Creative Financial Services No Comments

Spotting Opportunities | Windfalls

Finding potential charitable gift opportunities for clients can deepen the conversation about broader overall charitable planning for them.  There are a number of areas to point to that will help you recognize those giving opportunities that your clients may not have suspected were available.


They can be expected, as in the exercise of corporate stock options, or unexpected, such as winning the lottery.  There is an economic impact to these events, but also an emotional impact that might be even greater.

Knowing how to solve the economic issue is only one factor in discussing options for sudden wealth.  Understanding the emotional upheaval and the possible reactions is the true key to being helpful to the client.

The possible sources of the new liquid wealth also present different charitable planning opportunities.


The sale of a closely-held business which represents a unique set of circumstances.  For most business owners it is the culmination of a lifetime of effort and also the transition to a new phase of life that is often not well prepared for.  The business usually embodies much of the owner’s self-image and identity which can make the sales process more challenging.

Planning to maximize the charitable aspects (and minimizing the taxes) of a sale before it happens is ideal for the owner and the advisors involved.

The challenging part is getting there in time before there is any form of offer and acceptance made.  If that happens then you can examine multiple charitable strategies such as the charitable stock bailout, a charitable ESOP, pooled income funds, a charitable remainder trust or even a simple donor-advised fund.

An observation I’ve made over the many years of doing this type of planning for business owners is that during their working lives they do everything in their power to avoid income taxes, and then when they sell the businesses completely ignore tax-saving options and often waste millions of dollars.

This is not their intention.  There is no one involved to tell them otherwise.  The accountant who helps them with their business and personal taxes is generally ill-equipped to handle charitable tax planning strategies on the exit from the business.


If you don’t already have business owners as clients you might consider one of the training programs on exit planning gave by either our Exit Planning Institute or the Business Enterprise Institute.  Even if you don’t become an exit planner, being knowledgeable about the aspects of a complete exit strategy can be vital to the integration of the charitable planning aspects.

You may also want to join a mergers-and-acquisitions group like the Alliance of Mergers and Acquisitions Advisors.  If nothing else, you get the opportunity to associate with people in the stream of deals that are happening.

According to BEI, 79% of business owners want to be out of their businesses in ten years or less and only 15% have even talked to an advisor about their exit plan.  There is a tremendous opportunity for a charitable advisor to be part of a large number of those exits.

To download a complete version of Opportunity Recognition, go here.

Creative Financial Services No Comments

How To Breakthrough The Couple Rejection Objection

As you’ve all experienced, the majority of your clients who are couples come together as a packaged deal. So what happens when a couple applies for a LTCi policy and only one is approved?

In most cases, the spouse who received the green light may no longer want a policy with a carrier who rejected coverage for their significant other.

And even worse, they may decide that they no longer need coverage at all. The reality is – if one spouse is declined, it is even more crucial that the insurable spouse has a plan in place.

Convincing the insurable spouse to proceed with the plan

Client Objection: “My spouse was declined so I do not want to take my policy.”

In this case, it is probable that the healthier partner will attempt to care for the other – with whatever financial, physical, emotional and mental demands that are required.

Your Reply: “Caring for a loved one could either be met with minimum effort or it may be very strenuous. And while personally caring for your significant other, you may have do to dip into your savings, leaving little funding left for your own care.”

You Ask: “Would you be ready to go it alone and take care of all those new tasks that arise in a situation like that?”

Once you’ve overcome the objections, we will help you make certain your clients have the right LTCi plan in place to meet their needs.

Contact your LTCi Sales Rep for more information.

Creative Financial Services No Comments

The Benefit of Key Person Replacement Insurance

Key Person Replacement Insurance is necessary to business owners who want to maintain the strength of their company if a key employee were to become totally disabled.

If an employer takes out a Key Person Replacement policy and the insured key employee meets the definition of Total Disability, the owner of the policy (the employer) receives either a lump sum payment or a combination of monthly and lump sum payments to cover the costs for the loss of the employee and to train a replacement.

To meet the definition of Total Disability, the insured must not be able to perform the duties of their Key Person occupation and are unable to work in any other occupation which is comparable by duties and/or earnings for the business.

Some benefits of Key Person Replacement Insurance offered by our carriers include:
  • Guaranteed Premium – The premium cannot increase due to changes in the insured key employee’s health.
  • Flexible Payment Methods – The policy can be set up to provide benefits in a lump sum payment or a combination of monthly and lump sum.
  • Waiver of Premium – After the insured key person is disabled and meets the elimination period, premiums are waived.
  • Interrupted Elimination Period – It is possible to combine different periods of disability to help reach the policy’s elimination period. These periods of disability must occur within a period that is twice as long as the elimination period, but less than one year.

To learn more about Key Person Replacement Insurance contact your Disability Income Specialist today.

Creative Financial Services No Comments

Take Heart! Not All Cholesterol Is Bad

Did you know:
  • The liver produces all the cholesterol our body needs, however, dietary cholesterol (taken in through the foods we eat), causes the liver to send even more cholesterol into the bloodstream.
  • High cholesterol can cause fatty build up in the arteries which increases our risk of heart disease and stroke.
  • High-density lipoprotein, or HDL, is considered “good” cholesterol. HDL helps to remove bad cholesterol known as low-density lipoprotein, or LDL. Triglyceride is another form of cholesterol and the most common type of fat in the body.
  • Cholesterol/HDL Ratio is calculated by dividing total cholesterol by HDL. The higher the HDL, the lower the ratio. This is a good thing!

In the past, carriers looked stringently upon all cholesterol levels when underwriting a case. These days, there are some carriers who can overlook total cholesterol levels if between 150-300. Preferred classes are available with favorable, low cholesterol/HDL ratios, even with total cholesterol levels nearing 300!

Consider these examples:
  • Male client, age 45, NS
  • Seeking $2 mil of Term, Cholesterol on exam was 298 with a Chol/HDL ratio of 5.0
  • Does not take any medication

Underwriting outcome: PREFERRED BEST!

  • Female client, age 60, NS
  • Seeking $1 mil of UL, Cholesterol on exam was 275 with a Chol/HDL ratio of 6.0
  • Takes a prescribed cholesterol medication

Underwriting outcome: PREFERRED!

  • Male client, age 52, NS
  • Seeking $500k of Term, Cholesterol on exam was 260 with a Chol/HDL ratio of 7.0
  • Takes a prescribed cholesterol medication

Underwriting outcome: NON SMOKER PLUS!

The CPS Life Underwriting Department has a heart for finding the best possible outcomes on your cholesterol cases. Give us a call!

Creative Financial Services No Comments

Take A Look Inside The Lucrative Life Of A Vitality Member

Seeing is believing, so we’re giving you a first-hand exclusive on the actual rewards and benefits real life members receive under the John Hancock Vitality Program – and why it’s one of the most innovative and popular Life Insurance strategies on the market today.

Wheel of Fortune

What if every time you went for a walk around the block you got $100 dollars? Under the Vitality Program, you have the opportunity to do just that. Every time members meet their workout goal, they get to spin the Vitality Wheel for a chance to win a cash gift card.

Smitten Not Stirred

To get you started off right, Vitality Members are immediately eligible to receive a free FitBit at sign up. But if you want to take it up a notch, you can also earn an Apple Watch Series 4 for only $25 using Vitality Points as well – with payments based on workouts completed within a calendar month.

Taking You Higher

The bigger they are, the better they fly. Reach a new status level in the program and get rewarded with cash credits to heavy hitters like Amazon, Hyatt, iTunes, REI, Royal Caribbean International and more.

Survey Says?

The Vitality Program practically sells itself, with discounts on annual premiums up to 15%, savings on healthy foods and cash rewards – all the while ensuring financial stability.

Contact your Life Sales & Marketing Associate to learn more about how you can enhance the trajectory of your clients’ future.

Creative Financial Services No Comments

Some Clarity On the 20% Pass-Through Deduction

Maybe there’s some favorable news for insurance agents and brokers, but don’t jump too high!

Recall that the Tax Cuts and Jobs Act of 2017 (TCJA) lowered the highest tax rate on C-corporations to 21%. To afford at least a partially similar benefit to pass-through businesses (S-corporations, partnerships, and sole proprietorships, or any LLC taxed as one of those three), a business deduction was possible that could be applied to the owner’s individual taxable income.

This “Section 199A Deduction” could be up to 20% of a business’s qualified business income

(QBI – the definition is unimportant for purposes of this article).  The deduction was subject to a phase-out or reduction, and TCJA divided all pass-through businesses into two categories for purposes of determining the amount of this “deduction reduction.”

The first was Specified Service Businesses. An owner of a Specified Service Business is eligible for a full 20% deduction if his or her personal taxable income is below $157,500 ($315,000 if filing jointly).  As taxable income increases the size of the deduction is reduced until the owner’s taxable income reaches $207,500 ($415,000 if filing jointly).  After that there is no deduction available.

The same taxable income level breakpoints are applied to businesses in the second category, Non-service Businesses, but their owners have an advantage in that the deduction phases out less or not at all if (in a nutshell) the company has a sizeable multi-employee wage base, or the owner has significant basis in the business.

The brou-ha-ha within the insurance industry when TCJA was passed was whether or not insurance agents and insurance brokers fell into the more advantageous second category (Non-service Businesses).

The legislation was unclear.

But now the U.S. Treasury has issued final regulations for TCJA that would include in the second (again, the more favorable) category of Non-service Businesses all insurance agents, agencies and brokerages taxed as a pass-through.  But the circumspect insurance advisor has reason to pause.

One group that the TCJA definitely specifies as a Specified Service Business are companies involved in “financial services”

These services are defined (in part) as the provision of financial services including “managing wealth, advising clients with respect to finances, developing retirement plans, developing wealth transitions plans . . .”, etc. (emphasis added).

It is hard to imagine comprehensive insurance planning that does not wander over into these regions.  Consult with your tax advisor for a final conclusion.

The good news for small insurance enterprises is that, business category notwithstanding; taxpayers with taxable income under $157,500 ($315,000 if filing jointly) are still eligible for the full 20% reduction and eligible for some relief at higher taxable income levels.

An excellent discussion from Principal Financial of the Section 199A Deduction under TCJA and the Regulations is available HERE.

Creative Financial Services No Comments

4 Ways To Become The LTC Expert In Your Community

In the competitive world of financial services, business professionals are always looking for ways to add value to help differentiate themselves.

In a market of one-stop shopping, becoming the local LTC resource can help you stand out in the crowd.

Build Your Brand

Develop relationships by contacting and joining local community organizations, like the Council on Aging, Rotary Club, or Chamber of Commerce. Establish yourself as a Long Term Care professional and offer your services to help educate people in the community on the need for LTC planning. You can also place an advertisement or by-line article in a local publication to establish yourself as an expert on LTC.

Create Awareness

Contact local estate planning lawyers and accountants to educate them on Long Term Care Insurance and its relevance in their practice. Remind them that protecting the assets and net worth of their clients from a LTC event can help preserve their client’s quality of life and help protect their assets.

You can also visit local nursing homes and care facilities to share Long Term Care information and insight with the families of residents. Talk with them about their own vision for retirement and their personal Long Term Care needs. Use social media to reach out to your contacts to provide expertise and ask for referrals.

Building Relationships

Keep your schedule full, and make contacts with as many potential clients as possible. In order to succeed in this field, you will need to continually educate people on the importance of Long Term Care planning. Follow these steps to build your reputation and position yourself as an expert in the industry.

Generate Leads

Seminars are a great way to get in front of many people at one time. CPS offers numerous marketing materials for you to use when presenting to potential clients. Be sure to follow up with a phone call to attendees, to schedule an appointment and answer any questions.

Our team is here to offer you support and prospecting techniques when discussing LTC in your community. Contact us today.

Creative Financial Services No Comments

Avoiding “Sticker Shock” With Disability Income Sales

Ever presented disability income insurance to a client, and found that with one look at the price-tag they are reluctant to purchase? While it is true that a DI plan could be costly for some – it certainly doesn’t have to be.

Avoid the “sticker shock” with your clients

The general rule for the amount a client should spend on their Income Protection plan is 3% or less of their annual income.

If the premium is higher than the 3% amount, the client is more likely to experience “sticker shock” – and, even if you are able to place the policy, the likelihood of it lapsing is much higher. The client will then have no protection and you will not have a renewal commission.

How to keep premiums under 3% of a client’s income

1) By adjusting both the Benefit Amount and Elimination Period (EP), you are able to make the policy more cost-effective.

  • Adjust the benefit amount to cover just the basic monthly expenses such as rent/mortgage, utilities, groceries, etc.
  • Approximately 75% of fully underwritten policies have a 90-day EP – if your client has enough savings, offer a 180-day EP.

2) Creating a mixture of Base Benefit and Social Insurance Supplement (SIS) coverage is another solution to keep a client’s premiums low.

  • The idea here is to get the most coverage for the lowest premium. Since the SIS coverage can be offset by Social Security, State DI or Workers Compensation, the premium is less expensive than that of the Base Benefit.
  • A good mixture of SIS and Base coverage can generally keep the premium within a client’s budget, yet provide them with the coverage to ensure their financial stability in the event they are unable to work.
A Fun Fact to share with your “sticker shocked” clients

Over 80% of disability income claims are settled within 5 years because the client recovered and returned to work, or they passed away. In lieu of a less than 20% chance, your claim will go past 5 years, a 5-year benefit can be very affordable.*

Not every client needs all the available costly riders the carrier offers – choose only the riders that will actually benefit a client.

And if in doubt of which rider(s) would be the most suitable – contact your DI Specialist to discuss the best options. We are here to help!

*Council for Disability Awareness 

Creative Financial Services No Comments

How Purchasing A Policy Can Lower Tuition Costs

Nobody gets help with college costs nowadays unless they first fill out a lengthy and bothersome form known as the FAFSA (the acronym stands for Free Application for Federal Student Aid, just in case it ever pops up when you choose the Governmental Financial Assistance category on Double Jeopardy).

The information entered therein drives all consideration for aid under all Federal and many State educational programs.

Now here’s the rub

FAFSA has certain eligibility criteria that determines – based on your income and net worth – how much you should be contributing to your child’s higher education.

If the amount they determine you can pay is too high it renders you ineligible for assistance.

And therein lies the additional rub

If you are poor and haven’t paid much of the tax that supports the assistance programs, then you’ll probably get financial support.  If you are rich and paid a great deal of the tax to fund the programs, then you probably won’t get any aid – but no big deal because you’ve got enough to pay the piper anyway.

The people that get hammered are those in the middle who have paid their fair share of the tax and, in addition, have been responsible enough to save, invest, and accumulate against the day of their anticipated retirement – only to find that the net worth that their sound economic behavior has created disqualifies them for assistance.

Here is where you can help your clients

Especially those with liquid net worth considerable enough that is proscribes or prohibits assistance.

The instructions for completion of the FAFSA form direct that in reporting financial information, “Net worth means current value [of includible assets] minus debt.”  For example, a commercial building worth $300,000 with a $100,000 mortgage would add $200,000 to the net worth calculation.

But more important – when adding the value of investments the instructions state that “Investments do not include . . . the value of life insurance . . . [or] annuities . . .”

How many clients do you have with considerable amounts of net worth in low-performing assets like CDs?  And now the value of those assets are creating a roadblock to financial add.

One simple solution to recommend is the transfer of funds to an annuity contract or an overfunded life insurance policy (they may not have adequate coverage anyway).

The timing of a purchase doesn’t appear to be an issue

In researching this strategy, calls to the FAFSA information line drew the response that an annuity or life policy was exempt so long as it was in force at the time of the completion of the FAFSA application.  Needless to say, a client should do his or her own spadework in this regard before making a decision.

Once the child is graduated or no longer in need of assistance, funds can be transferred back into the investment opportunities of choice.  From the time that inquiries into possible financial aid begin until the event of a child’s graduation is usually long enough to purchase an annuity with an acceptably short surrender charge period – especially if the 10 o’clock scholar involved is one inclined to pack four years of higher education into six.

Contact us for the best product opportunities available for clients who are prospects for this FAFSA Net Worth Minimization Strategy.

Creative Financial Services No Comments

Help Protect Your Client’s Income With Linked Benefit Life Insurance

Do you have a client who would like to purchase a Disability Income policy but face the difficulty of qualifying due to the nature of their profession? Perhaps their reported income is low and the amount of benefit available is insufficient.

A DI alternative through a Linked Benefit Life Insurance policy

Today, many carriers are offering Linked Benefit products which allow your clients to access a percentage of their policy’s death benefit in order to cover their Long Term Care expenses.

Typically, in order to qualify for this acceleration of benefit, the client will need to have lost the ability to perform two of the six Activities of Daily Living (ADL’s) which include eating, bathing, dressing, toileting, transferring and maintaining continence. Odds are that if you could satisfy the parameters to go on disability claim then you could also satisfy these parameters to exercise your LTC benefit.

The benefit is not based on earnings and there is no income verification needed

This product qualifies your client only on their health, not on their occupation. As a result, you can offer a Linked Benefit plan to any of your clients who could qualify for a typical Life Insurance policy. There are numerous products that offer this LTC rider.

Whether your client is interested in a guaranteed death benefit, building cash value or a combination of both, there is a product available that can provide a monthly benefit in the event that your client is unable to perform two ADL’s and cannot earn their income.

Call your dedicated Life Marketing Specialist if you have a client to consider or if you would like to learn more about how Linked Benefit Life products work.