Life insurance has always been a "I don't want to talk about it", "I only need it if the unforeseen happens" kind of concept. We at Simplicity Illinois want to bring a new conversation around life insurance. Many large institutions like Credit Suisse, Goldman Sachs, etc. also feel this way and are prevalent in the life settlement industry. If top investment banks view life insurance as an asset class, shouldn't your clients.
One particular concept we’d like to share addresses the concerns below.
1. What happens if I live too long or outlive my money? I'm sure you have heard this concern many times before.
2. What happens if I get sick and need some type of care? This is becoming more and more of a concern with longevity and improved medical care.
One way we position this concept is by viewing this as a hedge for their overall portfolio. For example, you have a 45 yr old client that has a $2mm net worth. They plan on growing this at 7% contributing 25k a year to around $8mm at retirement (age 65). How the sale happens is discussing with this client the things that can wipe out a plan.
- Dying too young
- Becoming sick along the way
- Living too long and not planning for it
So the key question is, Mr. Client, what if I told you I could insure your portfolio against these 3 things; dying too young, becoming chronically ill and living too long? Would you be interested? Oh and by the way I can do this guaranteed and get you a tax equivalent rate of return in the 5% range.
The solution is American General's Secure UL. It is a guaranteed UL contract paid up at age 85. It provides 10% of the Death Benefit as income at age 85. So in this case the client would receive $100k for 10yrs tax free up to basis and ordinary income after that. They can stop the income at anytime, so they could take the income to basis and then stop so the rest passes tax free to beneficiaries. Lastly, this product has a chronic illness rider that provides 2% of the death benefit (capped at the IRS per diem limit annually) and has a 90 day elimination period. This is an indemnity (cash) benefit with no restrictions on how you use the money.
I hope this helps in adding another option for your clients. We will be sharing other ideas and concepts around the idea of looking at life insurance as an asset class. We hope Simplicity Illinois can help you and your client with solutions. We are here to help you grow your business and add to your top line.