Why CareValue for SPWL?
7 Single-Premium Whole Life (SPWL) Sales Ideas.
Older clients often have their nest eggs spread over an array of savings accounts, CDs, money market accounts, cash value life insurance, or annuities that they’ve accumulated over the last 30, 40, 50 years. Oftentimes these assets are just sitting there, not doing anything for the client. They’re not performing, especially in this interest rate environment, and they’re not providing income.
If your clients are interested in using any of these accounts for asset transfer, a single-premium whole life (SPWL) policy is a tax-efficient way to immediately increase the amount they can pass on to their family or favorite charity. The following seven scenarios will help you recognize a good single-premium whole life opportunity when one presents itself.
- Leave a Legacy – Find out if a client already has some designated “Leave Behind” money—something for the kids or grandkids. It it’s sitting in a CD or savings account, SPWL is a tax-efficient way to significantly increase the legacy your client can leave behind.
- Annuities Not Needed for Income – According to LIMRA, 85% of in-force annuity dollars will end up inherited. If your client has a non-qualified annuity they decide they don’t need for income, your client’s beneficiaries will be responsible for any taxable gain upon transfer. Generation Legacy offers a tax-efficient way to leave this money behind, while significantly increasing the death benefit amount.
- 1035 Exchange – If your client already has paid-up life insurance and is healthy enough to qualify for new coverage, they might be in a good position to exchange a paid-up policy, using the cash value as a single-premium, for a new policy with a potentially higher death benefit. This can be accomplished by a 1035 exchange and the new policy would require no additional premium.
- Universal Life Rescue – If you have clients who purchased UL policies in the 80s or 90s when interest rates were high, most likely these policies have imploded because current interest rates are not high enough to maintain the financial integrity of the policy. The client could use a 1035 exchange to move the existing cash value to a SPWL that would allow them to retain a level death benefit with no future payments.
- Final Expense – Older clients often set up a savings account with a set amount of cash to pay for their funeral and other final expenses. Using their burial account as a single premium they could increase that amount, eliminate the 1099s and they could still access the funds in case of emergency through policy withdrawals or loans.
- Long-Term Care Situations – Single-Premium Whole Life is not a replacement for Long-Term Care insurance, but for clients who don’t want LTC or can’t afford it, a SPWL policy with an accelerated death benefit rider can provide access to funds in the event of a catastrophic illness.
- Reduce Income and Tax Exposure – Most accounts that generate interest require a 1099 each year, which may expose your clients to additional income tax on their Social Security benefits. Accounts not needed for income could be re-positioned to a SPWL where it would accumulate on an income tax-deferred basis.
Contact CareValue’s Life department for help with any SPWL illustrations.