Blog #190: Crystal Clear — and Simple

Bob Ritter's Blog #190 Crystal Clear – and Simple image

InsMark has several sophisticated ways to illustrate a retirement plan that features cash value life insurance.  The simplest of all, though, is Life Plan – a one-pager with just about everything you need to know about cash value life insurance funding a retirement plan.

Crystal clear – and simple . . .

You can read the rest here: Blog #190 . . .


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Blog #189: Permanent vs. Term Comparison (Part 3)

Wall Street Journal – You Are So Wrong!

Bob Ritter's Blog #189: Permanent vs. Term Comparison (Part 3) Wall Street Journal – You Are So Wrong! image

Blog #189, third in a “term vs. perm” series, introduces a more complex, yet highly effective, method of eliminating term insurance for those clients with the cash flow to buy permanent coverage.  It develops a significant boost to net worth while providing the same – in some examples even better – after tax retirement cash flow.

Check out this graphic where red is net worth developed by the term plus equities package, and green is the permanent policy.  Buying the term is an $8.85 million mistake!

Bob Ritter's Blog #189: Permanent vs. Term Comparison (Part 2) Wall Street Journal – You Are So Wrong! - Effect on Net Worth image

Buy term and invest the difference?  It’s a terrible strategy if you have the cash flow to buy permanent life insurance.

You can read the rest here: Blog #189 . . .


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Blog #188: Permanent vs. Term Comparison (Part 2)

Wall Street Journal – You Are So Wrong!

Bob Ritter's Blog #187 Permanent vs. Term Comparison image

In the February 5, 2019, issue of The Wall Street Journal (WSJ), there is a flawed and misleading article in the Journal Report section entitled The Case Against Permanent Life Insurance.

Blog #187 featured Indexed Universal Life vs. Term Insurance and an Equity Side Fund.  There were some pretty amazing results in favor of the IUL.  With Blog #188, we are comparing Participating Whole Life vs. Term Insurance and a Taxable Side Fund with the Side Fund supported by a hypothetical bond fund.

The criticism is always words and no math.  With Blog #188 you can gauge the validity — or deficiency — of the term vs. permanent proposition narrated in The Wall Street Journal as it applies to Whole Life.

You can read the rest here: Blog #188 . . .


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Blog #187: Permanent vs. Term Comparison (Part 1)

Wall Street Journal – You Are So Wrong!

Bob Ritter's Blog #187 Permanent vs. Term Comparison image

In the February 5, 2019, issue of The Wall Street Journal (WSJ), there is a flawed and misleading article in the Journal Report section entitled The Case Against Permanent Life Insurance.  Due to the reputation of the WSJ, you will soon be fending off criticism of permanent life insurance from your prospects and clients.

American humorist Josh Billings once said, “It ain’t ignorance causes so much trouble; it’s folks knowing so much that ain’t so.”

I first ran across this anti-permanent insurance evaluation in a 1950s book entitled The Grim Truth About Life Insurance written by Ralph Hendershot, a retired financial editor and columnist of The World-Telegram and The Sun.  At the time, it caused considerable controversy within the life insurance community as an unproved theory.

This same criticism has also been voiced frequently over the years by such folks as Suze Orman and Dave Ramsey.  It is also often heard from stockbrokers.

This is how Suze does it:


“I HATE WHOLE LIFE INSURANCE”
“I HATE UNIVERSAL LIFE INSURANCE”
“I HATE VARIABLE LIFE INSURANCE”
“THE ONLY TYPE I LIKE IS TERM INSURANCE”

 

You can read the rest here: Blog #187 . . .


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Blog #186: Solo 401(k) vs. Indexed UL
Knock Your Socks Off (Part 4)

Bob Ritter's blog #186 Solo 401(k) vs. Indexed UL<br>Knock Your Socks Off (Part 4) Image

A Solo 401(k) is one of the most dynamic of qualified plans.  It is a strategy used by self-employed and owner-only companies where, in 2019, up to $62,000 in combined plan contributions can be deducted for those age 50 and over.  Under age 50, the limit is $56,000.

Blog #186 introduces you to an insurance-funded alternative using Indexed Universal Life (IUL) and compares it to a Solo 401(k).

You can read the rest here: Blog #186 . . .


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Blog #185: Split Funded 401(k)™
Knock Your Socks Off (Part 3)

Bob Ritter's blog #184 Image Part 2, A New Look at Various Financial Alternatives (It Will Knock Your Socks Off)

Tom Graves, age 35, plans to take advantage of the $19,000 maximum contribution to his 401(k) effective January 1, 2019.  His employer matches the first $4,000.  Known as a Split Funded 401(k), can an effective case be made for diverting the after tax cost of the remaining $15,000 beyond the employer’s match into a personal, non-deductible, retirement plan?

The Case Study also includes our new Comparison of Plan Costs which compares the mortality costs and fees of life insurance with the fees and income taxes of alternate investments.

The results may surprise you to the extent that the life insurance is superior to the 401(k).

You can read the rest here: Blog #185 . . .


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Blog #184: It Will Knock Your Socks Off (Part 2)

Bob Ritter's blog #184 Image Part 2, A New Look at Various Financial Alternatives (It Will Knock Your Socks Off)

Recently in Blog #180, we announced a critical upgrade to our comparison modules in the InsMark Illustration System involving the ability to compare internal plan costs.  In addition to values, you can now illustrate the difference between investment taxes and fees vs. the mortality and administrative expenses of life insurance.  The alternatives never match up to the life insurance, and this feature is a significant breakthrough in illustration capacity.

We typically use an illustration like our Various Financial Alternatives (VFA) where you can compare cash value life insurance to a variety of investments, e.g., a taxable account, a 401(k), a tax deferred account, an equity account, etc.  We also compare the life policy to just one other investment using the Other Investment vs. Your Policy illustration module.  We also address “buy term and invest the difference” by including a companion term policy with an alternate investment using the Permanent vs. Term illustration module.

You can read the rest here: Blog #184 . . .


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Blog #183: Are Your Clients Too Old
to Use IUL in a Retirement Plan?

Bob Ritter's Blog #183: Are Your Clients Too Old to Use IUL in a Retirement Plan? image

This Blog addresses an awkward situation.  James and Allison McNamara are both age 55 with a current net worth of $4.75 million.  They are at the peak of their earning (and saving) years and intend to retire at age 65.  They are reviewing an Indexed Universal Life (IUL) presentation involving a Private Retirement Plan (PRP).

Some people think IUL does not work very well with loan activity starting as early as ten years.  This presents a dilemma that involves the difficult task of demonstrating to James and Allison the value of a retirement strategy that produces no retirement cash flow for 20 years – 10 years after retirement begins.

To address this, you cannot rely on the usual illustration format and try to talk your way through the problem as the issue is so obvious; however, our Wealthy and Wise® System can handle it easily since the System merely finds the needed retirement cash flow from other assets.  The results of this analysis should open up a whole new market segment for Private Retirement Plan presentations, i.e., those at or near retirement with large sums available for retirement savings but who would usually pass on a plan that doesn’t begin to produce income until well past retirement.

You can read the rest here: Blog #183 . . .


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Blog #182: Endorsement Split Dollar
with Salary Continuation at Retirement

Bob Ritter's Blog #182 endorsement split dollar with salary continuation at retirement image

Supplemental Executive Retirement Plans (SERPs) have long been the go-to benefit plan for large public companies, and the new 21% income tax bracket for C corporations frees up substantial cash flow for such plans.  SERPs typically include retirement and survivor benefits (both taxable to the covered executive or his beneficiaries) and are funded with corporate-owned life insurance (COLI) policies.

A variation I like features after tax retirement and survivor benefits.  It is called Endorsement Split Dollar with Salary Continuation at Retirement (ESD+SC), and Blog #182 covers it in detail.

Some readers may question whether loan regime split dollar or executive bonus might be better choices.  Endorsement Split Dollar with Salary Continuation at Retirement is designed for an employer who wants to reflect all policy cash values on its balance sheet and welcomes the presence of key person indemnification through its share of the policy death benefit.

You can read the rest here: Blog #182 . . .


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Blog #181: Endorsement Split Dollar with Optional Transfer

Bob Ritter's blog #181 Image Endorsement Split Dollar with Optional Transfer

Throughout my Blog series, I ’ve written a lot about Loan Regime Split Dollar (See Blog #177 and Blog #177 for example).  I haven’t addressed the several variations of employer-owned Endorsement Split Dollar that we also illustrate.  This Blog features one of them.  It involves an employer owning a life insurance policy in certain pre-retirement years during which the covered executive names personal beneficiaries for a large percentage of the death benefit.  The employer, who owns all cash values, has the option to transfer the policy to the covered executive at any time, and this case study will illustrate that transfer occurring at the beginning of year 11.

The 2003 split dollar regulations eliminated the use of this arrangement, and we have replaced it with Endorsement Split Dollar with Optional Transfer.  It works particularly well for business owners.

You can read the rest here: Blog #181 . . .


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Blog #180: A New Look at Various Financial Alternatives
(It Will Knock Your Socks Off)

Bob Ritter's blog #180 Image A New Look at Various Financial Alternatives (It Will Knock Your Socks Off)

One of the reasons VFA became so popular is that it smoothly introduces cash value life insurance as a superb financial instrument.  With it, you can take on equity accounts, annuities, tax-exempt bond funds, IRAs, and just about any economic alternative a critic could come up with – and “knock the socks off” a prospective client with the comparative results.

Prospective clients make quicker, easier and, frankly, better decisions when comparative logic is used.  It frees you from trying to convince your prospects – in a vacuum – that purchasing life insurance is a good decision.  “Compared to what?” has favorably changed the public perception of life insurance – and of life insurance producers.  At InsMark, we take some credit for helping make this happen.

Now I want to knock your socks off with some new VFA capacity that will further enhance your prospect’s view of cash value life insurance.  What I am about to show you is not only applicable to a straightforward retirement sale but to the most complex concepts like split dollar, COLI executive benefit plans, premium financing, etc.  Because no matter what you present, letting VFA test the quality of the “eggs in the omelet” radically improves the perception of your overall presentation.

You can read the rest here: Blog #180 . . .


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Blog #179 - Helping Millennials with Financial Decisions

helping Millennials with financial decisions

As I was writing Blog #179, it reminded me of Bill Boersma’s comment in his article in the December 2014 issue of Trusts & Estates in which he discusses life insurance as an asset class: “I can only wonder if another asset with the same qualities would be implemented more frequently if it wasn’t called life insurance.”

From the research I’ve been doing on Twitter, Facebook, and Instagram, Millennials, in particular, are not getting much of a message about the value of 21st century, cash value life insurance.  Blog #179 is my attempt to equip upscale Millennials with sufficient information to identify a financial adviser skilled in the living uses of modern-day life insurance, especially indexed universal life.  It is a remarkable product in my estimation.

I also hope my readers will encourage the Millennials they know to read Blog #179 to learn the unique features of indexed universal life.

You can read the rest here: Blog #179 . . .


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Blog #178: Coordinating Exceptional Split Dollar™
with Wealthy and Wise® (Part 2 of 2)

Bob Ritter's Blog #177 coaching and InsMark's Exceptional Split-Dollar image

Exceptional Split Dollar provides senior executives with a way to transform loans from an employer into substantial, tax free, retirement cash flow while producing a credit to earnings for the employer in all years.

The coordination of Exceptional Split Dollar with Wealthy and Wise produces compelling retirement results.  While any well-designed split dollar illustration can generate an interesting presentation, it is inadequate as a stand-alone retirement piece.  The results can be effectively presented only by coordinating it with an overall retirement analysis.

You can read the rest here: Blog #178 . . .


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Blog #177: Exceptional Split Dollar™ (Part 1 of 2)
New Premises and Conditions

(Including a “Jim Harbaugh” Variation)

Bob Ritter's Blog #177 coaching and InsMark's Exceptional Split-Dollar image

Blog #177 introduces you to Exceptional Split Dollar, our new strategy for providing tax free retirement cash flow for favored executives (including Jim Harbaugh-type coaches).  It fully complies with the Final Split Dollar Regulations issued in September 2003 (68 FR 54336) by the U.S. Treasury Department.

Exceptional Split Dollar provides favored key executives with a way to transform loans from an employer into substantial, tax free, retirement cash flow while producing a credit to earnings for the employer in all years.  Illustrated using new features in the InsMark Loan-Based Split Dollar System, it requires no payments or taxes from the insured executives.

Exceptional Split Dollar produces more favorable results than the equity split dollar and reverse split dollar strategies of the 1970s, 1980s, and 1990s, the designs of which were always somewhat speculative due to the lack of specific tax law and regulation for the favorite variations.

You can read the rest here: Blog #177 . . .


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Blog #176: Best Way to Evaluate Roth Conversions
(Part 2 of 2)

Bob Ritter's Blog #176 wealthy-retired-couple-sitting-on-the-beach image

The higher the client’s income tax bracket, the more intense the objection to converting an IRA to a Roth IRA.  Blog #176 addresses this issue for a client in a 49.3% bracket (federal and state) with $2,000,000 in an IRA.  The tax turns out to be a superb investment – a term not generally associated with taxes.

We then ramped the analysis up to evaluate an increase to a 75% bracket created by eager politicians should the Democrats gain control of the House, Senate, and Presidency.  With this scenario, the Roth becomes irresistible.

You can read the rest here: Blog #176 . . .


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Blog #175: Best Way to Evaluate Roth Conversions
(Part 1 of 2)

Bob Ritter's Blog #175 wealthy-retired-couple-sitting-on-the-beach image

The decision to convert an IRA to a Roth IRA is often waylaid by the client’s negative view of the income tax issues resulting from the conversion.  Let’s examine this concern because the income tax generated usually turns out to be a good investment.

The case study in this Blog involves a ten-year conversion of $600,000 in IRA funds to a Roth IRA with the goal of enhancing the retirement results for Robert and Ann Baxter.  Both are currently age 60 and planning to retire at age 70.  The results are significant as they can meet their annual, spendable, cash flow goal of $150,000 — indexed at 3.00% — while also providing an increase of $1,915,723 in their long-range net worth.  See below for a graphic of the results.

You can read the rest here: Blog #175 . . .


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Blog #174: Dual Security Plan

Bob Ritter's blog 174 excutive dual security plan image

Welcome to InsMark’s newest innovation, the Dual Security Plan (DSP).  This unique buy-sell / retirement benefit plan only works for members and partners of Limited Liability Companies, Limited Liability Partnerships, and Partnerships.

What a plan for members and partners!

You can read the rest here: Blog #174 . . .


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Blog #173: The Impact of Tax Reform on
Retirement and Estate Planning Presentations

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We believe that the Tax Cuts and Jobs Act (“Tax Reform”) has made the purchase of cash value, life insurance even more attractive in the retirement planning sector.  Blog 173 will provide you with significant proof of this.

Estate Planning

We believe that the Tax Cuts and Jobs Act (“Tax Reform”) has made the purchase of cash value, life insurance even more attractive in the retirement planning sector.

At first glance, it may seem that Tax Reform has damaged the estate planning market for cash value, life insurance sales where customers may feel:

  • They don’t need to purchase trust-owned life insurance; or
  • They no longer need their existing trust-owned life insurance and can surrender those policies.

We believe both conclusions are false in the vast majority of client circumstances.  These thoughts are developed further in Blog #173 along with several sample reports and illustrations proving the continuing value of life insurance as a planning device for both retirement and estate planning.

You can read the rest here: Blog #173 . . .


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