My best life insurance month ever, Pt. 2Article added by Steve Lewit on September 18, 2012

Steve Lewit

Buffalo Grove, IL

Joined: February 27, 2008

My Company

In order to get over the fear that life insurance might ruin my annuity sale, or that I don’t know enough, or that clients are not interested, I had to develop specific strategies and surround myself with the right support personnel. Today, I’d like to share these with you.

Bragging just isn’t my game, so I hope you don’t take this and my last article that way. My game is about inspiration — about trying to find the keys that will unlock your potential, both personally and financially.

Of course, making a bunch of money in one month is pretty neat, but what’s even more neat for me is how lit up I get sharing the keys I discover with you, so that you can do the same thing (or perhaps something even better).

In my previous article, I wrote about the fears that many of us hold about selling life insurance and how that fear, or any fear for that matter, freezes us, prohibiting a venture into something new. In order to get over the fear that life insurance might ruin my annuity sale, or that I don’t know enough, or that clients are not interested, I had to develop specific strategies and surround myself with the right support personnel. Today, I’d like to share these with you.

The idea of using life insurance is triggered in my strategy in these ways:
    1. My client has qualified monies which are not going to be needed to support income at any time in the future
    2. My client has a priority of passing assets to heirs
    3. My client is contributing to a 401(k) in excess of the company match
    4. My client has or will have an estate tax issue
Any one or combination of these factors starts me thinking about the use of annuities in conjunction with life insurance or just life insurance itself. Let’s look at the items one at a time.

Client with qualified monies not needed for income

Ask your clients this simple question: “Suppose you are 70½. Would you take your required minimum distributions if you didn’t have to?” If your client says no, then explain the potential taxation of the IRA (taxes on the RMDs; taxes on the reinvested RMDs; taxes on the IRA when passed to heirs; estate taxes on the IRA if the estate is large enough). Then explain how using life insurance transfers the IRA from the estate into an irrevocable life insurance trust (ILIT), thus reducing the taxable estate; eliminates taxes upon death (life insurance in an ILIT passes estate and income tax free); and recoups any taxes paid on the IRA rollout amounts that were used to pay the life insurance premiums (through the death benefit).

In this scenario, I like to put the IRA into an annuity with a lifetime pay rider that foots the premium for life.

Client has a priority of passing money to heirs

Life insurance is a tax-favored vehicle that leverages assets. It can reduce and recoup taxes in an IRA and, at the same time, leverage the value of the IRA, which is a perfect strategy for getting a larger legacy to heirs. Life insurance can also be used as a way to guarantee principal, from an annuity that has a lifetime income rider and which will, in all likelihood, eat through the principal.
Client is contributing more than the company match to a 401(k)

Superior results can be achieved by just contributing the match amount to the 401(k), paying taxes on the balance that would otherwise be contributed, and then purchasing a max funded life policy which will provide tax free income to the client when he or she retires. This strategy is especially suitable for younger clients.

Client has an estate tax issue

Take your client’s total estate and grow it by 3 percent compounded until they are age 90. Most clients do not realize how big their estate will be and, if the estate tax exemption remains low (going to $1 million for 2013), they don’t realize the size of their estate tax liability.

Combining this strategy with any of the other strategies gives you an extremely compelling case.

OK, you know the strategies, but how do you make sure you don’t waste a lot of time meeting with clients who are not qualified? Here’s what you do:

1. If a client expresses interest in the concept (notice I said the concept, not the details) then you stop right there and say, “Mr. Client, if you are interested in this concept, the next step is to see if you qualify. Once we know if you qualify, then we can go through the details.

"To see if you qualify, I need to take some information from you, you need to take a simple medical exam at home and then we will know exactly what we are talking about. There’s no cost or obligation involved. Without seeing if you qualify, we could waste a lot of time working with numbers that are not real and which could be better or worse than what the insurance company will offer us. Does that sound like a good approach?"

Always get your clients qualified right away before going into any detail. You, and they, need to know where everything stands to have any further discussion.

2. What if clients don’t qualify from the get-go? No problem. Since you may be rolling money out of an IRA, you can use whichever spouse is healthy.

If neither spouse is healthy, then you can ask your clients if they would like to help their grandchildren.; If they say yes, then they can roll out their IRA, purchase a life policy on a son or daughter, which builds high cash value, and in that way, begin a healthy transfer of funds from their estate, recoup taxes paid on the qualified monies and provide cash that grandchildren can use in the future.


The opportunity of capturing more clients and making multiple, larger sales by using life insurance is just a matter of finding a little bit of courage and disregarding most of the negative things you’ve heard about selling life insurance. Get yourself a focus strategy, pre-qualify your clients before you get into the details and you will be on your way to having a month equal or better than mine.
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