Blog #148: More New Logic for Permanent vs. Term (Part 3 of 3)

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In Blog #146 and Blog #147, we examined several “Compared to What?” term vs. permanent illustrations for Tom Robinson, age 35, involving $601,839 of Indexed Universal Life (IUL).  The policy was illustrated at 7.00% with scheduled premiums of $20,000 a year through age 65 with significant cash developing thereafter.  It was compared to $600,000 of 30-year level term costing $525 with the difference in premiums invested in either an indexed annuity or an equity account.

“Men often oppose a thing, merely because they have had no agency in planning it, or because it may have been planned by those whom they dislike.  But if they have been consulted, and have happened to disapprove, opposition then becomes, in their estimation, an indispensable duty of self-love.” – Alexander Hamilton, Federalist No. 70

If you missed reading these two Blogs, I strongly recommend you and/or your staff review each one if competition with term insurance is something you or your associates face with clients and/or their advisers.

This Blog takes a different tack in that I included the “term vs. perm” comparison within an overall retirement analysis using our Wealthy and Wise® System (although the logic should work with most comprehensive retirement plans).

Case Study

Tom Robinson and his wife, Jodie (also age 35), are both CPAs employed by the same large accounting firm.  They have a good start toward their retirement with significant values in their 401(k)s earning 7.00%. They both plan to contribute the maximum amount of $18,000 (the 2017 maximum), and their employer matches 20%.  They have agreed we should take inflation into account when calculating future contributions, and we did so assuming 3.00% inflation.

See Blog #98 for a discussion of including monitoring fees in a retirement analysis.

Note: While 3.00% is an artificial number for the future, whatever actual inflation occurs should be reflected in your annual reviews as their plan is brought up to date.
Recommendation: Charge the Robinsons a monitoring fee for their annual review.

Tom and Jodie also plan to include the IUL noted above with its $20,000 annual premium to age 65 in the overall analysis.  In the alternative term analysis, this same $20,000 will be invested in an equity account with a growth assumption of 7.00% plus a 2.00% dividend.  I assumed the annual $20,000 is new money contributed toward their retirement.

Tom and Jodie’s current combined after tax income is $250,000 and their goal is to provide this after tax amount at retirement plus the 3.00% inflation adjustment while maintaining a reasonable level of net worth.

It is important whether the inflation goal for retirement cash flow is calculated in today’s dollars or beginning with their retirement goal of $250,000.  If today’s dollars is the benchmark for the 3.00% inflation, by the time they retire in 30 years, their first year’s after tax cash flow requirement will be $606,816 increasing yearly thereafter by 3.00%.  While they may want to work toward this goal in future years, for this analysis, we based the beginning of the inflation assumption on the $250,000 starting at age 65.  Otherwise, they would need a massive commitment of personal income to their retirement plan.  They already have committed a significant amount: a deductible $36,000 a year to their two 401(k)s and $20,000 to either the IUL or the term plus equities package.

I also kept the asset base limited to their defined contribution 401(k)s and an equity account in order to make this evaluation a little less complex for you.

Below is a summary of the results of the comparative analysis:

Summary of the Retirement Analysis
Tom and Jodie Robinson (both currently age 35)

blog 148 image 1 summary of the retirement analysis tom and jodie robinson

*Joint life expectancy plus five years.
(Joint life expectancy is the point at which at least one of the clients is alive.)

Click here for a discussion of joint life expectancy by Mike Kitces.

Click here for comments on Yield, Sequence of Returns, and Monte Carlo Simulations.

As do so many people their age, Tom and Jodie have no expectancy of ever collecting retirement benefits from Social Security, so we have ignored any entries for that category.  We have also kept the data to a minimum to make this an easier analysis to evaluate.

Below is graphical comparison of the Robinsons’ Net Worth:

Retirement Planning
Strategy 1: Term Insurance and an Equity Account
vs.
Strategy 2: Indexed Universal Life
Image 1 (Net Worth and Cash Flow Comparison)

blog 148 image 2 retirement planning term insurance and an equity account indexed universal life net worth comparison

Both Strategies produce the same desired spendable cash flow, but buying the term is a $10 million dollar (and growing) long-range mistake.  The additional net worth produced by Strategy 2 means that Tom and Jodie could realize millions more in after tax retirement cash flow by utilizing IUL.  Note that Strategy 1, the term/equity combination, is in a death spiral.

Retirement Planning
Strategy 1: Term Insurance and an Equity Account
vs.
Strategy 2: Indexed Universal Life
Image 2 (Wealth to Heirs and Cash Flow Comparison)

blog 148 image 3 retirement planning term insurance and an equity account indexed universal life wealth to heirs comparison

Heirs are better off long-range with Strategy 2 by over $9 million.

Click here to review a selection of reports from this Wealthy and Wise evaluation.  There are 4 Comparison reports, 14 reports involving the term and an equity account, and another 14 dealing with the winning permanent solution.  With any Wealthy and Wise presentation, I recommend that you have all the reports for a given analysis with you when you are visiting with a client or client’s attorney or CPA.  The system backs up every number shown, and you never know which report you’ll need to have handy to answer the inevitable question, “Where did this number come from?”  That’s why I provided all of them to you in this Blog.

Most Wealthy and Wise users select a few key illustrations for the main report and put the balance in supplemental sections or an Appendix.  More elaborate report organization can be accomplished (Table of Contents and Section pages) through use of the following prompt -- which I used for this Blog -- located on the bottom right of the Main Workbook Window:

blog 148 image 4 preview or print client presentation

Conclusion

Buy term and invest the difference?  Phooey!  In view of the “perm vs. term” evaluations in Blog #146, Blog #147, and Blog #148, you should be well-armed to eliminate the “buy term and invest the difference” argument whenever it surfaces.

“I can only wonder if another asset with the same qualities would be implemented more frequently if it wasn’t called life insurance.”1

1From an article by Bill Boersma in the December 2014 issue of Trusts & Estates entitled “Life Insurance as an Asset Class”.

 

InsMark’s Digital Workbook Files

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Digital Workbook Files For This Blog

Blog148.zip

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

If you obtain the digital workbook for Blog #148, click here for a guide to its content.

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 InsMark Systems

To license any of the InsMark software products, visit our Product Center online or 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.

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We created the Referral Resources listed below to deliver a “do-it-for-me” illustration service in a way that makes sense for your practice.  All are IMOs and InsMark Agency Platinum Power Producers®, and they are highly skilled at running InsMark software.  They will utilize your choice of insurance company, and they do not require a commission split.

Mention my name when you talk to our Referral Resources 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.

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Important Note #1:  The hypothetical life insurance illustration associated with this Blog assumes the nonguaranteed values shown continue in all years. This is not likely, and actual results may be more or less favorable.  Actual illustrations are not valid unless accompanied by a basic illustration from the issuing life insurance company.

Important Note #2:  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.

Important Note #3:  The information in this Blog is for educational purposes only.  In all cases, the approval of a client’s 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.

“InsMark” and “Wealthy and Wise” are registered trademarks of InsMark, Inc.

 

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More Recent Blogs:

Blog #147: New Logic for Permanent vs. Term (Part 2 of 3)

Blog #146: New Logic for Permanent vs. Term (Part 1 of 3)

Blog #145: The $23 Trillion Market

Blog #144: Don’t Burn the Nest Egg®

Blog #143: Premium Financing Opportunities In The Small Case Market

 

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 #147: New Logic for Permanent vs. Term (Part 2 of 3)

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

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

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In Blog #146, we examined a “Compared to What?” illustration for Tom Robinson, age 35, involving $601,839 of Indexed Universal Life (IUL) at 7.00% with scheduled premiums of $20,000 a year through age 65.

The comparison involved $600,000 of level 30-year term with a premium of $525 coupled with a tax deferred account (think indexed annuity) at the same 7.00% as the IUL.  Premiums for the indexed annuity were $19,475 which, when added to the $525 for the term, totaled the same $20,000 as the premiums for the IUL.  Tom is in a 35% federal and state, marginal, income tax bracket.

At retirement age 65 (as the 30-year term insurance expires), Tom is scheduled to make a participating loan of $1,483,951 on the IUL which, when matched with a withdrawal from the indexed annuity, causes the complete termination of the annuity.  The IUL is left with sufficient cash value to generate $2,900,000 in further retirement cash flow plus remaining cash value of $1,336,676 at the end of the analysis.  The IUL is the clear “winner” – it’s not even close.

When “buy term and invest the difference” is examined mathematically rather than conversationally, it typically is revealed as a delusion.  To quote G.K. Chesterton who some believe to be the greatest thinker and writer of the 20th century, “Fallacies do not cease to be fallacies because they become fashions.”

Case Study (Equity Account)

Let’s examine what would happen if we used an equity account instead of an indexed annuity as the alternative.  The goal is to produce the identical amount of free cash from the IUL at age 65 that would exist if the equity account is surrendered.  The amount of free cash from either financial instrument is identical – with continuing cash value remaining in the IUL.

The equity account assumptions are:

  7.00% Growth
  2.00% Dividend1
25.00% Cap Gains tax rate
65.00% Long-term portion of Cap Gains
25.00% Dividend tax rate
35.00% Income tax rate
  1.00% Management fee
15.00% Portfolio turnover2

When you measure the items that retard the growth of an equity account compared to IUL, the equity account typically does not stand a chance of competing.

1The indexes available for IUL generally don’t credit a dividend.  The current S&P 500 dividend yield is about 2.00%.  So to be fair, I included a 2.00% dividend for a gross yield of 9.00%, 200 basis points greater than the IUL interest rate assumption of 7.00%.

2index fund assumed.

As with the indexed annuity, annual deposits to the equity account are $19,475 which, when added to the $525 for the term insurance, total the same $20,000 as the premium for the IUL.  I scheduled a participating loan of $1,643,952 on the IUL to match the value of the equity account if cashed out.

The IUL is left with sufficient cash value to generate $83,605 in participating loans for 29 years which by Tom’s age 95 would total $2,424,545 in after tax retirement cash flow plus remaining cash value of $1,661,963 at the end of the analysis.  Again, the IUL is the clear “winner” by a huge margin.

Cash Flow Summary

  • The equity account produces $1,643,952 in after tax funds at age 65.
  • The IUL produces the same $1,643,952 in after tax funds at age 65 plus $2,424,545 in subsequent cash flow plus residual cash values of $1,661,963 at age 95.

Below is a graphic of the comparison:

Term Insurance and an Equity Account
vs.
Indexed Universal Life
Image 1

blog 147 image 1 term insurance and an equity account vs indexed universal life

Click here to review this comparative illustration from the InsMark Illustration System produced by the Permanent vs. Term module on the Personal Insurance tab.

The key illustration numbers are on Pages 2 and 3 of 12.  Equally important are the four pages that follow which detail the equity account’s values.  Bear down on these four pages to be sure you follow the tax implications of the equity account.

As you can see on Page 8 of 12, the equity account would need a growth rate of 10.05% – plus the 2.00% dividend – for a total yield of 12.05% to match the results of the IUL (505 basis points more as than the IUL at 7.00%).

The graphics starting on Page 9 of 12 are particularly informative.

An Alternative

If Tom were to retain the $1,643,952 in the IUL at age 65 rather than distribute it by loan to match the cash out value of the equity account, his annual after tax retirement cash flow could increase to $204,044 through his age 95 (and continue thereafter should he live longer), a rather amazing result.  This would, of course, mean the equity account would survive at age 65 to match the after tax cash flow of $204,044 from the IUL, but it could do so for only 10 years, followed by $122,656 for one year, at which point it would be depleted.

Cash Flow Summary

  • The equity account produces $2,163,096 in after tax cash flow from age 65 to 75.
  • The IUL produces the same $6,121,320 in after tax cash flow from age 65 to 95 plus residual cash values of $991,541 at age 95.

Below is a graphic of this comparison:

Term Insurance and an Equity Account
vs.
Indexed Universal Life
Image 2

blog 147 image 2 term insurance and an equity account vs indexed universal life

Click here to review this comparative illustration from the InsMark Illustration System produced by the Permanent vs. Term module on the Personal Insurance tab.

Note:  Many financial experts believe that income tax rates will have to at least double to deal with the consequences of out-of-control entitlements and the lurking menace of major increases in interest rates on federal debt.  Although the election of Donald Trump likely delays this from happening in the short term, it appears to be ultimately inevitable.  Tom’s IUL would be unaffected by increases in federal taxes while the equity account would be further diminished.

A Final Thought from Dave Ramsey and Suze Orman

There is one remaining criticism from these two that bears review: “The surrender charges are horrendous with IUL.”

While not particularly critical to a serious buyer since it is the accumulation value that gets the credited index rate, this objection should scare off the non-serious buyer.  On the other hand, there is an alternative.  Most issuers of IUL have an option that waives most of the early surrender charges.

For example, in the illustration just above, if I select that option, the resulting first year cash value increases from $4,897 to $17,360 (86.80% of the $20,000 premium) – but by year 30, it slips from $2,047,278 to $1,933,422, a drop of $113,850.  As a result the policy can support only $198,632 of continuing after tax cash flow instead of $204,044.  So there is a small, long-range price to pay of $162,360 in reduced after tax cash flow by selecting the high early cash value option.  To some it may be worthwhile; to others, an unnecessary reduction.

Click here to review the results of this high early cash value option.  As you can see on Page 8 of 12, the equity account would need a growth rate of 9.52% – plus the 2.00% dividend – for a total yield of 11.52% to match the results of the IUL (452 basis points more than the IUL at 7.00%).

Conclusion

The next time you run into a prospect or an adviser that raises the “invest the difference” argument, ask this question: “If something you believe to be true turns out to be wrong, when would you want to know about it?”

This almost always generates this response, “What do you mean?”

Respond with, “I need fifteen minutes to show you.  When can we do that?”

Sales suggestion:  Always bring a comparison to term and invest the difference with you to any interview – even if you think you won’t need it.  You may not need it, but is it ever valuable if you do.  You never know when this issue will surface.  Imagine an interview where your prospect (or his attorney or CPA who happens to be present) brings this up just as you are ready to close the sale.  The comparative analysis requires a demonstration of the math involved, and it is difficult to do it without the proof of the numbers.  So have several of them with you.

Click here for some information about preparing this illustration that will be helpful if you want to duplicate it.  (Downloading the digital workbook file for Blog #147 below will also be useful as you can see the precise keystrokes I used in the InsMark Illustration System to prepare the illustration.)

More on the Subject

In Blog #148: New Logic for Permanent vs. Term (Part 3), I’ll examine permanent vs. term in the context of a comprehensive Wealthy and Wise® evaluation comparing retirement cash flow, net worth, and wealth to heirs.

 

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
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Digital Workbook Files For This Blog

Blog147.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.

If you obtain the digital workbook for Blog #147, click here for a Guide to each of the illustrations.

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 InsMark Systems

To license any of the InsMark software products, visit our Product Center online or 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.

For help on how to use InsMark software, go to The Quickest Way To Learn InsMark.

InsMark’s Referral Resources
(Put our Illustration Experts to Work for Your Practice)

We created the Referral Resources listed below to deliver a “do-it-for-me” illustration service in a way that makes sense for your practice.  All are IMOs and InsMark Agency Platinum Power Producers®, and they are highly skilled at running InsMark software.  They will utilize your choice of insurance company, and they do not require a commission split.

Mention my name when you talk to our Referral Resources 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!

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Important Note #1:  The hypothetical life insurance illustration associated with this Blog assumes the nonguaranteed values shown continue in all years.  This is not likely, and actual results may be more or less favorable.  Actual illustrations are not valid unless accompanied by a basic illustration from the issuing life insurance company.

Important Note #2:  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.

Important Note #3:  The information in this Blog is for educational purposes only.  In all cases, the approval of a client’s 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.

“InsMark” and “Wealthy and Wise” are registered trademarks of InsMark, Inc.

 

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More Recent Blogs:

Blog #146: New Logic for Permanent vs. Term (Part 1 of 3)

Blog #145: The $23 Trillion Market

Blog #144: Don’t Burn the Nest Egg®

Blog #143: Premium Financing Opportunities In The Small Case Market

Blog #142: Increased Taxes Are Coming

 

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 #146: New Logic for Permanent vs. Term (Part 1 of 3)

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

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

Getting Started with InsMark Training Video

Bob Ritter's blog #146 image-1 new logic for permanent vs term part 1 of 3

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“Buy term and invest the difference” continues to be the siren song of the uniformed — folks like Dave Ramsey and Suze Orman.  I have written several Blogs on the inefficiency of term insurance.  Click here to access an inside page of the Blog Index to review them when you have some time for study.

But for now, I want to explore a new way to counter the Permanent vs. Term argument.

Case Study 1a

Tom Robinson is age 35.  He has decided that Indexed Universal Life (“IUL”) is the policy for him and is considering $600,000 in face amount with premiums of $20,000 a year until his expected retirement at age 65.  Values are illustrated at 7.00%

Tom is in a combined federal and state marginal income tax bracket of 35.00%, and I have prepared a comparison to 30-year term with a face amount of $600,000 coupled with a side fund of an indexed tax deferred account (like an Indexed Annuity) yielding the same 7.00% as the IUL.

The term premium is among the lowest I could find on the web -- $525 for $600,000 of 30-year level term.

blog-146-image-2-illustration-indexed-ul-term-insurance-indexed-deferred-annuity

*The smallest face amount that produces a non-MEC
(increasing death benefit for 30 years; level thereafter)
Red arrow = income tax shrinkage.

Here is the tax calculation for the Indexed Annuity:

  1.   $1,968,405 = value at end of year 30
  2.   $  584,250 = 30 x $19,475 (cost basis)
  3.   $1,384,155 = gain in the contract (a – b)
  4.   $  484,454 = income tax at 35.00%
  5.   $1,483,951 = net proceeds (a – d)

Note:  Unless the income tax bracket tops out at 35.00% in 30 years, the income tax on the gain in the Indexed Annuity side fund would be considerably higher due to the $1,384,155 gain in the contract being taxed all in one year.  But let’s be positive and hope for a future top tax bracket of 35.00%.  (The IUL fortunately does not have to deal with this risk.)

Now comes the new illustration strategy – a tax free participating loan of $1,483,951 is scheduled on the IUL at the beginning of year 31 that is sufficient to empty the Indexed Annuity when $1,483,951 is withdrawn from it.  The annuity is effectively surrendered while the life policy continues on – with the most extraordinary results.

Real Wealth Involves Sustainable Cash Flow

The transaction leaves sufficient value in the IUL that, starting the next year, it can support tax free annual loans of $100,000 for supplemental retirement cash flow through Tom’s age 95 (and continuing should he live longer).  This produces cumulative retirement cash flow of $2,900,000 for a total of $4,383,951 including the $1,483,951 realized at retirement.  In addition, the IUL has residual cash value remaining at the end of the analysis of $1,336,676.  The Indexed Annuity is depleted at Tom’s age 65.

So -- as Tom’s 30-year term insurance expires, he arrives at retirement with IUL producing tax free capital of the identical amount of after tax capital contained in the annuity side fund ($1,483,951).  The IUL also generates $2,900,000 in further retirement cash flow plus residual value of $1,336,676 at the end of the analysis.  The IUL is the clear “winner” – it’s not even close.

Here is a snapshot of the summary on the bottom right of Page 3 of 12 of the illustration available below:

blog-146-image-3-surrender-the-annuity-at-age-65

Below is a graphic of the results:

Term Insurance and an Indexed Annuity @ 7.00%
vs.
Indexed Universal Life @ 7.00%
Image 1

blog-146-image-4-term-insurance-and-an-indexed-annuity-vs-indexed-universal-life

Click here to review this comparative illustration from the InsMark Illustration System produced by the Permanent vs. Term module on the Personal Insurance tab.

The key illustration pages are Pages 2 and 3 of 12.  Equally important are the four pages that follow which detail the Indexed Annuity’s values.  Bear down on these four pages to be sure you follow the tax implications of the transaction.

As you can see on Page 8 of 12, the indexed annuity would have to earn 10.35% to match the results of the IUL (335 basis points more than the IUL at 7.00% – almost half again as much).

The graphics starting on Page 9 of 12 are particularly informative.

Case Study 1b

If Tom were to retain the $1,483,951 in the IUL at age 65, his annual after tax retirement cash flow could increase to $204,044 through his age 95 (and continuing should he live longer), a rather amazing result.  This would, of course, mean the deferred annuity could also produce after tax cash flow if it is not surrendered, but only an after tax amount of $204,044 for eight years, then $180,082 for one year, at which point it would be depleted.

Here is a snapshot of the summaries of Case Studies 1a and 1b:

blog-146-image-5-case-study-surrender-annuity-at-age-65-vs-retain-annuity-for-income

Click here to review this comparative illustration from the InsMark Illustration System produced by the Permanent vs. Term module on the Personal Insurance tab.

Conclusion

Hey, Dave Ramsey and Suze Orman, what do you think of us now?

Buy term and invest the difference?  As usual, cost bears no relationship to value.  Clearly, term insurance has its place for those with small budgets or covering short-term needs, but not as a participant in alternatives to cash value life insurance.

“Fallacies do not cease to be fallacies because they become fashions.”
— G.K. Chesterton

The next time you run into a prospect that raises the “invest the difference” argument, ask this question: “Do you dislike cash value life insurance so much that you’ll sacrifice yield just to avoid it?”

This almost always generates this response, “What do you mean?”

Respond with, “I need fifteen minutes to show you.  When can we do that?”

Try asking it this way with a hostile attorney or CPA who indicates a preference for term, “Do you dislike cash value life insurance so much that you’ll recommend your clients sacrifice yield just to avoid it?”  Be prepared, it will annoy them.

Sales suggestion:  Always bring a comparison to term and invest the difference with you to any interview – even if you think you won’t need it.  You may not need it, but is it ever valuable if you do.  You never know when this issue will surface.  Imagine an interview where your prospect (or his attorney or CPA who happens to be present) brings this up just as you are ready to close the sale.  The comparative analysis requires a demonstration of the math involved, and it is difficult to do it without the proof of the numbers.  So have several of them with you.

Click here for some information about preparing this illustration that will be helpful if you want to duplicate as I have shown.  (Downloading the digital workbook file for Blog #146 below will also be helpful as you can see the precise keystrokes I used in the InsMark Illustration System to prepare the illustration.)

More on the Subject

In Blog #147: New Logic for Permanent vs. Term (Part 2), I’ll examine buy term and invest the difference with the “difference” in an equity account with growth at 7.00% plus a 2.00% dividend, the latter being the missing component of the typical index associated with IUL.  (It’s the price paid for no downside below a 0.00% yield with IUL.)

I’ll also discuss the impact of what happens to this analysis in a future world of increased taxes.  Although the election of Donald Trump likely delays this from happening, I think it is ultimately inevitable in view of the expected growth of the federal deficit due to unfunded entitlements and the lurking menace of major increases in interest rates on federal debt.

In Blog #148: New Logic for Permanent vs. Term (Part 3), I’ll examine permanent vs. term in the context of a comprehensive Wealthy and Wise® evaluation comparing retirement cash flow, net worth, and wealth to heirs.

 

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

Blog146.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.

If you obtain the digital workbook for Blog #146, click here for a Guide to each of the illustrations.

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 InsMark Systems

To license any of the InsMark software products, visit our Product Center online or 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.

For help on how to use InsMark software, go to The Quickest Way To Learn InsMark.

InsMark’s Referral Resources
(Put our Illustration Experts to Work for Your Practice)

We created the Referral Resources listed below to deliver a “do-it-for-me” illustration service in a way that makes sense for your practice.  All are IMOs and InsMark Agency Platinum Power Producers®, and they are highly skilled at running InsMark software.  They will utilize your choice of insurance company, and they do not require a commission split.

Mention my name when you talk to our Referral Resources 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!

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

“The reason I use InsMark products is because they are so good at explaining financial concepts to all three parties: 1) the producer trying to explain the idea; 2) the computer technician trying to illustrate it; 3) the customer trying to understand it.”
Rich Linsday, CLU, AEP, ChFC, InsMark Power Producer®, Top of the Table, International Forum, Pasadena, CA

“InsMark’s Checkmate® Selling strategy is still one of the most compelling tools to bring a client to a definitive decision, based on their best case alternatives!!!  Solid mathematical comparisons that prove the validity of our insurance solution!!!”
Frank Dunaway, III, CLU, Legacy Advisory Services, Carthage, MO

 

Important Note #1:  The hypothetical life insurance illustration associated with this Blog assumes the nonguaranteed values shown continue in all years.  This is not likely, and actual results may be more or less favorable.  Actual illustrations are not valid unless accompanied by a basic illustration from the issuing life insurance company.

Important Note #2:  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.

Important Note #3:  The information in this Blog is for educational purposes only.  In all cases, the approval of a client’s 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.

“InsMark” and “Wealthy and Wise” are registered trademarks of InsMark, Inc.

 

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More Recent Blogs:

Blog #145: The $23 Trillion Market

Blog #144: Don’t Burn the Nest Egg®

Blog #143: Premium Financing Opportunities In The Small Case Market

Blog #142: Increased Taxes Are Coming

Blog #141: Strategic Philanthropy

 

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Robert B. Ritter, Jr. Blog Archive