Friday, July 25, 2014

The Cost of Waiting - Summer Sales Ideas for 2014

To read the complete blog article which provides details and sample illustrations supporting the content in the video above, go here

What follows is an abbreviated version of the blog content:

To be certain of having life insurance when you need it, you should acquire it before you need it.  So an important factor to consider involves the advantage of acquiring your policy now -- while your health may be the best it ever will be.  Of even greater importance, should something unexpectedly happen to you in the short term, your family will be protected.

Here is another reason for acquiring life insurance early:  Harvey Pierce, MD, is an internal medicine physician.  He is age 45 and has determined that the participating policy loan features of an Indexed Universal Life (IUL) policy can provide him with a superb retirement supplement.  The death benefit of the policy, while certainly valuable to him and his family, is not the primary reason for his interest.

His adviser is encouraging him to purchase the policy now.  Dr. Pierce asks, "I will commit to this, but does it really make much difference if I do it now or in a couple of years?"

This question can be easily answered using the Cost of Waiting module available on the Personal Insurance tab in the InsMark Illustration System.

We'll compare the following two alternatives:

  • $500,000 increasing death benefit IUL issued at age 45 (max-funded with 20 annual premiums of $23,717 -- just short of a MEC -- with policy loans starting at age 65)
  • $500,000 increasing death benefit IUL issued at age 47 (max-funded with 18 annual premiums of $25,384 -- just short of a MEC -- with policy loans starting at age 65)

To read the complete blog article which provides details and sample illustrations supporting the content in the video above, go here

Thursday, July 24, 2014

Equity Rescue Plan Made Easy - Summer Sales Ideas for 2014

To read the complete blog article which provides details and sample illustrations supporting the content in the video above, go here.

What follows is an abbreviated version of the blog content:

Can Indexed Universal Life (IUL) compete with an equity account? In some ways, it's an apples vs. oranges comparison in view of the equity account's potential for gain in excess of the participation cap of the IUL. On the other hand, the downside protection against loss of IUL gives it a competitive advantage, and for some clients, this is an overwhelming plus.

Let's just compare them using the same interest rate, say, 7.50%. We'll also credit the equity account with a 1.00% dividend since IUL typically excludes dividends from the crediting rate of the selected index. (Some companies may offer this feature, but I am unaware of any.) As you will see, the IUL outperforms the equity account by a wide margin.

The reason for this is the significant difference in the items that retard the growth of the equity account vs. those that impact the IUL.

Equity Account Limitations

  • Management fees
  • Income tax on dividends
  • Income tax on realized short term gains
  • Capital gains tax on realized long-term gains
  • Turnover: Income tax and/or capital gains tax

Indexed Universal Life Limitations

  • Haircut on the index used
  • No credit for a dividend
  • Mortality charges

Case Study

Tom and Anne Murray are both age 45. Among other assets, they have an equity account currently valued at $250,000 with a cost basis of $200,000. They are interested in acquiring more life insurance on Tom's life for the protection of their three children and are evaluating IUL as an appropriate policy.

Tom and Anne intend to use the equity account to supplement their retirement income. Their adviser suggests using the equity account as a source of premiums for the IUL and accessing the IUL cash value to enhance retirement cash flow. They want to examine this strategy.

To establish the premium pattern for the IUL, we used a calculator in our Wealthy and Wise® System to determine the level amount of after tax cash flow that could flow from the $250,000 equity account. We directed the calculator to deplete the account over five years taking into account the limitations noted above.

Wealthy and Wise Equity Calculator Prompt

This calculator is located on the Equity Account sub-tab located on the Liquid Assets tab.

The calculator determined the equity account could produce $53,304 a year for five years (after tax) which we will use to fund the IUL. Starting at age 65, they will begin accessing cash flow from the IUL. Below is a graphic of the IUL results over 50 years (Source: Illustration of Values module in the InsMark Illustration System):

Click here http://insmarkblog.com/downloads/Blog-21-%28IUL%29.pdf to review the entire IUL illustration. Pay particular attention to Pages 2 and 3 where after tax retirement cash flow of $50,000 a year is illustrated (withdrawals to basis; loans thereafter). Note also that a substantial amount of death benefit is available in all years, a feature not associated with the equity account.

The next step is to compare the IUL with continuing the equity account with the identical after tax cash flow of $50,000 a year from each Strategy starting at their age 65. For this, I used Wealthy and Wise, and below are the graphics from that System showing the comparisons of net worth and death benefit.

Net Worth Comparison

(After Providing $50,000 a Year in After Tax Retirement Cash Flow from Both the Equity Account and the IUL)

Death Benefit Comparison

(After Providing $50,000 a Year in After Tax Retirement Cash Flow from Both the Equity Account and the IUL)

Equity rescue? You bet it is!

Click here to review the Wealthy and Wise reports.

A Wealthy and Wise case typically requires input of all a client's financial information. This is not the case with an Equity Rescue Plan (or an Annuity Rescue Plan as described in Blog #10) http://insmarkblog.com/blog-10-annuity-rescue-made-easy.html . Both can be illustrated with minimal data input. An ancillary benefit is that it gives you a platform to discuss other planning opportunities with what is likely to be a very impressed client.

Conclusion

Click here for a testimonial from one of our licensees. For a license to use and InsMark System or Wealthy and Wise, contact Julie Nayeri at InsMark at julien@insmark.com or (888) InsMark (467-6275). Institutional inquiries should be made to David A. Grant, Senior Vice President -- Sales at (925) 543-0513 or dag@insmark.com. For the best life insurance carrier and appropriate product selection, contact the Ash Brokerage nationwide Life Team at (800) 589-3000.

Wednesday, July 23, 2014

The Pothole in Wealth Management - Summer Sales Ideas for 2014

To read the complete blog article which provides details and sample illustrations supporting the content in the video above, go here

What follows is an abbreviated version of the blog content:

Real wealth involves sustainable after tax cash flow coupled with maximum net worth invested at comfortable yields.  Note the use of the phrase "after tax cash flow" not "after tax income".  This often means accessing principal from weaker assets while allowing stronger assets to accrue as long as possible.

Case Study Video, Good Logic vs. Bad Logic™ (8 minutes)

For the full version of this video (17 minutes), please click on the link at the end of this blog post.

Example:  Simon and Ann Scott are age 55 and 50 and plan to retire in 10 years.  They have almost $6.5 million in net worth (IRAs, CDs, Munis, Equities) and $900,000 in home value and personal property.  They want $25,000 in monthly, after tax, retirement cash flow indexed at 3.00% as an inflation offset.  It's the first day of the first month of their retirement, and they need $25,000 for the month.

But now the pothole ...

From which account do they take it?  And does it make any difference?  You bet it does.  They can take it out smart (we call this Good Logic) or they can take it out using guesswork (we call this Bad Logic).

In their case, both Good Logic and Bad Logic produce the needed level of after tax cash flow over their years of joint life expectancy (40 years in this example); however, net worth is a different story.

The result is a difference in long-range net worth of $12.5 million in favor of Good Logic.  If you were their adviser and didn't help them determine this, you had better hope a competitor doesn't.

So, how do you do this calculation for your client?  Well, you could program Excel to do a factorial solve (1 x 2 x 3 x 4 = 24 solves each year for 40 years in this example).  If you have, say, 10 asset classes, it would take 3,628,800 million solves each year for 40 years.  You probably don't want to have Excel do that.

If this is your initial introduction to Wealthy and Wise®, you may want to watch the Comprehensive version of our "how to" video where we take your through the sample case step by step using our Wealthy and Wise® planning system.

Comprehensive version including the Case Study (17 minutes)

Good Logic vs. Bad Logic™ Video (Comprehensive)

If you are licensed for InsMark's Wealthy and Wise® and would like to review the menu prompts we used for this analysis, please email us at bob@insmarkblog.com and we will get the Case Data file (Workbook) right out to you, (be sure to ask for the Workbook for the Blog #8: "The Pothole in Wealth Management, Good Logic vs. Bad Logic™").

For a license to use Wealthy and Wise®, go to https://www.insmark.com/products/wealthy-and-wise-system or contact Julie Nayeri at InsMark at julien@insmark.com or 1-888-InsMark (467-6275).  Institutional inquiries should be made to David A. Grant, Senior Vice President -- Sales at dag@insmark.com or 925-543-0513. For the best life insurance carrier and appropriate product selection, contact the Ash Brokerage nationwide Life Team at (800) 589-3000.

Tuesday, July 22, 2014

How to Prove Your Clients Should Purchase LTC - Summer Sales Ideas for 2014

To read the complete blog article which provides details and sample illustrations supporting the content in the video above, go here.

What follows is an abbreviated version of the blog content:
Sometimes it seems there are only two kinds of prospects for long-term care insurance: Those who can't afford it and more affluent candidates who can -- but resist spending the money thinking, "I'll just self-insure it."

Next time you run across one of the latter, ask this question: "Would you like to know mathematically whether self-insuring is a valid option?"  Most affluent people will want to hear what you have to say.  For example:

Assumed Client Data
Clients:  Age 65 and 60
Net Worth:  $3.5 million
Desired After Tax Retirement Cash Flow:  $100,000 indexed at 3.00%

Assumptions

  • Assume a claim occurs in 8 years for one of the insureds that lasts for 6 years, after which death occurs.
  • Assume the total benefits for the claim on a monthly basis will be $6,000 in today's dollars -- and medical inflation averages 5% a year.
  • Assume the annual premium for a Long-Term Care policy with an inflation rider covering both individuals is $12,000 -- reducing to $6,000 during the claim period.
  • Assume the inflation rider increases total monthly benefits by 5% (compounded) a year.
  • Assume retirement cash flow needs decline by 25% during and after the claim period.

Let's compare three scenarios:

  1. No coverage purchased and no claim costs assumed.
  2. No coverage purchased and claim costs paid via withdrawals from Net Worth.
  3. Coverage purchased and claim costs paid by the insurance company.

Hold on to your hats.  Here are the results using InsMark's Wealthy and Wise® software system.

Why is buying the LTC insurance the most efficient option?

Remember the assumption above where "retirement cash flow needs decline by 25% during and after the claim period".  Each client's situation will require different assumptions, but in this case, it's simple mathematics -- the present value of the reduction in retirement cash flow more than offsets the present value of the cost of the premiums for the Long-Term Care policy.

This logic also makes self-insuring slightly more efficient than doing nothing -- but the insurance option is the winning strategy by a large margin.

Go forth and be productive . . . but if you aren't using Wealthy and Wise, you don't want to run into a competitor who is.

Click here to review the 20 summary reports for this Case Study.

Click here to review the 65 detailed reports for this Case Study.

If you are licensed for InsMark's Wealthy and Wise and would like to review the menu prompts we used for this analysis, please email us at bob@insmarkblog.com, and we will get both Case Data files (Workbooks) right out to you for the 20 summary reports and the 65 detailed reports (be sure to ask for the two Workbooks for the Blog #6:  "How to Prove which of Your Clients Should Purchase Long-Term Care").

Click here to learn more about InsMark's Wealthy and Wise.  You can also contact Julie Nayeri at julien@insmark.com or 888-InsMark (467-6275).  Institutional inquiries should be directed to David Grant, Senior Vice President -- Sales, at dag@insmark.com or 925-543-0513. For the best life insurance carrier and appropriate product selection, contact the Ash Brokerage nationwide Life Team at (800) 589-3000.

Monday, July 21, 2014

Adding Key Executive Coverage - Summer Sales Ideas for 2014

What follows is an abbreviated version of original blog content. Read the complete article here.

Editor's Note: This blog is the second in a series involving several issues that emanate from the decision to sell a closely-held business, most of which provide opportunities for you to develop some serious business. If your practice involves retirement and/or estate planning for owners of such firms (or you would like it to), it is impossible to do it effectively without knowing the value of the business. InsMark has formed a joint venture with a cloud-based business valuation firm named BizEquity to form the InsMark Business Valuator.

Most business valuations cost upward of $8,000 - $10,000. The InsMark Business Valuator (powered by BizEquity) will do it for $350 ($150 if you purchase a package of 20 valuations.)

Review a recording of the one-hour webinar on the InsMark Business Valuator (powered by BizEquity) on the InsMark YouTube Channel.

Review Blog #41: If We Sell Our Business, Can We Afford to Retire?

This current Blog features a solution regarding life insurance coverage on the owner of the business where the InsMark Business Valuator has detected a $1,000,000 loss to the firm should the owner die.In the blog, we determined that George and Marie Grove, age 65 and 60, could maintain their current level of net worth (approximately $10 million) while ensuring after tax retirement cash flow of $440,000 a year indexed at 3.00% as an inflation hedge.

Key Executive Coverage

(Business-Owned or Personally-Owned?)

George and Marie believe the business will be hurt financially should George die prior to selling it in five years. The InsMark Business Valuator identifies this loss to the business at $1,000,000. Click here http://insmarkblog.com/downloads/blog-42-Acme-Ford-Very-Vulnerable-To-Departure-of-Owner.pdf to view the entire report to see the comprehensiveness of the evaluation.

The easy solution is to indemnify the business against the loss of George by having the business purchase $1,000,000 of life insurance on him. The evaluation should also take into account that George needs to replace his income for Marie's benefit. One way to meet the cash needs of the business and the income needs of Marie is to have the firm own a life insurance policy on George large enough where $1,000,000 of the death benefit offsets the reduced value of the firm due to George's death, and the balance is used to fund a salary continuation benefit for Marie.

Is there a way to coordinate those two goals with, let's say, $2,000,000 of coverage? What kind? Term insurance for five years? Is there a place for a permanent policy?

The best way involves the personal purchase of permanent life insurance.

Alternate Key Executive Insurance Technique

Following are the steps for implementing this arrangement:

  1. George purchases the life insurance policy personally with Marie as beneficiary. The face amount of the policy is $2,000,000, $1,000,000 of which reflects the loss to the firm should he die prior to the sale of the business.
  2. If George dies prior to the sale of the business, Marie collects the life insurance proceeds, and although the LLC has lost $1,000,000 in valuation through the death of George (as documented by the InsMark Business Valuator), Marie has the $1,000,000 of the life insurance in a tax free life insurance death benefit to offset the loss.

George and Marie have personal access to the policy's loan values for tax free cash flow during retirement years.

We purchased a $2,000,000 policy. It is a max-funded Indexed Universal Life policy with five premiums of $184,000. Click here http://insmarkblog.com/downloads/blog-42-George-Groves-Illustration.pdf to review the Illustration of Values of the policy from the InsMark Illustration System.

There is no other planning software that can accomplish the analysis in Blogs #41 and #42 other than the combination of the InsMark Business Valuator (powered by BizEquity) and Wealthy and Wise.

For information about the InsMark Business Valuator (powered by BizEquity) or licensing information regarding Wealthy and Wise and the InsMark Illustration System, contact Julie Nayeri at julien@insmark.com or 888-InsMark (467-6275). Institutional inquiries should be directed to David Grant, Senior Vice President - Sales, at dag@insmark.com or 925-543-0513. For the best life insurance carrier and appropriate product selection, contact the Ash Brokerage nationwide Life Team at (800) 589-3000.

Friday, July 11, 2014

What is the defining issue of the 21st century - Interviews You Can Use



The world is undergoing a great transformation to a geriatric population that will change the world over the next 50 years, where 2 billion people will be older than age 60. Women will dominate those who live to age 100. And the recruitment of the next generation of financial and insurance professionals is at risk. Online syndicated financial columnist and talk show host Steve Savant interviews Joe Jordan nationally recognized industry expert, platform and author of Living a Life of Significance.

Thursday, July 10, 2014

How to increasing your personal productivity - Interviews You Can Use



Product diversification can impact your productivity like few business strategies can. Registered reps are increasing incorporating other product lines into their practice to generate new revenue. Annuities, life and long tem care insurance are among the new offerings in brokerage and wire houses. Online syndicated financial columnist and talk show host Steve Savant interviews Joe Jordan nationally recognized industry expert, platform and author of Living a Life of Significance.

Wednesday, July 9, 2014

How to make a commitment to action- Interviews You Can Use



There's a great decision and commitment to be made among all producers. Since no sale happens until first contact is made, there needs to be a commitment to the number of people you contact. It may be old school, but there's no way around calling 7-10 people a day for appointments. Nick Murray's Game of Numbers underscores this sales axiom. Online syndicated financial columnist and talk show host Steve Savant interviews Joe Jordan nationally recognized industry expert, platform and author of Living a Life of Significance.

Tuesday, July 8, 2014

How to change your personal beliefs - Interviews You Can Use



All production in society is behavioral. Identifying the root cause of an individual's motivation can have an impact on society at large. There's a great decision and commitment to be made among all producers. There are three areas of in a producer's belief system they need to adopt to be successful. The right mix of business, selling value not price and being inspired (and not just motivated.) Online syndicated financial columnist and talk show host Steve Savant interviews Joe Jordan nationally recognized industry expert, platform and author of Living a Life of Significance.

Monday, July 7, 2014

How to change the brand of financial services - Interviews You Can Use



Five European countries have already moved away from product commissions. That decision may have been affected by the ongoing criticism of capitalism on the continent. Even the Pope has been critical of the free market. But there has been no other system that has elevated more people out poverty than capitalism. All production in society is behavioral. Identifying the root cause of an individual's motivation can have an impact on society at large. Online syndicated financial columnist and talk show host Steve Savant interviews Joe Jordan nationally recognized industry expert, platform and author of Living a Life of Significance.

Friday, July 4, 2014

How to use structured cash flow settlements in turnkey marketing campaigns



Advisers are continually searching for alternative products that can benefit their clients and differential them from other advisers. Structured cash flow settlements are relatively unknown even though they have been around since in the early nineties. There are videos and written content campaigns available for qualified advisers for marketing in their community. Certified Financial Planner Joe Hipp is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Structured Cash Flow on Let's Get Down to Business.

Thursday, July 3, 2014

How structured cash flow settlements can enhance life insurance designed for income



A TAMRA compliant cash value life insurance policy can deliver tax-advantaged income. Many savers and investors have single deposits for this strategy, but the money must be amortized between 4-5 years to comply with TAMRA. Structured settlements can generate a significant increase in funding life insurance with above market yields. Certified Financial Planner Joe Hipp is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Structured Cash Flow on Let's Get Down to Business.

Wednesday, July 2, 2014

What are the financial planning applications from structured cash flow settlement income



Cash accounts have yielded low returns for sometime with the depressed interest rate market. Many savers and investors are seeking higher yields. The income payout of a five year structured settlement may be appealing to them. Five and ten year-structured settlements can also be part of an income strategy where retirees purchase blocks of predictable income. Certified Financial Planner Joe Hipp is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Structured Cash Flow on Let's Get Down to Business.

Tuesday, July 1, 2014

What are the risks and rewards of the structured cash flow settlement market?



Above market yields are extremely attractive for a cash account alternative, but there are no guarantees. However, factoring companies generally perform a rigorous due diligence examination of the defined benefit plan and the plan participant. Most factoring companies have reserve and escrow accounts for additional loss mitigation. In addition, many structured cash flow settlements are purchased from federal, military and state run plans who have with taxing authority. Certified Financial Planner Joe Hipp is interviewed by Steve Savant, syndicated financial columnist and talk show host featuring Structured Cash Flow on Let's Get Down to Business.

About Steve Savant

Steve Savant

As the National Marketing Spokesperson for Ash Brokerage, Steve Savant looks forward to meeting financial professionals in every way possible - in person or by video through conferences and social media.

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