LIFE INSURANCE
Life insurance is a guarantee that a sum of money is paid either on the death of the insured person
or after a set amount of time. It is an agreement between an insurer and the policy holder that a
designated beneficiary will receive the benefit in exchange for premium.
Mortgage Term
Mortgage protection is the most popular insurance that a new homeowner secures because a lot of times
when a person buys a house, they go into debt. If the breadwinner in the family dies with debt that
is not favorable financially for the rest of the family.
Most new homeowners think about buying mortgage protection because they don't want to leave their
family burdened. They do want to leave their family a financial legacy in form of a life insurance
payment that covers the amount of the mortgage in case of their death or disability. The coverage
amounts involved never go down with mortgage protection and the insurance never goes up. It is a
level premium payment and it's a level face amount.
There are some available riders on a policy. There are some accelerated death benefit riders, so if
something happens to the client, and they have a terminal illness or something unfortunate, they can
accelerate it with a chronic critical or terminal illness. This means they get a percentage of the
face amount.
They can secure a family health benefit rider where something crazy happens to the person’s house.
There is a way they can write a check for common carrier accidental death benefit rider that means
the amount can double in the total amount, and if the insured dies in an accident then the
accidental death actually lets the common carrier pay up to two times the amount and then the
accidental death rider doubles it. There is also a waiver premium disability income rider is
accident only. This is an important thing, so if the proposed insured gets disabled in an accident,
then they the insurance carrier doesn't let them or doesn't make them make premium payments for two
years so the writer provides a monthly benefit for up to two years if the insured becomes totally
disabled with 180 days of accidental bodily injury or sickness.
With mortgage protection, the key thing is it is by far the most popular coverage for new
homeowners. Typically, people go into debt then buy a mortgage protection policy so they don't leave
debt for their family and their house is paid off so that's one less financial worry that the family
has in the event of a death of the proposed insured. Foresters Strong Foundation is the main product
we offer for people seeking this type of coverage.
Final Expense
Whole Life insurance coverage helps a family cover final expenses when a family member dies. The
average funeral in America right now is $12,000. Final Expense coverage eases the financial burden
placed on loved ones after a death of a family member. The coverage is permanent if you qualify and
your rate never increases. Your benefits never decrease. A lot of families use final expense for
Social Security income replacement in a cash accumulating account that can temporarily cover missed
payments as well. A lot of times they can come in the different types like preferred, standard and
basic with adjusted prices for each. There is no medical exam with whole life insurance, but the
healthier you are the better your rate will be.
Typically, face amounts are dictated depending upon
the carrier's terminal illness riders based on accident accelerated death benefit riders. There's no
medical exam, no blood profile, no oral swabs, none of that stuff that isn’t fun for people. It is
just simple basic health questions and, typically, it covers final expense. That’s any costs with
funeral expenses and here's a big misconception with some people: they think that if you buy a
policy for your loved one that the check goes to the funeral home. It doesn’t. It goes to the
beneficiary, so whoever the owner of the policy gets to pick their beneficiary. They get to pick who
gets the money, not the funeral home.
It's not subject to probate fees, other financial obligations
that a family faces when losing a loved one. This is a great plan because it is the kind where
benefits never go down and the premiums never go up. It's just a really standard, easy to explain
plan that can be approved with a couple of health questions. There's cash value and if you miss a
payment the cash can make your premium payments for you, so there's also all kinds of riders that
can be added and if you do surrender at risk cash value. After a certain period of time, some
companies have living benefits that live inside of it. The best final expense product we have is
Foresters Plan Right.
Children's Whole Life
Mutual of Omaha offers a great children’s Whole Life policy for ages 0 years old to 17. It goes from
a very small amount up to $50,000. It is the most standard children's whole life plan you've ever
seen in your life! Premiums never go up, the insurance amount stays the same and every single
children's whole life policy generates cash value. This means you can increase your insurance amount
at 25, 30, 35 and 40 years old; or when you have a life event such as you get married, adopt a kid,
buy a house, etc. A lot of times, a grandparent or parent buys their child a children's whole life
policy they transfer ownership so now the child owns the cash in the policy and it is building up
over time.
The person or the proposed insured, AKA the child, they can use the policy they got from
the grandparents or their parents and add to that. That means they never have to buy permanent life
insurance again, there's very minimum health questions on the application, there's waiver premium
and all kinds of cool riders you can add to the policy. It helps cover costs associated with
unexpected loss. It’s great for parents looking to provide protection for a child's future
insurability, you know a lot of people that run into health challenges down the road. If you have a
children's whole life policy while you're young, you can add to it based on your health when you
were a child and got the policy.
There is very little underwriting and very little cost, because
these are whole life insurance policies for kids. It is very affordable with only two health
questions. It has a guaranteed insurability rider, and it is one of those applications that the
grandparents can get and the proposed insured obviously doesn't have issues because they're going to
be 17 or younger. It is made for grandparents and parents to get their child set up for financial
stability moving forward. It is a great way to start a permanent life insurance policy before the
person really even becomes an adult.
TAX-FREE RETIREMENT
These types of policies involve investing money for growth without owing future taxes on that growth,
even when it is withdrawn.
Annuities
Annuities in the U.S. are primarily purchased for two reasons. First, if someone wants to move a lump
sum and they don't need it until retirement, they move this lump sum into an account that can never
lose money. Over time, they turn 65 or 70. At that point, they can elect to get a monthly check
guaranteed every single month, or until they die. This is called lifetime income. There are all
kinds of lifetime income benefit riders that you can attach to annuities.
The second main way to use an annuity is to keep a bucket of money safe from market risk. Typically,
the way annuities work is you are incentivized with a bonus to move your money. Let's say that your
product does have a bonus, so that is kind of a signing bonus, so whatever the percentage is they'll
give you a signing bonus for you letting them have your money for retirement. Let's say that you're
meeting with a client and they roll $100,000 into an annuity. You know the company might hold onto
their money for 10 years and then they'll give them a 5% signing bonus for trusting them to let them
have their money. The reason they're able to do that is because you are basically getting an annuity
that is not a liquid play, it's a long-term retirement solution. It is just a way to keep your money
safe.
The first way was the lifetime income guaranteed option and the second option is called in college
principal protection or moving a bucket of money they can't lose money. In college, they reach the
law of 100. That is when you take whatever age you are, and believe that number is the amount of
money that you should have into an account that doesn't lose money. For example, if you are 33 years
old you want 33% of your money in a relatively safe investment. 100 minus 33 is 67, so 67% of your
retirement dollars should be in what is called a risky investment annuity. Annuities are not risky
investments.
Typically, people over the age of 50 don't want to lose any money because they don't have the time
to take the risk that a younger person does. If you know you don't want to worry about losing money,
you put money into either a fixed rate of return or an account that gets a percentage of what the
market gets with no downside risk. You are participating in the gains but not in the losses. Zero is
your hero.
The bad thing about annuities that you read on the Internet deals with liquidity, so that ability is
a terrible investment. Let's say you have $100,000 and you want to get a fair rate of return on that
money next month. This is a terrible program because you're signing a long-term commitment that is
designed for people that don’t need the money for five years, 10 years or whatever years you are
talking about. Because of that, you're being able to lock in interest rates, and you're being able
to participate in market gains with no market losses so there's all kinds of annuities. There's
fixed, there's index, and there's variable with variable annuities. You can lose money, but The
Alliance only does fixed and indexed annuities. Basically, an index means you can't lose any money
but you can get a percentage of the gains and fixed, it's just at what the fixed rate is. A lot of
people use annuities as a way to diversify their retirement dollars and put it in an account where
they can't lose money. They don’t have to worry about it, they can rest easy at night knowing that
if the market crashes or another event like 9/11 or the COVID-19 pandemic happens their retirement
dollars are safe inside of an annuity.
Index Universal Life
Index Universal Life deals with regular universal life and indexed universal life policies. They are
both flexible premium cash accumulating permanent life insurance policies if they are funded
correctly.
A lot of times there is a minimum payment that you have that you can pay where there is a maximum
payment you can pay. There's a thing called target premium, so as long as you pay target most
illustrations will last until age 100 or age 120, which would be called permanent cases.
There's also guideline level premium and that means it is the most amount of money that the
government will let you pay above targets if you think about target being the recommended amount
that the insurance company says, “hey if you pay this the policy will be active until you die,” and
there's a maximum amount so if you pay target with any kind of Universal Life, your policy is going
to start generating cash as soon as you make your first payment.
Anything you pay over target generates more cash. For example, let's say that you have a client and
you sell them a $500 a month case. What they can put in is $1,000 a month, so it costs $500, but
they could pay $1000 so that extra $500 helps accelerate the cash accumulation factor inside of the
policy.
It's almost like being a bank with your name on it inside of a policy so if you want to borrow money
from your bank you can pay yourself back the interest if you want to. A lot of times people pay more
than the insurance costs and then they use that bucket of money that's built up over time, and they
use that to supplement their retirements a concept called tax for retirement so that's more pop to
the tax retirement.
A lot of times people use universal life an indexed universal life as a permanent life insurance
play with the flexibility if they want to in the future to use cash to supplement their retirement
to pay bills when they get older. It's flexible, so you can you can pay this amount of premium for a
certain year, and you can pay this amount if you want to later. Or you can make payments for 20 or
30 years, then just let your cash make go to work.
It's called flexible premium for a reason, so you kind of tell the policy how much money you want to
pay. It offers a lot of younger clients the ability to purchase a permanent policy, but it costs
less statistically. The most popular universal life that we sell is a smart UL and any of the F&G
products are great. F&G Elite has the highest cap so they can generate your cash the fastest. It is
built for younger people and older people that want to hide money inside a life insurance policy.
They can use it for death benefit, or use it for a supplemental retirement option moving forward.
OTHER PRODUCTS
Dental
The Alliance can help people who need dental coverage. One carrier, Mutual of Omaha, offers clients
coverage in a simple, easy format. You can even offer quotes using a quoting app on your phone. The
great feature is there are no health questions. You key in the client zip code and there are two
dental plan options. The preferred plan is more expensive and lowers your deductibles while the
protection plan has a higher deductible. They are both good plans and are often cheaper than options
like Blue Cross/Blue Shield.
This is a way to help people with an individual dental plan. It can lower their out of pocket dental
costs, so primarily will sell these to older people in their 60s and 70s that don't have coverage.
This is another insurance option we are able to offer our clients outside of life insurance.
Disablility
There are two ways to get disability insurance as a rider on a Term or Universal Life policy. You can
do this if buy a term policy. You can also use a universal life policy to do this by adding a
disability income rider. The most popular way to do it is through an “accident only” so the client
would have to get disabled in an accident to collect, and most riders on those policies are six
months, meaning you get the benefits for six months after you get hurt in an accident.
A standalone disability means it's a standalone disability policy, which means there's no life
insurance attached to it. You can get a monthly benefit with the lowest amount you get at $300 a
month and the highest one is $4,000. You do have to wait 30 days if it's an accident, where it takes
90 days to get the benefits if it is from a sickness. You can elect to get the benefits for one
year, two years or three years. Then, the benefits stop so obviously the longer the benefit, the
better off you are. The more expensive it is, and there's no gender specifics, it is the same price
for male and female. Most of the time people want disability, they're going to have it to add to a
policy as a form of a rider. If they don't want life insurance, they can get standalone disability.
The more coverage that you want, the more it is going to cost and the longer you want the benefits,
the more it costs.
Accident Only Insurance
Accident Only life insurance is the most inexpensive life insurance on the market. That is the case
because the beneficiaries only get paid in the event that the proposed insured that dies must have
passed specifically from an accident. If you have an accident only policy and die from cancer, it
doesn't pay out because it's accident only life insurance, which makes it the most inexpensive way
possible to get life insurance in the world.
If you're meeting with a client and they want a
specific amount of coverage, but they can't afford it a lot of times people will get this amount of
coverage in one area and they will get this much more in an accident policy, which will be a total
life insurance amount of this. A standalone accident policy is a great way for a younger person that
does not necessarily want a “Big Boy” policy yet, but wants to get started with life insurance
benefits. These types can range from $50,000 to $500,000.
There are also all kinds of useful family
plans that you can add dependents to. For example, if you don't want every child to have their own
policy, you get a family policy. Some states have a return of premium option if you died in an
accident. That means the beneficiary would get a check if you did die in an accident. The most
popular product that's very inexpensive for younger people is accidental death and again it's only
available for people that are in between age 18 and 50.
Medicare
Medicare is a federal health insurance program for:
- People who are age 65 or older
- Certain younger people with disabilities
- People with End-Stage Renal Disease
If you’re eligible for Medicare, you can enroll through the Social Security Administration. There are two parts to Original Medicare, Part A & Part B. Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care & some home health care. Part B covers certain doctors’ services, outpatient care, medical supplies and preventive services. You usually don’t pay a monthly premium for Part A if you or your spouse paid Medicare taxes while working for a certain period of time (10 years). Most people will pay a premium for Part B.
However, Original Medicare doesn’t cover all healthcare expenses. You have options for additional coverage through Medicare Advantage plans (also referred to as Part C), Prescription Drug plans (also referred to as Part D) and/or Medicare Supplement plans. All of these plans supplement the coverage you get through Original Medicare. You have to be enrolled in both Parts A and B of Original Medicare before you can enroll in either a Medicare Advantage or Medicare Supplement plan. You cannot have both a Medicare Advantage and a Medicare Supplement plan.
Medicare Advantage plans may have a zero premium but you may have to use certain doctors & hospitals. Many Medicare Advantage plans include extra benefits such as dental, vision, hearing, gym memberships & much more. Medicare Supplement plans will have a premium but can be used with any doctor or hospital in the U.S. that accepts Medicare. There are lots of options & it’s important for you to work with a licensed insurance agent who can help you understand the different options & which may be best for you.
