Let Them Tell Their Story

Our Customers’ Stories

by David Brock on October 8th, 2018



Storytelling is important.  None of us live in a world of data and logic, as much as we might pretend that we do.  Stories are important.

Stories provide contexts to teach our customers and help them learn.  They provide a basis for helping our customers understand how we might help them.  They help customer learn through understanding the stories of people and organizations who have faced similar issues.  Stories engage our customers hearts and minds.

Unfortunately, when we think of stories, too often, we think of our stories or those we want to tell.

But our customers have their own stories—stories relevant to their own companies, organizations, and functions.  These provide the frameworks that provide them meaning in their jobs.  Stories that are personal, these provide the context of who they are.  Inevitably, these stories are tightly intertwined.

Stories provide the framework and rationale to how we live, what we believe, what we value, how we dream, what we want to achieve.  They shape who we are–as individuals and as people working in organizations.

We focus so much on the stories we want to tell, too often we forget to understand our customers’ stories.

But that’s probably most important, until we can understand our customer stories, we have difficulty positioning ours.  Until we understand their stories, we don’t know how to help our customers expand their stories to include ours.

Storytelling is important.

Imagine if we took the time to let our customers tell us theirs.


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Policy Analysis and Review

Reviewing Life Insurance Every Year Is A Must

Since life circumstances change over time, life insurance policies must be updated to reflect those changes. As a rule, it is best to review coverage at least once per year. When doing this, spend some time pinpointing major life changes over the past year. Meet with a personal agent to go over a list of events to ensure adequate updates. To evaluate current coverage, ask these self-assessment questions:

  • Did marriage status change this year?
  • Were any babies or adopted children added to the family?
  • Did a spouse, child or other dependent family member die?
  • Did personal debt amounts change?
  • Have interest rates changed since the policy was started?
  • Did working or retirement status change?
  • Was there a change in income?
  • Was there a partnership or ownership change in a business?
  • Was a new key employee added to a personal business?
  • Was any money inherited recently?
  • Do parents require financial help?
  • Were there any major health status changes?
  • Did smoking status change?

Some of these criteria such as being a smoker will affect life insurance pricing on the insurer’s end and on the policyholder’s end. Major life events and income or debt changes are good reasons to increase a coverage amount. This is not required by the insurer. However, it is important to leave enough money to cover debts, final expenses and some living expenses for heirs. If there was a significant income increase, a person may want to add more money to a life insurance policy for a child’s future college fund or for an elderly parent’s skilled care.

Also, another topic commonly overlooked by consumers is insuring a spouse who is a stay-at-home caregiver. Men and women who stay home to take care of the house and the children make vital contributions. If they die, the main breadwinner is left with the expense of finding someone to care for the children and the home. Paying for child care and a housekeeper can be expensive. It is important for stay-at-home caregivers to have life insurance as well.

Policy Expiration
Term life insurance is a popular choice. People purchase it for a specific amount of time such as 30 years. If the policy’s term expires without it being renewed, the policyholder is no longer covered. There are other types of policies that do not expire, and the payout and premium remain the same regardless of health or age changes.

A person who buys a term life insurance policy at age 30 for a term of 30 years would pay much less at that point than he or she would pay to renew it at age 60. If the individual started smoking and had multiple health problems, the cost to stay insured would be significantly higher. When choosing life insurance or updating it, always keep a long-term plan in mind. People with term life insurance policies can convert them into permanent policies before they expire.

The right policy choice for each person depends on personal circumstances, health status, age and budget allowances. Although universal life insurance may be a better option than term life insurance, it is more expensive. However, having an affordable term life insurance policy is better than going without life insurance. To learn more about life insurance options and how much coverage to purchase for individual circumstances, discuss concerns with an agent.

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What is a Dynasty Trust?

With a properly executed estate plan, your wealth can be enjoyed by your children and even their children. But did you know that by using a dynasty trust, you can extend the estate tax saving benefits for several generations, and perhaps indefinitely?

A dynasty trust can build a bridge that protects your wealth from gift, estate and generation-skipping transfer (GST) taxes and helps you leave a lasting legacy. And, with today’s higher lifetime gift and GST tax exemptions, a dynasty trust is all the more powerful.

Dynasty Trust in Action

Transfers that skip a generation — such as gifts or bequests to grandchildren or other individuals two or more generations below you, as well as certain trust distributions — are generally considered to be GSTs and subject to the GST tax (on top of any applicable gift or estate tax). However, you can make gifts up to the GST exemption amount free of GST tax.

The exemption in 2018 rose to $11.18 million (up from $5.49 million in 2017). So you may want to use as much of your exemption as you can afford to this year and next. Applying it to a dynasty trust can help you make the most of your exemption.

Your contributions to a dynasty trust will be considered taxable gifts, but you can minimize or avoid gift taxes by applying your lifetime gift tax exemption — also $11.18 million through 2018 (up from $5.49 million in 2017).

After you fund the trust, the assets can grow and compound indefinitely. The trust should be designed to make distributions to your children, grandchildren and future descendants according to criteria you establish. So long as your beneficiaries don’t gain control over the trust, the undistributed assets will bypass their taxable estates.

Enhancing the Benefits

To increase the benefit to future generations, you can structure the trust as a grantor trust so that you pay any taxes on the trust’s income. The assets will then be free to grow without being eroded by taxes (at least during your lifetime).

Also consider further leveraging your GST tax exemption by funding the dynasty trust with life insurance policies or property that’s expected to appreciate significantly in value. So long as your exemption covers the value of your contributions, any future growth will be sheltered from GST tax, as well as gift and estate tax.

Allowing a trust to grow for several generations can produce enormous amounts of wealth. For example, a trust funded with an initial contribution of $5 million and earning an average annual return of 6% will be worth more than $92 million in 50 years and almost $1.7 billion in 100 years (assuming no income taxes or distributions).

Three Planning Scenarios

Even though the long-term tax-saving benefits may be substantial, you may question the reasons to include distant descendants as beneficiaries. Here are three scenarios to consider:

1. If your estate plan already provides for your immediate family with resources to spare, a dynasty trust can be a nice supplement to your plan.

2. You may be reluctant to turn your children into “trust fund babies” by allowing them to live off their inheritances. You can design a dynasty trust to ensure that your children, grandchildren and future generations pursue their own careers while at the same time providing them a safety net in the event they’re unable to pay for health insurance, medical care, education, housing or other necessities.

3. A dynasty trust can be a great tool for encouraging charitable giving. For example, you might provide for the trust to make matching distributions to beneficiaries equal to a percentage of the charitable contributions they make each year.

Whatever your reasons for including a dynasty trust in your estate plan, it’s important to communicate your intentions to your present and future beneficiaries.

Considering State Law

If you think a dynasty trust might help you achieve your estate planning goals, talk to your adviser about the state law considerations. Some states apply the rule against perpetuities, which limits a trust’s life span, generally to no more than 100 years or so. But many states have extended the limit to several hundred or even 1,000 years or have no rule against perpetuities.

You don’t have to live in a perpetual trust state to take advantage of this technique; it can be just a matter of specifying the applicable state law in the trust agreement. But additional requirements may include appointing at least one trustee who resides in the state whose laws govern the trust — a bank or other corporate trustee, for example — and locating at least some of the trust assets in that state.

Laws vary from state to state, so choose carefully. Typically, the most attractive states are those that both allow perpetual trusts and have no state income tax.

Is a Dynasty Trust Right for You?

If establishing a lasting legacy is an estate planning goal, a dynasty trust may be the right vehicle for you. However, before you take action, consult your estate planning adviser, because a dynasty trust can be complicated to set up.

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Big Tax Changes in 2018

Big tax changes have gone into effect in 2018. Thanks to the massive new tax cut that Republican lawmakers enacted late last year. I thought it would be good to highlight some of the key changes. Remember, changes are always opportunities. It is a chance to provide information to our clients and ask questions to see what type of help they really need. Here are some of the key changes:

  • Individual taxes  Standard deductions nearly doubled to $24,000 for couples, $12,000 for singles and $18,000 for household heads. Given these higher amounts, it is a sure bet that fewer people will itemize.
  • Home Mortgages are nicked Interest can be deducted on up to $750,000 of a new acquisition on a primary and secondary residence, down from $1 million. The new limit generally applies to mortgage debt incurred after December 14, 2017. Older loans still get the $1 million cap. No write off is allowed after 2017 for interest on home equity loans for which the proceeds are used to buy a car, pay down credit card debt etc.
  • The Medical Expense deduction is enhanced – Lawmakers chose to keep this popular write-off but they’ve also lowered the threshold AGI on Schedule A from 10% to 7.5%.
  • The Child Tax Credit is doubled to $2,000 for each dependent under age 17.
  • Estate Tax and gift tax exemptions have changed. Congress has doubled the lifetime estate tax exemption to $11,180,000. The rate remains at 40%. The annual gift tax exclusion for 2018 is $15,000 per donee.
  • The new tax law dramatically reforms the taxation of businesses of all sizes. Regular Corporations (C Corps) will pay a flat 21% rate, down from the 35% top rate now. This lower rate is permanent and begins in 2018

There is so much more to know about the ever-changing tax environment. But with change comes an opportunity to serve. Take the time to familiarize yourself with the changes and reach out to your clients with the information they need. You will be glad you did.

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The Cost of Care Calculator

Have You Tried the Cost of Care Calculator?
It’s important for clients to understand the cost of LTC services in order to understand why an LTC Rider is such a valuable feature on a life insurance policy. Mutual of Omaha’s new calculator provides this information. Learn more.
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6 Reasons to Convert Term Insurance

Despite the fact that many financial advisors consider permanent life insurance to be a more important long-term planning tool than term life insurance, many consumers still opt to purchase term life policies.

Term life insurance is often sold at a lower price compared to permanent life insurance products. Other times, a consumer sees a term life insurance policy as one way to satisfy an immediate coverage need. Some of the common expenditures that consumers may envision the pay out from a term life insurance policy covering include:

  • Funerary expenses
  • Medical expenses
  • Consumer debt
  • College or graduate school tuition

Devotees of the media personality Dave Ramsey may also hold term life policies as one pillar of the author and talk show host’s personal finance plan, which includes advising consumers to buy term life policies because they’re cheaper than whole life policies, then use the difference to invest in the stock market.

However, only about 2 percent of term life insurance policies actually pay out, according to Forbes Magazine.

Converting a term life insurance policy to a permanent life insurance policy should always be a back-pocket option for most consumers. Advisors who talk with clients about this option will gain the benefit of that person’s trust in addition to the potential for fresh business, given that the original policy does indeed include a conversion clause.

It also behooves financial professionals to seek clarity with clients whenever those consumers seem ‘fuzzy’ about the conversation requirements of their term life insurance policies – including any relevant conversion deadlines.


Since buying a new whole life policy will be more costly than the investor’s old term life policy, the first thing that an investor should understand is the lasting value of permanent life insurance.

Read on for six reasons why consumers with term life insurance policies should consider converting those policies, despite the higher premiums associated with whole life products.

  • They’re likely to outlive their term life insurance.

No one is happy with an investment that results in zero gains. The No. 1 reason that consumers who seem very likely to live beyond the term of their standard life insurance policies should look into conversion options is, if they don’t, they risk losing their premiums once that policy has expired.

  • They are rethinking their estate.

Term life insurance policies are generally not seen as effective for estate-planning. Whole life insurance policies, on the other hand, carry more value and security.

Also, wealthy consumers who are concerned about estate taxes that may be incurred by beneficiaries after they die may consider whole life insurance policies because of the payout of those policies can be used for just such an expense.

  • They may simply prefer an upgrade.

Term life insurance policies are often sold to young families with competing financial priorities such as paying down debt or socking away money in a college fund. These customers might have preferred the long-term security of a whole life insurance policy, but simply couldn’t afford it and instead decided to buy a term life policy.

As these consumers become more financially secure, and they are more willing to pay higher life insurance premiums for increased financial security and peace of mind.

  • They anticipate steep family costs.

Consumers who anticipate that their families will face major financial hurdles after they are gone, such as the expense of caring for a developmentally disabled adult, may want to turn to a whole life insurance policy in order to ensure that those beneficiaries are adequately covered.

  • They are restructuring their retirement income.

Consumers who can see retirement on the horizon and want to ensure sufficient income throughout old age may want to consider how a whole life insurance policy, the principal of which is tax exempt, can serve as a savings tool. Investing in one can equate to a certain amount of tax-free retirement income down the road.

Some consumers may even want to consider investing in a tax-sheltered permanent life insurance policy now with the anticipation of cashing it out later for retirement income.

  • Their financial priorities are changing.

Since the chances are high that individual investors were younger and healthier when they purchased their term life insurance policies. Some of those people may have subsequently developed very serious illnesses that could prevent them from qualifying to purchase permanent life insurance policies in the future. People in this boat may want to convert a term life insurance policy in order to forgo the anticipated medical exam that would be required to purchase a completely new whole life insurance policy.

ISN Network (800) 338-1892

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Insight From Roccy

I am a fan of Roccy  DeFrancesco, JD. I particularly like when he goes deep on helping advisors understand the complexities in Life Insurance products. This is a good insurance lesson from one of the better teachers out there.


From Roccy-
Since we are doing education on IULs in a webinar series, I thought I’d do some general life insurance education on a topic that is not widely known or understood.
                In fact, I’ve always been amazed at how few advisors know what CVAT or GPT means in the context of designing cash value life insurance policies for clients. So, I thought I’d do a newsletter on both.
What are CVAT and GPT, and why are they important?
                CVAT is the abbreviation for Cash Value Accumulation Test, and GPT is the abbreviation for Guideline Premium Test. These terms refer to the two basic alternatives for determining whether a product meets the requirements to qualify as a life insurance contract (not whether a policy is a modified endowment contract or not).
                Both tests define the relationship between cash value and the death benefit that is required at all times for a contract to qualify as life insurance but, as you will see later, they do it using two different approaches.
                What happens if a product fails to meet one of these two tests?
                The product is then no longer taxed as a life insurance contract. Instead, the growth on cash is taxed annually as an investment.
                Most life insurance software defaults to running a GPT. So, without a majority of advisors knowing it, they have been running GPT-tested cash value insurance illustrations for clients.
                The real question is: Why run an illustration using CVAT?
                The non-technical answer is because you can pay larger premiums into the policy quicker with a lower initial death benefit and a higher cash surrender value
                If that’s the case, why are we not running all of our illustrations using CVAT?
                Again, giving a non-technical answer, the reason is that when you get into the borrowing phase of the contract, even though CVAT starts with a lower death benefit (which you would think would accumulate more money in the policy quicker), a policy tested using GPT will almost always allow the client to borrow more money from the policy in retirement.
Example illustrating why CVAT shouldn’t be used most of the time

                Let’s look at a 45-year male old who pays a $50,000 a year in premium until age 64 and then borrows from the policy at age 65.
Initial Death Benefit
1st Year CSV
CSV at age 65
Because the initial death benefit is lower and the cash value is higher, you’d think the CVAT policy would yield more of an ability to remove cash from the policy, but that’s not the case.
Loans from the policy every year from ages 65-100
While it makes little sense, GPTing allowed the client to remove more money from the policy from ages 65-100 even though the CSV (Cash Surrender Value) just prior to borrowing was higher with CVATing.  The required death benefit with CVATing rises much quicker in the borrowing phase vs. GPTing. This is why GPTing almost always allows a client to borrow money from a policy vs. CVATing.
When do I see the CVAT used? 
                CVAT is used routinely in whole life policies (yet another reason I don’t like WL).
Unfortunately, I also see it used quite a bit in the college funding arena. Why, unfortunately because agents and insurance companies use CVAT testing to prop up the cash value in the policy in the early years to make it look better than it really is (and there are a number of short fund situations where clients want to shove a lot of cash in quickly).
                As I’ve stated a number of times over the years, cash value life does NOT work for the vast majority of clients when trying to save/pay for college. If you would like to read my 10-page summary on why cash value life doesn’t work for college planning, click on the following link:
When “should” you use the CVAT?
            Potentially in a premium finance situation where you need high cash value in the policy to help with collateral.
            Otherwise, you should use GPTing (especially if the goal is borrowing from the policy).
            While you may not use CVAT too often, or even never, if you are in the financial services field and certainly if you sell cash value life insurance, you should know your trade and, therefore, you need to know the difference between CVAT and GPT and when to use one over the other.

Roccy DeFrancesco, JD
Benton Harbor, MI 49022

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