Life Insurance Needs Selling

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(No Transcript)
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Life Insurance Needs Selling
Chris W. Kite October 6, 2004
Chrisk_at_cossdev.com cossdev.com
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Life Insurance Needs Selling
the next Reality TV show?
Kwame Jackson from The Apprentice www.life-
line.org spokesperson for Life Insurance
Awareness Month Life insurance funded his higher
education
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Life Insurance Needs Selling
the next Reality TV show?
Survivor Who will be the first beneficiary to
receive 7 to 10 times income as a life insurance
benefit? The Protector The Accumulator You Bet
Your Life
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Life Insurance Needs Selling
the next Reality TV show?
Family Feud Survey says! Life Insurance
Needs People average 2-3 times income when they
need 7-10 times income Retirement Needs On
average, people are far short of what they need
to save for retirement Whats a family to do?
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Focus on Life or Retirement Needs?
Buy more life insurance? Focus on retirement,
take the risk of early death? Prepare your
spouse to live without you? Retire at a later
age? Lower expectations, live on a tighter
budget?
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Balance Protection Accumulation Needs
Permanent policy 1-2 times income, add more when
able Low cost term or term riders until 5 to 10
years of retirement, 4-8 times income Take
advantage of retirement plans review other
insurance needs
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Balance Protection Accumulation Needs
5-10 years from retirement as term costs rise,
redirect dollars to retirement permanent life
plans More protection up to about age 60
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Balance Protection Accumulation Needs
OK to reduce protection near retirement, early
death is a tragedy, but surviving spouse has use
of retirement assets Build accumulation
annuity income for longer life expectancies Speci
al circumstances push out retirement age,
pension income or other benefits lost at death
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George Mary Bailey Case Study
George, age 45, 60k income/yr 20 years till
retirement 20 years/2 10 times income -
based on replacing 50 income, interest offsets
inflation - divide by 3 if interest beats
inflation by 3
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George Mary Bailey Case Study
Permanent Plan of 120k 10-Year Term of
240k 15-Year Term of 240k 600k total Level
term switching to decreasing term would be ideal
fit, but level term is the typical, competitive
product
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Multiple of Income Approach
Typically seen as crude measure compared to
capital needs analysis Fast easy to do Keys
to making it more accurate than capital needs
analysis - Look at years to retirement to set
multiple - Look at death benefit in excess of
cash value Not A. L. Williams approach it
recognizes value in cash value
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George Bailey Policies at Age 60
100k income/yr, 5 years till retirement 3 times
income 300,000 net need
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George Bailey Policies at Age 60

• Three scenarios to cover net need
• 300,000 term benefit
• 360,000 death benefits 60,000 cash value
• 600,000 death benefits300,000 cash value
• All have 300,000 net benefit.
• Cash value is for long term needs.
• Scenario 2 can be risky. Policy may fall apart
  in 10 to 20 years unless premium is increased or
  benefit is trimmed. Scenario 1 can become too
  costly unless benefit is eventually decreased.

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Special PoliciesUL or Term with long-term
guarantees
Protection policy becomes legacy value Long-term
death benefit is provided even if the policy runs
out of cash value BUT policy must be supported
by company asset values (ex. a shadow
account) Be sure to keep policy in-force Be
aware policy cost is not practical after
guarantee period
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Capital Needs Analysis Good exercise, but here
are problems
Takes time trust to gather asset liability
data Results vary greatly due to assumptions
for life expectancy, asset growth, future
income, inflation Social Security Assumes
client dies today, unlikely scenario, only a
limited map of lifes journey
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Capital Needs Analysis Good exercise, but here
are problems
Mixes retirement needs with life needs Decreases
need by net worth High net worth still has loss
of income at death Low net worth misdirects
retirement need
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Multiple of Income ApproachAdditional concepts
Easily quickly find the net insurance need
with a map from today to retirement Next step
gather Net Worth data to find the money, plan
for retirement reposition assets
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Life Insurance Alliances
Alliances with customer needs peace of mind
about the future Education, career planning,
employment services Family values history,
videos, scrapbooks
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Personal Case Study
Robert L. Kite died in 1991 at age 61 Balanced
plan of life health insurance, retirement
funds pension income Not poor, not wealthy
enough for needs balanced for budget
circumstances
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Personal Case Study
Put 1/4th of money into life annuity Then able
to go for growth stocks 1999 (age 70) move to
conservative mortgage funds
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Life Insurance Needs Selling
We can provide a simple road map for lifes
journey Show a path of protection in case of
early death to accumulation for retirement
(protection from outliving assets) Provide
peace of mind about the future and legacies to
pass on to loved ones
Chris W. Kite Chrisk_at_cossdev.com cossdev.com