Thought for the day:
Retire? I’m going to stay in show business until I’m the only one left.
— George F. Burns
If you will read no further:
If you had an opportunity to provide your clients with a retirement investment strategy that would credit annual interest based on the performance of the S&P index each year up to 12% and charge you 1% to guarantee no losses in down years, would you offer this to them? What if it would also provide lifetime tax-free retirement income? What if it would guarantee to pay any balances to the heirs tax free? Sound good? What if it was called life insurance? Oh crud. Guess we can’t do it then.
Thought for the Week:
As the government continues to go after our 401ks and IRAs there is going to be more and more interest in finding ways to create tax free retirement income and pass tax favored money to our heirs. This is why every young client in the process of building their financial net worth should seriously consider adding an Index Universal Life insurance policy (IUL) to their portfolio. These products allow the client to deposit large amounts of money into the cash value which will be credited each year with interest based on the performance of the S&P (or other chosen index) typically up to a maximum of 12%-13%. That means if you have $20k in the cash value and the index rises 15% in a given year 12% or $2400 will be credited to the account. Then the account will be charged for the cost of insurance (perhaps 1%) so that the cash value will now be $22,200. (not precise amounts, but give you the general idea.) If the market went up only 10% the same 10% would be credited to the cash value before deducting for cost of insurance. The real value here is that if the market loses money in a given year the cash value does not go down, except for the (approx.) 1% charge for insurance.
An account that can only go up or stay the same is a really good deal as long as it doesn’t cost too much. Add to that the fact that there are no income taxes applied against the annual gains and, when properly designed, income can be taken without income taxes, and you have the basis for an excellent private pension strategy that can look like a Roth IRA but without the government regulations and limitations. Check out the results on pages 15-17 of the illustration that a 45 year old client can achieve for his retirement while protecting his family with almost ½ million dollars of life insurance. If you are not showing this to your younger clients or to your retired clients for their children, everyone is missing out on an excellent opportunity.
In most cases if your client is in his forties, he probably should have $1million or more of life insurance. Half of it should be this kind. They don’t need to fund the policy with maximum deposits initially if they don’t want; but set it up so it will be grandfathered in when this tax favored product is also taken away by the government. They will be really glad you put it in their portfolio then. Nancy Woo and Randy Masciarelli can help you design a proposal to show your client. Call Peggy at (800) 238-8144 and she will put you in touch with one of them.
A Final thought:
It is interesting to me that when you describe what insurance and annuities do, what benefits they provide and what security they offer, they rise to the top of the charts for desirability. Then the press and the rest of the folks who don’t, can’t or won’t bother to understand them come forth with all the negative reasons why these are no good. And, almost always, they are wrong. But then we move on and fewer people get the benefit of these outstanding solutions for financial security. And now with the easy apps that are available for so many of the products, you are quickly running out of excuses to avoid offering them to your clients.