Coop's Scoop

Episode 2 - Prospecting for Life Insurance in Retirement Planning Opportunities

January 17, 2020 Cooper Lewis with Highland Capital Brokerage Episode 2
Coop's Scoop
Episode 2 - Prospecting for Life Insurance in Retirement Planning Opportunities
Show Notes Transcript

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 prospecting for clients that can benefit from suplemental tax free retirement income using life insurance.

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Hello, everyone. This is Cooper Lewis with Highland Capital Brokerage. Welcome to Coops. Coops, Coops, Coops! Coops! 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. Hi and welcome to Coop Scoop. Let's talk about prospecting for life insurance and retirement planning or a LIRP, as it's called within the industry. Life insurance, in Retirement planning. Typically, this is going to be a client age range 30 to 60. That's who you want to key in onbecause that's where this fits. You also want to look for clients with good income, because what we want to do is to over fund a life policy so that it generates a significant accumulation value. We're not really after the insurance death benefit per se. We're just using this as the vehicle for retirement income. Now. Currently, the retirement income out of a life policy is tax free, but you and I know that Congress is always looking for ways to get taxable dollars. This may change down the road. Roth IRA rays may change Down the Road. Life insurance in retirement planning, is one of the Only vehicles available for somebody that's outside of a Roth. It's also one of the only vehicles that people can put in as much money as they want to. There's no government cap like in qualified plans. So if you've got professionals who have extremely high incomes and are maxed out in all their qualified accounts and they can't qualify for a Roth account, you have a vehicle for them, and that's life insurance. Now, one of the things that we want to try to do is to make sure that your clients understand it's life insurance and they're going to  hate it. Some of them may say I don't need any more life insurance, and you need to be confident enough to say life insurance is just the vehicle that allows us to do what you want to do. Forget about the life side of it. We're going to be able to put money into this product, into this vehicle,  that you can't put in anywhere else, either because you don't qualify for it or you're maxed out. So help them understand that life insurance it's just a vehicle to let them achieve the objectives they want to achieve. Now, one of the issues that you're going to hear is, well, what kind of growth am I going to get? And you're going be in the same position that you are withyour invested accounts? Who knows? That's not the objective. We're putting money away, protected from creditors. That's one of the other things that your professionals will or should be key on. Because if you've got professionals like a doctor, for instance, they're very aware of being creditor exposed Life insurance is creditor protected in most states. So they're going to be able to fund this without worry of being sued and having this disappear on them... much different than their investment accounts. The other thing is, this is flexible. Uncle Sam isn't telling them when or when they can't take retirement income. What I mean by that is, we all know that when you put money in a qualified plan, if you take it out pre-59 1/2, you're going to pay a penalty on it. Uncle Sam's going to make you start taking income at 70 1/2 because they need the tax dollars so they let you put it away tax free, but now they want to start getting their money back. When you use insurance for this vehicle, you get to decide when you take it,  how you take it. And Uncle Sam doesn't have any say in the matter. So if you've got somebody, and I mentioned this in the initial episode, somebody that's used a vehicle like this for college funding and then continued so that they could use it in retirement funding, guess what,  all that money's come out tax free. So if they used this, took out funds earlier in the policy to help pay for educational expenses, then continued paying premium in. Now they're taking an income out for retirement. Find another vehicle that allows you to do that. There isn't one. If they want to take early retirement, guess what? Let's say the retired 55 they can't touch their qualified accounts without paying a penalty. But if they've got an accumulation, permanent life insurance product, they could use at 55  years old, income coming off their life policy, get them to 59 1/2 or 60 where they can start taking money out of their retirement account, their qualified money accounts. Excellent. Excellent vehicle for that. Now they will need to have started funding this much earlier than 55 to have significant accumulation value if they want to use it for full retirement income. So this is where somebody more towards 30 comes into play or somebody 40 that's able to dump in a lot of money, or pay in a lot of money on this. So lots of moving parts on this one.. don't limit what you think can be done. That's where we come into play. You're going  to be able to call us, Call me. I can crunch these numbers for you and see what works. All right, so that's where this helps significantly. So don't think that just because somebody's 45 they've missed the boat or even 50. That's not the case. A lot of that is going to depend on how much funding do they have the ability to put in to do what they want to do! I've got a product in most states that if we start funding at 50 we can start taking withdrawals at 55. It's  an index UL, it's rather unique, but I'm not getting into product at this point. But just know that that's where your wholesaler comes into play because we know products to help solve problems so that you don't have to. You just bring us the problem. We'll bring you the solution or attempt to bring you solution. There's not something for every situation. All right now, why?  Why is this important?  Why use life insurance proceeds? Let me change that because proceeds implies that they died; life insurance income as opposed to some of the other vehicles out there. Well, you and I know that social security is a big part of a lot of folks retirement plan. And depending on where you have their funds invested, that's going to impact SS most of the time. Their social security calculations and how much  benefit they're going to get or not get -  like muni bonds. Everybody thinks muni  bonds are a great investment vehicle for retirees. Problem is that income still counts towards Social security, So if you're able to give them funds or providing income stream for them, that doesn't hit their Social Security calculation. Just think what that might do for your client's peace of mind. Life insurance proceeds are part of that solution because that income, that withdrawal or loan that they've taken on that accumulation policy, does not factor into so security benefit calculations. A lot of clients would like to have the upside of the market growth, but they want to have the protection on the downside for their retirement funds. One of the advantages of using accumulation, say IUL products, in this mix, is it allows your client to still participate in market upside growth, but it shields them from the downside. And when we're talking about retirement funding or retirement income, that's a huge safety net and offers tremendous peace of mind for your clients. So don't  exclude or rule them out when you're having these conversations with them, because the minute you bring up life insurance, they're going to have that immediate knee jerk response of I don't need any life insurance, and you're going to be able to show them that this is just a vehicle to accomplish what you're trying to accomplish. Just like a lot of clients, they are so attuned to when they hear the word annuity automatically knee jerk... I don't like annuities. I don't want to talk about them because they've only heard the negatives about them because of some of the voices that are out in the investment community. And let's face it, those voices are there because if you take money out of investment accounts that they earn fees on, they don't like that, so hence they're going to talk negatively about them. But once a client understands the protection and  the value that, say an index fixed indexed annuity brings to their retirement planning process, their eyes and minds, a lot of times are opened and will change their opinion. A lot of times you're gonna hear clients bring up fees on the insurance products... You know insurance products come with a lot of fees. What you also need to point out to them is the fees on insurance products are disclosed. They're also having fees on their investment accounts, so the fees are not really an issue. There's a cost of insurance on this thing, but that's part of the vehicle that they're in. But in the scheme of things, it's less than the managed fees on their investment vehicles over the long run. And in addition, they've got the death benefit. If something were to go wrong in their life, their investment accounts do not have anything like that. So not only does the insurance vehicle provide income tax free, there's a death benefit, a lump sum that's going to be paid to their beneficiary, that no other investment vehicle that they have offers. So even if the fees are the same or even a little higher, there's a benefit at the end of the road that no other investment vehicle offers. It's one way life insurance in retirement planning, another opportunity for you to mine your book of business and look for those clients ages 30 to 60 and talk to them about a diversified retirement income strategy. I'd say using life insurance, but you may wanna hold off on using that term with them so that they don't just knee jerk and close the door on you. 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 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.