Small-business prospecting guide P For financial professional use only. Not for use with the public. Make the most of an untapped market Small-Business Life Insurance Kit M-5136 Page 1 of 6
Start reaching more small-business owners in FOUR STEPS Successful financial professionals know the importance of maintaining a steady stream of appointments with clients and prospects. The tactics on the following pages can broaden your reach and help grow your small-business market. Four steps to help reach this untapped market Life insurance provides valuable death benefit protection. But that s just the beginning of the advantages it can offer your small-business-owner clients. It can also be an important part of their overall business strategy addressing financial concerns such as income replacement and debt repayment. ONLY 47% OF U.S. BUSINESSES with fewer than 100 employees offer insurance benefits 1 Choosing to serve the small-business-owner market could also help you create a competitive edge and distinguish yourself from other financial professionals. It holds great potential for building your business because there s a large gap in protection for much of the small-business segment. In fact, in the U.S., only 47% of businesses with fewer than 100 employees offer insurance benefits. 1 Small businesses may have a need for the solutions life insurance can provide. According to LIMRA s 2013 Small World: Trends in the U.S. Small Business Market, 2 the top reasons small-business owners give for owning business life insurance are: To reimburse the company for the loss of a key employee To repay business-related loans (business continuation) To provide estate liquidity to the owner s family To fund a buy-sell agreement In the following pages, we ll walk you through several steps that can help you reach more small-business owners. We ll also show you some tools that can help you ask the right questions and uncover your clients potential need for fixed index universal life (FIUL) insurance. Keep in mind that life insurance is an underwritten product and is contingent on the health qualification of the insured and, in some cases, financial qualification. 1 The Use of Advisors by Small Businesses, LIMRA International, 2013. 2 Small World: Trends in the U.S. Small Business Market, LIMRA International, 2013. Page 2 of 6
STEP 1: Identify the right people Before you can offer the right solutions, you have to get in front of the right clients. Find them by examining your existing client base, networking with affinity groups, and partnering with other professionals. Contact your current clients Before you can offer the right solutions, you have to GET IN FRONT OF THE RIGHT CLIENTS Start by reaching out to your business-owner clients who you think may be underinsured. Use the sample prospecting letters and client mailers in this kit try sending out a few each week and following up with a phone call. Network with affinity groups Local alumni associations, chambers of commerce, church/religious associations, and business organizations (such as Rotary International, Lions Clubs, and Kiwanis International) are great places to start finding networking groups. Partner with other professionals Consider setting aside a few hours each week to drop in on small businesses and introduce yourself. You may also want to contact professionals (e.g., attorney, accountant, CPA, property and casualty insurance agent, bank trust officer, etc.) with whom it would make sense to establish a mutually beneficial relationship. By partnering together, you can share a broader range of financial solutions with clients. Page 3 of 6
[Date] [Prospect name] [Prospect address] [City, state ZIP] Is there a business strategy you ve overlooked? Dear [Prospect first name,] As a small-business owner, you ve had to work hard to build your business, and work even harder to maintain it. That s why you need to know about a strategy you can use to address several of the challenges you face by using life insurance to both safeguard your business against future disruption, and provide valuable benefits to your employees. I would like to show you how you can: Provide an income-tax-free death benefit for your beneficiaries, while providing the opportunity for cash value accumulation that can be accessed for various purposes, 1 such as supplementing your retirement income. Protect your business against financial loss in case of a key contributor s death, disability, or critical illness. Retain valuable employees by providing them with an attractive benefits package with little or no administrative cost. Redeem the business interests of a co-owner in the event of a co-owner s death. Provide for the continuation of your business upon the death of an owner. I will call you within a few days to schedule a brief no-obligation consultation, so we can explore which of these options could benefit your business. Sincerely, [Your name] [Your title, insurance agent] [Phone number] 1 Policy loans will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change and you should consult your tax professional. Keep in mind that most life insurance policies require health and, in some cases, financial underwriting. An employer-owned life insurance policy may be subject to the requirements of Internal Revenue Code 101(j) in order to obtain an income-tax-free death benefit. In general, those rules require that before the policy is issued, the employer must provide the insured with a written notice of the life insurance and obtain a written consent from the insured. Consult with an attorney for application of those rules to a specific situation. M-5139-B (R-11/2012) Small- Business Life Insurance Kit At this informative insurance sales presentation, you ll learn how business life insurance policies can provide more than just a death benefit and can help you: Recruit and retain key people PROTECT Cover employee benefit and incentive program needs Protect the continuity of your business after a potentially disruptive event This workshop is free but seating is limited Please call or email me today to reserve your place. You ll leave this presentation with new insight into an important but often overlooked resource that can help ensure the success of your business. [Place] [Date] [Time] [Financial professional name] [Financial professional number] [Financial professional address] against the loss of key employees. Products are issued by, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. www.allianzlife.com Not FDIC insured May lose value No bank or credit union guarantee Not a deposit Not insured by any federal government agency or NCUA/NCUSIF MLIF-1054 (R-11/2012) STEP 2: Schedule an appointment As you build your network and connect with other professionals, tell them more about the benefits of FIUL by sharing a client-approved presentation in this kit. Consider scheduling group presentations or informal seminars for other members of your networking groups. Or, try cold calling to set up meetings with individuals. For even the most seasoned financial professionals, cold calling can be intimidating. Yet it s effective. The phone scripts below can help make the process less awkward; practice them several times until you can deliver these openings smoothly and comfortably. Also keep in mind that this kit provides a variety of tools for you to use in order to get in front of clients and start the conversation such as these: Protecting the life of your business Discover the business benefits of life insurance For small-business owners, this presentation is a must. THE VALUE of your business M-5139-B Client pre-approach letter MLIF-1054 Seminar invitation MLIF-1036 Client mailer Cold calling scripts Calling an existing client who owns a business: Hello (client name), this is your agent, (agent name). Is this a good time to talk? (If the client is busy, ask, When is a better time to talk? ) I m calling today to let you know that I am currently helping some of my other business-owner clients with succession planning (and/or executive compensation plans) utilizing a life insurance policy. Since I value you as a customer and you re also a business owner, I wanted to make sure you knew that I m offering these services. When would be a good time to discuss your business life insurance needs? Calling a business professional: Hello, (business professional name). This is (your name) calling from (name of your agency). I m an (insurance agent / financial advisor / financial professional, etc). Have I reached you at a good time? (If no, ask, When is a better time to call? ) I m interested in learning more about your practice and your business to see if there might be an opportunity to partner with you in sharing client referrals. When would be a good time to meet or discuss? Leaving a voicemail: Hi (client name). This is your insurance agent (agent name). Sorry I missed you. I m calling today to let you know that I am currently working with small-business owners on business succession planning (and/or executive compensation plans) utilizing a life insurance policy. Since you re a reputable and successful business owner in my area, I wanted to make sure you knew that I am offering these services. Please give me a call back at XXX.XXX.XXXX to discuss your business or personal life insurance needs or to schedule a meeting. I look forward to hearing from you soon. Page 4 of 6
Small- Business Life Insurance Kit (R-11/2013) Life insurance Business concerns Most business owners express interest in one or more of the following concerns. Rate your level of interest for each: Extremely Somewhat concerned concerned Not concerned I want to guarantee my business will not suffer financially from the death or disability of a key employee. I want to use my business checkbook and receive a current business tax deduction when I provide retirement and life insurance benefits for myself and/or key employees. I want to make contributions to a retirement plan for myself and/or key employees, above ERISA restrictions and contribution limits, but without administrative hassles. When I retire, I want to make sure that I/my family will receive the full market value for my business. If I died tonight, I want to prevent my executor from having to sell my business interest at auction block prices to raise money for estate settlement costs. I want to make formal, written arrangements for how my business interests are to be handled upon my death, disability, or critical illness. I want to put sufficient funding mechanisms in place to make these arrangements a reality. I want an employee benefit plan without cost to me that would help employees feel more secure and satisfied. This information is not intended to provide specific legal or tax advice. Neither Allianz Life Insurance Company of North America nor its affiliates or representatives and employees provide tax or legal advice. You should consult your tax advisor or attorney regarding your specific situation. M-5121 Life insurance for small business (R-11/2013) Life insurance can be a valuable business strategy tool. The death benefit and cash value accumulation potential can be used for various purposes such as helping you retain your key employees, rewarding your top executives, ensuring the continuity of your business, and even providing extra income for your retirement by taking policy loans from any available cash value. 1 Not all businesses are alike, however. Here s a brief overview of the most common types of businesses, with a brief description of some of the advantages and disadvantages each offers. Understanding more about your business entity can help you choose the most appropriate type of life insurance. Planning ahead with life insurance can be good for you and your business. 1 Policy loans and withdrawals will reduce available cash values and death benefits and may cause the policy to lapse, or affect guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change and you should consult your tax professional. This document 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. Please note that Allianz Life Insurance Company of North America, its affiliated companies, and their representatives and employees do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney. Guarantees are backed by the financial strength and claims-paying ability of. Product and feature availability may vary by state. M-5146 STEP 3: Have a fact-finding conversation Many small-business owners may not realize the pivotal role that life insurance can play in their business continuation strategy. A fact-finding conversation can help uncover those wants and needs. Start by learning about their business operations: Tell me about your business How many owners are there? How many employees do you have? What types of benefits do you offer? How do you attract, reward, and retain key employees? What will happen to the business if a key employee retires or dies? Next, broaden the discussion to bigger long-term questions: What are your primary financial goals? Do you have any concerns about the ability of your overall financial strategy to meet these goals? If something happened to you, would your business partners want your spouse as their business partner? Do you have a business continuation plan in place? How is it funded? When you retire, what do you plan to do with the business? Where will your retirement income come from? Are you using life insurance to help support any of these goals? After you ve talked to your clients about their needs and goals, use the Business Insurance Fact-Finder (M-5121) to get a closer look at their financial situation. If you aren t sure of the legal classification of the business they own, see the Business entity reference guide (M-5146) in this kit. Business Insurance Fact-Finder Business entity reference guide Business planning with life insurance can provide BIG BENEFITS TO SMALL BUSINESSES. It s good business to plan ahead but first, you need to understand your business. For our complete life insurance portfolio, contact your financial professional. M-5121 M-5146 Page 5 of 6
M-5115 STEP 4: Offer solutions based on your clients needs After you ve had a chance to learn more about your clients and their business, you ll be able to evaluate the data and see how fixed index universal life insurance can meet their goals or concerns. In addition to providing a death benefit for their beneficiaries, it can also meet these key needs: Business planning solutions: Life insurance can play a valuable role in helping clients reward and retain employees, reduce or delay their tax liability, and protect the future of their business. Apply these tactics consistently TO HELP GROW YOUR SMALL BUSINESS MARKET Accumulation: Fixed index universal life insurance policies offer cash value accumulation potential based on the positive changes in an external index. Clients can access any available cash value through policy loans for various financial needs, such as to supplement retirement income. Supplemental income in retirement: Do your clients want the potential for an extra source of income in retirement? One option may be to draw supplemental income from their life insurance policy s available cash value through policy loans. Some of your clients may even choose to pay an additional premium to their policy with the idea of increasing accumulation potential and accessing any available cash value in retirement through policy loans. 1 Tax advantages: Life insurance policies can offer several tax advantages, such as an income-tax-free death benefit for beneficiaries. The cash value accumulates tax-deferred, which may help it grow. Clients can also access any available cash value income-tax-free through policy loans. 1 Business life insurance overview Business planning with life insurance The Business life insurance overview (M-5115) can be a great resource in helping to determine an appropriate solution for your clients needs. M-5115 Small-business owners present a big opportunity for you to grow your practice. For more help and sales tips, call the Life Case Design Team at 800.950.7372 (press 1 for Sales Support, then 2 for Life). 1 Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Tax laws are subject to change. Your clients should consult a tax professional. Policy loans are not usually subject to income tax unless the policy is classified as a modified endowment contract (MEC) under IRC Section 7702A. However, withdrawals or partial surrenders from a non-mec policy are subject to income tax to the extent that the amount distributed exceeds the owner s cost basis in the policy. Loans, withdrawals, or partial surrenders from a MEC policy are subject to income tax to the extent of any gains in the policy, and if the payment occurs prior to age 59½, a 10% federal additional tax may apply. Guarantees are backed solely by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. Products are issued by, PO Box 59060, Minneapolis, MN 55459-0060. 800.950.1962 www.allianzlife.com Product and feature availability may vary by state. (11/2013) Page 6 of 6