How About Selling Annuities Using Life Insurance?

This is a natural because you can transfer (1035 exchange) from a life insurance policy to an annuity without tax issues. The original basis on the life insurance policy now becomes the basis of the annuity which means that there are situations where an annuity could grow without occurring tax liability.
Here are some situation and general information about life insurance.

Types of Life Insurance

Term Life Insurance, insurance for a specific time period or term. 10 years as an example
Whole Life, insurance for your whole life. Guaranteed premium, death benefit and cash value. Whole life is guaranteed

Universal Life, Limited guarantees and the premium presented to the prospect is usually set by the agent. Funds accumulate in contract based on insurance companies declared rate. Very few UL policies have guarantees other than the good name of the company. Most UL I have seen are under funded.

Variable Universal Life, same as universal life except the funds are invested in separate accounts (like a variable annuity). Once again limited guarantees.

Single premium products. It is possible to buy single premium whole life, universal life and variable universal life. The value to this concept is with the correct policy you can give your prospects a fully guaranteed contract that will never require funding in the future. There are some variations that will not fully guarantee future results so always do the correct due diligence.

Life Insurance Sales Opportunities

1. Exchange: Life insurance cash value will transfer to an annuity without any tax liability. 1035 exchange

2. Remix: Sometimes you can use the cash value in an old policy to purchase a new life insurance contract. The purpose would be to have a paid up policy (no more premiums), remove any loans (forgiven) or to increase the ultimate death benefit to the beneficiary.

3. Policy loans: If you are lucky to find a policy loan on a life insurance policy, it is free money. Here is how that works, you can tell the client that you will get the loan forgiven. Most larger life policies are there for a long gone reason and the need for life insurance at this stage is less. Have the insurance company readjust the cost basis and forgive the loan. This changes the amount of non-taxable dollars but if it is paid out as a death claim it is tax free. If the need for life insurance no longer exists, have the life insurance company forgive the loan and 1035 the new basis to the annuity company. You sell this concept on two levels, loans go away and you use the exclusion ratio for their illustrated payout when the need arises for income. Easy sale and the loan going away will make the client love you and hate their insurance agent.

4. Annuity Change: If you find an annuity whose current purpose is to transfer the proceeds to a beneficiary, consider this. The tax deferred portion of an annuity is taxable as ordinary income to the beneficiary. So determine the taxable portion of the annuity, cash it in (withhold the tax liability for client) send the funds to a paid up policy with the cash value still available. When these proceeds are paid to the beneficiary they will be paid tax free. Just compare the future value of the life insurance with the after tax benefit of the annuity.

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How About Selling Annuities Using Life Insurance?

This is a natural because you can transfer (1035 exchange) from a life insurance policy to an annuity without tax issues. The original basis on the life insurance policy now becomes the basis of the annuity which means that there are situations where an annuity could grow without occurring tax liability.
Here are some situation and general information about life insurance.

Types of Life Insurance

Term Life Insurance, insurance for a specific time period or term. 10 years as an example
Whole Life, insurance for your whole life. Guaranteed premium, death benefit and cash value. Whole life is guaranteed

Universal Life, Limited guarantees and the premium presented to the prospect is usually set by the agent. Funds accumulate in contract based on insurance companies declared rate. Very few UL policies have guarantees other than the good name of the company. Most UL I have seen are under funded.

Variable Universal Life, same as universal life except the funds are invested in separate accounts (like a variable annuity). Once again limited guarantees.

Single premium products. It is possible to buy single premium whole life, universal life and variable universal life. The value to this concept is with the correct policy you can give your prospects a fully guaranteed contract that will never require funding in the future. There are some variations that will not fully guarantee future results so always do the correct due diligence.

Life Insurance Sales Opportunities

1. Exchange: Life insurance cash value will transfer to an annuity without any tax liability. 1035 exchange

2. Remix: Sometimes you can use the cash value in an old policy to purchase a new life insurance contract. The purpose would be to have a paid up policy (no more premiums), remove any loans (forgiven) or to increase the ultimate death benefit to the beneficiary.

3. Policy loans: If you are lucky to find a policy loan on a life insurance policy, it is free money. Here is how that works, you can tell the client that you will get the loan forgiven. Most larger life policies are there for a long gone reason and the need for life insurance at this stage is less. Have the insurance company readjust the cost basis and forgive the loan. This changes the amount of non-taxable dollars but if it is paid out as a death claim it is tax free. If the need for life insurance no longer exists, have the life insurance company forgive the loan and 1035 the new basis to the annuity company. You sell this concept on two levels, loans go away and you use the exclusion ratio for their illustrated payout when the need arises for income. Easy sale and the loan going away will make the client love you and hate their insurance agent.

4. Annuity Change: If you find an annuity whose current purpose is to transfer the proceeds to a beneficiary, consider this. The tax deferred portion of an annuity is taxable as ordinary income to the beneficiary. So determine the taxable portion of the annuity, cash it in (withhold the tax liability for client) send the funds to a paid up policy with the cash value still available. When these proceeds are paid to the beneficiary they will be paid tax free. Just compare the future value of the life insurance with the after tax benefit of the annuity.

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Problems Selling Mortgage Protection Insurance Are Not Your Fault

Problems with Mortgage Insurance Sales

If you have ever sold traditional mortgage protection insurance, you know how hard it can be. You must put a lot of miles on your car, driving around to meet with clients in their living rooms. You also have to be available for them when they are home, which means you spend a lot of evenings working. Many times you will have to spend time out of town, because that's where you have leads and appointments, and this can be inconvenient and expensive!

Furthermore, some of your prospects may have been attracted to mortgage protection insurance because of the direct mail piece they received. But these direct mail pieces can give some people the wrong expectations. They may glance at the card or letter, and see an offer of insurance with no medical exam, and then assume that pre-existing conditions will be ignored. You may find that some percentage of the business that you have worked so hard to submit gets declined. People with very common professions can declined for disability insurance, just because of what they do for a living!

In addition, clients may see an offer of disability insurance or critical illness insurance and think they can obtain that sort of coverage without obtaining a large life insurance policy. The client may feel as if they already have enough life insurance. Some clients may read about waiver of premium riders while unemployed and confuse that with a supplemental unemployment benefit which most mortgage protection insurance does not offer.

You are Not The Problem!

The problem with selling mortgage protection insurance is not you, as the insurance agent, but the product you are selling which does not meet the client's expectations. When you present a product that gives a prospect the security they are looking for, selling is easy! In fact, many homeowners are concerned about protecting their finances now, when they are alive. When a large bank asked their customers what they worried about, a majority said they worried about paying their bills if they lost their job or became disabled. Many homeowners, especially younger ones, are not concerned about large death benefits. They are concerned about layoffs, accidents, or disability.

Offer Your Clients Mortgage Protection They Want!

You can find a mortgage protection insurance plan that solves many of these issues. You will not need to ask your clients health questions and almost every professions is accepted for disability payments. There are some vesting periods and waiting periods, but we feel that this type of insurance appropriate for many clients who do not want, or cannot qualify for, a traditional mortgage life insurance policy. You can also offer the new mortgage protection insurance to clients up to the age of 70!

Offer clients unemployment, disability, and hospital indemnity insurance, along with a death benefit, and all without asking health questions! You can sell this insurance from your home office as the forms can be completed over the internet. Move your mortgage protection insurance business into the twenty-first century.

And no, your client does not even need to have a mortgage to qualify!

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Problems Selling Mortgage Protection Insurance Are Not Your Fault

Problems with Mortgage Insurance Sales

If you have ever sold traditional mortgage protection insurance, you know how hard it can be. You must put a lot of miles on your car, driving around to meet with clients in their living rooms. You also have to be available for them when they are home, which means you spend a lot of evenings working. Many times you will have to spend time out of town, because that's where you have leads and appointments, and this can be inconvenient and expensive!

Furthermore, some of your prospects may have been attracted to mortgage protection insurance because of the direct mail piece they received. But these direct mail pieces can give some people the wrong expectations. They may glance at the card or letter, and see an offer of insurance with no medical exam, and then assume that pre-existing conditions will be ignored. You may find that some percentage of the business that you have worked so hard to submit gets declined. People with very common professions can declined for disability insurance, just because of what they do for a living!

In addition, clients may see an offer of disability insurance or critical illness insurance and think they can obtain that sort of coverage without obtaining a large life insurance policy. The client may feel as if they already have enough life insurance. Some clients may read about waiver of premium riders while unemployed and confuse that with a supplemental unemployment benefit which most mortgage protection insurance does not offer.

You are Not The Problem!

The problem with selling mortgage protection insurance is not you, as the insurance agent, but the product you are selling which does not meet the client's expectations. When you present a product that gives a prospect the security they are looking for, selling is easy! In fact, many homeowners are concerned about protecting their finances now, when they are alive. When a large bank asked their customers what they worried about, a majority said they worried about paying their bills if they lost their job or became disabled. Many homeowners, especially younger ones, are not concerned about large death benefits. They are concerned about layoffs, accidents, or disability.

Offer Your Clients Mortgage Protection They Want!

You can find a mortgage protection insurance plan that solves many of these issues. You will not need to ask your clients health questions and almost every professions is accepted for disability payments. There are some vesting periods and waiting periods, but we feel that this type of insurance appropriate for many clients who do not want, or cannot qualify for, a traditional mortgage life insurance policy. You can also offer the new mortgage protection insurance to clients up to the age of 70!

Offer clients unemployment, disability, and hospital indemnity insurance, along with a death benefit, and all without asking health questions! You can sell this insurance from your home office as the forms can be completed over the internet. Move your mortgage protection insurance business into the twenty-first century.

And no, your client does not even need to have a mortgage to qualify!

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Road-Test All Telephone Sales Applicants by Telephone

You might think selling by phone is a challenge.

You face a lot of rejection, and if you do business-to-business calling, my specialty, you need to confront and conquer secretarial screening and voice mail, before you can even earn a shot at wooing your ultimate buyer.

But the selling part, if not easy, is manageable, if you know what you're doing and your have hammered out your value proposition and a great script.

What's really daunting, what keeps business owners up at night, and human resources folks grabbing for the Maalox and Valium, are the recruiting challenges. Simply put, staffing your call center so you're running at 90-95% capacity at all times is nothing less than a Herculean endeavor.

How come?

Turnover is a major problem, keeping new hires in those seats long enough so they'll get their "phone legs" and make a dandy living. Too often, too many of our recruits bolt for the door before their payroll paperwork has been fully processed.

A major metropolitan newspaper has experienced 400% annual turnover, going through 1,200 bodies each year to keep its 300 seat center staffed. I pointed out, after doing a cursory analysis of costs, that this paper could double the salaries of all 300 reps, given what it was wasting in recruiting and training costs, alone.

Adding to their woes was a fundamental error. When they advertised for telephone sales reps, they sabotaged their chances of hiring the best folks, efficiently, by appending these words:

NO PHONE CALLS, PLEASE!

Let me say this quite clearly: Screening telephone sales people by phone is not an option-it is essential. Otherwise, how can we assess whether they have the basic talent and vocal endowment to hold up their end of calls when sales are at stake?

Resumes, unless posted at YouTube or at another video-based site, do not speak. People can look great on paper but be marble-mouthed, frozen with fear, or sound utterly dumb over the phone. The only way to assess their telephone strengths and weaknesses is to get them on the line, or at least allow them to contact you.

Telephone sales job applicants need to be put to a telephone test.

In a future article I'll discuss the crucial paces though which we need to put them before giving them further consideration.

By screening applicants better, especially by phone, we can diminish those costly turnover numbers I referred to above, bringing down our overhead to a manageable
range.

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Endowment Shortfall Problems

The endowment shortfall is an issue that has effected hundreds of thousands of people across the UK. A conventional endowment policy is a life insurance contract which will pay a predetermined lump sum following the death of the life insured. An endowment policy is also an investment policy as part of the premium is paid into one of the insurer's with profit funds. As the policy progresses a value is accumulated and is supposed to meet a target at the end of the policy, upon assumed growth rates. At this point it matures and pays out a final valuation to the consumer.

The sum insured is split into two elements, the guaranteed sum assured which is an amount that should be guaranteed to be paid out at the end of the policy and the mortgage sum assured which is the guaranteed sum assured combined with the total life cover in place.

Bonuses are paid each year called reversionary bonuses and these accumulate and are paid at maturity. The insurer will announce at what rates these bonuses are applied at each year. There is also another possible bonus applied to the policy upon a claim or at maturity which is called the terminal bonus. Again these rates are announced by the insurer each year and are not guaranteed to be anything at all.

As previously mentioned the policy is an investment and has a surrender value which is made up of the bonuses, premiums paid and how long the policy has been in force.

It is possible that when upon any claim or early surrender that the policy can be penalised due to poor market conditions. This means that the surrender value will have a Market Value Reduction or Adjustment made to it. This is applied to protect other policies that remain invested in the with profits fund that these policies are invested in.

The endowment shortfall has been a result of the poor performance of the insurers' with profits funds. Bonuses have also been low or non existent and whereby upon sale the policies were made out to hit or even exceed at target at the end of the policy they have been falling well short.

The main concern is that the possibility that there could be a shortfall was never made clear at the beginning of the policy by which ever company or agent that was responsible for selling the product.

Throughout the term a consumer can ask for a projection from that point until the policy is due to mature, this is called an estimated maturity value. This will show upon 3 different assumed growth rates what the policy will likely pay out at maturity. This can show a shortfall from early on and people that have been actively watching their policy have been able to take action but unfortunately many people don't find out until a lot later or even at the end and this can be a very problematic surprise!

Due to the backlash that has come from the endowment shortfall problem insurers have seen consumers complain in vast numbers as have financial advisers and any other people or companies responsible for selling these contracts. Companies have been set up to deal with mis-selling complaints on behalf of consumers and also there are a range of market maker companies who are willing to buy endowment policies from consumers for a competitive price so they can keep the policies as collective short term investments. This is a very popular choice for people that are not willing to see the endowment policy through to maturity only to be faced with a huge endowment shortfall. It is at the very least a way of cutting their losses.

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The Importance Of Investing Money For A Rainy Day

Money in my opinion is not the most important thing in life, but it is nice to know that you have a certain amount of money, saved or invested, which you can use if needed. I actually think that health and happiness are the two most important things in life. Having this pool of money helps to keep me healthy and happy, as it means that I do not have to stress as much about the future.

I only really realised the importance of investing and saving money, when I was twenty-three years of age. Up until this age, I would always spend all of my wages and did not care if I was overdrawn in the bank. I used to think that I could die tomorrow, so why bother about saving money which I might not ever use. This is a bit stupid, I know.

At the age of twenty-three, on one particular day, I was having a conversation with a friend called Tim. He basically earned the same amount of money as I did and lived a similar lifestyle. Tim told me that he was thinking of buying a flat and that he was going to cash in his investment bond to help fund the move. I was very shocked that he even had a bond and asked him how long he had had the bond, and how he had managed to get the money to put into it. I expected Tim to tell me that his parents had given him the money, but they hadn't, he had saved up the money himself.

Tim told me that he tries to save as much money as he can per month and normally manages to save at least £100. When he has a £1000 saved in the bank, he then invests the money into a bond.

I was very impressed with Tim and I have to admit a little bit jealous of his money. I then thought to myself, if Tim can save, then so can I. I set myself a goal of saving up a £1000 and planned to do this within ten months. I had to be less wreckless with my money and it would be a good test for me.

It did not prove to be that difficult and it was a good feeling seeing a healthy bank balance for once. After only eight months I had saved my target of £1000. Instead of putting it into a bond, I decided to take an even bigger risk and to buy some shares. I am happy to say that two years later the share price of the company I had chosen to invest in, had risen by sixty percent. This I have to admit was pure luck as I had simply guessed at who to invest in. The company I chosen had had a dismal few years and its share price was at its lowest ever level. I had heard that the company had recently had some major changes at the top and I decided to gamble just on these few facts.

That was my first experience of investing and it gave the taste for it. I have regularly been buying and selling shares as well as investing in unit trusts for around ten years now. It has also become like a kind of sport or hobby for me, as I am trying to always pick a winner. I have won some and lost some but have had a huge amount of fun along the way.

I now have a certain amount invested in different ways and when for example I have a big car repair bill, I have no need to panic as all I need to do, is to cash in some of the units of my unit trust. That is what I like about a unit trust, unlike with an endowment policy where you need to wait until the end of the term to have access to your money, with a unit trust you can take out all or just some of your units at anytime that you want.

Before I started to save up money, I would often get quite stressed about the future. How would I be able to buy a house? How will I be able to buy a decent car? These are just two of many questions I would ask myself. I would try to ignore the questions by saying to myself that at that stage of my life, I should be earning more money.

I am now very happy that I had that conversation with Tim. Investing money in the way that I do has helped me to get onto the property ladder and also helps to fund my yearly holiday abroad for my family. It also gives me a peace of mind for the future and helps to to sleep easier at night.

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