Life Cycle Financial Planners, LLC

Author: Ted Bernstein

  • When Does Life Insurance Without Commission Mean Better Value?

    When Does Life Insurance Without Commission Mean Better Value?

    Life insurance without built-in commissions is best suited for permanent life insurance buyers who want low premiums and better performance, especially in the very early years. The commissioned compensation model was designed more than 100 years ago when the average face amount of a life insurance policy was less than $5000. Today, some people purchase life insurance policies with face amounts as high as one hundred million. If you are considering a permanent life insurance policy, chances are good that you will find value in life insurance policies that offer some flexibility over how much commission is paid.

    Life insurance premium financing is a perfect example for using a low commission product to enhance the structure of the financing. I believe it is a primary financing goal to borrow as little as possible and pay the least amount of interest expense for the loan. Designing the life insurance policy properly can help accomplish both of these objectives. 

    As the innovator of life insurance without commissions or fee-based life insurance, I will always be concerned about the negative perceptions associated with life insurance. Offering complete disclosure and transparency about policy pricing, permanent insurance without built-in commissions can offer meaningful value to life insurance buyers.

    “Bernstein…has introduced what are essentially no-load and low-load policies to the life insurance business…That could mean huge savings for policy buyers.” Forbes
    “Low-load Life Performs Better For Clients, Companies” National Underwriter

    Short Term Value Enhancement

    Instead of creating policies with built-in commissions, the insurance company can design policies to offer better value in the early years, especially. Because the commission is a relatively small expense over the life of a policy, its long term impact is less dramatic. When the insurance company does not have to pay high early year commissions, the policy’s early year surrender values can be as much as 95% of the premium paid. Instead of receiving commissions from the insurance company, the life insurance buyers pays a fee.

    “Life insurance without built-in commissions provides a meaningful alternative for buyers of large permanent life insurance policies, especially in the estate planning, premium finance and corporate owned life insurance markets.” Ted Bernstein“Back in 1982, Bernstein was sure he had an idea for a new service that would save consumers money. There was just one problem: it was bound to alienate all the people who would normally sell it…he started a campaign to explain his concept to other professionals to whom a wealthy person might go to for advice for life insurance: namely, lawyers, accountants and bankers in trust departments.” Martha Mangelsdorf, Inc.

    Typical Uses of Life Insurance Without Commissions:

    1. Buyers seeking large face amounts, in excess of $5,000,000.

    2. Overfunding a permanent life insurance policy for retirement planning purposes.

    3. Second to die policies, especially in excess of $5,000,000.

    4. Premium financing.

    5. Corporate Owned Life Insurance

    premium financing, life insurance commissions

    Give us a call at 561-869-4500 or email me at TB@LifeCyclePlanners to get started. I offer a complementary conversation about anything on your mind concerning your insurance coverage or succession plan.

  • The SAFEST Guaranteed, Lifetime Income Solution – Everything Guaranteed!

    https://www.youtube.com/watch?v=u6sQK1zLKJU

  • How Much Life Insurance Should You Buy?

    How Much Life Insurance Should You Buy?

    Term Insurance Rates Are Remarkably Low! How Much Life Insurance Should You Buy? From Who?

    It is important for consumers to have a good understanding of how inexpensive term insurance really is to own. Once you engage with a professional to start the process, a robust discussion will usually follow about “how much” coverage do you need to meet your goals and objectives. From there, you should learn about state of the art innovations to reduce premiums, create value and increase flexibility. Maximum flexibility and the ability to customize for most people, is more important than anything else.

    The Installment Payout Option – Just one example: Most people buying life insurance today for income protection prefer to have the proceeds paid to their heirs in a partial lump-sum with the balance paid in equal, guaranteed installments over a time period they choose. Life insurance buyers now can control how the proceeds are paid to their beneficiaries at the time they purchase the policy. Until recently, beneficiaries were always paid in a lump-sum. Now, at the time of purchase, you instruct the insurance company to pay GUARANTEED, pre-determined payments over a time period you selected. The premiums can be up to 40% less, EVERY YEAR!

    Things change as time goes by. The Installment Payout Option allows you to re-design the structure of payments at any time to meet the needs of your family, without underwriting.

    Still, too many people are only concerned about the minimal premium differences among different insurance companies. They key is to work with a professional to first customize exactly what you need and want the policy to do in the short and long term. Not doing so is the equivalent of going into an auto dealership and demanding the least expensive car without first “building” the car to meet your unique goals and objectives. Worse is the fact that most people are not aware of these relevant innovations that can now be customized into your policy. More and more insurance companies are creating products that allow experienced professionals to design the perfect policy for you.

    I offer a complementary consultation, by phone or in person, which is designed to help you explore the innovations that now exist and to determine if I am the right professional for you. I have 30+ years of experience that will ensure you end up with the perfect plan and products for you.

    Send an Email to Ted Bernstein or call my direct number at 561-869-4500. Upon request, I can provide you with many clients or professional advisors who can speak to the experience of working with me and my family.

  • What Should You Choose: Time or Money?

    What Should You Choose: Time or Money?

    An excellent article in The New York Times Sunday Review 

    “But when it is a choice, the likelihood of choosing more time over more money — despite the widespread tendency to do the opposite — is a good sign you’ll enjoy the happiness you seek.”

    Given the choice between more time or more money, which would you pick? For a beach vacation, you might pay more for a direct flight to gain a couple of extra hours getting sand between your toes.  Read More…

  • Is Your Universal Life Insurance Policy Keeping You Awake?

    Is Your Universal Life Insurance Policy Keeping You Awake?

    Is Your Universal Life Insurance Policy Keeping You Awake?

    Several months ago I began writing about a few life insurance companies that are increasing the insurance rates within certain policies. The highly unusual practice is contractually permissible but RARELY done. Some have started arguing, and suing carriers, suggesting it is not legal. I helped the Wall Street Journal and several other very well respected journalists with their coverage. It is an important topic for those impacted by these increases.

    If you own a Universal Life policy and you are concerned about it, contact me and I will be glad to offer what I can to give you guidance. You can reach me at 561-869-4500 or email me at: EMAIL TED

    Most policies are not in immediate danger of lapsing or needing higher premiums. IS YOURS?

    Something interesting is happening that is worth mentioning. Some Whole Life salespeople are universal life bashing.

    The problem here is NOT universal life. The problem is how insurance companies failed and fail to communicate with their policyholders about how to manage a universal life policy. The proper way to manage a Universal Life policy is easy to convey and communicate to every policyholder but the companies have left this very important issue up to their agents. Some agents do, too many don’t. What happens if your agent leaves the business? What happens if your agent forgets? Each and every year, the insurance company can mail you, email you and use all sorts of other tools to inform you that the policy may be underperforming. If you monitor the policy and make tweaks along the way, you won’t find yourself going over a cliff.

    The issue:

    Whole life costs more for the same coverage, it is not flexible, and will not be competitive when rates are moving up quickly. Its higher annual premiums prevent many people from ever getting permanent insurance. It simply costs too much for the majority of life insurance buyers.

    If you put the same Whole Life premium into a Universal Life policy and a Whole Life policy for the same person, run at the same interest rate or dividend scale, and then compare them, they will perform almost identically. The guarantees in Whole Life are usually stronger for a difference that I do not consider to be very meaningful. Nearly every inforce Universal Life insurance policy in the U.S. (tens of millions or more) is not at the minimum interest rate and is not charging the guaranteed cost of insurance. The Whole Life companies are also nowhere near their guaranteed dividend scale, typically Zero percent.

    Yet, every Whole Life policyholder is paying premiums as if the dividend scale was Zero percent. This means that Whole Life policyholders are OVERPAYING for insurance coverage to never have a premium increase to maintain their coverage. There is nothing wrong with that structure. Once people understand that they are paying for or will have to pay for guarantees that no insurance company is presently experiencing, most want a better option.

    The BETTER option:

    The better option is a flexible premium, adjustable life insurance policy that gives you the flexibility to add premiums if you need to, when you decide it makes sense. You make those coverage decisions with the guidance from a professional, at least once a year. By doing so, you will never be caught off guard and any changes can be met with a measured reaction. The result is that you will pay less for your coverage each year but retain the right to raise the premiums.

    Who should own Whole Life insurance?

    A simple question with a simple answer, finally. For my clients who know at the outset that meeting annually to discuss their coverage is less likely than not and those clients who don’t voluntarily save well, Whole Life is a good option. They will pay more to make sure any changes don’t negatively affect them and the Whole Life premium cannot be missed which helps some people create a forced savings.

    So, why then should a person buy Universal Life over Whole Life? The answer is to pay lesser premium and have more flexibility. The difference in flexibility is not close. The higher premiums put into a Universal Life policy will essentially create identical values in the UL policy. By doing this, you will be overfunding the Universal Life policy which is exactly what the Whole Life policy does. The Whole Life company gives you a dividend to compensate for the increased premium they charged you.

    It is this difference in flexibility that opens the door for Universal Life to be mismanaged and underfunded. It is not a matter of product superiority or inferiority.

    My comments are not based on any type of inability to offer Whole Life. I am able to offer my clients nearly every whole life contract available in the market. I am not against Whole Life. I am for it when the client profile, goals and objectives warrant its use.

    All life insurance should be monitored annually for numerous reasons. There once was a time when you could put a life insurance policy in a vault, pay the premiums and never think about it. That ship has sailed and for good reason. Even if we could go back to that time, is it in our best interest to do so? Absolutely not. From here we need to learn this valuable lesson about a product’s evolution and the NEED to monitor the policy with a professional, once a year. Once you get the hang of it and understand how the internal and external factors are impacting policy performance, the monitoring process is 15 minutes per policy with most of the work done by your insurance professional.

    MY OFFER: I am offering you a 15 minute, no obligation phone call, to discuss any concerns you may have about your inforce coverage. I normally charge to do policy audits and I have been providing this service for 30+ years to individuals, attorneys, C.P.A.’s and trust companies. The Wall Street Journal has done a good job covering this Universal Life topic and I would be happy to email the articles to you, upon request. It is an honor to be quoted by such an esteemed business publication about a topic that I am very passionate about.

    Ted Bernstein
    Retirement Planning
    561-869-4500 – Direct