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When you measure the cost of funding life insurance by dividing the face amount of the policy into the cumulative annual premiums, the awesome leverage of life insurance becomes readily apparent.
For example, if the annual premium for $100,000 of life insurance is $1,200, and you divide the $1,200 by $100,000, the discounted dollars calculation results in an answer of $1.2 cents for each $1.00 of death benefit in year 1
In year 2, it goes to $2.40 for each $1.00 of death benefit, but guess what? It never approaches $1.00 for each $1.00 of death benefit. Even if you apply a use of money factor, it typically won’t reach $1.00 per $1.00 until well past life expectancy — and as you will see below, in some cases it never comes close to reaching $1.00.
Steve Savant and Don Prehn do a nice explanation of this concept in their video below entitled “Dollars of Benefit for Pennies of Cost”.
If you’d like more detail using both Universal Life and Indexed Universal Life, see my Blog #48: Dollars of Benefits for Pennies of Cost. It includes a look at the illustrations for both Universal Life and Indexed Universal Life.
Coming Attractions
Next week in Blog #73, Don and Steve will discuss how charitable giving can be impacted by the Discounted Dollars strategy.
Conclusion
The discounted dollars approach can be a very effective, yet simple, tool to feature the magic of 21st century life insurance. And it certainly warms up an interview where, without it, you and your client have to hunt for the current assumption numbers buried deep in a 20-page carrier illustration.
Important Note: The Indexed Universal Life illustration featured in the video and Blog #48 includes participating policy loans (cash values securing these loans continue to participate in whatever interest is credited to the policy). This feature can produce significantly better results than fixed loans. For a demonstration of this, see my Blog #52: Participating Loans vs. Fixed Loans.
Important Note: Many of you are rightly concerned about the potential tax bomb in life insurance that can accidentally be triggered by a careless policyowner. Click here to read Blog #51: Avoiding the Tax Bomb in Life Insurance.
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.
New Zip File Downloaders
Watch the video.
Experienced Zip File Downloaders Download the zip file, open it, and double click the Workbook file name to open it in your InsMark System.
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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), or you can click here to order it at the InsMark website. Institutional inquiries should be directed to David Grant, Senior Vice President — Sales, at dag@insmark.com or 925-543-0513.
InsMark’s Referral Resources
(Put our Illustration Experts to Work for Your Practice)
We created Referral Resources to deliver a “do-it-for-me” illustration service in a way that makes sense for your practice. You can utilize your choice of insurance company, there is no commission split, and you don’t have to change any current relationships. They are very familiar with running InsMark software.
Please mention my name when you talk to a Referral Resource as they have promised to take special care of my readers. My only request is this: if a Referral Resource helps you get the sale, place at least that case through them; otherwise, you will be taking unfair advantage of their generous offer to InsMark licensees.
Save time and get results with any InsMark illustration. Contact:
- Ben Nevejans, President of LifePro Financial Services in San Diego, CA.
Joint Interviews
If you want or need help from a qualified producer for joint interviews with any InsMark illustration and are willing to share the case, email us at bob@robert-b-ritter-jr.com, and we will provide you with recommendations.
Testimonials
“I use InsMark every day. And I have been using it since it was a C:> prompt back in the early 1980s. The new Jazz release is the most exciting upgrade to the system I’ve seen in 28 years! With unlimited options for customization, you can now be as creative as you want when producing illustrations.
Chris Jacob, CFP, InsMark Platinum Power Producer®, St. Louis, MO.
"I really thought I knew all the sales techniques that affect my business, but I do now, thanks to InsMark."
Sam Keck, MBA, CLU, CFP, LUTCF, InsMark Platinum Power Producer®, Financial Planner, Denver, CO
“InsMark is an integral part of my business and has been for many years. A great partner!”
Jeffrey Berg, InsMark Platinum Power Producer®, Edina, MN
More Recent Blogs:
Blog #71: When Life Insurance Doesn’t Work — or Does It?
Blog #70: What Exactly is CheckMate® Logic?
Blog #69: Seven Variations of a Great Executive Benefit
(including my favorite)
Blog #68: A Pretend 401(k) Plan vs.
Indexed Universal Life
Blog #67: Filling the Pothole in Wealth Planning
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