by: Sam Kaufman, Partner
Agent Support Group-May, 2019 ASG Insight
Now that April 15th has past and we have all seen the actual impact of the Tax Reform Act of 2018 we can move forward and implement planning concepts with more peace of mind. Life insurance continues to maintain a leading position as a tax favored vehicle for accumulation. Although many advisors have been prone to favor GUL type products in the death benefit sale, IUL is quickly gaining traction as the vehicle of choice for supplemental retirement planning.
“Bridge Products” provide a guaranteed death benefit to age 85-90 with some having the ability to provide a lifetime guaranteed death benefit. Contrary to GUL which has minimal or no cash value accumulation, IUL provides cash value accumulation that may be used for alternative needs as our life changes. You have the stability of a guaranteed death benefit to life expectancy or beyond while enjoying the benefit of cash value accumulation for supplemental retirement needs.
This takes me back to when I first entered the life insurance business and there was only a choice of two products, whole life and term. Some pundits would exploit the virtues of “Buy Term and Invest the Difference”, which had you done it 40 years ago would have worked out well. However, most never invested the “rest” and have seen their term costs rise as they aged. Whole Life was the original combination of term and investment under one umbrella. Most advisors nor their clients viewed interest rates, mortality or general expenses as having minimal, if any, impact on performance. If you are old enough to remember Flit craft, there was never a projected dividend schedule that was not far surpassed by the actual dividends paid.
Warren Buffet stated that had you invested 10,000 in an Index Fund in 1942 it would be worth 51 million today (CNBC Feb. 25, 2019). If we follow the Oracle of Omaha’s wisdom and the pundits of “Buy Term and Invest the Difference” then IUL becomes the product of choice. Add to that the ability to dial the guaranteed death benefit longevity and you have the perfect product today that can protect you and your family financially.
Life insurance products have become living financial instruments. The modern day advisor needs to think about diversification of products within a client’s portfolio to achieve the best balanced financial results. Think about blending products with GUL as an anchor, IUL as a conservative investments and whole life which tends to be more responsive to interest rate fluctuations. Think out of the box, your client will appreciate the added value.
The sales team at ASG is here to help you implement a customized life insurance program for your client. It’s more than just making the sale.