4 WAYS TO OPEN CLIENTS’ EYES TO THE POWER OF CASH VALUE can be used in many ways, but it’s important to focus on a few key strategies that can address top-of-mind concerns – or secret dreams – of your clients. Here are four distinct opportunities to discuss with them.
OPPORTUNITY NO. 1: Providing Flexibility in Retirement
For many people, a retirement date signifies something that is chosen for them, rather than a flexible decision that they control. The cash value of a life insurance policy can be used for an early retirement to provide a bridge to the point where payouts from qualified plans and Social Security begin. It may also be used to provide a supplement during retirement to boost monthly income. Most importantly, life insurance can provide protection for the family in the event of premature death, with the death benefit proceeds helping to fund a spouse’s retirement. The cash value in a life insurance policy is under the control of the owner. There are no pressures or timelines dictating how long money must be kept in or when it can be taken out. With a substantial amount of cash value built up over decades in a life policy alongside well-funded retirement savings, an owner can have more flexibility in terms of when to retire and ready cash to do it, on a tax-favored basis.
OPPORTUNITY NO. 2: Launching a Business
Many people long to start their own businesses, either because they have a great idea or because they want the excitement of controlling their own destiny. A major roadblock is the capital to get started. Many take out bank loans, only to struggle with the immediate financial strain of meeting their repayment obligations. Others try to “bootstrap” by starting small and re-investing what they earn, only to become frustrated by slow progress. A life insurance policy’s cash value can help with a startup business. The owner has complete control over the money, and can use it to pay for startup expenses and life expenses like medical and other insurance, while the business gains its footing. Visionaries like Walt Disney and Ray Kroc used life insurance policy loans to launch Disneyland and McDonald’s fast food.
LIFE
PEOPLE NEED EDUCATION ON THE POWER OF LIFE INSURANCE The ING U.S. Insurance Revealed study discovered far too few individuals realize that the cash value potential in life insurance can create the financial means to cover a wide range of life’s opportunities and challenges. While many are clear on the traditional role of death benefits, only a tiny fraction understands how built-up cash value can help with retirement security, college education, caring for aging parents, and other goals.
What do you believe is the most important reason to have life insurance?
26%
23% Pay off debt
4%
Replace income
3%
1% Help care for aging parents
Pay for children’s future education costs
OPPORTUNITY NO. 3: Paying College Tuition
Protect retirement savings and other investments
1% Build funds that I can access through insurance products
Life insurance can play two roles in helping pay for a child’s college education. One scenario, which most people would rather avoid discussing, applies when the policy owner dies. In such an unfortunate event, the death benefit – presuming it’s high enough – can be a resource to cover a child’s college
education. A second and less drastic scenario can apply when a policy owner puts enough money in the policy over time to build up cash value to pay for one or more years of a college bills. A little-known fact about the cash value in life policies is that it does not get counted in federal financial aid calculations. This can be a very important advantage that potentially
December 2012 » InsuranceNewsNet Magazine
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