What’s your clients’ most important asset? Their home? Their car? Their business? What about their 401(k) account? You get the idea. How about their paycheck?!
For the majority of Americans, their most important asset is their ability to get up every day, go to work and earn a paycheck. Most of what they own and do is based on what they earn. So whether they are in a one- or two-paycheck household, all of their income is critical to everyday living. Your clients need to insure this extremely valuable asset just like they insure everything else – the need “paycheck protection” insurance.
Problem is, most people don’t realize the importance of this coverage, or they think, “Nothing will ever happen to me. It will always happen to the other guy or girl.” But things do happen to people.
At some time in their lives, one out of every four of today’s 20-year-olds will be disabled for more than three months. And one in three people between ages 35 and 65 – our primary working years – will become disabled for more than three months. 1
Once you are disabled for 90 days, the average disability last more than two years. 2 How much of a hardship would it be to go without a paycheck for 90 days, let alone 2-plus years?!
Have you ever seen the commercial where the lady is sitting outside of a coffee shop and looks down at her napkin – it says, “You will have heart attack today!” Of course, no one really gets a heads up when something bad is about to happen. But we can put a plan in place to help overcome the adversity that comes with a debilitating event.
Put it in Practice: You never know when something bad will happen, so it’s always wise to put “paycheck protection” insurance in place as soon as possible. Plus, getting your clients covered when they are healthy and young makes the process easier and costs less money. Talk to the Ash Brokerage DI team today!
1 Statistics, ssa.gov
22010 Gen Re Disability Fact Book
What do you know about pharmaceutical companies? You’ve likely utilized their products and have a general understanding of how drugs get from point A to point B. But, could you explain the nuances of a particular drug? What about the FDA-approved uses, brand and generic names, side effects and contrast between competing brands? Unless you’re lucky enough to have a husband, brother-in-law and father-in-law who are all pharmacists – as I do – chances are you wouldn’t have a clue.
Life insurance can be just as complex and unique to individuals as their prescriptions – there are countless options for countless needs. Instead of relying on pharmacists for information, however, you can rely on Ash Brokerage. We’ll help you sort through the options with your clients until we find the best remedy.
A few years ago, I helped an advisor with a case for a business owner who had a prosperous company, employees he valued and a family of four at home. When they first met, the client had a few small individual life insurance policies, but he had a need for more coverage – both personally and for his business. He came to Ash Brokerage for a Life Insurance Portfolio Analysis (known as Life Audit at that time) on his current policies. Throughout the process, we were able to educate the client on his policies, which – big surprise – were not performing appropriately or doing what they were supposed to do.
We went back to the basics and performed a simple needs analysis and overall financial assessment with the client. Then, we were able to determine the appropriate type and amount of coverage for all his needs. I had the privilege of being on a phone call with both the advisor and client to answer product questions and offer guidance on the policy’s contractual obligations. This wasn’t a high-level discussion, but rather a conversation akin to friends talking around the dinner table. This well-educated, successful businessman knew very little of our industry, so it was our duty – and the advisor’s – to help decipher the life insurance for him. We helped him gain confidence in his decisions AND helped place his policies in force.
I recently spoke to the advisor and was saddened to hear that the business owner had suddenly passed away in an accident a few months ago. The agent recalled his emotional meeting to deliver the death claims and help provide guidance to the surviving spouse and business partner. They were both thankful for the life insurance. Even though it couldn’t bring their loved one back, it would make their lives just a bit easier to endure. If the advisor hadn’t looked at the client’s old policies and explained why they weren’t appropriate, the outcome of that meeting might have been very different.
Take away: Don’t assume your clients fully understand the life insurance they have, why they need it or the benefits it can provide. After all, you’re not a pharmaceutical expert, and they’re most likely not a life insurance expert. Partner with Ash Brokerage to utilize our Life Insurance Portfolio Analysis process and help educate them.
The emotion of long-term care event speaks for itself – it needs little, if any, explanation. The financial impact, however, should be explained. In detail. Over and over. Don’t stop until the client completely gets the picture.
Cost of care in this country averages $80,000 a year for a nursing home or $50,000 a year for part-time care in your own home. Assisted living falls somewhere in the middle. Twenty years from now, those costs will likely double – 20 years from now, the last of the baby boomers will be entering their 70s.
Long-term care planning shifts the risk off an individual and their family. It’s better leverage on their money. Without shifting the risk, without planning, clients by default are choosing to self-insure. When we show them how to self-insure more effectively with insurance solutions, we have to show them the financial impact of their decisions – good or bad.
A typical, standalone long-term care policy costs $2,500 a year. Average cost of care in this country is $5,000 a month. So what’s more expensive? It makes good financial sense to shift the risk and do long-term care planning.
Concerned about having to lose in order to win? The market today is ripe with solutions that offer a promised benefit. Live too long, die too soon, maintain control over your premium. If your clients have money set aside for retirement, it could be multiplied in value – sometimes two to four times – for long term care! Why wouldn’t your clients want to have their money work harder?
Put it in Practice: Make sure you move past the emotional and into the financial when you’re having the care conversation. The Ash Brokerage LTC team can help show your clients the impact of their decisions.
You’ve heard the sales pitch before: Life insurance is a Super Roth, a Roth on steroids. But has anyone really analyzed these comparisons and their validity? Let’s take a closer look at why life insurance is often compared to Roth IRAs with additional benefits.
To qualify for a Roth IRA, you have to fall under certain limits established by the IRS. If you’re married filing jointly, your income has to be less than $191,000. If filing single, your income has to be under $120,000. In addition to income limits, Roth IRAs also have annual contribution limits – currently the limit is $5,500, but people age 50 and over can contribute up to $1,000 extra per year to “catch up” before they retire.
Life insurance, on the other hand, isn’t bound by any IRS income or contribution limits. Instead, it’s bound by insurable interest and medical qualifications.
In a Roth, you always have access to the basis without penalty. However, if you are looking to access cash in excess of the basis before age 59½, you’ll incur a 10 percent tax penalty. There are exceptions for first-time homebuyers and qualified educational expenses, however.
With life insurance, you may incur surrender charges in the first 10-20 years, depending on the contract. Outside of surrender charges, there’s no penalty for accessing the cash value in excess of basis in the contract before age 59½. It’s important that early withdrawals are closely monitored, however, as they could affect the performance of the contract and create a tax liability if the policy lapses.
Life insurance policies are self-completing and provide beneficiaries a tax-free death benefit – which is greater than the account balance – should the client die before retirement. (Please note that life insurance has cost-of-insurance charges to provide this benefit.) With a Roth IRA, the account balance passes to beneficiaries and may be subject to taxes.
Beyond age 59 ½, both contracts allow the client to access the gain without paying capital gains tax. Neither contract requires a minimum distribution at age 70½ like a traditional IRA.
Life insurance and Roth IRAs have several similarities. However, a few differences may allow high-income individuals to take advantage of Roth benefits through the purchase of cash-accumulating life insurance contracts.
It’s that time of year again! Houseplant Appreciation Day (celebrated Jan. 10) is finally upon us. It’s hard to believe it’s already been a year since we last took the time to celebrate the bond between man and shrub.
Houseplants offer many benefits: They filter our air, look great and can even reduce stress. As we all know, constant time, attention and care are all required to successfully tend to our green friends. Many of us are more than up to the task.
Why then, do we neglect to care for one of our clients’ most important financial instruments: their life insurance?
Most financial professionals agree that a client’s life insurance holding should be reviewed every couple of years, or after any major life event (marriage, birth of a child, new job, retirement, etc.) If your clients own any form of cash value life insurance, reviewing the coverage regularly is even more important. Unfortunately, this rarely happens.
Maybe it’s lack of insurance knowledge that keeps us from contacting our clients. Maybe we want to avoid the image of the “salesman.” Maybe we don’t even know who to ask for help. Whatever the reason, Ash Brokerage has the solution: our Life Insurance Portfolio Analysis (LIPA) team!
The LIPA team is a dedicated group of people who specialize in the review of in-force life insurance. With a signed authorization from the policy owner or trustee, and a couple other items, they can order information from the issuing insurance company to “stress test” the health and viability of any insurance policy.
After the in-force policy performance has been reviewed, the team can look at the marketplace today and determine if there are any potential improvements to be made. The life insurance industry is a fluid marketplace; products are constantly changing and evolving, just as your houseplants are constantly growing!
All joking aside, as a financial professional, understanding the need for life insurance review is critical. The consequences of a poorly managed policy can be devastating.
As you take time to celebrate the indoor flora in your life (or not) on this Houseplant Appreciation Day, at least remember this: You have a dedicated team at Ash Brokerage that is waiting to help take the pain out of life insurance review. Our goal is to be objective, efficient, and make you look like a professional. Call the team today for marketing materials, sample outputs or to simply learn more about the process!
© 2018 Ash Brokerage LLC.