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 July 15, 2005
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Is your life insurance business missing this important
alternative?
A client is no longer satisfied with the current policy and asks the
advisor to explore options. In the past, many advisors have managed
their life insurance clients in this way. Few alternatives were open
for life insurance policies so many producers waited for there clients
to approach them and ask for alternatives and exit strategies.
Proactive producers have uncovered a new strategy to benefit their
senior clients and create a new revenue stream for their company.
Life insurance valuation gives you a fantastic tool to review your
current senior book of business, perform a quick analysis of eligible
clients and approach them with a customized life insurance valuation
proposal.
Consider this, secondary insurance market growth coupled with more
aggressive mortality tables, lower insurance premiums, and more
competitive insurance products have opened up great opportunities for
agents with senior clients to sell existing life insurance policies and
purchase comparable coverage with reduced or eliminated premiums.
What if you could offer your client a 30% reduction in annual premiums
on a new policy with similar coverage? Would that be interesting to
them? Would writing the more beneficial coverage be interesting to you?
A life settlement can liquidate your senior clients existing policy for
multiples of the surrender value and the proceeds can be used for
anything, including more competitively priced insurance and financial
products. Don’t forget, clients considering surrender, lapse, and
1035 exchange should always have a fair market valuation performed.
Call us at 800-667-0305 to review insurance liquidation alternatives
available to your senior clients or follow the three easy steps below.
Step 1. Start
with your 3 oldest clients first, use or online Life Settlement
Qualifier at www.1stlifefinancial.com/qualifyacase.html
to determine their eligibility.
Step 2.
Customize an Approach Letter and Life Insurance Valuation
Proposal™ at www.1stlifefinancial.com/agents/index.asp
to present this option to your eligible clients. Be sure to include our
quote form.
Step 3.
Follow up with your clients by phone or in person to answer any further
questions and ensure they complete and return the no cost, no
obligation quote form.
The
Life
Insurance Valuation Proposal©
is an important part of The
Life
Settlement Selling System™ available exclusively to
affiliates of
1st Life
Settlements.
To
learn more about 1st Life Settlements and the Life Insurance Valuation
Proposal©, call 800-667-0305 or visit www.1stLifeFinancial.com/freekit.html
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UNITEDHEALTH TO BUY
PACIFICARE - UnitedHealth is buying PacifiCare in a deal valued
at more than $8 billion in cash and stock. Together, the companies
cover 68 million people and will become the nation's largest health
insurance company. Executives said the merger would improve the
American health care system by increasing the kinds and quality of
services available to most people.
METLIFE CLOSES ON
TRAVELERS – MetLife has acquired Travelers from Citigroup
for $11.8 billion in cash and stock, making MetLife the undisputed No.
1 in U.S. individual life insurance sales and No. 2 behind Hartford in
annuity sales. Citigroup expects to realize an after-tax gain of
about $2 billion on the deal.
EBBERS GETS 25 YEARS
– Bernie Ebbers, the 63-year-old former CEO of WorldCom was found
guilty in March and was sentenced this week to 25 years in prison for
his part in the WorldCom fraud that resulted in a subsequent
multi-billion dollar bankruptcy. Ebbers' sentence is the most
severe given to a white-collar criminal in recent history and will
probably send chills up the spine of other similarly accused
executives.
AIG, SPITZER AND
GOLDBERG - New York Attorney General Eliot Spitzer is said to be
exploring a settlement with AIG over the insurer's accounting practices
that exaggerated the strength of the company and propped up its stock
price. No word yet on Spitzer's plans for former CEO Hank Goldberg and
CFO Howard Smith. Both have been ousted from the company and we bet
both would go for any deal offered, especially after the Ebbers
sentence above.
DENNIS DAMAGE
- Initial estimates for insured damages from Dennis range from $1
billion to $5 billion. That a pretty big spread, but it will takes some
time for the real numbers to surface.
U.S. HEALTH SPENDING
TOPS ALL – According to the Johns Hopkins Bloomberg
School of Public Health, the U.S. continues to spend significantly more
on health care than any country in the world. In 2005, Americans spent
53% per capita more than the next highest country, Switzerland, and
140% above the median industrialized country. The authors analyzed
whether two possible reasons — supply constraints and malpractice
litigation — could explain the difference in health care costs
and found that neither factor accounted for the difference. Defensive
medicine, however, did have an impact. Other causes weren't provided,
but our guess is "over-priced and over-used."
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UNEMPLOYMENT LOW - The unemployment
rate dipped in June to its lowest level in nearly four years as
employers expanded payrolls. This strengthens the Fed's
contention that the economy is in good shape and the labor market is
gradually improving despite high energy prices. The civilian
unemployment rate dropped to 5% in June, down from 5.1% in May and the
lowest since September 2001.
AMEX PAYS NH $7.4 BILLION - American
Express will pay $5 million in fines and penalties and $2 million in
restitution to New Hampshire investors stemming from charges that its
advisors cheated clients by selling its own underperforming funds. New
Hampshire's securities regulator had sought $17.5 million in fines and
restitution. E-mails provided a paper trail that the company was
pressuring agents to sell American Express funds.
SEC STILL AFTER SCRUSHY -
HealthSouth founder Richard Scrushy may have been acquitted on criminal
fraud charges but the SEC is pressing civil charges and seeking nearly
$800 million in fines and restitution. And get this...Scrushy's
attorneys have said that he wishes to return as an executive to
HealthSouth, where he continues to sit on the board of directors.
AMERICAN DREAM BECOMING UNAFFORDABLE
- The housing market in booming in cities across the country, making
the dream of owning a home out of reach for many in the middle class.
"Many of the overheated real estate markets throughout the country have
become unaffordable for the majority of the population," said Jack
McCabe, a housing industry analyst in Deerfield Beach. "Many people are
paying well over 50% of their income for shelter. It leaves no money
for savings or sometimes even for recreation." In California, only 17%
of households can afford a home with a median price tag. The median
home price in California is $522,590 and to buy the typical home with
monthly payments of $3,067, a California family would need to earn
about $122,700 to qualify for a conventional loan.
UNIVERSAL HEALTH CARE PUSH -
Advocates are looking to revive a movement for universal health care.
Bills have been introduced in at least 18 state legislatures calling
for a single-payer system, where the government would collect taxes and
cover everyone, similar to programs in Canada and across Europe.
NEVER QUIT? – Nice adage but
it sure didn't apply to Morgan Stanley co-President Stephen
Crawford. He resigned just days after the bank went public with
terms of an agreement that entitled Crawford to collect $32 million if
he quit between July 5 and August 3. The bank's board was already under
fire for a windfall severance package worth more than $113 million to
former CEO Phillip Purcell, as well generous packages to other
departing executives. Now those are golden handshakes!
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NAVA, BOOMERS AND RETIREMENT - The National Association for Variable
Annuities believes financial advisers, carriers, Congress and
regulators need to provide appropriately tailored retirement solutions
for the nation's 77 million boomers...this, of course, includes
variable annuities. NAVA describes the pending baby boomers retirement
wave, financial illiteracy, increasing longevity past 85 and the
pending crises of Social Security and Medicare as "the perfect storm."
ESTATE TAX MYTH
- According to a Congressional Budget Office report, only a few wealthy
farmers end up owing estate taxes and there is little evidence that
family farms are being lost to the estate tax. With the increase
in the estate tax exemption, very few farms are even subject to the
estate tax. The National Underwriter reports that efforts are
underway to break the estate tax repeal deadlock in the Senate, by
agreeing to retain the estate tax but increasing the threshold and
decreasing the tax rate. Problem is that the Republicans and
Democrats can't agree on the amount of the threshold. Estimates
show that if the threshold is increased to $3.5 million and the tax
rate set at the current 15% capital gains tax rate, only about 13% of
the current estate tax revenue would be retained. Since that
would cost billions of dollars in revenue, the issue then becomes how
to make up for the lost revenue: increase other taxes (e.g., income
taxes), reduce government spending or increase the budget
deficit. When the issue becomes one of shifting taxes from the
richest 1% of Americans (those who currently pay estate taxes) onto the
general population, it becomes a political tough sell.
RISING HEALTH COSTS
HURT – No surprise here. Rising health insurance premiums
present the toughest challenge for small-business owners in New York
state, according to a recent survey by the National Federation of
Independent Businesses (NFIB). In the survey, 350 owners of New York
businesses with up to 250 employees were asked what they considered was
their "most important business problem." Insurance topped the list,
followed by "big business competition."
MONEY MYTHS
– These are from Washington Post writer Michelle Singletary: (1)
Co-signing a loan is not a big deal. If I co-sign, I'm just a backup.
(2) You can't get credit after you file for bankruptcy. (3) You can't
take a tax deduction for home equity loan interest if the money is not
used for home improvement. (4) Student loans are dischargeable through
bankruptcy. (5) Death wipes out credit card debt. For more go to http://washingtonpost.com and
search for "Money Myths."
MORE OLDER WORKERS
– With 8 of every 10 baby boomers planning to work after the
standard retirement age 65 and with what used to be called "old age"
(65 to 75) consisting of people who are both mentally and physically
fit, you can look to see a marked increase in older workers in the
future. Some bonuses for employers who hire older workers are an
eagerness to be productive, maturity, good work ethics, less turnover
and better attendance.
NASD EYES EIAs
- With equity indexed annuities (EIAs) growing in popularity, they are
gaining more and more attention from securities regulators. The absence
of firm supervision of unregistered EIAs by associated persons could
harm the broker-dealer's customers, so the NASD is proposing that
broker-dealers treat EIAs as if they were securities in their
compliance operations. Not doing so presents a great risk to carriers,
should the SEC rule that EIAs, like variable annuities, are, indeed,
securities products.
INDEXED ANNUITIES
– Let the above serve as another warning about nomenclature. We
should be saying indexed annuities (IAs), not equity indexed annuities
(EIAs).
ADVISERS SHIFTING
FOCUS - A Hartford Financial survey indicates that as baby
boomers start approaching retirement, they are showing more interest in
financial advisers who can assist them with income planning/asset
distribution strategies during retirement. The big question they
want answered is, "How can I avoid outliving my assets?"
EXCHANGE-TRADED FUNDS
- The first exchange-traded fund tracking a commodity (StreetTracks
Gold Shares) hit the market in November of last year and has already
amassed more than $1.5 billion in assets. Expect more commodity ETFs in
silver, oil and maybe some currencies to pop-up in the future.
SON OF BOSS TAX
SHELTER - The IRS reports it has recovered more than $3.7
billion in unpaid taxes, interest and penalties from users of the
illegal "Son of Boss" tax shelter. The scheme used financial products
to create "artificial tax losses" that were used to offset profits from
asset sales. Some 1,800 taxpayers used the "plan" to underpay nearly $6
billion in income taxes.
MAJOR DEATH BENEFIT
INCREASE – Retroactive to the 2001 invasion of
Afghanistan, the U.S. military will begin paying a tax-free death
benefit of $100,000 to survivors of troops killed as a result of
hostile action in a designated combat operation or zone, or while
training for combat or performing hazardous duty. The prior
benefit was a paltry $12,420. The maximum amount of
Servicemembers Group Life Insurance was also increased from $250,000 to
$400,000 for all troops.
MEDICAL BILLS GO
PUBLIC - Congress, CEOs, and even the AMA have long argued that
one way to control health-care costs is to give consumers more
decision-making power. But without decent price information for medical
procedures, it's been a bit unrealistic to expect consumers to make
smarter decisions about health-care spending. No details as yet, but
the Center for Health Transformation plans to begin putting price
information on the Internet.
LOSING HOMES TO
MEDICAID - The largest financial risk that seniors face today
is the potential of assisted living and nursing home costs devouring
the nest egg that has taken a lifetime to build. Many will end up
relying on Medicaid to pay these costs. If that's the case for you,
chances are that Medicaid will come after your home when you die.
Qualifying for Medicaid requires the patient's liquid assets to be no
more than $2,000, not including their home. Traditionally, Medicaid has
allowed a patient to keep their home while they're in the nursing home.
Since Medicaid doesn't force the sale of the home at that time, many
seniors assume they will be able pass it to their heirs at their death.
However, back in 1993, Congress passed a law that required the state
agencies that run Medicaid to make every effort to get reimbursement
for the money spent on each patient. This means the states are required
by law to take any assets remaining at death, up to the amount spent by
Medicaid. For years, many states completely ignored this law or
only casually attempted to recover Medicaid costs. But those days are
over. Facing budget crunches and exploding health care costs, many
states are now aggressively pursuing recovery of their expenses. Read
more at www.guardingyourwealth.com.
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