Life insurance is such a blatantly obvious solution that many consumers fail to grasp that it may very well be the sexiest, low-cost, low-risk financial management vehicle around. And while insurance is often seen as a dyed-in-the-wool industry, the truth is that it is both sophisticated and innovative. Here to fight the charge that insurance is boring are a handful of truths financial pros use in leveraging tactful, creative insurance planning.
1. The core client base is changing.
The life insurance industry is undergoing a paradigm shift. “We're in a value market that extends beyond product portfolios,” says Bob DiMeo, managing director for Crump Life Insurance. “A number of our agents are writing higher premiums with long-term, higher-level clients again this year. Why? The life insurance industry client-base changed from mostly old, sick and wealthy with estate planning concerns. Today, we see 40- and 50-year-olds earning significant incomes at relatively younger ages.”
Moreover, DiMeo notes “Creative life insurance planning today is more about overcoming financial concerns than merely insuring someone just because. Someone can accumulate and distribute substantial sums of money without the tax implications of qualified plans.” He concludes: “In states such as California, for example, where ordinary income tax exceeds 50 percent, this is the most interesting concept in the world to a life insurance client and her or his investments manager.”
2. Riders allow for endless creativity.
Long-term care and executive benefits can come at steep discounts given the right plan design. When talking about creative life insurance concepts, one would be remiss to not mention Synergy Financial's Paul J. Pichie, based in Southern California. “Life insurance strategies, designed the right way when covering a client's risk potential, trump most wealth/investment strategies for business owners and high-net-worth individuals alike,” he says.
Mr. Pichie specializes in bundling long-term care (LTC) options into early cash value life insurance via policy riders. This strategy doubles as an executive benefits plan and a viable buy-sell funding arrangement. “The primary purpose of insurance is to protect against mortality based losses, but with tailored insurance planning you can provide your client with more coverage for less cost with additional flexibility … OMG, technology is awesome!” he concludes.
The best of the best got that way because their enthusiasm for life insurance extends beyond the widely-perceived notion of buy this in case you get struck by lightning-type of insurance — something Rick Wieder, president of Zorro Insurance Brokerage and NAIFA in Broward, Fla., knows quite well.
“The public is smart. They just need a quick one-two blurb about what creative financial dilemmas effective life insurance design can overcome,” says Wieder. “Take a 73-year-old's unneeded IRA. I can fund an immediate annuity with her required minimums (RMD) and seed a life insurance trust. That IRA will be worth 300 percent of its principal at her demise. Guaranteed.”
3. Customer service solutions just keep getting better.
Something unusually creative: The head of Atlantic Insurance Brokerage, a BGA / Marketing Organization, explains their 24-hour agent support platform: “Most life insurance agents have client appointments in the evening. Most life insurance general agencies are on 9 to 6 hours and thus closed at night,” says Andy Morafates, the company's Chief Executive. “In 2004, we started a 24-hour agency to cater to producers when they require underwriting or sales support the most — when they are taking applications or conducting field underwriting questionnaires.”
We have personnel from all over the country and provide them a home office. It's a creative way to employ the most capable case managers and underwriters and keep us accessible to the producers nationally. Believe it or not, some top producers conduct business on Sundays. So do we.”
4. Less is sometimes more.
Every year, the Life Insurance Marketing Association (LIMRA) releases its report about a generally healthy demand for life insurance nationally. What does that say about life insurance's appeal? Only good things.
Life insurance is fluid and thus accommodating to producers who understand how and where to incorporate it into a client's portfolio. But you have to know the product inside and out. To accomplish this, some of the biggest banks in the country send their sales managers to Joel Solomon’s financial workshops to learn how attractive life insurance can be.
Solomon's famous line for financial advisors epitomizes creativity in insurance: “It's not about having 200 products loaded with different features. We work on some of the most complex client circumstances whereby tax and asset management intertwine. Most of our policies are with one, or maybe two insurance companies. It takes enormous competence and creativity to adjust one reliable product in various situations instead of writing whichever premium is lowest on a quote chart.”
It’s true: You can write bigger ticket premiums using one or two products. You just have to get creative.