Danny McKeever

About Danny McKeever

Posts by Danny McKeever:

illustration of a magnifying glsas over a document representing the need to perform a life insurance policy review

Many clients view their life insurance policy as a ‘set it and forget it’ affair. After some time spent with their advisor crafting a policy to protect their loved ones and their legacy they simply go about living. Unfortunately, far too many advisors treat their policies in the exact same way. Once the sale is done and the policy is in force, they don’t truly consider it again as long as the premium payments continue. Not only is this a missed opportunity to sell a warm client new business, but it is also a disservice to the client. Policy reviews are essential for keeping your client relationship close and providing the best client service possible.

A phone call today could mean more business tomorrow

In reality, your client’s life changes all the time. They get married, they have children, those children go to college and start their own lives. As their lives change so too do their insurance needs. A policy you sold to a client in their 30’s may no longer be sufficient for the life they are living in their 40’s and 50’s. This is why it is imperative that you develop a relationship with your client that allows you to help them address their new needs as they arise. The policy review is the first step you need to take to address these changes.

As I mentioned earlier, most clients forget about their life insurance policy outside of their premium payments. They go on living their life under the belief that a policy they purchased a decade earlier will protect their loved ones in the event of their passing. They rely on you to know the ins and outs of their policy and to speak to them about new opportunities and products that could help serve them where they are at today. The policy review process is your tool to educate them on where their current policy works… and where it doesn’t in their current fiscal and health environment. The policy review affords you the opportunity to sell more insurance in an effort to provide your client with the best available protection.

a winding river representing the need to change your life insurance policy as your life changes

A change is gonna come: When to conduct a policy review

If you have clients that bought a policy from you a year or two years ago then you should go over their policy and reach out to them today. A simple check-up call or email to let them know you are still working on their behalf can go a long way towards starting the conversation about where their life has taken them. Ask them if there have been any significant changes to their situation since you last spoke to them.

Have there been any changes to their:

Income
Family
Relationship
Health
Mortage

Any and all of these can have serious implications concerning their current coverage. Maybe they recently quit smoking, lowered their blood pressure, and started living a health-conscious lifestyle that might save them precious premium dollars. Or perhaps they were promoted at work or had success in a new business and require more coverage than their older policy provides.

The purpose of a policy review goes beyond ensuring that their life and their policy are on the same page. It is a matter of developing deep and meaningful relationships with your clients. The more you learn about your client, the more opportunities you will be able to share with them. Going a bit further for your client will create trust and loyalty. Perhaps you have sold a policy for them but not for their spouse. Their children will need life insurance at some point in the future. Who are they more likely to buy from? An insurance salesman that their parent spoke to once or an advocate that their parent knows well and refers to them?

Before the call, perform an investigation on the policy itself

Review your client’s policy so that you know it inside and out. Look for common mistakes such as:

Are the beneficiaries current?
Is it tax-friendly to their estate?
Are there better solutions today that didn’t exist when the policy was written?

Take your questions and your findings into the review process. When done correctly, a policy review can save your clients money and provide them with more appropriate coverage. Your client will appreciate the time you’ve taken to help keep their affairs in order.

an antique telephone representing the need to call your clients to perform a life insurance policy review

It is always worth the conversation

Your client relies on you for your expertise. Keeping your client close and caring about their coverage means conducting regular policy reviews, checking in with them about how their life is going, and consistently communicating new products that could best serve them today.

Rocky Mountain is happy to help you review any policies and find better solutions for your clients. Together, we can ensure that the policies you sold yesterday help your client thrive tomorrow.

As the holiday season approaches and the long stretch of winter months begins, Americans enter a season of giving, goodwill, and family get-togethers. Charities and non-profit organizations make their greatest push during this time to ask for donations and fund their outreach.

When your clients think about life insurance, they most likely are focused on providing for their family, however, life insurance can also be a wonderful vehicle to support the various causes and organizations that they regularly contribute to. Let’s take this time to talk about how your clients can support their favorite charities through existing and new life insurance policies while easing the tax burden on their estate.

How donating life insurance can be beneficial to both the donor and the charity

Utilizing life insurance as a vehicle for charitable giving doesn’t only benefit the charity. For clients with substantial estates, gifting life insurance can offer substantial tax benefits for the donor. The government does not impose a ceiling on charitable donations for estate tax purposes. This means that while the charity that your client is passionate about helping will receive a substantial sum at the end of the policy, the donor’s taxable estate can be significantly reduced as well, easing the tax burden on their heirs.

Not all methods of donating life insurance proceeds to a charity enjoy identical tax estate tax advantages but using life insurance to support non-profits and charities can be more effective in terms of the size of the donation compared to simply giving cash. Let’s look at some of the options for using life insurance to finance donations.

fountain with hands catching water to represent charitable giving

Adding a charity to the list of life insurance beneficiaries

Perhaps the simplest way for your client to support their preferred charities involves adding the charity to the list of beneficiaries. While the tax benefits of this method aren’t as significant as gifting a policy directly to a charity, adding the charity as a beneficiary will reduce the taxable estate by the amount received.

The only obvious advantage here is privacy. When the charity is a beneficiary, the donor is able to keep secret their gift from their heirs. This also means that the donation cannot be contested, ensuring that your client’s wishes will not be hindered or interfered with in any way.

Adding a charitable giving rider to an existing policy

A charitable giving rider can be added to your client’s life insurance policy often at no additional cost or loss of value to the death benefit. The rider specifies a percentage of the policy face value to a charity that qualifies for inclusion in the rider. There may be some limitations specified in the rider as to the amount of the gift. These should be discussed with your client when considering the best approach to support their preferred charity. These riders may also require a higher amount of protection in order to qualify.

Some Charitable Riders of Note

Some charitable riders go above and beyond in the name of charitable giving. For instance, Symetra offers a Charitable Giving Benefit rider at no cost upon purchase of life insurance. Their rider provides a chosen charity with a dollar amount equal to 1% of the death benefit on the policy. It also makes it free and easy to change the charity that receives the money throughout the life of the policy.

Additionally, AXA offers a Charitable Legacy Rider with some of its policies that meet minimum death benefit requirements of $1 million or greater. This rider adds an additional 1% benefit to the total death benefit for a chosen charity.

The benefit of a charitable giving rider is ease and convenience. There is no need to create and manage a gift trust for the charity until the death of the insured client. This is a simple approach to charitable giving that can offer a substantial windfall to the charity with little effort on the part of the donor.

A wrapped present representing adding a charity to your life insurance policy

Donating entire policies: Where compassion and tax advantages meet

There are several advantages for both your client and the charity when donating a life insurance policy. For your client, donating a policy can offer a significant reduction to their taxable estate. Depending on the wealth your client leaves behind, this can represent thousands of dollars in tax savings. For high-net-worth clients, donating a policy can satisfy their philanthropic needs and reduce their overall estate tax without disturbing their overall financial plan.

For the charity, the amount of money received through a donated policy is often much greater than simply adding a rider to their policy. There is no ceiling on the amount that can be donated. The donor is responsible for paying premiums on the policy which are also tax-deductible.

Gifting a life insurance policy can also be used to turn an older, unwanted policy into a meaningful donation. Perhaps your client has an older policy that no longer fits their current needs. In this case, converting that policy to a charitable gift can make a difference to both the charity and your client’s taxable estate.

‘Tis the season of giving, let us know how we can help

Rocky Mountain is happy to help you explore charitable life insurance options for your generous clients. Leaving a financial legacy for their heirs is important, but so is leaving the world a better place than they found it.

For you clients who want to make a meaningful impact with their charitable giving, let us know how we can help you present them with options that are mutually beneficial. Happy holidays from all of us here at Rocky Mountain. We wish you and your family a safe and loving holiday season.

Life Insurance awanerness month marketing

While September is officially Life Insurance Awareness Month, in reality, every month presents an opportunity to reach out to old clients and discover new opportunities in your local market. Marketing and outreach are concepts that get thrown around quite a bit in the industry. Some agents excel at making new connections while others may need more concrete direction in order to feel comfortable. This month, we are gonna go over a couple of ways you can find success in your marketing campaign.

Work your existing business: the power of policy review

Some of the best revenue opportunities lay in your existing client base. Changes to regulations that affect our business and your clients’ opportunities such as the illustration update from AG 49A and IRC Section 7702 create a compelling reason to check in on your clients’ policies.

Reaching out via email or phone to offer a policy review has two main benefits: it shows your client that you are always looking out for their best interests and presents opportunities for your client to save money, purchase more coverage if their goals have changed, and helps keep them aware of new products and alternatives that may be applicable to their needs.

Make use of email campaigns to all of your clients regularly

In addition to offering a policy review, it is important to keep the line of communications between you and your client open throughout the month and year. A consistent, targeted, email campaign can help you get the word out about new products and services to your book of business while maintaining your brand and presence with your clients.

Social media marketing for life insurance

Use social media software to keep your clients in the loop

Social media scheduling software has come a long way in the past several years. Posting to socials can be a chore but going to where your client is online is still one of the best ways to connect with them.

Lifehappens Pro is your friend

Lifehappens Pro is a suite of technologies that can help simplify your overall outreach campaign. With the click of a button, you can coordinate social posts to reach your audience on several platforms. Check out their free trial and give it a go. You can find it here.

Lifehappens Pro can give you:

Flyers, brochures, and graphics to use in your campaign
Videos for greater client engagement
Themed campaigns (such as one for LIAM) to generate awareness
Content collections to pull resources from
Social media posting and analytics to see what’s working and what’s not
Calculators for just about anything your client would like to see

The trial is for 15 days, and after that you can keep the outreach rolling for only $32 dollars per month. We endorse them because we use them. It’s that simple and it will help take your marketing to a new level.

podcasts for life insurance marketing

Have you ever been on a podcast?

Consider creating a podcast that you can link to your website. Your clients aren’t in the industry, but that doesn’t mean that they don’t want to know more about what’s happening in life insurance. A monthly podcast can be a great way to keep your content fresh while discussing the job you love.

Or be a guest on someone else’s podcast

You can also search Spotify, Itunes, and other podcast libraries for existing podcasts about life insurance. Content creators are always looking for new people to talk to and interview. Reaching out to the owner of the podcast with some topics that you’d like to talk about is another way to get your message across. This has the added benefit of connecting with a pre-existing audience and could help with lead generation.

life insurance digital marketing

Use life insurance statistics: bring the receipts

Statistics can be a great way to illustrate the importance of life insurance on your website, social posts, blogs, and public appearances. Lifehappens and LIMRA are your go-to sites to find the latest studies and stats about the industry. Showing your visitors the current trends in the market can amplify their understanding while giving you targeted content to present in all of your marketing campaigns.

Reach out, follow up, and carry on

Ultimately, marketing outreach is something that you should prioritize if you want to grow your business. It’s important to maintain regular contact with your client. The marketing Rule of 7 states that a prospect will take action after hearing or seeing a message 7 times. While that may seem over the top, the implication is clear: If you aren’t reaching out and presenting clients and prospects with consistent messaging, very little will move them to take you up on the opportunities you are offering. Make outreach a small part of your daily routine and follow up on your success.

Term life insurance is used for a variety of different reasons. At its core, however, it offers inexpensive coverage in the event of the unthinkable, providing your clients’ families and businesses with a large payout for a specified duration. These durations are most commonly 10, 15, 20, 25, and 30 years. Those durations, coincidently, also correspond with common loan amounts people would use for either their mortgage payments or their small business loans. Let’s explore a creative and cost-effective way to help your client pay off their house in full should anything happen to them during the course of their mortgage agreement. Let’s take a look at term life layering.

Simple Term Insurance to Protect Your Client’s Home

Mortgage loans are often either 15 or 30-year notes. Mortgage protection insurance (not to be confused with primary mortgage insurance, or PMI, which is often required by the lender in case of default on the loan) is voluntary and covers the outstanding mortgage amount in the event that the homeowner dies.

What would happen if the primary wage earner died and the spouse suddenly had a mortgage payment due next month without the additional income? In today’s hot real estate market, the spouse could probably sell the home quickly and take the equity in the home to live off of for a while, but is this the best option? What happens in the future when the real estate market cools and it takes 6 months to sell the home? Will that spouse and the kids get evicted after a foreclosure? These are the types of questions that your client might not think to ask themselves. This is why they look to you for guidance and consultation. Fortunately, for the savvy broker, there is an intelligent way to layer term life so that addresses these concerns in an equitable way.

In the most obvious approach to solve these various crises, a client with a 15-year mortgage on a $500,000 home that they already put $200,000 down on, could use term life insurance to protect the remaining $300,000 balance by purchasing a 15-year term insurance policy for that amount. This way, should something happen to your client during the mortgage term, the death benefit would allow their spouse to pay off the house, not disrupt the kid’s daily lives any more than is already happening, and provide the breathing room necessary to make it through this difficult time.

Layering Term Life: Protect Your Client’s Mortgage Without Mortgaging Their Pocketbook

Layering (sometimes referred to as laddering) is accomplished by utilizing multiple term insurance policies, with various durations, to cover the mortgage loan. If your client took out a $300,000 mortgage, as in the example above, they would be paying down the mortgage over time. In this case let’s say the mortgage was a 30-year mortgage, instead of a 15-year. As they’re paying down the principal on the loan, they don’t need as much insurance in year 20 as they did in year 5 because they’ve been paying down the loan for an additional 15 years. So…they need to get three insurance policies: a $100,000 10 year, a $100,000 15 year, and a $100,000 30 year term life insurance policy that adds up to the same $300,000 in coverage on day one. Here’s where the math gets fun and where we can really save some money while protecting our clients. If a reasonably healthy, but slightly overweight, 45-year-old man buys a 30 year, $300,000 term policy to cover his $300,000 30 year mortgage, it will cost him about $1150 per year, or about $100 per month. If he were to instead layer the 10, 20, and 30 years, $100,000 policies, it would cost a total of $980 per year, or just over $80 per month. That’s almost a 20% savings each month! And it doesn’t end there!

Term Layering Presents a Tremendous Savings Over Time

Since mortgages are paid out over time, your client doesn’t need $300,000 in coverage in year 15, as they have already paid some of that down. By layering term policies, not only do you save them on the monthly cost of the insurance, but, in the example, we’ve used here, after each 10 year period, one of the term policies drops off, and they no longer need to pay for those, again lowering their monthly cost. In the first 10 years, they need all three policies in place, but after year 10, the 10-year term insurance policy drops off, lowering their monthly payment on the two remaining (20 and 30-year terms) to about $780 per year. And, 10 years after that, the second policy drops off, leaving them only with the remaining 30-year policy (which at this point still has 10 years to go), and again lowers their monthly payment to under $500 per year! Take the total premiums for 3, $100,000 policies that we layered and the total over 30 years would be about $22,500. A more than 35% savings compared to paying for a $300,000 30 year term!

Let’s check out some actual numbers to drive the point ‘home’.

Layered Premium Schedule for Male, age 45 Standard Non-tobacco

Year	10-Year/$100,000	20-Year/$100,000	30-Year/$100,000	Total Premium	30-Year/$300,000
	Annual Premium	Annual Premium	Annual Premium	Annual Premium	Annual Premium
1	$198.92	$290.51	$487.88	$977.31	$1,158.02
2	$198.92	$290.51	$487.88	$977.31	$1,158.02
3	$198.92	$290.51	$487.88	$977.31	$1,158.02
4	$198.92	$290.51	$487.88	$977.31	$1,158.02
5	$198.92	$290.51	$487.88	$977.31	$1,158.02
6	$198.92	$290.51	$487.88	$977.31	$1,158.02
7	$198.92	$290.51	$487.88	$977.31	$1,158.02
8	$198.92	$290.51	$487.88	$977.31	$1,158.02
9	$198.92	$290.51	$487.88	$977.31	$1,158.02
10	$198.92	$290.51	$487.88	$977.31	$1,158.02
11		$290.51	$487.88	$778.39	$1,158.02
12		$290.51	$487.88	$778.39	$1,158.02
13		$290.51	$487.88	$778.39	$1,158.02
14		$290.51	$487.88	$778.39	$1,158.02
15		$290.51	$487.88	$778.39	$1,158.02
16		$290.51	$487.88	$778.39	$1,158.02
17		$290.51	$487.88	$778.39	$1,158.02
18		$290.51	$487.88	$778.39	$1,158.02
19		$290.51	$487.88	$778.39	$1,158.02
20		$290.51	$487.88	$778.39	$1,158.02
21			$487.88	$487.88	$1,158.02
22			$487.88	$487.88	$1,158.02
23			$487.88	$487.88	$1,158.02
24			$487.88	$487.88	$1,158.02
25			$487.88	$487.88	$1,158.02
26			$487.88	$487.88	$1,158.02
27			$487.88	$487.88	$1,158.02
28			$487.88	$487.88	$1,158.02
29			$487.88	$487.88	$1,158.02
30			$487.88	$487.88	$1,158.02
Total Premium Paid	$1,989.20	$5,810.20	$14,636.40	$22,435.80	$34,740.60

Term Layering is a Strategy with Wider Applications

I used mortgages as an example here because the term durations offered by the insurance companies align well with mortgage loans. This strategy of layering can be used to fit many financial plans and objectives. Essentially any time-based asset that requires protection can be handled well and affordably with layered term policies. Your clients count on your expertise to help them protect their families and their assets. Thinking outside the box can reveal new strategies that save them money while still offering the peace of mind they need. It is always worth taking a look at how to use any insurance product to make sure that they get the most out of their coverage. Insurance products aren’t one-use propositions. Depending on the carrier, the budget, and the need, there are many ways to use any product to best fulfill the goals of your valued clients. Feel free to reach out to Rocky Mountain to see how you can provide the best possible opportunities for your client.

should you spread out your clients death benefit over time

The Pros of a Spreading Out Your Client’s Death Benefit

Have you ever been in a competitive situation with another agent and wish you could knock down the premium on a life insurance product while keeping the death benefit the same? Have you ever had a client come to you and as part of their overall financial plan you helped design, needing a certain amount of death benefit associated with their life insurance within a specific budget? How about a client who looks at you when you mention life insurance and says “I don’t want Mama/Papa to run off with a boyfriend/girlfriend with a whole bunch of money after I die!”? (This last one is one I’ve really heard!) There is a rider that comes free of charge, which can solve all of these issues.

benefits to spreading out the death benefit

A Rider to Spread Out the Death Benefit

A few carriers offer the ability to spread out the death benefit of a policy. The general idea is that instead of paying out the beneficiary a lump sum amount at the time of death, the owner of that policy can annuitize the death benefit, in a fully customizable way, to their heirs. Sometimes referred to as a “poor man’s trust”, these spread death benefit riders allow the owner to control the benefit paid from beyond the grave. If they have a spendthrift spouse or kid and are worried that they’ll take the entire $1 million death benefit and blow it in Las Vegas, they can dial in a smaller lump sum initially, provide a steady income for up to 30 years, and then also have a final lump sum payout at the end.

Spreading Out the Death Benefit Can Reduce Premiums and Raise Payouts

Let’s take a look at some examples here. Jeff and Stacy are 30 years old and have 2 young children. Jeff buys a term life insurance policy with a spread death benefit rider. The policy is applied, underwritten, and approved for $1,089,077. A few years later, Joe suddenly dies in an accident. His term insurance policy had been structured when it was purchased to pay out an initial lump sum to Stacy for $250,000, allowing her to pay off the house, cover his final expenses and wipe out the other credit card debt they had accumulated. Then, for the next 15 years, Stacy received a steady $3,000 per month, every month, until the kids finished school and at the end of the 15 years, she received a $500,000 final lump sum. The final lump sum was used to pay the kids’ college tuition and fees, and help fund Stacy’s retirement.

The total payout in this example was $1,290,000. The policy was a 30-year term policy and by structuring it with the spread death benefit option (at no cost) at the time of application, they were able to save $249 per year in premium. Remember, he only applied for $1,089,077, and that was what he paid premium on, not the $1.29MM total payout.

Here’s another example. Andrew is a 50-year-old male needing a $2,000,000 20 policy to make sure that his special needs daughter is covered if he were to die. At a standard rate, this will cost him $6,170.00 per year in our example. However, he has a budget of $5,000 per year. By structuring the policy to pay an initial lump sum of $250,000 to cover his final expenses, pay off the house, and providing a $250,000 final lump sum for her benefit, he is able to get to the same $2,000,000 payout and provide his daughter with a $5,002 fixed monthly payment for 25 years. And he did all that with only needing to be underwritten and approved for $1,586,916 at the time of application and the annual premium now fits his budget costing only $4,901.83 per year!

A Common Concern: Keeping Your Family Solvent for Years After Your Die

A fairly common objection to life insurance involves concerns about how a beneficiary will spend the death benefit. Some people really are against the idea of their spouses getting large lump sum payouts and “having a good time” without them at their expense. If Robert is 40 and in pretty good health. After filling out a needs identifier with you online, it’s determined that he needs $500,000 to replace his income for the next 15 years while the kids are still in the house. A 15 year, $500,000 term policy will cost him $45.58 per month, but he tells you that half a million dollars is way too much! “Why do they need that much money?! They’re just going to run off and vacation without me. They need only enough to cover my burial expenses.” By using one of these spread death benefit riders, you can now design a policy to have an initial benefit payout of $50,000 to cover the funeral expenses and pay off the car. Then for the next 15 years, while the kids are still in the house, we can replace his $2,500 per month income that “Mama” can’t get at while allowing them the same standard of living they were accustomed to. In this case, the monthly premium savings is minimal, now costing $44.93/month, but he’s accomplished his goal while still providing his family the protection that they need.

Rocky Mountain Can Help You Design A Case For These Clients

Each carrier’s rider is slightly different, but the one thing they all have in common is that they need to be selected at or before the time of issue. They can always be changed or canceled by the policy owner at any time prior to the insured’s death, but they cannot be added after the fact. We can help you with this case design if you have clients that fit these examples.

Coming to Terms with the Complexity of Indexed Universal Life Illustrations

After its introduction in the late 1990s, Indexed Universal Life Insurance began a steady climb over the following decades to eventually account for 20% of held policies in the United States. Remarkably, after hitting the $1 billion sales mark in 2011, sales doubled over just the next 8 years! Current figures (which are 1 year behind) have IUL sitting at $2.3 billion in sales by the end of 2019. This rapid growth did not occur in a vacuum and most certainly was not without controversy. As the industry comes to grips with AG49-A and its impact on IUL illustrations, it is more important than ever that producers stay informed when it comes to illustrations and options regarding these popular policies.

Indexed Universal Life Filled the Risk/Reward Gap

The success of IUL policies is due in large part because of the gap that they filled between traditional Universal Life insurance and Variable Life insurance. For policyholders whose primary concern is tax-favored cash value accumulation but still want the security that a death benefit provides, IULs can make for a perfect fit.

With the tax-free death benefit and cash accumulation opportunities indirectly tied to an index such as the S&P 500, IUL’s could compete well with traditional Universal Life policies. As there is a 0% growth floor on the indices that the IUL mirrors, there is no risk to the policyholder of diminishing cash value in the event of a market downturn. This allowed IUL’s to compete with Variable Life Insurance and its potentially negative returns.

Creating an insurance product with a supportable higher rate of return than traditional Universal Life while eliminating the market risk associated with Variable Life has been the key to IULs success.

Zero is Your Hero

The unique proposition of IULs that allow for the policyholder to maintain the cash accumulated in their policy is commonly known as ‘zero is your hero’. If the index that the policy is mirroring underperforms, the cash value of the policy neither grows nor shrinks. It remains flat. In this way, policyholders can participate in the gains of the market without suffering the losses.

In order for an IUL to be supportable from a financial perspective, caps and participation rates are imposed on the gains. The cap is a limit on the gains and the participation rate determines how much of the gains beneath the cap the policy can earn.

The difference between the actual market gain and the policy’s allowable earnings helps support the policy when the market bottoms out. Caps are typically in the 10%-12% range. For example, if the market soars upwards by 15%, and the policy cap is 10%, then the policy enjoys 10% returns and the remaining 5% can help fund the policy when the market takes a dive. The premiums cover the cost of the insurance itself along with associated fees. The participation rate creates more financial stability to help support the policy in volatile markets.

How Does an IUL Support Itself During Prolonged Market Decline?

In reality, a prolonged market decline would ruin IUL sales over a long enough period of time. However, history shows us that the indices generally trend upward over the years and enjoy more years of substantial growth and fewer years of decline.

The S&P 500, for example from the end of the depression (1937) through 2017 had 61 positive growth years compared to only 19 negative growth years. Additionally, among the positive years, there were 3 times as many years of double-digit growth compared to single-digit growth. This clearly supports the concept that an IUL can support itself over the long haul.

Fierce Competition Muddied the Illustrations

In an effort to outduel the competition, insurance companies turned to creative illustrations to make their IUL policies stand out amongst a suddenly crowded field. With ever-growing complexity, producers and policyholders alike had a difficult time parsing out the actual costs and benefits of these wild illustrations and eventually, oversight had to be established to deal with the resulting obfuscation.

The problem arose as carriers began adding higher than supportable fund crediting rates and leveraged loan interest rates in their illustrations. Each carrier was trying to make their version of an IUL more attractive to the buyer. As the gold rush fever in the IUL market grew, many of these illustrations were either inaccurate or not supportable financially. It became clear that regulation was needed.

Regulation Attempted to Clarify the IUL Market

In 1995, the NAIC set forth guidelines to force carriers to simplify their illustrations regarding IULs and limited their ability to add caveats and footnotes. They ordered that illustrations must have well-defined terminology that a layperson could understand. What they had not taken into account at the time, however, was that carriers would alter loan rates and fund crediting rates to the policies to make them more attractive.

In 2015, the NAIC revisited the IUL illustration problem to deal with the unsupportable additions. They set limits on policy loan leverage rates and crediting rates. They also required disclosures to be added alongside the illustrations to help the consumer better understand what they were purchasing.

What’s important to note here is that AG49 only limited what carriers were able to illustrate. The policies themselves were relatively unchanged and were still able to perform at the changed rates.

With the illustrations for IULs under tighter scrutiny, the industry had to get creative once again. The advent of bonuses and multipliers (which had not been addressed in AG49) were added to illustrations in order to position one carrier’s IUL over their competitors. These bonuses and multipliers were also prone to create an unsustainable cash growth respective to the cost of the policy. Additionally, these numbers looked better on paper than they were actually able to perform. The murky ethics of these new illustrations created an even larger problem than what the NAIC was trying to address with AG49.

AG49-A: Change for the Better, at Least for Now

After the passage of AG49, and with the invention of new rate multipliers and bonuses, it was only a matter of time before the NAIC would need to once again intervene on behalf of the producers and consumers. Transparency was the key to this new regulation. AG49-A, which went into effect in 2020, curbed the ability to show the impact of multipliers and bonuses in the illustration. The thought was that by forcing the carriers to simplify their illustrations and removing the illustration of these new tools, the playing field for IULs would finally be leveled.

Not unlike the passage of AG49, AG49-A only regulated what the carrier was allowed to show on the illustration. Bonuses and multipliers are still being used from a policy perspective, they just aren’t allowed to use them as a selling point in their illustrations. How this will impact the industry is still playing itself out. But if there is one thing that we can all be certain about, it is that the industry will continue to evolve and push the envelope where illustrations are concerned.

We Want to Help Producers Deliver Clear and Accurate Guidance to their Clients

While we certainly support the objectives of the NAIC in bringing some order to this illustration problem, we would like to share our approach towards the producers who do business with us:

We believe it is our responsibility to learn as much as we can from a company and industry experts about the product and illustrative processes and to make that knowledge available to the producer. In the case of IUL, we have had many sessions with the companies that offer IUL to better understand their product. Additionally, we subscribe to IUL Digest by Brett Anderson for additional information and consultation. We find Brett and his publication to be one of the best in the industry for 3rd party information in their area of expertise.
To provide the producer and his or her client the best supportable information on the program they are looking at, we believe in the “Expectations of Reality” rather than “Expectations of Illustration”.
Over our many years in business, we have found education and knowledge are invaluable to put the producer in the best position to provide his or her client with the best information possible to have them make the purchase decision based on the client’s needs.
The primary responsibility of the BGA is to provide the producer with what he or she needs to provide the highest quality available service to their clients.
Over our years in business, we have observed that not much changes in the oversight business. Something is developed and works but problems develop, regulators then get involved, more regulation, more confusion, and so on. For an agent to depend on themselves to develop the resources to address these complexities becomes very difficult, particularly when the producer wants to sell his client the best product from the best company.
With the complexities inherent in IUL we suggest you work with someone who understands IUL to help you do the best job for your client and we offer our services.

As the landscape of our industry continues to shift around us, we look forward to helping you provide outstanding service to your clients.

In the past 5 years, the National Association of Insurance Commissioners (NAIC) has stepped into the world of Indexed Universal Life Insurance with the goal of regulating the wild illustrative disparities between competing products. In 2015, regulators introduced Actuarial Guideline 49 (AG 49) in an effort to reign in illustrations where interest credited was concerned in order to level the playing field and provide the consumer with a more accurate picture of how the IUL policies could be expected to perform. In an effort to stay compliant with AG 49 but still make their products appear more robust than their competitors, carriers found new ways to ‘juice’ their illustrations by introducing bonus multipliers thereby boosting the performance of their illustrations. This essentially allowed carriers to abide by AG 49 where the maximum growth rate was set while also adding the bonus multiplier on top of that rate in their illustrations. This is to say that while the intention of AG 49 was pure, the result of its implementation created more or less the same problem regarding illustrations that could be tweaked to appear more valuable than the consumer could reasonably expect. Yet again, the playing field was uneven, and comparing one carrier’s illustration to another was not consistent.

Back to the Drawing Board: Enter AG 49-A on November 25th, 2020

Since bonus multipliers were relatively new at the time the original AG 49 rolled out, they were not included in the regulation. Carriers took advantage of this omission to continue to add perceived value to their illustrations, touting the potential while ignoring some of the negative aspects such as charges and fees associated with some bonus multipliers. The NAIC met again to amend the original AG 49 to include these new tools and attempt once again to simplify the illustration component and infuse a degree of transparency to the process. The revised regulation, AG 49-A was agreed upon and is set to activate on November 25th, 2020.

AG 49-A does Not Eliminate Multipliers but Removes them from Illustrations

With the new regulation, carriers will no longer be able to illustrate the potential impacts of bonus multipliers in their illustrations, effectively lowering the growth rate on these illustrations. AG 49-A does not prohibit these tools from the policy. Additionally, the loan crediting rate was lowered from 1% to 0.5%.

What Does AG 49-A mean for Agents?

Rocky Mountain Insurance Network wants to help agents stay on top of these dramatic changes to product illustrations. A few companies have made product and/or illustrative changes to be compliant with AG49A. However, the illustrations do not have to be compliant until November 25, 2020. The problem that poses is if you are working on a case and comparing company A to B to C, you’re comparing apples to oranges. For example, John Hancock has changed their illustration process to be compliant already while we are told PAC will not have their compliant illustrations until November 25. So if you are comparing PAC to Hancock, the comparison is invalid as PAC is still illustrating all the multiplier scenarios that were the driving force behind the revision of AG49 and indeed the Pac lawsuit in California. We are keeping track of those companies that have made their illustration systems compliant and those that have not. If you are working on an IUL case, call us and we will be happy to share our updated information with you.

The Future of Product Illustrations

The original AG 49 produced change and innovation in the marketplace as carriers sought to find new avenues to increase the performance of their product illustrations. It is likely that the new amendment limiting the illustration of those innovations will necessitate more change. Rocky Mountain Insurance Network prides itself on keeping agents up to date and informed so that they can continue to sell ethically and with confidence. Once every company has come into compliance with AG 49-A, the illustration landscape will likely settle down. How long that lasts is anyone’s guess. Rocky Mountain Insurance Network is committed to helping you navigate these complicated changes to our industry every step of the way.

life insurance during the pandemic is like a life ring

Life Insurance Awareness Month in 2020 has seen a seismic shift in the way consumers think about Life Insurance in the United States. The combined forces of the Covid-19 pandemic and subsequent government lockdowns found consumers eager to contemplate their life insurance needs in the wake of such uncertainty. A consequential study published by Lincoln Financial details the trends in our industry in this turbulent time. With the advent of new forms of underwriting and digital technology, what these current circumstances mean for client acquisition is profound.

Survey by Lincoln Financial on Covid-19 and the Effects on Life Insurance Shows Tremendous Movement

The Lincoln Financial Covid-19 Life Awareness Survey was conducted in July of 2020 by a third-party market research firm and assessed the year over year impact of Covid-19 on the insurance industry for people 18 years of age and older. Here are some key takeaways to consider:

Over half of the respondents have life insurance policies in place while half did not
The majority of policyholders took this time to review their policies and ⅓ of those people made changes to their policy
New policies purchased for people under age 45 increased 20% compared to last year
The sale of digitally underwritten term policies also increased
The greatest obstacle to purchasing insurance was cost, but for younger consumers, lack of knowledge on which policies to purchase was a significant obstacle as well.

What these takeaways tell us is that the younger generation is finally coming around to the point of assessing their life insurance needs due to the pandemic. Additionally, people between ages 45-50 and also those 60 years and older have shown increased interest in purchasing more insurance or address changes to their current policies.

Additionally, the top 2 reasons that people were purchasing life insurance were to cover funeral-related expenses (49%) and to cover lost income for their families in the event of their death (43%). While this is not a significant change to previous years, the backdrop of the pandemic lends itself to more consumers contemplating their own mortality, and therefore, considering first-time purchases of life insurance policies.

What This Means for Your Clients

There is a current trend of policyholders and potential clients to reassess their needs where life insurance is concerned. The fact that half the people surveyed don’t currently hold policies is combined with the fact that more people are considering first-time purchases presents an opportunity to reach out and help educate potential clients on what the best options are for their personal goals and needs.

online-life-insurance-lady

The Rise of New Underwriting and the Digital Policy for Young Consumers

Millenials (age 24-39) and Gen X’rs (age 40-55) showed increased interest in online policy acquisition. Some 40% of Millenials responded that they would be more likely to purchase insurance if they could do so completely electronically as did 36% of Gen X respondents. Both of these were a larger group than those who said they were not more likely to purchase electronically. The shift in online insurance sales tells us that some age groups are warming up to the idea of doing absolutely everything online. The rise of new term policies that don’t require medical labs and tests is well suited to this group especially when the concerns of Covid-19 are taken into account.

People have been working from home online, their children attending school online, groceries are more often being ordered online, and essentially every aspect of our lives during the lockdowns has been geared towards the internet as a matter of safety. The ramifications of this will likely yield lasting results in terms of how people purchase life insurance.

What this Means for Your Clients

While online policy sales have increased this past year, many young consumers have stated a primary obstacle for purchasing insurance is a lack of knowledge and understanding about what policies are better for them than others. This is an excellent opportunity for advisors to reach out to younger consumers and help them learn more about life insurance and how it could benefit them. Additionally, many consumers expressed the desire for an insurance policy to do more than just cover death expenses and showed an interest in policies that could double as reasonable investments. As you know, these policies are more complex and the education a seasoned advisor could impart on these consumers would be welcomed in the current marketplace.

Policy Review and the Pandemic

55% of policyholders reviewed their policy as a result of Covid-19. Even more surprisingly, 65% of Millenials reviewed their policies during this time. Of the people that reviewed their policy, one-third of them made changes. Of the changes that these policyholders made, the breakdown was as follows:

12% Increased their coverage
11% Updated contact information
9% Changed the type of coverage they own
8% Changed the policy’s beneficiaries
Only 4% decreased their coverage

What This Means for Your Clients

If you have clients that have not requested a policy review, now would be an excellent time to address that with them formally. With changes to jobs, income, and the added sense of urgency that the virus has brought, clients of all ages could benefit from your expertise during a policy review. It is astonishing that during an income downturn due to government lockdown restrictions that consumers who reviewed their policies chose to increase coverage shows that peace of mind outweighed an uncertain market for many policyholders. Now is the time to reach out to your existing book of business and address new needs that have arisen in the past year.

Hot air balloons present a new opportunity

Life Insurance Awareness Month and The Pandemic Have Created New Needs and New Market Opportunities

It’s obvious that the pandemic has had a dramatic impact on the industry and on the minds of consumers. What the data tells us is that now more than ever, consumers are ready to learn more about life insurance. While it is always the right time to reach out to consumers and educate them on the benefits of obtaining a life insurance policy, the current conditions practically mandate this approach. Marketing centered around a pandemic is not easy. We all know that people are better served with a life insurance policy, playing to the fears of the people in order to cash in on the market is a murky proposition.

As always, it is important to listen to the needs of your current clients while reaching out in earnest to new business. Their concerns are already evident. Our job is to bridge the gap between their concerns and outstanding policies that address them directly. This is a fascinating time to be an advisor and a producer. As the data has shown, the need for insurance has increased and we should all up our game to meet this new demand.

One of the biggest mistakes that a life insurance advisor can make when trying to grow their business is ignoring the business that they’ve already earned. Your clients rely on you for your guidance and knowledge concerning their policy. You are their life insurance expert. While many people purchase a life insurance policy and never think of it again, the best advisors maintain their relationships with their clients and, over time, use policy reviews to turn old policies into new business.

The Primary Reasons to Conduct a Policy Review

A policy review is a periodic meeting with your client where the primary objective is to go over their current life insurance policy and see if it is still aligned with their life and goals. It is an opportunity to reconnect with them and discover what has changed in their life since they originally purchased the policy from you.

The Policy Review Process Steps: What to Do and When to Do it

Your relationship with your client is all about consistent reach out and connection. Every 1 or 2 years, refreshing both yourself and your client on their policy can lead to many discoveries where coverage is either lacking or no longer appropriate for their needs today. Through your partnership with RMIN, the policy review process is very straight forward and our team of insurance experts will ensure that you don’t miss out on opportunities for both you and your client regarding the latest products and regulations that can impact their coverage as their life changes. Here’s the basic breakdown of how to initiate a policy review.

Once you’ve identified the client and policy that you would like to review, reach out to them. We can help you with email templates that handle the language you need to request the review meeting. Ultimately the meeting will be conducted on the phone or in person.
During this meeting, you will obtain information about your client’s current life situation and identify any life events that could be reflected in their current policy.
Once you’ve spoken with your client, you will have them sign an Authorization form that allows RMIN to conduct the review.
We’ll do the heavy lifting of contacting insurers and obtaining the in-force information and all illustrations.
Once we have conducted the actual review, we will send you an email confirming the status.
We will call you to go over our findings and send you a comprehensive review package to go over with your client containing the pertinent illustrations and information about their policy.
If we recommend a replacement, all applications and illustrations for the new policies will be sent to you for your client’s approval.

While a policy review doesn’t always result in replacement or additional coverage, we have found that over half (50%) of the cases we’ve reviewed resulted in the need for improved coverage that benefits both you and your client.

Policy Reviews for Individuals: Life Rarely Sits Still

For individual clients, their life insurance policy should always reflect their current life needs and goals. Life can change on a dime and it isn’t unusual for major events to require a shakeup in their coverage. Let’s run down a list of common life events and how they might affect a need for an updated policy review.

Changes in income
- New Job or Business
- Loss of Job or Income
- Recently Retired
Change in Family
- Birth or Adoption of a new Chid
- Aging Parents that you Care for
Change in Living Situation
- Purchase of a new home
- Recently paid off the mortgage on current home
Change in Relationship
- Recently Married
- Recently Divorced
Change in Health
- Quit Smoking, Lowered Blood Pressure or Cholesterol
Older Policy based on Outdated Inflation
- If a policy is 10, 20 years old or more, recent inflationary data may alter life insurance coverage effectiveness

These are some of the considerations that should be taken into account when conducting the policy review conversation with your client. The best relationship with a client is one where they can share these life events and the new goals and challenges that they present with you. Your ability to analyze them in terms of policy implications will go a long way to uncovering new opportunities for both of you.

Common Life Insurance Policy Mistakes

Some Common Mistakes to Look for On Your Client’s Original Policy

Nobody is perfect and a general misunderstanding of life insurance can lead individuals (and businesses) to make several unforced errors when setting up their life insurance policies. RMIN covers these at length HERE. For the purpose of this article, let’s go over some of the most common mistakes and what to look for in your initial pre-meeting review of your client’s policy.

Naming the estate as the beneficiary
1. When naming beneficiaries, leave the estate out of it and instead encourage your client to select actual people or organizations that they want to receive the death benefit. Estates are too often subject to state taxes that will diminish the benefit and waste your client’s investment. Taxes bad. People good.
Not having any backup beneficiaries
1. The sad truth about life is that it ends. This is also true for the lives of policy beneficiaries. By not naming a few backups for each beneficiary in a policy, your client risks leaving the benefit in limbo if that beneficiary passes away before they do.
Your client never reviews your beneficiaries
1. Let’s face it, sometimes the person that your client wants to benefit from their policy today is not the person they will want to benefit 10, 20, 30 years from now. Review their beneficiaries with them to make sure that new children are included if so desired and that ex-spouses who they may no longer wish to benefit do not.
A business purchases a policy and doesn’t update with new vehicles and solutions
1. There are policies for businesses today that didn’t exist 20 years ago. Help your client stay on top of the new products that may help them and their business realize their investment in a more efficient and productive way. Explore the latest options and update, update, update.
Your client has the wrong insurance for the wrong situation
1. Term life insurance eventually runs out and becomes more expensive. The benefits of lower premiums vanish over time. Regular reviews can pinpoint the best moment to either purchase more insurance or convert them to a more suitable vehicle for their investment. Remember, life doesn’t sit still and neither should their policy.

Policy Review for Business Entities: Staying on Ahead of Changing Guidelines

Businesses are subject to different rules governing how life insurance policies for employees can be distributed. It is not uncommon for business owners to make mistakes when putting together their initial life insurance policy. There are many pitfalls that may go unnoticed resulting in unnecessary taxation of death benefits, inaccurate beneficiary assignments, and inequitable distribution of premium payment responsibilities.

Additionally, if certain guidelines are not followed, for example, as outlined by The Pension Protection act of 2006, then in some cases your client’s death benefit will be subject to income tax. This would result in the loss of tens of thousands of dollars or more that could have been avoided with a comprehensive policy review to catch these errors and mistakes.

In the world of business-owned life insurance, there are forms that must be filed every year along with taxes, consent between the owners and the employees must be obtained and detail-oriented accounting is required to navigate the regulations that govern benefits and payouts.

Reviewing policy for business entities can be tricky in itself. As a business grows, its employees’ coverage needs also change. In addition to catching pitfalls accidentally woven into the original policy that could cost owners hundreds of thousands of dollars, the investment vehicle aspect of policies must be addressed as markets shift. Utilizing a strong team of professionals can be the difference between success and failure of a policy as we will outline with some examples in the next section.

Real-World Examples of Businesses with Troubled Policies

At RMIN, we have helped advisors uncover opportunities for their own bottom line through helping correct mistakes in the insurance policies of the companies and owners that they advise. Here are some scenarios that have played out in a win-win situation for both the advisor and the business.

We reviewed the policy of a mid-size software company that had upwards of $32 million in key man term life insurance. In this case, the company in itself was the policy owner, the premium payor, and the sole beneficiary.

Upon further research and inspection, we discovered that the policy was not 101(J) compliant, meaning that the signed Notice and Consent of Form 8925, which must be filed annually, had not been maintained. This required us to recommend a total plan replacement. The result? Compliant company coverage which assured the client met the benefits and goals that they initially desired and over $150,000 dollars of new premiums.

In another scenario, an auto dealership had a cross-purchase buy/sell agreement between two owners. After our review, we discovered that the first owner had 60% of the coverage while the other owner had %40 percent. The problem? The policies were owned, paid for, and benefitted the corporation itself. It was a C-corporation. Under the initial cross-purchase agreement, the policy should have been owned and paid for by the other owner. Without that, there were seriously damaging tax implications waiting down the road.

Once again, a total replacement was required to prevent unnecessary taxation and save the company a lot of money.

In a nutshell, non-compliance creates incredible tax burdens on poorly crafted policies. Whether it is non-compliance with the buy/sell agreement or the missed compliance of the 101(j) regulations, without a policy review, a company may have no idea that they will be in hot water later on.

The Prudent Investor: Policy Reviews for Trustees

With the advent of Universal Indexed Life Insurance and other life insurance accumulation products, the Uniform Prudent Investor Act of 1992 was an update to the Prudent Man Rule. Large trusts that contain relevant life insurance policies as part of the overall portfolio must maintain compliance with this Act.

A policy review meeting with the trustees from time to time is necessary to inspect this compliance in order to prevent running afoul of the prudent principles designed to foster transparency and fairness in the investment vehicle.

These trusts can be complex and a team of professionals is the best way to ensure that no stone is left unturned when keeping up with compliance.

The Takeaway: Policy Review will Increase your Earnings While Helping your Valued Clients

There isn’t much more to say than that. If you want to find the simplest path towards higher commissions and sales, the best way forward is through providing outstanding service to your existing client base. Part of that excellent service is by making certain that no matter where they are at in their lives, their insurance is moving along with them. In most cases, this means obtaining more insurance from you or augmenting their policy to cover their new and growing needs. Never sit idle on a client. They will not have the time in their life to focus on what their life insurance can do for them. That is your job. If you do it well, you will conduct regular policy reviews with all of your individual, business, and trustee clients. Your partnership with our team will ensure that you always have the right answers to maximize both your client’s investment and your business simultaneously. So go through your client list and ask yourself, when’s the last time you talked to each of them. Odds are certain that their lives have grown. Help their insurance grow along with them.

Indexed Universal Life Insurance (IUL) policies were first introduced by the Transamerica Life Insurance Company in 1997 and now account for over 20% of all policies purchased in the United States. IUL’s are some of the most flexible and advanced life insurance policies you can offer to your clients and over the past 20 plus years they have evolved into an incredible equity opportunity for investment and estate planning. A comprehensive understanding of IUL’s is now an essential aspect of any agent’s practice as they allow a client the security of a death benefit while also providing a secure and lucrative investment vehicle for their retirement. What may be most surprising, however, is the fact that as an investment vehicle, an IUL can perform as well as 401k’s, IRA’s, and other tax deferred retirement plans while still delivering substantial death benefits.

IUL Rundown: Why the Index.

Given the complexity of an IUL policy, let’s take a moment to broad-stroke what IUL actually is and what it does for the policyholder. The key component resides in the ‘I’ or indexed aspect of the policy. At its root, an IUL is a permanent life insurance policy that pays a tax-free, lump sum to the policy holder’s beneficiaries upon their death. What makes an IUL special, however, is that the cash paid into the policy can be tied to an index (such as the Nasdaq 100, S&P 500 and others) and the gains from that index will, in turn, generate gains in the cash amount. While it is not directly tied to the index in the sense that cash put into an IUL is not played in the markets, but rather it’s value is increased based on the percentage of the index on the upswing.

Unlike a 401k, the gains realized over time in the savings account portion of an IUL are not taxed and there is no limit to the amount a policyholder can contribute to their account. This makes an IUL an ideal place to let money grow and best of all, even though it is mirroring an index, there is no risk of losing the capital gained in the event of a market drop.

No Gain, No Pain.

One of the most tantalizing aspects of an IUL policy is that if the index it is mirroring realizes no gains or suffers losses, the cash value will not decrease. There is a 0% floor built into an IUL that simply means that if the index falters, no interest on the investment will be paid during that period. Many insurers raise this floor a couple of percentage points in order to guarantee modest returns in the event of market losses. This results in significant wealth-building during boom periods with gains that are locked in and no negative exposure risk during a market downturn.

It is important to note that these gains are not a direct mirror of the index. For instance, if a policy is tied to the S&P 500 and the market gains 20% in a single period, the policy will not accrue 20% cash gains. This is actually a good thing and it is the reason that an IUL is able to offer the guarantee that a market loss is not reflected in the cash value of a policy. In order to make this promise, the insurance company uses a metric to cap the amount of gains possible during market growth. The metrics used are the cap on gains and the percentage of participation rate. For instance, a policy with $100,000 cash value, a 12% cap, and an 80% participation rate would yield $9600 dollars in gains when tied to an index that grows 20%. ($12,000 cap X 80% participation rate).

The beauty of an IUL over a variable policy is that the policyholder can realize substantial income growth over time without their capital being burdened by the monthly ups and downs of market forces. Compared to a straight fixed policy, the percentage returned to the holder is significantly higher.

Additionally, unlike other investment vehicles such as a 401k, an IUL policyholder can withdraw the cash accumulated in their policy without penalties. In this sense, an IUL is really a policy that focuses more on the life of the holder than the death.

Fixed Life, Meet Variable Life.

IUL’s boast tremendous flexibility in regards to where the cash contributed by the policyholder eventually ends up. The tax-free savings account portion can be tied to virtually any available index in any desired amount. They can also choose to contribute more towards a fixed-rate part of their policy as a safe haven to guarantee more modest returns. It is this marriage of fixed and variable that has made IUL’s attractive vehicles for investment over the past 2 decades.

In fact, the versatility of IUL’s makes it easy to forget that they are still bonafide life insurance policies. This is due to the fact that the contribution towards a death benefit is often minimized in favor of greater sums being devoted to the tax-free growth of the index gains. Typically, a small portion of the cash contribution goes towards the life insurance premium alongside any fees charged by the insurer while the lion’s share of the cash goes into the indexed and fixed investments outlined in the policy.

Apples and Oranges

There are many things that you can do with your money in an IUL that are simply not possible with a 401k. With a 401K you are not allowed to:

Take a Loan against it greater than $50,000
Avoid paying taxes on gains made
Avoid your heirs paying taxes on gains made
Contribute as much cash as you want
Avoid paying back money you’ve borrowed against it
Avoid penalties from taking cash out of it

With an IUL, none of these onerous restrictions exist, and since it only gains on when the market gains, the fluctuations experienced by a 401K are actually benefits in an IUL. In a sense, an IUL resets at 0. Think of it this way. When the market loses 3%, a 401K must wait until the market recoups that loss before it can be whole again. With an IUL, you are always whole. If the market crashes, you earn no interest and you lose no capital. When the market begins to recoup its losses, the money grows with the positive momentum.

Who Should Purchase an IUL?

Given that the benefits of an IUL are realized over time, the younger you can purchase an IUL the greater your gains will be. Since the money you put into an IUL can be withdrawn, there is comfort in knowing that the cash put in today will be safe tomorrow. Since the money put in has already been taxed, policyholders will not be taxed again on the gains in the savings portion. Knowing that both your client’s money and their family is protected by the policy, a UIL for a young, earning, professional is both sensible and responsible.

There are many places to put money to meet growth goals and each of them yields different results in different market circumstances. An IUL offers more flexibility than an IRA and can pay attractive dividends down the road when clients are ready for retirement. When crafting a policy, be sure to work with the specialists at Rocky Mountain Insurance in order to clearly articulate the best program for your clients.