Designing and packaging cases, particularly those surrounding clients with complex needs or large premium values, can be time consuming and require a great deal of your resources. In an industry where time is money, it’s important that you have the support you need to make the process as simple as possible. The next time you’re working a case in which multiple needs must be met with a single solution, consider contacting your Creative Life Sales Team for help. We can leverage our expertise and connections to identify any missing links and turn “trouble” into a placed policy that achieves all of your clients’ needs.
THE FACTS
· Male client, age 63
· Large cash lump sum available
· Repositioning part of a cash portfolio
· Looking for both income and a death benefit
THE GOAL
With retirement nearing, the client was looking for a way to turn a portion of his cash portfolio into better benefits for himself and his family. He desired a tax-free income to supplement the pursuits he planned to follow for enjoying his golden years, but also wanted to be sure he would have a legacy to leave his heirs – one that didn’t include a tax burden.
THE COURSE OF ACTION
After many years of working hard to build and maintain a successful career, the client knew that retirement was just around the corner. He decided it was time to meet with his agent to review his current plan and determine if there were more effective strategies for achieving his long-term financial goals. Together, they decided to reevaluate a large cash position the client was currently holding in his cash portfolio. The client asked if there was a way to allocate these funds in one lump sum more specifically for creating supplemental retirement income, but not at the expense of leaving a death benefit for loved ones.
The agent went to work surveying options for the client and determined that typically, using such a large single premium payment that isn’t a 1035 exchange to purchase a life insurance policy would create a modified endowment contract (MEC). Although this could serve as a means for establishing the wealth transfer he wanted upon death, it would prohibit the tax-free accessibility of the policy’s cash value. In order to find a solution that would cover the missing link and achieve both of the client’s goals, he decided to contact his Creative Life Sales Team for help.
THE SOLUTION
Because of the client’s large premium amount available, we contacted Lincoln Financial Group to explore the possibility of setting up a premium deposit account for the client. Using this method, the account would pay the necessary premium to the carrier in advance, earn 2.5% interest on the funds in the account and create a structured payment plan for the client without forcing him to track payments from various accounts. With the proper construction, this solution would allow the single premium payment to avoid MEC rules.
After working with the agent to supply Lincoln’s underwriting team with the APS records they needed to informally shop the case, a Preferred Non-Tobacco rating was offered. Using Lincoln’s LifeReserve® Indexed UL Accumulator, the client would have several index crediting options to choose from for accumulating cash value in the policy that would be available for tax-free income he could take in retirement. More importantly, he could feel confident knowing that if something happened to him, his family would be taken care of by the policy’s tax-free death benefit.
THE RESULT
For the client: With the right solution in place, the client wouldn’t have to make a choice between competing priorities. Instead, purchasing one policy that he could track simply and easily would allow him to protect both his future and his family’s.
For the agent:
Don’t hesitate to use your Creative Life Sales Team’s connections to help identify any links missing in your case design. With the knowledge and resources available at our fingertips, we can turn the placement process into a seamless system that generates the best results for you and your clients. Call us anytime.
FOR AGENT USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC. 12299 – 2012/5/8
Lincoln LifeReserve® Indexed UL Accumulator is issued on policy form UL5062 and state variations by The Lincoln National Life Insurance Company, Fort Wayne, IN. In some states, contract terms are set out and coverage may be provided in the form of certificates issued under a group policy issued by The Lincoln National Life Insurance Company to a group life insurance trust. Contractual obligations are backed by the claims-paying ability of The Lincoln National Life Insurance Company.
Product features, limitations and availability vary by state.
Agents may not give tax, legal, accounting or investment advice. Individuals should consult with a professional specializing in these areas regarding the applicability of this information to his/her situation.