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 September 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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September 2019 – 7 Ideas and Views Newsletter by Van Mueller
The August newsletter had a mistake in the Canadian idea that I MUST correct, because the information is so important. The mistake was a typo. I know the correct number, we just missed it when we edited the newsletter. A Canadian agent caught the error right away. I first want to thank that agent and then I would like to apologize for the error. Please make the correction to your understanding of what I am about to share because the information is so vital to inspiring Canadians of the necessity to do important planning.
Canada has 37 million people and by 2030 they will have 10 million, not the 30 million people I wrote in the newsletter turning age 65 by 2030. To be completely accurate the number is 9.5 million. I round up to make it easy to divide 37 million into 10 million so I can produce a percentage. That means 27 percent of Canada's population will be over age 65 by 2030. If there are approximately the same number of people under age 18 at that time the math becomes very devastating. By 2030, in Canada, there will be two taxpayers for every recipient of benefits. Taxes will have to increase dramatically to provide the promised retirement and healthcare benefits.
By 2030, in Canada, there will be two taxpayers for every recipient of benefits. Taxes will have to increase dramatically to provide the promised retirement and healthcare benefits.
Here is the CORRECT math again. There are 37 million residents in Canada. By 2030, 10 million of those residents will be over age 65.
Why did I put this at the very beginning of the newsletter? Because circumstances are NOT that much different in the United States: They are just bigger. We have 140 million people turning 65 over the next 25 years. At any one time there could be approximately 80 to 85 million people that are over age 65. Again, that is approximately 25 percent of the population of our country. We are also rapidly approaching a time when we will have only two taxpayers for every recipient of benefits in our country. Can You Say Higher Taxes?
I want to thank you all for reading this information so carefully. Your input is greatly appreciated and respected. It helps me to keep this newsletter as accurate as possible.
Next, I would like to review all of the amazing benefits of cash value life insurance. I believe our industry has lost sight of what an amazing invention cash value life insurance is. We would assuredly sell more cash value life insurance if we better understood and communicated its magnificent characteristics. Wouldn't it be fair to say that cash value life insurance is one of the greatest inventions humans have ever created? Here are some important reasons why:
Wouldn't it be fair to say that cash value life insurance is one of the greatest inventions humans have ever created?
1. Cash Value Life Insurance Replaces Economic Value
Employed people are kind of like earning machines. If they work to their retirement age, these people will collect all or most of their economic value. They will be able to share this value with the people they love and the people who depend on them. If, due to premature death, some portion of this value is lost, the economic damage is as real and as tangible as if a building had burned to the ground. We would have insurance on the building to replace the loss. Do your prospects and clients have insurance on themselves to replace their significant value as an earning machine? You won't know unless you ask.
2. Cash Value Life Insurance Is Collateral
For many reasons cash value life insurance is the finest collateral that is available. It offers fixed dollar guarantees that permit the lender to safely loan up to 100 percent. The value can NEVER decrease; it will always stay the same or increase. Finally, and many people have forgotten what a powerful benefit this is: Cash value life insurance provides GUARANTEED BORROWING POWER! Even if a bank rejects your prospect or client for a loan, they could still borrow money from their cash value life insurance. In my experience that has proven to be one of the most valuable benefits of cash value life insurance.
3. Cash Value Life Insurance Is A Magnificent Gift
When a parent or grandparent buys and pays for a substantial cash value life insurance policy, they are giving a gift that can grow into a veritable fortune. The policy can provide a protective safety net as well as establish an amazing foundation of savings that will benefit the child or grandchild throughout their entire life. If we really love these people, we must help them to establish firm financial footings. My assistant Laurie says all the time: “Love is not just a feeling; it is an action.” We must inspire our prospects and clients to take action.
Love is not just a feeling; it is an action. We must inspire our prospects and clients to take action.
4. Cash Value Life Insurance Is Property
There are only two sources of income. Aren't they people at work or money at work? The people we love, the people who depend on us for food, clothing and shelter are also dependent on people at work. If for some reason, the people at work are interrupted or terminated, it becomes crucial to have money at work. Cash value life insurance is vital property because it reaches full value at the exact moment we need it to. It provides full value at death or full accumulated value at retirement. Cash value life insurance is the finest property our prospects and clients can own.
5. Cash Value Life Insurance Is Discounted Estate Tax
The Federal Estate Tax Exclusion that became effective 1-1-2018 is currently $11.18 million per person. That means a married couple can exclude up to $22.36 million before they would be required to pay estate or gift tax. On January 1, 2026 the estate tax exclusion is sunsetted to return to the previous $5 million per person with annual inflation increases. If the government needs more revenue in the future and the political direction of this country continues to move towards transfer of wealth from the rich to the middle class and poor would it be better to pay these taxes with whole dollars, or would discounted dollars be more advisable? Wouldn't cash value life insurance provide that amazing discount?
If the government needs more revenue in the future and the political direction of this country continues to move towards transfer of wealth from the rich to the middle class and poor would it be better to pay these taxes with whole dollars, or would discounted dollars be more advisable?
6. Cash Value Life Insurance Is A Fully Funded Contractual Will
Regular wills have many inadequacies. Even when they work, the will proceeds through probate, incurring costs and opening up your affairs to the scrutiny of the public. When wills don't work, your desires can even be contested, at great cost with the possibility that the will can even be declared invalid. Cash value life insurance “wills” have none of these problems and even fully fund your estate for the determined value at the precise time the money is needed.
Think about this! Isn't it true that people surrender other assets and put those proceeds into cash value life insurance, which is a fully funded contractual will? Few, if any, surrender cash value life insurance to invest in stocks, bonds or real estate.
7. Cash Value Life Insurance Pays What Someone Else Would Have To Pay
Someone always pays for cash value life insurance. The head of the family, if insurable, pays for their cash value life insurance with a few dollars from their income. If they do not and they die too soon, then someone else, a widow, an orphan or a business inevitably ends up paying costs that would have been covered by cash value life insurance.
The cost of cash value life insurance isn't the problem. It is inexpensive and eventually profitable for our clients. Real costs are food, clothing and shelter, not to mention the loss of a parent's time with the family. The real cost is not knowing how to make ends meet and need to continue to work instead or retirement. All of these issues exact a heavy cost. Cash value life insurance policies are inexpensive in comparison.
Please ask all of your clients these questions: “Do you want to make a big mistake or a little mistake? Isn't the premium the little mistake? Wouldn't putting your family or business in jeopardy by doing without cash value life insurance be the big mistake?”
Please ask all of your clients these questions: “Do you want to make a big mistake or a little mistake? Isn't the premium the little mistake? Wouldn't putting your family or business in jeopardy by doing without cash value life insurance be the big mistake?”
8. Cash Value Life Insurance Is Transferred Risk
Many fathers have daughters who are married to inadequately insured husbands. Who does the risk transfer to if the husband dies prematurely? Isn't the answer the father and maybe even the loving grandfather? Wouldn't a great solution be to insure the son-in-law? You could have the cash value belong to the grandfather and the death benefit belong to the daughter. There is no more risk for the grandfather. The risk has been transferred!
I am not being a chauvinist. This applies equally to families where the woman is the primary earner. This applies to same sex families as well. Who will be responsible if something happens? Can that risk be transferred for pennies on the dollar instead of full dollars? Ask them if that would be a more sound strategy.
9. Cash Value Life Insurance Is One Dollar Doing The Work Of Many Dollars - Fantastic Flexibility
What if there was a vehicle you could put your money into that guaranteed you would never lose any money? What if the money that accumulated in the vehicle was always available to take advantage of investment opportunities at their most beneficial time, wouldn't that be wonderful?
What if you could do all of that with reduced or completely eliminated income tax liability? Wouldn't that be wonderful? That's not all: What if you could use this vehicle to offset financial considerations caused by a critical illness such as heart attacks, strokes or cancer? What if you could use the value created in this vehicle to pay for long term care or assisted living and when you died the leveraged death benefit would replenish the money you used for those purposes. Wouldn't that be amazing? What if we had another surprise for you? What if you never needed the benefits for any of these purposes? Wouldn't it be wonderful to know that you had not wasted one penny on a benefit you didn't use? Wouldn't it be amazing to find out that when you got to retirement age that you could use the accumulated benefits to provide an income tax free income supplement to your retirement? And finally, would it be amazing to find out that whatever you didn't use would be paid to your family, business or a charity you had interest in, free of income tax responsibility?
What did I just describe? That was a wonderful description of a cash value life insurance policy. Please think about this. You can turn data and information into knowledge and wisdom. Your creativity and knowledge can unlock the magnificent benefits of cash value life insurance for all of your prospects and clients. Please don't assume your prospects and clients know any of this about cash value life insurance. Ask them about all these wonderful benefits. You will be astonished with your results.
You can turn data and information into knowledge and wisdom. Your creativity and knowledge can unlock the magnificent benefits of cash value life insurance for all of your prospects and clients.
Now, I would like to talk with you about what is going on in our country and our world and why now is the time for you to be at your best.
I am sounding an alarm. Please consider this to be a call to action for our industry. We have gridlock in government. Government can no longer be depended upon to keep even the smallest of promises. We have magnificent turmoil in the markets currently. There are dire predictions everywhere. It is entirely possible for people to lose everything they have gained in the last 10 or 12 years in as little as 90 days. There is uncertainty everywhere. The uncertainty is global. We have a world population that is aging with no plan to provide income for longer and longer life expectancies. This is a time when our prospects and clients need us to be at our very best.
We have to stop making excuses. We can't keep saying, “we'll try.” We can't keep telling ourselves that “someday” we will be as good as we need to be. The American people need all of us and our industry to step up and they need us to do it right now! The next five years need to be the best five years of your career.
I have good news! Small changes can have an enormous impact on your practice. I talk with so many agents who think they are miles away from the success they desire, when in reality they are only inches away from that success. The difference between greatness and mediocrity is very small indeed. Please make a decision to choose to be great.
The difference between greatness and mediocrity is very small indeed. Please make a decision to choose to be great.
Below you will find several suggestions of small things you can start doing immediately that will help you achieve your desired success. If you apply these ideas, I believe you will begin to realize dramatic improvement in days or weeks rather than months or years.
1. Stay Positive
We are problem solvers, not fear mongers. Messages of “Doom and Gloom” will help to get your prospects' and clients' attention, however it will not inspire them to take action. Most times, they will shut down, deny or even give up. Instead, we must focus on the opportunity that these financial challenges create. Isn't it true that not only do we have the tools to keep people safe, during the coming financial catastrophe, we even have strategies that will allow us to take advantage of financial catastrophes? Wouldn't our prospects and clients be inspired to take action if they had information like that?
2. Get Passionate
Anyone who has seen me speak knows that I am always excited about all we can do for people. I like our products, but I love how we can use those products to help our prospects and clients accomplish their financial and retirement goals. You can take care of loved ones, and you can protect clients from all the financial things they are fearful of. Most importantly, you can help our customers regain and maintain control of their financial futures. Isn't that amazing? Here's something else. You do not have to be bombastic to express enthusiasm. When you are able to ask questions in a conversational manner you sound like you know what you are talking about. That inspires trust and confidence. When you stutter and stammer and stumble over your presentation you destroy confidence in your ability to serve the customer.
When you are able to ask questions in a conversational manner you sound like you know what you are talking about. That inspires trust and confidence.
3. Practice, Practice, Practice
I am not naturally a good sales person. I learned the skills that helped me to Top of the Table production and I practice those skills a lot. You become very valuable to prospects and clients when you are so well practiced that you can actually listen to what they are telling you rather than thinking about what you are going to say next. Practice will change your appointments from canned presentations to instinctive, intuitive, wonderful conversations. Conversations build relationships and people give money to insurance and financial professionals they have relationships with. Isn't that the ultimate goal?
4. Remember, This Isn't About You
You don't need to tell your prospects how smart you are. They won't believe you anyway. You don't need to have all the answers. You only need to ask all the questions. The prospects and clients will provide all the answers. If you focus on the customers' needs, desires and wants, and are determined to make a difference on their behalf, not only will you make the sale, you will be rewarded with more referrals than you would ever know what to do with.
I know I say this a lot, but you must come to your own understanding that this is truly the greatest time ever to be an insurance and financial professional. We have the greatest products we've ever had. We need these products more than ever. And, all we have to do is ask the American people if they want to be in control of their financial futures or do they want to relinquish that control?
Get out there and show America what you can do.
Let's start with the rest of the newsletter.
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: Some Taxable Income in Retirement Is Beneficial
Ed Slott has written a wonderful article to remind us that in tax planning nothing is black and white. In many cases it might be beneficial to leave some fully taxable income for retirement. In his article he provides 5 reasons some funds should be kept in traditional IRA's or 401(k)'s.
I would like to add a couple of ideas from a sales person's view. Ed Slott makes you think creatively. He is very analytical, and he is THE IRA EXPERT! Yet, he thinks with a salesperson's vision. That is why you must read what he writes. Let me give you a couple of examples.
Let's say you meet a 50-year-old prospect who already has $300,000 or $400,000 in a 401(k) or IRA. Many agents ask me if they should do a 72T and roll that money over to a Roth IRA or a cash value life insurance policy. If we are creative and more concerned with the client than ourselves that probably WOULD NOT be a quality recommendation. We would cause them to pay a lot of income tax during a high earning period in their life which would not be beneficial. Before I share what I would recommend let's see what would happen to the $300,000 or $400,000 already in in their 401(k).
Let's have these accounts not have any more contributions and have them grow to $400,000 or $500,000. Let's also assume that safe return interest rates increase back to their historic 5 percent. My famous transition sentence is let's do the math together. Five percent of $400,000 is $20,000 of annual interest. Five percent of $500,000 is $25,000. If you add $30,000 of Social Security for this couple, which by the way is the average current Social Security benefit, you would have $50,000 of income on the smaller account and $55,000 on the bigger account. Only taking federal income taxes into account, how much is taxable? On the first number of $20,000 from the IRA and $30,000 of Social Security there would only be $150.00 of federal income tax. On the $25,000 and $30,000 of Social Security the federal income tax would be $400.00. If you understand you are able to utilize the lower tax brackets in retirement and at that time you could convert let's say an extra $20,000 of fully taxable money into non-taxable money. On the larger example adding $20,000 to $25,000 already being withdrawn would cause a federal income tax liability of $1,964.00 on the total $75,000 of income the effective tax rate would be 2.6 percent.
Because tax rates continue to be progressive, even if the sunset provision takes effect on January 1, 2026 the effective tax rate would not increase dramatically in this example. So, you could help these people dramatically control their tax liability in the future. What is the current sale, however?
Ask them if it makes sense to build up too much fully taxable income in retirement? If you build the account to one million or more now you have much less flexibility to manage your future tax liability. Ask the 50-year-olds if instead of contributing to a fully tax-deductible account shouldn't they stop contributing and start contributing the same amount from age 50 to age 65 in a Roth 401(k), a Roth IRA or a cash value life insurance policy that they could use to supplement tax free the fully taxable income provided by the taxable accounts? You could also show them how to kill two birds with one stone. Those after-tax contributions could also fund hybrid life and annuity products that would cover long term care if needed but would not be wasted on premiums if long term care was not needed.
That's what my relationship with Ed Slott does for me. He gets me to think about how to use even paying taxes effectively for the benefit of my clients. A great article. Read everything you can written by Ed Slott.
Title: 5 reasons to keep some funds in traditional IRAs, even for Roth IRA lovers
https://www.investmentnews.com/ (Investment News, August 19, 2019)
https://www.investmentnews.com/article/20190819/BLOG09/190819930/5-reasons-to-keep-some-funds-in-traditional-iras-even-for-roth-ira
Idea #6: Return to Sequence of Returns
What does Tom Hegna say are the most dangerous years in retirement? The 5 years before you retire and the 5 years after you retire. Why? If the returns are negative during the first part of your retirement, the stress to have them last your entire retirement increases dramatically. It is much better to experience losses, if you ever have to, at the end of your retirement. That is why so much attention is given to “sequence of risk.” This risk is even more enhanced if you take withdrawals while the losses are happening. That is why so much planning is required. If you can establish options that allow you to not take withdrawals during downturns and have the income provided that you need that is not affected by losses, that is good planning.
In the coming decade with all the volatility we will experience, sequence of returns planning will become vital. Become an expert in this endeavor and you will help a lot of people and you will achieve the success you desire.
Title: Tell Clients About Sequence of Return Risk
https://www.thinkadvisor.com/ (Think Advisor, August 1, 2019)
https://www.thinkadvisor.com/2019/08/01/tell-clients-about-sequence-of-returns-risk/?slreturn=20190730171822
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