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A Fresh Approach to Building Your Business

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Presentation on theme: "A Fresh Approach to Building Your Business"— Presentation transcript:

1 A Fresh Approach to Building Your Business
Mark Stueven National Sales Director CRB

2 Sales Opportunities There are numerous sales opportunities today. Clients in all stages of life still need our help! Whether they are young families, baby boomers, or business owners, they all have an interest in planning for the future and ensuring their loved ones are protected. You can help ease their concerns by showing them how life insurance offers them multiple solutions, including guaranteed protection and the flexibility to change with the times.

3 Sales Opportunities Young Families Small Business Owners
Want to protect their business from unexpected events Loss of key employee Cost associated with employee turnover Families with children Working couples Single-income households Single-parent households Today we’re going to focus on 2 specific sales opportunities: Younger clients are not only looking to protect their income, but also want to ensure they provide a guaranteed income stream to their families if they experience the loss of their spouse or main breadwinner. The Income Protection Option provides income replacement to clients at a time of unexpected need. The typical client profile for the IPO are: Families with children Working couples Single-income households Single-parent households The economic volatility of the last few years has brought a whole new set of challenges to business owners. They are looking for ways to reduce the high costs associated with employee turnover by retaining key employees longer and receive a meaningful tax deduction as well. Our Small Business Triple Play strategy is a unique approach offering business owners guarantees, flexibility and control to help ensure their business is protected.

4 Income Protection Option (IPO)
Now, let’s begin our discussion on the Income Protection Option…

5 How much life insurance do your clients need?
LIMRA 2011: The number of households that are uninsured or underinsured is at a 50-year high

6 Reasons for Buying Life Insurance Buyers vs. Nonbuyers
Life insurance beat out all other sources of financial assets or income that Americans expect to use to help pay bills, and to maintain their lifestyle if the primary wage earner dies- LIMRA, when you look at people who have actually bought life insurance, the main reason for their purchase was to replace income. So these clients have been able to equate the amount of life insurance that they needed with the idea that it was going to replace income. One of the top reasons for not buying life insurance has been the difficulty for clients to decide on what kind of life insurance to buy and how much of it. If you are able to help prospects understand how to think of life insurance in terms of income replacement, you increase the chances that they will buy a life insurance policy. Seems simple enough, seems intuitive enough, but why hasn’t this translated into sales? 2010 Trends in the United States, LIMRA Fact Book MarketTrends

7 Effective Fact Finding: 3 Questions
FOCUS ON LOVED ONES If you die tomorrow, how much is needed to satisfy outstanding debt and any other final expenses? 1 What is the monthly income stream required for your spouse to continue to run the household? 2 Would you like a lump sum set aside for college expenses, for your kids, retirement for your spouse or a wedding for your daughter? 3 So keeping this in mind, effective fact finding is focused on the beneficiary/ies instead of the buyer. We’ve come up with 3 simple questions that can help you focus the conversation towards the recipient. And now Transamerica has developed the Income Protection Option to help translate the answers to these questions into a life insurance sale.

8 Guaranteed Income Strategy: Income Protection Option (IPO)
If you die tomorrow, how much is needed to satisfy outstanding debt and any other final expenses? 1 What is the monthly income stream required for your spouse to continue to run the household? 2 Would you like a lump sum set aside for college expenses, for your kids, retirement for your spouse or a wedding for your daughter? 3 5 – 25 years / $100 min. $10,000 min. Guaranteed Monthly Income Stream Initial Lump Sum Final Let’s go back to those three fact-finding questions and see how they fit into the IPO process.

9 Guaranteed Income Strategy: Income Protection Option (IPO)
5 – 25 years / $100 min. $10,000 min. Guaranteed Monthly Income Stream Initial Lump Sum Final Available at no additional premium cost May include multiple beneficiaries Can be modified prior to the death of the insured A portion of each monthly payment and a portion of the final lump sum are reportable as interest income It’s a no-cost endorsement, that (if elected) allows the death benefit to be paid as a monthly income stream for 5-25 years, and even allows you to leave an initial lump sum or ending lump sum….or a combination of all of the above. It can be modified or even cancelled at any time prior to the death of the insured.

10 Income Protection Option Scenario
Client Profile John, 37, married to Ann, 35 2 children aged 10 and 8 John is a business manager and Ann is a nurse Consider the case of John. John needs to protect his income because he has a lot of financial responsibility to his loved ones. Without his income, John’s family would struggle and probably not be able to pay their monthly expenses.

11 Income Protection Option Scenario
Concerns Will his family have enough to help cover living expenses if something happens to him? How can he help ensure the financial security of his spouse and kids for the future? Given, Ron has many concerns. Among them:

12 Solution: Trendsetter® Super with the IPO
Trendsetter ® Super policy on John with the IPO* Family Need Initial Lump Sum Guaranteed Monthly Income (15 Years) Final Lump Sum Ann (Spouse) $50,000 $1,500 Amy (Child) $ 500 $25,000 James (Child) Total $2,500 / month (for 15 years) With the IPO, John can plan out ongoing financial assistance for his family should something happen to him. He can leave an initial lump sum to cover any hospital costs, funeral expenses, etc. He can leave monthly income for Ann so that they can continue to pay their bills. John can also leave a final lump sum payment at the end of the IPO payout period for college for his kids tuition, a wedding for Amy, etc. Monthly Premium: $36.90 Total Face Amount: $446,025 Total Income Protection Option Payments: $550,000 *Trendsetter Super 20, Male, 37, Preferred, Nonsmoker

13 Income Protection Option
Economical Simple Gives Control to Policy Owner Death benefit payout options Flexible Income Protection Option Economical Simple Gives Control to Policy Owner Death benefit payout options Flexible Continued from previous slide

14 IPO Talking Points Producer Presents Benefits to Client:
“Let’s build a family protection plan.” “With all the economic uncertainty, we can create a guaranteed income stream for your family.” “What could your loved ones do with an extra $500/mo? $1000? $2000?” Take control of the sale by presenting benefits your client can relate to.

15 Available Marketing Tools: Income Protection Option (IPO)
IPO on TransWare® Flyer IPO Consumer Brochure IPO Consumer Flyer IPO Calculator on iPad App IPO Calculator on Mobile App IPO Flyers and brochures can be found on ANI under Product Information (Home > Product Information > Life > Life- Term). Select search and all flyers will show up or you can search by the title of the flyer. We also have the enhanced IPO calculator that includes a sub-calculator for each field available on the iPad App. And you can also download the Mobile Rate Calculator to your iPhone, BlackBerry or Android.

16 Small Business Triple Play
Now, let’s shift the discussion to over to our Small Business Triple Play strategy. The client in this situation to a small business owner. We’ll find they have a unique set of challenges when it comes to planning for the financial future of their businesses.

17 Business Owners: What is at stake?
Number of businesses in the U.S. is 5.7 million 90% are small businesses (fewer than 20 employees) Small Businesses 90% It has been said that the main engine behind the American economy are small businesses and these numbers show. However, the death or disability of a principal owner of a closely held business can create serious financial problems for the business and the survivors. Without a succession plan in place, a business could suffer the following events at the owner’s death or disability: Downturn in revenue, resulting in inability to make payroll or other liabilities Loss of clients due to a lack of trust or image of instability - Reduction or complete loss of income stream for your spouse and family Poor operational decisions from uninformed or unqualified employees or family members Liquidation Source: 2010 County Business Patterns

18 Challenges for Businesses
Decreased unemployment is increasing voluntary turnover Workers have more career options Small Businesses 80% Businesses today are facing many challenges. One challenge that is reported by Price WaterHouse Coopers is that as unemployment has decreased, voluntary turnover has risen which is the first time this has happened in six years, and especially within top performers. With the economic recovery, workers are finding themselves with more career options. PWC Saratoga Human Capital Effectiveness

19 Employee Turnover Wage and salary workers = 4.6 years of median tenure1 75% of an organization’s top performers leave the company within 3 years2 Replacement costs range from 60% to 200% of an employee’s annual salary3 We’re seeing wage and salary workers staying with companies an average of 4.6 years. And the top performers have an even higher turnover with about three-quarters leaving the organization within 3 years. The costs to businesses for employee turnover is significant and range anywhere from 60% to 200% of an employee’s annual salary. Given these findings, it’s more important than ever for businesses to find ways to retain these employees (especially top performers). 1US Dept. of Labor: Bureau of Labor Statistics, Employee Tenure Summary released September 2012. 2http://www.forbes.com/sites/danschawbel/2011/11/22/whos-at-fault-for-high-gen-y-turnover/2/ 3Society for Human Resources Management, Executive Brief: Differences in Employee Turnover Across Key Industries.

20 Target Market Small Businesses Who Want: To retain key employees
To select who benefits Little to no administration costs Tax deductions Understanding these challenges can present a great opportunity to help employers, especially small business owners. They want to retain key employees by selecting exactly who receives the incentives in order to keep valuable talent in-house, and they need simple solutions without a lot of hassle or additional costs. And especially with today’s higher income tax rates, small business owners want tax deductions to reduce their tax burden. Unfortunately, many small businesses can’t afford to put a comprehensive benefit package in place, but there is a way that they can still provide competitive benefits. And with the strategy I’m about to go over, not only can small business owners provide something unique that even the largest employers aren’t offering their employees, but the business can also take advantage of all important tax deductions in the current year.

21 Small Business Triple Play
Employee Benefits Income replacement 1 Safety net 2 And that strategy is our Small Business Triple Play which on top of being unique and providing for tax deductions, it packages 3 tremendous benefits for key employees. These benefits can be customized to meet the needs of both the business owner and their top performer. So for business owners that want to retain a key employee and are willing to pay for a benefit to keep that person on board, let’s go over some of the types of questions to ask a business owner when discussing 3 main benefits. First, the business owner can protect an employee’s paycheck: Would your employee find it beneficial to have income continue on to his family in the event of his premature death? How much of your employee’s monthly income would you want to protect, and for how long? Second, the business owner can provide funds to incentivize its top performer to stay with the company: How much would you be willing to put towards that key employee’s benefit annually which could be available for him at retirement in 15, 20, or 25+ years? And third, the business owner can provide protection for long-term care, a very unique benefit that’s extremely valuable to employees and not widely offered by companies in today’s market How would you like to distinguish yourself by providing a crucial benefit to your key employee with long term coverage, which could even be paid up by retirement? Long term care protection 3

22 Small Business Triple Play
TransACE® with the LTC Rider Income replacement 1 Safety net 2 The Small Business Triple Play is possible with TransACE with the Long Term Care Rider which provides a guaranteed death benefit and 3 big plays: For the first play, TransACE has the Income Protection Option which can provide income replacement to the family in the form of a guaranteed monthly income check for up to 25 years and enables businesses to help its employee protect against the loss of his or her salary in the event of premature death. With the second play, it’s the MultiFlex Surrender Endorsement, a cash-back feature on the TransACE policy that provides up to 100% of premiums back to the policyowner when surrendered in year 15, 20, or anytime after year 25. It enables small businesses to provide their employees with a safety net or structure a “retirement” bonus while not providing access too early for that employee to run off with to another employer. For the third and final play, LTC Rider gives employees much-desired financial protection in the event that long-term care is needed in the future. Three benefits that a small business owners can offer top performers and set themselves apart from their competition, while also being simple to set up and providing the business with meaningful tax deductions. Let’s see the Small Business Triple Play in action… Long term care protection 3

23 Small Business Triple Play Example
InWorks, Inc. Computer repair business George, Head of IT InWorks’ most valuable employee InWorks is a computer repair business, and the insurance advisor helps InWorks hone in on one of its major concerns which is retaining its key employee, George. George manages the IT area and keeps the place running. Without him, InWorks would suffer a major loss to try to replace his talent. The insurance advisor works with the owners of InWorks to find a solution to incentivize George to be a long term member of the team and to continue to grow the company.

24 Small Business Triple Play Example
Deciding on Benefits: Income Replacement Long Term Care Protection Safety Net $6,500/mo for 15 years or $5,000/month for 20 years or $4,000/month for 25 years $158, in year 15 or $211, in year 20 or anytime after year 25 Up to face amount Maximum $1M in benefits $211,820 available at retirement (age 65) Up to face amount of $907,089 $5,000/month for 20 years With the Small Business Triple Play, benefits can be customized to meet the goals and needs of both InWorks and George. Based on how much InWorks is willing to commit, the insurance advisor works to underwrite him and help them choose the right fit. InWorks is willing to pay a benefit of about $10k/year to George for as many as 20 years so that if George retires at InWorks, by age 65, he will have a paid-up policy. George is underwritten as a 45 year old male preferred non-smoker. Together, they can decide what would work best: First, George can replace part of his income. Based on premiums InWorks is willing to pay, he can choose an income stream of $6,500/mo for 15 years for his family if he passes away, $5K/mo for 20 years, or $4K/mo for 25 years if he would like them to receive income longer. Second, to incentivize him to stay with InWorks, George will have cash available to him as early as age 60, or even more if he retires with InWorks at age 65 and chooses to cash in the policy then. And third, George can choose to have long-term care protection to keep him from depleting retirement funds should he require long term care assistance in the future. He and his wife really appreciate this benefit because they’re currently providing care for his wife’s widowed mother.

25 Small Business Triple Play
During Working Years TransACE® with the LTC Rider TransACE® InWorks, Inc. Annual Bonus Annual Premium George recognizes income For the Small Business Triple Play, while George is employed with them, InWorks will provide him with an annual bonus. InWorks benefits from a tax deduction each year for the amount of the bonus, while George recognizes the bonus as income for tax purposes. The bonus money goes to paying annual premiums on life insurance, the TransACE with LTC Rider.

26 Small Business Triple Play: IPO
If George Passes Away TransACE® with the LTC Rider Income Protection Option $5,000/month for 20 years George George’s Family If George passes away, the Income Protection Option provides George’s family with a $5k/month guaranteed monthly income for 20 years. Income Replacement

27 Small Business Triple Play: MSE
At Retirement - age 65 (year 20) TransACE® with the LTC Rider MultiFlex Surrender Endorsement $211,820 George In 20 years when George is 65 and he retires from InWorks, or anytime after policy year 25, George can surrender his policy and receive $211,820 to supplement his income or cover other family needs and goals. Safety Net

28 Small Business Triple Play: LTC Rider
Throughout his Lifetime TransACE® with the LTC Rider Long Term Care Benefits George And throughout his lifetime, George has long term care protection with the TransACE with LTC Rider. He can access benefits from the policy for his long-term care needs even during his working years, and when he retires, George will have a paid-up policy which will continue to provide financial security with long-term care coverage. Long Term Care Protection

29 Small Business Triple Play Benefits
Retain Employee in Competitive Environment Tax Deduction Valuable Benefit to Employee Employee With the Small Business Triple Play, the employer is able to provide a differentiated benefit for its key employees that very few other employers offer, receive a meaningful tax deduction, and reduce the high costs associated with employee turnover by retaining key employees longer. In addition, the key employee benefits by receiving guaranteed income protection for the family, has access to available cash at retirement, and will have long term care protection should it be needed in the future. A one, two, three win with the Small Business Triple Play – providing a unique solution to solve the challenges of employee retention facing business owners. Income Replacement Safety Net Long Term Care Protection

30 A Fresh Approach to Building Your Business
Income Protection Option A sales tool that provides families with guaranteed monthly income replacement. Small Business Triple Play A unique solution using life insurance to solve the challenges of employee retention facing business owners. To summarize:

31 This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code. This material was written to support the promotion or marketing of the products, services, and/or concepts addressed in this material. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here. Trendsetter® Super 20 (Policy Form No ) is a term life insurance policy issued by Transamerica Life Insurance Company, Cedar Rapids IA Premiums increase annually beginning in year 21 for the 20-year policy. Policy forms and numbers may vary, and this policy may not be available in all jurisdictions. Insurance eligibility and premiums are subject to underwriting. TransACE® is a nonparticipating, flexible-premium universal life insurance policy issued by Transamerica Life Insurance Company, Cedar Rapids, IA Policy Form No. ICC12 UL07 or UL07 (CVAT), Long Term Care Rider Form No. ICC 12 LTCR02 or LTCR02. Policy and rider form and number may vary and this policy and rider may not be available in all jurisdictions. Transamerica Life Insurance Company (“Transamerica”) and its representatives do not give tax or legal advice. This material is provided for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties must be urged to consult with and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here. Discussions of the various planning strategies and issues are based on our understanding of the applicable federal tax laws in effect at the time of presentation. However, tax laws are subject to interpretation and change, and there is no guarantee that the relevant tax authorities will accept Transamerica’s interpretations. Additionally, this material does not consider the impact of applicable state laws upon clients and prospects. Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information is current as of July 2013. CRB

32 Thank you!


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