Thought for the day:

Living without assets is so much more painful than dying rich that people who have no annuity income will either draw down less than they could otherwise afford, or accept a risk that they can’t afford at all.

 

If you will read no further:

Westland has all of the top term insurance carriers with their rates and forms available on our website and Genworth just announced an average 12% decrease in their term rates. They will be available on our website here next Sunday.  You can choose either to get the quotes and forms yourself, 24/7 or proposals, advice and forms from Randy randym@westlandinc.com or Nancy nancyw@westlandinc.com .  You can call them at (800) 238-8144 and tell Peggy I told you to call. You will find that doing term insurance thru Westland is so much more satisfying.

 

Thought for the week:

When people ask me for advice on investments I find that my stress level goes up a notch, especially if I think I have to respond by saying anything but, “Don’t ask me.  I don’t have a clue.”  My sense is that most of the more knowledgeable wealth managers and investment advisors are in the same place when it comes to insurance questions.

It makes sense when you think about it.  Do you really have time to read, digest, and assimilate all the information that is available from the insurance carriers about their products, tax laws and design strategies while keeping current on the economy, stock market, investment products and COMPLIANCE?

Do you know how to increase the income your clients can receive from their retirement assets while reducing the volatility, the taxes and their stress?  Josh Ver Hoeve knows about every annuity known to man and can provide you with everything you need to know about placing annuity income in the portfolio. And he knows which is the best company to place it with at any point in time, and why.

Or when the young entrepreneur is looking for a way to increase the amount he is contributing to his IRA or Roth IRA; wouldn’t it be great to show him how to contribute to an insured fund that has the capability of earning upwards of 8% tax free with no downside risk, then pay tax-free income for life.  What a nice base to have in the retirement portfolio.  Nancy and Randy know how to do all of these things and more.  And you don’t have to call several different wholesalers to get it done.  They have all of the top carriers and the knowledge to use them appropriately.

Then there is long-term care.  You never again have to make a long-term care presentation on your own.  Call Chris and let her know you have a client who should have LTCi insurance.  We will design the case and propose the appropriate carrier based on age, sex, married status, health and financial ability.  Then we will present you with the proposal and assist in the presentation (if you like) by being available on the phone when you talk to the client.   Once the client says “yes” we will take the application, arrange for and track the underwriting and present you with the policy ready to present to the client.  Since the only other thing we could do for you is spend your commissions, I would say it doesn’t get much easier than that. 

Call us and experience the difference between talking to the “sales desk kid” at the “brokerage” and discussing your case with one of our 10 or 20 year veterans of the business.  Now that’s what I call providing professional advice.

 

One more thing:

There are only four financial scenarios possible with regard to potential long term care need.

1. Don’t have Insurance; don’t ever need LTC assistance 
2. Have LTC insurance; don’t end up ever needing LTC assistance 
3. Have LTC insurance; end up needing LTC assistance 
4. Don’t have LTC insurance; end up needing LTC assistance 

The truth is, 1, 2 & 3 will end up being okay for your client and their family; and you as their advisor.  . But the stark truth is long-term care is now costing upwards of $100,000 per year.  If you are not encouraging your clients to adopt a strategy that will take a chunk of that off the table, you will have to answer some tough questions from some distraught family members.

Thought for the day:

Tomorrow: (n) a mystical land where 99% of all human productivity, motivation and achievement is stored.

Think about it:

When creating a retirement income strategy, IRR is largely irrelevant once it is adjusted for the risk of outliving your assets. Living without assets is so much more painful than dying rich, that people who have not annuitized a portion of their retirement assets will either draw down less than they could otherwise afford (which by definition would make the IRR useless to lifestyle), or run a risk that they can’t afford at all.

Thought for the week:

Everyone is running from their bonds lately; but not from their fixed annuities.  My mom has a fixed annuity that continues to pay the same safe rate as it did four years ago.  While bonds have tanked, she just keep on clicking along….tax deferred I might add.  Her stocks have done well this year too and the overall risk in her portfolio is qulite manageable.  Conventional wisdom tells us that fixed insurance and annuity policies carry a low return and are not very efficient in a portfolio.  But studies from the Wharton School (and my mom’s personal experience) tell us that the various insurance products are just another asset class with a significant role to play in modern portfolio theory.

By properly combining these non-conforming assets with a portfolio of stocks, one can achieve the highest returns in the overall portfolio while minimizing the clients’ overall risk.  Tolerance for risk is generally (and no doubt should be) reduced among older clients; and they depend on us to manage their portfolio to last as long as they do.

Life insurance for younger clients is a great way to systematically build a basic retirement account that can be designed to create tax free accumulation and tax free retirement income that will compete very nicely with stocks and bond portfolios while addressing the risk of dying too young or living too long.

Quote of the month:

“I almost dropped my teeth”, she said.  “I mentioned to my client that we should set up a strategy for long-term care and that I had a way she could take care of it without paying premiums for insurance.

She was actually very interested.

When I explained MoneyGuard to her, I was amazed at how quickly she embraced the idea. Now she is introducing me to her bridge club.”

When you show your clients how they are actually better off with insurance than without, you will be amazed by the response.

If you are a female advisor:

Have you taken care of your own long-term care planning?  I assume you practice what you preach when it comes to investing your portfolio.  But have you set up a strategy for eventual long-term care?  Now is a great time to do this for yourself and your clients before the rates go up on conventional LTCi policies.  As I mentioned last week, rates are due to go up by as much as 30% for females beginning in September with most companies rolling them out over the next four months.

The linked-benefit products are a better deal if you have the money, but they too keep offering reduced benefits as interest rates continue to reside at historical lows.

Thought for the day:
“My choices in life were either to be a piano player in a whore house or a politician.  And to tell the truth, there’s hardly any difference.”    Harry Truman.

 

If you will read no further:

How many clients/prospective clients have you visited with this past week?  How many times did you bring up the subject of long-term care planning?  Sooner or later you will talk to each client about long-term care. But if you don’t bring it up now, the conversation will invariably be about what to do now that they are sick and looking forward to writing big checks for care.  Which conversation would you prefer to have?  What have you done about your own plans for LTCi?  Read this short newspaper article when you get a moment …just one of dozens of articles in the press each day. 

 

Thought for the day:

30% OFF SALE

ON LTC INSURANCE FOR SINGLE FEMALES.

Because females represent the majority of claims, the major LTCi carriers will begin rolling out their new gender-based pricing which will increase female rates by 20% – 40%. 

 

I just got off the phone with a friend of mine that wants to purchase some form of long-term care insurance.  She is not a client.  She has a financial planner.  She and I talked about her acquiring LTCi for herself and her husband about 2 ½ years ago when they were in their middle 50’s.  She thought it might be a good idea but kept putting it off.  This morning she told me her husband has been diagnosed with Parkinson’s and she is suffering from two broken shoulders as a result of a fall.  Why such an injury?  She has osteoporosis; didn’t know it until the fall.  Now she would like to act quickly to get insurance.  I’m thinkin’ her chances of success or slim at best.

To look at her you would never suspect any problems, but it is very likely she will end up spending the majority, (if not all) of her wealth on care someday…her words, not mine.  Over 60% of us will write checks for some form of nursing care for some period of time before we die.  The only other single life event with a greater chance of occurring… is dying.

It has been five years since the last stock market meltdown. We are coming up soon on the next one.  Careful investors are putting trailing stops on their stocks.  It’s only a matter of time.  Wouldn’t it be great if you took $100k off the table and “invested” it in to a linked-benefit policy, secure a significant benefit for your client and let them know that after the collapse, they can take it all back out and invest it elsewhere if that is their choice; not likely since they will have experienced the peace-of-mind knowing that they have a strategy in place to minimize the financial impact of future cost of their care.

If conventional LTCi is more appropriate for your client, you need go no further than Westland where we will design the case for you, help present it if desired, take the application and send you the policy ready for delivery.

Transamerica has announced their new product roll out beginning September 10, and we expect many of the other carriers in our portfolio to implement by year end. Now is the time to talk to your clients. The time is always short between the carrier announcement of the new product and the ability to submit applications on the current product series.  This is a one-time opportunity.  It would be a shame for people to potentially miss out on thousands of dollars of premium savings, so make your clients aware now.

 

Transamerica announces Transcare III and gender based pricing

John Hancock announces August 19 launch date for gender rates in five states

Thought for the day:

“It’s not how we fall: it’s how we get up”   Sharon Stone.

 

If you will read no further:

Reflect for a moment back to the 1980-82 recession followed by the Savings & Loan crisis in the mid ‘80s and Black Monday in October, 1987.  Then there was the recession of 1990-91 and again the dotcom bubble in 2001; followed most recently by the 2008-09 Great Recession. If you were young and earning a living and didn’t lose your job, each of these (in retrospect at least) represented an opportunity to invest for greater gains going forward.  But if you are retired when these occur and need to take income from a portfolio in decline and later as it tries to climb out of the “dumpster” it could be devastating.  And if your spouse needs care when this happens and even more is required from your portfolio to pay for it…..well, you get the idea.  And read this:  4% Rule WSJ 3/13

Buying insurance and never needing it may seem like a financial bummer.  Needing insurance and not having it can be a catastrophe.  Our clients are retiring in the most uncertain of times.  Don’t ignore the opportunity to provide them with the financial support that only insurance can achieve. 

 

Thought for the week:

Someone asked me recently how I come up with an original thought each week about insurance.  After all, PEARLS has been published each Monday for the past four years….and no repeats.  My answer is that every week I talk with financial advisers who ask questions or have situations involving insurance their clients own, or should own.  And every week there is a same theme repeated.  Nobody wants insurance when there is plenty of time to get it; and everyone wants insurance when it is too late.  That thought continually stimulates my editorial juices.

In all my years in this business I have delivered many different kinds of insurance benefits ranging all the way from modest to huge.  No one has ever told me they didn’t need or want the money; and no one has ever calculated the return on the premiums paid.  And invariably the money comes at the most opportune time.

Unfortunately, the majority of people I meet rely on their financial advisors who typically avoid advising them until they request it; and that is usually when it is too late.  Take life insurance for example; every retirement plan involves leaving a legacy.  Sometimes the clients want to leave money behind for their family.  But more importantly, they must plan to leave money behind otherwise they must plan to empty their portfolio the day before they die.  The best advisor among us cannot guarantee that strategy.

Purchasing life insurance later in life is not at all the same as it was when you were raising your family.  Then it was an expense you bore to replace lost income in case you “checked out” early. But later it becomes an investment.  Because later, it is no longer a matter of if you die, but when you die.  Every decent life insurance policy will deliver a 5% tax free return (or better) on the premiums you deposit into it if you die at life expectancy.  Want a higher return?  Die young!  On the other hand, how many of us would give up a few percentage points of return on our eventual legacy if it could buy us 6-10 more years of healthy living?

Make that life insurance product one that pays for long-term care when needed and provide the best quality of life for the insured, a heighted sense of financial security for the spouse and protect as much of the legacy as possible for the heirs.  Now what is wrong with recommending that to every client when you conduct their periodic review? And do it before they ask you about it, OK?

Oh, and one more thing.  The most difficult challenge when writing these weekly treatises, is coming up with the “Thought for the day”.

 

 

 

 

 

Thought for the day:

Isn’t it interesting that when we present Life Insurance no one is going to die?  When we present a Life Income Annuity they won’t be living long enough to get the value.                                          GP

 

If you will read no further:

This is one of the most important editions of Pearls I have sent in a long time.  Our phone is ringing off the hook from advisors requesting illustrations for annuities.  Nowhere is there a more competent annuity source than Josh Ver Hoeve and the folks at Westland.  Almost every design that is turned out does precisely what we are told the client needs to happen.  Yet, only a small portion of the designs are eventually implemented.  Annuities typically deliver income for life that is 50% to 150% MORE than can be safely generated by a managed portfolio in addition to being substantially tax free for years and guaranteed for life.  Yet it seems that the final choice is often to create a portfolio consisting solely of non-guaranteed assets and rely on the skill of the advisor to navigate the uncertainties and the volatility in the market for as long as 30 years while the client ages, becomes dependent on family or caregivers and finally dies. 

We believe this is because most advisors have not witnessed enough situations where clients have seen their assets dwindle and have to alter their lifestyle to preserve capital.  They are not grasping the importance of securing for life, basic needs that provide peace of mind.  The last major market collapse was 5 years ago.  Many of your clients were 65 to 70.  How old will they be when the next serious “market correction” happens?  When the gains they have achieved in their portfolio dissolve once again. This may be good thing for youngsters who can take advantage of the bargain prices by adding more money to their portfolio.  In retirement, they are taking money from the portfolio, so down markets are destructive both financially and emotionally. The solution is NOT to abandon the markets in favor of annuities; but rather to include annuities in the asset allocation of the retiree’s portfolio.

 

Thought for the future:

Last week we mentioned our research in the subject of annuities from folks who have significant expertise in their application within a retirement portfolio.  We thought you might be interested in several comments in response to studies that question the annuity’s value.  The ones that particularly interest me are the studies concluding that a successful retirement plan can be accomplished without the use of annuities.  What I find interesting is that the “advantage” typically is very slight and relies on successful application of principals that would have worked in retrospect for the past 50 years.

“And though your strategy may be theoretically possible, it suggests and requires perfect behavior. Or…you can “buy income and invest the difference”, utilizing an efficient ladder of income annuities, eliminating the risk of sequence of returns, market volatility, liquidity, longevity and many other risks; then properly manage the remainder of the portfolio with three goals of liquidity needs, opportunity for growth and legacy with more ease. It is my assertion, most clients will be way ahead in the long run by finding competent advisors who know how to manage money and incorporate income annuities in a meaningful fashion.”  Curtis V. Cloke   Founder, Thrive Income Distribution System

 

“Any strategy not implementing SPIAs has the following problem: To optimally consume, you have to hit zero assets right when you die. Because you don’t know when that is, you have to “over-insure” yourself by taking less than you could. The “mortality drag” (the increase of life expectancy that comes with the increase of actual age of a person) has to be “paid” for by the portfolio and this reduces your withdrawal rate. This is not the case once a participant has annuitized a portion of their retirement assets. IRR on any pure drawdown strategy would quite simply HAVE to be better, and significantly so, to compensate for this problem. Furthermore, during retirement any decrease in the non-annuitized assets will disproportionally affect the longevity of the portfolio: For example, a 15% drop in asset value might lead to a 30% drop of “fundable life span” unless the drawdowns are adjusted accordingly. IRR is largely irrelevant once it is adjusted for the risk of outliving your assets: Living without assets is so much more painful than dying rich, that people who have not annuitized will either draw down less than they could otherwise afford (which by definition would make the IRR useless to lifestyle), or run a risk that they can’t afford at all. I say this as someone who does not have a skin in the retirement game, is not selling any products, but has had significant exposure to many national retirement systems in order to be able to compare.”

By Karl Strobl   Past Global Head of Structured Products and Retirement Solutions for Deutsche Bank

 

Thought for the day:

“If you had to identify, in one word, the reason why the human race has not achieved, and never will achieve, its full potential, that word would be ‘meetings.”              Dave Barry

If you will read no further:

You should take a quick look at this article from Fox Business and perhaps refer it to your clients.  Ignoring this issue will not make it go away, or be less expensive.

Thought for the week:

I spent a couple of hours this Sunday morning reading “white papers” and articles on annuities and came to realize two things.  First, that I have no life; and second, that that there is no final answer in the controversy over the value of annuities in the financial planning context.  What I do find consistent is that almost every argument centers on whether or not one can do better for the client using a distribution model incorporating a managed portfolio.  In other words, the annuity ( I am referring to SPIAs) sets the bar.  If you make your living selling insurance products annuities are great.  If you make your living managing a portfolio for fees, you may seek out the position that better results can be achieved by not turning your money over to an insurance company.

Many financial planners confess their frustration with the complexity of annuities and how difficult they are to understand.  Actually the subject of annuities is a big one because the term refers to instruments that accumulate money and/or distribute it and utilize either securities or fixed interest.  Variable annuities are a subject unto themselves.  Let me only say that their true value only involves the accumulation of money.  After that (by comparison with other options) they are lacking when it’s time to take the money to spend. More on that subject some other time.

On the other hand, SPIA’s and (to a lesser degree) Index Annuities can be very straight forward.  Take money that has been accumulated for retirement and spend it on retirement.  You know that you can get the most income for your client by dividing the amount they have accumulated by the number of years they will live, taking into consideration a rate of return.  But you don’t know either of those and the insurance company does….actuarially speaking.  So when they give you a figure it is based on an assumption that your client will live to a certain average age.  Of course some will die sooner and others will live longer, but the insurance company doesn’t care because for them, it will all work out in the end.   Don’t try this at home…or in your practice.  Because you have to get it right one client at a time. No offence, but you are not that good.

Does all this mean you no longer manage their investments?  Not at all!  But your first priority is to provide the client with a secure income to support his lifestyle.  Take care of that first using the annuity.  Then manage the rest to anticipate future needs for additional income or unique opportunities or emergencies.  Since the average retired client can receive 6-8% income from a SPIA vs. 3.5% (current accepted rate) from a balanced portfolio (50/50 or 60/40) the same income can be derived from half the money and, the rest can be invested.  Everything else can be explained by Josh Ver Hoeve (800.238.8144) when he prepares a quote for you.

So what do I say to the planners that conclude that they can do better than the insurance companies?  Retirees with modest portfolios are the ones most affected by such an option and are less able to handle the risk and uncertainty….particularly as they age.   Unless you can demonstrate a significant increase in retirement lifestyle and comfort, all the math and the projections in the world won’t be sufficient to overcome the peace of mind that one has by knowing they will received that check every month as long as they live.

Bottom line, it’s not just about returns.  It’s about providing predictability employing a strategy the client can understand and with which he can be comfortable.  Do that and you have done your job.

Thought for the day:

When a man opens a car door for his wife, it’s either a new car or a new wife.
– Prince Philip

If you will read no further:

Financial planning for the retiree is much different than for the younger clients trying to build their wealth.  Average rates of return make sense to them as you grow their portfolio.  In retirement it is about sequence of return.  If you use averages to create your plan design you stand a very good chance of disappointing your client.  Look how an index annuity overcomes sequence of return issues.

Thought for the week:

I read last week in one of the financial newsletters I get that insurance products are soon to be the HOT financial instruments of the next 20 years as the markets settle in to a volatile, modest yielding period and the boomers are looking for predictable pensions and dependable health care resources. This sounded familiar to me as it is what I have been saying for several years.

But many advisors still ignore that idea and invest their clients’ money as if it were the eighties again. One advisor recommended including a non-liquid limited partnership to a couple I know who wanted as much guaranteed lifetime income as they could get. This couple had modest resources and had been keeping almost half of their 401(k) money in money-market accounts for the past 3 years, not wanting to risk it “going down again like it did 2008-09”.

To his credit, he also recommended an annuity for steady income from the 401(k). But instead of choosing a fixed SPIA that would have total guarantees for life, he recommended a VA using a GIA with competitively high income. However he either didn’t know or failed to disclose that the income would be reduced if/when the investment account value went to zero. With 3% combined fees plus “investment restrictions” the fund would have to earn almost 9% EVERY YEAR to break even. One bad year and the fund would most certainly be depleting almost every year thereafter.   Annuities are an important part of a retiree’s secure portfolio, but you must know how to choose properly or you can put a client at great risk later in life when they can least handle it.

Many advisors ignore LTCi planning assuming their clients will have enough money to self-insure; that if you commit the same premiums to a solid investment program, by the time you need LTCi you will have plenty more money to pay for it without buying insurance. It’s difficult to argue with that advice, since the planner most assuredly knows precisely when his clients are going to need care and will certainly be able to grow their money accordingly.

One planner who gave that advice to a healthy single female (age 63) was referring to a TLC policy from Genworth. He felt that by investing $100k at a “pretty secure” 7% (6% after his fees), by the time she reached age 85 (that’s when he determined she would need it for care) the account would worth $360,000 gross and $270,000 after taxes. That’s assuming the market wasn’t in a “funk” when she needed to take money to pay for care.

He simply ignored the fact that the day after she puts the money in, the TLC policy is worth $238,262 if she dies, and $557,622 at the rate of $93,000 per year whenever she needs long-term care all tax free and no matter what the stock market happens to be doing at the time. Can you imagine what it did to a client’s portfolio who had to begin drawing down about $8,000 or $10,000 per month beginning in 2008? What about the next downturn….or don’t you think that will ever happen again?

Thought for the day:

After the game, the King and the Pawn go into the same box.    – Italian proverb

If you will read no further:

The only people who don’t think your clients should have insurance or annuities in their portfolio are your broker/dealer or their accountant.  The BD doesn’t get paid (much, if at all) so they don’t care; and the Accountant doesn’t get paid. Neither one of them know much about it.  Westland does know about it and can be a rich source of information for you to tap if only you will let us.  And your clients will love what you have to tell them.

Thought for the week:

You enter a Vegas casino to play blackjack and are confronted by two tables with different rules:

Table #1 is very familiar.  Bet $10 and if you win, you keep your bet and get an additional $10.  If you lose, you lose your $10 and have to make a new bet.

Table #2 was something new.  Bet $10 and if you win you get to keep your bet and get an additional $6.  But if you lose, you just get to keep your $10 and bet it again. Which table would you sit down to?

Perhaps you would be like me and sit down at table #2 and send your spouse to table #1.  Mine always does better than me in Vegas.  This way, she has an opportunity to win big and I am assured of winning something without losing anything.

It’s sort of like the smart advisors who split annuity investments between Variable and Equity Index.

It would be really great if we could manage a portfolio to produce an impressive return each year and remove the volatility from the clients’ portfolio.  Unfortunately, that is one thing even the best portfolio manager will struggle with unsuccessfully.  But it really helps to inject a fixed-indexed or Life Income Annuity into the mix.

An index annuity can only go up or remain the same making volatility a non-item.  A Lifetime Income Annuity increases the predictable income from a given portion of the portfolio by an average of 60%.

Learning to use annuities in your clients’ portfolio will increase security, predictability and peace of mind and reduce the stress (for you as well as your client) when the next financial “adjustment” comes along.

Fifty Two:

The percent of advisors who do not characterize the life insurance side of their practices as either “successful” or “very successful,” according to a Saybrus Partners survey released recently. Excessive paperwork (25 percent) and the complexity of selecting from a huge number of the various policies and fitting them to a client’s needs (37 percent) were the primary reasons cited. That is why it is so encouraging to see how nicely our life insurance sales are increasing.  Our planners always present the finest products with the most competitive rates because Nancy Woo and Randy Masciarelli, our senior life insurance advisors, are so very helpful and the people who experience their service once return again and again for their outstanding service and ideas.  Their understanding of the market and our portfolio of products and companies make placing insurance for your clients an easy and natural part of your planning practice.

If you haven’t tried us yet for life insurance, call Nancy or Randy at the next opportunity.   Let them give you a taste of our Westland service and expertise.  Then compare the product and the compensation with your current source and they will make a believer out of you.   You can reach either of them by calling Peggy at (800)238-8144 and she will connect you; or email them at Nancyw@westlandinc.com  or Randym@westlandinc.com.

PS  Perhaps the Saybrus Partners people should take a look at Westland to improve their sales.

Thought for the day: 

“Those who die without life insurance should be made to come back to see the mess they’ve created.”  

                                                                                                Will Rogers

 

If you will read no further:

As America ages, insurance and annuities are a growing segment in the arena of personal finance and must be understood by all who practice investment management and financial planning.

“In todays’ highly competitive, compliance-driven culture, you must be educated, informed and skilled.  Take advantage of the Westland expertise in every aspect of insurance marketing, case design, selling, underwriting, delivery and post-sale service. Put a higher degree of confidence into your insurance advice.                           – Charles F. Chillingworth

 

Thought for the week:

Steve has a successful company that has been managed by his daughter, Julie for the last five years.  At age 45 she is clearly capable of growing the company and taking it to another level….as long as he sticks around for a while to allow her time to mature her own relationships with their customers and complete the transition to a 21^st century business model. 

For years Steve has owned life insurance (several $million) as a “key-man” and to function as an integral part of the purchase agreement that Julie will use to buy out her brother who is anything but capitalistically inclined…but that is a story for another time.  The life insurance has always been term insurance to keep the cost low.  Actually for the past 15 years or so, keeping insurance premiums low needn’t have been a top priority and now we know that it shouldn’t have been. For now Steve has a $3million policy that is “terming-out” and his health is really tenuous….so bad in fact that new term insurance will cost him $68,000 per year (table 6).  He could convert the old term policy but they want $325,000 per year to convert to a permanent policy, his only other option. 

Fortunately, in a few more years, Julie will not have to rely on her dad’s contacts to keep the business viable so as a key-man policy it certainly won’t be needed.  However, with dad in such poor health, having that $3million as a resource to buy out her brother is certainly desirable.  But he will have to die in 10 years or they face another renewal which will only be an option to convert to a policy that will cost several hundred thousand dollars per year.  

Which begs the question; what happened to the old adage about “buy term insurance to protect your family and business when you are young then when you are older you will no longer need it”? 

Steve bought the cheap stuff and spent the difference all the time when he wasn’t very likely to die.  And now that he is certain to die and the proceeds could be put to such good use by all concerned, it is becoming more and more difficult and soon to be impossible.

Steve opted to purchase the new term insurance policy hoping to outlive it and “waste” $680,000.  The insurance company hopes he turns out to be right.  Both feel it is a gamble worth taking.  Julie, on the other hand has a $3million term insurance policy she will now convert to a permanent policy and pay only $17,000 per year.  She actually is planning on increasing the premium deposits over time so that by the time she is 70 and ready to deal with transition issues, the life insurance will be paid up. 

We are seeing more and more of these lately; proof that many high net-worth folks will find that their use for life insurance will continue as they age. The cost will just become more and more uncomfortable unless they plan ahead and at least purchase some with permanence in mind.  You might want to advise them of that.

Thought for the day:

“A golf match is a test of your skill against your opponent’s luck”                                                           

 

TO OUR MANY NEW RECIPIENTS OF THIS “MONDAY GREETING”, A FEW WORDS OF EXPLANATION; AS IT IS UNLIKE MOST ANYTHING  YOU RECEIVE FROM  OTHER VENDORS.

“PEARLS” is intended to provide four minutes of education and entertainment once a week.  If you take the time to read it, you will find over time that you have an added awareness and appreciation for the role that fixed and variable insurance products can play in a well-designed portfolio. Not always a revelation; but we won’t waste your four minutes either… Unless, of course, you find my humor “not funny”.

The mission of Westland Financial Services is to support the financial advisor community with solid, up-to-date strategies that include insurance products to meet certain needs of clients.  We show financial planners the reasons to use insurance as a desired option rather than just because it’s needed.

Open it, give it a glance; and then delete if you see nothing of interest.  We think that most of the time you will go ahead and allocate a whole four minutes.

 

If you will read no further:

“Long-term care insurance provides choice and control, protects retirements and lifestyles, and allows loved ones to care about you rather than being forced to care for you. You can’t put a price on that kind of value.”  http://hub.am/10moir9 

Bill Jones, president of The MedAmerica Companies

 

Thought for the week:

Following a recent presentation I made to a group of consumers a gentleman came up to me and said that I was a “Fraud”.  Quickly consoling myself that he was only one out of the 70 folks in attendance, I naturally asked him why he would say that.  “Because, he said, I came here expecting to learn how to self-insure for long-term care; and all you did was try to sell me an insurance policy”.  He was referring to my compelling presentation (that everyone else thought was quite insightful) about placing a linked benefit insurance policy like MoneyGuard or TLC from Genworth into the portfolio to leverage the value of their savings by 3-5 times when LTC is needed.

When I asked him just what he expected to hear, he said that he wanted to know how to get the most from any government programs and other ways to reduce the impact on his portfolio when paying for long-term care.  I pointed out that we did carefully go through the five Government programs and tax laws that address and define the government’s participation in the long-term care issue. Then went on to point out that the remainder of the presentation was about how to best position money in his portfolio to provide the maximum value at the time of need with the minimum impact to his legacy.  Pretty awesome, huh? 

Even though I pointed out that money could be placed in an account with the insurance company that would be safe and liquid and earn three times the interest (or more) than the bank to purchase needed benefits. That these annual earnings are not taxed.  That the deposit could be retrieved at any time for any reason.  That, if he ever needed care, his account would be instantly revalued at 300% to 500%* of the deposit and generate tax-free income of 4% to 6% PER MONTH of that value for as long as six years. And finally, if he never needed to use the money in the cash account for any reason, or he never needed long-term care, his heirs would receive the money when he passed away, plus a tax free rate of return equaling or exceeding any bank interest he could expect. From that point on he sounded like some financial planners I know, “Yes, but you are just trying to sell me an insurance policy”.  

I started to explain to him (again) that he had to have his money somewhere.   And he interrupted me by calling me a “fraud” for the second time and bragging that he could do better by investing the money elsewhere; and instead, I would try to sell him a life insurance policy.  Needless to say, I determined that our conversation was over and I told him he could have his money back.  Oh wait!  The lecture and the wine and hors d’oeuvres were free.

At least I was able to console myself that a financial planner would never think like that. He/she would know that even at a constant 8% tax free return it would take 18 years to grow his money four times and almost 25 years at 6%; while my plan delivers that amount THE NEXT DAY if needed.  And what if he needs it sooner rather than later?  But then, it’s really only insurance.  And who wants that? 

 *Depending on sex and age at time of issue and the policy design chosen.    

                                                                                                                                                          

Josh Ver Hoeve is the “Amazon.com” of the annuity business.  Call (800)238-8144 or email joshvh@westlandinc.com your proposal by noon and it is guaranteed to be shipped that very day.

Genworth is now offering 5.75% cap and 5.25% bailout on 7 yr. index and everyone else is raising their rates as well. That is why Josh Ver Hove is so busy lately.