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Tax returns offer insight into a client’s financial planning needs, including life insurance and long-term care. Utilizing the consolidated information found on a client’s 1040 tax form, the John Hancock 1040 Overlay tool makes it easy to uncover needs and even easier to address them.

How the tool works

A great example of how this tool works is by reviewing question 8a of the 1040 tax form. Question 8a provides you with the client’s taxable interest. The overlay tool suggests asking the following questions regarding your client’s taxable interest;

Where is this invested and how much is it earning? What is the money for? Are you concerned about taxes?

If your client does not have an immediate need for that money, or their ultimate goal is to leave it to their children or grandchildren, there may be a life insurance opportunity.

Generally, the interest indicated on line 8a are low risk investments such as CD’s, savings accounts, and bond income. The low-risk nature of those investments ensures a corresponding low rate yield. A perfect alternative for a low risk-low reward strategy is to use the assets to purchase life insurance, which may provide a higher Internal Rate of Return, while also providing tax free growth and death benefit protection.

I encourage you to familiarize yourself with these tools and incorporate this process into your practice. By doing so, you will have a simple strategy to help you easily uncover and discuss your client’s life insurance and long-term care needs.

1040 Overlay Guide

1040 Overlay Tool

1040 Tax Form