Single Premium Whole Life Policies

Transcription

1 Single Premium Whole Life Policies By: Roccy DeFrancesco, JD, CWPP, CAPP, MMB Author of: Retiring Without Risk Founder: The Wealth Preservation Institute 1

2 Whole life? Generally speaking, I m not a big fan of WL. I m not LEAP fan. I m not the biggest fan of the infinite banking system or bank on yourself system. (FYI, both of the above can be done with Revolutionary Life which is my preferred wealth building policy). However, I do like SPWL policies and that s what I will be discussing today. 2

3 How are SPWL policies different? When you think of a single premium policy, what do you think of? A MEC. That s what SPWL policies are, but they are designed that way for a reason. These policies are NOT for wealth building and tax-free retirement income. 3

4 What are the benefits of SPWL? Immediate increase in the value of your estate Benefit is not subject to probate proceedings Death benefit paid to heirs is not subject to federal income taxes! Immediate access to your funds (cash values) Accelerated benefits for LTC, critical and terminal illness*. *Not all companies have the critical and terminal illness riders. 4

5 Immediate increase in the value of your estate Think about it, this product is for people who are conservative and let money sit in CDs or money market accounts. If you are 65 and have $100,000 in CDs or money market account and die, your heirs get $100,000 (and it s most likely subject to probate). With a SPWL policy, the DB would be $166,000 - $182,000 depending on the product. 5

6 Access to cash One reason clients do not like life insurance and/or annuities is because of the surrender charges. With the ROP product, the client can literally receive a ROP the same year or any year thereafter. With the non-rop rider, using the $100,000 premium for a 65 year old example, the CSV in year one would be in excess of $90,000. Within 3-years the illustrated CSV would be over $100k and it is guaranteed to e over $100k within 5-years. 6

7 Better returns than a CD/MM Using the $100,000 example, in year 10, the nonguaranteed CSV in the SPWL policy (non-return of premium) is $144,000. If the CD account returned a net of 1.5%, the account value would be $119,000. After 20 years, the numbers would be $134,500 in the CD account and $229,000 in the SPWL policy. Remember that if they take money from the SPWL policy the gain is taxable (but the numbers are still compelling). 7

8 Long Term Care Insurance One of the biggest expense of our senior client is that of LTC. Buying LTC insurance for anyone is expensive and for someone over 60, it s very expensive. Plus, it s like term life, if you don t use it, you feel like the premium was a waste of money. SPWL policies are designed with a nice LTC benefit (which arguably is a FREE benefit). 8

9 LTC continued Using the $100,000, 65-year old example, the client would have the following LTC benefit. ROP product = $449,000 in total LTC benefits. The Non-ROP = $141,000 guaranteed at issue and projected to be $265,000 at age 85. The difference is because the non-rop product is designed to give higher LTC benefits and no real growth on the cash in the policy whereas the other product will build cash value which will add to the death benefit and in turn the LTC benefit every year. The LTC benefit is tax free because it is an advance on a % of the DB. 9

10 Other benefits The non-rop product has a strong critical and terminal illness rider. So if the client become critical or terminal, he/she can get access to a higher % of the DB. In the 65-year old $100,00 example, the critical illness benefit starts at $154,000 and at age 85 is projected to be $259,000. The terminal illness benefit starts at $161,000 and is $266,000 at age

11 Other difference in the policies -The ROP is nice, but if the client activates the ROP, they no longer have the policy and the return on the money is non-existent. -ROP is simplified issue (the NON-ROP is not). -The ROP product is an expense reimbursement product (meaning the client has to pay for the expenses and then is reimbursed for "actual" expenses). With the NON-ROP product, once the insured can t perform 2 of 6 ADLs, it simply pays the client regardless of expenses incurred. 11

12 Continued -The NON-ROP product is designed more for death benefit planning and for clients who want access to the death benefit prior to dying (if they have a critical or terminal illness). -The NON-ROP product is a much better savings account. However the ROP product has a much higher LTC benefit. 12

13 Why use a SPWL policy vs. FIA? Use SPWL if the client wants: A much larger death benefit (outside of probate) A tax free benefit to pass to the heirs at death. A FREE LTC benefit (or critical or terminal illness accelerated benefit rider). 100% liquidity with the ROP product Use a FIA if a client wants: Better growth on the cash (that can be guaranteed 7%) A guaranteed income for life they can never outlive. 13

14 Classic sales chart SPWL Annuity CD/MM Stocks/Bonds Income tax free death benefit Yes No No No Tax deferred accumulation Yes Yes No No Immediate estate increase Yes No No No Avoids market risk Yes Yes Yes No Avoids probate costs Yes Yes No No Accelerated Benefit Riders Yes No No No Accidental Death Benefits Yes No No No 14

15 Summary The bottom line is that if you are in the financial services field, you have to know this product. It s mainly for conservative clients who are interested in LTC benefits while not having to give up access to the premiums paid. It s for people who have money in CDs/MM accounts who can make better use of that money. It s for people who want to pass a larger asset to the children when they die. 15

16 More information If you would like more information on the products in the marketplace (4 viable one including the new one that just came out), please For those who get signed up to sell these products with an IMO I work with, you will receive a $500 marketing credit that can be used on several of my $25,000 worth of marketing tools. If you have questions, please info@thewpi.org or call

17 1) Introduction Outline for the 1.5 day Dallas seminar (hotel to be determined) on the 9 th and 10 th of November Cash Value Life Insurance Attend this Free Educational/Marketing Seminar Noon-5 pm day 1 8 am 5 pm day 2 2) Equity Indexed Universal Life product review (comparing the major EIUL products in the marketplace and which one is the best ). 3) Proper ways to run illustrations to maximize the amount of tax-free borrowing (and doing so in a compliant manner) 4) How to avoid lawsuits when selling EIUL Variable loans 140% crediting High cash value Living benefits Per 1000 charge waiver 5) The proper use of EIUL when funding for college planning. 6) EIUL vs. stocks and mutual funds (The "real" numbers) 7) EIUL vs. 401(k) plans and Roth Plans (The "real" numbers) 8) Advanced sales techniques -IDGT sales - preferred partnership uses -Retained earnings rescue -NQDC -Estate tax transfer -Captive Insurance companies -Pension Rescue -Cash Balance Plans and 401(h) Plans.

18 -Special Needs Trusts 9) EIUL vs. stocks and mutual funds (The "real" numbers) 10) EIUL vs. 401(k) plans and Roth Plans (The "real" numbers) 11) Selling Life Insurance and Annuities using H.E.A.P. (the #1 door opening and financial information gathering tool in the industry today). 12) Illustration software (EIUL vs. stocks/mutual funds and vs. 401(k) and other tax-deferred plans) 13) The 4orce CRM system (classic uses of a CRM system, dripping system, double opt in system and landing page creator) Annuities 14) The 7% guaranteed FIA product review and application. 15) Fully explaining and understanding Guaranteed Income Benefit (GIB) riders 16) FIAs vs. VA income riders. 17) New GIB Illustrative software. Miscellaneous 18) New sales/educational book advisors can use Also, for those who have not yet attended the CWPP certification course, this course will be held at the same hotel in the 11 th -13 th. For those who attend the 1.5 day marketing, you can receive a $300 discount to attend the 3-day CWPP seminar. To learn more, info@thewpi.org.