If your prospecting is mainly with the age 55-80 group, you know it’s not what it was even a few years ago. “Almost tapped out” is the way some advisors are describing it.
If your practice is feeling that pain, there’s a way to reach a broader, motivated and largely untapped audience: Consumers age 36-55.
You can do it with Indexed Universal Life (IUL) insurance policies. What grabs the attention of this age group is the concept of a “tax-free retirement.”
Unlike IRAs and other qualified retirement accounts, there are few cap limits on IUL contributions. Essentially, this means your clients can invest as much as they want into IUL savings vehicles.
These accounts not only help them hedge any risks associated with their retirement savings; they also offer your clients the potential of having tax-free distributions in retirement. The higher contributions are not only wonderful news for your clients, but you can also benefit from a greater earning potential based on the regular and automatic deposits they make to these accounts.
IUL opens up more sales opportunities
As you know, IUL is experiencing double-digit growth in the insurance and financial services industry. Continue reading to find out why.
Indexed Universal Life is a hybrid product that can allow for policyholder flexibility. (Photo: iStock)
The growth that these types of policies are experiencing is so significant, you can be sure that if you’re not selling IUL, the competition is out there getting the business.
Here are some of the ways you could be pitching IUL to new prospects:
- Over-funded minimum death benefit sale showing income distribution in retirement years.
- As a GUL alternative. Often showing the same premium with slightly lower guarantees and far better cash value potential or solving for a slightly higher premium with same guarantees as a GUL.
- Buy-Sell cases where the policy values can be used for key person retirement income or to buy out a retiring principal.
- Frustrated high earners at the inflexibility of their other tax-deferred accounts. IUL is an excellent option for clients who have maxed out their retirement accounts or find themselves limited in the amount of tax-deferred income they can contribute to their 401(k).
- 401(k) alternative.Why invest retirement dollars tax-free and be taxed on the growth over time? Five dollars invested in an IUL is taxable, but when it turns into $20 later, there’s no tax bill. A 401k lets you invest the $5 tax-free, but taxes you when it grows to $20 later at who knows what percentage.
- Protection against the stock market volatility. IULs offer market-linked gains without market-based risk.
Consider this case study: A 45-year-old preferred nonsmoker can buy $1 million of a GUL for $7,230 and have coverage guaranteed for a lifetime with little to no cash build up in his plan. However, he can the same $7,230 and deposit it into an IUL product and have guarantees to age 95 with a projected cash value of $152,000 at age 65, using the default interest rate the carrier can show under AG49.
Even at a lower rate of return, the values are far better than nearly all GULs on the market. Would a client trade the handcuffs that most GULs come with for a few less years of guarantees and the future flexibility than an IUL offers? It has been said this product offers “optionality,” the flexibility of deciding how to use it in the future without having to make any decisions today.