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© 2016 Million Dollar Round Table Million Dollar Round Table 325 West Touhy Ave. Park Ridge, IL 60068 USA
2016 MDRT Annual Meeting e‐Handout Material Title: How Much More Life Insurance Can I Buy? Speaker: Robert M. Ball Presentation Date: Tuesday, June 14, 2016 Presentation Time: 3:30 ‐ 5:00 p.m. The Million Dollar Round Table® (MDRT) does not guarantee the accuracy of tax and legal matters and is not liable for errors and omissions. You are urged to check with tax and legal professionals in your state, province or country. MDRT also suggests you consult local insurance and security regulations and your company’s compliance department pertaining to the use of any new sales materials with your clients. The information contained in this handout is unedited; errors, omissions and misspellings may exist. Content may be altered during the delivery of this presentation.
Slide 1
Robert M. BallHow Much More Life Insurance Can I Buy?
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Slide 2
How MuchLife Insurance
Can I Buy?
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Slide 3
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Slide 4
Robert M. Ball
Consultant, Coach, Advocate
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Slide 5
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Slide 6
WL
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Slide 7
• WSJ, Money, NY Times
• Ramsey & Orman
• White Coat Investor
• Social Media
• CPAs & Attorneys
• Life/Investment Industry
WL
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Slide 8
NEED
LOWER
RATE OF
RETURN
HIGH AGENT
COMMISSIONS
NEED
LOWER RATE OF RETURN
HIGH AGENT COMMISSIONS
NEED
LOWER RATE OF RETURN
HIGH AGENT
COMMISSIONS
NEED
LOWER RATE OF RETURN
HIGH AGENT
COMMISSIONS
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Slide 9
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Time History of Life Sales – Total Picture
1980 1985 1990 1995 2000 2005 2010
1980 – 1990New Money UL
1990 – 2000Decade of VUL
Mid – 2000sULSG
Post – 2008IUL
WL Term Current Assumption UL VL/VUL ULSG Indexed UL
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Slide 10
Life Insurance Selling1. Damage of Needs Analysis
2. Handling the Cost Objection
3. Death Only Presentations
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Slide 11
. . . Not exactlyPioneer?
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Slide 12
AMOUNT?
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Slide 13
NEED
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Slide 14
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Slide 15
WTC Relief Fund
2,800 Claims Paid
NONEUsed Needs Analysis
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Slide 16
WTC – Example #1
Fireman – 25
$50,000 X 30
$1,500,000
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Slide 17
WTC – Example #2
Executive – 55
$500,000 X 10
$5,000,000
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Slide 18
NEED
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Slide 19
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Slide 20
Do you really need
the same house?
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Slide 21
Do you really need
an entire car?
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Slide 22
Do you really need
a real diamond?
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Slide 23
INSURANCE
“To FULLY indemnify propertyagainst all forms ofhazard and peril.”
Merriam-Webster Dictionary
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Slide 24 Common “Needs” Mistakes
1. Cost of living
2. Case facts never change
3. ROR on proceeds
4. Subtract assets and Social Security
5. No need
6. Drop policy someday
7. No cushion for unknowns
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Slide 25
NEED
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Slide 26 HUMAN LIFE VALUE THEORY
“The capitalized monetary worth of the
earning capacity resulting from the economic forces
that are incorporated within our being:
namely -- our character and health,
our education, training, and experience,
our personality and industry, our creative power,
and our driving force to realize
the economic images of the mind.”
Solomon Huebner, Ph.D.
“The capitalized monetary worth of the
earning capacity resulting from the economic forces
that are incorporated within our being:
namely -- our character and health,
our education, training, and experience,
our personality and industry, our creative power,
and our driving force to realize
the economic images of the mind.”
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Slide 27
HUMAN EXPERIENCE
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Slide 28 NEEDS = LOW SALES
Underwriting Maximums
Needs Based Marketing
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Slide 29
John – 32 $200,000 Income
Mary – 33 Stay at Home Mom
Child – 4
Child – 2
JOHN & MARY
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Slide 30
Income “goal” ???,???
Less existing insurance $500,000
Other assets 200,000
$700,000
Sale - $1,000,000
NEEDS ANALYSIS
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Slide 31
John – 32
200,000 x 20 = $4,000,000
Mary
4,000,000 x 50% = $2,000,000
$6,000,000
HUMAN LIFE VALUE = Minimum Need
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Slide 32
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044
$12.00M
$10.00M
$8.00M
$6.00M
$4.00M
$2.00M
$0
Wealth Building Potential
$11,216,988
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Slide 33
Future Value $11,200,000
Discount Rate 3.5%
Study Period 30 years
Present Value $3,990,318
PRESENT VALUE CALCULATION
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Slide 34 How much life insurance
don’t we ever recommend…
per client?
per month?
per year?
per career?
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Slide 35
Buy only whatyou NEED…
and drop itASAP
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Slide 36
TYPE?
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Slide 37
Adjustable,Universal,
Variable,Life Insurance
Survivorship
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Slide 38
Adjustable,Universal,
Variable,Life Insurance
Survivorship
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Slide 39 $4 BillionCash Value
Primerica100% Term
100% of the Time
Suzy OrmanHATES
Whole Life
4,400 Execsand the CEO
Own Whole Life
$17 BillionCash Value
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Slide 40
WHY?
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Slide 41
COLI & BOLI
Tier 1 Capital Cash Value
Death Benefits Liquid
Disability Benefits Rate of Return
Law Suit Protection Low Risk
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Slide 42
“Inevitable Gain”John O. Todd Organization
Circa 1950
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Slide 43
“Inevitable Gain”John O. Todd Organization
Circa 1950WL
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Slide 44
WL
ASSETALLOCATION
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Slide 45
S&P History
Apples to Apples?
ProjectedPerformance
vs.
PAST
Investments
Whole Life
FUTURE
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Slide 46
S&P History
Apples to Apples
ProjectedPerformance
vs.
PAST FUTURE
Investments
Whole Life
PastPerformance
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Slide 47
Male – 33
Annual Investment $50,000
Term Insurance $2,500,000
Years 1983-2015 S&P – 100%
CASE STUDY FACTS
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Slide 48
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
1984 1989 1994 1999 2004 2009 2014
S&P 1983 through 2015
Assumes Annual Investment of $50,000Management Fee of 1.5% | Income Taxes of 35% | Term Premium of $4,500
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Slide 49
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
1984 1989 1994 1999 2004 2009 2014
S&P 1983 through 2015
Assumes Annual Investment of $50,000Management Fee of 1.5% | Income Taxes of 35% | Term Premium of $4,500
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Slide 50
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
1984 1989 1994 1999 2004 2009 2014
S&P 1983 through 2015
Assumes Annual Investment of $50,000Management Fee of 1.5% | Income Taxes of 35% | Term Premium of $4,500
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Slide 51
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
1984 1989 1994 1999 2004 2009 2014
S&P 1983 through 2015
Assumes Annual Investment of $50,000Management Fee of 1.5% | Income Taxes of 35% | Term Premium of $4,500
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Slide 52
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
1984 1989 1994 1999 2004 2009 2014
S&P 1983 through 2015
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Slide 53
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
1984 1989 1994 1999 2004 2009 2014
Assumes Annual Investment of $50,000Management Fee of 1.5% | Income Taxes of 35% | Term Premium of $4,500
S&P vs. Whole Life Cash Value 1983 through 2015
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Slide 54
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
1984 1989 1994 1999 2004 2009 2014
Total Legacy Value: S&P and Term vs. Whole Life
Assumes Annual Investment of $50,000Management Fee of 1.5% | Income Taxes of 35% | Term Premium of $4,500
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Slide 55
COST
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Slide 56
What you earn
Your insurance costs
Your annual savings
Your debt and mortgage
What’s left for lifestyle
Total Hypothetical Cash Flow
Cash Flow Sources*
* Based on $250,000 Household Income
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Slide 57
What you earn $ 2,500
Your insurance costs
Your annual savings
Your debt and mortgage
What’s left for lifestyle
Total Hypothetical Cash Flow $ 2,500
Cash Flow Sources*
* Based on $250,000 Household Income
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Slide 58
What you earn $ 2,500
Your insurance costs 1,000
Your annual savings
Your debt and mortgage
What’s left for lifestyle
Total Hypothetical Cash Flow $ 3,500
Cash Flow Sources*
* Based on $250,000 Household Income
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Slide 59
What you earn $ 2,500
Your insurance costs 1,000
Your annual savings 16,000
Your debt and mortgage
What’s left for lifestyle
Total Hypothetical Cash Flow $ 19,500
Cash Flow Sources*
* Based on $250,000 Household Income
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Slide 60
What you earn $ 2,500
Your insurance costs 1,000
Your annual savings 16,000
Your debt and mortgage 13,775
What’s left for lifestyle
Total Hypothetical Cash Flow $ 33,275
Cash Flow Sources*
* Based on $250,000 Household Income
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Slide 61
What you earn $ 2,500
Your insurance costs 1,000
Your annual savings 16,000
Your debt and mortgage 13,775
What’s left for lifestyle 12,500
Total Hypothetical Cash Flow $ 45,775
Cash Flow Sources*
* Based on $250,000 Household Income
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Slide 62
DEATH ONLY?
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Slide 63
$500
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Slide 64
WHAT IS LIFE INSURANCE?
“A contractual promiseof capital to be
delivered in the future.”
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Slide 65
INSUREDSPOUSE &CHILDREN
Death BenefitPaid to Family
INSURANCECOMPANY
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Slide 66
INSUREDSPOUSE &CHILDREN
Insured isPrimary Beneficiary
INSURANCECOMPANY
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Slide 67 PROMISED
CAPITALReverse Mortgage
Asset Spend Down
Pension Maximization
Annuitization
Less Risk
Lower Taxes
Legacy
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Slide 68 RETIREMENT DILEMA
Lifestyle Legacy
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Slide 69 RETIREMENT DILEMA: Unknown Duration
Investing Dis-investing?
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Slide 70
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
$1.00M
$750,000
$500,000
$250,000
$0
Linear Asset Pay-down
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Slide 71
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
$1.00M
$750,000
$500,000
$250,000
$0
Linear Asset Pay-down
Whole Life
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Slide 72 PROMISED
CAPITAL
Life Insurance
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Slide 73
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
$80K
$60K
$40K
$20K
$0
Retirement Asset Hoarder
$1,000,000 @ 4%, taxed at 35%
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Slide 74
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
$80K
$60K
$40K
$20K
$0
Retirement Asset Spender
$1,000,000 @ 4%, taxed at 35%
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Slide 75
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
$80K
$60K
$40K
$20K
$0
Retirement Advantage
$1,269,772
$500,000
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Slide 76 Capital at Work
INVESTMENT
WHOLE LIFE
$
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Slide 77
NQDC PostRetirement
Law Suits ROR
LIFE INSURANCE
BoA
CV
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Slide 78
Bob &Tami Kids GrandKids
Charity
LIFE INSURANCE
Ball, Inc.
CV
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Slide 79
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Time History of Life Sales – Total Picture
1980 1985 1990 1995 2000 2005 2010
1980 – 1990New Money UL
1990 – 2000Decade of VUL
Mid – 2000sULSG
Post – 2008IUL
WL Term Current Assumption UL VL/VUL ULSG Indexed UL
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Slide 80
Life Insurance Selling1. Damage of Needs Analysis
2. Handling the Cost Objection
3. Death Only Presentations
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Slide 81
Life Insurance Selling1. Human Life Value Theory
2. Handling the Cost Objection
3. Death Only Presentations
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Slide 82
Life Insurance Selling1. Human Life Value Theory
2. No Additional Out-of-Pocket
3. Death Only Presentations
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Slide 83
Life Insurance Selling1. Human Life Value Theory
2. No Additional Out-of-Pocket
3. Live to Age 90 Plus!
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Slide 84
Q&A
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Slide 85
Thank You!
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Slide 86
• WSJ, Money, NY Times
• Ramsey & Orman
• White Coat Investor
• Social Media
• CPAs & Attorneys
• Life/Investment Industry
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Slide 87
HUMAN EXPERIENCE
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Slide 88
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