Life Insurance Strategy

Life insurance comes down to Term, whole, universal, or Endowments. Annuities have no protection, only cash value, but are long-term investments that you contribute to monthly or according to a schedule of your choosing. You can serve two needs at once, since you can take loans out along the way to retirement completely at your discretion! Always go for the higher number in the range, because the difference is worth the extra leverage. Sell Packages. Merchandise. Never policies.

Term:

• Good for any amount of years
• Can have increasing or decreasing premium, but always a level premium
• Pure protection like auto insurance: Pay for protection without getting your investment (CSV) back.
• Pay each month, 6 months, year; different grace periods apply
• Renewable or convertible at the expiration date
• Higher premium since the new policy is issued at your new current age
• No insurability required (aka Medical tests)
• Can get more term or convert to whole life
• Investments are not tax deductible
• Can be a rider that offers pure protection on other life policies
• Highest death benefit (DB) per dollar paid
• No proof of insurability at renewal or conversion (outside of extenuating circumstances)
• Conversion has a deadline and must be a convertible policy
• Again, the new policies are based on your age at renewal/conversion

Whole:

• Premiums paid:
• For the rest of your life
• Once up front
• In 10, 20, or 30 years
• Until age 65
• Graded or modified
• Modified has 50% discount for first 5 years then level
• Multiple increases and then level
• Current Assumption (Interest rates affect premium) Has max premium built-in
• Indexed premium (based on CPI)
• Indeterminate 
• 3 years fixed then you choose to a max threshold
• Nonparticipating (no dividends), but premiums are discounted based on company performance.
• Difference in premiums will:
• Increase CSV or DB if you pay prior premium though it asks lower premium
• Decrease CSV or DB if required to pay higher but pay prior premium
• May be required to pay premiums after income earning days (retirement)
• Not tax deductible, and any growth is taxed when you surrender
• Cash value must equal death benefit at age 121
• Can get a policy loan, which is reflected at death or surrendervand requires a small fee
• Death proceeds are only taxed as part of an estate if estate is in excess of $5 Million
• Cash Value built in:
• 6-7% interest tax deferred
• Insurance aspect is Death benefit minus Cash Value

Universal:

• Pay how much you want each month (no tresholds)
• After a few premiums, you can skip payments
• If CSV=0, contract expires.
• Based on Current Assumption and Market Conditions
• Used most for buy/sell and other business policies.
• Includes mortality charges and interest debits at each payment date.
• Higher DB would require proof of insurability
• Can make a withdraw or a loan, withdraws have penalties in first 10 years.
• Can get Death benefit = Face amount (more premium for CSV)
• Can get Death benefit = Face amount + Cash Value (more premium for protection)
• Includes a balance statement at year end

Variable Universal:

• You buy units with different investment objectives (asset classes)
• Can Allocate premium to several different units
• Can switch money to other units 1-4 times per year
• 45 day money back period
• Have voting rights (one vote for each $100)
• Can convert to whole life within 24 months
• Fixed premium
• Guaranteed Minimum Benefit, but no CSV guarantee

When taking a loan out, the money is taken from your death benefit, not your cash value. The money accrues the same interest but the loan (which is taken from reserves) also accrues negative interest. The interest, if unpaid, will also be taken from your DB. When you make payments to the loan, you are replenishing money that you withdrew from the reserves. This loan, then is the same as paying with cash: if you pay with cash, you lose the interest that you could have earned on that cash until you get the cash back. If you pay with a loan, you lose interest that you had to pay on that loan. In the end, you finance in both cases, but be smart and mitigate the loss of capital where possible. The money is taken from your primary fund and placed into the guaranteed fund, which earns a lower interest. The loan accrues interest also. The interest must be paid off or your policy can lapse, which isn't terrible and doesn't affect your credit, but defeats the purpose of the insurance. The dividends your policy accrues can cover some or all of your interest payment, which is ideal, since dividends are pre-tax dollars.

Loans from 401K are tough; highly regulated since they are qualified investments and controlled by your employer. You must liquidate your other investments before you will be allowed to take a loan from your account, which sometimes defeats the purpose of 401K since it is to increase investments. 401K has been described as a jail for your money! Get life insurance so you can die without regret and rest in peace.

Quotes to sell by:

• The best investment in the world is the one that pays the most when you need it the most, and that's life insurance. BF
• Life insurance is important but not urgent. When it becomes urgent, it's too late. MF
• People don't care how much you know until they know how much you care. TM
• The stock market is where money makes money, but life insurance creates cash where none had existed. A piece of paper, drop of ink, and a few pennies on the dollar... and we can create more than most people can accumulate. BF
• Anyone can accumulate the money life insurance promises, you have the ability. What you don't have is time. Life insurance underwrites time. If I could guarantee that you live 10, 20, 10 years more, how much would you be willing to pay for that time? If you need time, you need life insurance. BF
• Life insurance costs pennies and guarantees dollars. Hedge your estate against taxes at death by buying life insurance. There is no substitute for the certainty of life insurance.
• What would you say if I told you I want 30 percent of everything you have in this world, and I want it now, in cash?" Tax burden in an estate pass. BF
• The price you pay not to do something is usually greater than the price you pay to do it. BF
• No one has a lease on life. BF
• The mechanics are simple. You set up a special account and put in $800 per month. My company sets up a special account and puts $578,000 in it. Should something happen to you tomorrow, next week, next year, we simply trade accounts. And mine will always be worth more than yours. [accompany with two actual checks and ask him to sign] BF
• When you walk out of this company, I'll walk in to buy it, and I'll buy for cash. You set your own price (since you are the majority investor), and we'll promise to pay it. I'll give your company a guaranteed market. Insuring key people insures profits. BF
• You insure your machines, but Key people are machines- money making machines. No one is indispensable and neither is your equipment, but it's all insured. Could you get a loan without insuring it? The banks feel the same way about your key people. The day your key people walk out, the lenders do too. The value of a key person is 5-8 times more than money's interest value. BF
• Ben doesn't put his hand down the prospect's pocket, he puts it in the tax-collector's pocket. Legitimately. BF
• He left unfinished business for his family to solve. He bought a new car with the money. There's nothing wrong with a new car, but it shouldn't come first. What should come first? I say your family has a right to go on living. That comes first. Saving money for retirement & purchases comes 2nd. BF
• Let me pay your tax for you. It'll be easier to pay out of income than principal. Principal is another way of saying liquidation. The first thing they take will be cash.
• I want to leave something to take care of your family, not something they must take care of. Make you worth the most when you should be worth the least.
• He was a one-man company, and he found that creditors began to worry what would happen when he was gone. The policy creates its own credit.
• Your estate is simply time. Time you have traded for assets. Would you be willing to give the government almost half your time?
• How much time would it take to repay everything you owe?
• Do you have a loan? You pay 9% for a debt. Pay us 3% for an asset!