Help Your Clients To Save For Retirement
Is Cash-Value Life Insurance A Good Place For You To Help Your Clients To Save For Retirement?
Do your clients need more life insurance to protect their families? Then is cash-value life insurance a good place for you to help your clients save for retirement? It might be the question of the ages!
Over the past 50 years, experts have argued about whether or not cash-value life insurance is a good or the best place for you to help your clients to save for retirement. The main argument is that you will have a lot more money… if you buy term and invest the difference?
However, there is much more for you to think about… than just how much money you will have for retirement! How long will you need the life insurance? What do you want the money for? How long will it be before you will need that retirement money? What will the income tax bracket be when you need that money?
In this brief article, we will just focus on the main issue! Will you have more or less money when you help your client use cash-value life insurance to save for retirement? Would you be better off helping your client with some other type of investment to save for retirement?
Compare Actual Results Of Helping Your Clients To Save For Retirement.
So, the first question to ask is, what will you compare the cash-value life insurance too? Will you buy term and then invest the difference in… mutual funds, stocks, qualified plans, municipal bonds, corporate bonds, treasury certificates, mortgage notes, CDs, etc.?
Most people are told that if you invest in the stock market or mutual funds, then you will have an average return of 10%. While, if you put your money into life insurance, you will only average 4%-6%. Logically, an investment that averages 10% per year will have a lot more money… than something that earns only 4% to 6% per year.
However, there is a lot more for you to consider than just comparing the investment returns. There is a lot of important information that you need to sort through and consider! Such as realistic investment returns, annual fees, and expenses. Then there are withdrawal penalties, income taxes, tax deferral, tax-free income, cost of insurance, ages, health rating, smoker, male, female, etc. These are all important points to consider when you are deciding to help your clients to use cash-value life insurance to save for retirement.
Example Of Helping Your Client To Save For Retirement Using Growth Mutual Funds.
Let’s assume you are a 45-year-old male. You need and want $250,000 of life insurance. You are a non-smoker, in good health, and have $6,000 to spend each year for the next 20 years.
If 20 years ago you had purchased a 20-year term policy with $250,000 of death benefits, then the policy would have cost you about $760 per year. That would have left you with about $5,240 to invest each year. The question is, where would you have invested that money?
How about if you had saved your money in a 401(k) or IRA using growth funds for retirement… as many people do?
Let’s take a look at the past 48 years to put ‘growth funds’ into perspective.
- In the 1960s the S&P 500 Index had an average annual return of 4.39% over those 10 years.
- During the ’70s the S&P 500 Index had an average annual return of 1.60% over those 10 years.
- In the ’80s the S&P 500 Index had an average annual return of 12.59% over that decade.
- In the ’90s, we had one of the best times in history for the U.S. stock market. The S&P 500 Index had an average annual return of 15.31%.
If you had received annual returns close to those of the S&P 500 Index during those 40 years (1960 through 2000)… Then you would have averaged 8.33% each year.
But, when you consider that the vast majority of mutual funds did not come close to matching the S&P 500 Index over those 40 years. And, then you subtract the annual fees of 2.5% to 4.05 %… It will give you an entirely different view of investing in the market.
And, we have not considered that from 2000 through 2008, the S&P 500 Index had a total loss of -38.53%! That is an average annual loss of -5.90% over those eight years.
Now, if you add in the history of those last eight years, then the average return for the S&P 500 Index over the past 48 years is only 5.82%. If you subtract expenses of 3.0%, then the net return becomes only 2.82%. And, that’s only if you were lucky enough to have found a mutual fund that performed as well as the S&P 500 Index did during those 48 years.
The “2007 Dalbar Report” tracked investors’ behavior over 20 years (1987-2006). During that time the average investor only earned 4.3%, whereas the S&P 500 yielded 11.8%. And that was during one of the best times in stock market history! What’s more, that does not include the stock market downturn of 2008.
So, if you had purchased a $250,000, 20-year term policy, at $760 per year, and then you invested the difference of $5,240 annually… into a 401(k) (with no matching contribution) or IRA… with an average annual return of 4.3 percent (per the “Dalbar Report”) (1987-2006), you would have had $167,909. And, all of the income you take would be taxable. So, if you were to withdraw $8,395 per year, based on a 33% state and federal tax bracket, then you would get to spend only $5,625 each year in retirement! (And you have no life insurance because you used term insurance)
On The Other Hand, What If You Help Your Client To Use Cash Value Life Insurance To Save For Retirement?
If you had purchased a good $250,000 index universal life or whole life policy back at that time and invested the entire $6,000 a year into a policy earning 6%… Then you would have $166,059. Even though you would have slightly less money, you could spend $8,303 each year in retirement… income-tax-free! That gives you about 68% more money to spend in retirement! (And you have life insurance because you used cash-value life insurance)
Just based on the numbers, it appears that cash-value life insurance can make a lot of sense for most people. (if they need insurance) And, that does not consider the many other unique advantages of cash-value life insurance:
- Unlike qualified plans, there are no caps (limits) on how much money you can save each year. You are only limited by the size of the policy.
- Your cash accumulates tax-deferred.
- You have a liquid “emergency fund” for life’s unexpected events.
- The cash values can be accessed income-tax-free and penalty-free before age 59½.
- Cash-value life insurance is not attachable by creditors.
- Cash-value life insurance does not count as an asset when you apply for college financial aid.
- When you overfund a cash-value life insurance policy up to the MEC guidelines… Then it can become “investment-grade life insurance.” (Missed Fortune concept)
- The cash accumulated in the policy can provide a tax-free income in retirement. (Taking withdrawals up to the cost basis and then borrowing the remainder)
- You will have the protection of life insurance in your retirement years to replace lost pension and Social Security income at your death. (Pension Max concept)
- Unlike qualified plans and annuities, the death benefits and cash values are transferred income-tax-free to your beneficiaries.
- Cash-value life insurance generally bypasses probate. (And it is private, no public records.)
- Cash-value life insurance can be used to pay income taxes on qualified plans and your estate taxes at your death.
- Safety: All 50 states have something similar to FDIC for life insurance policies and annuities. Plus, insurance companies must, by law, cover at least 100% of their liabilities with cash reserves. Hence the term “100% legal reserve life insurance company.” There are also regulations as to the percentage that can be held in certain forms of assets. This system has produced a remarkable overall record of solvency and safety.
- Guarantees: Only life insurance and annuities guarantee your principal. And then offers you a minimum growth guarantee for the life of the contract.
Does your client need life insurance to protect your family? If you can get returns similar to the stock market without the risks, more guarantees, tax-free income, plus many more benefits… Then why wouldn’t you want to help your client to use cash-value life insurance to save for retirement?
Our Specialized Life Insurance Marketing, Leads, And Sales System…
With 90 Days Of Personal Training, Coaching, And Sales Support To Help Your Client Use Cash-Value Life Insurance For Retirement!
Our Trusted Advisor Success Program™ is about you helping middle-income families to find the money to Live Debt Free And Truly Wealthy! So you will help families to get all the life insurance they need to protect their families. While they save for a tax-free income, save for college, create a family bank, etc. (Using cash value life insurance!)
Check out our Trusted Advisor Success Program™! Because you will get 90 days of personal insurance training, coaching, and mentoring… with back-office sales support! All from a team that has helped agents and advisors to succeed for over 40 years! First, we will show you how to find and attract your best life insurance leads/prospects. So you set great sales appointments. Then we will show you how to do a complete client fact-find to help families to identify and want to solve their financial problems. We will also show you how you can help families find the money! So that they can take action right now! Next, we will show you the best ways for you to present your ideas. So you will take your life insurance and annuity sales career to extraordinary heights like the legends!
Discover The Best Life Insurance Marketing Strategies!
Inside our Trusted Advisor Success Program™, you will find all the best life insurance marketing strategies laid out for you… in a step-by-step process! Using booklets, free reports, joint ventures, educational workshops, seminars, and more – with all the tools, scripts, invitations, PowerPoints, and more. So you can find and set your best life insurance sales appointments with qualified prospects! Because your ‘special message’ to everyone will be all about how you help middle-income families to find the money to spend, save, invest, insure and plan wisely for the future! So they can “Live Debt Free and Truly Wealthy!”
You will also learn how to use all the HOT Sales Concepts… Wealth In Motion, Infinite Banking. Missed Fortune, Circle Of Wealth, Wealth Beyond Wall Street, Tax-Free Retirement, etc… All combined into Our Superior Found Money Management Strategy designed to help average people, not just the wealthy!
Includes Membership To Our Insurance Marketing And Sales Resource Center – With Live Weekly Training!
Check Out Our Exclusive Members-Only Website, because as a member, you will gain immediate access (24/7) to the Greatest Collection of insurance marketing and sales strategies and systems ever gathered in one place for agents and advisors. This includes all of the proven insurance marketing and sales tools… sales letters, prospecting scripts, sales presentations, questions, and so much more! (monthly fee… less than $1 a day)
You will also receive 3 Live Hour Coaching Webinars each month; Live Group Coaching; Case Design Class; & Insurance Marketing & Sales Strategies Training with immediate access to all of our Past Coaching Webinars! You will finally learn all the insider secrets you need to set the best sales appointments. And how you can really help your client to find the best way to save for retirement. So that you will close more and larger sales right now!
When Will You Read Our Full-Length Book! So You Learn How To Really Help Your Client Save For Retirement!
We urge you to take the time to read our 20 Chapter book… ‘Middle American Family’s Guide To Living Debt Free And Truly Wealthy!” Because we give you the complete strategies, on how you can help middle-income families to find the money to spend, save, invest, insure, and plan wisely for a secure future! So that you can help them to “Live Debt Free and Truly Wealthy!” As a result, you will understand our philosophies, concepts, and techniques by the end of the book. And finally, you will know how you can make a real difference by helping your family, friends, clients, and neighbors get rid of their debt. So they can save for retirement. So that they will have a secure financial future! Book Outline – Get A Digital Copy of Our 20 Chapter Book! Only $18.97, Immediate Download, ORDER Now!
Nothing Will Change Until You Make it Change. It Is Up To You To Learn How To Help Your Clients Use Cash-Value Life Insurance To Save For Retirement!