Here’s a scenario: one of your clients has an IRA and they want to leave it as an inheritance for their children or grandchildren.
What do you do?
Many agents would, without thinking, pass this to a securities licensed investment advisor and not think another thing about it.
If you’re a licensed life insurance agent, or you have someone in your office who is, you should be all over opportunities like this.
Wealth Transfer 101
We call it “wealth transfer” and the subject is one of the most popular in our training and education series.
What is wealth transfer?
In technical terms, wealth transfer is the process of rolling a qualified account into a single premium immediate annuity (SPIA) and using the monthly income from the annuity to fund an indexed universal life insurance policy (IUL) to create a tax-free wealth transfer upon death.
Wow, in English please?
Simply, wealth transfer utilizes insurance-based products to provide a low risk, tax-free solution to this problem. Who wouldn’t want that, right?
The process to get to this answer is pretty simple.
STEP 1: Identify the Opportunity & Build the Need
- Uncover opportunity
Step 1 sounds so simple it’s almost insulting.
But, there is an elegance to the discussion that would uncover opportunities like this.
More than anything, you as the insurance agent have, in the client’s eyes, moved the discussion from the normal realm of protecting the client with basic insurance to, now, helping them manage their money.
It may not require a securities license but you have nonetheless moved up the gene pool with this discussion.
Now that you are finished fact finding and have educated your prospect on their options, it’s time to show them exactly how wealth transfer works.
STEP 2: Communicate How Wealth Transfer Works
- Roll IRA to SPIA (Single Premium Immediate Annuity)
- SPIA creates lifetime income
- Lifetime income funds life insurance (IUL)
- Life insurance pays beneficiaries TAX-FREE
Bada bing, bada boom, as Tony Soprano would say. A simple, yet powerful solution.
Let’s deal in the real world now. The chart below provides a fly-by for a case we worked last year that would be exactly what our imaginary client would want. This should help you put the pieces together to have a better understanding of how wealth transfer works. And, it should now have your wheels spinning for which of your clients might be interested in hearing about this.
Real Life Wealth Transfer Scenario
- IRA = $913,000 Taxable Inheritance
- SPIA creates Lifetime Income = $46,000/year after tax
- $46,000 funds Life Insurance
- Life insurance = $2,015,000… TAX-FREE!
For more information on this, please talk with someone on our team so we can dive into the details with you.
Ask yourself: “Would my client be happy I was able to offer a solution that eliminated the tax liability on the future inheritance to their children”?
Wealth transfer is a great way to go back and see your clients and drive more referrals. Not only are you offering tax advantages for estate planning purposes, you’re also offering cash accumulation through the use of indexed universal life (IUL).
I’ll repeat this from earlier: The products that comprise the wealth transfer opportunity do not require you to be securities licensed, but they do require you adhere to strict compliance and suitability guidelines.
Also, I’m assuming if you have made it this far into our blog that you hold the common knowledge of annuities and life insurance OR it has your attention.
If you would like more information, please contact us for one-on-one training to learn how to sell your first wealth transfer case.