We look forward to the Van Mueller newsletter every month. It's chock-full of sound bites, sales tips, and eye-opening statistics. Here are our favorite parts of the December 2020 edition. We're sharing the full introduction, and 2 of the 7 monthly sales ideas. If you like what you read, we encourage you to click here and become a subscriber.
Reprinted with the author's permission.
December 2020 – 7 Ideas and Views Newsletter by Van Mueller
Wow! Hasn’t this year gone by quickly? Yet, at the same time doesn’t it feel like it will never end? Insurance and financial professionals play the most important roles they have ever been required to do in the history of our country. With establishments like government, Wall Street and the banks refusing to serve the American people, Americans are left to flounder in their quest for financial and retirement success and for our younger Americans, financial freedom.
So, to end the year I am going to do an update of the 40 questions. I am going to expand on the language so that you can create all the appointments you would ever want.
The hardest part of what we do continues to be getting enough appointments. We still need to get better at this vital segment of our profession. I have said it many times before, but I repeat: We do not sell life insurance, annuities, mutual funds, long term care, car insurance, med supps or retirement plans – and if you think that is what you do, then that is probably why you don’t have enough appointments. Our primary responsibility is to inspire people to take action.
We must become professionally skilled at asking questions that are conversational in nature so that the customer can use their own reasoning power to determine the most appropriate course of action for themselves, their families and their businesses. That is the only way to overcome all the naysayers who downplay the vital importance of guaranteed income that cannot be outlived, mortality credits, and powerful leverage techniques that only our industry can provide.
Please understand; this is your chance to not only be successful, you can be significant. You can bring value to our customers where none existed. You can provide strategies for success that the American people didn’t even know existed. This is the most important time ever to do what we do for a living. You matter. You are vital to the future financial success of the American people.
This is the most important time ever to do what we do for a living. You matter. You are vital to the future financial success of the American people.
OK, now let’s get started with the 40 questions.
1. What is the best age to take your Social Security?
Why is this the first questions to learn? This question gives you access to more prospects than ANY OTHER QUESTION. There are 74 million Baby Boomers born between 1946 and 1964, and 66 million Generation Xers born between 1965 and 1980. That means 140 million Americans turn 65 by 2045. They all are trying to develop strategies for this.
You should develop an expertise about Social Security. It will serve you for the rest of your career in one of the most effective and efficient ways possible. How can you easily develop your knowledge about Social Security? Please read the book “Get What’s Yours” by Professor Laurence Kotlikoff. He is considered to be one of the foremost experts on Social Security in our country. He has a column for Forbes magazine called “Ask Larry” and a website: MaximizeMySocialSecurity.com. They are a great place to start.
This is how the first question can be used: “Mr. or Mrs. Prospect, what is the best age to take your Social Security? Wait, before you answer, did you know that many studies show that over 90 percent of Americans take Social Security to their detriment rather than their benefit? If I could ask you a series of questions that would help you clarify how to maximize rather than minimize this important benefit, wouldn’t that be worth 45 minutes of your time? There is no cost or obligation for this, and I won’t even try to sell you anything. In fact, I think you will be so pleased with the information that you will walk me to my car and hold the car door open for me. With no cost or obligation, wouldn’t this vital information be worth 45 minutes of your time?”
You can add to your Social Security questions as needed if you understand a few facts. Most Americans take Social Security between age 62 and 65. But the demographic and longevity information does not support that decision. A man who makes it to age 65 has a life expectancy of age 86. A woman who makes it to age 65 has a life expectancy of age 89. For a married couple who makes it to age 65, there is a 50 percent chance that one of them will live until age 95. The break-even age, whether you take Social Security benefits at age 62 or age 70, is around 80 years old. So, most Americans are missing out on many years of much higher income, and also missing out on a way to provide the surviving spouse with a much higher income after the first spouse dies. It is a spectacular opportunity.
Most Americans take Social Security between age 62 and 65. But the demographic and longevity information does not support that decision.
Most prospects and customers will ask this question: If I defer to age 70, how will I provide income until them?” But you have the tools to be able to use the progressive income tax laws to provide as much as $47,700 of annual fully taxable income with only $1,990 of federal tax, which is only a 4.2 percent effective tax. You have ways to use fully taxable money at the lowest effective tax rates. Then, when they reach age 70, they will have maximized this guaranteed benefit and can again supplement with fully taxable money with little or no income tax liability.
I will be providing my annual explanation of how to show the difference between marginal tax and effective tax rates in the January newsletter. Becoming skilled with these questions and this information is a game changer. The information is not about product. It is not about you. It serves the prospect or client with a strategy for success with a vital benefit they depend on. It also easily leads to other planning. Don’t miss this opportunity to dramatically increase your appointments and your success.
2. Is my Social Security inheritable? If not, is it possible to make some of my Social Security inheritable?
This question seems antithetical to question number one. It is. There are no absolutes in insurance and financial advice; you have to tailor it to the needs of the person you are working with. So who would you ask this question to? You would want to ask single people that you might advise to defer until age 70 and married couples who have enough income even if they don’t take their Social Security. The conversation goes like this: “What happens if you reach age 70, get one Social Security check, and then die? Haven’t you lost all your Social Security?” This works especially well with single retirees, but it can also be an interesting question for married couples where they have plenty of non-Social Security money.
There are no absolutes in insurance and financial advice; you have to tailor it to the needs of the person you are working with.
Here’s an example. I had a female client who – with pension and inherited income from her mother – had more than enough income to live comfortably. I had previously advised her to defer taking her Social Security until age 70, so she could maximize the benefit. Around her 65th birthday, while doing her annual review I mentioned that I wasn’t sure, but one piece of advice I gave her might need to be addressed again. She asked what it was. I asked her if any of her Social Security was inheritable. I explained that the reason I was asking was if she got to age 70 and received one check and then died, would anyone receive the rest of her Social Security? She said that she didn’t know. I asked if there was any way to find out. She then asked, couldn’t we ask Social Security? I asked, do they have a website? They do, it is ssa.gov. We checked it out and found that only $255.00 was inheritable. I then asked her this question: “If we could make some of your Social Security inheritable so it could benefit you late in life and help your family after you were gone, would you be interested in finding out how to do that?” She was definitely interested.
Her Social Security at age 65 was $2,400 per month. We used $400 per month to pay the additional income taxes. We used the other $2,000 per month to buy a $24,000 per year cash value life insurance policy. I explained to her that if she lived for ten years, she would have $240,000 of cash value and $425,000 of face amount. She asked right away: “But it doesn’t look like I made anything over those ten years.” I replied, “I know it looks that way, but can I ask you a few more questions? Did you turn $240,000 of forever taxed money into $240,000 of never taxed money that you can use any way you choose, for the rest of your life? If you die tomorrow, didn’t you make $425,000 of Social Security inheritable? Won’t we be able to use this money to pay for long term care if you ever need it? Didn’t we figure out a way to make Social Security pay for this rather than it coming out of your already existing money? What do you think the value of all of that is?” She definitely wanted to go forward with the plan.
One of the keys to success in our industry is three words. Find The Money! We should always be on the lookout for these kinds of opportunities.
One of the keys to success in our industry is three words. Find The Money! We should always be on the lookout for these kinds of opportunities.
3. Would it be amazing if you could be the beneficiary of your own life insurance while you are still alive?
Ask this question, and then before they can answer, ask them this follow up question as quickly as you can: “Really be honest, what do most people think you have to do to collect on life insurance? They will say that you have to die. Then you say, conversationally, what would you say if I told you that life insurance has never, ever paid any money to dead people?
Then, I actually lean in and I declare, if you think I want you to die, I don’t. What if we could show you how to use the living benefits of a cash value life insurance policy to never lose any money, ever again? And then, because you didn’t lose any money, what if you could access that money to take advantage of investment opportunities as they present themselves. What if you could do all of this with little or no income tax liability? Also, I have a surprise for you. What if you could use the same dollars that you are using for financial and retirement success for protection purposes as well, without wasting any money if you didn’t need the protection benefits? Wouldn’t that be a more efficient and effective use of your money?
For example, let’s say you have a critical illness like a heart attack, stroke, or cancer when you are in your early fifties. If you have a heart attack and miss work for eighteen months, then you could use the values in this strategy to transition your life without it being destroyed. Or you could use the values to retrain yourself so you could return to a work life with less stress. When you died, the death benefit would replenish what you used to survive the critical illness income tax free. Even better, if you don’t have a critical illness, then you haven’t wasted any money on protection you didn’t use.
Also, you can use this strategy to pay for long term care. Notice that I didn’t say nursing home. I ask all my clients if they realize that 40 percent of people who died from COVID-19 in the U.S. lived in nursing homes. Then I ask, would you ever put someone you love into a nursing home if you didn’t have to? Wouldn’t it be better to build value in this strategy, so you could pay for care at home? I even ask poor and middle-class families, “Wouldn’t it be wonderful if we could build $200,000 or $300,000 or even $400,000 of cash value in this strategy so you could be in control of situations like this?” Then I ask: “Do you know what the best part is? If you don’t ever need long term care, then you haven’t wasted any money on the coverage. Additionally, when you retire, we can supplement your retirement with tax free income that you cannot outlive. And when you finally die, we will send whatever is left to your family, business or charity income tax free. Please, will you really think about this? Do you know anything else in the world that can do what I just described?” They don’t. You then ask, “If there is no cost or obligation and I promise not to sell you anything, do you think that you could at the very least find 45 minutes in the next week or two to discover how you could make this work for your family or business?” Wow!
I ask all my clients if they realize that 40 percent of people who died from COVID-19 in the U.S. lived in nursing homes. Then I ask, would you ever put someone you love into a nursing home if you didn’t have to?
4. Is there someone at the Internal Revenue Service that you have decided you are so madly in love with that you want to leave them a bunch of your money?
By the way, never use IRS or Uncle Sam. First of all, the Internal Revenue Service is not part of our family. It is important to say the words, the Internal Revenue Service, the Government. Make it hurt. Don’t make it sound nice with IRS and Uncle Sam.
When you ask the question, you must follow up with another question to give the first question context: “Do you realize that if you have an IRA, 401(k), 403(b) or 457 plan and you have two or more non-spouse beneficiaries, then it is highly likely that the primary beneficiary of that money will be the Internal Revenue Service.” Ask, “may I give you an example?” There will never be any taxes between spouses under current law. But when the second spouse dies and the children inherit, this fully taxable money, they pay the tax at their rate rather than their parent’s rate. Children, most times, inherit this money during their best earning years.
Ask again, “may I give you an example?” Now let’s say you have $400,000 in a fully taxable account. Let’s say federal and state taxes would be 40 percent. 40 percent of $400,000 is $160,000. That leaves $240,000 divided by two children, or $120,000 per child. So, the primary beneficiary of this money will be the Internal Revenue Service. Ask if they are okay with that. Also ask if they would like to change the amount that the Internal Revenue Service receives. Then ask them to think about something. Let’s say you invested $200,000 of the $400,000 that you built the account to. If the Internal Revenue Service takes $160,000, then haven’t you really just been a tax collector for the Internal Revenue Service, all these years? Are you okay with the Internal Revenue Service taking most of the gains you have made on this money over your lifetime?
Here is another version of that question. “Are you building a legacy for the Internal Revenue Service or for your family and/or business?” Here is another, “Would you prefer to pay your taxes when they are on sale now or do you want to wait until you have to pay full price in the future?” These questions become even more valuable because of the reduction and possible elimination of the “stretch provision” for non-spouse beneficiaries of qualified money.
These questions become even more valuable because of the reduction and possible elimination of the “stretch provision” for non-spouse beneficiaries of qualified money.
Finally, I get lots of appointments with this series of questions, which can be asked anywhere. They can be asked anywhere because you are not talking about products, you are asking for opinions. That is why this works. People love to give their opinions. I ask people if they would have a little fun with me for just a few moments. Will you pretend for just a moment that you don’t know anything about investing, insurance or taxes? I then say, please I know you are really good at these things or you wouldn’t have any money. If it’s okay, I would just like your opinion; it will take less than a minute. Would that be okay?
Would it be more beneficial for you to take a tax deduction now on a small amount of money and build it into a large amount of money that the Internal Revenue Service can tax at whatever level is deemed necessary in the future or would it be more beneficial to pay your taxes now on a small amount of money and build it into a large amount of money that the Internal Revenue Service could never get their hands on again?
Before I share what they answer, remember to always use the words “beneficial” or “appropriate” when asking these questions. It is important to never use the word “smarter”. Never attack a customer’s intelligence. Ever!
When they answer the question about which is more beneficial or appropriate, they ALWAYS say it is option number two. You then ask, doesn’t that require we ask you one more question? They usually ask what question. And I say, why are you doing option number one, if you know that option number two is more beneficial? They usually reply with something like, “I really never considered or realized that I was doing that.” I then ask, “What if you could establish a strategy that was most beneficial to you and your family rather than the Internal Revenue Service? When would you want to get started?” They always want to start right now.
This was only the first four questions. I have included many new questions in the narrative I have provided in this newsletter. Over the next few months, I will continue to increase the narrative of the 40 questions, and I will be adding to the list. Next month, however, I will be updating how to use the progressive income tax laws to move fully taxable money from marginal tax rates to lower effective tax rates. It is always the most beneficial newsletter of the year.
Let’s get started with this month’s seven ideas.
Idea #2: Social Security Trust Funds?
With the hottest question we use to increase appointments being about Social Security, I wanted to continue to add to your knowledge of this vital government benefit. In last month’s newsletter we provided information about its cost of living increases and the pressures being applied on the funding of Social Security.
This article explains the trust fund aspect of Social Security. The program was a pay as you go program until 1983 when Congress decided they would collect more than was needed and build a trust fund to bolster future benefits.
According to the Social Security Trustees, the combined trust funds have a deficit of $16.8 trillion through 2094 and a $53 trillion-dollar shortfall over the infinite horizon.
The question that is usually asked is will everyone get their Social Security? The answer is absolutely yes. Where will they get the money? That is why this article is valuable. It answers a lot of questions that our customers ask. Improve your Social Security skills. It will increase your success in our business.
Title: The Social Security Trust Fund, Explained
https://www.thinkadvisor.com/ (Think Advisor, November 22, 2020)
https://www.thinkadvisor.com/2020/11/22/the-social-security-trust-funds-explained/
Idea #4: How Much of the Stock Market Gains Are Real?
I have a wonderful friend who sent me a text. Here’s what it said. “30,000”. That was the day the Dow Jones Average crossed 30,000 for the first time. This is the problem that our entire industry faces. We are long-term planners being influenced by short term noise.
First, we do not make people rich; we prevent them from being poor. And, so many of us have forgotten that this eleven-year bull market is based on fantasy, manipulation and quantitative easing. Now, we have another study by the very reputable Societe Generale. You know their SocGen funds.
The study explains that most of the gains in the markets were influenced by Central Bank quantitative easing. The Nasdaq would be closer to 5,000 than 11,000. The S&P 500 would be around 1,800 rather than 3,300. I believe if you added stock buy backs to this study all of these markets would have probably had losses rather than gains over the last eleven years.
When this market finally crashes, and it will, many of our customers will be put into situations they will never recover from. Our responsibility is to make sure that doesn’t happen, isn’t it? Focus on our competitive advantage rather than where we face the most challenges. This article verifies much of what we have been saying about the markets.
Title: How much of the stock market’s rise over the last 11 years is due to QE? Here’s an estimate
https://www.marketwatch.com/ (Market Watch, November 6, 2020)
https://www.marketwatch.com/story/without-qe-the-s-p-500-would-be-trading-closer-to-1-800-than-3-300-says-societe-generale-11604688442
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