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Policy Matters

Third Quarter 2022


You probably have clients who have maxed out all qualified plans, are paying down debt well, have contributed to 529 plans for kids, and are looking for additional tax-deferred assets.

While there are a number of benefits to all Permanent Life insurance coverage for your high-income earners ...

  • The cash values grow tax-deferred in the life insurance policy
  • The owner can structure income tax-free payout from policy withdrawals and/or loans
  • Death benefits paid to beneficiaries are income tax-free
  • There is no income limit; unlike a Roth IRA, there are no earned income phase-out limits for high income individuals
  • There are no contribution limits; unlike a regular retirement plan that caps annual contributions, the life insurance can be structured to accept much higher annual payments
  • There are no Required Minimum Distribution requirements later in life
  • Depending on the state, may offer creditor protection

... most policies fall short. Why is that?

  • High upfront loads/commissions leave minimal cash value in the early years
  • Surrender charges further reduce the cash values your client can access, and they may not drop off for many years
  • Policies are often designed to maximize agent compensation, rather than client accumulation
  • Many policies are funded for just a year or two; the insurance agent who sold them the policy disappears and isn’t monitoring the plan and make sure it’s on track

So how do we solve it?

Partner with LLIS.

Life insurance companies have been looking at the fee-only world and have created solutions to get your clients the benefits above, without the shortfalls.

We have options for you and your clients that are designed for fee-only advisors: Advisory Life Insurance policies that come without surrender charges and the high upfront loads and commissions.

Because we work in the best interests of you and your clients, we design the policies for maximum accumulation.

And you, the advisor, are a key component in this. Insurance companies now have third-party authorization for you as the investment advisor to manage the cash values. And since you may work with clients for many years on accumulation and then the distribution aspect of the Advisory Life policy, you can add the cash value into your AUM platform for billing.

We worked with these clients and their advisors recently:

Mr. B

He had an Ameriprise Universal Life policy, but the Advisory Life plans outperformed the current projections, so we did a 1035 exchange to a new Advisory Life Insurance policy. Mr. B also had an Ameriprise Variable Annuity that we exchanged to an Advisor VA, but that’s a story for another time.

Dr. W

He had almost $1 million in cash value in a Group Variable Universal Life (VUL) policy he’d contributed to right up until retirement, which is coming this year. His advisor asked us to review a projection of the current policy and while his goal is to take money out in retirement, the Group VUL didn’t carry past his age 94, having never taken $1 out. If he started distributions, the policy would lapse even faster. Solution: Advisory Life Insurance – minimum face amount allows him to take money out through retirement, tax-free.

Mr. TX

This very wealthy client is charitably-inclined, has a taxable estate, and is interested in tax-deferral. Solution: Advisory Life Insurance! Mr. TX retains control of the cash values during life and -- by having a charitable beneficiary -- the death benefit isn’t added to his taxable estate.

Questions on how Advisory Life Insurance might fit into your clients’ planning? Just ask Mark!


Term Life Insurance | Low-Load Universal Life (Individual & Survivorship) | No Lapse Guaranteed Univeral Life (Individual & Survivorship) | Long Term Care Insurance | Disability Insurance | Critical Care Insurance | Low-Load Variable Annuity | Immediate and Fixed Annuities | Low-Load Variable Universal Life | Hybrid Life/LTCi | Hybrid Annuity/LTCi

(We recommend low-load permanent life insurance and annuities when possible)

(Not all policy types available in all states)

For a list of current providers, visit the Advisor Tools section of our website and click on "Insurance Companies We Work With".

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