by: Mark D. Milbrod, CLU
Partner, Agent Support Group
Here we go…It’s 2017 and I am sure it is going to keep us all on our toes. The Insurance Industry is going to have a lot of changes ahead. Among these changes, and with Donald Trump as our new president, there is talk of eliminating the federal estate tax. This has caused a great deal of chatter among insurance professionals who are seeing this as the end of “Estate Planning” types of sales.
Although it is true that this market will likely contract, a need still exists for planning in the wealthy, affluent communities, but the middle market we serve is still full of opportunities.
For our wealthy clients, life insurance still provides unique features that open the door for a number of sales opportunities that cannot be rivaled by any other financial instruments. Our wealthy clients have very specific problems that can be solved with the products that we provide. Let’s take a look at a few…
Estate Equalization : For clients that have family businesses with only certain family members working in that business, there is a need for life insurance to provide equal distributions for the “non- involved” family members/heirs.
Business Planning: Life insurance still provides the ideal vehicles for a number of business planning solutions such as Key-Person Indemnification, Buy-Sell Planning, Securing Loans, Deferred Compensation for key personnel and golden handcuffs to retain that same personnel.
Asset Class Inclusion: Life insurance can be used as a diversification tool that leverages dollars into large guaranteed tax-free sums of money for generational planning, regardless of market volatility. Even if there is no estate tax, these windfalls will be a welcomed addition to any estate plan involving wealth transfer.
Charitable Planning: Most affluent clients are philanthropic. Assets can be given to charities during their lifetimes and be replaced to their heirs via life insurance proceeds on a tax free basis. By structuring a charitable gift program while simultaneously purchasing life insurance, they can accomplish the best of both worlds.
Asset Protection: Life insurance that is put into trusts provides asset protection via privacy statutes. These privacy statutes vary from state to state and are very popular amongst affluent clients as a means of shielding assets from outside threats and/or frivolous lawsuits.
The wealthy/affluent community has and will continue to use life insurance for the many benefits outlined above. For the middle markets, let’s not forget the role that life insurance plays. Simple things like income replacement, mortgage protection and supplemental retirement planning will always serve this marketplace very well. Also, with the additional of Long Term Care Riders on Life Insurnace contracts, we can offer protection against health threats that can be financially catastrophic to most families.
Contrasting the needs of the middle market segment to the affluent, it is apparent that regardless of estate tax laws, there will always be needs to fill within this group. In the wake of tragedies, the middle market clients are more concerned with Wealth Creation techniques that will assure their families secure financial futures.
So, with 2017 upon us, it is clear that we are still vital to the markets we serve. Whether it’s the affluent or the huge middle market segment, we are positioned well to provide products and services that are needed by both.
All the best for a Happy, Healthy and Prosperous 2017!
Find more of Mark’s Bark’s Blogs on our website: http://www.asglife.com/insurance-view/marks-barks-blog/