 Jerry Rhinehart, CIC, CLU, ChFC, RHU Panama City, FL

1. Top Five Uses of Life Insurance  Jerry Rhinehart, CIC, CLU, ChFC, RHU Panama City, FL

2. 1 Learning Objectives 1 Advantages of Life Insurance 2 Create an Estate 3 Fund a Business Transfer 4 Pay off the Home Mortgage 5 Key Person Insurance 6 “Tax-Free” Retirement Replacement

3. 2 Please note the DISCLAIMER

4. 3 The Advantages of Life Insurance  Tax Advantages

5. 4 Taxation of Life Insurance The Premiums are Not Deductible  Death benefit free of income tax Benefit will be in Estate of Owner  Gifted policy could result in Gift Tax Cash Values grow Tax Deferred – FIFO

6. Example of First In, First Out — FIFO Cash Value 15,000 Paid Premiums 10,000

7. Example of First In, First Out — FIFO Cash Value 15,000 Paid Premiums 10,000 Gain 5,000 Withdrawals up to "basis" are income tax free

8. 3 The Advantages of Life Insurance  Tax Advantages  Benefit Advantages  Relationship Advantages

9. Why Should Your Agency Sell Life Insurance?  What (and how important) is Relationship in our business?  As the agent you want toBuild A Wall around your clients. This is especially important for a P/C agent. Working with an Insured (life) or a Beneficiary should lead to additional sales … including P/C.

10. 4 Life Insurance Fact-Finder Why use a questionnaire?  Questioning is the basic foundation for selling

11. 5 Life Insurance Fact-Finder How Do We Sell?  Go gatherdata...  …and then try to sell them something!

12. 5 Life Insurance Fact-Finder How Should We Sell?

13. 5 Life Insurance Fact-Finder How Should We Sell?  Emotional Selling  Questioning (70% - 30% rule)

14. Life Insurance Fact-Finder Emotional Questions followed by... Data Questions

15. Life Insurance Fact-Finder Why is this info necessary?

16.  L&H questionnaire (pages 27-30)

17. 7 Life Insurance Can Be Used To... Create an Estate  What is “an estate”?

18. 7 Life Insurance Can Be Used To... Create an Estate  What is “an estate”? Stuff

19. $300,000 $100,000 $250,000 8 A View of Your “Stuff” $1,000,000 $3,000,000 $4,650,000

20. What Makes Up Your Estate? Tangible Assets

21. 8 Everybody has an estate _________. Everybody’s estate is either __________ … or it is _________. ___________ can solve either problem. problem too big Life Insurance too little

22. 7 Losses That Can Impair an Estate Property Losses Casualty Losses Disability Death Loss of Employment

23. 7 # 1 What Type of Life Insurance is Best for this Need?

24. 7 Term Insurance  Coverage Guaranteed to End No Cash Value  Great for Temporary Needs!

25. Return of Premium (ROP) Term How to sell ROP using the “TWO ACCOUNTS” concept

26. Return of Premium (ROP) Term How to sell ROP using the “TWO ACCOUNTS” concept

27. 7 Permanent Insurance  Whole Life Universal Life Variable Life or VUL Great for Long-Term Needs!

28. 9 Life Insurance Can Be Used To... Create an Estate  Fund a Business Transfer  “you gotta have the piece of paper”

29. 9 Life Insurance Can Be Used To... Create an Estate  Fund a Business Transfer  “you gotta have the piece of paper”

30. Full Control of the Business Minimum Payment for the Business A Smooth and Prompt Transfer Continuing Line of Credit No Interference from the Deceased Heirs What the Remaining Owners Really Want!

31. 10 The Cost of Borrowing  To borrow the money and buy-out the heirs will be extremely burden- some … and expensive No partner – lost expertise How much profit do you have to earn to pay back the bank?

32. 10 Key Provisions of a Buy-Sell Agreement  Death  Disability  Termination

33. 10 Key Provisions of a Buy-Sell Agreement  Death  Disability  Termination  Pre-arranged Price / Formula  First Right of Refusal

34. Funding the Buy-Sell  Personal Funds   Sinking Fund  Borrowed Funds  Installment Payment to Heirs

35. Funding the Buy-Sell  Personal Funds   Sinking Fund  Borrowed Funds  Installment Payment to Heirs  Life Insurance

36. 11 Examine the“Key Point”on Page 11

37. 12 What is your Role as the Agent Concerning the Buy-Sell Process? 1 – Understand the Basics 2 – Know how life insurance fits 3 – Motivate your client to take action

38. 11 # 3 What Type of Life Insurance is Best for this Need?

39. 11 Permanent or Term Insurance  Term Insurance Permanent Life Insuranceor First-to-Die Life

40. 13 Life Insurance Can Be Used To... Create an Estate  Fund a Business Transfer  Pay off the Home Mortgage

41. 14 “How Much Are You Really Paying For Your House?” Mortgage Amount - $200,000 Mortgage – 5% Term - 30 years Monthly Payment - $1,073 Total Payout (360 mo.) - $386,280

42. 14 Mortgage Amortization Calculators

43. How do we find our “Mortgage Pay-off” prospects?  All New Homeowner’s Applications  All New Commercial Property Insurance Applications  Talk with your Realtor friends  Check the Real Estate closing at the Court House

44. 13 #3 What Type of Life Insurance is Best for this Need?

45. 13 11 Permanent or Term Insurance  Term Insurance / Joint Decreasing

46. 13 11 Permanent or Term Insurance  Term Insurance / Joint Decreasing Permanent Life with Term Rider for Spouse – Cash Value for Future Payoff

47. 15 Life Insurance Can Be Used To... Create an Estate  Fund a Business Transfer  Pay off the Home Mortgage  Key Person Insurance

48. Is it possible we are insuring our PCs better than our VPs?

49. Insuring the Key Person A Natural Sale for the P/C Agent

50. 15 Insuring the Key Person Use the Comparison of “Key Equipment”