It’s Open Season for Roth Conversions – Make Sure You’re Hunting for Them

Bruce Beaty – VP Business Consultant

It seems that everyone is talking about taxes and creating tax-free future income for clients.

Maybe it’s because its tax time, but there seems to be more conversation than ever around national debt (over $28 trillion), stimulus spending and that impact on future taxation, and our current administration has bluntly stated that it will purse higher corporate and personal tax rates.

Now more than ever you have an opportunity to engage with your clients in tax planning and Roth conversion conversations. The time is now.

I noticed this week that one of our carrier partners was highlighting a product that allows for a 10% penalty free withdrawal based on the original deposited amount (rather than the current account value). This is unique in the annuity space and, positioned as a way to build an income bridge to maximize social security. Check out this idea from F&G on the Flex Accumulator. It got me thinking that this could be the ultimate “Deployment vehicle” for Roth conversions. To clarify, this product receives the rollover, say $500,000. Then the liquidity is used to send $50,000 in conversions each year going forward to the “receiving vehicle” 

Note: this is not the only product that could be used in this manner, give us a call and we can give you insight into other options.

Now what to choose for the receiving vehicle? There are several different angles to consider here when it comes to premium bonuses companies like Silac (up to 10%), Equitrust (up to 10%), AmericanLife (up to 16 + (3%)) and others offer large premium bonuses. These bonuses offset the tax impact on conversions at least up to a point.

Perhaps a flexible premium product to keep it simple (one policy, one application): Delaware or Nacolah are popular flex premium solutions. All future growth would be tax free and the client has the flexibility for whatever they want and need when it comes to distributions. With Surrender periods as short as 7 years, and trail commissions available the possibilities are vast.

Consider a large income bonus: Nassau RE (up to 45%, or 14% simple), Global Atlantic Income 150 (50% income-based bonus by year five), Allianz ABC (25%), Athene Agility (15%). Hey, if guaranteed income life is appealing, why not try tax free income for life?

If its “ leave on money” consider and enhanced death benefit product like Global Atlantic 7% simple for 15 years , Allianz ABC or AIG x5 benefit base 250%, or Athene Agility, or Americo’s Heritage Maximizer (30%).

Or, if you really want to get creative take the $50k and put it into a Single premium life product like Equitrust, NWL, Sagicor. Depending on the age and carrier that $50k could buy upwards to $100k in death benefit.

In summary, there a so many different solutions, and I am only highlighting a few here, but the opportunity has never seen such a great sense of urgency as it is seeing today. The power of the Roth conversions include a qualifying distributions (see official rules for details @ being tax free, this includes income doublers, income rider distributions, free withdrawals, and death benefits (including enhanced death benefits.)

Attached you will find the sales idea mentioned up front for Social Security Maximization, but honestly this might be an even bigger opportunity. Check out Kurt’s updated product picks by clicking the button below, or even better call Kurt or Katie today for a run down on any of these or other product recommendations based on your clients’ needs and objectives.

Planning is the Gift of Love

Bruce Beaty, ChFC, RICP – VP Business Consultant

February, otherwise known as Hallmark and florist appreciation month, is the month for love. There are different types of love; amorous, romantic love, puppy love, and the love we have for our families, children, etc. 

You are uniquely positioned to help clients express their love to their loved ones in so many different capacities. But perhaps the most important way is to help your client have a plan.  

Ask yourself, why don’t people plan?  What parent would not want to spare their child pain, or avert disaster for a surviving spouse?  What patriarch or matriarch wouldn’t want to improve the life paths of their children and grandchildren?   Who doesn’t want to create a legacy? 

Planning is the epitome of expressing love to the family. Think about it, why would someone not have a plan for retirement, long-term care, life insurance, or estate planning?  Not having a plan does not mean the prospect does not care, it means they are scared or they do not understand the topic the way you do.  If they did, they would have a plan. 

Being prepared can help avoid pain and create positive moments. Imagine facilitating conversations between clients and their heirs, collaborating on their estate planning rather than waiting for the
posthumous bomb to drop in the attorney’s office.  What if that dialogue included spending money during their lifetime to celebrate the family, for what would have otherwise gone to probate and estate taxes?

Envision the freedom that is created with a lifetime income plan, and how that frees up resources for things like helping the children start that business or buy that home?  It is all about creating value and giving permission to spend and enjoy where possible. 

Picture the gift that is created with leverage, like long-term care planning that protects the estate from spend down or protects the surviving spouse from impoverishment.

Consider also the multi-generational approach to life insurance. I cannot imagine how we get through the future without a significant increase in taxes and potentially a volatile economy.  The gift of large life insurance death benefits may make the difference between the “haves and have-nots” of the future.

Here is a closing thought, helping clients to create a Legacy is primarily about lessons and values they impart to their families, however creating the financial resources to accompany those lessons brings that transference to life. 

If you are not helping your clients protect their assets from probate, estate settlement fees, and the headaches associated with the estate planning process (both during life and after) it is time to start, and we can help you.  If you are not proficient at creating retirement income blueprints that help clients create income floors they cannot outlive, dig in with us.  If you are not yet comfortable with creating generational wealth, don’t wait!  Call us today for assistance and resources to help you master these sales opportunities.

The New Face of LTC – It’s a Matter of Having the Conversation

Bruce Beaty, ChFC, RICP – VP Business Consultant

Wow! This segment of the industry has changed. My grandmother sold nursing home insurance for a brief time.  When it came time to use it, it was a very good policy and it required her to be in a nursing home.  The problem was the she wanted to be at home.  She was in her mid-80s and prone to falls.  Grandfather, 13 years her senior, couldn’t care for her so off she’d go after a fall, then back home she’d come…and another fall, and back in again.  So what is the point?

People want to be at home, around their familiar belongings, nearby their families.  Let’s be honest, once someone goes into a care facility the kids don’t come around as much, and the grandkids, (you know that nursing home smell) yeah not so much either.  Besides, it’s expensive!  Institutional care can devastate a family’s finances, not to mention the impact these care costs can have on the insurance carriers.  Look at all the companies who left this space and/or sold their blocks of business.  I swear there is an island of misfit LTC actuaries out there who were ostracized for mispricing LTC and guessing completely wrong on lapse assumptions.

Enter a new world of living benefits.  We talked a lot last month about Legacy Planning.  I think living benefits are a big part of this conversation.  Living benefits allow folks to leverage their assets whether they live too long, die too soon, or their bodies quit before they do.  Who knows which risk to insure for?  Think about it.  If we are creating income floors to provide lifetime income that cannot be outlived with income riders on annuities, why not throw in a doubler that could pay for in-home care for a bit (usually up to 5 years) thereby taking longevity and morbidity risks off the table.  Besides, if I need care I’d rather the caretaker come to my house than to get stuck in a nursing home, at least for as long as it is reasonable.  Besides, think how much less it costs for a home health-aid than paying out $10-$12k per month for institutional care.  Bonus:  Since many clients are looking at Roth conversions, why not throw in an income rider with an LTC doubler so the benefits are all tax-free and you get a tax deduction if you spend more than 7.5% of AGI on health costs.  So there you go! (unless the tax code changes again).  By the way, the same conversation applies to living benefits in life policies. Actually, there is a policy with a lifetime income benefit, critical, chronic, terminal illness, and a critical injury benefit…talk about your Swiss army knife of coverage!

Don’t get me wrong, I think we all should have bought a 10-pay policy back in the 90s when everyone was healthy and the premiums were affordable, but hey, not everyone did.  Traditional LTC is not dead, but in my experience by the time most humans choose to acknowledge their own morbidity, they are either too old, too sick, or the premiums are just too high. 

I know many advisors who are “anti-income rider” and just want to sell the best accumulation product keeping the withdrawals at a reasonable level…everything will be great.  Personally, being a risk-averse and overly protective person, I like transferring the risk away.  Think about all the risks that annuities (and life) and other planning products remove from our clients’ lives between now and the day their estate is settled.

  1. Longevity risk (withdrawal rate risk)
  2. Inflation risk
  3. Morbidity risk
  4. Mortality risk
  5. Market risk (consumer behavior risk)
  6. Sequence of return risk
  7. Interest rate risk

All of this is integrated into the care continuum.  Having a strategy around declining health, its’ commensurate costs and challenges, with a focus on quality of life as we age can all be accomplished with proper planning, be it traditional LTC or innovative products with enhanced living benefits. The right answer is out there for all your clients.  It’s just a matter of having the conversation.

Living a Life of Significance: How Legacy Planning Diverges from Estate Planning

Bruce Beaty, VP Business Consultant

What Is Estate Planning?

The arranging for the disposition and management of one’s estate at death through the use of wills, trusts, insurance policies, and other devices.

Therefore, Estate planning is about death. Death, taxes, probate (avoidance), courts, attorneys, accountants, executors, trustees, documents, fees, delays, fighting and frustrations. Estate planning can also infer that one has an estate. The implication then is that estate planning is reserved exclusively for the wealthy.

Legacy planning however, used as a synonym for estate planning, carries a different connotation altogether.

“A Legacy is what you leave behind in others; the planning we are doing right now gives them the capacity to act on that gift.”

Levi Sherley, Asset Advisor

An important question that we begin asking ourselves as humans more frequently with each passing year is something along the lines of, “How can I make a positive impact in this world beyond myself and my end date?”, and “How can I make life easier, better, and more significant for my child, community, or even strangers I may never meet?”

You see I believe we have a moral obligation to help as many people leave a legacy of significance for their people. Yes this means good estate planning (for everyone who has any level of assets) but it is so much more.  Let’s close on what this really means.

Legacy Planning consists of the following:

The Estate Planning Component:

  • Properly funded Trusts to avoid probate.
  • Non-Trust Assets properly structured with POD, TOD and updated beneficiaries.
  • Well-structured Wills, designating important items going to the right people.  (Imagine the family wars created when people decide to let their heirs sort it out!)
  • Advanced Directive so difficult decisions do not have to be debated by loved ones.
  • Financial Powers of Attorney so that important transactions can continue if someone is incapacitated. 
  • Healthcare Power of Attorney designating who should make important decisions if my body quits before I do.

The Legacy Component:

A Family Love Letter allows our clients to speak love into the hearts of their families and leaves instructions as to their values and wishes.  A powerful part of this message could include, “Lessons I have learned about money and what I want you to know about the gift you are receiving.” 

This final note is an opportunity to right a wrong that could just never be addressed on this side, or to kindly and gently encourage good behavior.  An example could be, “Johnny, I’m so proud of you for staying clean, and your trust will allow you to keep making great choices and accessing your inheritance every five years.  Keep it up!”

The bottom line is this: Making an impact beyond ourselves can be done without resources by simply being a wonderful person, but the effect is multiplied exponentially with capacity.  Maximize that capacity for your clients by implementing all the above estate planning protections and then add in the following.

Life insurance:   Leveraging a larger death benefit for heirs turning small dollars into BIG tax-free dollars.

Living benefits: (Life Insurance, Annuities, and LTC) Keep the clients in the comfort of their own home and accessible to the family as long as you can while mitigating estate shrinkage as long as possible.  These types of resources can make a huge difference in their care experience, and quality of life towards the end.

Lifetime income that they cannot outlive.  I love Tom Hegna’s idea of creating a paycheck and a “play-check” for life. If we all started working with our clients to designate one check every month for joy, even just $1000 to spend on something fun, to give it to someone to impact their life, to go see a child or grandchild, or whatever.  Can you imagine what a Legacy your clients will be living while they are alive to see and enjoy it?   Give your clients permission to spend! Make it a goal. How about we create lifetime inflation-proof income with all the qualified money and buy a big old life policy to fund the family Legacy?

I guess what I am saying is that if we provide all the protections, spend the right monies at the right times, and do this thing right, the Legacies your clients will leave behind will change the future for generations to come. 

Think about this, why does the name Rockefeller still carry so much sway today?  John D. passed away almost a century ago.  His name and impact is his Legacy.  What’s yours?  

Limited Time!! CARES Act Sales Opportunity

Bruce Beaty, RICP, VP Asset Business Consultant

It’s interesting how Life Insurance has evolved into a “multi-tool”.  Most of what we see this month is focused around the most well-known feature of life insurance, which is the death benefit.  However, we have seen life insurance used in a plethora of other applications. Deferred compensation, tax-free retirement, an alternative solution to traditional long-term care, a college funding vehicle, a get-out-of-debt strategy, a store of value, and a creditor protected safe haven.  We have seen uses that allow it to act as a proxy for disability and a wealth transfer vehicle.  We see parents pay premium on kids’ policies and the other way around.  Corporations buy it, business partners buy it, and banks buy it too. We used to even see strangers owning life policies on others.  We see banks lending the premium and companies being the beneficiaries.  So not to beat a dead horse but….

Life insurance is very flexible and can be used to fulfill many visions and goals.  Today we have a new option available designed to help clients get through tough times.  The Cares Act allows our pre-59 ½ clients to pull money out of an IRA or other qualified account and forego the pre-59 ½ ten percent penalty (excise tax). They can also spread the tax impact over three years (or pay it back).  This reminds me of when we could do a Roth Conversion and spread the taxes over three years.  I’ll bet many who didn’t take advantage of that opportunity wish they would have. 

The article, “Have You Opened your Gift from the CARES Act Yet,” by producer, Jay Beattey, explores a new resource that may be available to your clients for a limited time only.  Perhaps it’s time to rectify an overfunded 401(k) situation for your clients, to create a tax-free bucket, and/or to create leveraged death and living benefits?  Looking for a source of funding for a Kai-zen?  This may be your solution.  Ed Slott is calling Life Insurance the new Stretch IRA.  Maybe it time to explore the full range of diverse applications  that the “multi-tool”, known as life insurance, offers, and also time to check out the power of de-funding the over funded 401(k).  You have until 12/31/2020 so don’t wait!  Make sure you explore the Asset Exclusive Planning Compass to assist in comparing your options, or give our knowledgeable life team a call to discuss options and case design for your clients (888-303-8755 x2160). 

Overcoming the Fear of Commitment

Bruce Beaty, VP Business Consultant

Pandemics aside, getting a commitment to move ahead with product solutions can be difficult, especially when that action involves surrender charge periods or longer timeframe planning commitments, which in some cases can be up to fifteen years.  Throw in a swine flu, COVID, or bubonic plague, and the prospects have yet one more smoke screen that gets in the way of accomplishing their long-term objectives. 

While many will use money markets or even an AUM approach to optimizing liquidity for life’s “what ifs”, that approach can often leave certain boxes unchecked for our end user clients.  Examples could include no guaranteed lifetime income, no living benefits for health triggered expenses, no tax-free benefits, lack of safety, lack of leverage, lack of crackers (time to get crack a lackin’).  You get the idea!

So what to do?  It’s times like these when I’m reminded of the resilience and innovation of our industry.  Today’s environment is screaming for a solution that already exists.  It’s called a return of premium rider.

Katie Hsieh, product specialist extraordinaire at Asset, shared with me that EquiTrust offers great product solutions for both life and annuity cases that feature ROP riders on each side of the fence.  So which one should you use?  Why not both?  You might as well hit a home run with clients and address solutions for both their “live on money” and their “leave on money”… the two financial brothers that always compete against each other.  Help your clients overcome that fear of commitment and put some checkmarks in boxes that will accomplish their objectives TODAY. 

We’ve attached illustrations for both solutions and our team would be happy to prepare a custom illustration that addresses any state specific variations.   Make sure to call for assistance with your next case design.  We look forward to the opportunity of collaborating with you!


EquiTrust WealthMax Bonus Agent Guide

EquiTrust WealthMax Bonus Client Brochure

EquiTrust WealthMax Bonus $200K – 65 Female

EquiTrust MarketTen Bonus Agent Guide

EquiTrust MarketTen Bonus Client Brochure

EquiTrust MarketTen Bonus $200K – 65 Female