RMD rules and ideas for using RMD’s

RMD rules and ideas for using RMD’s

Clients need to start taking RMD’s by April 1st of the year after they reach age 72.  This is the new rule that is in effect.  For those clients that have accumulated a good deal of assets, this could mean taking required minimum distributions that they DON’T need.  As an example, a couple of age 72, who have a combined $2M worth of qualified plans, would need to take a gross distribution of $78,125. See the chart below. Based on how RMD’s are calculated, this generally means that a client’s qualified plan balance declines dramatically in their later years.  How can clients retain more of that value to leave to their loved ones?  A 2nd to Die policy would provide clients with a leveraged & tax-free approach to leave money to the next generation.  Here is a sample quote showing two 71 year old’s (male- standard plus non-tobacco & female- preferred non-tobacco).  read more
The Importance of Term Conversions & Tips

The Importance of Term Conversions & Tips

A term conversion is a contractual obligation a client has, to convert his or her term policy to that specific carrier’s permanent product(s) without having to go through underwriting again.  Each carrier has its own specific rules for term conversions, with some carriers having more favorable options over others.  For instance, some carriers will allow conversion to their entire permanent portfolio for the entire level term period, up to maximum age (could be anywhere from 65-75).   For those clients that value having these better conversion options, it important to take note of the term conversion guidelines when looking at term policies when first purchasing.  Typically, the carrier will allow the insured to convert to the permanent policy at the same rate class he or she was approved at the term policy.  However, we have seen carriers downgrade an insured’s rate class if the rate class on the term no longer read more
“Life” without Contact

“Life” without Contact

It has been a tough couple of weeks learning this new normal, but we are pushing through and we are all here to help. The interest in life insurance is still quite high, especially with the concern about COVID-19. At this point carriers have made limited changes to their underwriting process, mostly concerning foreign travel. The largest change has come with paramed exams. Exams are being delayed or cancelled by clients, concerned about exposure to new people. Exam companies are also making changes, saying that examiners will only come if your client does not show any symptoms of illness. The good news is that we are set up to offer life insurance for your clients without the need for a paramed exam. You can apply with “drop ticket” application, or iGO electronic apps so that you and your clients can talk through the application remotely. The following products are available read more
SECURE ACT – Eliminating the Stretch IRA and Solutions Using Permanent Insurance

SECURE ACT – Eliminating the Stretch IRA and Solutions Using Permanent Insurance

With the SECURE Act passed by Congress, there is a huge opportunity to talk to you clients about permanent life insurance.  The goal of the act was to encourage more businesses to offer a retirement plan to their employees.  However, in order to cover the costs of some of these benefits, the act also took away the Stretch IRA.  The Stretch IRA was a way for non-spousal beneficiaries to stretch out distributions over their life expectancy when inheriting an IRA/Qualified plan.  This would allow the beneficiary to maximize their lifetime distributions while minimizing taxes.  With the elimination of the Stretch IRA, non-spousal beneficiaries will now have to liquidate the account within 10 years.  Here is an example – PRE- SECURE ACT 60 year old male client has $500,00 in his IRA- assuming he takes appropriate RMDs at 70 ½ (5% growth), he would leave an account worth $663,000 at his read more
What ID-Protection Services Really Do

What ID-Protection Services Really Do

We all hear about the big breaches in the marketplace but what does that mean to us, what can an identity theft protection services actually do to protect us? If these questions have ever run through your mind, you are not alone! But, we should understand these services and what they offer. First! No, Identity theft protection services DO NOT prevent identity theft. The prevention of identity theft is a far fetched idea at this point. You would have to gain/regain control over all of your personal information from every area of your life and secure that information. This, unfortunately, is unrealistic as most of our information is out there already. We provide our Personal Identifiable Information (PII) for almost everything/transaction we do. Our own behavior and the companies we associate with every day are susceptible to breach or mishandling information, putting us all at risk. This alone creates exposure read more
Why Use Life Insurance to Supplement a Client’s Retirement?

Why Use Life Insurance to Supplement a Client’s Retirement?

Why would anyone use life insurance to supplement their retirement?  Life Insurance provides valuable death benefit protection.  But a properly designed cash value life insurance policy can also provide living benefits in the form of tax-free distributions.  Let’s look at some of the primary reasons why it is a valuable solution for many clients looking to save for retirement. Tax Diversification One of the primary reasons to use life insurance in one’s retirement planning strategy is for tax diversification. Before looking at why the tax-free advantage is important, let’s first look at what the options the client would have otherwise. A client has the option of three different traditional investments for funding of their retirement.  They can use a tax-deferred vehicle, like a 401(k).  They could fund a taxable investment like mutual funds, stock, and bonds.  And lastly, there are tax-advantaged assets like the Roth IRA and municipal bonds.  And read more
When to write outside of Northwestern?

When to write outside of Northwestern?

As a Northwestern Mutual agent/advisor you represent one of the most influential and trusted life insurance carriers in the country. You have access to a vast source of information and excellent products to protect your clients.  However, one company cannot be all things for all clients. A time will come when you need to look outside of Northwestern to other companies.  There are two main areas that a BGA can help Northwestern agents, Underwriting, and Products.   Underwriting The most obvious time to look outside of Northwestern is when your client is declined or rated by Northwestern’s underwriting.  Depending on your client’s condition, there may be another carrier that is more favorable.  Developing a relationship with a Brokerage General Agent is an important step, that provides you the freedom to discuss your client without pressure and determine if there may be a better fit outside of Northwestern.   There are several opportunities to go outside of northwestern prior to submission, which can save you and your read more
Should I offer my P&C clients Life Insurance?

Should I offer my P&C clients Life Insurance?

It’s ok to offer Life insurance! Ask yourself why national P&C carriers like Liberty Mutual and Nationwide, require their producers to write life insurance too? The answer is retention. As you know the more lines of business you have with a client, the more likely they are to stay with your agency.  Life Insurance is a long-term product, one that you do not have to review/replace every year.  Since these clients are more likely to stay with you long term, it increases the amount of renewal commissions you can make on their other product lines as well.  On the opposite side of the coin, think about the clients that go looking for life insurance and find another P&C agency down the street that can help them.  Once that agency helps with the life insurance, they will most certainly quote the P&C business as well, wouldn’t you? An opportunity with Life Insurance While our agent may be correct that “clients no longer ask about life read more
What is a BGA (Brokerage General Agency)?

What is a BGA (Brokerage General Agency)?

A BGA is an insurance agency that works with financial professionals who are licensed to sell the insurance products of carriers we represent. A BGA is a partner for you, the insurance agent, to help you find the best product for your client.  A BGA can represent several companies and many product lines. The four main product categories for most Brokerage General Agents are Life Insurance, Long Term Care Insurance, Disability Insurance, and Annuities. Who do you work with? Our clients are insurance professionals like yourself.  We work with Property & Casualty Agents, Carrier Life agents, Employee benefits brokers, and financial advisors.  Each type of agent comes to us for different reasons, but all are looking for help finding the right product for their client.  Many of you have direct access to a few Life Insurance carriers, whether you are a career agent from Northwestern or a P&C agent with a direct Cincinnati Life appointment.  However, there are read more
Life Insurance Application

Life Insurance Application

What does a life insurance application look like? In the last 15 years, a life insurance application has grown to become a long legal document with more words than you would ever want to read.  Since traditional paper applications have become so long, life insurance companies and third-party software companies have attempted to simplify the process using technology.  There are three major ways to collect the required information, but regardless of the process, the time it takes to complete a life insurance application is still on average 45 min to 1 hour.  The three processes are traditional Paper applications, E-applications, or “drop ticket” applications.  Like everything else, there are pros and cons to each. Paper Applications Paper Applications are still the most commonly used application type.  The agent/bga can better control the underwriting process, including ordering the paramed exam, and if needed, APS records.  This control can be important if something goes wrong in underwriting read more
Disability Insurance: Why you Should Sell it

Disability Insurance: Why you Should Sell it

Sell the plan that works when your client can’t. Anyone gainfully employed has an asset worth protecting. That asset is his income. Disability insurance provides income in the event a worker is unable to perform the duties of his job. Workers take a big risk without disability insurance. It’s hard to fathom how much an impact it can have.  The one key question that should be asked is: “What asset or assets would you use to cover monthly expenses if you were to become disabled?”  If your client doesn’t have a valid asset to pull income from, then it cannot be emphasized enough how important it is to get them covered with disability insurance. A client’s entire financial plan can come crashing down in an instant without a steady income coming in. A disability policy will charge a specific premium based on: The insured’s occupation, health (including tobacco status), and income benefit read more