Blog #80: Converting Low Yielding Assets into a Charitable Gift Annuity

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Converting low yielding assets into a Charitable Gift Annuity (“CGA”) can be an easy way to:

  • Increase retirement cash flow;
  • Increase net worth;
  • Increase wealth to heirs;
  • Make a significant gift to a favored charity.

Don Prehn and Steve Savant have a short (5 minute) video on how Roger Bacon used the CGA concept to make all four elements occur, and you can view it below.

Blog 80 Steve Savant and Don Prehn video image converting low yielding assets into a charitable gift annuity

After viewing Don and Steve’s video, click here to visit my Blog #56 for a detailed exploration of this comprehensive wealth planning strategy — plus a look at the reports created by InsMark’s Wealthy and Wise® System.  Also included are the simple calculations used to compute a CGA, courtesy of the Arizona State University Foundation, as well as suggestions about other strategies that you might want to bring to a client’s attention.

 

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.

Digital Workbook Files For This Blog

Blog80.zip

Download all workbook files for all blogs

Experienced Zip File Downloaders Download the zip file, open it, and double click the Workbook file name to open it in your InsMark System.

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 Wealthy and Wise, 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 any InsMark illustration, contact any of the Referral Resources listed below.  All are InsMark Agency Platinum Power Producers®, and they are 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.

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:

“Bob Ritter is a master of illustrating complex issues in a simple easy-to-use manner that definitely helps you better serve your clients.”

Gary Curry, President and CEO, ORBA Financial Management, InsMark Platinum Power Producer®, Gold River, CA

"I use InsMark software products because the concepts are cutting edge, well documented and supported, and user-friendly for both my clients and myself."

Wayne Weaver, Clearwater, FL

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More Recent Blogs:

Blog #79: Insurance Sales to Clients with IRAs

Blog #78: More on How to Smite a Termite

Blog #77: Integrated Planning for College and Retirement

Blog #76: Smart Use of Term Coverage for Funding College Costs

Blog #75: Golden Handcuffs for Sam Hunt

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 #79: Insurance Sales to Clients with IRAs

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

Getting Started with InsMark Training Video

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Many producers tell me that they don’t utilize charitable giving concepts in their wealth planning.  This is likely because they don’t ask clients about their charitable goals.

“Do you have a favorite charitable cause?” is such a great question to include in your fact-finding.  “What charities do you favor?” is the obvious follow-up question for those with charitable motivations.

You will probably find that a significant majority of your prospects and clients do have one or more favorite charitable causes, and the answers to the two questions are valuable to tuck away for possible use as you pursue suitable wealth planning strategies.

One of the simplest yet very dramatic wealth planning concepts involves those who have IRAs and are typically age 50 and older.  Steve Savant and Don Prehn have produced an excellent video on this subject that can help you understand the power of a concept called Charitable IRA, an irresistible planning strategy that features unique insurance sales.

You can view their 8-minute video below which examines this concept for Harold and Martha Fontaine, age 65 and 60, who have a current net worth of a little over $5,500,000 which includes an IRA with a value of $1,000,000.  (The strategy works for an IRA of any amount.)

Bob Ritter's Blog 79 insurance sales to clients with IRAs charitable IRA wealth replacement trust video image

If you’d like more background and details on the impact of this approach on the Fontaine’s long-range net worth, wealth to heirs, and results for their favorite charity, review my Blog #55: Charitable IRA.

 

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.

Digital Workbook Files For This Blog

Blog79.zip

Download all workbook files for all blogs

Experienced Zip File Downloaders Download the zip file, open it, and double click the Workbook file name to open it in your InsMark System.

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 Wealthy and Wise, 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 InsMark illustration, contact any of the Referral Resources listed below.  All are InsMark Agency Platinum Power Producers®, and they are 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.

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:

“Major cases we are developing have all moved along successfully because of the sublime simplicity and communication capability of Wealthy and Wise.  I guarantee that the proper use of this tool will dramatically raise the professional and personal self-image of any associate who dares to take the time to understand it…”
Phillip Barnhill, CLU, InsMark Gold Power Producer®, Minnetonka, MN

“InsMark is an absolutely mind blowing experience.”
Larry Gustafson, InsMark Platinum Power Producer®, Denver, CO

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More Recent Blogs:

Blog #78: More on How to Smite a Termite

Blog #77: Integrated Planning for College and Retirement

Blog #76: Smart Use of Term Coverage for Funding College Costs

Blog #75: Golden Handcuffs for Sam Hunt

Blog #74: Long-Term Care – Insure or Self-Insure

 

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 #78: More on How to Smite a Termite

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

Getting Started with InsMark Training Video

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Bob Ritter's Blog #78 More on How to Smite a Termite

Lisa Johnson is a single mother, age 40.  She owns an employment agency in San Francisco that is thriving in the hi-tech environment.
Lisa is considering acquiring $700,000 of Indexed Universal Life (IUL) max-funded for retirement cash flow with five level premiums of $20,500.  She is in a marginal state and federal income tax bracket of 35.00%.

Lisa wants the life insurance coverage, but her accountant has suggested that term insurance might be a smarter buy.  So she is also looking at buying $700,000 of inexpensive 30-year level term at $700 a year and investing the difference.

Let’s compare the two plans.  We’ll do it two ways:

  1. Term insurance with the difference in premiums going into a taxable side fund yielding 7.50%, the same illustrated interest rate as the IUL.¹
  2. Term insurance with the difference in premiums going into an equity account with a growth rate of 7.50% plus a dividend yield of 1.00%.²
¹ Plus 0.75% management fee.
² 0.75% management fee; Capital Gains rate of 30.00%; Dividend tax rate of 30.00%; 70.00% long-term gains; 30.00% short-term gains; 25.00% portfolio turnover.

Below are summary graphics of each comparison:

Term Insurance and a Taxable Side Fund
versus
Indexed Universal Life
(60 Year Analysis)

term insurance and taxable side fund vs indexed universal life graph

Not only does the taxable account and its related cash flow run out of gas, it is illustrated to do so at Lisa’s age 71.  That’s way too early for a retirement plan to have much significance.  Lisa would have to earn 14.07% year in and year out on the taxable account to match the results of the IUL.  (The 30-year term insurance will have expired by her age 70.)

Click here to see the full illustration.

Term Insurance and an Equity Account
versus
Indexed Universal Life
(60 Year Analysis)

term insurance and an equity account vs indexed universal life graph

The equity account and its related cash flow are illustrated to collapse at Lisa’s age 75.  That’s still way too early for a retirement plan to be of much value.  Lisa would have to experience growth of 11.02% year in and year out on the equity account (plus the dividend noted) to match the results of the IUL.  (The 30-year term insurance will have expired by her age 70.)

Click here to see the full illustration.

Conclusion

Buy term and invest the difference . . .  There is no valid economic theory that explains why a bad idea is acceptable simply because one hears it frequently.

Variations

Check out these Blogs to see how IUL compares to a 401(k):

Blog #61: Sacrificing Cash Flow with a 401(k) Plan

Blog #68: A Pretend 401(k) Plan vs. Indexed Universal Life

 

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.

Digital Workbook Files For This Blog

Blog78.zip

Download all workbook files for all blogs

Experienced Zip File Downloaders Download the zip file, open it, and double click the Workbook file name to open it in your InsMark System.

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.

Referral Resources

If you would like assistance with an InsMark illustration, contact any of the Referral Resources listed below.  All are InsMark Agency Platinum Power Producers®, and they are 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.

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:

“The InsMark software is indispensable to my entire planning process because it enables me to show my clients that inaction has a price tag.  I can’t afford to go without it!”
David McKnight, Author of The Power of Zero, InsMark Gold Power Producer®, Grafton, WI

“I have been using InsMark since it was a C:> prompt back in the early 1980s.  The new Jazz release is the most exciting upgrade to the InsMark Illustration 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®, SFI-Cadeau, St. Louis, MO.

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More Recent Blogs:

Blog #77: Integrated Planning for College and Retirement

Blog #76: Smart Use of Term Coverage for Funding College Costs

Blog #75: Golden Handcuffs for Sam Hunt

Blog #74: Long-Term Care – Insure or Self-Insure

Blog #73: The Discounted Dollars Strategy (Part 2 of 2)

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