Protection Products

What “Coco” Teaches Us About Legacy Planning


Protection

I recently sat down with my wife and son, at their urging, to watch Disney’s animated movie, “Coco.” In a concise recap, the movie is about a young Mexican boy who is trying to understand why his family has alienated his deceased great-grandfather, especially on the Day of the Dead, a Mexican holiday that honors family members who passed on.

In typical Disney fashion, they put a nice spin on the story and, while their message of redemption plays well, I found myself thinking of a different message.

You see, in the movie we learn about the spirit world and how memory play a big part in a person’s legacy. When people in the spirit world are completely forgotten by their family in the living world, their spirit can no longer exist – it’s essentially your final passing. This reminded me of legacy planning.

Many advisors instruct their retired clients to allow their life insurance to lapse, except for a small amount for final expenses. They say, “Your children are grown, your home is paid for, you don’t need life insurance.” While I have always found this to be a bit cynical, watching “Coco” helped bring the concept into clarity.

Wouldn’t it be fantastic if, on your grandsons 25th birthday, you could provide him with a check for $20,000? And what if he received a check for the next 10 years, along with a handwritten note from you telling him how much he means to you? And, as he receives that check, wouldn’t it be wonderful if he could recall a favorite memory or two that you shared with him?

And, if he used that money to put a down payment on a home, or establish a college fund for his new baby, you would essentially be providing his family with a financial head start that maybe you didn’t have but wanted for him.

And, what if all of this could happen many years after you had passed away? Wait, what?! Yes, you can leave a legacy to your children, grandchildren, nieces and nephews or a favorite charity many years after you are gone. That is the power of life insurance. 

Like the characters in “Coco,” your clients want to remembered long after they leave this world. To all my advisor friends out there, please don’t let this movie’s message go to waste. Help your clients, today, to create their legacy for years to come.

Life Insurance Legacy Planning Estate Planning

Ask an Underwriter: Why should clients be screened for diabetes?


Protection

November is American Diabetes Month and, ironically, the month for pumpkin pie! But … diabetes is about far more than skipping or modifying dessert. It’s a common condition affecting millions of Americans with potential life-threatening complications.

In fact, according to the American Diabetes Association, 29.1 million Americans, or 9.3 percent of our population, had diabetes in 2012, and 1.4 million Americans are diagnosed with diabetes every year.

So, even if your clients haven’t been diagnosed as diabetic or pre-diabetic, it’s important to understand the disease and its risk factors. One simple screening could save a life or a lifetime of complications! Unfortunately (or fortunately), their lab results can come back with surprising results.

 

Types of Diabetes

Type 1 diabetes

usually develops in childhood or adolescence (prior to age 30) and accounts for 10-15 percent of all cases. In Type 1, the cells in the pancreas responsible for producing insulin have either been destroyed or produce no insulin. Since no natural insulin is available, treatment involves injection of laboratory-manufactured insulin for effective control of glucose metabolism. Risk factors for Type 1 include autoimmune disease and a family history of diabetes.

Type 2 diabetes

is commonly associated with obesity and onset after age 30. A family history of diabetes is common, and sufferers probably inherit a predisposition to glucose intolerance, which is exacerbated by obesity. 

Gestational diabetes

starts or is first recognized in pregnancy, in a previously non-diabetic woman. It usually becomes apparent during the 24th to 28th week of pregnancy. Risk factors include family history of diabetes, obesity, birth weight over 9 pounds in a previous infant, unexplained death in a previous infant, congenital malformation in a previous child and recurrent infections. Thirty to 50 percent of women with a history of gestational diabetes develop non-insulin dependent diabetes within 10 years. 

 

Potential Complications

  • Diabetes Mellitus

    is a group of metabolic disorders characterized by chronic hyperglycemia from insulin deficiency or resistance, or both. It is usually irreversible and, although a reasonable lifestyle can be enjoyed, the late complications result in reduced life expectancy. Macrovascular disease leads to an increased prevalence of coronary artery disease, peripheral vascular disease and stroke. 

  • Neuropathy

    is damage to the small blood vessels that supply all nerves, causing numbness and tingling in the extremities, abnormal sensations and muscle weakness.

  • Nephropathy

    is a progressive kidney disease caused by damage to the capillaries due to longstanding uncontrolled diabetes.

  • Retinopathy

    is damage to the retina in the eye from microvascular changes which can cause blurry vision and, in extreme cases, blindness.

  • Proteinuria

    is the presence of excess levels of protein in the urine due to damage to the kidneys.

 

Testing – Hemoglobin A1C

The industry gold standard for identifying applicants with, and those at risk for, diabetes is an A1C screen. This test measures a person’s average levels of blood glucose, or blood sugar, for the past two to three months. It is measured as a percentage, and the ideal range is less than 5.7.

A hemoglobin A1C screen is stable, is not affected by glycolysis and does not require fasting, making it more reliable and accurate that a glucose test. These screenings can empower applicants to take control of their health, especially those who are pre-diabetic and have the chance to make life-saving changes.

So let’s all become aware – about diabetes or any disease. Ask questions. Educate yourself. Be an advocate for yourself and your clients. More importantly, know your number!

 

Learn More

Statistics About Diabetes, American Diabetes Association: http://www.diabetes.org/diabetes-basics/statistics/

 

About the Author

Debra Misko is passionate about her work and gratified to help clients find security for their family’s future. She has worked in underwriting for 21 years and has been with Ash Brokerage for more than eight years. A graduate of Schoolcraft College, she has a business degree and has also completed two of the Academy of Life Insurance Underwriting exams. 

 

UW Underwriting Diabetes

Why You Can’t Afford to Avoid Long-Term Care Planning


Protection

Personally, I’ve seen two family members require long-term care, and those care events were emotionally, physically and financially draining for everyone involved. Planning ahead could have made a world of difference.

Professionally, I’ve seen an advisor’s relationship with his clients negatively impacted when he avoided discussing LTC. Again, a little planning could have made a world of difference …

A Missed Opportunity

About two years ago, I received a call from an advisor whom I’d been trying to connect with for months. He apologized for not returning my calls and emails, and he said he needed my help, which made my day.

The advisor, who focused primarily on investments, explained that recently, one of his top clients came into the office and laid down two linked benefit policies – one for him and one for his wife. The client said he was at the bank when the bank’s advisor pitched the policies to cover their future potential LTC expenses, in return protecting the rest of their assets. This made sense to the client and his wife, so they moved forward, using excess cash they had sitting at the bank.

The client brought the policies back to the investment advisor to see how they would fit into the couple’s existing retirement plans. The client said, “We purchased these from the bank advisor because we know you don’t deal on the insurance side.”

Not only was the investment advisor upset because he lost business, but he also felt he let his clients down by not helping them prepare for potential LTC expenses. He also told me these same clients starting moving their money away … to the bank advisor. He said, “I need to be brought up to speed about LTC planning and available solutions before this happens again.”

Moral of the story: If you aren’t having LTC discussions with your clients, someone else will.

 

Your Chance at Redemption

The concept of a three-legged stool is used a lot in our industry. We usually position three needs and point out that any two will have a hard time standing without the third.

This is a simple way to position LTC planning with clients. You may have done a great job of planning their retirement income and wealth transfer plans … But what happens if their health becomes compromised? Their income and estate plans could be ruined. Tell your clients, “This is why I would like to discuss a plan that addresses potential long-term care expenses.”

By positioning an LTC plan as protection for your clients’ assets and income, you’re showing them you care about protect everything they have worked so hard to accumulate over their working years. You’re showing them how to support all three legs of their stool.
Your LTC team at Ash Brokerage is here to help you in any way we can. We understand you’re busy with many other aspects of the financial planning process, and LTC planning may not be your main focus. Let us help you streamline the process and grow your business along the way.

When you’re proactively discussing LTC planning with clients, you’re a step ahead of your competition. Want to get started? Check out last month’s post on opportunities within your existing book of business [LINK] or give us a call.


About the Author

Mickey Belt has been in the insurance industry for about four years and has been able to assist many advisors with incorporating LTC planning in their practices. He views LTC planning as a value-added service that advisors can provide to their clients to protect their assets. Mickey is currently working his way through the Financial Services Certified Professional® designation through The American College.

Diversifying Tax Brackets


Protection

When it comes to planning for retirement, it’s widely accepted practice to diversify your clients’ portfolios. To mitigate risk, investments should come from various sectors of the economy and include different types of income vehicles. 

But what happens IN retirement? Have you looked at diversifying your clients’ tax brackets as well? As they take income, they could take a hit with income taxes. Cash value life insurance is an option to help clients reduce their debt to the IRS. 

First and foremost, cash value life insurance provides invaluable income protection during your clients’ working years, just as term insurance does – but if structured properly, the protection lasts forever. In retirement, when it’s time to start taking income, your client can take withdrawals from their cash-value policy and then loans – all income tax free with proper planning. 

The power comes when you think about filling up their lower tax brackets with mandatory income, such as Social Security, pensions, required minimum distributions, etc., then in years when they need more money, they can use the cash value life insurance to avoid triggering higher tax brackets. 

Here’s an example to help explain what I mean:

  • 45-year-old male, preferred underwriting status
  • AXA BrightLife® Grow Indexed Universal Life contract with $500,000 death benefit
  • Annual premium of $8,465 would generate 20 years of income at $21,153 starting at age 66 (based on the BrightLife® Grow at default of 6 percent)
  • Assumes tax calculations made in 2014, filing jointly
  • TAX SAVINGS: $6,730 (40 percent)

 

 

Social Security, Pension, RMDs, other Taxable Income

Taxable Income OR Cash Value Life Insurance, Roth IRAs and Municipal Bond Interest

Total

First $18,150

Next $55,650

Next $26,200

$100,000

Without Life Insurance Planning

Tax Rate

10%

15%

25%

 

Taxes Due

$1,815

$8,348

$6,550

$16,713

With Life Insurance Planning

Tax Rate

10%

15%

0%

 

Taxes Due

$1,815

$8,348

$0

$9,983

 

Put it in Practice: Diversifying your clients’ assets during retirement could help them reduce their tax bills – and anxiety. Think of some clients who could benefit from this strategy:

  • Clients who have maxed out their 401(k)s or can’t qualify for Roth IRA 
    • Life Insurance can act as a Roth IRA Alternative or Supplement
  • Clients of average means who have expressed concerns about retirement
    • May have seen their parents, co-workers or neighbors struggle
  • High net worth or high earners
    • Many clients with assets over $2 million or incomes over $500,000 are subject to new taxes and don’t need all their assets or income today
    • They may have a retirement need

 

As part of the Ash Advanced Markets team, Matt Bowden’s main goal is to provide advisors with the most comprehensive selling ideas and world-class service to help grow their business. Matt has worked with Ash Brokerage for more than seven years, helping to create individual and business case designs and concepts. 

Living Benefits are ‘Not Your Father’s Life Insurance’


Protection

In the 1980s, the now-defunct car manufacturer Oldsmobile ran a marketing campaign with the slogan, “Not your father’s Oldsmobile.” They were trying to overcome the stigma that their cars were slow, boring and, well, old … They wanted customers to view their brand as sporty and fun, with vehicles that had modern features and amenities. 

Do you see the eerie parallel with life insurance? Our work is not defunct, but many people view it as boring and expensive. The phrase “necessary evil” is often tossed around … who wants to buy that? 

The trouble is, the stigma is false. You see, today’s products are “not your father’s life insurance.” Anymore, it’s not about death benefits, but living benefits, too. Modern products can provide access to cash, disability protection, or even long-term care coverage. 

So what can your clients do with an old “jalopy” life insurance policy? Well, you could possibly help turn it into a new, modern vehicle for getting them where they want to be. 

Every year, Ash Brokerage reviews existing life insurance coverage for more than 1,000 clients using our Life Insurance Portfolio Analysis (LIPA). It’s no exaggeration to say that we’ve seen almost everything this industry has to offer, in all shapes and sizes. 

No matter how many cases we work on, most people are still surprised to learn they can take their existing life insurance policy and exchange it for another with comparable or higher death benefits, while providing long-term care coverage as well. Or that they could create guaranteed, monthly income with a smaller amount of life insurance.

Put it in Practice: Your clients’ old life insurance policies may be classic, but likely not fitting their modern needs. Take LIPA out for a spin and help them discover the living benefits of today’s products. 

 

As manager of the Life Insurance Portfolio Analysis team at Ash Brokerage, Sam Rocke enjoys working on complex cases that require creative solutions. His goal is to not only promote and manage the unique process to ensure clients have the best possible protection, but also to present the planning strategies and concepts in a concise format that’s easy to understand.