Avoid The Portfolio Killer

By | Life Insurance, LTC Insurance, What's Trending | No Comments

Did you know that married couples retiring at age 65 will average $260,000 in healthcare costs? Even more will be needed if a chronic illness care is required! This makes healthcare the second largest expense in retirement.

Many clients’ portfolios are not prepared for the impact of a long-term care need. Instead of carving out a sliver of assets to cover this event, many Financial Advisors will watch their clients’ portfolios dwindle as they spend down those investments year after year to pay for long-term care expenses.

Let’s look at an example:

An FA in Pittsburgh had a client with sizable nest egg worth around 2 million. The FA never thought about covering this client in the event of a long-term care need, as the client had enough assets to “self-insure” if the situation came up.  Fast forward several years. The client was diagnosed with dementia and was confined to a nursing home for over 12 years. The client’s children were forced to spend down over $1.5 million dollars. Not only were the heirs out $300,000 per child, but the advisor lost their potential investment too. When the client passed away, her children took what little assets were left in her portfolio and moved them to another FA, their trust in the first advisor having been destroyed. Don’t be this advisor!

If the FA had simply suggested the client carve out a sliver of their assets to purchase the LTC rider, the clients’ portfolio may not have been depleted. The beneficiaries’ trust would have stayed with the FA, and their assets could have gone to the FA too!

Resources

Sequence of Returns Matter

By | Life Insurance, What's Trending | No Comments

There are many benefits of owning a permanent life insurance policy. First and foremost is the life insurance death protection. Additionally, one of the many benefits that can be utilized along the way, if necessary, is access to the policy’s accumulation value for the benefit of the policy owner while living. For instance, accumulation value can be used as a supplement during the policy owner’s retirement years.

Investment returns are variable and unpredictable. The order of returns has an impact on how long a portfolio will last if the portfolio is in the distribution stage and if a fixed amount is being withdrawn from the portfolio. Negative returns in the first few years of retirement can significantly add to the possibility of portfolio ruin.

Let’s take a look at two scenarios below

SCENARIO A

Let’s assume we have a client that has accumulated a retirement portfolio of $1,000,000 at his retirement age of 65. This retirement account is going to be invested in an index fund that mirrors the S&P 500. This client’s goal, with this asset, is to withdraw $50,000 a year pre-tax to help support a portion of his post-retirement lifestyle. If he retired and experienced the sequence of returns in Scenario A, after a 10 year timeframe, he would have ended up with a projected account value of $506,951.

SCENARIO B

But what if we simply reversed the hypothetical rates of return? The results of the reversed sequence of returns is shown in Scenario B. By reversing the sequence of returns this client would have an ending account balance of $406,597.

Click Image to Enlarge

Unfortunately we can’t control what the market is going to do when we decide to retire. But there is a possible solution to help protect a client in years when the market does go down….Max Accumulator+.

If the client had purchased American General Life’s Max Accumulator+ when he was 50 years old, he could have funded the policy and utilized the power of IUL (upside potential with no downside risk due to market performance) to create an additional bucket of money that could be used as backup income source for the years following negative performance in his retirement account. Below is an example of the resulting scenario when using an IUL.

Click Image to Enlarge

Campaign In A Box: Life Insurance Retirement Planning (LIRP)

By | Business Cultivation, Life Insurance | No Comments

Initiating a marketing campaign can be difficult, but American General has made it easy with their Campaign in a Box. The campaign is equipped with many resources that would have taken weeks to create and gather on your own.

The campaign is broken down into 3 different sections. First is Promotions/Prospecting, Training Package, and Selling Strategies.

Promotions/Prospecting

Here you will find the resources to help you prospect. From pre-formatted text messages, tweets, LinkedIn and Facebook Posts, and even images you can use as a thumbnail for your social media post! If you have a blog, you can also use the pre-written blog content that highlights LIRP!

Training Package

Everything you need to refresh your memory or train any staff on the LIRP concept! Here you’ll find a strategy brochure, infographics to help you market, key talking points, and even a training video!

Selling Strategies

Take the guess work on how to approach the conversation with your clients. This section of the campaign is essential and will be key in helping you close more business. Here, you can watch a video and learn the “LIRP” pitch, find customizable PDF’s, and even an interactive sales tool – Life To The Max that you can share with your clients.

Click the links below to visit the Campaign in a Box Resource page from AIG and download the marketing materials below!

Campaign In A Box
Resource Page

Agent Only

Visit Resource Page

What Happens When Your Plans Don’t Work as Intended?

Consumer

Download Brochure

Will You Have Enough
Money to Retire?

Consumer

Download Infographic
X