Life Cycle Financial Planners, LLC

Tag: buying life insurance

7 Helpful Tips to Review Life Insurance
Life Insurance Policy Forensics

Follow the 7 helpful tips to review life insurance coverage below and you will either improve it or have confirmation that the policy is appropriate. It makes sense to review all insurance coverage every two years. Done this way, each type of insurance should take no more than 15 minutes.

For many individuals who own or purchase life insurance, having an objective and impartial advocate in the process proves to be invaluable. It is a complex asset class, there are hundreds of insurance companies with 50 State Insurance Departments. For individuals or businesses, our service helps you navigate the life insurance world with the comfort of impartiality defining underscoring the relationship. Acting in the best interests of our clients is the cornerstone of our practice.

For institutional owners of life insurance policies or individual trustees of trust owned policies, life insurance is an asset that must be regularly monitored by the policy owner. The owner is a fiduciary and is therefore responsible for the policy and for keeping it in good standing as any other asset for which they have this responsibility. When revocable or irrevocable trusts are owners of life insurance, we recommend that the policy or policies be reviewed on a regular basis by the Trustee. If the review is out-sourced to a professional, we suggest that these reviews be done on a fee basis.

Long before other professionals began working in this area, we recognized the value of an unbiased, fee-based option to give trustees and owners the proper level of due diligence assurance and trustee compliance.

The life insurance industry is in a constant state of change making a life insurance policy a complex financial tool. Many types of policies and their components are misunderstood by the policy owner. The insurance industry is constantly changing the way life insurance is designed, priced and underwritten. Having an objective professional who is not contractually prohibited from selling products is similar to the value of a real estate appraisal done by an independent appraiser.

FREE OR FEE? IS THERE A DIFFERENCE?

Trust Owned Life Insurance (TOLI) should be treated as a “buy and manage” asset. Too often, life insurance agents offer only the buy function and not the manage function as this is typically not part of their standard discipline. Every Trustee and Owner of a life insurance policy must ask themselves this question: “Is there a difference in the value of a life insurance policy review done on a fee basis versus a free review?” Is the review being done by a sales agent as a way to create selling opportunities? The goal for policy owners is to develop a review and monitoring model based on best practices versus predatory practices. When the owner is in a fiduciary capacity, the review process should be done on a fee basis to ensure impartiality.

THE 7 BENEFITS OF A REVIEW – CHANGE CREATES RISK FOR OWNERS HELD TO A FIDUCIARY STANDARD.
1. Life Expectancy has lengthened. Insurance companies have implemented pricing and underwriting standards to reflect these improvements. There have been significant changes in heart disease, cancer, diabetes, high blood pressure, mental disorders, medications and other medical issues.
2. Insurance companies have introduced innovative new products and pricing techniques that reduce premiums and improve policy performance. For example, indexed universal life is policy type that did not exist 20 years ago.
3. Interest and dividend crediting rates change. Economic conditions are always changing, requiring insurance companies to either increase or decrease their crediting rates. These crediting rates are directly tied to the rate of return in the policy. As a result, due to today’s low interest rate environment, many interest sensitive policies such as Universal Life, Variable Life, Indexed Universal Life and various combinations of these, issued prior to 2000 are not performing as originally intended.
4. Market conditions have changed. Fluctuations in the stock market have impacted life insurance. Many customers purchased Variable Universal Life policies in the 1990s that are at risk of failing or in need of re-calibration due to these fluctuations.
5. Planning goals of the policy owner may have changed. Evaluation of current goals and needs is an essential part of the life insurance audit process.
6. New products have emerged possibly making previous product selections less desirable in light of new options.
7. Federal Estate and Gift Tax laws have changed which can eliminate the need for coverage.
WHAT IS INCLUDED IN THE REVIEW?
- A client update of original goals and objectives and a policy summary.
- Location of original policy and all amendments.
- A review of the structure of the policy, ownership, beneficiaries, payment methods, relative to the client objectives.
- An assessment of possible rate class improvements.
- An evaluation of the effect of changes in interest rates/sub-account performance, increase in cost of insurance, or any combination thereof. Updated carrier ratings provided from national rating agencies.
- Market Comparison. An objective evaluation on whether there is a more cost effective and reliable way to provide the results the client expects. This is intended to ensure that the client’s current and future objectives are being met. Also review the availability of new or improved carrier products.
- Context Analysis –is the policy still suitable for the current estate plan, as circumstances are constantly changing in clients’ lives as well as applicable tax law?
- Premium Funding Analysis – Many policies will eventually lapse due to poor policy performance, leaving the client with a sizeable premium increase. Current projections will be obtained to view the policy under different conditions.
- Stress Test – Worst case scenarios will be analyzed by running a variety of different illustrations from inforce carrier(s) and alternative carrier(s).
- Secondary Market Analysis – If it is determined that a policy is no longer needed or wanted, rather than lapsing or surrendering the policy, it may make more sense to sell to a third party institution in exchange for an immediate cash settlement or arranging for a lender to make the premium payments.
Before any review can be begin, it is critical that we speak with the insured/owner and their advisors in order to gain important insight concerning the policy’s origination, purpose of insurance and how it fits into today’s planning goals and objectives. Please contact us at 561-9-869-4500 or email me to arrange a complementary consultation about our policy review services.
December 8, 2016
Lower Your Life Insurance Premiums With A Smart Hybrid Policy – Protect Your Beneficiaries Better.
Lower the Cost of Your Life Insurance and Protect Your Heirs the Way You Intended:

Until now, life insurance buyers did not have an option to structure the payment of the policy’s proceeds to their beneficiaries. All that has changed – now you have the control to design the payout exactly as you want them paid. Why does this matter?

Turning the proceeds into guaranteed payments by the insurance company LOWERS THE ANNUAL PREMIUMS as much as 40% and protects the proceeds from every kind of risk.

Do you want the beneficiaries of your life insurance policy to receive a lump sum? One of the most important things you can do for your heirs is to protect them exactly as you intended when you decided to purchase life insurance. Remarkably, life insurance proceeds only last, on average, 3 years! Ask any parent or spouse if they INTEND the proceeds to be gone in 3 years. That is never their intention.

The perfect plan guarantees the number of payments you choose, turning the proceeds into payments that can never be mismanaged. With interest, the insurance company makes structured payments to your beneficiaries based on the plan you create when you set up the policy. Everything is guaranteed. You can change the plan anytime.

For example, instead of a $2,000,000 lump-sum payment, your beneficiaries can receive equal payments of $200,000 for 10 years. Or equal payments of $100,000 for 20 years. How about a plan that pays $500,000 upon death and 10 more equal payments of $150,000? Each person is different and now, each person can customize the payout to meet their precise, individual needs.

It gets better. The premiums can be as much as 40% lower every year depending on the time frame you choose. Or, for the same premium in your current policy, you can increase the amount of insurance up to 40%!

The “Installment Payout Option” allows the policy owner, at the point of purchase, to choose how many years to defer these payments.

Win –Win: You either purchase up to 40% more life insurance for the same premium as a lump-sum payout or lower your annual premiums up to 40% every year. By choosing a greater number of payout years, the ANNUAL SAVINGS is increased.

The surge in annuity sales over the past several years is evidence that principal protection and guaranteed results are critically important to millions of consumers. “This groundbreaking alternative is the perfect life insurance solution”, says Ted Bernstein of Life Cycle Financial Planners. And, it is available for both term and permanent coverage.

Why upgrade to the Installment Payout Plan?
1. Transform lump-sum proceeds into guaranteed installments.
2. Offers the most competitive premiums available – everything GUARANTEED.
3. Reduces premiums as much as 40% for same amount of death benefit.
4. Protects life insurance proceeds from market risk.
5. Tremendous flexibility, installment periods between 5 and 30 years.
“The biggest challenge we face is raising awareness of this important option”, says Ted Bernstein, Owner of Life Cycle Financial Planners. “Almost everyone can upgrade their insurance coverage and we are uniquely qualified to help our clients…even smokers and people paying more for rated policies.”

Please call us at 561-869-4500 and let us help you compare your existing policy with the benefits of the Installment Payout Option. Or, email Ted.

Make sure to inquire about Life Insurance with living benefits and turn the face amount of your life insurance policy into an emergency health insurance fund.
October 20, 2016
The Incredible Value of Life Insurance – Nothing Else Can Do This…

As September is Life Insurance Awareness Month, this is a great testament to the value of how life insurance protects us. We offer state of the art solutions that are customized to meet your specific goals and objectives. Let us help you minimize your premiums and maximize the value of your coverage. Please call me at 561-869-4500 or email me at tb@lifecycleplanners.com

October 19, 2016
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October 13, 2016
Life Insurance Industry Must Do Better Controlling The Important Conversations.

Can you recall any life insurance company campaigns targeting consumers directly about the value and virtues of their core products? Have you ever seen these ads during the LPGA, The Masters, The World Cup or the World Series?

They could be promoting the value of income annuities in retirement, or the differences between permanent life insurance and term insurance? Each of those events reaches the necessary demographics for our industry. Imagine if Apple did not advertise directly to their customers? What if Ford didn’t advertise directly to buyers but GM and Toyota did, spending hundreds of millions of dollars targeted right at those consumers? The immediate impact on GM sales would be dramatic.

Imagine if these companies left the sole messaging responsibility to their local, privately owned distributors? They wouldn’t. It would be disastrous in every way. And yet, this is exactly what is happening with the life and annuity companies; almost without exception.

This is not about brand advertising. There is plenty of money being spent on branding ad campaigns while Suze Orman, Ken Fisher and Dave Ramsey have taken control of these conversations affecting our businesses.

Why are these companies not advertising and marketing their products to their policyholders? One explanation from some companies is that they do not sell directly to consumers and as a result, it is not their responsibility. Insurance companies rely on a variety of distribution methods to sell and reach their policyholders, mostly through a network of professional agents who specialize in the sale of these products.

Distribution in the automobile industry is similar. For example, as consumers, we are unable to purchase a BMW directly from the BMW company. Nor can we buy a Cadillac directly from GM. We buy from their middleman, their dealerships. The car companies support their distributors in many ways and one way is through direct to consumer advertising and marketing. The manufacturers advertise on a national level and their dealerships are targeting more locally in a coordinated partnership.

We have reached the point where our product manufacturers must seize this responsibility and begin to advertise, promote and market the products they manufacture, directly to insurance and annuity buyers. Over the past several years, there has been an obsession to “crack the code”, to find a way to jump start and create online consumer demand for life insurance and annuities. Unfortunately for all stakeholders, no magic bullet has been found. Life insurance is sold, not bought. But the insurance companies can help us create demand for these products. We are the industry’s “dealerships” and we simply cannot afford to shoulder this responsibility without their help.

The time is now for the industry to use its formidable resources and take control of these conversations. The carriers should begin inspirational campaigns that are dedicated to influence consumers to take action. This messaging requires complex, multi-media campaigns. I believe the ROI will be significant on many tangible and intangible levels, especially on new sales.

Without this change, calculated misinformation from our competitors will continue to influence consumers about our products. Consumers will lack the education based information to make informed decisions which negatively impacts sales. As the whole pie continues shrinking, so too will the overall slice for each distributor. We know this happens. The industry continues to lose agents every year and the remaining agents have reached an average age of 60. Sales are down or flat every year!

Currently, it is our competitors who define our products, our services and our professional status. They spend more, they message better and they communicate better with financial journalists. With all due respect to the few journalists who cover and do know the insurance and annuity space well, there are far too many others making incorrect and un-rebutted claims about our industry. I worry every time I see an article about life insurance and annuities written by journalists without the credentials to critique these products. Asking the distribution system to be solely responsible for pushing back against these misinformation campaigns is ineffective. By definition, we are easily dismissed for lacking objectivity and impartiality.

As these trends persist, crises of uninsured’s and under-insured’s have emerged into a national problem. I also suggest that there is a crisis of incorrectly insured’s, people who own the wrong coverage. There are millions of term insurance policyholders in their 50’s and 60’s who are near the end of the guaranteed term period, without good options. They didn’t convert and the conversion deadline passed meaning they cannot convert if they wanted to. For some, obtaining new coverage is filled with hurdles. Their health has changed and their budgets may not allow them to acquire what they now need.

How did they get here? Suzy Orman, Dave Ramsey and Art Williams told them to buy term and invest the difference. But nobody did. They bought term but didn’t invest the difference with any kind of discipline, if they did at all. Too many inexperienced insurance agents told people they would not need life insurance once their kids were grown and independent. Ask any person over 50 with kids and a spouse if they have no further need for life insurance today. There is plenty of pain and blame to go around but these consumers deserve good solutions going forward and we need to counsel the millennial generation about how to buy the right blend of affordable protection, for now, and permanent coverage for later. The cheapest term insurance product when they’re 35 is not the answer.

It is time for the entire compensation system to be reconsidered. Part of the reason for the widening gap of un-insured’s and under-insured’s in the middle market is because the commission is too low for sales in this market. As premiums drop and commission levels remain constant, the selling compensation is dropping in real terms.

To conclude with some good news, I am hearing more and more carrier interest about direct to consumer campaigns. Let’s hope this interest turns into real, meaningful dialogue about these issues, with all stakeholders.

I can be reached at Life Cycle Planners, Email or Facebook.

October 11, 2016
Women Face Unique Threats In Retirement – CNBC’s Epperson On Why Annuity Should Be Part Of A 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.

Helping Women Retire Securely

October 3, 2016
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.

September 30, 2016
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.

September 22, 2016