Money manager made the following comments to Financial Planning Team.
What our analysis seems to indicate is that there is far greater downside risk for not much lost in upside potential. With the re-position for MoneyGuard protection, your values at age 100 for the older spouse show $8,700,000 Net Worth with or without our hypothetical LTC event. While NOT putting in place protection shows only about 6% more in upside potential to an expected $9,200,000 Net Worth at age 100. The RISK however, is a 32% potential loss to $6,300,000 if our hypothetical LTC event happened. So again, the question is; do you give up a potential gain of about $600,000 to eliminate a potential loss of about $3,000,000?
Here is another way of looking at this. You are betting $3,600,000 (today’s portfolio value) and are expecting a $8,700,000 pay off if we re-position the $140,000 today. Or do we bet $3,600,000 and might get $9,200,000 if we win (no ltc event) or $6,300,000 if we lose (having hypothetical ltc event). By the way… it is about a 70% chance that you lose and 30% chance that you win.
What will most clients be more appreciative of? If you help them prevent taking a big hit or squeezing out a little more yield?
I sincerely understand though that this couple should be just fine no matter the decision.
Sorry to carry on…
If you do not have the time to commit for doing insurance work, then assign insurance work to an associate or allow Westland to assist. What would you pay an associate? 50%? Westland will be your associate for 25% or less depending on your role. Best of all you are keeping it all in your control and not allowing any competition to creep into your practice. We just become part of your practice just like an associate.
Client, Female age 68, with first grandchild having first birthday. Her Advisor mentioned the cool Legacy Gift Idea, and she said great idea! Her mother (Great Grandma) contributed $1,000 and she committed to $100 monthly for 20 years into a Indexed Life Program for grandson.
Expected results: $25,000 invested over 20 years, cash value expected of only $40,000 at year 20 and with a death benefit of over $200,000 and growing from day 1. Nothing too exciting, yet, but wait. By year 40 the cash value is expected to be over $160,000 and the death benefit over $400,000. By age 65, the cash value is expected to be near $1,000,000 and death benefit over $1,200,000. Quite a legacy from only a small initial commitment.
Using a savings calculator on Bankrate.com with a 6% assumption, the result at age 65 is about $750,000 with no insurance. There are extra bells and whistles with the Legacy Gift Idea (tax free distributions-loans for example). Start letting your clients who have children and grandchildren know about this and you will be surprised how many will move forward. Call us for a customized illustration for a case today, maybe for your own child or grandchild!
Case Study Female Age 2
Sample Illustration Female Age 2
Tax free withdrawal of $23,000 to help pay for college expenses and $44,000 tax free supplemental retirement income. That is a wonderful legacy for you to be remembered by.
We met with an advisor and discussed ideas to help him boost revenue while helping many clients and prospects. We discovered a couple ages 59 and 58 who he had completed some retirement planning work with and they were going to be just fine according to his E-Money Capital Needs Projection. However, we modified the model to test for several scenarios.
Him dying tomorrow (had existing term insurance through age 75)
Her dying tomorrow (no current life insurance)
Him or her having a long term care event at age 83 for 4 years duration (no existing LTCi)
Him dying – plan still succeeded
Her dying – plan failed
Either having LTC event – plan failed
This planning session led to a 15 year term sale on her and traditional LTC insurance on both. They didn’t have the portfolio to justify a linked benefit strategy, but we did look at all options.
Partner with Westland and allow us to help you figure this all out and be by your side if needed when presenting solutions to your clients.
Hopefully you are thinking of clients where you can add real additional significance and value to their family with protection and legacy strategies.
Call for your personalized case designs today. We are here at your service.
- Walt purchased a $1million life insurance policy at the age of 47 and died from a brain tumor at age 53. Everyone would agree that (no matter what Walt paid for it) he made a good investment buying that policy…an Internal Rate of Return (IRR) of about 108% per year?
- Sharon purchased the same kind of policy at the age of 63 is active and in good health most of her life and died at the age of 93. After 30 years of paying premiums….an IRR of about 5.1% per year. Should she have put her money in a mutual fund? Maybe, maybe not.
- Tom and Gina ages 62 and 60 repositioned $100,000 into a Life with Long Term Care Linked Benefit joint strategy. If either of them ever needed care, they would have $7,600 per month each for as long as care was needed. If they never needed care, their family would receive $190,000. Everything is guaranteed by the life insurance company. Receiving a solid safe return, care or no care.