Explaining Wealth Transfer With Single Premium Life

​Way back in December, 1993, Cornell University’s Science News calculated that over ten trillion dollars in wealth would change hands by the year 2040, with about 115 million bequests averaging more than $ 90,000 each! With the up-tick in our recent markets, who knows what those numbers really are today? This question gives you a tremendous opportunity to provide your clients with solid information regarding wealth transfer using a product they may never have considered before.... Single Premium Life.

In your next conversation with your clients, you should explain that if they are considering wealth transfer, Single Premium Life could be one of the most efficient vehicles on the market today. Then, mention the article quoted above, stressing that, “Things have certainly changed over the past 20 plus years and the numbers could be a lot higher over the next 25 years.” 

Next, you should explain that since most of these new inheritors/heirs are in the middle class, they are not usually candidates for sophisticated estate planning, they are not hiring money managers, and often, for these same “middle class heirs," estate taxes will not be a factor, especially with the increase in the deduction. Also mention that Single Premium Life products take advantage of current tax laws by allowing your clients who have a lump sum of money to increase the size of their estate, pass the proceeds to their heirs Federal Income Tax free, and bypass probate! 

Ideal candidates for Single Premium Life are usually between 65 and 80 and have money set aside for future generations. They are also somewhat conservative, and they love guarantees, not “what-ifs.” Since Single Premium Life is life insurance, many agents are afraid that their client has to be in excellent health and meet stiff underwriting requirements. That is not the case: They just have to be in fairly good health and meet minimal underwriting requirements if we're using a simplified issued product. 
 
So, when you’re considering presenting a Single Premium Life plan to your clients, you’ve got to look for money that your client doesn't need. Finding that money is simple. Ask your prospect a few simple questions:

• “What do you want this money to do for you?” 
• “Are you going to pass it on to your children, grandchildren, church, or charity?”  
• “Are you living off the income?”

If your client answers “yes” to these questions, you have an excellent candidate! 

Furthermore, prospects who have CDs, passbook savings accounts, and/or fixed annuities are also usually good candidates. Look for money the client doesn't use for retirement income now because he or she has other sources of income, such as CDs that roll over year-to-year, interest on the CDs, or passbook savings account. Explain that these earnings are all taxable every year thereby reducing the amount of money they're going to leave to their heirs, their beneficiaries. 

Maybe your clients have deferred annuities. They're great, but if they have those earmarked for their kids, they're not the best way to go. Deferred annuities were originally designed to provide lifetime income for your client not their heirs. The problem is that the money left behind in an annuity can create an enormous tax time bomb for the heirs. Not only will they pay taxes in their income tax bracket (that is normally many times higher than your client’s), it’s going to push them into a new income tax bracket, possibly causing significant additional taxation problems. So, if your client doesn’t need the funds for their own income, Single Premium Life can eliminate those taxes, allowing a tax-deferred build-up and a tax-free income transfer at death.  

This product was designed as a wealth transfer product and provides a lot of other benefits such as accelerated death benefits for nursing home care, home health care, or the inability to do two activities of daily living. If available and approved in your state, Single Premium Life may also carry many types of accidental death riders. 
 
We can provide guaranteed benefits, such as the safety that they want, tremendous liquidity, and great tax-efficient growth. The key to selling Single Premium Life is to identify those prospects who have money earmarked for future generations. How do you know? Easy... Ask the questions! If you need some help, use our great Safe Money Places™ fact finder to help you determine if your client is a candidate for Single Premium Life.  
​
Like to know more? Give us a call and let us help you help your clients with tax efficient wealth transfer.

Get The Fact Finder

---

Until next time… good selling!
​
Raymond J. Ohlson
Founder & Retired CEO
Ohlson Group
​1-877-844-0900