Thought for the day:

“As long as they are keeping score, we might as well try to win.”   -Geno Ariemma – Univ. Conn. Girls Basket Ball coach. 

 

If you will read no further:

Family Home Auto

Which of these three are the most important to you?

Which of them are the most adequately insured?

 

So your young new client with a family and a budding career wants to get serious about his retirement and needs your advice. He’s maxing out his 401k at work but knows he needs to do more. Are you going to tell him to invest each year in a taxable managed portfolio to build retirement assets that will incur more taxes each year as he gets nearer retirement? Or will you set him up with a personal security strategy that will accumulate a tax deferred non-qualified retirement fund that will instantly mature for $1million or more if he gets sick or dies before his family is grown and he reaches retirement age.

All of our carriers offer these new style products that will predictably perform better than the typical retirement strategy, particularly when you consider current taxes, market volatility and risk and ultimately provide predictable after-tax lifetime income. Begin by getting a case design from Nancy or Randy for your young clients and compare with other alternatives you might show them. See what a great foundation plan this can be to help build family and retirement security.  

It’s certainly not your father’s life insurance anymore.

 

Thought for the week:

How long will it take you to turn $150,000 into $329,000guaranteed and tax free?  That’s a 5.4% (6 -7% tax equivalent) rate of return over 15 years.  I just placed this life insurance policy on a 73 year old man who truly believes he will avoid ever needing long-term care; but he heard about these life insurance policies that he could leave for his daughter or use for his own care if it turns out he is wrong.

What will you say when your good client calls?

“Hey John, this is Roger.  Helen had a stroke a few weeks ago and it looks like she is not going to rebound as we had hoped.  She is home now but needs a lot of care and that’s just not what I do well.  I have hired a caregiver but it looks like it’s going to cost about $4,000 per month. Do we have insurance for that?”

“No, Roger.  Remember, we agreed you could afford to pay for it yourself?” 

“Hmmm, I don’t remember that; but if you say so….  The problem is the doctors say she is going to get progressively less capable and I’ll probably have to have someone here at least 16 hours a day.  That’s going to bump the cost up to over $8000 per month.  I don’t want to put her in a nursing home.  Are you sure we can’t find some insurance for her?”

“Unfortunately, not.  We’ll just have to start liquidating your portfolio.  Hopefully it will be enough to last longer than she does.”

Had Advisor John worked with Westland to reposition a portion of Roger’s portfolio several years earlier while Helen’s health was still good, his response could have been more like….

“Oh, I’m so sorry to hear that, Roger.  But yes, we do have a plan in place.  Remember we moved those two CDs into the insurance contract several years ago?  So we can begin by submitting a claim and collect as much as $6,200 per month.  By the way, if you need some help coordinating her care, the insurance company will provide that for free.  One call and we can take care of everything.”

We have been hearing of a lot positive stories as advisors tell us of the claims they are making on the MoneyGuard and TLC policies they placed in their clients’ portfolios a few years back.

Now we have several different linked-benefit products to fit a variety of circumstances from Single Premium plans to multiple deposits to lifetime “investments”….all of which will create an impressive return to your client whether or not long-term care is actually needed some day. 

You should never have to tell your client there is no plan to help pay for their long-term care. 

Thought for the day:

“You can’t have a better tomorrow if you are thinking about yesterday all the time.”                                                                                                Industrialist Charles Kettering

 

If you will read no further:

At Westland Financial we have always promoted win/win solutions to clients’ financial planning challenges. Like introducing Universal Life providing current value to the client, profitability to the carrier and fair compensation to the advisor; creating and promoting MoneyGuard which provides a win, win, win for Client, carrier and advisor. For almost 10 years I have been calling for an annuity that would provide the lifetime guaranteed income guarantees of SPIAs while compensating the fee-based advisor with annual asset-based fees instead of one time commissions. And now we have it. 

Now you can provide your retired client with greater income, increasing with inflation, guaranteed for life and include it into his managed portfolio without affecting your own cash flow. Read on for more details; then call Josh at 800.238.8144 for specifics and case design assistance.

PS You might as well read it now. Ultimately, you will be embracing this concept. Sooner is better.

 

Thought for the week:

A revolutionary (non)Variable Annuity

Most VAs since the late 90’s have been purchased because of the income riders that guarantee an acceptable lifetime income regardless of the performance of the underlying securities portfolio. The client gets the advantage of participating in market returns but is assured that when it’s time to receive a lifetime retirement income, he can count on the value of his investment (for purposes of establishing the size of that monthly check) having appreciated at no less than 5% (or something close). This is the most popular annuity product ever. Why? Because the clients can indulge their desire for stock market gains while assuring their guaranteed income.

In most cases however, the growth in the investment account has been less than impressive. In the best of markets it’s difficult to grow the account at anything over the rates guaranteed by the income riders when you subtract various fees that can exceed 3% from the returns achieved by the required asset mix. All of that and the client’s principal (for liquidation purposes) is still at risk.

Introducing the latest innovation in Personnel Pension strategies!

For the client, the product provides:

1. Protection of principal
2. Respectable growth in all market scenarios
3. Guaranteed Lifetime Income (if desired) that can offset inflation.

For the Advisor, it provides a way to:

1. Reduce portfolio volatility and uncertainty
2. Provide clients with assured income for life, if desired
3. Receive asset based compensation

The oldest and largest producer of Equity Index products has developed the next generation of retirement products and is making it available only to licensed investment advisors and high end professionals with professional designations. The sophisticated nature of these products is immediately evident and clearly must be presented by knowledgeable individuals.

• Imagine a product that uses the Barkleys Strategic Bond Index in combination with the S&P index to increase upside potential while guaranteeing NO LOSSES.
• Imagine if your client could receive each year, the total upside appreciation of their investment less a 2.9% spread, but for future income purposes that annual realized rate of return is increased by 50%.
• Imagine if you can assure them that their principal is 100% safe from any market correction.
• Imagine the client’s lifetime income will increase each year by the same rate as their account value. For example:
  • The index increases by 6.9%, their account value increases by 4% (6.9 -2.9 spread = 4%)
  • Their retirement income increases by 4% the following year and will continue to receive like increases in subsequent years.
  • Imagine earning an asset-based fee the same as your AUM.

Check out this Sample Case 

My client is 67 and has $150k in a variable annuity with a GLWB rider. Because the carrier requires that 40% of his assets must be in bonds it is difficult to receive much over a 9% combined ROR, even in a very good year. Subtract the fees of 2.5 – 3% and his “up year” maxes out at a little north of 6% with no guarantee it won’t go south next year.

Since time is getting short for my client to take income (about 7 more years) I suggest that he lock in his gains to date by “1035ing” his balance into this State-of-the-Art product,, continue to increase the value for retirement income purposes and never see his cash balance recede; no matter how badly the next bubble may burst.

He ends up with a less expensive and more predictable retirement plan, protection from loss of principal and a more robust pension strategy going forward…and I get a raise in income. 

Call Josh. You have his number.    

Thought for the day:
Ability is what you’re capable of, motivation determines what you do and attitude determines how well you do it.” Lou Holtz

If you will read no further:
You are correct when it occurs to you that everywhere you look today is seems like financial advisers are discussing Social Security strategies, retirement planning and the inclusion of annuities as a part of their recommended strategies. No one is a better resource than our own Josh Ver Hoeve the human annuity encyclopedia. Call Josh (800)238-8144, for help with a retirement plan design or a second opinion on an existing annuity recommendation. You cannot rely on product information that is more than a week or two old as changes occur daily. In fact, lately Josh has had to refresh his knowledge each time when he returns from lunch. So when you call Josh, you know you are getting the best.

Important announcement:
Please welcome Mikah Fitzpatrick, our newest addition to Westland. She will be responsible for making sure you are properly licensed and contracted with each carrier as needed. She will also be working with Cynthia to make sure your business is processed as quickly and accurately as possible. Which reminds me; make sure you have your insurance license(s) in force and your CEs for LTCi and Annuities are current. Do not forget to take carrier specific product training prior to writing an annuity application. This is required in just about every state and for every carrier. If you are not sure, send a note to Mikah at Mikahf@westlandinc.com and she can quickly check it out for you.

Thought for the week:
You know how occasionally you wake up in the morning with a fresh idea, significant revelation or remembering an important item? This morning when I opened my eyes it occurred to me that this is the 40th anniversary of Westland Financial Services, Inc. In April 1974 the month of Fools Days (1st and 15th) we created a company that would ultimately play important roles in the development of the financial services industry. And over the years we have in fact, created an impressive record.
• We were the first insurance marketing company to form a vendor relationship with a securities broker dealer to provide insurance and annuity education and products to their representatives. That broker dealer was Private Ledger; now LPL Financial, one of the largest in the industry.
• We played a prominent role in the national rollout of Universal Life which, because of us, caught hold with Financial Planners well before it was accepted by life insurance agents.
• We were the first to create single premium polices using Universal Life to store Legacy Assets, accumulate them at competitive rates of return without taxes, with substantial liquidity and pass income tax free to the heirs. It was three years before the rest of the industry embraced SPWL.
• And most significantly, we developed the concept of Linked-Benefit Life in the form of Assured Care which became MoneyGuard which became the granddaddy of an entirely new product segment to address long-term care and has consistently increased yearly sales, currently exceeding $2Billion.
• We continue to lead the country in our knowledge, understanding and access to the best of these products like TLC from Genworth, Asset Care from State Life, Asset Preserver from New York Life and the Life Care rider from John Hancock.
• We provide leading edge services for conventional LTCi insurance as well, keeping the financial advisors current and exceptional in their recommendations to their clients.
• And now the latest innovation in life insurance is the accelerated benefit rider. No one should be paying for life insurance with a death benefit they cannot access early for chronic illness, critical illness or terminal illness. Our life department is unexcelled in the inventory and knowledge of the best of these products.

I tell you all this for two reasons: first, because I am proud of Westland’s people and our rich history; and second because I want to emphasize the leading edge nature of our unique company.

In an industry where all competitors have the same products paying the same commissions requiring the same administration to consummate business, Westland has consistently demonstrated a level of sophistication and professionalism that excels among our competitors. Who you rely on for assistance in recommending and placing your insurance business should be someone you would hire If you were creating your own “in house” insurance department. That is the caliber of knowledge and service we provide.

With the constant changes and innovations coming from the insurance industry now and in the years ahead, Westland Financial Services will continue as the leader in insurance and retirement planning.

Thought for the day: 

“Government, like fire, is a dangerous servant and a fearful master” 

                                                                                    George Washington

 

Just a Thought:

If you like this BLOG, why not share it with other professionals who might enjoy it.  Forward it to them and encourage them to sign up; or send us their email address and we will forward this issue to them and encourage them to become a regular reader.  While you are at it, go on and sign up yourself so you can receive these automatically and respond with timely comments.

 

If you will read no further:

Many financial advisors who read this BLOG do not consider Insurance and Annuities their strongest area of expertise. But their clients rely on them to make sure they have the insurance products they need and that they are suitable. If your clients have to die for their loved ones to collect they will not be happy when they find out you did not tell them about the kind of product that would have paid them while still alive had they become permanently disabled, critically ill, or terminal-but-not-yet-dead.

It’s time for all of your clients to get an insurance check-up because most of them have the wrong kind of life insurance. To make sure they don’t continue to pay for insurance that is yesterday’s news and grossly inadequate, collect their policies or pull their information from your client files and let us take a look. We will provide a current evaluation, tell you if improvements can be made and offer alternatives that are more like the I-phone then that clunker from 20 years ago. Call Nancy Woo or Randy Masciarelli to help, 800.238.8144

 

 

Thought for the week:

The economy that we have been experiencing since 2008 involving historically low interest rates and five years to recover what has been lost has some implications of which we should all be aware, or the impact on many of our clients and perhaps even on our practices will be tragic.

Think about it;

• We have an ageing Bull Market that is pushing the historical limits and looking at the next Bear.
• Our clients are retiring and are expecting us to help them support a comfortable lifestyle.
• Our clients no longer have the singular goal of building their wealth for future use.
• Our clients expect us to position their assets to provide income they won’t outlive, additional income when needed to help pay the increased cost-of-living when they become infirm; and pass a legacy to heirs who are facing an even more uncertain future and can use all the financial help they can get.

As investment advisors, we have historically faced one most significant risk….Market Risk. With diversification, asset allocation and intelligent strategies we help our clients overcome Market Risk and successfully build their wealth.

But now there are many more risks that must be addressed once the client retires and must live on the wealth you have helped him create; Inflation Risk, Deflation Risk, Withdrawal Rate Risk, Sequence of Returns Risk, Long-term Care Risk, Regulatory Risk, Taxation Risk and the granddaddy of them all, Longevity Risk.

Longevity Risk… the risk of outliving our income. But that’s not all. The longer we live, the more opportunities for market losses, the greater the possibilities of running out of money, the more significant the Sequence of Return issue and the greater the likelihood of needing long-term care.

The most important strategy therefore is to remove the Longevity Risk from a retiree’s portfolio so that you can eliminate, or significantly reduce most or all the rest; and concentrate on continuing to earn them a respectable return on their investments.

Stock markets and other investment instruments are never expected to specifically address these issues. And many successful individuals will die poor when their investments are unable to meet all of their requirements in an environment of volatility and uncertainty. Only insurance companies are able to eliminate Longevity Risk. They can do this successfully because they also deal with Mortality Risk. They win when people with life insurance live a long time and they win when annuitants die too soon. Everything in the middle is just a calculated profit. No other investment or institution can do that.

Some clients have so much money they cannot possibly out live it if you simply stuff it in the mattress. But most need you to help them position their assets, take the Longevity Risk off the table and cover the extra cost needed when they require long-term care.

I’m not suggesting that investment portfolios should be replaced with insurance policies. But there is no doubt that your retired clients will be much better off when their portfolios include a guaranteed Pension Income floor that eliminates Longevity Risk and insurance strategies that increase income when needed to protect their portfolio from decimation due to excessive health care costs and even provide a more efficient and predictable solution for leaving a financial legacy.

Most planners admit to modest knowledge of the insurance industry, its unique products and the many sophisticated strategies that can be employed to address these retirement-based concerns. So they continue to rely on the investment concepts they have employed for years to grow assets; when what is really needed are concepts for their retired clients to spend assets sufficient to provide the best possible life style without running out of money before they die.

Let us help you take clients’ Longevity Risk off the table, increase the security and predictability of their retirement income, and reduce their stress. Call Josh or email him at  Joshvh@westlandinc.com.

Thought for the day:

“I think it is just terrible and disgusting how everyone has treated Lance Armstrong, especially after what he achieved, winning seven Tour de France races while on drugs.  When I was on drugs, I couldn’t even find my bike”….  Willie Nelson

 

If you will read no further:

We talk a lot in these weekly presentations about the importance of providing retirees with a dependable retirement paycheck in the form of a life annuity that places a monthly income directly into their bank accounts.  There are many reasons for including an annuity in the portfolio including the high rate of tax free income and the peace of mind one gets from knowing it will last as long as they do, regardless of market conditions or world events. 

But here is one very important feature of a SPIA that hasn’t occurred to me in years.  SPIA income provides maximum protection from fraud, financial abuse by children, friends or relatives and from other financial choices gone wrong. 

The 83 year old lady whose son keeps asking her for $100,000 to start his business would be much better off if she had a SPIA that paid her a lifetime monthly income that prevented her from making an unwise investment decision and moving money into the “dark whole” in the first place.

 

Interesting Stats:

A recent poll of financial planners and clients rated the top four risks in retirement.  They were:

            Planners                       Clients

1. Longevity                      Healthcare
2. Volatility                       Inflation
3. Healthcare                    Volatility
4. Inflation                        Longevity

…which bears out our experience talking with clients about long-term care planning and the reactions to our workshops on LTCi and linked-benefit plans.  Eventually all clients want to talk about how to get an insurance company to pay their long-term care bills.  The conversation will be worthwhile only if it occurs before they get too old or too sick.

Then there are the claim numbers.  In 2013, over $7.5billion in long-term care claims were paid to over 273,000 individuals, according to the AALTCI.  But we have another indicator of the scope of this issue.  The number of calls we receive from advisors trying to get insurance for their clients who have serious health issues and are facing a long-term care event is rising significantly.  Many of these are from advisors who have ignored the issue, believing the client could pay the cost themselves.  But when the time comes to face these costs, everyone wants to have them paid by an insurance company.

 

Thought for the week:

My associates are telling me that I have failed to emphasize enough, the availability of Annuity Care from State life.  While I believe a life insurance based long-term care strategy is the best way to go for folks who have sufficient resources to commit to it, the annuity-based version is simple and easy to understand.  It’s just an interest baring account that does as well as a CD but much better when the time comes to pay for long-term care.

You have clients with money in banks or money market accounts that clearly would be the first resource their family would turn to if they need to pay long-term care bills.  Their money is safe and available and they are earning a modest taxable rate of interest.  What if you could tell them that account could double or triple instantly if they ever needed to tap it for long-term care?  Using Annuity Care from State Life, they can continue to hold the money in a safe depository that pays a modest interest rate.  But now, they will no longer receive that pesky 1099 on that pitiful amount of interest and if they need care, they will have access to as much as two or three times the account value.  Call us at (800) 238-8144 and tell Peggy you want to talk to someone about Annuity Care.  She will put you on the right track.

Thought for the day:

Some of the world’s greatest feats were accomplished by people not smart enough to know they were impossible.                                                              Doug Larson

If you will read no further:

From Harvard Professor Dan Gilbert:

As Retirees age, those with annuitized income are more satisfied then others living exclusively off Social Security and their financial portfolio.  Retirees who rely solely on a defined contribution plan to fund retirement are significantly less satisfied with retirement. The importance of automatic retirement income is consistent with my own studies on declining cognitive abilities in advanced age as well as the simple intuition that managing an investment portfolio and deriving an appropriate income takes work that might be better delegated to a pension manager or automated through the purchase of an annuity.

Read his entire paper, “What Makes A Successful Retirement”  here.

Important Trivia:

Bernie Madoff’s victims are beginning to receive reimbursements for their losses from the Madoff Victim Fund which, in addition to liability settlements from major investment banks, includes funds from auctioning off Madoff belongings such as luxury homes, boats and 14 pairs of boxer shorts. Madoff’s underwear fetched $200.

Thought for the week:

For the past week now I have been participating in a discussion on a LinkedIn interest group on the legitimacy of suggesting that a client purchase life insurance on his/her parents so that when they die, the client will receive a huge lump sum that can go far in enhancing their own retirement. Many of the participants expressed disapproval of someone actively attempting to benefit from their parents demise. I have my thoughts on that, but am not interested in discussing the morality of it.

What does interest me however, is the planning sense that is made out of insuring ones parents. Look at any insurance illustration and you can see the predictable rate of return generated by “investing” in premiums for a policy on a healthy senior’s life. The only unknown is when the person will die so that the actual ROR can be calculated. Click here to see illustration. No one objects to receiving an inheritance. No one objects to parents investing money to grow that inheritance. Investing in insurance that grows the inheritance definitely has merit. And for sure, it is a good idea to protect the inheritance by using life insurance to pay for long-term care costs or for estate transfer costs.

I have had a large insurance policy on my mother for many years. It can be tapped to pay long-term care cost if she needs it, or it will pay a respectable return to me if she doesn’t. The bottom line, my sister and I have not had to worry about paying to take care of Mom should the worst happen. Mom is 91 now and each year she lives is a joy. The fact that my rate of return on her policy is going down is a small price to pay for having her with us that much longer. Another example of how life insurance is a win-win.

 

And finally:

The “January Predictor” says, how stocks finish in January determines how the market will finish the year. Well, the Dow ended 5.3% lower than it was at year-end and the other major indices were also down, so 2014 will end on a down note…or will it? In the last 115 years the Dow finished up 74% of the time when January was up, but it also finished up 52% of the time when January finished down. It appears the January Predictor is no better than a coin flip, so we need to use science.

The “Super Bowl Indicator” says when the NFC team wins, the market will be up and if the AFC team wins the market will be down. Football science says since Seattle won the market will go up. However, this indicator has more loopholes than a Congressional budget bill. Indeed, when the Rams beat the Titans in 2000 the Dow lost 6%; even though the Giants won in 2008 the Dow dropped 34%.

Maybe you should buy an index annuity and wait for baseball?

Thought for the day:

We hang the petty thieves and appoint the great ones to public office    ~Aesop~

If you will read no further:

Each month we seem to get more and more calls for SPIAs and index annuities.  We have been talking of the need for these guaranteed, predictable instruments in a retiree’s portfolio for several years.  It appears that people may actually be listening.  Either that or more people are getting nervous about when then next market drop will occur; or maybe they have figured out that having a secure predictable base income in a retirement portfolio just makes good sense.  In any event, Westland is definitely a great place to get competent access to the annuity marketplace.

For an interesting article in Forbes Magazine on the importance of having income annuities in the retirement portfolio, click here 

Thought for the week:

I received two calls last week from clients and advisors regarding life insurance policies that are “crashing”.  One client is a 92 year old lady whose advisor died a while back so she gets me.  Her policy is about to lapse and after spending many $thousands in premiums over many years, she must now make a decision about spending more premiums to keep it in force until she dies or needs long-term care.

I explained to her that if she pays the required premiums (even though they are quite steep) she can guarantee that someone will get the benefit, which will be measurably greater.  When we looked at the numbers she said, “That’s a lot of money to pay, but the return to my sons, or to me if I go into a nursing home, is quite good.  This is more like an investment than just higher insurance premiums.”  She says she can’t afford the premiums from cash flow, but she can move some money from some sucky bank accounts and will end up with a better return.  I was really excited because she totally gets it.

The other call was from an 83 year old insured who has been ignoring notices from the insurance company for several years and now has a lapse pending notice.  He wants the insurance but it is very costly. He hasn’t had the epiphany yet; so it remains to be seen if he will see it as a guaranteed investment or just “too much to pay for the insurance”.

The point here is that in neither of these cases did anyone in the past 20 years suggest, encourage, demand, cajole or in any way motivate these folks to have a life insurance review.  If they had, they could have foreseen this situation well in advance and made some adjustments that would have made it much easier now to keep the insurance in force which they both want to do.  Because everyone wants to keep their life insurance when they know they are terminal.  And the older we get, the more “terminal” we get.

Call Peggy (800)238-8144 and ask for Nancy or Randy and they can help you with providing policy review for your clients.  At the very least your clients should be made aware of the new provisions that allow them to access their death benefit for Chronic or Critical care without having to die first.

 

Things that make you say, “Oh wow!”

A recent study by Glasgow University in the U.K. found that bottled water, although it is substantially more expensive, is actually more likely to be contaminated than water from your faucet because it is less well-regulated.  Bottled water and tap water typically come from the same sources — natural springs, lakes, and aquifers. While public water supplies are tested for contaminants every day, makers of bottled water are only required to test for specific contaminants every week, month, or year.

And……………………

Recent health studies have linked caffeinated coffee to a lower risk of type 2 diabetes, Parkinson’s disease, liver cancer, and even suicide.  So now the ideal long-term care planning strategy is to drink lots of coffee and (in case the studies are wrong) put a chunk of money into MoneyGuard and you don’t have to worry about needing nursing care.

Thought for the day:

For Denver Fans….

There’s nothing that cleanses your soul like getting the hell kicked out of you.  Woody Hayes/ Ohio State

 

 

If you will read no further:

Heads-up information to help some of your clients:

There are over 2.6 million group long-term care, or LTCi certificate holders in the U.S.  Many of those insured believe that they have comprehensive LTC coverage that covers many types of long-term health care costs. If some of these are your clients, you need to advise them properly or they could be out thousands of dollars.   Read more

Thought for the week:

I just got off the phone with an advisor who advised a client to move $100k into TLC (linked-benefit Life policy) last November.  She had attended one of our webinars a while before and decided she should pay more attention to long-term care planning, so this was her first ever transaction on behalf of one of her clients.  She called to tell me how happy she was that she did the transaction because the way the market has been acting lately, her client (a 67yr. old widow) is showing signs of getting a little nervous.  When the advisor showed her how with the cash in the insurance policy the effects of the market decline on her portfolio were not all that negative….plus with her own strategic actions, the volatility was even less.  The advisor and the client are both happy; and the client also knows that if long-term care is in her future, her portfolio will instantly gain about $300k to pay for her care as needed.

I’m Happy too.

Also:

One of our readers just reminded me that I have not mentioned Variable Universal Life (VUL) lately.  I have never been much of a fan because most of the products and promotion of them has focused on the high potential cash value when illustrated with a high average accumulation rate which does not take into consideration the markets up and down results. And with the expenses involved in these contracts, much of the presentation material is misleading.  I used to feel that VUL was only a great product when you invest large premiums into contracts with minimum required face value for tax free CV growth and tax free retirement income.  That was until Equity Index UL products came out and demonstrated their ability to consistently out-perform VUL.

HOWEVER, the newer versions of VUL products are focusing on providing guaranteed lifetime coverage at a low premium.  So now, when matching against fixed UL, when looking for a premium that will guarantee coverage to age 100 or 120, the VUL will often win out.  As it happens, we offer several of the best carriers with the most competitive products.

You should call Randy Masciarelli or Nancy Woo, our outstanding life insurance advisors for information and assistance with VUL whenever you have a life insurance need to address.  You may be surprised at what a great value there is in these products.

Thought for the day:

“Clothes make the man.  Naked people have little or no influence on society.”

Mark Twain

 

If you will read no further:

The Aged Based Limits chart for deducting Long-term Care premiums for 2014 is now available.  Every year, the amounts increase per age band due to inflation. Individuals can deduct LTCi premiums if they itemize more than 10% of their AGI in medical expenses (for age 65 and over, it’s 7.5%).  Also use the chart when an entity pays the LTCi premiums on behalf of employees….C Corps, S Corps, Partnership, and LLC. 

 

Thought for the week:

I recently received the following from a financial planner who has been selling linked-benefit products for several years.  The thoughts he has expressed certainly resonated with me.  Thought you might think so too.

“I believe that LTC should be viewed as an integral part of the retirement income plan.  One hundred percent of retirees will need to have resources to support their lifestyle, some for as long as 30 years. Have you ever heard anyone refuse a plan that would give them more?

Over half of our clients will have to increase that income by $thousands each month for some period of time to pay for the services from a professional caregiver. It only makes sense to acknowledge this and incorporate a strategy in the retirement plan. 

Every purchase/investment is an emotional one on some level. Whether they choose to purchase conventional LTCi insurance or not is largely based on their personal experience or attitude about insurance in general. They say they won’t need it, but that is the excuse they use because they don’t want it. Linked-benefit products allow them to incorporate an “investment” strategy that will predictably increase their income by several thousand dollars a month to help pay the added cost of someone taking care of them. Those with sufficient assets can embrace this approach with more enthusiasm because they won’t be purchasing insurance all the while hoping it will be a waste of money. 

I advise all of my clients to acknowledge that the second most significant financial issue after securing enough income to enjoy life is to arrange for the additional income that is likely to be needed for care down the line. (I always show them what I have done in my own planning for long-term care.)  Once the 100% need and the 50% need are addressed, then we can get on with legacy planning.  LTCi planning, regardless of the approach/product, will help assure the size and predictability of that legacy. “ SRC

 

What to do with the RMD:

It didn’t seem like so long ago, I sold life insurance to you young parents and the most important part of the transaction was to convince them that it was needed.  Most were sure they were going to live for a very long time. 

Now I find myself talking about the value of life insurance to people over the age of 65.  You would think that “a very long time” to 70 year old is about 15 years, since that is what the mortality tables tell us.  It has always made me wonder why someone would want to get rid of life insurance just as they are getting closer to making a claim on it.  But that is what some advisors suggest. “You don’t need it anymore.  Take the money and invest it.”  Rarely do they say, “Take the money and spend it.”   We recently presented a $250k life insurance policy to a 70yr. old client who was beginning to take Required Minimum Distributions from his IRA.  He was in average health and his first withdrawal was going to be about $11,000.  He didn’t need the money; would rather not take it; was looking for options of what to do with it.  He didn’t need any life insurance…but then he didn’t need to put the money into his investment account either.  Bottom line, he already had a substantial managed account with his advisor, but he didn’t have any life insurance.  We showed him that he could put the $8000 per year that would be left after paying the tax on his RMD into a $250k life insurance policy.  If he died a little past life expectancy at age 85 (a 32% chance that year) the tax-free annual rate of return would be 8.77%.  But if he was unfortunate and died at age 80 it would be 20.12%.  Comparing that with some other investments in his portfolio and considering the insurance provided a guaranteed result; he thought it a wise investment to put the money in the life insurance policy.  This was a good choice for all involved.

Thought for the day:

Confidence is contagious.  So is lack of confidence.        -Vince Lombardi

 

 

IMPORTANT ANNOUNCMENT:

Westland Financial Appoints Tim Morton CEO

Tim Morton has been appointed Chief Executive Officer of San Diego based Westland Financial Services (WFS), Founder and President Gene Pastula CFP® announced today.

Mr. Morton has been an integral part of Westland for the past six years with an ever expanding role.  An active member in the broker/dealer community, Mr. Morton was recently elected to FINRA’s (Financial Industry Regulatory Authority) Small Firm Advisory Board (FSAB) and is a member of the Board of Directors for the National Association of Independent Broker/Dealers (NAIBD).  Mr. Morton’s 33 years of success in the financial services industry and his previous senior managerial roles, makes him uniquely qualified to lead Westland to its next level of success, Pastula said.

Established in 1974 and headquartered in San Diego, CA, Westland Financial Services, is a national insurance consultancy serving the financial planning and investment advisory community. WFS has been instrumental in the development and marketing of new generation insurance products that are uniquely designed for use by financial advisors to expand their value and provide stability and predictability in client portfolios.

 

 

If you will read no further:

Should all of a client’s retirement income be derived from the “I’ll do my best to get you 4-5% with just a little volatility and not too much risk” kind of planning?

Fixed Index Annuities set sales records in 2013; and SPIAs (we think of them as personal pension plans) are increasingly becoming an important tool for planners advising their clients on how to take income from their qualified and non-qualified portfolio.  We have all the top carriers and (most importantly) the expertise to properly incorporate these into your clients’ retirement income plan.

Become an expert in 2014:  Call Josh Ver Hoeve (800-238-8144) every time you have a client who wants income from their portfolio.  Get his recommendation to compare with your (annuity deprived) plan.  If you choose not to recommend Josh’s approach, it won’t be because you never considered it or new nothing about the option.  By this time next year you will know more about annuity planning than 80% of the financial planners and investment advisors out there.

 

 

Thought for the week:

The story of Fred and Alice

About 14 years ago, Fred and Alice began their retirement years.  They had been using a financial planner friend of ours for many years before so had been successful in building a retirement portfolio capable of providing a comfortable lifestyle.  The only thing that had not been considered to that point was what to do about long-term care planning.  Alice was in favor but Fred…well Fred was Fred.  And Fred could not see spending money on some insurance that he knew they would never use.  But Alice convinced him to at least consider it and their planner surprised them by suggesting that rather than purchase a conventional LTCi policy (since they have a substantial portfolio) why not simply “invest” some of their savings into a linked-benefit product.  That way, if LTCi were ever needed there would be extra money to pay the bills and if not; the money wouldn’t be wasted since it would continue to be part of the estate.

Last year, at the age of 83, Fred suffered a serious stroke.   So now Fred and Alice have a caregiver in their home 12 hours a day to take care of Fred.  The linked-benefit plan doesn’t pay all the bills, but it does provide over $5300 a month tax free and will continue to do so for a total of six years if necessary.  Can you imagine the peace-of-mind that gives Alice?

She tells her friends about this policy but unfortunately many of them are already too old or too sick for the idea to do much good.  Their advisors should have told them about it years ago.

You know? The interesting thing about including insurance products in the plan vs. just investments; when things go wrong, the insurance products truly become stars.  And when things go right, they just become part of the planned-for results….all up-side and no down-side.

You need to tell your clients that….before they get too old or too sick.