Thursday, April 24, 2014

Expanding Sales with Life/LTC Linked Benefits

Long-term care costs aren't typically covered by Medicare or regular health insurance. Medicare is limited in what sort of care it pays for and how long.

Life linked-benefit products are life insurance contracts coupled with chronic illness or long-term care riders. They were created to address client hesitancy to purchase a product they may never use, plus there are other attractive features:
  • Guaranteed* to derive a benefit.
  • Allows clients to more options.
  • LTC benefit riders can accelerate payment of life insurance death benefit to cover long-term care needs.
  • Most have simplified underwriting options, with no medical exam required.
Linked-benefit products can provide attractive benefits for some clients, providing a potential Win-Win-Win opportunity.

1. WIN: Provides a death benefit if the client never needs long-term care
2. WIN: A 1035 exchange may provide tax-free, long-term care benefits on never taxed money
3. WIN: Allows client to choose how and where to receive long-term care services - home care, assisted care facility or nursing care.

Have you presented your clients with the many benefits provided by life linked-benefit products?
These innovative solutions offer living benefits many of your clients may be seeking. The market for
these products also provides attractive opportunities to help expand your sales.

For Financial Professional Use Only. Not For Use With The Public.

*Guarantees based on the claims paying ability of the insurance company. In addition to the death benefit, LTC living benefits can be derived for most products should a qualifying event occur.

This information is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax 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.

PAIS 01040814

Thursday, April 17, 2014

Showing Your Appreciation

In addition to birthdays and anniversaries, look for other opportunities to keep in touch with your clients. Keep an eye on your local paper, if you see an engagement or wedding announcement, a Little League championship victory, or a business expansion, take the time to send a personal card, it will speak volumes. Events that are significant to your client’s lives are reason for celebration and your gesture and acknowledgement will set you apart from the crowd.

One step further - host a client appreciation event. Here are some ideas to get you started:

1. Who do you want to invite? Look to your “A Clients” on your first round, along with those clients that you think will provide good referrals/contacts. You want to encourage your clients to bring a friend(s) that might like to learn more about the topic and your services.

2. What is the most convenient time for the event? Maybe a Friday or Saturday night for your clientele.

3. Where? What is the most convenient location? Are your clients spread out? Maybe you want to have more than one event in different locations.

4. Make it fun! Here are some ideas:
  • Grazing table with sophisticated “small bites” creating an atmosphere for more socializing (late afternoon/early evening)
  • Wine & Cheese Tasting (weekend afternoon)
  • Golf Clinic (weekend morning or afternoon)
5. Plan far in advance. Get compliance review/approval on any content if you are making a presentation.

6. Each state has different laws on what constitutes gifting. Please consult these first.


Saturday, April 12, 2014

What You Need to Know About the Tax Court Decision on IRA Rollovers

You may have heard the news about a recent United States Tax Court ruling regarding IRA rollovers. In its January 28, 2014, Bobrow v. Commissioner decision, the court ruled that an individual can only make one IRA rollover per year. Regardless of how many IRAs a client owns, the individual is only allowed to rollover one IRA per 365 days – not per calendar year. Take note that this ruling applies to Roth rollovers as well.

IRA Rollovers & Bobrow Decision
Typically, a distribution from an IRA results in taxable income. A rollover is the distribution of funds from one IRA payable to the account owner. The owner then has 60 days to redeposit the funds to the same or a different IRA. Generally, individuals do not have to include the distribution as taxable income if they “roll over” the amount within a 60-day period.

The court’s decision in Bobrow limits how many rollovers individuals can make over the course of a 365-day period. The Tax Court held that an account owner can perform only one rollover from one IRA to another (or the same) per 365 days, no matter how many IRAs the individual owns.

IRS Implementation: As Early As January 1, 2015
The IRS, meanwhile, intends to follow the court’s decision by implementing the one-rollover-per-year rule as early as January 1, 2015. That means IRA owners will have some time to adjust to the rule. For more information, visit the IRS website.

Trustee-to-Trustee Transfers Remain Unlimited
Keep in mind that IRA rollovers differ from trustee-to-trustee transfers between IRAs. According to the IRS website, individuals can continue to make as many trustee-to-trustee transfers as they wish. A trustee-to-trustee transfer involves transferring funds directly from one IRA to another; funds are made payable to the new IRA custodian – never the account owner. 

The Bottom Line
Many retirement experts are calling this recent court ruling a “game changer for the 50 or so million households in the U.S. that own an (IRA).”[1] The court’s decision has caused a wave of inquiries and questions from financial professionals, industry insiders and perhaps your own clients. So what’s the best course of action? Be smart. Encourage clients to talk with their qualified tax professional if they are considering moving around their IRA assets. In addition, clients should be directed to their registered representative or RIA if they are considering the liquidation of any securities, including those within an IRA. 

Any transaction that involves a recommendation to liquidate a securities product, including those within an IRA, 401(k) or other retirement plan for the purchase of an annuity or for other similar purposes, can be conducted only by individuals currently affiliated with a properly registered broker/dealer or registered investment advisor.  If you are unsure whether or not the information you are providing to a client represents general guidance or a specific recommendation to liquidate a security, please contact the individual state securities department in the states in which you conduct business.

This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for accounting, legal, tax or investment advice. This information is based on our understanding of current tax law. Keep in mind that tax and legislative information may be subject to change and different interpretations. Individuals should consult with a qualified professional specializing in these areas regarding the applicability of this information to their specific situation.


[1] Powell, Robert, “IRA rollover ruling stuns advisers and savers,” MarketWatch, April 4, 2014,


Thursday, April 10, 2014

Creating Your Elevator Speech

It is essential to have a mission or focus statement that describes your goals and what your business can provide to the consumer. Having this at the top of your mind to share with new clients or to reiterate to current ones, is a great advertisement of why you’re different.

Interestingly, all of us know about elevator speeches, but how many of us have them? An elevator pitch is a brief, persuasive speech that you use to spark interest in what your business does. You can also use elevator pitches to create interest in an idea or product – or in yourself. A good elevator speech should last no longer than a short elevator ride of 20-30 seconds, hence the name.

  1. Identify Your Goal – Think about the objective of your pitch. Do you want to talk about your business, a product or simple, engaging speech to explain what you do for a living?
  2. Explain What You Do – Focus on the problems that you solve and how you help people. Your pitch should bring a smile to your face. People may not remember everything that you say, but they will likely remember your enthusiasm.
  3. Communicate Your Unique Selling Proposition – this identifies what makes you, your business, and your solutions unique.

Preparation and practice can help you get your message across concisely, so people want to hear more.


Thursday, April 3, 2014

Guiding Principles on Suitability

As the 2008 market disruption made abundantly clear, fixed rate and fixed indexed annuities are useful tools to assist consumers by providing them guaranteed lifetime income (keeping in mind that guarantees are based on the strength and claims paying ability of the issuing insurance company). Fixed annuities should be considered a valid part of a prudent retirement strategy for some portion of a consumer’s assets. However, a fixed annuity sale should only take place if it meets the NAIC Model Regulation’s suitability standards and benefits the consumer in light of each consumer’s specific liquidity, financial needs and retirement goals.

All parties in the sales process, including insurers, marketing organizations, and annuity professionals, should make reasonable efforts to avoid inappropriate, unsuitable, fraudulent, or misleading sales. Consideration should be given to what values and benefits are available to the annuity purchaser and what risks or opportunity costs will be borne by the purchaser under various possible future scenarios.

View the NAFA’s Guiding Principles on Suitability here.

The paper also discusses suitability considerations for fixed annuity sales, while providing guidance in the development of review processes, suitability recommendations, and systems.

The guiding principles paper is provided with permission by NAFA - The National Association for Fixed Annuities. Partners Advantage is a NAFA Premier Partner. Material from third-party sources is being provided as a service to you. Please note that the information and opinions included are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Partners Advantage Insurance Services, LLC. Financial Professionals should ensure they continue to follow the current policies on the use of any advertising, third-party materials and/or social media as required by your broker/dealer and/or the carriers that you represent.