Your sales at the crossroads

Ask the Big Questions
The most effective way to spot cross-selling opportunities is via holistic, financial planning types of discussions, Kauffman says, where every aspect of a client’s portfolio is scrutinized. Then, he says, it’s time to ask the Big Questions to expose need: Have you, the client, accumulated enough assets to retire when you want to? Do you have enough to last a lifetime, living the lifestyle you want to live? To what extent are your retirement assets–and your spouse–protected in the event either of you dies or requires long term care?

“We’ve been trying to educate [product] specialists on how they can sit down with a client, do a thumbnail sketch of their retirement and distribution situations and spot any holes in their program,” Kauffman explains. “Because once you have that know-how, that skill set, you can very easily pivot from one product to another.”

Permanent life insurance and long term care insurance top the list of products most readily cross-sold with annuities, says Leib. “We tend to look at the long term care [insurance] piece first. Generally that’s where we are likely to find the biggest hole in somebody’s financial plan.”

LTCI offers an extra guarantee
Often Leib positions LTCI as a form of “portfolio insurance” for clients who have invested in a variable annuity or a fixed-index annuity to build their asset base. Instead of classifying the funds used to pay for an LTCI policy as an expense, he prefers to position them as an asset reallocation, “because without [an LTCI policy], you would be using assets to pay for care anyway.” That logic appeals to a wide range of clients, including the wealthiest ones, he says. “Why pay for something out of pocket when you can insure it away?”

The versatility of permanent life insurance as a tax-efficient wealth-transfer, income-replacement and liquidity-generation tool makes it a popular cross-selling partner with annuities. Typically the type of annuity a client has will dictate the type of life insurance he or she purchases, notes Kauffman. On the conservative end of the spectrum, a client with a traditional fixed annuity might be inclined to buy a traditional fixed universal life or whole life policy, while more aggressive investors with a variable annuity tend to opt for variable universal life. Likewise, a client with a fixed index annuity might be best suited to an indexed UL policy.

In a cross-sell situation with annuities, Leib says he’s most apt to use permanent life insurance to create liquidity for a surviving spouse, to equalize an inheritance or as a wealth transfer vehicle within a trust, such as an irrevocable life insurance trust or a charitable remainder annuity trust. In situations involving trusts, the annuity–generally an immediate annuity with a withdrawal rider–might serve as an income source for the person who established the trust, while the permanent life insurance policy (preferably with a death benefit guaranteed to at least age 120) is the asset that replaces whatever amount he or she donated to the trust. This is where estate planning expertise is a must. Agents and advisors who lack that expertise should be sure to bring in a professional, such as an attorney, to be sure it’s structured and executed properly, Leib adds.