How to sell more Life Insurance

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How to use wills to sell more life insurance

How to use wills to sell more life insurance

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  • 1. Presents… Prospecting for Life Insurance A different approach
  • 2.
    • In Canada
    • 51% of Canadians don’t have a Will
    • In the USA
    • Nearly 57% of Americans do not have a Will
    • 69% with children under 18 years do not have a Will
    • Just under 50% of Americans aged 50 or more have a Will
    • Only 25% of adults between 25 and 34 have a Will
    • Less than 10% of adults between 18 and 24 have a Will
    • Over 70% of Canadians don’t have an enduring Power of Attorney
    • Greater than 50% of existing Wills are either out of date (things have changed) or poorly drafted to begin with
    • Lawyers do not advertise so people are seldom confronted with the importance of drafting a Will.
    • This spells – OPPORTUNITY for insurance advisers
  • 3.
    • There are approximately 745,000 unclaimed balances worth $168 million in the books of the Bank of Canada!
    • Over the next decade it is estimated that approximately $700 Billion from Canadians' estates will be distributed according to provincial laws because people did not have Wills or the original Wills can't be located.
    • One of the biggest factors that divide families is when the parents die and the Estate is distributed.
  • 4.
    • Because they don’t like to think about death
    • Because they have no idea what to put in a Will – Lawyers seldom advise they only take instructions in drafting a Will
    • Because Wills cost too much – on average in Canada - $500 - $700 per person for s straight forward Will
    • Because they don’t like lawyers and don’t know one they can trust
    • No sense of urgency
    • Nobody has approached them about making one
  • 5.
    • In Canada, there are four basic types
    • Formal Will
    • Notarial Will
    • Holographic Will
    • Fill in the blanks
  • 6.
    • Make phone calls to prospects and ask the following;
    • Do you have a Will?
    • Does your Will need some changes?
    • Can I send you some useful information about Wills?
    • If making phone calls is not your thing, then get a mail piece sent to prospects then follow up with a phone call.
    • Alternatively you could talk to people in person – your waitress, barber/hairdresser, family, friends, or anyone you do business with or you meet. In this case I would recommend a card with information about Wills – as follows..........
  • 7.
  • 8.
    • Providing Funds To Guardians For Use In Raising The Children
    • Many a court case has been filed by children who were raised by a guardian claiming that the guardian misappropriated their inheritance leaving them with less at age of majority.
    • This occurs because the Testators did not award capital to their guardian for the sole purpose of raising their children.
    • For example, there is a good possibility that a bigger vehicle may be necessary, or a bigger house. These are not typical amounts used to feed and cloth the children which are sometimes provided for in the Will.
    • NOTE: It’s never wise to have your Executor and Guardian as the same person.
  • 9.
    • Providing Funds To Executors
    • The job of the Executor can be substantial. Other than out of pocket expenses, loss of wages due to time that may be necessary to file documents and deal with disbursements can become expensive especially when there are minor children that must be provided for until the estate can be finally settled.
    • Location of Your Will
    • It is NEVER advisable to keep your Will in a safety deposit box – How will the Executor prove he or she is the Executor to get access to the Will?
    • Make sure the Executor knows where it is located and if possible keep it in a fireproof safe at home.
  • 10.
    • Joint Tenancy
    • One method employed in Estate planning is the use of property held in joint tenancy. Under the law, property held this way is owned 100% by each party and therefore indivisible.
    • On death of either party, the property automatically goes to the surviving owner(s) and does not form part of the Estate.
    • Some problems
    • In the event that one of the joint tenants get’s sued or divorced, the property can and usually is severed and converted into a “tenancy in common
    • This means that property held jointly is not safe from claims while living and therefore should be entered into very carefully. There may and usually is also the possibility of tax implications unless the property is acquired jointly to begin with.
    • NEVER recommend this as an estate planning tool without taking into consideration all these complications.
  • 11.
    • Its not just what you say but how you say it.
    • The legal system is all about wording and the meanings attached to them. Lawyers and courts have their own way of interpreting words and twisting words to mean things we never intended to convey.
    • EXAMPLE:
    • A man died leaving his business to his son. At the time of the inheritance the son was married. Shortly after receiving the transfer through his father’s Will, the son’s wife filed for divorce claiming half of the business.
    • Naturally the son claimed it was his by inheritance and no increase in value had occurred as would normally be of significance in dividing marital property.
    • The case came down to the Wording of the Will. As it turned out the father’s Will simply stated, “I leave my business and all assets of the business including bank accounts to my son Robert.”
    • The attorney for the soon to be ex-wife claimed that the father intended it for them both . Of course dad was dead so he could not be asked.
    • The court awarded half the business & cash to the claimant on the grounds that it could not be determined if the father had in fact intended it or not, but assumed that since they were married it was for the benefit of them both.
    • If the father had stated the same thing but added the words “for his own use absolutely and forever”, then that would leave the son in control and his ex-wife would have had no claim.
  • 12. Presents… Part 2 How to sell more Life Insurance Through Wills
  • 13.
    • EXAMPLE: This is taken from an actual case I worked on.
    • John, a successful farmer has a problem. He is married & has 4 adult children. One is a son who farms with his father hoping one day to take over the farm. The other 3 are daughters, 2 of whom are married, with no interest in the farm.
    • How will John divide his estate to be fair?
    • OPTION #1:
    • Divide the farm up equally between all the children & have the son purchase his sister’s interest or portion. – on the death of both himself and his wife.
    • PROBLEMS THIS SOLUTION CREATES:
    • You cannot simply divide indivisible land so John would have to incorporate the farm now and then divide the shares. This will come at a cost of incorporating & maintaining the corporation.
    • How will you ensure the daughters sell their shares to their brother later?
    • How will the son get the financing to buy out his sisters?
    • If he could borrow the necessary funds (which would be doubtful), could he still afford to farm with such a huge debt load?
    • Assuming mom survives John, what will she live on and where?
  • 14.
    • OPTION #2:
    • Leave the farm to his son and other assets to his daughters and wife such as cash in the bank etc.
    • PROBLEMS THIS SOLUTION CREATES:
    • Unless John is very wealthy (cash wise), chances are his daughters & wife will get shafted.
    • John would feel pressured to save huge amounts of cash for estate distribution and thereby not enjoy his retirement years
  • 15.
    • OPTION #3:
    • Leave everything to his wife and let her deal with it later.
    • PROBLEMS THIS SOLUTION CREATES:
    • What if his wife pre-deceases him or dies at the same time – in a car accident?
    • This is only avoiding the inevitable distribution problem and leaving that to his wife to figure out would be very nice at all – especially if she is elderly at the time and in bad health.
    • What if she should remarry?
    • NOTE: Often in cases like this the lawyers recommend the establishment of a Trust as follows – everything goes to mom in trust for as long as she lives but goes to the children as per the Will’s directions for distribution.
    • Trusts basically tie everyone’s hands . Mom cannot re-mortgage or sell the house or farm should she need money. The farm cannot be mortgaged by the son or children since it is not legally theirs yet and the bank cannot kick mom off in the event of default on the loan, so they will not take the farm property as collateral.
    • Lawyers often recommend Trusts because it is their area of expertise and makes them a lot of money in administration. There are very few cases where a Trust actually would be the best option.
  • 16.
    • OPTION #4:
    • Sell the farm to the son now.
    • PROBLEMS THIS SOLUTION CREATES:
    • If John loses ownership what will he do? Is he ready to retire?
    • How will his son pay for the farm?
    • If he could borrow the money how will he make payments & still keep the farm viable?
    • If John takes payments will this simply come out of the current farm income and is that viable? Also, if his son takes ownership now, gets married & subsequently gets divorced then how will John get paid?
    • How fair would this be to the daughters? After all it really won’t cost the son anything if dad is financing the purchase.
  • 17.
    • OPTION #5:
    • Sell the farm to the son now using Life Insurance
    • WHY THIS IS A BETTER SOLUTION
    • If you did a financial comparison of cost with conventional financing the cost of a term100 type policy or a quick pay Universal Life policy it will be very clear that the insurance cost is substantially cheaper. NOTE: I ALWAYS did this in my proposals.
    • The son purchases the insurance on John. The beneficiary is mom and his sisters – ALL TAX FREE
    • The son will NEVER buy a farm cheaper than this
    • Everyone gets treated fairly and there is nothing to negotiate on or fight about afterwards
    • Because the insurance cost is relatively cheap, there is enough room for John to take out a “pension” from the farm when he doesn’t want to be active anymore and its flexible.
    • Everyone, including the son can move on with their lives when John dies.
    • There is no need for complications now or later
  • 18.
    • How this played out:
    • I approached John about drafting his Will. At first he hesitated. I suspected it was because he was not sure how to distribute everything so I assured him I had some ideas that might help and he granted me the appointment.
    • On arriving he told me immediately that he was not interested in life insurance and would not buy any because he did not believe in it.
    • After I lead him through all the options and their costs, he could plainly see for himself that having his son buy life insurance on him was a smart idea, so he called him in to the meeting and had me explain it to his son. Of course HE did not have to buy any life insurance so he was okay with the suggestion that his son did – after all the son was going to get the farm this way.
    • I wrote him up for $750,000 of term 100 life insurance and at his age of 68 the premium was substantial and so was my commission.
    • I would NEVER have gotten to first base with this client trying to talk to him about life insurance and nobody ever had. BUT through the Will I was able to not only solve his problem which he felt very heavily, but I was also well paid for doing so.
  • 19.
    • Some Background
    • When I worked on this case, I was a Notary so I could draft the Wills for him myself.
    • I was also an avid student of Estate Planning and studied a great deal of case law on Will disputes and settlements in the courts.
    • Most Life Insurance brokers or agents refer Wills to lawyers and lose a great deal of business as a result. In fact many lawyers will talk the clients into creating a trust and as such kill any proposal for life insurance.
    • Pre-Paid Legal now gives you the opportunity of a life time.
    • By using a top legal firm to draft the Will, you can sell them a PPL policy, earn a commission (which is paid every year like general insurance products)
    • You can coach them on estate matters – As part of my team I will teach you how.
    • In most cases you will land up selling more permanent life insurance and earn much more money
    • The need for this insurance is so well established that the likelihood of cancellation is minimal