BHIM-Sales-idea-Put-the-Life-Back-in-Life-Insurance

Sales Idea
Put the Life Back in Life InsuranceRole Play / Script
Producer Opening CommentsThanks for stopping by. As I mentioned on the phone, several years ago, the IRS made a subtle tax code change that redefined what life insurance benefits could cover. It allowed for the life insurance “death benefit” to be used while you are alive.This code change essentially put the Life back in Life Insurance. Yes, life insurance, but not like we have ever seen before. The death benefit that life insurance provides could now be accelerated while you’re alive to help address your client’s chronic and terminal illness needs. I want to share with you how and why families are using it to protect their wealth and their families.
For Financial Professional Use Only | Not Approved for Use with Consumers
Key Criteria:Mom and Dad need to be together for the talk. Involve the family whenever possible.Early ‘50s ideal with investable assets in $500,000 – $5M+ range.Most people don’t understand the long-term effects of a chronic illness. Engage them early in the conversation with stories.
Agenda:Today I would like to do three things with you. Discuss the …The Challenge(why did the IRS make this change)The Opportunity(how families are taking advantage of the change)Discuss Your Options(if this makes sense—look at some options for you)
Bordenhamman.com
Sales Idea
Put the Life Back in Life InsuranceRole Play / Script
10,000 Americans celebrate their 65th birthday every day.Good news—life expectancy continues to increase—unintended consequences.7 out of 10 people over the age of 65 will experience a chronic illness.Define Chronic Illness as:Inability to do 2 out of the 6 activities of daily living:Or cognitive impairment, i.e., Alzheimer’s.Share a personal story.Hear the client’s story and feelings.According to the National Bureau of Economic Research, 90% of Americans have done nothing to protect themselves.The U.S. spends nearly $725 billion a year on chronic illness. Seven billion is paid by LTC policies. Families pay another $63 billion out of pocket, but the majority of care is unpaid by families ($450B), families taking care of each other.The problem is only going to get worse because of the changes to family dynamics. Who is going to take care of us?
Thegovernmentcontinuestorecognizetheenormityoftheproblemandthestressthisissuewillcontinuetoput onthesystem.Oneofthechangestheymadeseveralyearsagoopenedthedoorforanewwaveoflifeinsurance policiesthatallowclientstoacceleratethedeathbenefitthroughoptionalriders,tax-freewhiletheyarealive,to helppayforthecaretheyneed.
There is a perfect storm brewing that has been widely recognized by most experts that study families, our aging population and chronic illness. The challenge we are facing is being caused by a confluence of issues.
THECHALLENGE
THE OPPORTUNITY
With these new optional riders, life insurance can cover three needs in one product.3 in 1: death benefit protection, potential cash accumulation, and care through riders that offer benefits triggered by chronic or terminal illness.What clients are doing? (asset repositioning to create and protect their wealth, moving from one pocket to the other, creating a tax favorable strategy to be used for their care if they need it).Why are they doing it?Know the potential chronic illness problem exists.Not interested in seeing their investment portfolio used – it doesn’t make sense.Want control of their care if it happens to them.
For Financial Professional Use Only | Not Approved for Use with Consumers
Bordenhamman.com
Sales Idea
Put the Life Back in Life InsuranceRole Play / Script
Married Couple | both 52 years old | $2,000,000 of investable assets | husband’s father has Alzheimer’s | clients have 3 children in their 20sThe Client’s ConcernsThe chronic illness the husband’s father is facing has caused financial and emotional impact on the family. Thus, the husband wants to ensure he doesn’t become a burden on his own family in years to come and he would still like to be able to provide for his family should something happen to him.The SolutionRecommended a $500k Universal Life insurance policy with Return of Premium and a Chronic Illness Rider.Proposal (Review proposal)There are several offerings in the market today that are very similar in nature. After we met with the clients and discovered the husband’s needs and concerns, we felt like this was the product for three main reasons:He liked the fact that we could use a return of premium death benefit on Founders Plus UL so that the amount available for care could rise over time.Once he was certified as chronically ill either by not being able to complete 2 of the 6 ADLs or a severe cognitive impairment, there is no waiting period that he has to satisfy.Lastly, he was attracted to the fact that he could use the benefit to pay for any type of care, including paying a family member to take care of him.
Example
CASE STUDY
For Financial Professional Use Only | Not Approved for Use with Consumers
Bordenhamman.com
Sales Idea
Put the Life Back in Life InsuranceRole Play / Script
QUESTIONS / SCRIPT
WhataboutMedicareandMedicaid,aren’tthoseprogramsavailabletopayforanychronicillness?Ihearthisquestionallthetimeandthesimpleanswerisno.Medicaremayhelpwiththingslikeabustedhiporknee replacementbutitisnotdesignedforachronicillness.Medicaid,ontheotherhand,isagovernmentprogram fortheindigent.Itisforpeoplewhohavenothingleftandtheirfinalstopisacarefacilitylikeanursinghome. Anotherreasonwhythegovernmenthasmadechangestothetaxcode,becausetheyrecognizetherehavetobe moreoptionsforfolks,otherwisewewillbepayingforit.WhatifIgaveeverythingawaytofamilylateronwhenandifIhaveachronicillness?Ihearthisquestionoften: theexamplewhereapersonisdiagnosedwithAlzheimer’sandearlyonfigurestheywillgiveitallawaynowsoMedicaidwillpayforit.Itdoesn’tworkthatway.Thegovernmenthasstrictlook-backrulesthatcangoasfarbackas5years.TheywillassesspenaltiesandaformulaisdeterminedthatwillnotallowyoutouseMedicaid formonthsorevenyears.TheAlzheimer’sexampleistheworstbecauseitcanlastaverylongtime.IfIdonothingandjustselffund,whichassetsshouldIusefirst?Thisisagreatquestionforyouradvisor.Dependinguponhoworwherepaymentsaremadefrom,therewillbeeitherataxorinvestmentsurcharge.For example,ifmoniesareusedfromamanagedaccount,therewillbesometypeoftaxchargetosurrender,eithercapitalgainstaxorordinaryincome,alsothemoneyisnotinthemarketandyoumaylosesomereturnvalue. Lifeinsurancemaybeabetterassettousethantheinvestmentportfolio.Clientscankeeptheirportfolios invested,whichhelpsensuretheywon’trunoutofmoney.HowmuchbenefitshouldIget?First,weneedtodeterminehowmuchdeathbenefitprotectionyouwillneed, thenwecanlookataddingonarideranddeterminingwhatamountofbenefityouwouldneed.Keepinmind,though,thehigherthefaceamount,thehigheryourpremiumamountwill be.Oneruleofthumbistolookatyourtotalportfolio,specificallyyourliquidinvestedassetsplusanydebtyou mayhave.Oncewedeterminethatnumber,wecanlookathowmuchthepremiumwouldbeforanamountoflifeinsuranceequaltothatnumber.Fromthere,wecanconsiderthepremiumforthatamountofcoverageanddeterminehowweneedtoadjusttheamountofcoveragetofindadesiredpremiumamount.Youaremovingassetsfromonepockettoanother;however,thesefinancialinstrumentsarelongterminnatureAnotherwayissimplemath.Oftentimes,achronicillnesscanlastbetween6and10years.Atfirst,peoplestayathomeandworkwithfamilyandcaregivers.Mostofthetimelifeisn’tallthatdifferent.Thecostearly oncanrangefrom$25,000to$50,000.Butremember,withtheproductthatIshowedyouthemoneycanbeusedforanything.Youcantakethefamilyonacruisearoundtheworld.Nursinghomestaysonlyaveragearoundtwoandahalfyears,butinthestateofCT,theycostover$100,000foraprivateroom.Costsaregoingupaswitheverything.
For Financial Professional Use Only | Not Approved for Use with Consumers
Bordenhamman.com
Sales Idea
Put the Life Back in Life InsuranceRole Play / Script
QUESTIONS / SCRIPT (cont’d)
WhatamImissing;whywouldn’tIdoit?Therealityisthatnoteverybodycandoit.Thereareseveralthingstoconsider,suchashowmuchdeathbenefitprotectionyouneed,theadditionalcostofaddingtherideraswellaswhetherornotyouwouldqualifymedicallyforit.Lifeinsurancecompaniesoperatebythelawoflargenumbers, whichiswhatyouaretakingadvantageofifyouqualify.IfIneedcarewillIstillneedtopaypremiumtothepolicy?No,policychargeswillbewaivediftheinsuredis receivingbenefits.Thisisagreatbenefitvs.theselffundplan.After24monthsonclaimthisproductsuspends premiumpaymentsforlife.Policychargeswillresumeiftheinsuredcomesoffclaimwithin25months;however,riderchargesdonotresume.Whatotherquestionsdoyouhave?
Next Steps for ProducerLearn and get comfortable with talk track.Identify clients to engage in conversation.Discuss any questions you might have with your AimcoR Member Firm.Prepare for your presentation.
For more information, or to discuss this concept in details please contact a member of the Borden Hamman Sales Team 800-492-9190, ext. 1
For Financial Professional Use Only | Not Approved for Use with Consumers
Bordenhamman.com