[quote=mikebutler222]

[quote=futureadvisor]what would be the pay out at a wire on an average term life policy?  [/quote]

Somewhere shy of the cost of any single serving baked good in a Starbucks.  

[/quote]

Hahaha!  Awesome.

[quote=menotellname][quote=futureadvisor]

What do you guys think about using life insurance as a cold call product just to get people in and build trust.  I would guess that most prospects are probably sh*tty but eventually you would come across good ones.  You could buy leads for cheep for a somewhat warm call.  The commission is pretty good, but you might get stuck being labeled as a life insurance salesman instead of a financial advisor? 

[/quote]

It could be a great move if you position it properly.

Right now in the life insurance world there is a revolution touting SPWL (single premium whole life) as a viable alternative to CDs and annuities for retirees.

Simply put, if you can articulate and demonstrate how the cash accumulation in a single premium whole life product produces a higher spendable yield than CDs or annuities, with lower tax consequences than CDs or annuities, AND with greater liquidity than CDs and annuities then you could come out big in moving "dead assets".

A reasonable method of showing this concept would involve showing a SPWL at 4%, non-qualified annuity dollars at 4.5%, and CDs at 5%.  We all know that in a 28% combined state and federal tax bracket that the CDs would yield less than 3.75% to the consumer.  Additionally, the annuities do have tax deferred advantages but don't you still have to pay taxes on the growth?  This effectively reduces the yield to less than 4% too.  How about liquidity?  Both CDs and annuities have nasty surrender penalties.  However, if they earn 4% in a life insurance contract can't they make "tax free" loans and/or withdrawals at anytime?  So at a lower interest rate they have a 4% effective yield.  Hey...it ain't what you make...it's what you keep.  Additionally...as an added benefit the client would have a tax free death benefit that is higher than their initial premium too.  Not a bad deal if they don't plan on spending these assets but would like to have access to them and lower their taxes.

Oops...wrong forum.  I am supposed to wax poetic about modern portfolio theory and exchange traded funds and trash anything that is not variable in nature.

Carry on.

[/quote]

Good call Meno.  In addition to standard SPWL there are also products that link a long term care benefit.  The clients love this idea.   Take 50 to 75K put it into a policy and get an immediate death benefit of 150 to 180K or a LTC benefit pool of money equal to usually twice the death benefit with a residual death benefit IF they have actually used the LTC portion.   Many people don't buy LTC because they don't want the premiums that go on forever and are just not convinced that they will ever use the LTC coverage.

This is obviously a strategy for people that have no need to spend the money invested in the policy, but what it does do is free up other funds to invest or spend now that they have covered the DB and LTC issues. 

Of course at a wire house, I doubt very much that you have access to these types of products.  I use them somewhat frequently with my clients in the age 50 to 60 bracket.   Very nice commission too. 

babbling looney, as I mentioned earlier, SPWL doesn’t work in comparsion to to annuities and cd’s because the money can’t be taken out tax free because cash taken out of one of these policies is treated as a Modified Endowment Contract and not a life insurance contract.

[quote=anonymous]babbling looney, as I mentioned earlier, SPWL doesn’t
work in comparsion to to annuities and cd’s because the money can’t be
taken out tax free because cash taken out of one of these policies is
treated as a Modified Endowment Contract and not a life insurance
contract.[/quote]



Life insurance is life insurance, it is not an investment. Taking out a
SPWL, and then borrowing against it, is just moving money from one
pocket to the other.



 The only way to win with life insurance is to die sooner than expected.

The IRS disagrees with you.  SPWL is a MEC which is considered an investment, which quite  ironically, makes life insurance in this case a bad investment.

Most Whole Life Policies, on the other hand, are not considered invesments, which quite ironically, make them much better investments than people think.   Whole life insurance for someone healthy is a phenomenal long term SAVINGS tool and can allow someone to spend more of their INVESTMENT money in retirement.

[quote=anonymous]babbling looney, as I mentioned earlier, SPWL doesn't work in comparsion to to annuities and cd's because the money can't be taken out tax free because cash taken out of one of these policies is treated as a Modified Endowment Contract and not a life insurance contract.[/quote]

Well, yes and no on making a comparison. 

I agree that the borrowing of money from a MEC is not a good idea as there are no tax advantages.

It depends on what the purpose of the annuity or CD is.  In many cases if you actually probe you will find that the client is holding a CD or annuity or basically just sitting on the money because they either

If they want to use it for any of those purposes a SPWL policy will accomplish those goals AND free up a good portion of the cash they are holding in reserve for more appropriate and liquid investments.  By having the above goals covered and being able to now actually utilize some of the cash the clients will have peace of mind.  Plus, unless the policy is a LTC linked benefit policy, they can even set these up in an ILIT and utilize the estate reduction features.  There may be some gift tax considerations, but only if the gift is very large to the ILIT as a MEC.

I also find that most clients have been misinformed about annuities as an estate tool.  Yeah they bypass probate, but the beneficiaries get to pay income taxes at ordinary income tax rates on the gain, which can be substantial. In many cases (depending on age of course), if half the money that would have been placed in the annuity is put into a SPWL policy instead, the client's beneficiaries will receive a much larger and tax free inheritance.  

If you don't like SPWL or think it is too wimpy,  there are some variable contracts out there too.  You are doing your clients a disservice if you don't discuss these things.    And if you don't talk to your clients about them......you can be sure that I or someone like me will do so.  This is also why insurance guys make a lot of money

I've got no problems with SPWL as long as the purpose is for the death benefits. 

It often won't work in estate planning situations because of the size of the premiums.

In general, I think that variable contracts blow.

[quote=joedabrkr] [quote=mikebutler222]

[quote=futureadvisor]I really have no idea what the pitch would be, I don't really know the produts, but am just thinking out loud.  Is the pay for life insurance really that bad?[/quote]

It's a complicated product and the payout is low. There are plenty of other alternatives. Best of luck.

[/quote]

The payout is low for you.....
[/quote]

We just did a million dollar annuity and got the low wirehouse/regional payout. Everybody made out, but us. What is the payout on insurance products at an Indy?

Fixed or variable?  What was the specific product?

The issue is on insurance products is that the B/D is (unfairly) taking a cut of a non-registered product.  

If it was a variable product, you probably got treated fairly.  If it was a fixed product, you probably got hosed.

The commission is product specific, so your question can't be answered.  On a typical fixed annuity, a sale of that size should put 30-40K in your pocket. 

At LPL, annuities pay out at 90% with no ticket charges. 

If your life business goes THROUGH LPL (using a Bisys or CentreLink), the payout is 90%. If your life business goes AROUND LPL (the insurance company mails you a check directly and LPL knows about it) the payout is 100%.  If you use LPL's Insurance Associates to process the term or UL product, then the payout is 100%.

[quote=anonymous]

If it was a variable product, you probably got treated fairly.  If it was a fixed product, you probably got hosed. 

[/quote]

If it was a variable product, you should have been able to "pick" the commission percentages. Most VAs let you choose to get more upfront, and less in the coming years, OR less upfront, and more in the coming years. If it had those options, they would have been in the application (usually with Letters, option A, option B, etc.)

now_indy, you are correct, but the issue is whether he is getting all of the commission or is the B/D taking a portion.  My position is that if it is a fixed product and his B/D is taking a cut, he is getting hosed.

[quote=joedabrkr] [quote=mikebutler222]

[quote=futureadvisor]I really have no idea what the pitch would be, I don't really know the produts, but am just thinking out loud.  Is the pay for life insurance really that bad?[/quote]

It's a complicated product and the payout is low. There are plenty of other alternatives. Best of luck.

[/quote]

The payout is low for you.....
[/quote]

I would guess (but feel free to correct me) the payout for term life is low for everyone as the cost is low to the client.

Anon.  You are right if the B/D is taking an override on fixed insurance or annuities he is getting hosed.

MikeB.  The payout for the first year of term insurance is usually a pretty high percentage of the premium for the first year and then drops to a smaller percentage in following years.  The companies will usually also pay a persistancy bonus for contracts that continue to be paid.  

Yes the term life insurance premiums are pretty low, but given that there is no override on commissions and that most people who have life insurance tend to keep paying it over a long period of time, I find it to be a good way to have a steady income stream to cover some basic overhead costs. 

The first year (12 months) commission pay out on health insurance is 20% of the premium.  I plan to add a lot more of this to my book next year.  

OK I just looked this up for payout on LBL

Term insurance is anywhere from 75 to 100% pay out on premiums in the first year and no pay out after that.  So if the premiums are $2000 I get $1500 to $2000.  Other firms pay out 40 to 60% the first year and then 2 to 3% afterwards

UL the payout is from 70 to 75% of first year TARGET premium with a.5 to 3% payout on amounts over target.   The following  2-10 years the payout is 2 to 2.75% of any amount of premium paid and from years 11-20 1 to 2.75%.

And just FYI the SPWL I was talking about with the LTC benefit is 7% with 2% trails.

Still think life insurance is for chumps?

[quote=babbling looney]

OK I just looked this up for payout on LBL

Term insurance is anywhere from 75 to 100% pay out on premiums in the first year and no pay out after that.  So if the premiums are $2000 I get $1500 to $2000.  Other firms pay out 40 to 60% the first year and then 2 to 3% afterwards

UL the payout is from 70 to 75% of first year TARGET premium with a.5 to 3% payout on amounts over target.   The following  2-10 years the payout is 2 to 2.75% of any amount of premium paid and from years 11-20 1 to 2.75%.

And just FYI the SPWL I was talking about with the LTC benefit is 7% with 2% trails.

Still think life insurance is for chumps?

[quote=babbling looney]

Still think life insurance is for chumps?

[/quote]

I never thought it was for chumps, I just thought the payout on term policies was small change. The payouts on other forms of L.I. are among the highest paydays there are. Thanks for the information.

[quote=mikebutler222][quote=babbling looney]

Still think life insurance is for chumps?

[/quote]

I never thought it was for chumps, I just thought the payout on term policies was small change. The payouts on other forms of L.I. are among the highest paydays there are. Thanks for the information.

[/quote]

Nevertheless....I still wouldn't recommend using life insurance as a lead call unless you plan to do mostly life insurance.  I think the O.P. was asking about it as a lead in for his brokerage cold calling business.

As stated before, insurance is time consuming and frustrating.  No quick slam dunks.

[quote=babbling looney]

OK I just looked this up for payout on LBL

Term insurance is anywhere from 75 to 100% pay out on premiums in the first year and no pay out after that.  So if the premiums are $2000 I get $1500 to $2000.  Other firms pay out 40 to 60% the first year and then 2 to 3% afterwards

UL the payout is from 70 to 75% of first year TARGET premium with a.5 to 3% payout on amounts over target.   The following  2-10 years the payout is 2 to 2.75% of any amount of premium paid and from years 11-20 1 to 2.75%.

And just FYI the SPWL I was talking about with the LTC benefit is 7% with 2% trails.

Still think life insurance is for chumps?

[/quote]

And they're going to go after "c" shares in IRA accounts?

I kinda always did (and still do) think the client is the chumpee on those deals! I'm not telling anyone how to sell what or which ethical dilemas exist for whom or anything along the lines of!

I think it is myour (mine, yours, ours) client's best interests that their consultant is still in the bidness next year.

BTW, most of my book is NY State based, so much of the eyepopping stuff is not available in NYS.

Mr. A

[quote=mranonymous2u][quote=babbling looney]

OK I just looked this up for payout on LBL

Term insurance is anywhere from 75 to 100% pay out on premiums in the first year and no pay out after that.  So if the premiums are $2000 I get $1500 to $2000.  Other firms pay out 40 to 60% the first year and then 2 to 3% afterwards

UL the payout is from 70 to 75% of first year TARGET premium with a.5 to 3% payout on amounts over target.   The following  2-10 years the payout is 2 to 2.75% of any amount of premium paid and from years 11-20 1 to 2.75%.

And just FYI the SPWL I was talking about with the LTC benefit is 7% with 2% trails.

Still think life insurance is for chumps?

[/quote]

And they're going to go after "c" shares in IRA accounts?

I kinda always did (and still do) think the client is the chumpee on those deals! I'm not telling anyone how to sell what or which ethical dilemas exist for whom or anything along the lines of!

I think it is myour (mine, yours, ours) client's best interests that their consultant is still in the bidness next year.

BTW, most of my book is NY State based, so much of the eyepopping stuff is not available in NYS.

Mr. A

[/quote]

I don't do much life insurance except in conjunction with estate planning or business successions.  When I do those, however, it does pay well. 

Frankly life insurance is a big pain in the rear.  It takes forever. You have to constantly be on the phone to the Doctor's office to get the medical information in time. The paramedics are usually backed way up in our area, thusly giving the client plenty of time for second thoughts.  Half the time the clients lie to you about their medical conditions and the underwriting comes in much worse than anticipated and the premiums are much higher than you quoted.    You have to continue to remind the client about the value of the insurance and keep the client paying the premiums, unlike a mutual fund or stock which is often just a one time investment. You need to monitor the policy to make sure it doesn't collapse if interest rates rise or if the variable accounts are tanking. You may need to ask the client to pay more premiums if they didn't overfund the policy in the beginning or decided to go on the cheap and just pay the bare minimum. That goes over real well. 

It just goes on and on and on.

I think we earn the money in life insurance.