LIFE MODULE - V

1. LIFE MODULE - V

2. Module V - Objectives • Fixed Premium Whole Life • Juvenile Premier Whole Life • Needs Analysis • Estate Planning Strategies • Sales Tips & Strategies • Handling Objections • Homework Assignment

3. Fixed Premium Whole Life

4. Fixed Premium Whole Life • Farmers Fixed Premium Whole Life is a level premium, level death benefit whole life insurance product designed to fill a variety of needs, including: • When a small amount of protection is needed • When a person wants life insurance without providing extensive medical information • When a small amount of coverage is desired for members of a large association without an employer/employee relationship.

5. Fixed Premium Whole Life The Farmers Fixed Premium Whole Life is especially sold in the final expense market and many Farmers agents’ refer to it as a “burial policy”. Many older persons, particularly those age 55 and older, are interested in a plan to cover final expenses. Final expenses can be the third largest expense most Americans face (after a home and car). The average cost of a funeral in the U.S. is more than $4,000; although, it is not unusual for services to cost more than $5K - $10K. It is important to note that these costs do not include final medical care, legal, and cemetery expenses, or the cost of inflation.

6. Fixed Premium Whole Life FPWL offers a level amount of protection with level premiums payable to age 100. ISSUE AGES: 0 - 80 MINIMUM ISSUE: $5,000 MAXIMUM ISSUE: $25,000 ages 0-65 $15,000 ages 66-80

7. Fixed Premium Whole Life Riders and Benefits: Guaranteed Insurability Benefit: Guarantees the option to purchase additional amounts of insurance at ages 25, 28, 31, 34, 37 and 40. Alternate options are also available and provide 90 days term coverage up to the GIB amount following college graduation, marriage, purchase of a home and birth or adoption of a child. This benefit is available for issue to age 37.

8. Fixed Premium Whole Life Riders and Benefits: Deposit Fund: This optional rider may be to build cash reserves for the future. Payments may be made at any time subject to a minimum deposit of $25. The guaranteed interest rate is 2%.

9. Fixed Premium Whole Life Submitting an Application: Use the standard application. Underwriting All policies will be charged standard premium. Applications for clients who would normally qualify for a Table D rating or better will be accepted.

10. Juvenile Premier Whole Life

11. Juvenile Premier Whole Life JPWL provides a level death benefit on the life of an insured child. The plan features guaranteed level premiums for the life of the policy and builds cash value. Excess credits may be credited to the policy and can be taken in cash, applied to reduce future premiums, added to a Deposit Fund, or used to purchase Paid-Up additions.

12. Juvenile Premier Whole Life Minimum Issue: $25,000 Issue Ages: 0-17 JPWL Insureds may apply for a non-nicotine discount at age 21. The non-nicotine premiums for those who qualify will be based on their original issue age.

13. Juvenile Premier Whole Life OPTIONAL RIDERS AND BENEFITS: Single Premium Paid-Up Rider - Provides additional whole life insurance on the insured. The rider builds its own guaranteed cash value which will be paid to the insured surviving to age 100. Minimum issue is the amount of coverage for $200 premium will purchase. Maximum issue is the amount of the base policy. This rider is only available at issue and cannot be added later. Depending on the amount of premium paid and the relative sizes of the base policy, this rider can produce a violation of the 7-Pay Test and cause the policy to become a MEC.

14. Juvenile Premier Whole Life OPTIONAL RIDERS AND BENEFITS: Payor Death and Disability - Waives premiums for the base plan and riders upon the original policyholder’s death or permanent and total disability of the payor. Accidental Death Benefit - Payable in addition to the basic benefit when death is accidental. It may be added after issue. The benefit may not exceed the total face amount of the base policy, plus the face amount of the paid-up rider. ADB is limited to a combined total of $150,000 per person.

15. Juvenile Premier Whole Life OPTIONAL RIDERS AND BENEFITS: Guaranteed Insurability Benefit - Guarantees the option to purchase additional life insurance without evidence of insurability. Option to purchase must be excersized within 31 days of the insured attaining ages 25, 28, 31, 34, 37 and 40. Alternate options are also available and may be elected up to 90 days for: college graduation, marriage, purchase of a home, birth or adoption of a child.

16. Needs Analysis

17. Needs Analysis In order to provide Premier Service to your policyholders, you must first determine their needs and goals before you recommend a policy or amount of insurance needed. Future income, debt reduction, mortgage payoff, education fund, adjustment fund, final expenses and current life insurance in force should all be considered when determining the amount of coverage needed.

18. Needs Analysis - Calculation FINAL EXPENSES Your family’s first financial problem will be your last expenses. State laws require that debts of an individual as well as liabilities created by the individual’s death must be paid within a reasonable time…usually one year. Money will be needed for funeral bills, last illness, creditors, estate costs and taxes.

19. Needs Analysis - Calculation EMERGENCY FUND To provide emergency dollars for all those unexpected expenses that upset the best of financial plans. Money will be needed for accidents, hospital bills, doctor bills, house repairs, auto repairs, necessary trips and taxes.

20. Needs Analysis - Calculation READJUSTMENT FUND A fund to provide temporary income: An income that will allow your family to adjust gradually to a new standard of living. An income to help your family overcome the financial shock of the first few months. An income that can tide the family over until Social Security begins.

21. Needs Analysis - Calculation MORTGAGE-FREE HOME Money to pay off the mortgage so the family will have… A home if they want to keep it An asset if they want to sell it An income if they want to rent it. Statistics show.. At age 25 1 out of 12 At age 35 1 out of 5 At age 45 1 out of 3 won’t live to complete the payments on a 30 year mortgage

22. Needs Analysis - Calculation FAMILY INCOME A family’s financial security depends on adequate income to help pay for the daily necessities of life. Money for food, clothing, household maintenance, transportation, medical/dental expenses, insurance and taxes. Income to keep the family and home together while the children are young and dependent.

23. Needs Analysis - Calculation EDUCATION FUND College education is almost a must in preparing a child for a business or profession in today’s competitive society. Typical annual cost for tuition, room, and board are: Public Universities $12,400 Private Universities $23,500 Junior Colleges $4,174 Most family budgets cannot stand the strain of paying for college out of current income.

24. Needs Analysis - Calculation RETIREMENT Only a small percentage of people are financially independent at age 65. Some have no retirement program while others have pension plans which are less than adequate. When retirement comes, there is a difference between wanting to work and having to work. Establishing a systematic plan for accumulation of dollars now can make your Insureds retirement years independent, comfortable and secure.

25. Needs Analysis PLANNED PROTECTION It is your professional responsibility to provide the information and tools necessary to assist your clients to obtain this peace of mind. Don’t leave your insured’s future to chance!

26. Needs Analysis EXAMPLE: Male Age 30, Female H/W, 1 child 5 yrs old. a. Current Annual Income: $ 50,000 b. Readjustment Fund: (a X 5) $ 250,000 c. Mortgage Debt: $ 100,000 d. Other Debt: $ 15,000 e. Final Expenses: $ 20,000 f. Education Fund: $ 40,000 g. Total Insurance In-Force: $ 100,000 f. Liquid Assets: $ 30,000 BALANCE NEEDED: $ 295,000

27. Estate Planning Strategies KEEP YOUR WILL UP-TO-DATE Estate taxes may be increased by the outdated language in your will simply because Congress changes the tax laws. Advise your insured to have both an attorney and accountant check the will every three years to see that it conforms to ever-changing rules.

28. Estate Planning Strategies IRREVOCABLE TRUST TO PROTECT ESTATE An irrevocable trust allows you to funnel money out of your estate into an investment trust for the future benefits of your heirs, usually your children or grandchildren. You may put into the trust each year up to the gift tax limits with no gift tax now or estate tax later. Generally, your heirs do not get the money in the trust until your death.

29. Estate Planning Strategies IRREVOCABLE TRUST TO PROTECT ESTATE There are four important considerations before you create an irrevocable trust: 1. You cannot receive the income from the trust investments. The money must either accumulate in the trust or be given to the beneficiaries. 2. Irrevocable means you cannot change your mind. 3. The attorney fees to set up the trust can be costly. 4. You do not need the trust if your sole beneficiary is your spouse or your net estate is less than $600,000.

30. Sales Tips & Strategies #1 - LISTEN If you don’t listen to your insured, you will not be able to understand what is important to them. Developing effective listening techniques will help you accurately assess a clients situation and make a recommendation to fit that need.

31. Sales Tips & Strategies #1 - LISTEN... If you don’t listen to your insured, you will not be able to understand what is important to them. Developing effective listening techniques will help you accurately assess a clients situation and make a recommendation to fit that need. Ask questions like: Is it important for you to provide the funds necessary to have your children attend the college of their choice? or.. If you were to die today, would your family be able to enjoy the same standard of living that they do today?

32. Sales Tips & Strategies #2 - CREATE A NEED After you have listened to your prospective insured’s responses to your questions, it is time to create a need within the persons personal situation. Is there a need for: Mortgage Protection Future Income - living benefits Estate Taxes Final Expenses By completing a Needs Analysis, you can accurately assess your clients current situation.

33. Sales Tips & Strategies #3 - CONFIRM THE NEED It is important that you confirm your findings with the prospective insured before proposing a solution. Remember, most policies are sold after the need is created and the insured has confirmed the need for insurance. Proposals can be of little benefit and can be confusing. For this reason, it is critical the prospective insured understand the need and believe you can help them fill the need. Remember: Sell on emotion. People usually purchase life insurance because of ______. LOVE

34. Sales Tips & Strategies #4 - PROPOSE A SOLUTION This is the stage where you would normally show a proposal to the insured. Show the prospect how the policy that you are proposing will fill their personal need. Sell yourself. The Client Service Folder and Positioning Statement script are excellent tools that should be utilized to make a customer a client. By including yourself in the “Circle of Professionals”, you will gain the trust and respect of your customer which is needed to close the sale.

35. Sales Tips & Strategies #5 - CLOSE THE SALE You must have product knowledge and believe in the products you sell before you can become an effective sales agent. Continue to learn at all times and rehearse as often as possible. By rehearsing, you will be able to handle most objections without much effort. If you cannot effectively close the sale during your initial presentation, it is unlikely a sale will be made at all. Let’s discuss a few objections you are sure to hear...

36. Handling Objections I have life insurance at work. That’s great! However, are you going to retire at XYZ Company? What will you do if your next employer does not provide the same benefits? At what age do you plan to retire? After you retire, are you going to be able to keep this insurance and if you will, how much will it cost. Also, what would happen if your employer goes through a series of layoffs or reduces the benefits that it currently provides? Wouldn’t it be nice to have a policy that you control?

37. Handling Objections I can’t afford insurance. If you are having a difficult time with your budget now, how is your spouse going to manage if your income were gone? You cannot afford not to have this valuable protection. If I were to find an affordable means of protecting your family, would you be interested in hearing what I have to offer? I understand insurance is expensive; however, do you really want to leave your family unprotected?

38. Handling Objections I want to think about it. I agree. Unfortunately, most people do not think about what will happen if the income producer were die. While you are thinking about it, why don’t we schedule a time to get together so that I may help you understand the options available. While your thinking about it, why don’t we get together and fill out the necessary paperwork to see if Farmers will accept you before we go any further.

39. Handling Objections • I only believe in term. • I agree that term insurance is a great option for some people! You may be one of the few who can invest your money and retire wealthy. You, more than most people, will need life insurance to reduce your Federal estate tax liability when you are to die. • I understand. Farmers offers some of the most affordable term products on the market. Let’s get together to see if term is the best product for you. • That’s interesting, why do you believe this? True, term insurance is cheaper in the short term, that’s why we call it temporary insurance. How long do you believe you will need life insurance?

40. Homework Assignment Complete Reserve Agent Life Exam and be prepared to discuss next week. NOTE: We will discuss handling objections in greater detail as we complete the Client Focused Marketing portion of the Reserve Agent training program.

41. Life Module IV Homework Assignment - Reserve Agent Life/Annuity Quiz 1. What is the difference between Whole Life and Term? 2. Briefly describe Farmers Flexible Universal Life? 3. List two examples of where term insurance would be your recommendation. 4. What are 5 characteristics of whole life insurance? 5. What are living benefits? 6. What is an excess credit? 7. Are excess credits guaranteed? 8. What is a Paid-Up addition? 9. What are the 3 factors that affect our ability to pay excess credits? 10. What is the difference between Level 10 and Ten Year Level? 11. What is the Corridor? 12. What is a Modified Endowment Contract (MEC)? 13. What is the difference between Option A and Option B on an FFUL or FPWL proposal? 14. What tax advantages does a FPWL provide? 15. What is the Farmers Mortgage Protection policy? 16. What is a keep-it-level option? 17. What is a guaranteed insurability rider? 18. What is a 10 day free look provision? 19. What are the 5 excess credit options available on the FFUL? 20. Complete a needs analysis on a client, friend, relative or yourself.

42. Quote of the Day.. Tom Hopkins - Champion Creed I am not judged by the number of times I fail, but by the number of times I succeed. And the number of times I succeed is in direct proportion to the number of times I can fail and keep trying!