Transcript No Slide Title

Global Insurance Solutions
June 21, 2006
Simple and Effective Sales
Concepts to Increase Your Sales
20 IN 20 OUT
• Client reactions to insurance:
• “I know I need the insurance, but to
keep paying and paying and sure my
family gets the benefit when I die…but
other than paying for it…WHATS IN
THIS FOR ME!!!!”
20 IN 20 OUT
• Advisor’s Response:
• If I could show you a way where you
could pay for this coverage, and in 20
years I will give you all of your money
back, and your insurance would be paid
up….would you be interested???
20 IN 20 OUT
• OBJECTIVES
• To increase UL sales with over funding
• To RETURN clients premium deposits in
the form of FUTURE INCOME
• And to provide client with increasing
insurance protection
2O IN 20 OUT
• CONCEPT:
• Clients will make deposits for 20 years
• Policy will be “paid up” at the end of the
deposit period
• Illustrations generally run at 5% or 6%
20 IN 2O OUT
• Level COI recommended
• At the the end of the deposit period
illustrate “return of premium/deposit” to
the client
• Still maintain death benefit for estate
purposes
20 IN 20 OUT
Case Study
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Male 40 Non smoker
Face Amount $200,000
Level Cost of Insurance, Face plus Fund
Illustrate using Low Fee Version at 6%
20 IN 20 OUT
•
How do my clients get their “money
back?”
1. Taxable Withdrawal
2. Collateral Bank Loan
Taxable Withdrawal
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Can always use this method
UL with “Living Benefits”
All premiums returned
Policy in-force…no further deposits
Face amount retained
Note: may affect client’s government
pension benefits
Collateral Bank Loan
• Provides “tax free income”
• Potential to capitalize principal and
interest
• Doesn’t affect/interfere with government
pension benefits
• Still maintain death benefit for estate
20 IN 20 OUT
• Can also be used with larger deposits:
• Male 45 NS
• Deposits $10,000 per year for 20 years
Joint Last to Die Legacy Concept
JLTD Legacy Case Study
• Couple – age 60 MNS/FNS
• Mutual Fund client with $500,000 in open
account with you
• Will need to spend all of the money during
retirement, but want to leave a legacy to their
children.
JLTD Legacy Case Study
• They decide they want to leave at least
$500,000 to their children
• Solution:
– Wanted safe and secure investment
– Minimum Annual deposit into Life
Dimensions UL
– All money in GIA at 3.5% (fully guaranteed)
– Level Cost of Insurance
JLTD Legacy Case Study
• Result:
– $500,000 Face plus Fund Death Benefit
– Annual cost = $5,510 or approximately
1.1% of their mutual fund holdings
– Internal Rate of Return of death benefit at
age 85 = 9.51%
– Equivalent to 17.6% before tax in GIC @
46% marginal tax rate
Age 85
JLTD Legacy Case Study
• If you don’t have clients with $500,000,
it will work just as well with lower
amounts
• Remember the rule of thumb is 1% to
3% of desired legacy.
Financial and Medical
Underwriting
The AIG Advantage
Financial Underwriting
• AIG Advantage
• Financial Underwriting Guide on Wave CD
– Clear, concise, easy to follow (pgs. 10-12)
• AIG offers higher limits, more lenient
• Strong synergy between financial and
medical u/w
Financial Underwriting
• Case Study (Mar 06) Female, age 34
• Company A offered $1.5M
• Income
$30,000
• Net Worth
• Joint Property
• Leveraged Account (joint)
• L/A Profit (joint)
$250,000 (50%)
$150,000
$ 50,000
• Total Net Worth
$450,000
Financial Underwriting
How much coverage would an
underwriter consider based upon this
information?
Financial Underwriting
• Calculations
• Income ($30K x 20 times) $ 600,000
• Net Worth ($450K x 7.9 times) $3,555,000
• Plus additional
$1,000,000
• Total eligible face amount $ 5,155,000
Medical Underwriting
The AIG Advantage
You asked…We listened
Term Life
“If you want to be in the Term market – you
need to remain a consistent player”
Our Product Line - Term Life
Term
Life
Policy Fee
reduced to $50
Family Term Market
Term Life
$500,000 PT20 Family Term
Market
•Do more for your clients!
•Sell more permanent insurance!
•Paid up policy for your clients!
•Earn more commissions!!!
What Have We Accomplished?
Term Life
•Given the client long term value
(total cost could be as low as $316.00
per year)
•Paid up policy at age 60 for
additional premium of $80.34 per month
•Can still extend term rider if
required
•Differentiates you from other
advisors
•Makes it more difficult to replace
term coverage
•More commissions for you!!
Family Term Market
Term Life
40 Year Old Male NS $500k
Preferred Term 20
($500K)
UL with 20 Yr.Term Rider
($100K UL $400K T20)
$780 x 20yrs.
= $15,600
$1806.52 x 20 yrs.
= $36,130
($20,530)
- 14,191
$ 6,339
Guaranteed CSV yr.20
Total Cost
Should the client cancel after Yr. 20 the
total cost of the coverage was
per year
$316.00
Family Term Market
Term Life
40 Year Old Male NS $500k
Preferred Term 20
($500K)
$312.00
UL with 20 Yr.Term Rider
($100K UL $400K T20)
Commission
208%
increase
$651.45
Our Product Line – Critical illness
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 20
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 10
Critical
Illness
Living Benefit 20
Critical
Illness
Living Benefit 20
Case Study
Critical
Illness
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Tom 42, Sarah 40 both non-smokers
Income of $120,000
They have two children
Life Insurance & Mortgage Insurance
needs are looked after
• Contributing to both RRSP & RESP
• Both want to retire in 20 years
Living Benefit
20
Case
Critical
Illness
Study
• They have a $175,000 mortgage on
their home
• They are contributing $17,500 in total
to their RRSP
• They are contributing the maximum
into RESP for their two children
Living Benefit
20
Case
Critical
Illness
Study
• Their concern is a Critical Illness
• What happens to their mortgage?
• What happens to their RRSP
contributions?
• What happens to their RESP
contributions?
• What happens to their retirement
goals?
• What happens to their children’s
education?
Living Benefit 20
Case Study
Critical
Illness
Tom
Sarah
$100K
LB 20
$902
81.18
LB 100
$2,135
192.15
$100K
annual
per month
$739
66.51
annual
per month
$1,871
168.39
Living Benefit 20
Case Study
Critical
Illness
45000
40000
$24,660
35000
30000
25000
LB20
LB100
20000
15000
10000
5000
0
10yrs
15yrs
20yrs
Tom $100K age 42 non-smoker
Living Benefit
20
Case
Critical
Illness
Study
40000
35000
$22,640
30000
25000
LB20
LB100
20000
15000
10000
5000
0
10 yrs
15 yrs
20 yrs
Sarah $100K age 40 non-smoker
Living Benefit 20
Case Study
Critical
Illness
Tom
$100K
LB 20
$18,040
20 years
$14,780
LB 100
$42,700
20 years
$37,420
difference
$22,640
$24,660
Sarah
$100K
Male, Non-smoker, $100,000 of T20 CI coverage
Critical
Illness
Company
Pure Protection
Age
30
Age
35
Age
40
Age 45
Age 50
Age 55
$37.26
$49.68
$70.83
$106.83
$163.53
$251.55
Canada Life
n/a
n/a
n/a
n/a
n/a
n/a
Industrial Alliance
n/a
n/a
n/a
n/a
n/a
n/a
Manulife Financial
$40.14
$49.95
$71.73
$104.58
$158.13
n/a
AIG Life
All monthly premiums are based on March 2005 LifeGuide.