Unlocking Legacy Potential with Single Premium Life Insurance: A Guide for Annuity Agents11/14/2024 Single premium life insurance (SPL) policies can be game-changers for clients looking to grow and protect their legacy. Yet, many annuity agents overlook these policies, leaving valuable benefits untapped. These policies offer clients strong advantages like tax-free chronic illness benefits, return of premium guarantees and most importantly, a tax-free legacy for their loved ones. Here’s why every annuity agent should make SPL a part of their client discussions. The Standout Benefits of SPL Policies 1. Leaving a Legacy Life insurance is the only financial tool that can provide tax-free death benefits and leverage monies that are earmarked to go to loved one’s. Annuities are popular for building retirement income, but they come with a potential “tax time bomb.” When clients pass on non-qualified annuities, any deferred gains are taxed as ordinary income for their beneficiaries, often reducing the inheritance significantly—especially if heirs are in high tax brackets. For clients looking to protect their legacy, this tax burden can be a major pitfall. 2. Return of Premium Guarantees A return of premium feature gives clients peace of mind, allowing them to reclaim their premium if their needs change, keeping their investment risk low and flexible. Think of this as a money-back guarantee. 3. Chronic Illness Benefits SPL policies often include chronic illness riders, letting clients access their death benefit tax-free if they face major health issues, providing crucial financial support without tapping other investments. 4. Ease of Underwriting Carriers today employ AI and other tools to eliminate the need for a phone interview or exam. We have carriers that can render an underwriting decision in minutes! Funding Strategies for SPL PoliciesAnnuity agents can guide clients in funding SPL policies creatively: 1035 Exchanges: Use the cash value of existing life insurance to fund SPL policies tax-free. This is a smart upgrade for clients with underperforming life insurance, often resulting in higher death benefits and tax-free chronic illness coverage. Non-Qualified Annuities: For clients with non-qualified annuities set aside for heirs, converting these funds into an SPL policy can double or even triple the value transferred. Although there’s a tax cost to repositioning, the result is a larger, tax-free legacy. Ohlson Group has been working the Single Premium Life marketplace for years and has even helped develop products in the past. Our seasoned team is ready to help you put together your next wealth transfer case. |
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