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 2023 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.
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December 2023 – 7 Ideas and Views Newsletter by Van Mueller
Over the last several months we have focused on prospecting and that the oxygen, the actual lifeblood of a successful career is getting enough appointments. This objective applies to every level of success in our business. Many high-level producers spend so much money on marketing that their net result is mediocre at best. It is estimated that 98 percent of the insurance and financial professionals DO NOT HAVE ENOUGH APPOINTMENTS. We have encouraged you to begin understanding that successful prospecting is a matter of timing. Your prospect may not give you an appointment the first nine times you call them, however on the tenth time they do.
Why does that happen? If you consider happenings in your own life, you will come to have a better understanding of what makes successful prospecting happen. Isn’t it possible that an external event like a war or a climate event or a mass shooting or a concern about the government and Wall Street being able to keep their promises an external event that causes a prospect to be interested when they weren’t before?
Couldn’t any number of internal events cause a previously uninterested prospect to become voraciously interested? An illness, a lost job, an inheritance, a pregnancy could just be a few of the multitude of reasons why a previously uninterested prospect might now wish almost desperately to want to have an appointment with you.
This is important! Professionals never get offended. If every time you call you are polite and offer a different question that is interesting and concerns the interesting happenings of the day, instead of being irritating to the prospect, you maintain your professionalism because you are always sharing new information in the form of a question.
This is important! Professionals never get offended.
It Only Takes One Time To Ask The Right Question To Get An Appointment.
Please go back and read, OUT LOUD, the last three newsletters. Don’t just scan the newsletters like you did in the past. If you apply the ideas shared in those newsletters your appointments will increase. All that is required is that you learn the skills and practice them enough so that they become conversational, even instinctive.
This is a learned skill. Everyone can learn to do this with practice.
Now, I would like to work with you to share a learned skill that is VITAL to your success. It is important in the prospecting function, and it is important in the selling function of our careers.
This knowledge is easily the number one, EMOTIONAL, reason why people will give us an appointment and take action with us. Americans worry about this issue more than any other issue by far.
I do not believe it is possible to have a successful career in our business without a foundational understanding of this issue. Many, even most agents, have little or no knowledge about this issue and they wonder why they don’t have enough appointments and don’t make the necessary amount of sales to be successful in our industry. You cannot have success in our industry without a basic understanding of income taxes.
We offer the public tax deferred and even tax-free products. How can you explain the tax deferred benefits of an annuity or an IRA or a 401(k) if you don’t understand income taxes and triple compounding?
How can you explain the tax deferred benefits of an annuity or an IRA or a 401(k) if you don’t understand income taxes and triple compounding?
Isn’t tax deferral triple compounding? Isn’t that interest on principal, interest on interest and interest on the taxes we would have paid if we had been taxed on an accrual basis like a CD or a savings account?
If we use the Rule of 72 accounting rule, we can explain to our customers in an easy-to-understand way how damaging paying taxes is to the accumulation of money.
If a customer has $100,000 earning 6 percent on a tax deferred basis it will take approximately twelve years for that money to double to $200,000.
If our customer is taxed on an accrual basis at a combined 33 percent Federal and State income tax, the net result of that same investment is 4 percent. If we divide four percent into 72, we find that it now takes 18 years for that same $100,000 to double to $200,000. Income taxes have caused the investment to require 50 percent more time or six years longer to reach the same $200,000. If we say this a little differently, the impact of taxes becomes more apparent. If this customer retires in 12 years with tax deferral, they would have $200,000. If they paid their income taxes annually, they would only have a little over $160,000. If the client wanted to begin to take an income using 6 percent, the tax deferred customer would receive $12,000 annually or $1,000 monthly, fully taxable, without touching principal. The customer who only accumulated $160,000 would only receive $9,606 per year or $800.50 monthly, fully taxable, without touching principal.
If the two customers lived for 20 years after retirement, the customer who chose tax deferral would receive $48,000 more in income than the customer who avoided tax deferral. Please remember this is with no risk to principal.
If the two customers lived for 20 years after retirement, the customer who chose tax deferral would receive $48,000 more in income than the customer who avoided tax deferral.
Our customer could still choose a tax-free account like a Roth IRA or Roth 401(k), or a cash value life insurance policy and the tax-free customer would receive $240,000 income tax free over those 20 years. Our customer that did not tax defer would not only receive $48,000 less or $192,000, but they would also have to pay income taxes on the $192,000 reducing its value even more.
You would then close with this question. Wow, if that was all the benefit wouldn’t you want to get started right away? Did you know that there is more? Do you know with named beneficiaries that this program doesn’t have to go through probate if it has named beneficiaries? Did you know that this program is incontestable and it’s private? Did you know it’s not a matter of public record? Did you know that you can control this money from your grave if you have spendthrift beneficiaries? Do you also realize that this money now has creditor and predator protection? Finally, do you realize this money has Medicaid versatility? It can be converted into an income stream under the spousal impoverishment rules to protect the spend down under title 19 and Medicaid. Ask your customers if they know any other things that can do what you can do for them.
So, how do we build a simplified foundational understanding of income taxes for ourselves that we can also share with prospects and clients?
So, how do we build a simplified foundational understanding of income taxes for ourselves that we can also share with prospects and clients?
Let’s start at the beginning with the standard deduction. That is the amount of taxable income a person or a couple can make before they have to pay one cent of income tax. All the numbers I am going to share with you are for the tax year 2024. The standard deduction for a single person under age 65 is $14,600. If the single person is over age 65 the standard deduction is increased by $1,950 to $16,550.
The standard deduction for a married couple filing jointly and under the age of 65 is $29,200. If the married couple filing jointly has one person over ager 65 and one person under age 65 the standard deduction is increased by $1,550 to $30,750. If both are over age 65 that couple receives two additional bonuses of $1,550 increasing a married couple over age 65 filing a joint return with a standard deduction of $32,300. There is no tax on the standard deduction. This is the first step to understanding that our tax law is a progressive tax law, meaning that you pay higher percentages of tax, the more income you make.
It will also help you to understand the difference between marginal tax rates and effective tax rates.
Let’s review what a progressive tax law means and what opportunities and challenges it creates for our customers.
There are also seven tax brackets. These are called marginal tax brackets. They are as follows: 10 percent, 12 percent, 22 percent, 24 percent 32 percent, 35 percent and finally 37 percent. In this newsletter, this month, and next month, I ONLY use up to the 24 percent marginal tax bracket. Why? I believe that someday sooner rather than later, the government will convert to a flat tax to simplify the filing and overseeing of Americans income tax filing. The government can no longer afford the cost of keeping the Internal Revenue Service as an effective tax collector with the laws the way they are. If we convert to a flat tax, I cannot foresee it being higher than 24 or 25 percent.
We are recommending that Americans pay their taxes now. If taxes would be lower in the future because of a flat tax with no deductions, we would have a lot of angry customers.
Remember, don’t just think of current circumstances when making recommendations to customers, also give serious consideration to what could possibly happen in the future.
Now, because you have a basic and foundational understanding of taxes you can begin to develop questions that will be so interesting everyone you talk to will want to give you an appointment. Not only that you now have access to a multitude of ways to help your customer buy because you have the ability to show prospects how to “find the money.” That is one of the most important things we do in our business.
You now have access to a multitude of ways to help your customer buy because you have the ability to show prospects how to “find the money.”
Ask your customer if they would prefer to pay a lot of taxes to support the government and the Internal Revenue Service or would they like to use some or all of those tax dollars to build a successful financial and retirement future for themselves and their families?
It’s easy. Ask a married couple filing a joint tax return why they aren’t taking advantage of the Rule of 56-10 or the rule of 127-12? They will ask, “What are you talking about?” You can reply with another question. You’ve never heard of the rule of 56-10 or 127-12? I was sure you would be using one of those rules to benefit you and your family. I can’t believe you’ve never been exposed to one of those rules before.
I am able to help many middle-class Americans buy beneficial cash value life insurance because we help them find the money using those questions and techniques.
Here’s an example. Remember last month’s Wage Statistics from Social Security shared that 50 percent of Americans make less than $41,000 and almost 70 percent make less than $61,000. So, I have 70 percent of Americans that I can ask if they are using the rule of 56-10.
Let’s say my prospect is living on $46,000 per year of income and they have $100,000 in an IRA or 401(k). Most of you walk past this prospect. I ask them why they are not taking advantage of the Rule of 56-10. I ask if they understand that they could take $10,000 per year of that IRA and pay the tax and turn that forever tax money into never, ever tax money in a 10-pay cash value life insurance policy. Why, because $10,000 added to $46,000 is $56,000. I ask if they understand the difference between a marginal tax rate and an effective tax rate. I ask if they realize that even though their marginal tax rate is 10 percent, their effective tax rate is only 4.16%. If you could withdraw your $100,000 IRA or 401(k) out over 10 years and it would only cost $4,160 to eliminate the tax on that money forever, would you do it? What do you think they would say, I’m not finished. I then ask if they realize that by putting the money in a 10-pay cash value life insurance policy, that the leverage between the money paid in and the death benefit will reimburse the family for much more than the $4,160 they paid while they were alive. I then ask them again if they realize how brilliant they are. They have figured out a way to eliminate ALL the taxes on that IRA or 401(k) and they didn’t pay one cent of the tax out of their own pocket. Amazing!
If you could withdraw your $100,000 IRA or 401(k) out over 10 years and it would only cost $4,160 to eliminate the tax on that money forever, would you do it?
This could be used at every marginal tax level for this married couple over age 65 that are filing a joint return.
Using the Rule of 127-12 if they make $87,000 per year, they can withdrawal another $40,000 and still be in the marginal tax bracket of 12 percent. The effective tax rate will only be 8.57 percent. So, if we withdraw $40,000 more on a 10-pay, we can fund that policy with $40,000 per year eliminating the tax on $400,000 for only $34,280. That is $3,428 X 10 years. The same conversation applies. The leverage between the premiums paid and the death benefit are more than adequate to reimburse the family the $34,280 that was paid while they were alive. That couple has effectively eliminated the tax on that money without paying one cent of the tax out of their own pocket.
Be creative for bigger sales. The Rule of 233-22. If a client lives on $150,000 per year, they could take out $83,000 per year from their IRA or 401(k) and eliminate the tax on $830,000 in a 10-pay cash value life insurance policy. The effective tax rate would only be 14.72 percent. Ask your customer if while they were alive, they could eliminate the income tax on $830,000 of fully taxable money and it would only cost them $122,176 over 10 years ($12,217.60 X 10) would they do it? Remember again that the death benefit is much higher than what they paid in taxes while alive. They literally can eliminate the tax without paying one cent of the income tax out of their own pocket.
Finally, the Rule of 416-24. This couple lives on $300,000 per year. You can remove another $116,000 every year from their IRA or 401(k) and still remain in the 24 percent marginal tax bracket. However, their effective tax is 18.79 percent. That is less than 20 percent. I ask them this question, “If, while you were alive you could eliminate the income tax on $1,160,000 and it would only cost you $217,964 ($21,796.40 X 10) would you do it?” Then show them how your strategy of using a 10-pay cash value life insurance policy reimburses the family for the income tax you paid while you were alive. You eliminated tax on $1,160,000 forever.
I ask them this question, “If, while you were alive you could eliminate the income tax on $1,160,000 and it would only cost you $217,964 ($21,796.40 X 10) would you do it?”
That’s not all there is. By using this strategy, you can use the money in multiple ways instead of only one way. You are using one dollar to do the work of many dollars.
Here’s the selfish reason. Ask them to pretend they have never met you and then give them examples of circumstances without you and with you.
First, if inflation becomes terrible and they have to use 50 percent of the principal of their IRA to maintain their standard of living, their legacy is reduced by half. Using your strategy, they can use 50 percent of the cash value while alive and the death benefit will more than replenish what they used while alive to still leave a full legacy to the family, income tax free.
This works for long term care or critical illness. If they use 80 percent for long term care or home health care, there is little left for the family. Using your strategy, the money used is replenished by the death benefit.
This even works for investing. If they stay fully invested, they could easily lose a lot of money in today’s environment. Using your strategy, they can access money to take advantage of opportunities without losing any money first.
Using your strategy, they can access money to take advantage of opportunities without losing any money first.
Here’s the best part: If they never need any of the above benefits, they did not pay one cent for the coverage, and they can still take advantage of all kinds of investment opportunities because they ALWAYS have access to the cash value.
Please take the time to learn these rules and some basic tax information and you will see your sales soar into the stratosphere. Here is a guide I believe you will find very helpful.
The Following Are Rules For Different Tax Filers.
Married Both Over Age 65 - 2024
| Tax | Effective Tax Rate | ||
|---|---|---|---|
| Rule of 56-10 | $32,300 | $2,310 | 4.16% |
| $23,200 | |||
| $55,500 | |||
| Rule of 127-12 | $32,200 | $10,852 | 8.57% |
| $23,200 | |||
| $71,100 | |||
| $126,600 | |||
| Rule of 233-22 | $32,300 | $34,337 | 14.72% |
| $23,200 | |||
| $71,100 | |||
| $106,750 | |||
| $233,350 | |||
| Rule of 416-24 | $32,300 | $78,221 | 18.79% |
| $23,200 | |||
| $71,100 | |||
| $106,750 | |||
| $182,850 |
Married One Over Age 65 and One Under Age 65 - 2024
| Tax | Effective Tax Rate | ||
|---|---|---|---|
| Rule of 54-10 | $30,750 | $2,310 | 4.28% |
| $23,200 | |||
| $53,950 | |||
| Rule of 125-12 | $30,750 | $10,852 | 8.68% |
| $23,200 | |||
| $71,100 | |||
| $125,050 | |||
| Rule of 232-22 | $30,750 | $34,337 | 14.81% |
| $23,200 | |||
| $71,100 | |||
| $106,750 | |||
| $231,800 | |||
| Rule of 415-24 | $30,750 | $78,221 | 18.86% |
| $23,200 | |||
| $71,100 | |||
| $106,750 | |||
| $182,850 | |||
| $414,650 |
Both Under Age 65 - 2024
| Tax | Effective Tax Rate | ||
|---|---|---|---|
| Rule of 52-10 | $29,200 | $2,320 | 4.43% |
| $23,200 | |||
| $52,400 | |||
| Rule of 124-12 | $29,200 | $10,852 | 8.79% |
| $23,200 | |||
| $71,100 | |||
| $123,500 | |||
| Rule of 230-22 | $29,200 | $34,337 | 14.91% |
| $23,200 | |||
| $71,100 | |||
| $106,750 | |||
| $230,250 | |||
| Rule of 413-24 | $29,200 | $78,221 | 18.94% |
| $23,200 | |||
| $71,100 | |||
| $106,750 | |||
| $182,850 | |||
| $413,100 |
Single Over Age 65 - 2024
| Tax | Effective Tax Rate | ||
|---|---|---|---|
| Rule of 28-10 | $16,550 | $1,160 | 4.12% |
| $11,600 | |||
| $28,150 | |||
| Rule of 64-12 | $16,550 | $5,426 | 8.52% |
| $11,600 | |||
| $35,550 | |||
| $63,700 | |||
| Rule of 117-22 | $16,550 | $17,169 | 14.67% |
| $11,600 | |||
| $35,550 | |||
| $53,375 | |||
| $117,075 | |||
| Rule of 209-24 | $16,550 | $39,111 | 18.75% |
| $11,600 | |||
| $35,550 | |||
| $53,375 | |||
| $91,425 | |||
| $208,550 |
Single Under Age 65 - 2024
| Tax | Effective Tax Rate | ||
|---|---|---|---|
| Rule of 26-10 | $14,600 | $1,160 | 4.43% |
| $11,600 | |||
| $26,200 | |||
| Rule of 62-12 | $14,600 | $5,426 | 8.79% |
| $11,600 | |||
| $35,550 | |||
| $61,750 | |||
| Rule of 115-22 | $14,600 | $17,169 | 14.91% |
| $11,600 | |||
| $35,550 | |||
| $53,375 | |||
| $115,125 | |||
| Rule of 207-24 | $14,600 | $39,111 | 18.94% |
| $11,600 | |||
| $35,550 | |||
| $53,375 | |||
| $91,425 | |||
| $206,550 |
This is a brief explanation of how to use the standard deduction and the various tax brackets (10, 12, 22, 24) to find the money to eliminate taxes on large amounts of taxable money using effective tax rates to inspire our prospects and clients to take action now while these opportunities exist. Please trust me. Your clients will be exceedingly appreciative. This is a skill that would be very valuable to learn.
Idea #1: 2024 Income Taxes
Since I am writing about all these rules, I made up to first of all remember things and second to create questions that would inspire my customer to take action, I thought it would be beneficial to include an article about these new numbers for 2024.
If you do not like this article “Google” 2024 Federal Income Tax Brackets and Standard Deductions. Search until you find an article you like.
Title: 2024 Income Tax Brackets And The New Ideal Income
https://financialsamurai.com/ (Financial Samurai, November 11, 2023)
https://financialsamurai.com/2024-income-tax-brackets-and-the-new-ideal-income/
Idea #6: 401(k) Hardship Withdrawals Surging
Here is another sign that the American people are facing increased financial stress. They are beginning to make more and more hardship withdrawals. Many of these withdrawals never get paid back creating real retirement danger. If you think taxes are high now, you don’t even know how to spell high taxes in the future.
Who do you have these conversations with? That’s correct. Grandma and Grandpa. Show them how to leverage their retirement funds so they can still use them without harming the principal. They can save their children and grandchildren using the strategies we propose.
Title: Americans continue to ransack their retirement savings, survey finds
https://finance.yahoo.com/ (Yahoo Finance, November 11, 2023)
https://finance.yahoo.com/news/americans-continue-to-ransack-their-retirement-savings-survey-finds-123049227.html
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