How life insurance can
help your clients with estate planning needs
What you need to know when meeting with your clients
Estate planning can be a complex topic that may involve several
client advisors. As a life insurance agent, you want to make sure
you are able to address as many needs as possible where life
insurance may help clients reach their goals. Your key to success is
to go into estate planning situations prepared with possible
solutions. Here is some guidance to help you with a successful
meeting.
To get started, take time to plan your visit with your client.
Identify questions that may help you discover key information. The
goal is to offer solutions that meet the client's needs. Here are
several questions about needs and the solution that may develop.
Question |
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Need |
Do you have kids? |
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This question opens up discussions about what the client
wants to do for children. It can be a point of reference for
future discussion. Find out if the children are involved
decision makers or have strong opinions about the planning
process.
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Do you have grandchildren? |
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Secondary education funding may be a goal for the
grandchildren or their children. A gift for the
grandchildren and children can be nice at a time when
financial help in early adulthood would be much appreciated.
Or, what if the client has substantial IRA or 401k funds set
to generation skip? In this scenario, it may be possible
that the children may inherit less than the grandchildren.
Life insurance may be a way to balance the situation.
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How big is your estate? |
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It's possible that the clients haven't done the math yet.
Identifying this figure will help start conversations about
estate taxes and the different solutions that may be
involved. Life insurance may be a solution to help cover
some or all of these expected costs.
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Have you thought about the future of estate taxes? |
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The current environment makes planning for federal estate
taxes challenging. Ask the client's opinion on his/her
thoughts.
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Are you familiar with your state death tax rates? |
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Clients may not be aware of state death taxes or the
appropriate exemption amount for their state. This
conversation may result in identifying a life insurance need
to cover state costs even if the client is within federal
exemption limits.
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Do you expect future gifts or inheritances? |
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A client's estate size today is unlikely to be the same
years down the road. By helping your client recognize the
impact of significant estate growth, you can more accurately
cover estate tax needs.
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Do you have a family business that you would like to pass
on? |
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A family business often struggles to survive as it passes
through generations. Life insurance may be used by the
business itself on the owner( s) as key people, or used to
by the family to help avoid the business being liquidated or
highly stressed to pay estate taxes.
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Do you have land or hard assets of significant value? |
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Selling these assets could generate the funds needed to
settle an estate, but a rushed sale in order to pay federal
estate taxes is not an ideal situation. These assets may
contribute to a large percentage of the estate's value
making it difficult for the executor to handle. Life
insurance can help cover estate taxes or be used as a
balancing tool to equalize inheritance between those who
receive valuable hard assets and those who don't receive the
assets.
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Are there any charities that are close to your heart?
|
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Life insurance may be beneficial for charitable bequests.
For pennies on the dollar, life insurance can provide a
great gift. By transferring by rule of contract, this would
be outside of probate and may be gifted various ways to
allow for different tax advantages.
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Do you have an outstanding mortgage? |
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Not every client will die with a house paid in full. Though
some clients may not be concerned, others are motivated to
see that all of their debts are covered and won't reduce
their estate size in other areas.
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What are your goals in estate planning? |
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This is a key question that when left open will help you
identify the client's motivation items. It's likely that
many goals may be achieved using life insurance. Some goals
could be helping to:
- Reduce estate settlement costs
- Provide sufficient estate
liquidity
- Preserve the value of the
estate
- Plan for orderly disposition
of a business interest
- Make specific bequests
- Minimize taxes
- Maximize amount to heirs
- Balance estate
- Provide for
spouse/children/grandchildren
- Education funding
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North American Company does not give tax or legal advice. Please
consult a tax advisor before making a gift in relation to insurance
that qualifies for a gift tax exclusion.
Life insurance policy will have generally income tax free death
benefits.
North American Company nor its agents give tax advice. Please advise
your customers to consult with and rely on a qualified legal or tax
advisor before entering into or paying additional premiums with
respect to such arrangements.
The primary purpose of life insurance is to provide a death benefit
to beneficiaries. Because of the uncertainty surrounding all funding
options except savings, it is critical to encourage your clients to
make personal savings the cornerstone of their college-funding
program. However, even a well-conceived savings plan can be
vulnerable. Should your clients die prematurely, their savings plan
could come to an abrupt end.
To protect against this unexpected event, life insurance may be the
only vehicle that can help assure the completion of a funding plan.
In addition to the financial protection aspect of insurance, the
tax-deferred buildup of cash values can be part of your clients'
college savings plan. Generally, distributions up to the contract's
cost basis are tax free. Moreover, loans in excess of the cost basis
are also tax free as long as the policy remains in force.
Insurance Brokerage America
National Marketing
P.O. Box 30248
Charleston, SC 29417
800-406-6303 843-769-9804
fax
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