From the CEO

Judith wrote this in 2011 when she was CEO, and so much of it still rings true. So to commemorate Life Insurance Awareness Month, here is a renewed look at how precious life is and how important planning is in uncertain times.

Life is uncertain, isn’t it?

Recent events -- menacing wildfires on the west coast, flash flooding in what seems like all parts of the country except those affected by the fires, senseless violence across the country, typhoon in Japan -- make us all aware that we can’t predict the future. Financially, recent legislation has done nothing but prolong the uncertainty we have felt. Every guideline seems to have an expiration date. And predicting what government will or won’t repeal, what taxes will or won’t be imposed, or even what the markets will or won’t do is even more unsettling.

But I do know this: a world without life insurance would be unthinkable.

There are so few guarantees these days; but you are in the unique position as a fee-only financial advisor to ensure your clients are protected with the life insurance they need. Many of your clients will be just fine with guaranteed premium Term insurance to protect the risk of dying too early. But add some guarantees to their guaranteed Term rates by making sure the Term policies they buy are convertible to Permanent insurance. Like one advisor we work with, who recommended in October 2003 that his client purchase a $500,000 10-year Term policy. Then in October 2013, we helped that client convert his policy to a $500,000 Universal Life policy at the same Preferred non-smoker rate class as the original one. While this may not sound remarkable to you at first, here’s the kicker: during those 10 years, that client had been diagnosed with a terminal illness. The policy is still in-force today and we have been working with his spouse and their attorney to maintain the policy; he is unable to manage that himself. Because his advisor worked with us to ensure that original 10-year Term policy contained a conversion feature, his beneficiaries will have $500,000 of income tax-free funds they can use at his death for any accumulated expenses.

We can't prevent the emotional suffering, but I think all of us want to protect our loved ones from suffering financially if we can.

Another example of Term insurance saving the day was a few summers ago when one advisor’s client borrowed his brother’s motorcycle for a spin around the block and was killed in a collision with a truck that ran a red light. He was just 34 with two children and a baby on the way. When his wife called our office to tell us what had happened, she said, “At least I don’t have to worry about losing the house or being forced to go back to work with a baby on the way.” These guarantees gave her peace of mind.

Then there’s Permanent insurance for your older clients; particularly those with trust-owned policies. Perhaps the trustee didn’t understand that premiums need to be paid every year … and on time. Or perhaps the funders of the trust account no longer want to pay premiums. Or for many, five years ago they had a taxable estate but no longer do under today’s tax regime. We can help you to restructure the original policy. And if your clients are healthy, they may be able to exchange their policy for a guaranteed paid-up policy with lower (or no) future premiums, and still provide a legacy and maintain all the benefits of a trust.

In an era where interest earnings continue to decrease, the guarantees inside old policies look pretty good. Where else could your clients have consistent interest crediting rates, most now hovering between 4% and 5%? And if your clients plan to leave a legacy for their children, there is no better way to guarantee that gift than a life insurance policy with guaranteed premiums and guaranteed death benefit for life. Life insurance provides financial security where other financial products may fail.

If your clients are nervous about the future, you can ease their minds by making sure they have the life insurance necessary to enhance the security and overall performance of their portfolios. No other financial product can match these guarantees. You can give your clients certainty in uncertain times.

Times may be uncertain, but the solvency of insurance companies and their record of paying claims timely and wholly are not uncertain. The insurance companies we work with (chosen based on ratings and customer service) have paid claims on 54 of your clients who have died in the last 15.5 years totaling $38,180,227. Here is just a sampling of the circumstances of those claims:

• 58-year-old male (2006): accidental gunshot wound (policy in force 3 years)
• 51-year-old male (2007): boating accident (policy in force 22 months; investigation via medical examiner report since police were called)
• 61-year-old male (2009): pancreatic cancer (policy in force 15 months. Since this was a pension max and he had two Term and one Permanent policy, it worked just like it was supposed to. All three companies paid their claims after an investigation of his medical records. They found no prior history and no evidence of fraud. Just a horrible disease.)
• 41-year-old female (2009): pulmonary embolism (policy in force only 5 months). Husband’s policy is in force.
• 57-year-old male (2011): colon cancer (policy in force 9 years)
• 64-year-old male (2013): cancer (policy in force 9 years)

The average age of those deceased clients: 55.1. The advisors with whom we work understand the fundamental truth that life is as precious as it is fragile. Thank you for asking LLIS to help you protect your clients with life insurance.

~ Mark

2907 W. Bay to Bay Blvd. | Suite 102 | Tampa, FL 33629-1706 | Toll Free: 877-254-4429
Local: 813-902-0002 | Fax: 813-902-0007 | www.LLIS.com

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