Blog #46: Let’s Make Sure the Girls Go to College

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(Presentations in this blog were created using the InsMark Illustration System.)

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Tom and Kristin Scott are 40 and 35.  Their two daughters, Daisy and Jody, are 10 and 8.  Tom is a sales manager, Kristin is a pharmacist, and between them, their gross earnings are $195,000.

Assume you have discussed various aspects of their financial goals with them and have established two priorities:

  • Making sure the girls are OK financially if either or both of the parents die;
  • Retirement planning.

This Blog will discuss what they should do to ensure the security of their girls -- including reserves for college costs.  Next week, we’ll look at their retirement plans.

College Cost Analysis - Step 1

Tom and Kristin want to provide at least $30,000 a year for six years for each child (the extra two years are for some form of graduate school).

Table 1

Year College Funds for Daisy, 10 College Funds for Jody, 8 Total
8 30,000 30,000
9 30,000 30,000
10 30,000 30,000 60,000
11 30,000 30,000 60,000
12 30,000 30,000 60,000
13 30,000 30,000 60,000
14 30,000 30,000
15 30,000 30,000
Total: 180,000 180,000 360,000

With a 5.00% pre-tax yield assumption, the Educational Needs Analysis module in the InsMark Illustration System indicates a requirement for $257,286 of life insurance to cover the costs in
Table 1Click here for the report.

What about inflation on college costs?  College inflation has eased somewhat from the 6% - 7% of recent years, but let’s include at least a 4.00% inflation factor.

Table 2

Year College Funds for Daisy, 10 College Funds for Jody, 8 4.00% Inflation Adjustment Total
8 30,000 11,057 41,057
9 30,000 12,699 42,699
10 30,000 30,000 28,815 88,815
11 30,000 30,000 32,367 92,367
12 30,000 30,000 36,062 96,062
13 30,000 30,000 39,904 99,904
14 30,000 21,950 51,950
15 30,000 24,028 54,028
Total: 180,000 180,000 206,882 566,882

Again with a 5.00% pre-tax yield assumption, the Educational Needs Analysis module indicates a requirement for $404,003 of life insurance to cover the cost of Table 2Click here for this report.

Who should be insured and for how much?  Since something can happen to either Tom or Kristin, I believe it is suitable to insure them both for $400,000 so the funds are available for college either way.  The annual costs for 15-year level term are: Tom: $300; Kristin: $200.

That’s an easy, cost-efficient solution.

Comprehensive Analysis - Step 2

I broke this evaluation into two steps because I want you to think about the reaction a couple like Tom and Kristin will have when you are able to provide a solution for one of their serious concerns: guaranteed college for the girls for $500 a year in term insurance premiums.  The compensation on the term insurance should be irrelevant to you.  Don’t you think they will want to hear what you have to recommend next?  You bet they will!

But we’re not finished yet.  What about the other financial needs for Daisy and Jody until they are both out of college?  Tom and Kristin are interested in an overall survivor plan that includes the following after tax cash flow, some of which will require a trust:

  • $25,000 for final expenses.
  • $25,000 for an emergency fund;
  • $190,000 to pay off the mortgage;
  • $25,000 to upgrade their home (Kristin’s sister, Jennifer and her husband, Joe, have agreed to act as guardians for Daisy and Jody.  They have three children and will likely move into the Scott’s home);
  • $30,000 a year for the next 15 years plus a 3% factor for inflation;
  • College funds noted in Table 2 above;
  • $50,000 to Daisy at age 25 for personal use: down payment on a home, investment in a business, travel, etc.;
  • $50,000 to Jody at age 25 for personal use: down payment on a home, investment in a business, travel, etc.

Note:  The last two items extend the analysis to 18 years.

At this point, we need to shift to the Survivor Needs Analysis (“SNA”) module in the InsMark Illustration System in order to take into account the various categories noted above.

Based on the above data, SNA indicates the following in red at the bottom of the Summary report:

Conclusion and Recommendation

We have compared the year-by-year relationship between your financial goals and expected assets benefits.

Based on your assumptions, your expected assets/benefits are not sufficient to meet all your financial goals.  For you to eliminate this shortfall, you should secure additional life insurance in the amount of $497,009.

Below is the graphic of that analysis:

18 year summary graph image

Click here for the full report indicating the shortfall.

Since something can happen to either Tom and Kristin, I believe it is suitable to insure them each for $500,000.  The 15-year level term costs are:  Tom’s annual premium: $600; Kristin’s annual premium: $400.

If you went back through SNA and entered the exact amount of the additional life insurance on the current assets/benefits tab, you would see this highlighted in green at the bottom of the Summary report.

Conclusion and Recommendation

We have compared the year-by-year relationship between your financial goals and expected assets benefits.

Based on your assumptions, this plan is in perfect balance.  No additional life insurance is required at this time.

Below is the graphic of that analysis:

18 year summary graph number 2 image

Click here for the full report indicating the perfect balance.

I think leaving a client with a complete report this way makes sense.  Almost no one does this, but it is far better than having the reports showing the shortfall as the last documentation provided to the client.  This approach goes particularly well when you are delivering the life insurance policies.

Don’t tune me out because of term insurance.  Next week, Blog #47 will address Tom and Kristin’s retirement planning concerns, and we’ll include the term insurance solutions contained in this Blog. We’ll also look at a cash value alternative to the term insurance.  You’ll learn about a long-range mistake of $3.6 million that Tom and Kristin will likely want to avoid if the cash value alternative is ignored.

Conclusion

This has been an effective analysis, and I don’t think you will find calculators that can handle data like this anywhere other than in the InsMark Illustration System.  I spent several hours this week scouring the web for calculators that claim to tell you how much life insurance you need.  None of them could handle anything like Tom and Kristin’s analysis.  This type of evaluation is fast becoming a dying art in the life insurance business, and I am very proud we are keeping it front and center in our software.

Speaking of “proud”, MONEY magazine ran a contest a few years back entitled “The MONEY Life Insurance Test”.  Producers from MassMutual, Northwestern Mutual, and several other top companies participated.  Our Survivor Needs Analysis provided the analytical tools used by State Farm Agent, Thomas Davis, for his first place finish in the contest.  Click here to read that report from MONEY magazine.

Note:  Business owners also need to know “how much” life insurance to carry on key executives.  That’s why we also have the Key Executive Life Insurance Calculator located in the InsMark Illustration System.  If this interests you, check out Blog #44.

 

InsMark’s Digital Workbook Files

If you would like some help creating customized versions of the presentations in this Blog for your clients, watch the video below on how to download and use InsMark’s Digital Workbook Files.

Digital Workbook Files For This Blog

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Download all workbook files for all blogs

Note:  If you are viewing this on a cell phone or tablet, the downloaded Workbook file won’t launch in your InsMark System.  Please forward the Workbook where you can launch it on your PC where your InsMark System(s) are installed.

 

Licensing

To license the InsMark Illustration System, contact Julie Nayeri at julien@insmark.com or 888-InsMark (467-6275).  Institutional inquiries should be directed to David Grant, Senior Vice President - Sales, at dag@insmark.com or 925-543-0513.

InsMark’s Referral Resources

If you would like assistance with an Educational Needs Analysis or Survivor Needs Analysis illustration for one of your prospects or clients (or help with other InsMark illustrations), contact any of the Referral Resources listed below.  They are all highly skilled at running InsMark software and can help you using your choice of insurance company.  Mention my name when you talk to one of our Referral Resources as they have promised to take special care of my readers.

Testimonial:

“InsMark is the Picasso of the financial services world — their marketing savvy never fails to amaze me.”

Doug Peete, Past President, Top of the Table, and InsMark Power Producer,
Overland Park, KS

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More Recent Blogs:

Blog #45: Controlled Executive Bonus Plan for
Life Insurance and Disability Income
(Part 5 of “Valuing the Business”)

Blog #44: Alternate Golden Handcuffs for Tom Hamilton
(Part 4 of “Valuing the Business”)

Blog #43: Golden Handcuffs for Tom Hamilton
(Part 3 of “Valuing the Business”)

Blog #42: Adding Key Executive Coverage
(Part 2 of “Valuing the Business”)

Blog #41: If We Sell Our Business, Can We Afford to Retire?
(Part 1 of Valuing the Business)

3 Reasons Why It’s Profitable For You To Share These
Blog Posts With Your Business Associates and
Professional Study Groups (i.e. “LinkedIn”)

Robert B. Ritter, Jr. Blog Archive

 

Blog #45: Controlled Executive Bonus Plan for Life Insurance and Disability Income
(Part 5 of “Valuing the Business”)

(Click here for Blog Archive)
(Click here for Blog Index)

(Presentations in this blog were created using the InsMark Illustration System, Cloud-Based Documents On A Disk and InsMark Business Valuator.)

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Editor’s Note: Blog #45 is the fifth and last in a series of Blogs involving several topics that are associated with the decision to sell a closely-held business, all of which provide opportunities for you to develop some serious production. The series is based on the results of the valuation of Acme Ford, LLC, using the InsMark Business Valuator (powered by BizEquity). (See Blog #41 for details of the valuation.)

Prior Blogs in the series are:

Review Blog #41: If We Sell Our Business, Can We Afford to Retire?

Review Blog #42: Adding Key Executive Coverage

Review Blog #43: Golden Handcuffs for Tom Hamilton, CMO

Review Blog #44: Alternate Golden Handcuffs for Tom Hamilton, CMO

Blogs #43 and #44 involved an examination of non-qualified executive benefit plans for Tom Hamilton, Chief Marketing Officer and a key non-owner executive of the Limited Liability Company owned by George and Marie Grove. The goal is to provide a benefit package to Tom that causes him to remain with the firm for at least the next seven years (including two years after the expected sale of the company).

In Blog #43, we featured a Controlled Executive Bonus Plan for Tom, age 40, that provides him with substantial survivor and retirement benefits from an investment-grade life insurance policy owned by Tom. (These plans are typically funded with Indexed Universal Life or Whole Life with Paid-Up Additions; this Blog series features Indexed Universal Life.)

Premiums are paid from gross-up employer bonuses, a strategy that includes the tax on the bonuses. The plan has a feature called a “Controlled Bonus” where, subject to the terms of a separate Employment Agreement, Tom is required to repay the bonus under certain circumstances such as voluntary termination of employment prior to a certain date or event described in the Agreement or termination by the employer for cause.

Click here to watch a short video of the Controlled Executive Bonus concept and its documentation.

For working Americans below their mid-40s, disability is a more common economic risk than death. A personal disability income (“DI”) policy is an important financial addition that Tom should have in his benefit package, and this Blog will show you how to include it in a Controlled Executive Bonus Plan. We selected a DI policy for Tom with a $7,200 annual premium, a 90-day elimination period, and a monthly non-taxable benefit of $12,750 lasting until age 65 (a potential total benefit of close to $4,000,000).

The Indexed UL policy is the foundation of Tom’s Controlled Executive Bonus Plan. It has more than sufficient participating policy loan values to provide the $7,200 in premiums for the DI policy — in all years but the first where policy loans are typically not available.

George Grove, Tom’s employer, chimes in, “How about we increase the bonus enough to cover the disability premium in the first year, and Tom can use his policy loan values for the rest of them.”

Click here to review the illustration using the Executive Security Plan module located on the Executive Benefits tab in the InsMark Illustration System. As you will see, we have a plan with the following five benefits:

  1. Deductible funding;
  2. Potential recovery of the bonuses if the executive terminates;
  3. Tax free death benefits for the executive’s family;
  4. Tax free disability income for the executive;
  5. Tax free retirement cash flow for the executive.

Note: The Flow Chart on Page 1 of the illustration is not yet part of the InsMark Illustration System as the idea of including a DI policy in a Controlled Executive Bonus Plan just occurred to me. We will add that capacity to Version 18.0 along with a variation that includes long-term care insurance.

In the meantime, if you would like to have working copies of both Flow Charts, email marketing@insmark.com and ask for copies of the “Controlled Executive Bonus Flow Charts from Blog #45” reflecting executive bonus plans coupled with disability income insurance and long-term care insurance. Until we get them in our copyrighted System, the Flow Charts should reflect our copyright at the bottom.

Evaluation Resource

We were able to develop Tom’s combination benefit plan for two reasons:

  1. We were alerted to Tom’s financial value as we reviewed the results of the appraisal of his employer, Acme Ford, LLC, by the InsMark Business Valuator (powered by BizEquity).  Click here if you would like to view our webinar on the InsMark Business Valuator.  Click here if you would like to visit the InsMark Business Valuator website.
  2. For some time, we have been searching for a disability insurance organization to partner with InsMark as part of our Referral Resource network.  As a result, we selected Disability Insurance Services (“DIS”) of San Diego, headed by Dan Steenerson, President and CEO.  I was very impressed with Dan’s organization as I was gathering information for this Blog, most particularly their marketing savvy coupled with their exclusive Analyzer comparing the benefits of several DI policies side-by-side.  Click here to review an example of the DIS Analyzer.

Click here for a three-minute video by Dan Steenerson explaining what we believe are his firm’s key disability resources that may be most applicable to your practice. Back when I was totally involved in production, I decided to stop selling DI policies as the murderous underwriting had simply worn me out. Dan tells me that this issue has lightened considerably, and he addresses this concern in his remarks.

Click here for a link to the InsMark DI Quoting Service to put DIS to work for you. Services include quotes for:

  • Individual Disability Income Insurance
  • Business Overhead Expense Insurance
  • Disability Buy/Sell Insurance
  • Critical Illness Insurance
  • Long Term Care Insurance
  • Bank Loan (ensuring repayment of loans)
  • Key Person

If you have a case where you would like to speak with someone at DIS, contact Ben Coleman, Sales & Marketing Manager, in San Diego at 619.284.8444 x8402 or bcoleman@diservices.com.

Documentation

Documents On A Disk imageThe documentation for the Controlled Executive Bonus Plan is different than a typical Executive Bonus Plan. Version 21.0 (and higher) of InsMark’s Documents On A Disk™ has specimen plan documents for this plan in the Executive Bonus Plan category located in the Key Employee Benefit Plans section. If you use this concept, you will need these documents. (If you include the disability income feature, your client’s counsel should insert the appropriate language. We will add this option in the next enhancement of Documents On A Disk.)

 

InsMark’s Digital Workbook Files

If you would like some help creating customized versions of the presentations in this Blog for your clients, watch the video below on how to download and use InsMark’s Digital Workbook Files.

Digital Workbook Files For This Blog

Blog45.zip

Download all workbook files for all blogs

Note:  If you are viewing this on a cell phone or tablet, the downloaded Workbook file won’t launch in your InsMark System.  Please forward the Workbook where you can launch it on your PC where your InsMark System(s) are installed.

 

To license the InsMark Illustration System and/or Documents On A Disk, contact Julie Nayeri at julien@insmark.com or 888-InsMark (467-6275). Institutional inquiries should be directed to David Grant, Senior Vice President – Sales, at dag@insmark.com or 925-543-0513.

InsMark’s Referral Resources

If you would like assistance with a Controlled Executive Bonus Plan illustration for one of your prospects or clients (or help with other InsMark illustrations), contact any of the Referral Resources listed below. They are all highly skilled at running InsMark software and can help you using your choice of insurance company. Mention my name when you talk to one of our Referral Resources as they have promised to take special care of my readers.

Testimonials:

“As a top national brokerage firm representing many insurance companies, the InsMark Illustration System has everything we need in an advanced marketing presentation system.”
Gary M. Baker, President/CEO, Bloom-Baker/Asensus of New England, Boston, MA

“I really thought I knew all the sales techniques that affect my business, but I do now, thanks to InsMark.”
Sam Keck, Financial Planner, Denver, CO

 

Important Notice

The information in this Blog is presented for educational purposes only. In all cases, the approval of the participants’ legal and tax advisers must be secured regarding the implementation or modification of any planning technique as well as the applicability and consequences of new cases, rulings, or legislation upon existing or impending plans.

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More Recent Blogs:

Blog #44: Alternate Golden Handcuffs for Tom Hamilton

Blog #43: Golden Handcuffs for Tom Hamilton
(Part 3 of “Valuing the Business”)

Blog #42: Adding Key Executive Coverage
(Part 2 of “Valuing the Business”)

Blog #41: If We Sell Our Business, Can We Afford to Retire?
(Part 1 of Valuing the Business)

Blog #40: Leveraged Deferred Compensation

3 Reasons Why It’s Profitable For You To Share These
Blog Posts With Your Business Associates and
Professional Study Groups (i.e. “LinkedIn”)

Robert B. Ritter, Jr. Blog Archive

 

Blog #44: Alternate Golden Handcuffs for Tom Hamilton

(Click here for Blog Archive)
(Click here for Blog Index)

(Presentations in this blog were created using the InsMark Illustration System and Cloud-Based Documents On A Disk.)

Getting Started with InsMark Training Video

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Editor’s Note: Blog #44 is the fourth in a series of Blogs involving several topics that are associated with the decision to sell a closely-held business, all of which provide opportunities for you to develop some serious production.

If you have not done so already, you may want to read Blog #43 as this Blog #44 is a continuation of the search for the best executive benefit plan for Tom Hamilton, a key non-shareholder executive of George and Marie’s company.

Below are the previous Blogs in this series:

Blog #41: If We Sell Our Business, Can We Afford to Retire?

Blog #42: Adding Key Executive Coverage

Blog #43: Golden Handcuffs for Tom Hamilton

Tom Hamilton, age 40, is the Chief Marketing Officer of George and Marie Grove’s business (a Limited Liability Company) and is largely responsible for a large portion of the bottom line.  His current annual compensation is $300,000. He has no ownership in the firm.

Although George and Marie expect the business to be sold within five years, they want to award Tom with a special executive benefit plan to encourage him to stay with the firm for at least the next seven years.  The additional time is to induce Tom to stay with the new owners for at least two years, a condition that enhances the value of George and Marie’s company to potential purchasers.

In Blog #43, we illustrated an executive benefit for Tom called a Controlled Executive Bonus Plan designed to cause him to remain with the firm during these next few critical years while the plans to sell the business are firming up.  That plan, if implemented, will provide Tom with a gross-up bonus to pay the seven scheduled $60,000 premiums on a personally-owned $2,600,000 indexed universal life insurance policy.  Included in that plan is a provision that if he terminates employment anytime within the next seven years, he owes the company an amount equal to the cumulative bonuses paid — a serious inducement for him to stay employed.  At the end of seven years, Tom no longer has any repayment liability.

The Controlled Executive Bonus Plan is a real game-changer in the world of executive benefits.  I have been a big fan of loan-based split dollar, but this new bonus variation includes one of the main features of split dollar (recovery of premium advances), and it adds a deduction of the plan funding for the business, a major advantage.  That said, loan-based split dollar still has plenty of use for owners of C Corporations.  The Controlled Executive Bonus Plan is for non-owner executives of any business entity (C Corporation, S Corporation, Limited Liability Company, Partnership, Sole Proprietorship, and Tax Exempt Organization.)

Good as the Controlled Executive Bonus Plan is, it misses a key point: If an executive like Tom is valuable enough to be provided with a significant executive benefit, he should also be covered with a business-owned key executive policy to indemnify the business against losses created by his death.

One way to accomplish this would involve the company buying an additional policy on Tom owned by, and payable to, the company.   Let’s see if we can be a little more creative than that.  Let’s change the way the $2,600,000 policy illustrated in Blog #43 is utilized.  Instead of Tom owning it and having it paid for using a gross-up bonus “controlled” bonus from the company, let’s have the company own the policy and divide its benefits in three different ways.

If Tom dies anytime during the next seven years, the $2,600,000 policy’s benefits will be shared in two of those ways.  Step 1 is very like a survivor needs analysis that you might do for a family.  It is, in fact, a business needs analysis.

    1. InsMark’s Key Executive Calculator determines that $1,525,737 of the policy’s death benefit should be retained by the firm as an offset to the loss of Tom.  This takes into account:
      • The present value of the estimated loss of sales due to the time it will take a replacement to ramp up to Tom’s performance;
      • The present value of any difference between Tom and his replacement;
      • The upfront costs associated with recruiting a new Chief Marketing Officer (search firm, signing bonus, and relocation package).
    1. InsMark’s Key Executive Calculator determines that $1,065,416 of the policy’s death benefit should be allocated to a sinking fund designed to pay Tom’s family an annual salary continuation benefit of $250,000 each year for seven years should he die anytime during the next seven years.  The $250,000 is indexed at 3.50% with a COLA (cost of living adjustment) and is deductible by the company.  The sinking fund is assumed to earn a 5.00% pre-tax rate of return.  Including the COLA, the salary continuance to Tom’s family totals $1,944,852 funded by the sinking fund.  (Proof of the math follows.)

In this case, the total death benefit needed is the sum of Step 1 ($1,525,737) plus Step 2 ($1,065,416) for a total of $2,591,153.  Since we have illustrated a face amount to $2,600,000, there is a slight excess of death benefit ($8,847).

Click here to review the four-page report from the InsMark Key Executive Calculator.  Page 1 is the summary; Pages 2, 3, and 4 back up the summary.  Page 4 is instructive relative to the relationship between the survivor income benefit and the $1,065,416 sinking fund established to pay it.

  1. Assuming Tom survives the seven years, at the beginning of year 8, ownership of the life insurance policy will be contractually transferred to Tom.  He will be charged income tax on the policy’s accumulation value, and the company intends to provide Tom with a gross-up bonus to pay the tax on the transfer.

If you are using Internet Explorer or Firefox, be sure to hover your mouse over any yellow stickies for an additional explanation.  The yellow stickies are not available with Chrome, iPhones, or iPads.

Transfer Tax Costs for the Participants

Click here for transfer tax calculations.

The Company’s Summary of Costs and Benefits

Click here for the Company’s Summary report.

Tom’s Summary of Costs and Benefits

Click here for Tom’s Summary report. The graph from Tom’s summary on Page 5 is also reproduced below.

Blog 44 Toms Summary of Costs and Benefits graph image

“Trifecta” refers to a winning sequence of three and is typically associated with a pari-mutuel bet in horseracing that involves picking which horses will finish first, second, and third in a given race.  We have given the name Executive Trifecta® to the trifecta of benefits described in this Blog, and this plan can be illustrated in the InsMark Illustration System (located on the Executive Benefits tab).

Executive Trifecta is highly suitable for non-owner key executives of any business (profit-making or tax exempt), but it is also effective for principals of C Corporations, S Corporations, LLCs, and Partnerships.  It may surprise you that it works better for principals of an S Corporation and even better for principals of an LLC or Partnership.

Click here to view a comprehensive PowerPoint that includes details on how Executive Trifecta applies in each of these organizations. Since the majority of closely-held firms are pass-through tax entities like S Corporations and LLCs, this aspect of Executive Trifecta can introduce you to a terrific benefit for owners of such firms. Most producers have pretty much given up on constructing effective fringes for such principles.

Executive Trifecta can also be an appropriate way to reward Directors of any entity for their service.

Is the Controlled Executive Bonus Plan better than Executive Trifecta?  In some ways, yes; others, no.  The Controlled Executive Bonus Plan is simpler to illustrate, and it is also simpler to explain (and understand).  They both benefit Tom in very much the same way because both give him full ownership of the policy beginning in year 8.  Executive Trifecta one-ups the Controlled Executive Bonus Plan by providing a serious death benefit for George and Marie’s company should Tom die during the next seven years.

The simplicity of the Controlled Executive Bonus Plan should not be overlooked.  Simple beats complex, right?  Simple always has a place at the table, but if I were presenting the Controlled Executive Bonus Plan, I would be concerned if I discovered a competitor was presenting Executive Trifecta.  What’s the tell-tale?  In your initial fact-finding with the company, ask about the potential loss associated with the death of certain key executives.  If the losses are not that significant, why are they key executives?  If they are significant, consider Executive Trifecta.

To some extent your choice depends on your own illustration skills and your perception of your client, and because of this, I can’t make a recommendation.  Both are outstanding benefit plans, and I recommend you become skilled with both of them if you are dealing with, or want to deal with, closely-held companies.

The following two Tables may help you decide which you prefer or, perhaps, which you prefer under which circumstances.  I think one of the most interesting issues about these plans is that they each cost George and Marie’s company virtually the same cumulative amount over seven years ($420,000 vs. $429,710).

Table 1 – The Company

Company Controlled Executive Bonus Executive Trifecta
Cost over 7 years $420,000 $429,710
Death benefit during 1st 7 years n/a $1,525,737
Value during
1st 7 years
Recovery of bonuses Policy cash values
Security during
1st 7 Years
Tom’s contractual promise to repay bonus Ownership of cash values

Table 2 – Tom Hamilton

Tom Hamilton Controlled Executive Bonus Executive Trifecta
Cost in all years $0 $0
Death benefit $2.6 million policy death benefit $2.1 million of survivor income¹ during 1st 7 years; $2.6 million policy death benefit thereafter
Living value Full policy cash value in year 8 Full policy cash value in year 8
Cumulative after tax retirement cash flow (age 65 – 100) $6,272,192 $6,272,192
Residual cash value at age 100 $2,983,579 $2,983,579
Liability Repayment of the bonus in years 1-7 less policy cash value $0

¹Indexed at 3.00% for a Cost of Living Adjustment.

Executive Trifecta — the Complete Illustration

Up to now, I have been showing you only segments of Executive Trifecta.  Click here to review the complete illustration.  (The Flow Chart on Page 3 is very busy, and you’ll have to study it carefully.)

Conclusion

Both Executive Trifecta and the Controlled Executive Bonus Plan produce exceptional benefits for participants.  Is this an opportunity for you with the business owners and professional advisers in your community?  You bet it is!

Documentation

Documents On A Disk imageThe documentation for Executive Trifecta is different than a typical Executive Bonus Plan.  Version 21.0 (and higher) of InsMark’s Documents On A Disk™ has complete specimen plan documents for this plan in the Executive Trifecta category located in both the Business Owner’s Benefit Plans and the Key Employee Benefit Plans section.  These specimen documents don’t exist anywhere else, so if you use this concept, you will need them.

Click here to watch a short video about documentation for Executive Trifecta. (YouTube has been experiencing difficulties, if the video does not play try it again — or try later.)

 

InsMark’s Digital Workbook Files

If you would like some help creating customized versions of the presentations in this Blog for your clients, watch the video below on how to download and use InsMark’s Digital Workbook Files.

Digital Workbook Files For This Blog

Blog44.zip

Download all workbook files for all blogs

Note:  If you are viewing this on a cell phone or tablet, the downloaded Workbook file won’t launch in your InsMark System.  Please forward the Workbook where you can launch it on your PC where your InsMark System(s) are installed.

 

To license the InsMark Illustration System and/or Documents On A Disk, contact Julie Nayeri at julien@insmark.com or 888-InsMark (467-6275).  Institutional inquiries should be directed to David Grant, Senior Vice President – Sales, at dag@insmark.com or 925-543-0513.

Referral Resources

If you would like assistance with an Executive Trifecta illustration for one of your prospects or clients (or help with other InsMark illustrations), contact any of the Referral Resources listed below.  They are all highly skilled at running InsMark software and can help you using your choice of insurance company.  You don’t need to be licensed for InsMark software to use their services — although if you aren’t, we would certainly welcome your participation.  Mention my name when you talk to one of our Referral Resources as they have promised to take special care of my readers.

Joint Interviews

If you want or need help from a qualified producer for joint interviews and are willing to share the case, email us at bob@robert-b-ritter-jr.com, and we will provide you with recommendations.

Testimonial:

“My experience with InsMark’s Executive Trifecta is career changing.  Showing this idea to a business owner is a win-win-win!  The business owner wins by protecting and retaining one of his most valuable assets (a key executive).  The executive wins by being recognized and rewarded for efforts, results, and loyalty.  The financial professional wins by gaining the confidence and business of a new client. This concept can revolutionize a financial services career.”
Kerry L. Walker  CLU, ChFC, InsMark Power Producer, The Walker Firm, Inc.,  Aurora, CO

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More Recent Blogs:

Blog #43: Golden Handcuffs for Tom Hamilton
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Robert B. Ritter, Jr. Blog Archive