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Pitching the Longevity and Safety Promise

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A recent TIAA-CREF survey found that 84 percent of Americans want guaranteed monthly income during their retirement years and that only 14 percent of Americans have annuities. The 70 percent of the population without annuities may be waiting for a broker to explain what an annuity is and how it can fulfill future monthly income […]

Preservation & Strengthening of the Agent-Buyer Bond

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Consumers searching for insurance will at some point face the decision of buying from a direct-to-consumer website or from an agent. Those who decide to buy direct typically cite cost as well as ease and speed of transaction as their reasons for doing so. Sounds simple. The problem? Insurance is not simple, and shoppers can […]

Re-Energize Your Business in 5 Steps

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Even if you did no traditional planning at all, it’s not too late to make 2016 your transformation year. I recently made a discovery that can help you transform your business from average to awesome starting right now. All you have to do is follow these five simple steps: Find your I.I.O.s. My good friend, […]

Go for the Close Five Times – At Least!

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How many times have you seen a commercial (either a TV ad, a public billboard, ad in a magazine, etc.) for Coke-a-Cola? Perhaps I should say how many times a DAY do you see one? Now you’d think that people already know about Coke-a-Cola, but did you know that Coke still spends billions of dollars […]

Connecting with On-the-Go Insurance Buyers – Now There’s a Platform for That

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Today people turn to their smartphones and tablets to do just about everything, like reserve a motel room, order Thai takeout, and compare mortgage rates. But when it comes to buying insurance, their mobile gadgets let them down. Simple, clear answers are hard to come by. Now an entrepreneurial team aims to fundamentally change the […]

*Special 2-Week Free Online Insurance Agent Summit*

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Insurance Agent Summit has brought together 60 of the world’s most influential agents and industry leaders to tell you exactly how they and other agents are beating the competition and building the business of their dreams. They’ll show you how to conquer the most difficult issues facing agents today, along with showing you exactly how YOU can use […]

eApps. Can They Be an Answer to Writing More Business?

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Fast. Simple. More. Next! Those are necessary watch words for any insurance professional that wants to succeed today. You can still only see so many people in a week so what can you do to generate more business faster? eApps have been touted as one solution but…with mixed acceptance. They have really advanced though and […]

2 Simple Changes That Took Me to Over $900K Per Year

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I never made more than $50,000 a year for the first 7 years as an advisor. Why? Was it because I wasn’t getting in front of enough people? Maybe… so the 8th year I figured out how to get in front of people and here are my numbers: Got in front of 301 people Did […]

Why Everyone Should Talk Politics While Networking

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Yes, I believe everyone should talk about politics while networking … if they’d like their network to go up in flames, that is. I admit that I chose the headline to get your attention. But to be clear, talking politics in the course of doing business — or networking for business — is definitely not a good […]

When Is the Best Time to Reach Prospects & When Should You Follow Up?

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It’s 2016.  Successful agencies turn to data when trying to maximize sales and marketing efforts. Agents today juggle tasks from sales, to marketing, to administrative follow ups. Knowing when to dial your leads shouldn’t be a task, it should be basic knowledge. Successful agencies don’t share this information, but they dial when the data says […]

How I Went from the Edge of Financial Oblivion to MDRT’s Court of the Table

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In the 15 years I’ve been married to my wife Bonnie I’ve learned that my biggest goal is to make her happier each day. Growing up there was another leading lady I was hoping to impress and make proud of me, and that was my mom. I would like to take you back to July […]

Uncovering the True Meaning of Disability

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When you hear the word disability, what is the first thing that comes to mind? If you’re like most people, you might imagine the physical objects commonly associated with an illness or accident such as hospital beds, canes, walkers or wheelchairs. That’s what I thought until I experienced a personal disability that I live with […]

How to Maximize Your Online Success by Choosing a Niche

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Growing an internet life insurance business as an independent agent with the goal of attracting anyone and everyone is a strategy that will most certainly end in failure. However, growing a niche internet life insurance business to attract customers within your chosen demographic is a strategy that will almost certainly result in more traffic, more […]

Watch: Best Practices for Success in Your Business [from Life Happens]

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In my 50+ years in the business, I’ve found few things more effective for recharging my business and my personal outlook than listening to my peers talk about what’s working—and not working—for them. My colleagues who belong to the Million Dollar Round Table are an ongoing source of inspiration for me. Younger advisors, like Danny […]

How to Achieve MDRT Qualification Year after Year

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If you are interested to join the ranks of top financial and life insurance professionals in the Million Dollar Round Table (MDRT), a strategic approach is absolutely essential. MDRT qualification requires a certain production-level to be met in addition to its strict standards for ethical practices. Luckily, the parameters for production qualification are laid out […]

Helping Clients Teach Their Children About Finances

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As trusted financial planners we take good care of our adult clients through holistic long-term financial planning while building strong relationships. In addition, there are many of us delivering added value by taking it a step further to include all family members in the conversation, including children. Doing so opens up the possibility to build […]

Skip Referrals For Better Introductions

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3 weeks ago, while conducting a full-day session, I mentioned a recent study that demonstrated that many clients don’t like to be asked for “referrals” but actually enjoy making “introductions.” About an hour later, I was talking about becoming more “referable” so as to obtain more referrals without asking. A gentleman in the front row […]

Three Elevator Speech Stories

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An elevator speech is your 30 seconds of fame. I have worked in the financial industry for decades. That sentence right there probably sounds mundane, but what if I told you, “I showed people that retiring happily ever after is within their grasp!” A good elevator speech is all about choosing the right words and […]

Tax Reduction Tools for Producers

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Many people are exhausted after tax season. They’ve been busy tracking down receipts, filing paperwork and meeting deadlines. Many just want a break from numbers for a while.

But it’s an agent’s job to steer these weary taxpayers in the right direction. Make the aftermath of Tax Day (April 17) an opportunity to help your customers prepare for Uncle Sam’s inevitable visit next year.

The best way to do that is by touting the tax benefits of annuities and other similar insurance and retirement savings products that can shield their income from taxes.

Tax-Deferments: IRAs and Other Retirement-Savings Plans

Offering retirement plans that can also act as tax shelters will score major points with consumers still raw from tax time.

Some workplaces already offer tax-deferred retirement savings plans, such as 401(k)s and 403(b)s. But, sometimes, these opportunities do not kick in until after a certain period of employment, or they may involve certain limitations and restrictions.

Regardless, hard-working individuals should be taking advantage of all available opportunities to set aside a maximum amount of savings now without the IRS taking its initial cut.

IRAs are a good investment vehicle to fulfill this purpose.

Your clients should be informed, though, that they will eventually have to pay the deferred taxes on their savings stashed away in an IRA.

Although, if they are not prematurely pulling cash from the intended retirement prize, they may be in a lower tax bracket by the time they’ve retired. This means that what they end up paying in taxes on the IRA funds at a later date may be less than what they would’ve paid on the earned income during their working years.

Additionally, taxes are paid only on the amounts withdrawn, while the remaining money in the IRA continues to accrue unburdened by a tax.

Annuities

Money invested in an annuity also accrues tax-deferred. And unlike an IRA, there is no yearly cap on contributions.

That makes those closer to retirement age target customers for this type of investment; especially when they have some catching up to do on retirement planning.

It’s important to note, though, that once it’s time to dip into the annuity, not all income is untaxed.

Direct contributions by the consumer to the annuity are free from the sting of taxation. But earnings derived from the investment are taxed at the regular income-tax rate.

However, consumers opting for an annuity will have some flexibility in payouts.

And those wanting a steady cash flow that extends beyond their working days, and is (somewhat) tax-free, will likely find an annuity to be a desirable choice.

Life Insurance Policies

Life insurance is important. And certain types of life insurance policies may also qualify for certain tax benefits.

Qualifications for favorable tax treatment are dependent on IRS review.

IRS consideration is typically based on whether an insurance policy is meant to be insurance rather than an area of investment. In other words, life insurance is generally meant to replace income and not assets.

One benefit of a whole life insurance policy is that it can grow interest on the savings portion of the policy tax-free.

So long as your clients do not sell, surrender or withdraw from a policy with a cash value component, taxes are deferred. Otherwise, typically, the difference between what was paid in (insurance premium) and what is paid out (cash value), is taxable as income.

Also, the first $50,000 of any employer-paid contribution to a term life insurance policy does not need to be reported to the IRS as taxable income.

There are several other tax rules governing life insurance products, as well as various tax benefits in certain situations. Some are good, and some are not-so-good. None is necessarily bad. It just depends on what your client wants.

For instance, if family security is not needed, a whole life insurance policy is not the best option if your client is looking for a higher rate of return.

On the flip side, where family security is important, they may be able to save their loved ones from the burden of taxation on the death benefit received from a life insurance policy.

Annual Financial Review: Competitive Rates and Value-Based Products and Selling

Now that consumers made it through another tax season, they can finally take a deep breath.

And, depending on the hit they took, they may decide to shop around for some better deals for next year; especially with the recent news of corporate tax cuts.

That’s where you come in. Keeping rates competitive and fees minimal can work in your favor. You don’t want to consistently quote above-and-beyond fellow insurers.

Also, as your existing clients seek to cut costs by downsizing or eliminating their current coverage and/or investments, consider bundles or other incentives as an alternative.

But avoid selling strictly based on price. An emphasis on value is equally (if not more) important, including eventual and recurring tax benefits to the consumer.

This keeps your clients happy long-term, especially at tax time, which keeps your residual income streaming in year after year.

When Annuities Make Sense in Retirement

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With life expectancies greater than ever, retirement could very likely be the longest phase of our client’s lives. Therefore, it is absolutely imperative for retirees to have a plan in place that;
• Provides the ability to spend and enjoy their money in retirement and
• Protects them from “living too long” and outliving their income.

Since retirement income planning is an extremely important and complicated process, this is something retirees should not attempt to do on their own. In addition to the risk of large investment losses and outliving their assets, there are other major challenges and considerations such as taxes, inflation, stock market and interest rate volatility, rising healthcare costs, taxes, and much more.

Why Consider an Annuity?

1. Growth Potential – Clearly every retiree wants their money to grow over time. The reason growth is so important is not only to accumulate more wealth, but also to fight against the aforementioned many “money predators’.’

Most retirees will tell you they prefer not to spend their principal, and would rather live off the income generated from their principal.

Therefore, in order for their income to keep pace with things like inflation, most annuities offer a well-diversified array of investment options to choose from which offer the potential to keep pace with one’s changing lifestyle and income needs over the long term.

2. Safety Provisions – By far, the two biggest financial fears for most retirees are: losing money and running out of money.

The fear of losing money and/or running out of money is not only understandable but also extremely critical. In fact, I firmly believe that “90% of a financial professional’s job is avoiding large losses”.

If your clients are taking income from their retirement assets and suffer significant losses (particularly in the early years of their retirement and income distribution) this can be extremely devastating and sometimes irreparable. In other words, the combination of large losses and withdrawing income can dramatically increase the probability of running out of money.

Therefore, annuities provide an alternative and solution, since most contain contractual guarantees that can insulate your clients against outliving their income, even if they suffer large investment losses.

3. Tax Efficiencies – I always jokingly say that my least favorite uncle is “Uncle Sam”. I have yet to meet someone who truly enjoys paying taxes. And of course, taxes come in all flavors; ordinary income tax, capital gains tax, taxes on dividends and interest, state taxes, estate taxes, and more.

John D. Rockefeller once said; ”The fastest way to accumulate wealth is to make sure you never pay tax on income you don’t use.” That may be one of the most brilliant statements I’ve heard aside from Einstein’s theory on compound numbers.

Annuities can offer two unique advantages with regards to taxes. First, while non­ qualified monies are accumulating inside an annuity, they are growing tax-deferred. Put another way, a client’s monies are not subject to tax consequences such as capital gains, dividends, and interest. Second, many annuities offer clients with non­ qualified monies the ability to provide tax-advantaged income when they are in the distribution stage.

Since we can’t beat the unbeatable opponent (the IRS), annuities provide our clients with options to minimize or avoid many forms of unnecessary taxation for non-qualified monies – where applicable and appropriate.

4. Income You Cannot Outlive – Given the exponential growth of the baby boomer generation, and the advancements made in modern medicine, life expectancies today are greater than ever. For example, when Social Security was first enacted in 1933, the average life expectancy for a male was approximately 59 years old…and yet Social Security didn’t start paying benefits until age 62!

Since males today have an average life expectancy of approximately 85 years old, it is easy to see why we are having such a tremendous battle with Social Security benefits. Many studies show that by the year 2030, more than 2/3 of the U.S. population will be above the age of 60.

So the message here is clear. Given the fact that today’s retirement plans are demanding a much longer period of income distribution, annuities are becoming increasingly popular alternatives.

5. Income Growth Potential – If a retiree needs their income to grow, their assets obviously need to grow at a rate that exceeds their withdrawal rate. Since many retirees have little to zero risk tolerance, annuities can provide a greater “peace of mind” to invest a portion of their monies in the stock market.

Back when interest rates were much higher, many retirees thought they could accomplish an adequate amount of retirement income by simply investing in bonds and CDs. However, most retirees found that these vehicles alone were simply not enough. After factoring in things like investment fees, inflation, and taxes, utilizing income-producing investments is usually solely capable of accomplishing income growth potential. Of course, this is especially true considering today’s historically low interest rates.

Given the many features, benefits, riders, and guarantees of an annuity, they can sometimes increase the willingness for a retiree to invest their retirement monies more aggressively than other investment options. Of course, this varies on a case-by-case basis. (continued on page 2)

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