BHC's Producer Insights
"Annuity and IRA Maximization"

  

For Immediate Release
Houston, Texas


Want to earn large life insurance commissions? It’s possible if you have clients that:

  1. have annuities earmarked for beneficiaries if not needed for retirement;
  2. are taking RMDs from qualified account that are not needed;
  3. want to exit from a two-tier annuity and maintain account value.
BHC can guide you to huge life insurance commissions with a new annuity and IRA rescue program. Insurability is a requirement but advanced age is not necessarily a disqualifier. Here’s the overview.

Beth, age 73, has a $400,000 non-qualified deferred annuity which she does not plan to use in retirement. Her estate is estimated to be $2,000,000, and her current tax bracket is 33%. Let’s assume Beth dies at age 75 when the annuity’s value is $450,000 and her estate is $2,400,000. She would pay estate taxes of up to 55% on the aggregate value over $1,000,000 and income taxes at a 33% rate on the annuity’s tax-deferred growth. Not a cheerful outlook for Beth’s heirs: how is this prevented?

With your help, Beth can establish an Irrevocable Life Insurance Trust (“ILIT”) to own an insurance policy with the same beneficiaries as her annuity. As a first step, you have confirmed that Beth is insurable in the amount of $1,200,000. Second, you annuitize the $400,000 annuity over a five-year or longer period to pay Beth annual installments. Based on the exclusion ratio, she will pay some income taxes on the annual payments. Beth plans to gift annually to the ILIT the amount needed to pay the life insurance premiums and use the remainder to supplement her retirement. The ILIT permits the trustee to borrow from the cash value of the policy to pay premiums in case Beth decides not to gift to the ILIT.

Since the ownership of the life policy is the ILIT, it is outside Beth’s now smaller estate [because of the annual life premium payments] and not taxable. At Beth’s death, the beneficiaries will receive $1,200,000 free of income and estate taxes. Of course, the size of the life insurance policy, and needed premiums, can be adjusted to fit the circumstances of your clients.

With the exception of current taxes on the installment, exactly the same can be accomplished by using unneeded RMDs from qualified retirement accounts. There are literally millions of retirees that do not need RMDs for their retirement, and converting to a Roth IRA is not feasible for their circumstances; therefore, a large and untapped market exists for the IRA rescue strategy using life insurance.

It is impossible to escape unhurt from a two-tier annuity. Taking a lump sum results in loss of front-end bonus and all interest earned above the minimum guaranteed. Taking an installment payout is painful, because the crediting rate on the money not withdrawn is invariably well below prevailing market. In many cases the most appropriate strategy is to annuitize, or take penalty free withdrawals, to fund a life insurance policy. Whether or not an ILIT is needed depends on the size of the estate.

BHC has a “client identification” program to maximize beneficiary benefits for your legacy-minded clients that are insurable. This free program for BHC producers is simple to implement, highly effective and will generate significant new commissions for you while benefiting greatly many of your current clients. We do all the hard work plus provide a confidentiality agreement to protect you and your clients. If interested, get the details today by calling BHC.

Shelby J. Smith, Ph.D.
February 2010
 

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BHC Marketing has annuity sales systems that work. PLUS our generous incentive programs can pay all the associated costs. If this interests you, call us or visit us online. BHC offers all the primary carriers, pays the highest commissions allowed, has a vast menu of business building programs and a staff of seasoned professionals to give you the service and support you expect and deserve. We also provide FREE leads and referrals provided by www.TheRetirementPros.com. You have choices and BHC is worth a look: visit online at www.bhcmarketing.com.


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