Pages

Thursday, December 1, 2016

Postpone the R in your RMDs

This is an Advanced Markets Minute provided by and used with permission from Mutual of Omaha - Advanced Markets

As you know, starting at age 70½, owners of qualified retirement accounts must take required minimum distributions (RMDs). However, some investors may not want to take RMDs on their entire pre-tax account, as it is all taxed as ordinary income and may provide them with more income than they need. Unfortunately, as their name implies, RMDs are required. 

At the same time, today’s longer life expectancies may have some investors questioning whether they will have enough to cover their expenses in the later years of retirement.  According to IRS life expectancy tables, there’s a 50% chance of a 65-year-old man living to age 85 and the same chance of a 65-year-old woman living to age 88.  Retirees may find themselves needing income later in life to cover expenses which may increase as they age, such as prescription drugs, in-home care, and other health care related expenses. 

A client with these concerns may benefit from a Qualified Longevity Annuity Contract (QLAC).  A QLAC is a deferred income annuity that allows investors to postpone taking income from their traditional IRA or qualified employer-sponsored plan until up to age 85.  With a QLAC, the investor shifts the longevity, market and interest rate risk to the insurer, who promises to pay guaranteed income for the investor’s life. This creates a pension-like income, and allows the investor to postpone taking such taxable distributions until age 85.   

If your client is married, the QLAC can be structured to protect both the owner and the owner’s spouse from longevity, market and interest rate risk.  A joint and survivor annuity option can be selected at contract purchase, which will guarantee income payments for the owner and the owner’s spouse for as long as they live.  Simply structure the contract with the owner and owner’s spouse as joint annuitant’s and list the owner’s spouse as the beneficiary of the contract as well.  That way if the owner or owner’s spouse die prior to or after the income start date, the survivor can continue the contract and receive income payments for the remainder of his/her life.  If a return of premium death benefit is preferred, the owner can select a cash refund option. 

Like all good things, there are limits. The IRS has limited QLAC premium to $125,000 or 25% of the investor’s qualified account balance, whichever is less.  There are also restrictions on the flexibility of deferred income annuities that should be discussed with your client because the contracts are irrevocable, no withdrawals are permitted and will have no cash surrender value.  These are just a few items to note. There are other considerations with a QLAC that should be addressed prior to recommending to a client. Advanced Markets can be a resource to assist you with a QLAC. 

For the right client, a QLAC can let them postpone some required distributions and the taxes that accompany them. Call us in Advanced Markets if you have any questions. 

This information is general in nature and not comprehensive, the applicable laws change frequently and the strategies suggested may not be suitable for everyone. Clients should seek advice from tax and legal advisors regarding their individual situation prior to making financial decisions. Mutual of Omaha and its representatives do not provide tax advice. 


Contact Partners Advantage for complete Advanced Markets assistance at 
888-251-5525, Ext. 361


For financial professional use only. Not for use with consumers.

The advice provided in this communication is not intended or written by the practitioner to be used and may not be used by you for the purpose of avoiding penalties that may be imposed by the IRS or any other taxing authority.

The advice in this communication was written to support the promotion or marketing of the transaction(s) or matter(s) addressed by the written advice.

You should seek advice based on your particular circumstances from an independent tax advisor.

Wednesday, November 23, 2016

Harness the power of eApps and Drop Tickets

You could be missing increased life insurance business if you are spending more than 5 minutes per application! 

Partners Advantage Life Director Dan Tucker and Life Brokerage Director Zach Tietz will show you how to harness the power of eApps and Drop Tickets to have cleaner life applications that are approved and paid faster. If you don't use online applications, LIFE insurance business could be passing you by! 

Top 5 Benefits of Online Life Applications: 
  1. Get Paid Faster
    Cases processed more quickly
  2. More Cases Placed Financial professionals experience higher placement ratios due to applications arriving in good order.
  3. Less Paperwork Hassle Less paper with full case management and real-time updates on cases.
  4. Full Compensation While the carriers or the eApp providers takes on some of the work, you still receive full compensation.
  5. It's EASY!
    Online applications are easy to use.
Fill out my online form.


Need immediate case assistance, contact the Partners Advantage Brokerage Team at 
888-251-5525, Ext. 704 


For financial professional use only. Not for use with consumers. 

Thursday, November 17, 2016

How Primacy Bias Impacts Effective Communication

http://www.partnersadvantage.com/Page/AboutUs
By: Charlie Gipple, CLU®, ChFC®, Senior VP of Sales and Marketing, Partners Advantage

Our right brain is the underlying cruise control and the left brain takes effort to fire up. If it takes no effort from your clients to work their right brain and a lot of effort for clients to work their left brain, it is obvious one should appeal to the side that takes no effort, which is the right brain, the emotional and natural instinct side. This again is what we want to do with these “Seven Secrets to Successful Communication."


Secret 1: Primacy Bias
You only get one chance to make a first impression, which takes place within seven seconds of somebody meeting you. What the primacy effect says is that the vividness of a memory or retention of information is higher at the beginning of a presentation or sales pitch or conversation.

As you can see on the graph below, when you first meet somebody, this vividness in their memory is the highest, or almost the highest (we will talk about the right side of this chart in a bit), and then as time goes by, towards the middle of a talk, the vividness tapers down. This chart below is why, if I am going to prepare for a presentation or a sales talk, I have what I call the 50/20 rule. What this means is I put 20% towards my introduction and closing, and I will allot about 50% of my preparation time to the middle section.
 

http://www.partnersadvantage.com/Page/AboutUs

So, with a 50-minute presentation, it is common for me to have 20% (or 10 minutes) of this presentation allocated to the opening and closing. In preparing for that 20%, I will spend around three of my six hours prepping for it.

First impressions matter and you only have one chance for a first impression. Without a great first impression, anything that follows is usually clouded in the listeners’ mind by the “bias” they formed earlier. So, it doesn’t matter how good the experience is beyond the first impression, if the first impression was negative, the following will be suboptimal to the listener versus if you otherwise gave a good first impression. Anybody who has ever presented and bombed at the beginning of a presentation knows exactly what I am talking about.


Learn more about the rest of the seven secrets: storytelling, simplification, power in the pen, feel/felt/found, confidence and recency bias...


DOWNLOAD the full white complimentary paper: Seven Secrets to Effective Communication, by Partners Advantage Senior VP of Sales and Marketing Charlie Gipple, CLU, ChFC.
Fill out my online form.

Questions or Need Case Assistance: Contact the Partners Advantage Brokerage Team at 888-251-5525, Ext. 700.


For financial professional use only. Not for use with consumers.
 

67113

Thursday, November 10, 2016

The Life Insurance Coverage Gap: How Single Premium Life (SPL) Insurance Can Help

In 2015 there was a life insurance gap in our country that exceeded $16 trillion dollars. The “life insurance gap” is what the need is of American households less the life insurance coverage already in place. Back in 1960, 70% of U.S. adults owned life insurance, whether it was individual life insurance or through a group plan usually found at their jobs.  In recent years, this number has fallen to only 59% of American adults that have either an individual plan or group plan. Even more startling, only 36% of U.S. adults have individual life insurance policies versus 59% back in 1960. The fact that since 1960, American families have evolved to dual income households, the percentage of adults having life insurance should have increased, not decreased! In other words, if two people in the family are getting income, both of those income earners should have life insurance.

There are five key reasons cited by consumers for not having life insurance or adequate life insurance:
  1. Affordability: In a study published by Prudential in 2013, 74% of consumers said that concerns about affordability prevented them from purchasing life insurance.
  2. Cost: Related to the above, consumers consistently overestimate the cost of life insurance. In the 2015 Insurance Barometer Study, 80 percent of consumers misjudge the price for term life insurance, with Millennials overestimating the cost by 213%, and Gen Xers overestimating the cost by 119%.
  3. Confusing: In that same Prudential study, 50% said that life insurance is too complicated to purchase.
  4. Underestimating the Need: Consumers in the Prudential study felt that they were adequately covered. Furthermore, they felt that high face amounts are excessive, especially at death benefits above $250k. A majority of the consumers felt overall that death benefits of two to three times their annual income would be sufficient. This is backed up by the fact that the median household income in America is around $50,000/yr. and the median life insurance policy has a death benefit of $115,000.
  5. Misperception about the Limited Role of Life Insurance: 63% of consumers in the Prudential study claimed they bought life insurance merely for funeral costs and final expenses. 
The confusion and misperceptions around life insurance create a perfect opportunity for SPL to help fill the coverage gap. Affordability should not be an issue with SPL because the target age group for SPL is 60-85 years of age. These folks likely already have money that they are merely looking to pass on to the next generation. Of course, if the client has “lazy money” in CDs, money markets, etc., the affordability issue can be easily overcome. Furthermore, SPL is a very simple product to understand. If the client puts $100,000 into the policy, the death benefit will immediately be $200k, for example. Note: the death benefit can be anywhere from 15% to 200% higher than the premium the client puts in based off the age of the insured. And by the way, the death benefit would be WITHOUT TAXES.
Learn more in the full white paper "SPL: Bridging the Gap from Annuities to Life Insurance," by Charlie Gipple, CLU, ChFC. It provides case examples, addresses costs and how you can find success in explaining these products to clients. 
Fill out my online form.


Questions or Need Case Assistance: Contact the Partners Advantage Brokerage Team at 888-251-5525, Ext. 700.



For financial professional use only. Not for use with consumers.

This material is intended for educational purposes only and is not intended to serve as the basis for any investment or purchasing decision. Insurance and annuity products: Are not deposits. Are not guaranteed by a bank or its affiliates. May decrease in value. Are not insured by the FDIC or any other federal government agency. This information is written in connection with the promotion or marketing of the matters addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, your clients should consult their own tax or legal counsel for advice. Pursuant to IRS Circular 230, Partners Advantage Insurance Services and their representatives do not give tax or legal advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Encourage your clients to consult their tax advisor or attorney. The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances. Encourage your clients to consult their tax advisor or attorney. The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances. Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy’s account value and death benefit. Assuming a policy is not a modified endowment contract (MEC), withdrawals are taxed only to the extent that they exceed the policy owner’s cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions. These characters are fictional and are not actual customers. Your own decisions should be made in light of your own financial situations. This hypothetical examples used are for illustrative purposes only, is no guarantee of return or future performance, and does not depict the actual performance of a specific product or its investment options. In order to provide a recommendation to a client about the liquidation of a securities product, including those within an IRA, 401(k) or other retirement plan, to purchase a fixed or variable annuity or for other similar purposes, you must hold the proper securities registration and be currently affiliated with a broker/dealer or registered investment adviser. If you are unsure whether or not the information you are providing to a client represents general guidance or a specific to liquidate a security, please contact the individual state securities department in the states in which you conduct business. Indexed Universal Life is not a stock market investment and does not directly participate in any stock or equity investments. Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; a market-indexed insurance product is not comparable to a direct investment in the equity markets. Clients who purchase IUL are not directly investing in a stock market index.

65157

Thursday, November 3, 2016

November is the Perfect Time to Focus on LTC Awareness and Protection

November is Long-Term Care (LTC) Awareness Month and we’re excited to announce a new turn-key social media campaign to educate consumers on the importance of long-term care protection. This campaign includes approved content including articles, videos and images! Courtesy of OneAmerica®.

Contact Partners Advantage Brokerage Team at 888-251-5525, Ext. 700 for access to these resources to help educate your clients.

Now is a good time to have this conversation with your clients:
“When should I prepare for long-term care?” You know that you can’t buy car insurance at the side of the road just after an accident. In the same way, the very best time to look at LTC protection is before you need it, when you’re healthy and may prepare for the future you want. By choosing LTC protection now, you and your family may look forward to the future with more confidence.

Fill out my online form.


For use with financial professional use only. Not for public distribution.

Sources: 
1. Ahrens, Marty. National Fire Protection Association. “Home Structure Fires.” Sept. 2015. 
2. U.S. Department of Transportation National Highway Traffic Safety Administration. “Quick Facts 2014.” March 2016. 
3. U.S. Department of Health and Human Services. 2016, June 24. “Who Needs Care?” 
http://longtermcare.gov/the-basics/who-needs-care/.

OneAmerica® is the marketing name for the companies of OneAmerica.

Partners Advantage Brokerage is not an affiliate of the companies of OneAmerica.

Thursday, October 27, 2016

Don't Enter through the Exit -Proper Ways to Approach and Illustrate IUL for Retirement Income

By Lisa "Lee" Morris
VP of Underwriting and Development,
Partners Advantage Insurance Services

An experienced financial professional knows all aspects of transferring wealth, replacing income, protecting assets and certainly providing supplemental retirement income all using life insurance products. IUL products have gained great traction in the marketplace as they address many of these aspects, but particularly retirement income. Although the main premise of life insurance is to replace a financial loss, why not accomplish even more by replacing a financial loss AND preparing for retirement. 

Here is the key if you decide to use this strategy. Make sure that you do not enter through the exit door by calculating the retirement income first and then solving for the face amount. An applicant still has to financially qualify and justify the amount of total insurance for which they have applied. Many financial professionals will simply ask an applicant how much sounds like a good idea for your retirement needs and create illustrations based upon the applicant’s response. However, the correct approach is to determine the total amount that the applicant can qualify for coverage and THEN illustrate the amount of retirement income that the applicant will be able to withdraw as retirement income without collapsing the policy. By following this technique, you can adequately meet financial justification and participate in a much smoother ride to policy issue.


For financial professional use only. Not for use with consumers.

Partners Advantage Insurance Services and their representatives do not give tax or legal advice. The material in this article is provided for informational purposes only and should not be construed as tax or legal advice. Guarantees and benefits are based on the claims-paying ability of the issuing insurance company. Keep in mind that most life insurance policies require health underwriting and, in some cases, financial underwriting.

69474

Thursday, October 20, 2016

How Creative Destruction is Shaping Annuity Trends

By: Charlie Gipple, CLU®, ChFC®, Senior VP of Sales and Marketing, Partners Advantage

Creative destruction is the idea that in the process of evolution, free markets can become somewhat messy while making progress. Although the world becomes a better place because of this evolution, progress, and upgrades, the process can be quite the disruptor for those who find themselves on the wrong side of creative destruction. 

This comes to mind as you look at the latest trends in the annuity world. There have been wins as well as losses over the past four years. The variable annuity (VA) product line has struggled but fixed annuities, indexed annuities, single premium immediate annuities (SPIAs) and deferred income annuities (DIAs) have excelled. 

What is causing the creative destruction in the variable annuity world? The No. 1 instigator was the 2008 financial crisis. During this time period, many manufacturers realized that guaranteed lifetime benefits (GLBs) were too costly for them to continue offering the living benefits. This caused a number of VA carriers to leave the VA business. If they continued, they eliminated products. 

Again, with creative destruction there are losers but there are also winners. The winners of this process have been the new VA innovations introduced by the carriers over the past years. These recent VA innovations are investment-only VAs (IOVAs); VA + deferred annuity (VADAs); and structured product VAs (SPVAs), also known as buffered VAs. 

Another benefactor of creative destruction within the industry is fixed indexed annuities. FIAs have been able to maintain strong guaranteed lifetime withdrawal benefit (GLWB) features that have been easily hedged within the design of a FIA product than in a VA product. The benefits that once defined the VA world are now defining the FIA world and other annuity products. 

There is another source of creative destruction on the horizon, as the Department of Labor’s (DOL) fiduciary rule takes effect in April 2017. As of now, the DOL is mandating that FIAs fall under the Best Interest Contract Exemption in order for the financial professional to get paid commission. This upcoming rule will affect a fair amount of FIA business because the new regulation focuses on qualified money. Time will tell how significant the impact will be.

Despite the significant storms on the horizon, I believe the annuity will be able to put more emphasis on the creative and less on the destruction.

Taken from Charlie Gipple’s article in InsuranceNewsNet Magazine, August 2016: “How Creative Destruction Shapes the Fixed Annuity Market” 
Fill out my online form.



For financial professional use only. Not for use with consumers.

Annuities are designed to meet long-term needs for retirement income. They provide guarantees against the loss of premium and credited interest, and the reassurance of a death benefit for beneficiaries. 

An income rider or benefit (sometimes called Guaranteed Lifetime Withdrawal benefits, or GLWB) is an additional feature available with some annuities and generally optional and come with additional costs. Income benefits are designed to provide income options above and beyond the standard annuitization or free withdrawal features in annuities. 

Fixed indexed annuities are not stock market investments and do not directly participate in any stock or equity investments.  Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; neither an Index nor any market-indexed annuity is comparable to a direct investment in the equity markets.  Clients who purchase indexed annuities are not directly investing in a stock market index.

Pursuant to IRS Circular 230, Partners Advantage Insurance Services and their representatives do not give tax or legal advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Encourage your clients to consult their tax advisor or attorney. 

The information contained in this article is not intended to serve as tax or legal advice and is not intended to provide financial or legal advice and does not address individual circumstances.

51720