“If you can’t sell permanent insurance in this low interest environment then you should seriously consider changing your profession!”
Ok – that may be too strong a statement and no one really wants you to resign from your practice, but we often forget how lucky we are to be in an industry with products that are so compelling – offering solid cash values – plus tax-favored accumulation and income-tax-free death benefits!
As just one example, I have attached an illustration showing a $25,000 annual payment into a 10- pay whole life contract to compare it with the yields of some other types of investments. Please note that we can achieve similar results with several other whole life and even over-funded UL policies, especially those stressing high early cash values.
US Treasury yields as of 8/2015: 5-yr 1.69 / 10-yr 2.33 / 20-yr 2.73 / 30-yr 3.03*
*US Dept of the treasury resource center
It would take 30 years for your money to double at the 2.33% rate of the 10-yr treasury bond!**
AAA Municipal Bond yields as of 8/2015: 5-yr 1.32 / 10-yr 2.35 / 20-yr 3.39 / 30-yr N/A
It would take 30 years for your money to double at the 2.35% rate of a 10-yr AAA Muni.**
AA Corporate Bond yields as of 8/2015: 5-yr 2.25 / 10-yr 3.32 / 20-yr 4.10
It would take 21 years for your money to double at the 3.32% rate of a 10-yr AA Corporate Bond.**
**Assuming interest reinvested at the same rate / Taxes not taken into consideration for this comparison
Now let’s see how a 10-pay whole life contract looks with respect to cash accumulations (complete illustration attached):
Alternative #1 – 10-pay Whole Life Insurance
Metlife Promise Select-10 – Contractual 10-pay life / assuming a Male 45 Elite health – Premiums
$25,000/yr
Rate of return of cash value including dividends
Year 5 – -7.08% / Year 10 2.48% / Year 15 3.98% / Year 20 4.45% / Year 25 4.65%
Your client pays $250,000 over 10-years and his money doubles in just over 20-years at age 65!
Don’t forget the insurance benefit! Year 1 – $612,420 / Year 10 $713,462 / Year 15 $809,876 / Year 20 $918,570 (age 65)!
Conclusion: So pick up the phone today and talk to your ASG brokerage professionals about helping your clients build equity through one of the many high cash value policies ASG offers! ~JS
Jay L. Scheiner, Principal
Author’s Bio
JD, CLU, lives in Long Island, NY. For the past 20 years, he has been a partner at Agent Support Group, a life insurance brokerage agency based in New York City. An avid fan of the outdoors, Scheiner enjoys boating and bicycling – in addition to hiking. Scheiner can be reached by telephone at 516-467-1190 or email at jay@asglife.com.