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Protecting Your Business and Loved Ones: The Importance of Life Insurance for Business Owners
Running a business is no easy feat. As a business owner, you pour your heart, soul, and countless hours into making your venture successful. But have you considered what would happen to your business and your loved ones if something unexpected were to happen to you? That’s where life insurance comes in.
Financial Security for Your Business:
As a business owner, you understand the financial risks associated with your enterprise. If you were to pass away, life insurance can provide a financial safety net for your business. It can help cover outstanding debts, ensure the continuity of operations, and even facilitate a smooth transition of ownership. Life insurance can be a lifeline for your business in times of uncertainty.
Protection for Your Loved Ones:
Beyond the business, life insurance is a vital tool for protecting your loved ones. It ensures that your family is financially secure, even if you’re no longer there to provide for them. The proceeds from a life insurance policy can help cover daily living expenses, mortgage payments, education costs, and more. It offers peace of mind, knowing that your family’s future is safeguarded.
Estate Planning and Business Succession:
Life insurance is an essential component of effective estate planning and business succession. It can help address potential tax liabilities and ensure a smooth transfer of assets. With the right life insurance policy in place, you can have confidence that your business and personal assets will be distributed according to your wishes.
Choosing the Right Policy:
When considering life insurance as a business owner, it’s crucial to assess your specific needs. Factors such as the size of your business, outstanding debts, and the financial needs of your family should be taken into account. Consulting with a knowledgeable insurance professional can help you navigate the options and find the policy that best suits your unique circumstances.
Conclusion:
Life insurance is not just a safety net; it’s a powerful tool that provides financial security for both your business and your loved ones. As a business owner, it’s essential to plan for the unexpected. By investing in life insurance, you can protect your business, ensure the well-being of your family, and leave a lasting legacy. Don’t wait until it’s too late—take the necessary steps today to secure a brighter tomorrow.
Please contact RAM GROUP for more information at 800-686-4238
Author: Jeff Rohrer 1-11-2024
Share the Value of Long-Term Care and Annuity “Doubler” Income Riders
There are several options financial professionals can use to help their clients prepare a strategy for retirement expenses. Long-term care insurance (LTCI) provides care for those who need long-term assistance in a nursing home, care at home or adult daycare. Some annuity “doubler” income riders can also be used to provide double the annual income for up to five years if the annuitant qualifies.
Communicating the Value of LTCI
Not having some form of LTCI can create tension between families, more specifically between the siblings whom can’t agree on who the parent will stay with. LTCI can help provide peace of mind that loved ones will be able to afford the help that might have been provided by family or friends in years past. Here’s the process I’ve been using for years to communicate the value of LTCI with prospects and clients.
- Find out what the prospect knows. Ask, “Do you know someone who needed help to get through his/her day? What happened? How did things turn out? How much did it cost?”
- Discuss the types of LTC services available today such as nursing home, assisted living, hospice, adult day care and home health care.
- Let your client know that many never expect to need LTC. But then ask, “Do you think it could happen to you? Why or why not?”
- Some people wait too long before looking into LTC insurance and they discover they’re not eligible due to their health. Ask your clients, “How’s your health been for the past five years? What medications are you taking? What’s your biggest health concern? At this time, it would be a good idea to obtain a HIPPA form so we can get our underwriting team involved.”
- Once clients believe it could happen, ask, “If it did happen to you today, what would you be concerned about?” This includes concerns of being a burden on their spouse or family, protecting their family’s assets, as well as maintaining control and independence.
- Ask how they feel about other long-term care options, “Knowing what you now know about Medicaid, Medicare and private health insurance, do you believe relying on them is the solution to your needs?”
- Once the client has agreed it could happen, and if it happened they would have to pay for it out-of-pocket at a rate of over $90,000 per year1, “How long will your money last without selling your home?”
- Ask if they are interested in a LTCI strategy, “If I can share show you a strategy that makes sense to you and is affordable, would you transfer the risk?”
Five Strategies for Long-Term Care Expenses
Once your clients agree, you can share these five options that are currently available to them:
- Self-Insure
- This means your clients don’t fill out any paper work today and what was mentioned before is not important to them at this time. Expenses will come out of their pocket if they need some form of care.
- LTC Insurance
- Several carriers have left this market space for many reasons. What you and your clients should know is this coverage can be expensive and difficult to get approved through underwriting. If your client is looking for the most thorough coverage, LTC insurance remains the most appropriate coverage and we offer carriers in this market space.
- Linked Benefits
- This has been a popular solution over the past several years. Unlike traditional life insurance, which just provides a death benefit, or long-term care insurance that only pays for qualifying expenses, a linked benefit policy has a death benefit, maintains a cash value and can provide income tax-free payments for qualified long-term care related expenses.*
- Living Benefits
- Many permanent and term life insurance offer advantages of exciting living benefits that can be added as a rider to the policy at an additional cost. In some cases, these benefits do not subtract from the death benefit, as accelerated benefits do. They’re in addition to whatever death benefit is paid upon your passing.**
- Annuity “Doubler” Income Rider
The Annuity “Doubler” Income Rider Strategy
A concern may be that with living benefits in a life insurance policy, linked benefits and LTCI require the insured to go through underwriting. Annuities do not require underwriting, but they do have financial suitability standards to qualify for the annuity. Our sales and suitability department can help you with this. Several insurance companies offer income riders that provide a lifetime income.
So why am I talking about annuity income riders? Several income riders offer a feature referred to as a “doubler”. If the annuitant can’t do two out of six defined activities of daily living, are confined to a nursing home or hospital for specified amount of days, or become cognitively impaired, the annual income the annuitant would receive due to the income rider could be doubled for up to five years. That extra money could help with medication, home remodels, paying for home care, etc. After the “doubler” has stopped, the annuitant will continue to receive their regular annual payment they were receiving originally. We must keep in mind that once these doublers are turned on, the accumulation value of the annuity is exhausted at a more rapid pace. This would impact the potential death benefit that beneficiaries could receive.
If you are not currently selling LTCI and are interested in providing more strategies or want to discover which carriers offer the annuity “doubler” income riders, schedule a 15-minute call with a member of the RAM GROUP team.
Originally published and posted by Oscar Toledo, of PartnersAdvantage, February 27, 2019
What Our Industry Needs Most
Marketing Funnels.
Marketing Funnels enable the industry to connect the need to the professional by offering guidance on products. The introduction of AI and machine learning will create stronger relationships both to the firm and product solution at a faster pace relative to traditional marketing efforts (mail, email, phone calls).
How?
In the past, an agency would purchase a list, spend resources creating a marketing message, then blast it out to that list. They repeat this process each time creating a new message and sending it to a different list. It becomes difficult to measure success in this example. Is it the list or the marketing message?
Tech company, InsurAware, applies AI and machine learning to support agencies and individual producers. By identifying candidates with an interest in purchasing insurance, helping create a message that will resonate with them, and repeating this message to the same group of candidates.
This is more than a “selling process.” It’s a strategy that allows agents to be consultative by helping an individual personalize and implement the solution that’s right for them.
It all starts with signals of intent.
Cofounder of InsurAware, Patrick Bowen, explains “…these intent signals are subcategorized into six groups where other things that they are doing from a digital footprint browsing standpoint shows different buckets they are in. So, if they’ve risen high on let’s say retirement planning, then the agent could send a piece that speaks to that. If it’s a new baby, then it could sound something like, is your family covered?
We try to help give the agent the best chance to touch on a topic that is relevant within that person’s current situation.”
This method has proven to up the odds of hitting a potential candidate with a relevant message.
Why InsurAware? IMOs invest a lot of time researching the offering of a third party to deem them valid and successful.
Instead of an agent spending time vetting all of the emails in their inbox to find the right vendor solution for the message they are seeking to deploy, and they can rely on the IMO for the reference.
A number of our agencies have taken a step forward after we set up 1:1 demo’s of InsurAware’s system to sign up and start working with them to help their agency and agents.
One agency that engaged with InsurAware two months ago had their first data enriched and set 6 appointments out of the first 14 leads that were generated using the enrichment software.
Each of these appointments were individuals the agent had spoken to before, but had no idea they were now looking for life insurance. One prospect in particular was just remarried, and had a new baby on the way. After several targeted marketing campaigns created with the help of InsurAware, reminding the prospect of everything the agency offered. The agent called and since it was such good timing, was able to take care of the family’s needs.
Of the 6 appointments set, 5 were kept and 7 applications were submitted.
The revenue generated from the sales on the first round of enrichment alone exceeded the cost of an annual agent subscription.
InsurAware is highly effective in identifying buying signals from clients within an existing book of business.
“Typically, we ask for 1,000 contacts to start. In any enrichment we do, what tends to come back is about 3% of people in that database will show those intent signals,” says Bowen.
Before using InsurAware, this agency was doing it all. Postcards, mailers, social media, radio ads, paying for ads in local gathering spaces. Anything to get the word out. But without knowing what stage of the decision-making process the target audience was in.
Let’s compare this process to walking into a shoe store:
You’re approached, “May I help you find anything?”
You respond, “No, just looking, thank you.” You know you’re not just looking. You came to buy shoes!
InsurAware finds your clients when they are in this consideration/ready to buy state and organizes them on a dashboard that allows you to send digital marketing materials with one click, straight from the platform.
Essentially, you are made aware that your clients are ready to buy, and now you can recommend the best product for them. AI and Machine learning is needed to accomplish this, but you don’t need to break the bank. In most cases, if you divert the budget away from some of the traditional methods and utilize this, it comes at a wash.
This convergence of AI and humanness allows the agent to not only sell but also recommend based on an individual’s situation.
Amazing, I know – and it’s designed to only get smarter.
Why should you care?
Whether you sell or keep your business you must ask yourself, “How do I ultimately survive?” Because even if you sell, you have a time period where you have to execute to maximize the terms of the agreement or purchase price.
IMOs are uniquely positioned to grab the insights and details different financial professionals have to help your agency execute. You’re not going to have access to these things on your own, nor would you want to spend the time researching and investigating at great lengths. But an IMO can do that for you and frankly should.
Customer service, contracts and compensation are all too often the focus of IMOs. Those that continue on this path are ignoring the most important tool that agents need: Marketing.
Marketing has a different meaning today.
And the way that we engage with the customer will continue to change. Look at policy fulfillment. We used to hand deliver insurance policies. Today your policy is emailed to you. This one change enables producers to be more efficient with how they spend their time. Less time on the road means producers are able to perform more customer facing activities.
AI and Machine learning can do the same thing. By addressing the audience that demonstrates intent signals of buying insurance.
All this means we should be looking at how we are getting in front of new people: By tapping into the power of marketing funnels.
A funnel process provides producers with many levers they can use to build meaningful relationships that attract and retain clients for life.
Thankfully, we have technology helping us.
InsurAware builds the funnel, fills it, and markets to it for you. A true one-stop-shop from client enrichment to digital marketing.
Fintech and Insuretech companies all over are using data to better understand consumer behavior, determine where the best opportunity is, and achieve a greater ROI.
Outsourcing the funnel creation process to an organization like InsurAware who makes this their area of expertise is the best way to achieve deeper relationships and exponential growth.
Click here to contact InsurAware.
Don’t miss out on this opportunity to expand your agency’s success! Let’s chat about how we might be able to help!
Original author: James Wong 10-7-2022
How to use expertise to grow your agency.
Consider who you partner with to bring your strategic plan to life.
You know how important it is for an agency or financial professional to establish trust with clients. It’s the key for being the firm agents come to for large or complex cases and to staying in business for the long-term.
In a recent blog post, I discussed the potential in niching down and serving a select group of clients in all areas. But that only works if you can demonstrate your expertise in doing that.
Keep reading to learn how to leverage expertise to grow your practice.
Here’s some food for thought: Agencies cannot survive with a sales team and back office talent alone…
To fully serve your agents, as well as the end clients, you need expertise in taxation, underwriting, estate planning, wealth transfer, succession planning, and marketing.
The fact is, agents and clients want to work with experts—at least for the really important things in life.
If you don’t believe that, just look at your own life…
Do you ever look for a “decent” doctor for your family, or an “okay” school district for your kids, or a real estate agent who knows how to help you with part of the process of buying your dream home? I doubt it. You want an expert in these key areas.
So who wouldn’t want their financial team to be experts? The good news is, you don’t actually have to be the expert in all areas—as long as you know where to find someone who is. Besides, if you tried to become the expert on everything, you’d spend way too much time and money—while in the meantime, miss out on new opportunities and the things you actually love doing.
Reframing the “jack of all trades” mindset
In your mind, there could be two things holding you back from this approach.
First, it’s innate in us to be self-reliant and push ourselves. Yet, we seldom have the bandwidth as leaders to spend time inside someone else’s business. We know our own paradigm well enough but we don’t have the luxury of learning someone else’s enough to apply it. In his book, “Who, not how,” entrepreneur coach Dan Sullivan outlines how we should stop asking ourselves, “How can I do this?” when setting a goal to achieve something, but rather, “Who can do this for me?”
Second, we typically conflate “expert” with a perceived cost … and this leads us to taking on something that’s not necessarily in our wheelhouse.
When you recognize this—and begin focusing instead on the relationships and connections you have to achieve your goals—it transforms you and often translates to more premium coming through your doors.
Do what you love and love who you know.
Enter the IMO. Working with the right IMO allows you to leverage their expertise and catapult your agency’s profit. When you find an IMO that can help you build a solid foundation when it comes to technology and your business model, and then utilize the access they provide to experts, you put your agency in a great position to grow sustainable revenue that allows you to thrive into the future. Or put you in a better position to sell.
What can an IMO with connections to subject matter experts do for you? If you were to work with RAM GROUP, we technically would pay the wages for talent, and we then pass on the costs only when a policy is in force…through a commission override. Also, because our success depends on your success, there’s alignment between our goals and yours when it comes to making sure a case gets placed. Additionally, you save time and effort partnering with an IMO to get the subject matter expertise you need. Which is much more efficient than trying to learn it all yourself.
That said, there are some agencies who choose to use the carrier for this rather than an IMO. Maybe it’s because their IMO doesn’t have subject matter experts or they feel carriers should be knowledgeable about how their products can be used.
While that’s true, I’d say there’s one major thing to keep in mind…
Carriers are technically capable of handling the issues and seeing the need for estate planning, or marketing, or underwriting… the solutions they provide must tie back to a benefit or feature found within their products.
It’s harder for them to see the solutions offered by their competitors like different underwriting credits, riders, age bandings, and so on.
IMOs look at multiple carrier product offerings and help you arrive at the ideal solution for the client’s situation. They see the market at an elite level and know how a number of products could be used in different ways to accomplish a specific need.
And your agents receive the valuable education and point of sale support to solve complex challenges for their clients—who oftentimes happen to be high net worth individuals.
You may have some agents who don’t have the ability or comfort to refer the client out to another professional to handle taxation, for instance. The support from their IMO could be the difference between losing the case and having a fighting chance of winning the business.
As an agency, this is a great value-add. And it trickles down to you in the form of revenue that might otherwise have gone to a competitor – and even worse, losing all of a client’s business!
Becoming the preferred firm for placing large and complex cases
Without experts in your business, you relegate yourself to only simple transactions and basic insurance coverage and miss out on the opportunity to bring on and serve more seasoned independent financial professionals.
If you’re using a deep business model, you have to be able to serve essentially all of a client’s needs. This helps attract the right producer or advisor to your agency and in turn, increase your valuation.
Experts in a particular area have “seen it all,” they’ve seen what works, what doesn’t, and common pitfalls when placing large cases. Can this be done in-house? Perhaps. Do you see the potential to cultivate this level of expertise for someone on your team today? Are you willing to invest in the extensive training for you or someone on your staff, or the recruiting and hiring expense of bring someone onboard to fill this role? Would you be able to patiently wait and watch them gain the real-life experiences, including the agony of losing a large case?
The alternative approach to this long, arduous, costly (and potentially heartbreaking!) process is to leverage an IMO who already has the complex case expertise in estate planning, taxation, and underwriting, and intuitively knows what to do and what to avoid — experience that a layperson wouldn’t have the luxury of knowing. That’s extremely valuable when we are talking about hundreds of thousands, if not millions, of dollars.
Once you have experts at your disposal—at a variable cost instead of an ongoing salary that you have to pay—you create a stickier value prop for your agency. This is especially important if you want to appeal to the modern producer with a comprehensive planning philosophy.
Here’s the bottom line…
Often we’ve talked about how important it is not to put all your eggs in one basket. Meaning, you don’t want the bulk of your business to come from just one source or key account because it jeopardizes your future.
With access to experts, you do not have to walk away from complex cases that could mean more diversified revenue streams for your agency.
Not only does partnering with an IMO with subject matter experts improve your business financially, it also legitimizes your business in the eyes of the carrier that sees you offering greater value to their agents.
The big takeaway here: Your ability to handle complex cases is a reflection of your brand.
Once your brand includes getting these kinds of cases placed, your reputation will precede you. Which means, you can attract even more top producers and their clients to your agency.
Next Steps: Determine the area of expertise needed.
Ok, it’s time to uncover the areas where experts could help your agency most.
Start by surveying your agents to determine which disciplines would be most beneficial to their team’s growth. That will tell you where to find the “low hanging fruit”…
Here are some sample questions to survey your agents:
Rank the order below where specialized education would benefit you the most? (1=highest opportunity)
- Taxation
- Estate Planning
- Premium Finance
- Succession Planning
Rank the service capabilities below where an investment would benefit our agency the most? (1=highest opportunity)
- Underwriting
- Marketing
- Accounting
- Technology
For those selected, are you currently in these markets and utilizing other firms for this expertise?
- Yes
- No
For those selected, are you currently seeking professional development for you and your firm?
- Yes
- No
Once you know what areas have the most interest, reach out to the agents. Have a discussion and see if you can quantify how much business you could earn if you had an expert in particular areas.
Then be willing to ask for help. Refusing to accept support can actually do a disservice to your business and stunt your growth.
What to look for in a trustworthy IMO
OK, by this point you get it! You realize you need to have access to experts. An IMO could say they’re an expert, but you need proof, right?
I would suggest looking to the stature of the IMO in the industry. What’s their reputation?
Who do they serve currently and what are they known for? Do their experts have specific designations or specialized education that instills trust and boosts credibility?
What are you hearing from top producers? Word of mouth and referrals are some of the most reliable forms of marketing out there.
This could be an opportunity to expand your success—don’t miss out on it.
Original Author: James Wong 7-6-2022
Department of Labor Fiduciary Rule—Important Information
| January 19, 2022 | ||||||||||
| Department of Labor Fiduciary Rule—Important Information | ||||||||||
| The Department of Labor (DOL) Fiduciary Rule has been updated to expand the agency’s interpretation of the existing five-part test to determine when an individual is an ERISA fiduciary. For the period of February 16, 2021, through January 31, 2022, the DOL advised it would not pursue prohibited transactions claims against ERISA fiduciaries who comply with the impartial conduct standards for transactions. Impartial conduct standards require fiduciaries to: (1) provide advice that reflects the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use, (2) receive only reasonable compensation, and (3) make statements that are not materially misleading. | ||||||||||
| However, beginning January 31, 2022, the DOL will require compliance with the Fiduciary Rule. Legacy is providing this information to assist you with compliance and will continue to monitor DOL activity and advise you of any further enforcement delays. | ||||||||||
| ERISA Fiduciary Status | ||||||||||
| Updates to the DOL Fiduciary Rule will impact insurance Producers, as the ERISA fiduciary status may be triggered more easily under the DOL’s reinterpretation of the five-part test, especially for rollover or IRA recommendations. You are an ERISA fiduciary if you: | ||||||||||
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| If a Producer is determined to be an ERISA fiduciary, to receive compensation, such as commissions, he/she must comply with the requirements of a PTE. | ||||||||||
| PTE 84-24 | ||||||||||
| To receive compensation, Producers may still use PTE 84-24. The general conditions of PTE 84-24 include: | ||||||||||
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| PTE 84-24 also requires a Producer to disclose: | ||||||||||
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| RAM GROUP and its insurance company partners will not be monitoring each agent’s compliance with PTE 84-24. However, it is important that you maintain written documentation for no less than six years of your compliance, to the extent that you are deemed an ERISA Fiduciary. | ||||||||||
| On December 18, 2020, the DOL adopted PTE 2020-02. However, RAM GROUP and it’s partner insurance companies are NOT financial institutions within the meaning of PTE 2020-02 and have no responsibility for, and are not monitoring, whether a Producer is an ERISA fiduciary, and if so, the Producer’s compliance with any PTE. Therefore, it is important that you rely on and comply with PTE 84-24. | ||||||||||
| Additional Information | ||||||||||
| We encourage you to review these notices from Americo, Ameritas, and Integrity for additional information on the DOL Fiduciary Rule and how to comply. Other carriers information will become available as well through their websites | ||||||||||
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| If you have any questions, please call the RAM Group Annuity Sales Team, 800-686-4238
FOR AGENT USE ONLY. NOT FOR USE WITH CONSUMERS. |
Special Needs Planning
Someone who loves and cares for a family member with special needs may be concerned about ensuring that their loved one continues to receive the care he or she needs throughout their lifetime.
How can you build a foundation for the future of your client’s family member with enough resources to maintain a high quality of life?
When a Special Needs Trust (SNT) is properly funded with a Life Insurance policy, you are providing a great supplement to their existing government benefits and creating comprehensive solutions for a special situation.
We can guide you through the process of creating a Special Needs Trust to assist in providing the care for your client’s special needs child.
The opportunities to increase your Life Sales using SNT’s are vast:
- Establishing a Protection UL within the trust
- Planning for all family members
- Supplementing Government benefits that are already in place
- Creating relative independence for the loved one
Planning for special needs is one of the most important pieces to a prospective client’s portfolio. More than ever, individuals are looking to secure a comfortable future for those they care about most.
However, individuals with a special needs family member have the daunting task of discovering a strategy to protect their loved one while trying to find time in their schedule to do the research. This creates a great opportunity to assist them in a time of need.
For more information on Special Needs Planning please contact RAM GROUP today!
The “Third-Tier” Of Income Protection For Top Wage Earners
The need for income protection in this country is clear – statistics show a common lack of personal savings amongst the majority of households. And top earners are not immune.
Although major corporations typically provide Disability Insurance (DI) through employer sponsored programs or voluntary employee-funded group DI plans, most physician and executive programs insufficiently limit benefits to a fraction of earned income – creating a great financial shortfall for high-income individuals.
The answer? A prescription of raised limits of DI throughout the market.
A high-cap excess personal DI is a great way for physicians, attorneys, accountants, and white-collar executives to find appropriate levels of economic safeguard.
We can provide a variety of “third-tier” Income Protection products to meet your client’s needs – and ensure the financial safety of your affluent and under-insured clientele.
The plan can be as simple or comprehensive as your clients’ needs require.
Securing individual DI is another obvious step – but again, traditional domestic disability carriers frequently fall short with their maximum issue limitations. If you have any clients or prospects who are making over $250,000 annually, they should be insured at least up to 65% to 75% of their earnings. Their protection needs may not be met by group coverage even with the addition of a layer of individual DI. The bundling of group and individual DI alone is not always a sufficient solution.
As a life/health insurance advisor, you know better than anyone that a sudden injury or prolonged illness can happen to anyone at any stage of their professional career.
Contact RAM GROUP for more information on “Third-Tier” coverage.
How To Breakthrough The Couple Rejection Objection
As you’ve all experienced, the majority of your clients who are couples come together as a packaged deal. So what happens when a couple applies for a Long-Term Care Insurance (LTCi) policy and only one is approved?
In most cases, the spouse who received the green light may no longer want a policy with a carrier who rejected coverage for their significant other. And even worse, they may decide that they no longer need coverage at all.
The reality is – if one spouse is declined, it is even more crucial that the insurable spouse has a plan in place.
Convincing the insurable spouse to proceed with the plan.
Client Objection: “My spouse was declined so I do not want to take my policy.”
In this case, it is probable that the healthier partner will attempt to care for the other – with whatever financial, physical, emotional and mental demands that are required.
Your Reply: “Caring for a loved one could either be met with minimum effort or it may be very strenuous. And while personally caring for your significant other, you may have do to dip into your savings, leaving little funding left for your own care.”
You Ask: “Would you be ready to go it alone and take care of all those new tasks that arise in a situation like that?”
Once you’ve overcome the objections, we will help you make certain your clients have the right LTCi plan in place to meet their needs.
Contact RAM GROUP for more information.
5.82% Investment Return “Equivalent” Guaranteed
Some clients may understand the need for Disability Income Insurance, but still resist purchasing because they don’t want to “lose” those premium dollars if they never use the coverage.
For many, the purpose of buying Disability Insurance (DI) is so they can sleep at night knowing if they get sick or hurt one day everything will be okay financially.
But what if nothing serious happens to your client during their working lifetime that prevents them from working? They have paid premiums to a policy for years that never was used. Having some peace of mind may have a cost, but there is a way to mitigate that cost.
There are income protection plans available with return of premium options that pay back the premium to your clients (income tax free).
This is how it works:
- A 39-year-old male Real Estate Agent earning $110,000 qualified for an Income Protection Plan that would pay him $5,000 each month (tax free) if he got sick or hurt and could not work.
- The premium for the coverage is $119.73 per month.
- If he reaches age 67, his total premium paid would be $38,094.
- If he adds the Return of Premium Advantage the additional cost would be $79.02 per month for a total premium of $198.75 per month.
- At age 67 with no claims being paid, the Real Estate Agent will receive a check for a tax-free amount of $63,236 – which is the investment return equivalent of 82% guaranteed* on the additional $79.02 monthly premium.
This “money back DI” solution can be offered on a long-term or even short-term policies. One option of the return of premium rider provides a lump sum return of a specified percentage of premium paid every 10 years (80 percent or 50 percent) less any benefit you receive.
Reach out to your clients to find out if they have been reluctant to purchase individual DI coverage because they feel they would be throwing money at a policy they will never use. Although policy premiums will be higher with the return of premium option, emphasize the “value” of being able to use the returned amount any way your client wishes – perhaps a lump sum payment on the mortgage or add to their retirement fund.
Contact your RAM GROUP with any questions or if you would like to see a proposal for yourself.
Original Author: Thomas Nicols, 9-29-2021