When Selling Life Insurance, Dont Forget To Tell The Rest Of The Story
Youve heard broadcaster Paul Harvey say it a million times: “Now, for the rest of the story.” As a life insurance sales professional, you can convert more prospects into grateful customers if you remember tell them “the rest of the story” about their retirement plan.
The part of the story that many people never hear is that a properly structured permanent life insurance contract may be one of the best retirement vehicles for tax-favored capital accumulation and tax-advantaged retirement income as living benefits, in addition to providing income tax-free death benefits to the beneficiary. Thats because life insurance performs well in all 4 phases of the wealth creation process: contribution, accumulation, withdrawal and transfer.
What most prospects dont realize is that the average retired couple will pay 8 to 12 times more in taxes on their IRA, 401(k) or other qualified plan during their retirement years than they saved on taxes during their accumulation years.
Qualified plans, including IRA and 401(k) plans, are considered by some to be punitive. Douglas Andrew, author of “Missed Fortune,” even calls them “the savings bonds the government has developed for itself.” Life insurance, on the other hand, is more like having your cake and eating it, too!
The 4 essential components to be considered should be liquidity, safety, rate of return and tax consequences. From a liquidity standpoint, life insurance can be an exceptional vehicle because you often can gain access to a good part of your money without significant consequence.
For example, often you can borrow against the cash value of the policy and not be taxed on the amount you borrow, paying interest at a fixed rate on the loan. The interest charged is often less than what another financial institution would levy. But the real value of this feature is the fact that you can borrow against the policy without canceling it, thus protecting your future.