With interest rates at historic lows and people living longer, guaranteed lifetime income is critical to a secure retirement plan. I recently wrote an article about Longevity Risk in a column I write for the Boca Raton Tribune about Life Cycle Financial Planning. It is just as relevant today.
“A lack of awareness and understanding about guaranteed income solutions is keeping an alarming number of people at risk during retirement. Most people feel safer and more secure with adequate amounts of guaranteed lifetime income. Without it, you are missing a key component of a balanced retirement plan. With it, your future is anchored in security, allowing you to consider more risk in other areas. An experienced specialist in guaranteed income solutions can help you determine the appropriate amount of income for your specific retirement plan.”
A big part of our practice is dedicated to helping women create retirement security. We discuss the challenges facing many single women face planning for retirement. A common concern shared by all women is how they will manage complex portfolios that require attention and time and is that necessary. The challenges of managing a complex portfolio of equities or bonds gets more difficult with age. We offer insight to men and women about just how difficult this process is at 80 or 90 years old. Once people come to learn about the benefits and the guarantees of income annuities, they begin to shift their risky equities to no-risk, guaranteed income contracts.
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.
