The single-premium path

Single-premium immediate annuities are a tax-efficient way to fund a permanent life insurance policy, Kauffman points out. In many situations, he says, payments from a SPIA can be used partially for monthly income and partially to fund insurance premium payments. “You can take an asset that’s sitting there and is going to be taxable when
it’s transferred to beneficiaries as part of an estate, and you leverage it up by purchasing [permanent] life insurance,
utilizing an SPIA as the funding vehicle. Basically you’re turning a taxable asset into a non-taxable asset for your heirs.”
Annuities also open the door to other, less obvious cross-selling opportunities. In the same vein as LTCI, there’s also an opportunity for the agent or advisor to position umbrella liability insurance and Medicare supplement insurance as forms of portfolio insurance designed to protect assets from unforeseen major drawdowns, notes Leib.
It’s not common practice, but there are also opportunities to cross-sell one annuity contract with another, notes Kauffman. For example, if a client has multiple CDs that are coming due as part of a laddering strategy, that money can be used to fund a similar laddering strategy involving fixed annuities with terms in the range of three to five years. Not only does such a strategy provide investors with significantly greater returns than they would get had they kept those funds in CDs, it helps protect against interest-rate risk.
Ultimately, says Leib, cross-selling in any form comes down to “getting creative” without compromising the client’s best interests. That’s how diversified practices are built.