How to You Bring Up CVLI to HNW Clients?

[RyanCO]

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An advisory prospect emailed me this morning in advance of a meeting on Monday with one of those videos on the benefits of cash value life insurance, asking if I offer this strategy.

(I've noticed, by the way, that like many other videos, it never says it's talking about Whole Life, it just discusses the benefits)

Anyway, I'll be including that option in our meeting. But for those of you who work with High Net Worth clients on CVLI, how do you bring up the topic? It seems to me that many people automatically turn off when CVLI and annuities are brought up - how do you introduce the topic?

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[DHK]

The reason that "many people automatically turn off"... is because of what they THINK they know. And what they think they know doesn't excite them about it to want it, let alone even discuss it. They may have heard that it's the product that only "greedy, commission-hungry" insurance agents want to sell you in order to rip you off. We know that's not true, but that could be the perception.


"Tell me, what do you know about life insurance?"

Client response: "A little." "A lot." "Not much." "I'm really not interested in life insurance." "I have all I'm going to buy." etc. It doesn't really matter what they say. (If they say they know "a lot"... then phrase the following to talk about TODAY'S life insurance policies.)

"Let me take about 5 minutes to tell you a little bit about (TODAY'S) life insurance policies." Now explain the difference between term & permanent coverage.

"The reason I'm bringing it up for your situation is because ... " Now explain the various benefits of how it can work in their favor.

 

[Mattie]

At least the prospect is actually asking you about it, even going so far as to have sent that video. Seems like an easy approach would be to just ask their thoughts on what they saw on the video they sent over. Good luck!

 

[EAJoe]

I would position it as a separate "asset class," not an investment. It's for high net worth people who have often maxed out their 401K and IRA contributions, desire to have a death benefit, and want the potential for cash accumulation and tax free income later down the road. It really can be a win-win, tax free death benefit for the heirs, and potential tax free income before you die. Definitely not for everyone, but when properly structured and managed, it has many benefits, especially policies with a LTC rider.

 

[DHK]

You know, 401k plans were originally designed as a "HNW" savings plan too. Then ERISA put various "testing" means in place in order to avoid it being a 'top hat' plan and keep benefits... as long as they get the rank and file participating too.

Why is permanent life insurance only for "high net worth" people?

The longer you let that mentality reign supreme in your thoughts... the less people you will be able to serve.

Just like showing the differences between term & permanent... show the differences between permanent life and a qualified plan. Let your client choose.

And I agree, it's not for everyone. Not 'everyone' can medically qualify. Not everyone 'wants' it. For everyone else... it can be great for them... and you.

 

[EAJoe]

You know, 401k plans were originally designed as a "HNW" savings plan too. Then ERISA put various "testing" means in place in order to avoid it being a 'top hat' plan and keep benefits... as long as they get the rank and file participating too.

Why is permanent life insurance only for "high net worth" people?

The longer you let that mentality reign supreme in your thoughts... the less people you will be able to serve.

Just like showing the differences between term & permanent... show the differences between permanent life and a qualified plan. Let your client choose.

And I agree, it's not for everyone. Not 'everyone' can medically qualify. Not everyone 'wants' it. For everyone else... it can be great for them... and you.

I should have clarified a little further. For lower net worth folks, I see tremendous value in permanent policies especially those with a guaranteed death benefit and good living riders. Minnesota Life's Eclipse IUL with the death benefit guarantee and long term care agreement is something that I would recommend to just about anyone who can afford it and get through underwriting.

Too often though, agents sell the policies improperly and the client has to start dumping more money in than they initially planned to keep the policy from lapsing. I've got a stack of over 50 UL policies that were sold (poorly) by a former agent in 2000-2003 that are all about to lapse in the next few years if the clients don't start increasing their premiums. These aren't people who aren't paying their premiums, they policies were illustrated with interest rates that companies can't offer any more. Setting the proper expectations for a policy, and using moderate illustrated rates can really help prevent this.

If one of the main goals of buying a permanent policy is to build cash value that you can access later, I think the ideal client is one who can over-fund it in the early years, and be willing to put more in later if needed to keep the policy alive.

 

[Cash]

You know, 401k plans were originally designed as a "HNW" savings plan too. Then ERISA put various "testing" means in place in order to avoid it being a 'top hat' plan and keep benefits... as long as they get the rank and file participating too.

Why is permanent life insurance only for "high net worth" people?

The longer you let that mentality reign supreme in your thoughts... the less people you will be able to serve.

Just like showing the differences between term & permanent... show the differences between permanent life and a qualified plan. Let your client choose.

And I agree, it's not for everyone. Not 'everyone' can medically qualify. Not everyone 'wants' it. For everyone else... it can be great for them... and you.

I know that you have recommended the Insurance Pro Shop before and they talk about selling permanent products to the middle class. Do you have success selling to that age/income range?

 

[DHK]

Absolutely. It's all about helping your client to determine their priorities and understanding how today's financial products work... in simple terms.

Too often, we as agents, make the conversation way too complex, so it confuses the prospect. A confused prospect won't act. If you talk too much about dividends, mutual companies, caps & participation rates... you'll confuse the prospect and they won't do anything.

Granted, these may not be "huge" policies, but they don't have to be. Sometimes you're re-directing current cash flow. Other times, you have to get them to begin to save money out of their gross income. In those times, I start with a "quarter out of every dollar" of their gross income and go down from there.

.25 of $1 on $100k is $25,000. Can you save that?

.15 (dime and nickel) out of every $1 on $100k is $15,000. Can you save that? (Btw, most experts and advisors recommend that we save a minimum of 15% of our income for the future.)

.10 (dime) out of every $1 on $100k is $10,000. Can you save that?

.05 (nickel) out of every $1 on $100k is $5,000. Can you save that?

.03 (3 pennies) out of every $1 on $100k is $3,000. Can you save that?

This is an adaptation of the monthly savings idea from John Savage, and blending it with Ben Feldman's "nickel and dime" plans. You start from the "HELL NO!" plan and get more and more affordable... to the point where it's almost ridiculous. I used $100k for the salary in this example just to make the math in the post easier, but you can get the gist of it.

Keep in mind that most people who might have a budget only for term insurance, would buy a permanent plan if they had the money and understood how permanent insurance worked. And you can usually blend a permanent/term policy to fit such a budget too. With a blend, you have future inventory for conversions too.

 

[Cash]

Absolutely. It's all about helping your client to determine their priorities and understanding how today's financial products work... in simple terms.

Too often, we as agents, make the conversation way too complex, so it confuses the prospect. A confused prospect won't act. If you talk too much about dividends, mutual companies, caps & participation rates... you'll confuse the prospect and they won't do anything.

Granted, these may not be "huge" policies, but they don't have to be. Sometimes you're re-directing current cash flow. Other times, you have to get them to begin to save money out of their gross income. In those times, I start with a "quarter out of every dollar" of their gross income and go down from there.

.25 of $1 on $100k is $25,000. Can you save that?

.15 (dime and nickel) out of every $1 on $100k is $15,000. Can you save that? (Btw, most experts and advisors recommend that we save a minimum of 15% of our income for the future.)

.10 (dime) out of every $1 on $100k is $10,000. Can you save that?

.05 (nickel) out of every $1 on $100k is $5,000. Can you save that?

.03 (3 pennies) out of every $1 on $100k is $3,000. Can you save that?

This is an adaptation of the monthly savings idea from John Savage, and blending it with Ben Feldman's "nickel and dime" plans. You start from the "HELL NO!" plan and get more and more affordable... to the point where it's almost ridiculous. I used $100k for the salary in this example just to make the math in the post easier, but you can get the gist of it.

Keep in mind that most people who might have a budget only for term insurance, would buy a permanent plan if they had the money and understood how permanent insurance worked. And you can usually blend a permanent/term policy to fit such a budget too. With a blend, you have future inventory for conversions too.

Thanks for the answer. Do you do the Found Money Management and actually find money? He talks about finding money from other insurance policies; home owners, auto owners, etc. and putting that money into life insurance/savings. I was wondering if any producers have had success doing this.

 

[DHK]

Every LEAP, Circle of Wealth, Missed Fortune users... all use variations of these kinds of methods. Those that truly master this... are at Top of the Table in production.

Yes, it works... but it's more important that YOU believe that it works and that your client sees that they will be in a better position because of it.

Found money management is about having a productive financial planning conversation. You don't "do found money management". You internalize and embody it. It's not a system that you think "I'll use FMM with this prospect... and a LEAP with that one." No, it's all about helping people do a better job and evaluating the choices that they have already made, and if you can help them make more informed and educated decisions.

Check out the testimonials. Mine is the one on top right now.

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