Thursday, September 22, 2016

SPL: Bridging the Gap from Annuities to Life Insurance

“Change Before You Have To.” - Jack Welch

Millions of financial professionals are now confronting important choices regarding change. These are financial professionals who are currently doing a significant amount of fixed and indexed annuity business. The world is going to change in April of 2017 and it will force you to change whether you want to or not. Hopefully you are making changes to your practice prior to this “forcing event.” What is this “forcing event?” It is the DOL fiduciary rule.

The implementation of the DOL rule is forcing financial professionals to diversify their business and there is not a more perfect product for these financial professionals to look at than single premium life (SPL) insurance. However, there are many annuity financial professionals who may not understand SPL and haven’t learned how it can provide an easy bridge from annuities to life insurance. 

If you are a financial professional who has primarily done annuities in the past, we know a significant hurdle is underwriting. This is one of the strong points with most single premium life policies. As a matter of fact, most products have a simplified underwriting process that classifies risks as quickly as possible, many times within 2-3 days of submitting the application to the carrier but can be within minutes. There are usually no medical examinations or blood tests and the carrier will often conduct a point-of-sale interview. The point-of-sale interview is basically simple questions regarding health history and height and weight. 

Whether single premium or flexible premium, the IUL marketplace has grown to where it now represents 20% of the entire life insurance market today. If you have become fluent with fixed indexed annuities, it is not a difficult leap to start to market and sell IUL. 

The issue of “cost” is brought up very frequently during conversations around life insurance and especially PERMANENT life insurance. Of course, this is perpetuated by the pundits such as Suze Orman and Dave Ramsey that consistently make the blanket statement that permanent insurance is too costly and one should buy term and invest the difference. So, as I lead “indexed boot camps” across the country, my job is to educate the financial professionals on why IUL is not so expensive if designed correctly and how the financial professionals can explain this with their clients. 

Learn more in the full white paper by Charlie Gipple, CLU, ChFC, on this topic. It provides case examples, addresses costs and how you can find success in explaining these products to clients. Request the complimentary white paper below:
Fill out my online form.

Also, don't forget to join Charlie for a complimentary webinar on Tuesday, September 27 at 2pm EDT to discover how to design cost effective IUL policies.

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.