Joe Ross (Photo: Daniel Williams/TA)

Using term life insurance in a buy-sell arrangement today is the equivalent of hanging on to an old flip phone, a speaker told attendees Wednesday at a NAILBA 36 pre-show workshop.

Joe Ross, vice president of sales productivity and business development at AIG Financial Distributors, talked about the advantages of using permanent life insurance in buy-sell arrangements during a session with the title “Triple Trigger Buy-Sell: The Next Generation of Buy-Sell.”

The National Association of Independent Life Brokerage Agencies is bringing hundreds of insurance distributors to Hollywood, Florida, for its annual conference this week.

(Related: LIMRA Stands With You)

Ross led off his discussion by comparing iPhone vs. flip phones.

“Our family has four iPhones and we pay about $300 each month,” Ross said. “Over the course of 10 years, we’re paying $36,000—for our phones!”

When one of Ross’s daughter’s cracked the gorilla glass on her phone, the family trekked to Verizon to get it replaced. “While there, I saw they still sold the old flip phones,” Ross said. He said he was even more shocked when he saw they were going for $2.08 per month.

“The interesting thing is that people perceive value in the iPhone,” Ross said. “They perceive such a difference that they’re willing to pay more than 30 times the amount they pay for a flip phone.”

Ross then talked about buy-sell agreements, or agreements established to protect or continue a business should a co-owner die, go through a divorce or simply want to sell.

Ross said that, too often, financial professionals fall back on the old familiar ways of conducting business. “In the process, the agreement loses value,” according to Ross.

He said setting up the funding vehicle for a buy-sell can be tedious work and long hours for financial professionals. And, in many cases, he said, that time is not spent as efficiently or as effectively as it could have been.

He likens switching to permanent life for a buy-sell arrangement, from term life, to shifting to an iPhone.

Shifting to permanent life is a more benefits-driven approach, he said.

“It allows for much more flexibility, and the premiums are multiples higher,” he said. “Not to mention that commissions are significantly higher than with permanent life policies.”

If you’re at NAILBA 36 and you missed the buy-sell workshop, you can see Ross again at 1:15 p.m. EST Friday. He will present a session on “Life Insurance Planning in a Changing Tax Environment.”

Ross plans to weigh in on tax reform, the potential estate tax repeal, and how talk about the tax bill is already impacting planners and clients, as everyone waits to see what will happen on Capitol Hill before making any money decisions.

—Read Business Succession Planning and the Buy-Sell Agreement on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on
Facebook and Twitter.