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Secrets of finding Senior Life Insurance
People commonly believe that life insurance is only for young people who are raising families and building their careers. This is simply no longer the case. Many seniors now need insurance to protect their families against various expenses, including home mortgages, funeral and burial costs, and credit card debt. Fortunately, there is a wide range of life products you can purchase to provide financial protection for your loved ones.
Longer term home mortgages have created an enormous need for this type of insurance. Many people purchase several homes throughout their working years, and these mortgages can last for forty years or longer. This means that you could still be paying on your home well into your sixties or seventies. Another reason for purchasing is the rising cost of final expenses. Funeral and burial services can easily cost $15,000 or more – this could represent a huge financial burden for your family if you have not provided a means to pay for these costs.
Today, it is possible to purchase life policies without undergoing a medical exam. If you have had some past health problems, this type of policy can be a great way to get the coverage you need. Since there are no medical exams for your underwriters to review, these policies can be issued much more quickly than traditional life insurance policies. In many cases, you can apply for a “no medical exam” senior insurance policy online, and have it approved without ever having to meet with an agent.
If your past medical issues were significant, you might want to opt for a guaranteed issue senior insurance policy. Unless you have a terminal illness such as cancer, you will be approved for a guaranteed issue policy. Keep in mind that these policies are typically only available at low limits – usually less than $25,000 – but they can at least provide funds for funeral and burial expenses, with some left over for credit card bills or other smaller debts.
While this type of policy can be rather costly, you can save money by purchasing your policy as soon as possible. Rates for buyers in their fifties are much lower than those for buyers in their sixties and seventies. Typically, rates remain the same throughout the term of the policy, so the sooner you purchase senior life insurance, the more money you will save.
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U.S. tax rules, to examine both types of accounts Roth
This article will explore the two types of Roth IRA’s, the Roth IRA and the Roth 401(k). I will address the similarities and the substantial differences in the two.
The Roth 401(k) plans started in 2006 with the Economic Growth and Tax Relief Reconciliation Act of 2001. They are often referred to as hybrids, meaning they are a cross between the traditional 401(k) plan and the Roth IRA. A Roth 401(k) is an option under the traditional 401(k) plan. So a plan cannot exist with only a Roth 401(k), plans must offer both pre-tax and after tax contribution options. An after tax contribution is made by designating a portion of your compensation as a Roth 401(k) contribution. You must know that this designation is irrevocable, you will not be able to reassign a Roth 401(k) contribution to have it later treated as a conventional pre-tax contribution.
Roth 401(k) contributions will not reduce your W-2 income. The amount of the contribution will be included in your income and be reported on your W-2 as taxable wages and compensation. The advantage is that earnings can then build up tax free.
Roth 401(k)s are similar to traditional 401(k)s in a number of ways. Both traditional Roth IRA’s and the Roth 401(k) have the same contribution limits. Fro 2007, up to $15,500 can be designated as a Roth 401(k) contribution, or if you are 50 or older you can designate up to $20,500 by the end of 2007. The contribution limits are adjusted annually for inflation. You may designate all or part of your contribution to the Roth 401(k). You must decide on how to split these contributions by looking at your tax situation and the advantages of each plan. You should consider the current and the future tax implications of each plan and weigh the current tax cost against the potential tax free income in the future.
Employers are allowed to make contributions , but the actual contributions can only be allocateed to the traditional 401(k) accounts. No portion of your employer match may be allocated to the Roth 401(k). Also, funds must be held separately for regular and Roth 401(k) contributions. Investment earnings and charges must be allocated appropriately to each type of account. If you have any plan forfeitures, they can only be alocated to the conventional 401(k); they cannot be allocated to the Roth 401(k).You will have to keep track of each.
You must designate a contribution to the Roth 401(k) before a contribution can be made. Also, under the terms of the plan you must be able to make designations annually.
Allocations to each type of account are not forfeitable. This means that if you leave a job, you have the option to roll over the Roth 401(k) to an account with a new employer or to roll the funds over to a Roth IRA. A rollover to another Roth 401(k) can be made only via a direct transfer to a new account. The five-year period, discussed more fully below, will carry over to the new Roth 401(k).
If funds should be distributed to you directly, you can be roll over the funds within 60 days to a Roth IRA. They cannot be rolled over to a Roth 401(k) at a new employer because they were distributed directly to you rather than transferred directly to the new Roth 401(k). The five-year period does not carry over from a Roth 401(k) to a Roth IRA; a new five-year period must commence following a rollover to a Roth IRA. Also, once funds have been rolled into a Roth IRA, they cannot be rolled to a Roth 401(k).
Roth 401(k) contributions differ from traditional 401(k) contributions in one obvious way. Roths are made with after-tax dollars, while traditional 401(k) contributions are currently excluded from income. What this means to you is traditional 401(k)s will lower current taxes, while Roths will have no immediate impact on them. However, the earnings on Roth 401(k)s can become fully tax free. Both contributions and earnings in traditional 401(k)s remain fully taxable when distributed.
Roth 401(k)s are similar to Roth IRAs because both are funded with after-tax contributions. There isn’t an immediate tax break for putting money into the plan. Roth 401(k)s are also similar to Roth IRAs in the way in which qualified distributions are treated. As with a Roth IRA, funds must be held in a Roth 401(k) for at least five years, then be distributed after age 59-1/2, or on account of disability or death. The first time home buying distribution option for the Roth IRA does not apply to the Roth 401(k).
Roth 401(k)s are different from Roth IRAs in several important ways. These are as follows;
1) Funds from a regular 401(k) cannot be converted to a Roth 401(k), while funds in a traditional IRA can be converted to a Roth IRA. Currently there are income limits on eligibility to convert. Starting in 2010, the income limits are dropped, so you eligible to convert at that time.
2) There is no income limitation on funding a Roth 401(k) as there is for Roth IRAs. In 2007, single taxpayers with modified AGI over $114,000 and joint filers with MAGI over $166,000 are barred from contributing anything to a Roth IRA. Under these circumstances, Roth 401(k)s have the obvious advantage over Roth IRAs.
3) There are required lifetime distributions from Roth 401(k)s; there are no such requirements for Roth IRAs, making Roth IRAs better. This generally means that withdrawals from a Roth 401(k) must commence at age 70-1/2. If you are still employed at the company maintaining the plan, the plan can allow distributions to commence after retirement if later than age 70-1/2
4) Contribution limits are substantially higher for Roth 401(k)s than for Roth IRAs. As mentioned earlier, the top contribution to a Roth 401(k) in 2007 is $15,500, or $20,500 for those age 50 or older by year end. For Roth IRAs, the contribution limit for 2007 is $4,000, or $5,000 for those 50 or older by year end. In this respect, Roth 401(k)s are better than Roth IRAs.
5) Early distributions which are distributions before the end of the five-year period, are treated differently. For Roth IRAs, an early distribution is treated first as relating to nontaxable after-tax contributions. If the distribution exceeds these contributions, the excess becomes taxable. Earnings are considered to be withdrawn last. So if a distribution does not exceed contributions to a Roth IRA, there is no current tax.For Roth 401(k)s, non-qualified distributions are included in gross income to the extent allocable to income on the contract, and excluded from gross income to the extent allocable to investment in the contract. The amount of a distribution allocated to investment in the contract is determined by applying to the distribution the ratio of the investment in the contract to the designated Roth account balance. If you under age 59-1/2 when the distributions are taken, there is a 10% early distribution penalty, unless an exception to the penalty applies.
6) A participant in a Roth 401(k) has no record keeping obligations. The plan administrator keeps track of the five-year period, allocations to the account, and any other relevant information. You are responsible for keeping track of rollovers and distributions. This is done on Form 8606, Nondeductible IRAs.
7) You will not have easy access to your designated Roth 401(k) contributions, as you would with Roth IRA contributions. You may withdraw Roth IRA contributions-tax free and penalty free-at any time. With a Roth 401(k), the plan must restrict access to designated contributions in the same manner as applied to elective deferrals to conventional 401(k)s. This means the plan can permit withdrawals for economic hardship if the same withdrawal option applies to pre- and after-tax contributions. But, as discussed earlier, the withdrawals will be prorated between tax-free contributions and taxable earnings.
So when would it be advisable to use a Roth 401(k)? Here are some factors to consider.
1) If you are younger with a long time until retirement, you may wish to opt for future tax-free income by sacrificing current income deferral. If so, you should choose the Roth over the traditional 401(k). There will be many years in which to build up a sizable retirement fund that produces tax-free income.
2) If you are planning to leave retirement funds to charity, you probably will want to opt for the traditional 401(k). This will give you current tax deferral and no future tax cost. For example, an estate can claim a charitable deduction for funds left to charity.
3) If you are currently in a lower tax bracket, you will not save substantial taxes by opting for current income deferral, and may prefer making Roth 401(k) contributions to the extent possible. In this way, future withdrawals will be tax free when it will probably AA higher tax bracket.
This article can not be complete, and we recommend that you consult an expert on your particular tax situation. Nevertheless, I have tried to provide enough information to help educate themselves on the bases. I hope you find this information useful.
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Closing Annuity Sales – first appointment
Closing annuity sales is the point of the exercise, and every professional knows the euphoria of a perfect presentation and close. Some salespeople believe it is the hand of destiny ushering them through the signatures, to the button-up, the handshake, and the drive home where they bask in the good fortune of finding that “low-hanging fruit.” The true professional spends the drive home replaying a different visual, a series of familiar steps that lead inevitably, unerringly to a new client for life. One salesperson gets lucky, the other gets validation.
The perfect presentation and close takes on a Zen-like quality, like the sound of one hand clapping. There is no sale, no close. There is a problem that finds a solution, a fear that finds comfort. All reasoning, all motivation comes from the client. Aristotle nailed it 2400 years ago: “The fool tells me his reasons, the wise man persuades me with my own.”
Now that you’ve given your first pair of Safe Money Seminars and collected a couple dozen appointments, here are some defining dos and don’ts. When precisely executed, my three appointment process of closing annuity sales will assure not only sales, but new clients for life. For example, do remember that all prospects walk into your office (or await your arrival at their home) with important core emotional values – wants, fears, hopes and dreams. Don’t jump into your pitch. If you insist on jumping into your pitch, save yourself the trouble and take a loaded revolver, get in the bathtub and blow your brains out. You’ll earn roughly the same commission.
The FUD Factor
Instead, do observe the FUD Factor. All people have fears, uncertainties and doubts that haunt subconscious caverns and, unless confronted, render their host incapable of making decisions. These FUDs not only define their host’s sense of self but also dictate how they relate to their money. Mr. and Mrs. Prospect are their fears, uncertainties and doubts as well as their money – all in varying yet fuzzy degrees. You must use your first appointment, your get-acquainted session, to deliberately and profoundly connect with these inner emotions.
How? Never lead with statements when you can lead with questions. Ask questions — well-crafted, provocative, incisive questions — and don’t be so eager to tell your story that you neglect to hear your prospect’s story. These are your money moments. The more time you spend soaking in the FUDs of your prospects, the more they will respect your advice, then help you craft solutions to their liking. The more they will think it was their idea.
And pay attention to body language, words they choke on, core emotional issues and outright fears. People are motivated by fear and greed, but fear will move them to action faster and with greater resolve than greed. Key in on the boogeyman, what keeps them up at night, what haunts their dreams. Most people need a psychiatrist more than they need a financial advisor. Fact is, a financial advisor is not very good at closing annuity sales until he or she becomes a good psychiatrist.
Three Questions
My favorite leading question is simply, “Where are you from originally?” When asked sincerely, the question gives them permission to take an autobiographical stroll down memory lane. Their eyes take on a nostalgic glow. There is a scant grin as they drift back in time recalling their childhood, their parents and siblings, schoolmates, the home they grew up in, what things were like in those days, and the passport that led them into adulthood. Your job here is to clam up and listen. Take notes like a freshman. You’ll discover bedrock values along with irrational beliefs, paralyzing fears and whimsical dreams. This exercise has nothing to do directly with closing annuity sales or getting to their money… but everything to do with getting to know who earned their money. The value of their assets is less important that the values that created them.
Next I say, “Tell me about the work you did before you retired.” A person’s identity is largely defined by their occupational history. What they did for a living is who they are. Their need to find a sympathetic ear to acknowledge career accomplishments is on equal footing with their need to trust someone to respect what they’ve accumulated along the way. Talk of work often leads voluntarily to talk of IRAs and 401(k)s, but this is not an invitation for you to pounce on their nest egg. They’ve been waiting all their lives for a financial advisor to just listen to them. Use conversation extenders like, “…and you feel this way because?” or “…and that experience is why you’ve kept your money in CDs all this time?” Get to the blood, sweat and tears that went into earning their nest egg.
Then I say, “Now then, John and Mary, tell me why you asked for this appointment and maybe the two or three most important things you’d like us to talk about.” They usually have a list of items to go over from your Safe Money Seminar, but if at this point they look at you like a deer in the headlights, try an alternate question like, “Tell me about the best financial move you ever made.” Many people will seize the opportunity to gloat over victories. Surprisingly often, however, they’ll volunteer their worst financial moves in painful detail, blow by blow, reaching deep to expose feelings that cry for emotional connection. This is when you know at a primal level that nothing in your arsenal for closing annuity sales equals the fire power of getting your prospects to tell their story.
A Few Wows
Your ratio of them talking to you talking should be about 5 to 1 or, in an hour, 50 minutes them to 10 minutes you. Remember, in your Safe Money Seminar you asked them to bring copies of last year’s tax return, life insurance and annuity policies, and brokerage account statements. Since the first appointment is not about the diagnosis (finding what’s broken), nor the prescription (closing annuity sales), you’ll use the little time you have to ‘Wow’ them as much as possible. For example, if their tax return shows $7,000 to $8,000 in interest income, it’s a safe bet they have roughly $200,000 in bank CDs paying 3.5% to 4% interest. You quickly do the math, glance up from the documents and say in nonchalant doctor speak, “And you’ve got, what, about $200,000 in bank CDs?” They verify the dollar amount for your notes and think, “Wow, how does he know that?”
Finally, you conclude the meeting. The simple message here is that, like any good doctor, you have not attempted any diagnosis and are far from prescribing any cure. The operative word here is “research.” It will take you a week to research their current portfolio and/or assorted financial documents and identify areas that are not reaching their highest potential, not serving their needs, or outright broken and need fixing. Set the return appointment for the same time, same place, one week from today. Of course, you’ll need to keep their documents for your research which, incidentally, reinforces the element of trust and assures their return visit. Then stand up, shake hands, look them in the eyes and thank them for sharing their lives with you.
You have done more toward closing annuity sales than anything you could have told them.
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