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Sales Opportunities in Life & Annuities - An Introduction to Quick Life
Presented by:George Fraser
Director of Annuities Quick Life
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Introducing QuicklifeA strategic partner of Insurance Community Center
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About George Fraser
George Fraser has over 40 years of Life and Annuity sales experience. In that time, he has acted as an agent, General Agent and Vice President of Retail Sales for leading Insurance providers.
George has served as National President of GAMA International, Chairman of the Board for AMTC as well as committee work for LIMRA. He also serves as a Director for Rainmaker Advisory LLC a leading consulting firm within the retail insurance broking sector.
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What this course will cover:
Sales Opportunities in Life InsuranceSales Opportunities in AnnuitiesHow to Sell and Increase your Profits in 2012How you can be in the Life Insurance business
without having to set up a support structure
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Your Personal Lines ClientProtect Families
with Dependent
Children
Estate Planning
Gifting Programs
Wills and Trusts
For the More
Sophisticated Client
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Protect Families with Dependent Children
Challenges:Most employer based group programs only
cover 1 x 2 times annual incomeMost families today relay on two incomesAverage employee changes jobs 7 times, no
continuity of coverageConversion plans very expensiveMost families have no emergency savings
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Protect Families with Dependent Children
Solutions: Costs for life Insurance are one half of what
they were 20 years agoTo replace a 60,000 a year income would take
1,000,000 at a 6% withdrawal rateThe cost for 1,000,000 of 20 year term for a
35 year old male is $485
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Protect Families with Dependent Children
Individual coverages are not employer dependent
Two income families require coverage on both spouses
Automatically include low cost term coverage as part of the renewal process
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General Uses of Life Insurance in Estate Planning
1. To provide liquidity to pay potential federal and state tax obligations
Starting in January of 2013 under current law tax rate will be 55% on estates In excess of 1,000,000
Many estates have assets tied up in real estate, business interests and fixed investments that are not liquid and would incur investment loss under forced liquidation
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General Uses of Life Insurance in Estate Planning
2. To provide estate equalization Allows families to divide estate assets equally
without having to liquidate the asset Allows families to target specific family members
without endangering a business3. To provide income to a family while estate is
being settled 4. To pay off estate liabilities outside of taxes
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Gifting Programs
Allows families to make specific gifts to endowments or charities
Allows families to make gifts to grandchildren or other relatives
Allows a family to set up a foundation to direct money to charities helping to reduce estate tax liability
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Wills and Trusts
Helps eliminate double taxation of estate assets
Allows purchase of Life Insurance to be kept out of gross estate
Can provide ongoing income for successor generations
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Purchase Agreement Funding Mechanisms - Buy & Sell Plans
Two types of funding agreements Cross Purchase and Entity Plans
1. Cross purchase agreements are typically used for partnerships that do not exceed three partners or in situations where the business may be sold at a later date and cost basis becomes important
2. Entity Plans are used with multiple ownership beyond three or In situations where the estate is going to redeem stock to pay estate settlement costs
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Purchase Agreement Funding Mechanisms - Buy & Sell Plans
Cross Purchase Plans
Each partner agrees to purchase the other partners interest at death or retirement
Purchase price can be agreed on at time of agreement or a evaluation method can be established
The agreement can be funded or unfunded
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Purchase Agreement Funding Mechanisms - Buy & Sell Plans
Cross Purchase Plans
1. Unfunded agreements are paid out of current earnings at the time of death and are a taxable event
2. Unfunded agreements can cause a strain on cash flow
3. Funded agreements with life insurance provide tax free funds to execute the agreement
4. Funded agreements can provide an accumulation to retire a partner
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Purchase Agreement Funding Mechanisms - Buy & Sell Plans
Entity PlansCorporation purchases the decedents interest
at time of death or retirement and retires the stock leaving the remaining partners as holders of all outstanding shares
Commonly used when you have multiple partners
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Purchase Agreement Funding Mechanisms - Buy & Sell Plans
Under section 303 has some estate tax advantages to estate of deceased partner
Remaining shareholders do not get a “stepped up” basis on the decedents share
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Purchase Agreement Funding Mechanisms - Buy & Sell Plans
Entity PlansCan be funded or unfunded1. Funds may not be available for the future
purchase if unfunded2. If unfunded money for purchase is after tax
funds3. Funded agreements with life insurance
provide tax free money for purchase
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Key Person Insurance
This is coverage written to indemnify a company against the loss of a key employee. There are several reasons for this type of coverage Loss of the employee would incur a loss of revenue A bank may require this in return for certain types
of lending to the company Used to provide funds for replacement of a key
employee
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Key Person Insurance
A key employee is part of an long term succession plan and their loss would undermine the plan
A life Insurance policy is used to provide tax free funds to the company
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Supplemental Retirement Programs
Deferred Compensation plans are an agreement between an employer and employee to pay out funds at a future date
Deferred compensation plans are typically used in C corporations
Deferred compensation plans do not offer current deductibility to company, but employee money is tax deferred
Company can be discriminatory on who it covers in the plan and how much they contribute
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Supplemental Retirement Programs
Plans do not require 5500 annual filings or ERISA filings although an initial letter of notification is required
Plan must have substantial rights of forfeitureWhen paid out funds are deductible to the
employer and reported as income to the employee
Deferred compensation plans have substantial balance sheet advantages to an employer
Can be funded or unfunded
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Bonus Plans
A Section 162 Bonus Plans is a non-qualified plan in which an employer gives a bonus to an employee as a supplement for their retirement. The bonus is tax deductible to the corporation and reported as current income to the employee. The employer can also bonus the tax amount due.
Almost always funded with Life Insurance Funds accumulate tax deferred Can be taken out tax deferred at retirement Can be discriminatory No ERISA filings No 5500 annual filings
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Annuities
An annuity is a contract between an Insurance company and an annuitant to accumulate funds which are paid out at a later date either in a lump sum or in periodic payments The money accumulates on a tax deferred basis. No current
income tax is paid on the earnings When the money is taken out the first distributions are
considered gain If annuitized the annuitant can receive a lifetime income even
if the initial funds are depleted Modern riders allow for withdrawals with the potential of
protecting principal
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Fixed Index Annuity
A fixed annuity where the annual crediting rate is pegged to a stock index Does not require securities licensing The value can go up, but never down Some products pay a bonus to the annuitant up
front. These bonuses range from 5-10% depending on the carrier. The bonus is immediately credited to the cash value of the annuity
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Fixed Index Annuity
This product is particularly attractive to individuals approaching retirement who want a hedge in their portfolio
Individuals who have accumulated money in an IRA who are concerned about conserving principal with a return that could keep pace with inflation
People who do not have large sums of retirement funds and because of age or other factors want to avoid market risk
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Why does the P & C Agent NOT sell Life Insurance
The Reasons are Many!Everyone recognizes the value of cross selling
to increase top line revenue from their existing book of business, yet in most agencies this does not happen.
How do you get company appointments. Who are the competitive carriers? How do I create a back office to assist me in
quoting and underwriting these products.
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Why does the P & C Agent NOT sell Life Insurance
What are some common problems that individuals and business owners face that these new products would provide solutions.
How am I going to find the time to sell and service these new products.
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Quick Life Solution
The Quick Life platform creates an instant back office for a producer with no cost Quick Life will help facilitate all company appointments
needed to sell the top carriers products The Quick Life quoting platform illustrates and compares
all of the competitive term products in the state a producer does business in
If a producer has knowledge ahead of time that a prospective client has a particular health issue it will only quote those carriers who have competitive underwriting for those conditions and the possible rates they will charge
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Quick Life Solution
The Quick Life platform eliminates underwriting time and producer involvement in the application and underwriting process Part one of application can be taken over the phone and
downloaded to the Quick Life website Quick Life arranges the medical exam and orders all attending
physician statements Quick Life secures all client signature requirements through the
paramedical examiner If underwriting issues arise Quick Life will shop the coverage to
other carriers When a policy is issued Quick Life will send the policy directly to the
client or to the producer
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Quick Life Solution
This user friendly platform lends itself to cross selling programs that do not involve large time commitment on the part of the P&C producer Eliminates time on the part of the producer to travel
to client to sell and secure applications The platform could be operated by a CSR in a
producers office eliminating need to find an outside producer to sell and service business
Could become an automatic part of the agencies renewal process
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Quick Life Solution
Through Quick Life concierge program clients could be driven to a website that requires no producer involvement, but will still receive a commission
Quick Life director available to work with agency to customize a marketing program for them
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Disclaimer
Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions;
and state jurisdiction. This instructional materials provided by Insight is intended as a general guideline and any
interpretations provided by Insight do not modify or revise insurance policy language. The authors of these materials are
Quick Life and Insurance Community Center. In providing these materials neither Quick Life nor, Insurance Community Center
assumes any liability or responsibility to any person or business with respect to any loss that is alleged to be caused directly or
indirectly as a result of the instructional materials provided. Copyright 2010 – 2012 All Rights Reserved
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