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 January 2019 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.
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January, 2019 – 7 Ideas and Views Newsletter by Van Mueller
Welcome to what will be, easily the best year of your career. You are more needed than you have ever been. The American people will be begging for your guidance in the years ahead with all the challenges and uncertainty they will be facing. There are so many issues that our prospects and clients will be confronted with. The list will be overwhelming if they don't have you to develop strategies that will keep them in control rather than being controlled by all the challenges they will face.
The simple list is led by higher taxes in the future. Then, how will our prospects and clients replace lower benefits? Will inflation harm our customers or benefit them? Will the ever-increasing volatility in all our investments be the downfall or the opportunity for our clients' financial and retirement futures? Finally, will living too long increase the risk or increase the opportunity of the aforementioned challenges?
The answer is actually very simple. If you plan and prepare for the events of the future these challenges will provide the greatest opportunities of our lives. If you do not prepare, your financial and retirement dreams will be demolished. It is actually an easy choice; however, it is not a choice that our prospects and clients can make unless YOU ASK THEM! Please stop assuming that they understand their choices. They do not. They are busy dealing with their vicissitudes of living.
Please stop assuming that our prospect and clients understand their choices. They do not. They are busy dealing with their vicissitudes of living.
That is the spectacular value we bring. We forget about this value over and over again. It is our competitive advantage that we have over everyone. We can ask questions about everything. We can ask about taxes. We can ask about lost benefits. We can ask about inflation. We can ask about volatility of all investments. And, we can ask what will happen if our prospects and clients outlive their money. EVERYONE wants answers to those questions. Young and old, rich and poor, they all need answers to those questions.
We change our careers immediately when we realize that we do not sell life insurance or annuities or mutual funds or long-term care insurance or homeowners insurance. When we discover that we help people build strategies that allow them to not be hurt by all the challenges that our prospects and customers will face and better yet, create strategies that allow those challenges to be turned into opportunities, that is when we arrive at the true purpose of our careers.
When the institutions that we feel we must depend fail, isn't it reassuring that this country still allows the people who do the preparation to succeed financially even if the institutions they depend on fail them.
That is why this is the greatest time ever to be an insurance and financial professional. That is why this is the greatest time ever to be a life insurance agent. For the first time ever, you are the competition. You must understand the opportunity to take advantage of it.
That is why this is the greatest time ever to be a life insurance agent. For the first time ever, you are the competition. You must understand the opportunity to take advantage of it.
Let's start with December's newsletter. I shared ideas that will allow you to use the current tax laws to reallocate enormous amounts of “forever taxable” money to “never taxable” money that is more effective and efficient.
Since that newsletter there have been some wonderful and remarkable new developments that will actually enhance and help you to understand the information provided in the December newsletter. This additional information will take this already powerful and amazing information and make it almost irresistible to our prospects and clients. The December newsletter and this January 2019 newsletter are career changers if you just take a little time to build a small amount of knowledge about income tax law. Please carefully understand my next statement.
IT IS ALMOST IMPOSSIBLE TO BE A SUCCESSFUL LIFE INSURANCE AGENT WITHOUT A BASIC UNDERSTANDING OF TAX LAW!
You must understand “Marginal” and “Effective” tax rates. You must know what the standard deduction is. You must understand the "progressive" nature of the tax brackets. You must understand how to calculate how much of a person's Social Security could become taxable. You must understand the “exclusion ratio” on an annuitized non-qualified annuity. These are basic, not comprehensive pieces of information about tax law that you must know. I have tried to keep the information basic. Here's an example. Last month I tried to explain the difference between a marginal and an effective tax rate. I explained marginal tax rates in a basic way saying that the tax rate was the rate you paid on the last dollar of your income. That is basically correct. It is not comprehensively correct. Why? Because, at certain income levels our prospects and clients could be subject to the Medicare surtax. That would make their marginal tax rate higher. They might not be eligible to take their full itemizations if they itemize deductions. That would also increase their marginal tax rate. I was trying to keep things simple. One out of 100 clients might be subject to the surtax. For most of us this will never be a consideration. So, I am using simple examples rather than comprehensive or complex examples. We must keep things simple for ourselves and our clients.
One out of 100 clients might be subject to the surtax. For most of us this will never be a consideration. So, I am using simple examples rather than comprehensive or complex examples. We must keep things simple for ourselves and our clients.
So, here is your first piece of spectacularly good news. The 2018 1040 instructions have just been released. This information will help you to develop more life insurance solutions than you could ever imagine. Here is how you can get this information.
- Go to IRS.gov.
- Click on forms and publications.
- Click on 1040 instructions.
- Print out all 117 pages.
- Please read all 117 pages as many times as possible until you become comfortable with the information.
- Make a copy of and especially read all four of the following recommended pages.
- Page 33, The Social Security Benefits Worksheet. This form shows whether your Social Security is taxable and how much is taxable. I have 20 blank forms with me at all times, so I am able to calculate taxable Social Security.
- Page 35, The Standard Deduction Worksheet. This page shows you what the standard deduction is for everyone. Remember this is for 2018 tax returns. The standard deduction in 2018 for a married couple over age 65 was $26,600. In 2019 it will increase to $27,000. The December 2018 newsletter discloses all the numbers for 2019.
- Page 112. This shows all the income and outlays of income. 40 percent of the government income comes from personal income tax, 29 percent from Social Security, Medicare, unemployment and other retirement taxes, 17 percent from borrowing. One sixth of our government's budget comes from borrowing money. Remember these are at record low interest rates. Finally, 7 percent of revenue comes from corporate income taxes and 7 percent comes from excise, customs, estate, gift and miscellaneous taxes. Right next to the chart that shows the income is a chart showing how the government spends the money. Almost half goes to Social Security, Medicare and other retirement programs. Remember, the bulk of the Baby Boomers and Generation Xers retire over the next 25 years. What will happen to these outlays?
- Page 113, 2018 Tax Rate Schedule. This page shows the tax brackets for married filing jointly, single, married filing separately, and head of household. The tax brackets are 10, 12, 22, 24, 32, 35 and 37 percent. These are why our tax code is called a progressive tax code. The higher your income, the higher the percentage of tax must be paid. You will also note that single people pay higher taxes than married people. You must understand this because when a married couple has a death or divorce the people that are now single pay higher taxes. Wouldn't that be important to a widow or widower to know?
Understanding this information is vital for you and your prospects and clients. What if you could pay your taxes now when they are historically low on fully taxable income and transfer that money and its growth to the future without ever any concern for income tax liability again, forever? Would that be a strategy you would want to examine?
What if you could pay your taxes now when they are historically low on fully taxable income and transfer that money and its growth to the future without ever any concern for income tax liability again, forever? Would that be a strategy you would want to examine?
Here is an additional piece of information you would want to have to share with prospects and clients. These four pages have made me so many sales over the years it is almost astonishing. The information is simple yet magnificently powerful. This information can be obtained from 1990 to the present. It is provided annually by the Social Security Administration and compiled by the Office of the Chief Actuary. It is free. Here's how you get this information and a very simple way to use it.
Google this exact sentence: Wage Statistics For 2016 – Social Security. Print yourself several copies of these four pages. Examine this information. First, out of 340 million Americans 163,520,606 paid Social Security taxes or a better way to say it, are workers. Of these workers, 67.3 percent had net compensation less than or equal to $46,640.94. 50 percent of wage earners had compensation less than $30,533.31.
If you examine the chart labeled “Distribution of wage earners by level of net compensation” you will find that 42.85 percent of wage earners receive compensation of $25,000 or less. 70.06 percent of wage earners receive compensation of $50,000 or less. 84.12 percent of wage earners receive compensation of $75,000 or less. Finally, 90.91 percent of Americans receive compensation of $100,000 or less. Ask prospects and clients this question; If you are married with two children and you make $100,000 per year or less, are you rich? Ninety percent of the time they will say no they are not. Then ask this very important question of the 9 percent who do make more than $100,000. When the government needs more revenue in the future, will they generate that revenue from the 91 percent who really don't have enough, or will they generate that revenue from the 9 percent who do? Isn't that you Mr. & Mrs. Prospect and client? Won't they be coming after you? Aren't you in the 9 percent? Don't the 91 percent have the votes to change tax laws to their favor? Finally, ask them if they think it's fair that because they did what they were supposed to do, and the 90 percent didn't, that the government and the Internal Revenue Service should be allowed to come and take their money to take care of the 90 percent who were unwilling to do all the things they did to build those savings? Should they build a tremendous pile of taxable money for the government to access in the future or should they build a tremendous amount of money for themselves, their family and their business that the government and Internal Revenue Service will never have access to again?
Finally, ask them if they think it's fair that because they did what they were supposed to do, and the 90 percent didn't, that the government and the Internal Revenue Service should be allowed to come and take their money to take care of the 90 percent who were unwilling to do all the things they did to build those savings?
Don't assume people know any of this. Please ask them. Use Social Security's own information to share why some planning must take place now while it is still possible. I can't explain well enough how easy of a sale this is once people understand conceptually that first, there are not enough people to collect all the revenue the government will need in the future and two, that it is a fool's journey to defer taxes to the future when our government will need more and more revenue. Ask prospects and clients again and again; do you want to be in control or do you want the government to be in control? Ask them if they understand that control only requires a little planning? Wouldn't that be worth their time and effort?
What makes this such an important time for life insurance understanding is this: Will additional tax revenue alone be enough to fund all the outlays that government has promised in the future? Of course not. It will not even be close. Will we be able to borrow the additional money that will be required? The answer to that is yes, and no. It will be no from other countries around the world. Why? Because they are already in debt more than we are. So, borrowing from other countries will reduce dramatically. So, who will we borrow from? Ourselves. Where will we get the money to do that? We will PRINT THE MONEY. Won't that reduce the purchasing power of the money? Yes. It will reduce purchasing power dramatically in the future. Why does that make life insurance so valuable? There are several reasons. You can purchase future dollars for pennies a year. That alone can offset inflation and deflation and investment losses. The cash value can be used to take advantage of investment opportunities. The cash value doesn't lose money during downturns and can be used to take advantage of investment opportunities because the cash value is always available. Finally, life insurance can be used for multiple purposes using the same dollar. That makes life insurance dollars more effective and efficient. Life insurance takes care of your family and your business if you die too early. It can be converted into an income that you cannot outlive if you live too long. Waiver of premium provides a selfcompleting benefit if you become disabled. Many policies have a catastrophic illness benefit. If you have a heart attack, stroke or cancer, you can access benefits from the policy. If you have been diagnosed with a terminal illness you can access most of the death benefit before you die. This allows you to arrange things in a beneficial way for your family or business before you die. You have no idea how reassuring that benefit can be. Finally, the major benefit of cash value life insurance for many decades will be paying for long term care. You will use either a rider benefit or the cash value to provide living benefits with the face amount, (notice I didn't call it the death benefit) reimbursing the money used during life. This is a big deal. With 140 million Baby Boomers and Generation Xers retiring in the next 25 years, finding the money for long term care costs will be the imperative of almost every family in America. Only you can do that. ONLY YOU!!!
With 140 million Baby Boomers and Generation Xers retiring in the next 25 years, finding the money for long term care costs will be the imperative of almost every family in America. Only you can do that. ONLY YOU!!!
Two more things I would like to touch on before we start the sales ideas. First, this has been a very interesting December for all the markets. Stocks, bonds, real estate, commodities, etc. have all seen serious volatility. I am writing this part of the newsletter the day after Christmas. In December the Dow Jones average fell from almost 27,000 to around 21,700. This was very close, but not quite a bear market. In order to become a bear market, the market must lose 20 percent which would have been 21,600. The market rallied almost 1,100 points on December 26th to 22,800. It looks like the markets will be down on the 27th. Does any of this sound right to you? Ask your prospects and clients if they shouldn't begin to be more cautious. Don't assume they know; please ask everyone.
This final few paragraphs will, I hope, sound a cautionary note for all agents who sell auto insurance and depend on its revenue as the foundation of their agency. I am hoping the information I am about to share will not be viewed negatively but as a decade advance notice that you will have to replace some revenue in your agency in order to maintain the success you have achieved. What better way to do that than by learning to sell life insurance at a time when its benefits are vitally required. By learning a few questions you will easily be able to transition prospects and clients into its important usefulness in their journey to successful financial and retirement goals.
By learning a few questions you will easily be able to transition prospects and clients into its important usefulness in their journey to successful financial and retirement goals.
Here is the information. Do not kill the messenger. I am only providing a heads up that is probably a decade from now.
I am sharing information that I read in the newsletter The Daily Cut from the Legacy Research Group. I have been reading the information provided by Chris Lowe and Doug Casey for years and years. They have been amazingly accurate in their sharing of information over the years and I thought this was too important not to share.
The electric vehicle and eventually the autonomous electric vehicle will create an “economic earthquake” that cannot be described. There are currently around 1.9 million electric vehicles on the roads. In only two years that number will increase to 13 million. By 2030, if you can believe it, that number will increase to 125 million. Autonomous electric vehicles will become a majority of that 125 million. We will use less cars. Fewer people will own cars. They won't need to. The article actually claimed that because there will be fewer cars with less humans driving them to have accidents, these self-driving electric vehicles will end the need for the auto insurance industry and ambulance chasing lawyers. High end cars will not be necessary in the future either.
The only thing delaying this is the artificial intelligence to run it. That is being put into place by the 5G networks that are being built which supply the loads of information required to run an autonomous electric vehicle society.
This is just a heads up. This is not happening for around a decade. I am only using this information to provide inspiration to look at ways to replace lost revenue streams. I hope you will take note.
Let's get started with seven quick sales articles or ideas for our new year.
We're passing on two of the newsletter's monthly sales ideas - every issue of the newsletter contains 7 ideas, plus one idea for the Canadian market. Subscribe to get them all.
Idea #1: Is an Annuity a Good Idea or a Bad Idea Tax Wise?
This article is trying to determine if buying an annuity is creating a tax bomb for the future. Here is my take on this article. If an annuity's tax deferred interest is a tax bomb, doesn't that make IRA's, 401(k)'s, 403(b)'s and 457 plans a tax nuclear bomb? Isn't all this tax deferral making huge revenue piles that the government can tax at any rate?
An annuity can, at the very least, be annuitized. It's tax treatment is taxed as return of principle and interest. All the other plans are fully taxable.
Don't you see? That is why the December 2018 and January 2019 newsletter are so valuable. Using the strategy of paying now and reallocating to Roth IRAs, Roth 401(k)s and cash value life insurance we can over time eliminate income taxes on IRA's, 401(k)s, 403(b)s, 457 plans, gains on annuities, gains on investments, etc. This information, which in a short amount of time, is easy to learn will change your career and your life forever. Use this article to show how investment people talk out of both sides of their mouths. Tax deferral is not okay on annuities; it is only okay on IRA's, 401(k)'s, 403(b)'s, and 457 plans. Really?
Title: Is an annuity a great idea? Or a tax "time bomb"?
www.marketwatch.com (Market Watch, December 21, 2018)
https://www.marketwatch.com/story/is-an-annuity-a-great-idea-or-a-tax-time-bomb-2018-12-21
Idea #6: More Caregiver Information
There are now more than 43 million worker age Americans who are working as unpaid caregivers. According to an AARP Public Policy Institute report family and friends provide caregiving equal to about $470 billion per year. With more and more Americans turning 65 over the next 25 years, we must begin planning for this caregiving tsunami we are about to face as a country. The article from U.S. News and World Report dispels 7 myths people have about caregiving and its associated costs. It is becoming more and more apparent that not only the people receiving the care need financial advice, but the people giving the care probably require just as much financial information.
Here is a simple example. Many family caregivers do not realize that they can pay themselves for giving this care. The median cost for home health care is $22 per hour. That would be a way for the family to save some money from their parents' estate without it being subject to the Medicaid/Title 19 lookback rules. Just knowing information like this makes you very valuable to families. They are not aware of any of the rules and your knowledge is vitally important to them.
With 140 million people turning age 65 in the next 25 years, this knowledge becomes increasingly important in the future. Remember, Americans do not buy our products for what they are, they buy our products for what they do. If you don't forget that you will become a valuable insurance and financial advisor in your area. These two articles will help you to build a foundation with which to have an intelligent discussion with prospects and clients.
Title: 7 Myths About Caregiving Costs
www.usnews.com (U.S. News and World Report, December 12, 2018)
https://health.usnews.com/health-news/medicare/articles/2018-12-12/7-myths-about-caregiving-costs
Title: Family Caregivers Need Financial Care, too
www.insurancenewsnet.com (Insurance News Net, December 26, 2018)
https://insurancenewsnet.com/innarticle/family-caregivers-need-financial-care-too#.XDTgyVVKiCg
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