In general terms the consumer is at the mercy of a professional. Whether it’s auto or home repair, Joe Public doesn’t have the knowledge to assess the estimate or the finished product. It’s no different with financial professionals. In the wealthiest country in the world, we are the least educated when it comes to money matters. Honestly, how many consumers can read their homeowner’s policy? And even if they did, do they understand it? You would think by now insurance companies would … [Read more...]

There are several rating services that assess an insurance carrier’s financial strength and/or claims paying ability. The rating serves have their own proprietary formula to assign a letter rating based on the public domain information the carrier files with the state or their direct submissions to the rating services. The most recognized rating services in the insurance industry are A.M. Best, Standard & Poor’s, Moody’s, Flitch and Weiss. The numerical Comdex Rating is a composite of … [Read more...]

The three and five year guaranteed fixed interest rate annuity environment is a leading consumer item for online and direct mail marketing pieces. The rates for three years are around 3.25% and the five years are around 3.90% at the time of this blog was written. Those rates are extremely attractive in light of the market meltdown and other competition interest rate vehicles. But a couple of caveats need to be included in your ad campaigns to fulfill full disclosure requirements. The first … [Read more...]

If you’re licensed to sell securities and life insurance, you may have had dividend conservations with prospects and clients about stocks, mutual funds, ETFs and cash value life insurance (participating whole life and indexed universal life or IUL) Security dividends, if distributed, are taxable and depending upon the duration of ownership of the fund, ordinary income and/or capital gains will apply when the dividend is taken in constructive receipt by the fund owner. Participating whole life … [Read more...]

In a decreasing interest rate environment investment grade bond performance has come under greater scrutiny. A small but growing segment of insurance and financial professionals offer participating whole life as a bond alternative for conservative clients or part of their conservative portfolio positions. That in itself may be a good option. The base policy has contractual guarantees that can appeal to conservative portfolio management with the added feature of potential for tax free … [Read more...]

Often retirement experts address portfolio holdings as short, mid and long-term positions. The retirement model dictates the time horizon, but in the case of cash value life insurance for tax free income, it’s a lifetime hold position. TAMRA compliant cash value life insurance can distribute tax free income via the withdrawals to basis and policy loans of gain AS LONG AS THE CONTRACT IS KEPT INFORCE FOR THE LIFE OF THE INSURED. If the contract is surrendered, lapses or matures all gain in the … [Read more...]

Generally speaking, Roth conversions usually take place between ages 55-65. Cash value life insurance carries as expense charge called the cost of insurance which is predicated on age and health. The cost of insurance begins to increase geometrically during those years by age. Usually clients at that age have some health issues so quoting the top preferred rates on a proposal to boost the internal rate of return is inappropriate most of the time. The cost of insurance is an expensive component … [Read more...]

The strategy of a Roth conversion is premised on the arbitrage, or the difference, of a client’s current and retirement tax brackets. The advantage is paying taxes today and none in retirement’s tomorrows. The additional feature to this conversion strategy eliminates exposure to the provisional income test for Social Security taxation saving benefit taxes because Roth IRAs are not subject to the test. But keep in mind the client may not have to pay taxes at all with the standard and senior … [Read more...]

In my career, I had the privilege of speaking in thousands of seminars. Communication is a God-given gift. I’ve listened to hundreds of speakers, some motivational, others tacticians. Most presenters speak at the 30,000-foot level, a few are technically deep and well versed in their areas of expertise. Often the public wants to meet with the speaker for their financial planning. Afterall the speaker can communicate. He has charisma and a certain panache. But eloquence is never a substitute for a … [Read more...]