Your book of business contains a lot clients that need your help. Find out what clients are your best prospects to approach and how. This episode focuses on life insurance.
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Hello, everyone. This is Cooper Lewis with Highland Capital Brokerage. Welcome to Coops. Coop, Coops, Coops. Coops! Scoop, scoop, scoop, Scoop. Scoop the podcast where I help you become a more complete financial planner or financial advisor with your clients using protection products to protect and enhance their family portfolio, lifestyle and retirement. Welcome to coop Scoop. This is the premiere episode. We wanted to launch this so that you have a tool that you can use to further your business using life insurance. One of the reasons why we went with a podcast is that it's flexible. It allows you to listen at your convenience, whether it's driving in the car, working out, running on the treadmill, walking through the neighborhood with the dogs. Whenever you can find time to spend 10 to 15 minutes, which is the anticipated length of these podcasts. One of the things that wholesalers are accused of is always talking product. So I thought I would begin these podcasts using a few sessions, talking about opportunities and how you find them. So let's explore how you can fined opportunity in your book of business that can protect your clients and help you help them so we'll start with life insurance. Let's talk about that low hanging fruit that sits in your book of business, and that's existing policies that your client's own, whether you sold it to them or whether someone else did. This is the lowest hanging fruit that exists. You need to be doing policy reviews for your clients so that you can make sure that their policies are going to stay enforce up until they expected them to. You want to be looking for policies that are in the neighborhood of 10 to 15 years or older, so that you can get what's called an inforce illustration from the existing insurance company so that we can see how those policies are performing. Now no lapse policies hit the marketplace in the mid to thousands 2004, 2005, 2006. These policies, as long as the premium is being paid on time, usually do not have any risk of lapsing because the guarantee is on the insurance company. But if you're policyholder has missed premium payments, those guarantees can be in jeopardy. So we want to find that out as there is not as much opportunity with a no lapse guarantee product as your ul or vul or indexed ul products. Those are the three products that you want to be looking for because they are very sensitive to interest or crediting rates. And if they have been on the books for 10 plus years, those interest rates that were credited or projected to be credited back when they were taken out are much higher than they are today, so that leaves room for you to go in and save the day. Basically, now the VUL is different story. Lot of those have outperformed the market place based on projections, unless you had an aggressive adviser who used a high crediting rate and then no telling where things fall on that one. But your client's are now older. So even if they had a V. U L, that was really outperforming expectations. Being older, they may be becoming less risk adverse, so that allows you to reposition them into something that is less risky now that they're older. So UL's or GULS these days are excellent vehicles to move them into - older whole life policies tend to have a lot of cash value to them. What your client doesn't understand is that gap that exists between the cash value and the death benefit has been narrowing. That means your insurance company is less on the hook than they were when they first took the policy out. So that's a great time to move that policy into more of a ULG or index policy, because there's typically less cost with them. So you can actually increase the amount of insurance if they want to keep paying the same premium, or if they would like to eliminate premium, much easier to do in the newer products than a whole life policy. Whole life is a very expensive - rock solid guarantees don't get me wrong. They have their place in everyone's portfolio. But again, your client's needs may have changed. Excellent opportunity to go review where things stand with them and what they want to do going forward. So those were the low hanging fruit - policy reviews. Let's talk about three scenarios to put new insurance on the books. This is where your client relationship is going to come into play because now you're going to be bringing something new to them that they may not have expected, But if you're not doing this, somebody else is. So this would further strengthen your relationship with your client because now you truly are their financial advisor. So let's talk about three scenarios to talk to your clients or mine your book of business so you can find clients that fit this profile. Anybody 18 to 80 is a viable candidate for insurance. Anything over 80 starts to become a little expensive, but again, if the needs there don't let age 80 year plus deter you, we've got companies that will write over age 80. You're probably going have most success with Client range 30 to 70 so sort of narrow your look, your mining down to ages 30 to 70 for these these strategies. So let's talk about the first scenario. First scenario is a client that has a significant amount of accumulated funds that you've been able to grow for them. Let's just pick a number $2 million $2 million. Sounds like a great number to have as you head into retirement . the drawback or problem becomes if you're gonna follow the 4% rule of distribution, which in some instances has been further scaled back to 3% of income to guarantee that the client doesn't run out of funds during their lifetime. That might be a little limiting for some clients as that may not fully pay for their lifestyle. That may not give them the purchasing capability that they want. And let's face it, a lot of retirement or independent living communities require a significant amount of funds to buy into at this point time. A lot of those communities have different structures to get your clients into them so that they have care once a health event happens down the road. So $2 million great number. But it's still not, for some clients, truly peace of mind. And if you've got clients with less than $2 million think what they are experiencing or going through mentally, they're thinking a lot of what they I thought they might be able to do is unachievable at this point. So here's where life insurance comes into play, because if you could put $350k, 500k, 1 million of coverage on your clients, your husband and wife, think about how that frees up that amount of money in their portfolio to do other things with because now they know that when one of the spouses die, they're going have a magic bucket that you have of investable assets to replace what they spent. So if it costs them $300,000 to buy into the independent living community, if you've got a $500,000 policy on them, when they know that once one of the spouses dies, they're going to have the funds available that they used to get into that community. So there's an opportunity for a life insurance sale to someone who has what would appear to be a significant amount of money. I know a lot of you all say that your client really doesn't need insurance because they are debt free. They've got a significant cash build up or accumulated value. But that may not be true peace of mind for your client. That's where conversations come into play. Let's look at scenario, 2. Now, scenario 2 is one that requires a permanent life product on your client. They've planned for retirement. They finally decided on the date they step away from work. Their income stream comes to an end other than than their investable assets. What's the worst thing that can happen to them at this point? Some would say, a Health event. But let's say they're healthy enough and that's not the issue, that one of the worst things in their mind is a market downturn that now starts reducing their investment accounts or accumulation accounts because now they've got a double whammy going on. They have started an income stream, and the market has taken money away from them. So instead of being able to count on growth in that account they are now facing a downturn, the sequence of returns can really impact their invested accounts, and if they're taking money out and there's a downturn in the market now, they have not only started the withdrawal process, but mentally, Now they're worried because what they thought they had isn't the case anymore. So what, as we know, if we've planned for something most of the time, mentally were okay because we expected it, But when we planned and something different happens in a negative capacity now we really begin questioning. Do we have enough money? Did I make the right decision? What's gonna happen? So we introduced possibly a lot of worry and fear that enters your clients thought process. If we had put a permanent life product in place early enough, where they had an accumulated value, you could take their retirement income out of that life policy as a withdrawal or a loan , leaving their retirement accounts alone and let them recover. Now your client has peace of mind. They know that their retirement investment accounts have a chance to grow again because they're not taking the money out of them. The mechanics of the process worked like this. The year after the downturn in the market, rather than taking their income from the invested accounts, you take it from the life policy. So now the invested accounts don't have that double whammy. They have a chance to recover. So the life insurance policy provides that income for that year or two years, giving the invested accounts a resting period so that they can continue to grow once the market turns around. And statistics show that the year following a downturn, the market is usually up and usually up pretty significantly very rare that we've had 2 down years, even rarer, three. But as you know once, your client starts retirement. If they have those kinds of scenarios, a two or three year downturn. Now they are really nervous and worried, even those that have a significant amount of accumulated value, because they were projecting their lifestyle and life retired life. And now we've made them question what that's going to look like. So a permanent life product, usually an index. UL or A. Current assumption UL, it could be a whole life product. Notice I didn't say VUL as they are already in the market. It's had the downturn also. So not a vehicle or an asset that you want to have them in if this is what you're trying to protect them against. because that's declining or going down the same as the market is. So a current assumption UL. An index UL or even a whole life. Whole life's different challenge. Very expensive. Most clients do not have a whole life product at this point in their portfolio scenario. How about scenario Three. Scenario three is another one that is pretty easy to to put in place because it's just general life coverage on young families. That's an easy, low hanging fruit. Problem is, they typically don't have the funds for permanent products so we're using term. But what happens when those kids get older? Now we've got additional educational costs and life costs entering the picture that may not have been taken into account when you put that original term policy on them. So this is looking for those "middle-er" families, if you will, families with middle, say, middle school kids, high school kids and making sure that they have enough protection that if something were to happen to the breadwinner, or mom in addition, because most, most people don't consider the spouse, and her income as the major driver on things. But I'm going to tell you there as important as the breadwinner because , if you were to add up the value they bring to the family, If she was no longer in the picture. The cost to replace what she does is astronomical, and most folks do not consider that. So, anyway, that's a side deviation. Sorry. So think about those families that you have that have middle schoolers or even high schoolers, and have you got enough coverage on them? If something were to happen, that say the college education funds are not being questioned. So those are great opportunities to revisit, have conversation with your client, make sure that they've got enough coverage so that if something happened now because again you put that term policy on them 10 15 years ago, costs have gone up considerably since then. So what was a good plan back then Maybe coming up short today. We all know college education has gone up considerably. So don't don't overlook that increase, because there may be a gap in your client's plan at this point that you could step in and help fill. So there you go different strategies. One looking for low hanging fruit on existing policies and in three additional sales opportunities to make sure that your clients have the protection that they thought they had originally. So low hanging fruit. Let me let me go back to that. So I suggested that you get an inforce illustration done. One of the things that is going to help you know where things are headed on your current policies are the inforce illustration, because it's going to show you based on current assumptions today and current premium being paid today, How long that policy is going to last. Inforce illustrations will show you that now. If it's being funded properly, the enforce illustration will show you that. Hey, no change is needed so everything is a okay. Older policies., unfortunately, those crediting rates were probably much higher than they are today, and that policy is going to lapse. The problem comes in is that the insurance company is not going to tell you till it's almost too late that for that policy is approaching a lapse point. Enforce illustration allows you to request a point in time evaluation to see where things stand. I'd suggest requesting to enforce illustrations, one being current projections. That's current crediting rate, current premium being paid. That's going to show you where things stand. The 2nd One I would suggest asking for at the same time, is show me what it takes to get this to age 105, because if the crediting rate was higher originally than it is today, it will show you the new premium that's needed to guarantee or get that policy to age 105 Or pick whatever age you or your client feels comfortable. Some clients would say age 100 because they're never gonna live to age 100. Others have family members that are age 98 99. So 100 is a very achievable date or target for them. So they want to see something a little longer, just in case. So I just picked pick a date on at age and get that enforce illustration runs. So then you'll get two of them back from from the insurance company. So if it's like a V u L. That's done really, really well over the last few years. or decade. You could scale back premium, for instance, and save your client some dollars. But it would also show you that possibly , vuls have done extremely well. Maybe we want to move it over to something a little more conservative these days, like an index ul - something that still participates with market upside but none of the downside. So there's an opportunity to move them from a risky position to a more conservative position and capitalize on that growth that they've had over the years. So an in force illustration will show you that because in some cases they may say, I don't need the policy anymore. The enforce illustration would show, Hey, you can stop payment premium payments and still keep the coverage. So rather than just not pay premium and expect it to lapse because they quit paying premium, the insurance company would still continue the policy until it ran out of funds. But now the client at least knows what's going on. They are not left in limbo because they said, Well, we quit paying premium and we don't know what's happening. it's unfortunate, but that does happen with policyholders. So at least you've asked the question and you have been proactive with things rather than reactive. So , thanks for listening, Hope this helps you look at your book of business differently. Maybe think about insurance differently. I think about it as an asset on your client as part of your client's portfolio and how you can maximize things for them that you may not have thought about. Well, that wraps up this edition. Thanks for spending a few minutes with me today. Hopefully, these concepts expanded your thought process as to how to help your clients in your existing practice and those that you're looking for as always, I'm here for help if you need it. 980.233.3419 This is primarily designed for Ladenburg advisers and if you're already working with a Highland rep, more than happy to get you connected to them so that they can continue this conversation with you regarding today's information. But if you're a consumer who has found my podcast, thank you for listening. If you are currently working with somebody, maybe you will share this with them. If you're not working with somebody, I work with the number advisors around the country more than happy to make an introduction. If that's something you would like otherwise, we could just have a conversation and see where it goes. Thank you, everybody. Have a great day.