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Life-Insurance-Review

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Life-Insurance-Review Powered By Docstoc
					Paul Sanfilippo
Brokerage Director

Contact Paul:
 Phone: (800) 823-4852 x8760
 E-mail: psanfilippo@pinneyinsurance.com
 View Paul’s Biography




                                       For financial professional use only. Not for client presentation.
Disclaimer:
This material was not intended or written to be used, and cannot
be used, to avoid penalties imposed under the Internal Revenue
Code. This material was written to support the promotion or
marketing of the products, services, and/or concepts addressed in
this material. Anyone to whom this material is promoted, marketed,
or recommended should consult with and rely solely on their own
independent advisors regarding their particular situation and the
concepts presented here.




                                           For financial professional use only. Not for client presentation.
Introducing…
The Policy
Assessment




               For financial professional use only. Not for client presentation.
Policy Assessment Agenda
• The role of life insurance
• Consumer Considerations:
    Why? Then & Now, Change
•   Technical Reason Problems Occur
•   Industry Problem
•   Product Enhancement
•   Advisor/Agent Concerns
•   Rules & Regulations
•   Uniform Prudent Investor Act “UPIA”



                                          For financial professional use only. Not for client presentation.
Policy Assessment Agenda
• Ruling & Appeals
• Insurance Valuation Services “IVS”
• Client Interview
• The Process:
    Goals, Presenting, Examine, Determine
•   The Trusted Advisor
•   Case Design
•   The Kit
•   2 Clients you need to Consider
•   Next steps

                                            For financial professional use only. Not for client presentation.
Why are Life Insurance Policies Purchased?
• Provide survivor income
• Ensure that debts are paid
• Provide education for your children
• Protect your business
• Reward key employees
• Supplement retirement income
• Preserve your assets
• Minimize Taxes
• Create a legacy


                                        For financial professional use only. Not for client presentation.
As Consumer’s Lives Change,
So should their Policies
• What worked for them then,
  may not work for them now
• The course of time may change
  each client’s needs
• Are your client’s needs being met?




                                       For financial professional use only. Not for client presentation.
What Changes can Affect a Policy?
• New family members?
• New career?
• Financial adjustment?
  (More or Less Income?)
• Health Changes?
  (Quit smoking, lost weight?)
• Bought a new home?


These in addition to any other life changes
will require a policy review to ensure your
client’s needs are being met sufficiently.
                                          For financial professional use only. Not for client presentation.
Top 10 Reasons Consumers
Need a Policy Review
1. Insurance Policy has not been
     reviewed in the last three years.
2.   Financial goals may have changed
3.   Life insurance needs have
     increased or decreased
4.   Ownership is structure has changed
5.   Beneficiary designations




                                          For financial professional use only. Not for client presentation.
Top 10 Reasons Consumers
Need a Policy Review
6. Family or business situation
      has changed
7.    Health has changed
      (may qualifying for a better rating)
8.    Is the policy cost-effective?
9.    Loans, withdrawals, or other policy
      changes have affected the policy’s
      performance
10.   Payment of premiums have been
      inconsistent

                                             For financial professional use only. Not for client presentation.
The Industry Created the Problem!
• Glass Steagall Act 1933
• 30 yrs. of Deregulation
  toward Repeal
• Establishment of the
  Gramm-Leach-Bliley Act
• Demutualization of
  Mutual to Stock Companies
• Mergers and Acquisitions




                              For financial professional use only. Not for client presentation.
The Industry Created
the Problem!
• Created Fierce competition
• Commission Squeeze
• Improved Technology
  created efficiency
• MGA, BGA, IMO, FMO Growth
• Online Retailers of term
  Insurance
• Social Media “31%”


                               For financial professional use only. Not for client presentation.
The Problem Forced Innovative Solutions!
The changes in the Industry forced
innovation of better Products:
• Historically low investment returns
• Interest Rates have declined
• Underlying Investments have
  not performed
• Mortality tables have changed
  significantly




                                        For financial professional use only. Not for client presentation.
The Problem Forced Innovative Solutions!
• Increased Life Expectancy
  due to Healthier Habits
• Lower expenses result in
  higher death benefits
• Lower Expense result in
  lower premium outlays
• Easiest to see in term insurance




                                     For financial professional use only. Not for client presentation.
Why should you Care?
• Policies may not perform as expected
  “Bad investment Decisions”
• Clients objectives may not be met
• Negligence in Administration,
  Design & Disclosure
• Litigation for those who are
  “part of the process” including:
   • Life Insurance Agent
   • Attorney
   • CPA
   • Trustee
   • Advisor
                                         For financial professional use only. Not for client presentation.
Rules & Regulations to Follow
Uniform Prudent Investor Act
• Provides a safe harbor for those
  acting in a fiduciary capacity.
• “Invest and manage trust assets as
  a prudent investor would…
  exercise reasonable care, skill,
  and caution”




                                       For financial professional use only. Not for client presentation.
Rules & Regulations to Follow
Code of Federal Regulations
Title 12 Sec. 9.6
• Mandates requirements for
   national banks dealing with
   trusts assets, including life
   insurance
• Reviews: Pre-acceptance,
   post-acceptance, ongoing annual

Investment Policy Statement (IPS)
• Creation

                                     For financial professional use only. Not for client presentation.
Uniform Prudent Investors Rule
• 1994 UPIA establishes standards for trustees managing
  in managing trust assets
• More than 45 states have adopted this Act
• Investment cannot be determined
  on a stand-alone-basis include ILIT’s
• ILIT trustee’s are fiduciaries act in the best interest of
  the trust’s beneficiaries
   • Must Diversify, Monitor, & Review
   • Risk and Return must be considered
   • May delegate responsibilities (Skilled vs. Unskilled)
   • 5 states –DE, WV, ND, WY, PA

                                               For financial professional use only. Not for client presentation.
Stuart Cochran ILIT (901 N.E2d 1128 March 2, 2009 IN)
• 1987 ILIT purchases a DB of $4,753,539
• 1999 policy is exchanged for two VUL polices od $8,000,000
• After major loses in 2003, Trustee hires outside, independent
    consultant to review policy
•   Consultant recommended further monitoring, due to potential
    lapse prior to mortality
•   Selling Agent proposes surrendering policy and purchasing a new
    policy of $2,536,000 & the consultant agreed
•   Trustee Surrenders the policy ($108,000 charge)
•    Insured dies soon after at age 53 and receives DB of 2.5 Million
•   ILIT Beneficiaries sue trustee for breach of fiduciary duty
•   Judgment for Trustee (PRUDENT) and ILIT beneficiaries Appeal
                                           For financial professional use only. Not for client presentation.
                     Keys to the decision
1.   The trustee hired an independent, outside
     consultant
2.   The consultant provided advice and the trustee
     followed it.
3.   The trustee “examined the viability of the policy
     and at least one other option
4.   UPIA Statute “Hindsight should not be used to
     judge the actions of the trustee; only the facts
     existing on the date of the decision are relevant.”
5.   Opinion provides guidance of minimum standards
     of conduct and fiduciary duty.



                                             For financial professional use only. Not for client presentation.
Insurance Valuation Services “IVS”
• Insurance Valuation Company providing a
  complete turnkey solution to help you manage
  the complexities of Life insurance.
• Comprised of Attorney’s, Tax Professionals and
  Analysts.
• Provides a totally objective and unbiased
  service
• Services allow you to focus on growing your
  business and strengthening the relationship
  with your clients

                                    For financial professional use only. Not for client presentation.
Insurance Valuation Services “IVS”
• Insurance Valuation Company providing a
  complete turnkey solution to help you manage
  the complexities of Life insurance.
• Comprised of Attorney’s, Tax Professionals and
  Analysts.
• Provides a totally objective and unbiased
  service
• Services allow you to focus on growing your
  business and strengthening the relationship
  with your clients.

                                    For financial professional use only. Not for client presentation.
  Insurance Valuation Services “IVS”
                                                                                 •   No Contract
• Typical Pricing in the market place                                            •   1 policy minimum
  • Policy Review - A stand-alone, non-biased Policy                             •   $250Paid in
    Review that is delivered to you electronically.                                  Advance

  • Portfolio Report - Executive Portfolio Report that                           •   No Contract
    includes a Market Analysis                                                   •   No policy
                                                                                     minimum/maximum
  • Policy Remediation - in-depth policy analysis, review                        •   $150 - $500
    of goals, objectives in-depth policy analysis, review                            Invoiced
    of goals, objectives and suitability, request additional                         Separately
    illustrations, create and distribute disclosure
                                                                                 •   No Contract
    statements, acknowledgement forms and market                                 •   1 case minimum
    analysis. Draft correspondence & conduct telephone                           •   $500
    briefings                                                                    •   Standard
                                                                                     Remediation
  • Complimentary service to PINNEY Insurance Agents                                 Package

                           For financial professional use only. Not for client
                                                               presentation.
The Client Interview
• Why do you own this amount
  of insurance?
• Why did you buy this type of
  insurance?
• What was the primary purpose for
  buying this insurance?
  (supplementing retirement, family
  security, college funding, tax planning)
• How much insurance will be
  in-force when needed?


                                             For financial professional use only. Not for client presentation.
The Client Interview
• Do you have the appropriate type
  and amount of insurance to meet
  your primary goal?
  (Cash accumulation vehicle or Death
  benefit — maximum death benefit)
• Retaining term beyond
  conversion period:
  - Does this make good economic sense?
  - What happens if your underwriting
     status changes?
  - Can you re-qualify for the lower rates?
  - Is the need for coverage temporary
     or longer term?                        For financial professional use only. Not for client presentation.
Goals of the Process
• Educate the Policy Owner(s) about
  life insurance and their policy.
• Evaluate the Policy Owner(s) the present
  situation of the policy and the Performance
  of the policy going forward.
• Present to the Policy Owner(s) the
  possible alternatives in the marketplace
  that can provide enhanced features
  and benefits.



                                          For financial professional use only. Not for client presentation.
Presenting A Process
• Review changes in life insurance needs
• Presentation
   • Logical
   • Easy to understand
   • Provides:
     –   Real Numbers
     –   Real Analysis
     –   Real Alternatives




                                           For financial professional use only. Not for client presentation.
The Assessment Will Examine
• Policy performance
• Policy design and function
• Funding of the policy
• Financial health of life insurance
  carrier
• Health status of insured
• New underwriting and medical exam
• New contestability and suicide
  clause periods


                                       For financial professional use only. Not for client presentation.
The Assessment Will Examine
• Lower cost guarantees
• Surrender charges
• Outstanding loans
• New surrender charge period
  may lower cash values




                                For financial professional use only. Not for client presentation.
The Assessment Will Determine if:
• A Policy is performing
   • If existing policy is performing as expected or
     better, and needs have not changed.
   • You are finished for now, and
   • Continue to review periodically to be sure policy is
     on course.
• A Policy is not performing
   • If existing policy is not performing as expected, or
     if needs have changed:
   • Determine a premium increase or decrease
     required to reach the goal.
   • Work with the client to correct the situation

                                               For financial professional use only. Not for client presentation.
The Assessment Will Determine if:
• You should Consider alternatives
   • If appropriate, consider other solutions.
   • Review additional insurance coverage
     options with your client.
   • Explain why additional coverage may be
     suitable. Share illustrations with the client to
     help them make the decision.




                                                 For financial professional use only. Not for client presentation.
Trust, Integrity & Diligence
• Conducting an insurance review
  will build client trust
• Having a system that is clear, easy to
  understand, and educates will restore
  faith in a clients ability to meet their
  objectives
• Implementing a process unilaterally
  provides a high standard of suitability
  and fiduciary control.



                                             For financial professional use only. Not for client presentation.
Case Scenerio
• George Client and Jean Client a Male,
  age 65 and Female, age 66 own
  a Survivor Life Insurance Policy
• Policy was originally obtained in 1993.
• Their current health appears to be
  Standard Non‐smoker and Standard
  Non‐smoker based on information
  provided on the Policy Assessment
  worksheet.
• An Pre-underwriting review was
  conducted using insurance company
  published underwriting criteria.
                                            For financial professional use only. Not for client presentation.
Case Scenerio
• Your stated policy objectives were used in
  the compilation of this report.
• When you completed the brief data sheet
  at the beginning of the Policy Assessment process,
  you stated the two most important factors to
  consider during our evaluation were:
   • Primary Objective: Add / Increase Benefits
   • Secondary Objective: Cost / Premium Reduction
• All recommendations provided are intended to maximize one
  or both of these goals and to help you achieve your desired
  outcome in the most effective and efficient manner.

                                          For financial professional use only. Not for client presentation.
For financial professional use only. Not for client presentation.
For financial professional use only. Not for client presentation.
For financial professional use only. Not for client presentation.
Case Scenerio Conclusion
• Based on the comparative premiums,
  underwriting, financial stability
• Primary goal of Add/Increase Benefits
  based on current premiums, the
  New Carriers Survivor Life policy for
  $4,511,376 at a premium of $20,000
• Secondary Objective: Cost / Premium
  Reduction $0 outlay, the New Carrier
  Survivor Life Policy for $3,027,828
• Current policy requires an increase
  in premium to $37,276 to maintain
  coverage on a guaranteed basis to age 100.
                                       For financial professional use only. Not for client presentation.
Case Scenerio Conclusion
• Recommendations:
 Move into UW with New Carrier
  • Assume all additional underwriting
    requirements are within the New Carriers
    "Standard Nonsmoker“ health class.
  • Assumes a 1035 exchange of $661,623.
  • Current policy has a Cash Surrender
    value of $661,623.




                                           For financial professional use only. Not for client presentation.
The PA Kit Includes:
• Advisor Brochure
• Client Brochure
• Client Work Sheet
   • Authorization to Release of IFPL
• Marketing Letters
• Fax Cover Sheet
• Folder (Optional)




                                        For financial professional use only. Not for client presentation.
The Client Brochure:
• You can count on Change
• What is a Policy Assessment
• How It Works
• The Process
• The Potential Outcomes
• Why Perform an Assessment?
• What does it analyze?
• Insurance Valuation Services

• View Sample (Online)



                                 For financial professional use only. Not for client presentation.
The Advisor Brochure:
• The Problem
• What is a PA
• Piece of Mind
• Examples of Potential Issues
• How it Works

• View Sample (Online)




                                 For financial professional use only. Not for client presentation.
The Worksheet:
• Printable OR Fillable
• Client Information
• Policy Objectives
• Medical History
• Ownership Information
• Authorization to Release

• View Samples: (Online)
  1. Printable
  2. Fillable



                             For financial professional use only. Not for client presentation.
Sample Report:
• Purpose of Assessment
    (Evaluate Changes)
•   Who Conducted the Assessment
    (IVS)
•   Executive Summary
    (Recommendations)
•   Special Considerations
•   Client & Policy Overview
    (Objectives & Ownership)

• View Sample (Online)


                                   For financial professional use only. Not for client presentation.
Sample Report:
• Policy Performance Assessment
    Current Funding Commitment
    Guaranteed & Non-Guaranteed
     Assumptions
    In-force Ledgers and
     Market analysis
• Summary of Alternatives
  (Primary & Secondary)
• Financial Stability Review (Carrier)
• Conclusion & Recommendations
  (Options, Next Steps)

• View Sample (Online)
                                         For financial professional use only. Not for client presentation.
Ask yourself 2 Questions
• What is your best written case?
  • This is a fiduciary tool to ensure that his policy is
    meeting the intended objectives.
  • It is also an advocacy process that can lead to
    referral conversation.
• Who is your worst client?
  • Is this the client that would be the most
    likely to sue you?
  • Do you want to have some compliance
    between you and this situation?



                                                   For financial professional use only. Not for client presentation.
Both of these 2 situations
       could be your
first 2 Policy Assessments




                         For financial professional use only. Not for client presentation.
Next Steps…
• Schedule meeting to meet with
    your client
•   Gather information needed
•   Authorization letter signed
•   Pinney/IVS will develop the
    presentation
•   Schedule meeting to review




                                  For financial professional use only. Not for client presentation.
Important Contact Information
 CLQ                www.WholesaleInsurance.net
 EZLife Sales       www.EZLifeSales.com
 Sales Tools        www.PinneyInsurance.com
 Pinney Platforms   www.PinneyPlatforms.com



800-823-4852 x8760

                                      For financial professional use only. Not for client presentation.
Thank you!

      For financial professional use only. Not for client presentation.

				
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posted:11/21/2012
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