The life insurance industry let us down when it allowed the estate tax rate to settle at 40% and the lifetime credit (exemption) to rise to $12MM per couple. The impact is still punishing planners of all stripes. It is time for life insurance companies to step up and commit to national advertising and marketing campaigns to promote the virtues of their core products, especially permanent life insurance.
Since then, the pin has been pulled from the grenade for PERMANENT life insurance. If the estate and gift taxes are successfully repealed in an upcoming tax reform act, it will be a devastating blow for the jumbo case market and for PERMANENT life insurance. The grenade will have gone off. I understand there will be a few niche markets (key man, forced savings strategies, over-funding for retirement income, premium finance and others) that will survive. Those niche markets for permanent insurance may be meaningful enough for a handful of carriers; not for dozens of them. There will always be a need for low face amount, permanent policies. To be clear, the sale of these permanent policies does not support or lead to a successful, bustling practice. That model used to work by helping new agents develop the stepping stones to much larger opportunities. That model is on life support and the repeal of the estate tax will be its end.
Just look at the overall permanent insurance numbers since the industry did not prevent the tax from being lowered or the exemption from rising to almost $6MM per person. Hopefully, the life insurance industry is mobilizing their influence and inspiring their troops to prevent the estate tax repeal from becoming reality. Personally, I don’t see it happening and I’m not sensing the passion and the fear required to win this battle. As much as anyone else in our industry, I hope that I am wrong.
Whether the tax is repealed or not, I would urge life insurance companies to act like companies in other industries who own the responsibility for creating a product’s demand. Without advertising and marketing campaigns on a national stage to re-brand the image of permanent life insurance and its distribution system, the remaining agents who average 60 years old will continue jumping ship. Leaving the responsibility and the cost of creating demand for this product to the distribution system, or no one, is a recipe for further disaster. Manufacturers create organic demand for their products. The auto industry and consumer electronics are two great examples.
Imagine if Apple and BMW left all sales and marketing solely to their local dealerships or the local wireless stores? No national sales and marketing campaigns to launch new products, defend against competitors, shape markets or educate consumers?
Today, most life insurance companies do not advertise on a national stage and if they do, they are brand advertising, which is of little or no value in business development at the local level. We don’t need anymore TV branding ads from insurance companies during The Masters. What the industry DOES NEED is for every relevant company to start running advertising campaigns about the virtues of permanent life insurance (and their other products) during the NCAA tournament, The Bachelor, the morning news shows, The Late Show with James Cordon and The Masters. This is an industry-wide problem and the industry needs to step up.
Permanent life insurance is a remarkable tool with extraordinary flexibility and great versatility. It can be customized, by the right professional, so that no two permanent life insurance policies are the same. No two buyers are the same. Their policies can and should reflect their differences, their needs and their desires, now and in the future.
One client may have an over-funded $5,000,000 IUL with Option C and a death benefit payable in a lump-sum. Another may have a $5,000,000 GUL with Living Benefits and the Installment Payout Option to protect his/her family with 20 guaranteed payments of $250,000 for 20 years. Another client may have a minimum funded UL tied into their lifestyle, earning credits for living the good life. And another might have a $5,000,000 WL policy with vanishing premiums.
Just like the combination of apps on my Smart Phone are not like the apps on another’s, no two permanent life insurance policies should be the same. We each start with a Smart Phone that makes calls. But, the way I intend to use mine is different than how you use yours. Our needs are different and that is what leads to which apps we download.
To help our industry fight the battle against the estate tax repeal, contact AALUfor information about who to contact in Washington.
Ted Bernstein can be reached at Life Cycle Planners or by calling him in Boca Raton, Florida at 561-869-4500.
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.
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.
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.
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.
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.
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.
New products have emerged possibly making previous product selections less desirable in light of new options.
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.
Make no mistake about it. The research continues to confirm that getting advice from professionals is beneficial in every measure: insurance, retirement planning, investing and quality financial plans.
Within 4 to 6 years, households who used advisors accumulated 58% more assets than those who self-directed their investments.
Using a professional advisor for 7–14 years essentially doubled the wealth accumulation of those without an advisor.
After 15 years, households held 2.7 times more wealth than those who did not seek professional guidance.
No other strategy guarantees lifetime income with no principal risk like indexed annuities.
These are NET RESULTS after taxes and accounting for the costs of the professional advice.
Advisors encourage their clients to save twice as much while simultaneously helping their clients develop long-term insurance, investment and retirement plans.
The Growing Demand for Advice.
Millions of people benefit each year from the value of annual reviews. Life Cycle Planning is financially rewarding and leads to more security. We will continue to demonstrate the value of professional advice by offering the best products, solutions and service to our clients. Please call us at 561-869-4500 or email me to arrange a complementary meeting to discuss how we may help.
Why do high net worth people borrow to purchase life insurance?
Premium financing relies on the concept of interest rate arbitrage. A loan enables life insurance owners to keep their money working for them and earning a higher rate of return than the interest rate charged for the loan. Instead of paying life insurance premiums with their own capital, a low cost loan is advantageous. This rate arbitrage must be favorable and appreciated for a successful premium financing arrangement to be suitable and make sense for the borrower.
The Advantages of Premium Financing are:
Low cost method to fund permanent life insurance while offering great flexibility in the future.
Using well managed leverage to drive down out of pocket costs.
Using life insurance to offset estate taxes.
Using low cost loans to fund permanent life insurance with the goal being of having fully funded policies in the later years.
To minimize out of pocket costs in early years until the anticipated exit strategies can pay off the loan.
Successful premium financing is understanding the risks and managing expectations. Working together with insurance companies and lenders ensures successful outcomes. People borrow money to pay for life insurance because they can borrow the annual premiums at a lower rate than what they are earning on their money. This historically reliable arbitrage between loan interest rates and a borrower’s ROI must be present for this to make sense. Later, we will explore this important arbitrage in more detail.
Premium Financing gives families with illiquid estates the ability to acquire large amounts of needed liquidity at death. By only paying annual interest on the loan, the out of pocket cost is less than paying properly funded permanent policies. Many estate planning attorneys find this financing strategy helpful to accomplish their wealth transfer objectives.
With short term interest rates near zero percent, life insurance premium financing gets strong consideration among high net worth life insurance buyers. Proceeds from life insurance provides the much needed liquidity that complements succession planning and wealth transfer planning strategies. Financing jumbo life insurance policies is often appealing to HNW people and their advisors because the arbitrage DOES EXIST between actual borrowing cost and the client’s overall ROI. If we look back 50 years, we see that interest rates are lower than insurance company crediting rates, with almost no exceptions. This correlation is the foundation of successful premium financing.
I have arranged financing for more than 500 families over the course of my career. As a result, I bring valuable expertise and experience that benefits consumers, their advisors, lenders and life insurance companies. For example,it is true that low interest rates are beneficial, if nothing more than causing a lower out of pocket cost. But, financing a life insurance policy should make sense whether interest rates are 3%, 6% or 9%. When borrowing costs increase, the values inside the life insurance policy should also be increasing. That can also lead to less collateral being needed for the loan and less premiums to fund the policy.
The borrowing rate is only one part of the premium finance story. Historically, insurance companies pay higher interest on policy cash values than borrowers pay for interest on loans. This is the other important rate arbitrage that should exist in properly structured premium finance arrangements.
Premium Financing Done Right.
Not free life insurance.
If premium financing is not “free life insurance”, then what is the true cost of financing a life insurance policy? It is the annual interest expense; that is the true out of pocket “cost” of a premium finance loan. When the loan is paid off, either during lifetime or upon death, that too is part of the cost.
With rates near 0%, premium financing is a strategy that deserves strong consideration for high net worth individuals, families and business owners who need permanent life insurance coverage. Compared to paying the annual premiums out of pocket, there are advantages to using a competitively priced loan to pay the premiums.
A properly structured premium finance arrangement is best suited for people who need and want coverage for life. The cost to borrow the annual premiums should be at least 3% lower than the ROI on their other assets. This creates another arbitrage that justifies premium financing. For example, if the loan interest rate is 4%, then the borrower’s ROI on other assets should be 7% or greater. If it is not, then it may not make sense to finance life insurance.
Premium Financing Considerations:
Each premium finance loan is unique and should be stress tested using conservative assumptions. We recommend working with experienced insurance professionals, advisors and experienced lenders who are familiar with this asset class.
The majority of the collateral for premium finance loans is typically the cash value within the policy. The reason lenders are willing to make premium finance loans at low interest rates is because cash value is considered to be as creditworthy as cash. Currently, premium finance loans are less than 3%. While interest rates are at historic lows, it can be wise to consider locking in a fixed rate.
Exit Strategy and The Loan Payoff.
There must be a sensible exit strategy to pay off the loan. One option is to use cash value from the policy. Another is to use assets already in the trust, such as inheritance monies, liquidity events from sales, etc. When the cash value of the policy is used to pay off the debt, make sure the policy is properly funded to remain inforce for life, after the cash value has been withdrawn or borrowed from the policy.
Can Real estate be used as collateral for premium finance loans?
Lenders typically do not like lending against real estate for these loans because the collateral is not easily available. However, there are some lenders that do work with existing clients to use real estate to support these loans. This tends to complicate something that is already complex. Customers with strong relationships have been known to receive loans from their existing bank.
Premium Financing and Estate Planning.
A premium financing arrangement can be beneficial to your overall estate plan. The life insurance policy is typically owned in a trustwithout gift tax or estate tax consequence. It is not uncommon for $25,000,000+ life insurance policies to be financed and owned in trusts that may be exempt from gift or estate taxation.
Premium Financing Is Best Suited For:
Clients who need jumbo amounts of permanent death benefit. 2. Clients who understand leverage & complex financial transactions, or 3. Clients using life insurance to offset estate taxes.
Business owners interested in succession planning and key-person protection may also be good candidates for premium finance arrangements:
Top 7 Premium Finance Considerations:
Lenders and insurance companies require that these loans are collateralized. The policy’s cash value is typically the majority of the collateral. In the early years, there is typically a small gap which the policy owner is required to satisfy.
The borrowing cost and the policy crediting rates have long been favorably correlated for these types of structures. They historically move in the same direction with the insurance policy crediting rates and dividend scales being higher than the borrowing costs.
Assuming you feel this strong correlation will continue in the future, financing may be right for you.
A positive rate arbitrage is created when policy crediting rates are greater than loan costs and a cushion is created that can be used when interest rates turn volatile or increase rapidly.
When interest rates rise quickly, there may be temporary rate compression or even rate inversion. Either scenariocould increase the annual interest expense until rates stabilize.
The cash value of the life insurance policy ultimately represents 100% of the required collateral for the loan. Gap collateral must be pledged until the cash value is 100% of loan value, typically in less than 10 years.
Properly structured, no personal guarantees are necessary.
Premium Finance Risks:
– Decreasing policy interest rates and policy performance risk. – Increasing borrowing costs or inability to refinance. – Policy lapse risk. – Collateral call risk. – Income tax risk.
STOLI RISK:Many premium finance structures have been created or used to take advantage of consumers and insurance companies by purchasing policies owned by strangers. They do this for the sole purpose of re-selling or using them for an illegal profit. We will not participate in STOLI arrangements and we urge people to avoid using life insurance for anything other than long term death benefit. Stranger Owned Life Insurance (STOLI) is not legitimate premium financing and should be avoided. Before proceeding with any premium financing arrangement, you want to fully understand the risks mentioned here and the exit strategies.
Inforce Life Insurance Policy Premium Financing:
Policy is the only collateral for the full loan balance; no PG.
Our capital source is a New York lender experienced in this asset class.
7-year loan maximum.
Fees and interest are financed as part of the loan. Little or no out of pocket expense.
Competitive interest rate.
Life expectancies: 12 years or Less. Sweet spot is 9 years or less.
Insureds: 70 and over.
Individual Policies: $3-99m face.
Portfolios: $35-500m face.
Issued Preferred or Standard.
Term sheets: Please allow turnaround time of 3-4 working days.
International loans not an issue.
In addition to securing coverage and arranging for the right lenders for each loan, Ted is often hired as an impartial consultant to help life insurance buyers determine which is the best financing solution. These cases often involve jumbo insurance amounts. Working with an experienced consultant on your side that is not selling product can prove to be very valuable.
You can Email Ted or contact him directly at 561-869-4500.
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?
Transform lump-sum proceeds into guaranteed installments.
Offers the most competitive premiums available – everything GUARANTEED.
Reduces premiums as much as 40% for same amount of death benefit.
Protects life insurance proceeds from market risk.
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.
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.
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.
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.
