From - 21/04/23
Global Insurance Solutions Inc.
March 29, 2006
Stir the Pot - Cook Up New Sales
Agenda
Using Total Needs Analyses Software Uncover Needs Prepare for Compliance
Stir the Money Pot – Three Selling Ideas CI to Protect RRSPs Quick Pay Mortgage and UL Guaranteed Pay – Alternative to RRSP
AXA Marketing Initiatives - 2006
Why use a needs analysis tool?
Uncover additional needs
Professionalism
Compliance trends Quebec Agent disclosure Conflict disclosure
Increases compensation
Common problems with needs analysis tools
Overly complex
Time consuming
Stand alone tool not integrated into quote system
Multiple pages
Changes cost money – print, print, print
AXA Needs Analysis
Built into the AXA software
Accurate
Comprehensive
Easy to use
One page snapshot of assets and liabilities
Professional appearance
Launch pad for AXA life quotes
Needs Analysis – Discovery
First meeting objective: Determine the amount of coverage required
Assets and liabilities
Existing insurance coverage
Goals and objectives
Don’t forget the “Soft’ questions – feeling & finding
Needs Analysis - The report
One page snap shot
Net worth statement
Defines the need
Stirring the Pot….
Total Needs Analyses highlights weaknesses in planning
Clients often accept need for insurance – just do not want to pay for it (or feel they can not afford it)
Needs Analyses highlights spending patterns
Stir the Pot – take existing monies and re-allocate to achieve same goals while providing additional flexibility
Critical Illness Insurance & RRSPs
If a critical illness strikes……
RRSPs designed for retirement use but often client’s only savings
Fully taxable upon withdrawal – not efficient use of savings
Long term financial plans based on compounding of growth i.e. time money is invested
Restoring savings likely to be difficult
Critical Illness Insurance & RRSPs
Solution: Contribute less to RRSP and purchase CI with ROP benefit
Ensures that RRSP remains intact in event of Critical Illness
More funds available to effectively deal with critical Illness
“Redirecting” savings will have minimal effect on retirement income
Critical Illness Insurance & RRSPs
Facts
Husband and wife, aged 40 and 38
Family income of $75,000 annually
Husband works full-time; wife part-time
2 children, own home
RRSP total savings currently of $20,000 and plan to contribute $3,000 per year to retire at 65
Critical Illness Insurance & RRSPs
Alternate Strategy
“Re-direct money” into CI to protect savings and provide funds in the event of a critical illness
Buy $25,000 CI with ROP on husband Cost - $476 annually*
* AXA T-75 Enhanced CI plan with FROP
Critical Illness Insurance & RRSPs
Continue as is: By age 69, RRSPs grow to $341,127*
Redirect monies to CI policy: RRSP grows to $302,210* ROP of $14,295 Total savings = $316,505
In first year of RRIF, $24,622 difference represents approx. $100 per month, before taxes
* 6% annual compounded growth
Critical Illness Insurance & RRSPs
If illness strikes and RRSP savings used, RRSP only grows to $226,256 at age 70
Monthly income difference in excess of $358 per month
CI monthly payment results in minimal income drop yet ensures retirement income plan stays in place
If death occurs, CI premiums refunded
Critical Illness Insurance & RRSPs
Use proposed RRSP $$$ to buy CI
Client does not have to look for “new” money
Keeps retirement plans in place
Provides more money if critical illness occurs (CI proceeds not taxable) AND reduces stress about future
Minimal affect on retirement income
Have insured client at “no cost”
Quick Pay Mortgage and Universal Life
General wisdom is to pay home off quickly….
Accelerated weekly payments reduces cash flow
Families often do without financial necessities
Disability income replacement Emergency funds Permanent life insurance
Quick Pay Mortgage and Universal Life
Solution: Make monthly mortgage payments and purchase Universal Life Insurance
Cash build up inside plan provides income in case of need
Mortgage can still be retired at desired date
Financial flexibility if circumstances change (for better or worse)
Increased life insurance protection, including paid up permanent protection
Quick Pay Mortgage and Universal Life
Facts
Husband age 42; wife age 40
Jointly owned mortgage of $250,000
Pay $416 per week* ($1,805 per month)
Bank mortgage insurance costs $105 per month
May inherit from parents in 20 – 30 years
No savings other than RRSPs* 6.45% 5 yr. term; 25 yr ammort.;
Quick Pay Mortgage and Universal Life
Alternate Strategy
Purchase $25,000 Universal Life Insurance on wife
Add T-20 riders: $250,000 on him; $225,000 on her
Pay mortgage monthly - $1,667 per month
Fund UL with difference in mortgage and insurance costs
Pay off mortgage fully in 20 years, if desired
Quick Pay Mortgage and Universal Life
Continue as is….
Mortgage will be paid in full in 21 years (4 years earlier than if paid monthly)
No permanent life insurance
Declining life insurance coverage; no ability to convert; not transportable
No emergency fund
Only savings in RRSP
Quick Pay Mortgage and Universal Life
Re-allocate $244 per month (difference in weekly/monthly mtge. costs) to UL*
Flexibility now to withdraw cash in event of disability, job loss, education needs or other unforeseen needs
Enhanced life insurance protection: Term riders with level, convertible
coverage Permanent coverage
*40 FNS,Pact II, T-100, 6%ROI
Quick Pay Mortgage and Universal Life
Accelerated payments - mortgage retired at end of year 21
Monthly mortgage schedule - $70,546 owing at end of year 21
UL Fund Value – est. $71,572 at end of year 21
Taxes on Fund – approx. $14,000, if owner still working
Quick Pay Mortgage and Universal Life
Mortgage retired on schedule, no increase in monthly family expenses
Couple has minimum of $500,000 of life protection throughout period, all of which can be made permanent if desired
Cash available for emergencies from year 1
Estate planning already in place if circumstances change (Inheritance? New job?)
Works well increasing rate environment
Limited Pay Insurance and RRSPs
RRSPs great …. Tax-Deferred Growth Annual Tax Reductions
But can be too much of a good thing.… Access to money limited – no flexibility $$$ taken into income – could affect
OAS; income tax rate Taxes have to be paid - at death, estate
reduced significantly
Limited Pay Insurance and RRSPs
Solution: Reduce or stop RRSP contributions and purchase high cash value, limited pay guaranteed life insurance
Retirement income unaffected
Enhanced flexibility in using retirement income
Estate planning solidified
Limited Pay Insurance and RRSPs
Facts
50 yr. old female – current RRSP valued at $250,000
Contributes $10,000 annually into her RRSP
RRSP to be primary source of retirement income
Would like to leave a legacy
Limited Pay Insurance and RRSPs
Alternate Strategy
Use “usual” RRSP contributions to purchase limited pay life insurance with guaranteed cash values
Stop future contributions to RRSP Leave existing RRSPs to compound Purchase $300,000 limited pay Horizon
65 at $6,700 per year
Limited Pay Insurance and RRSPs
Continue as is: Base RRSP grows to $801,784* @ age 70 New contributions add additional
$238,998 @ age 65*
Purchase $300,000 Horizon 65 using equivalent of net proceeds of RRSP contributions ($6,700/yr.)
Guaranteed CSV @ age 65 = $150,000
6% return compounded annually
Limited Pay Insurance and RRSPs
Access to cash in policy flexible:
Borrow – proceeds tax-free; capitalize costs
Leverage – structure deal with lender; proceeds tax-free
Withdraw – net approx. $137,471*
- insurance lapses
Only last option affects income
*Assume 30% tax rate, based on ACB
Limited Pay Insurance and RRSPs
Access to RRSP monies limited Monies can only be brought into income at
marginal rate Contributions for 15 years = $238,998 Taken as lump sum at age 65, proceeds
would net approx. $131,449* Loss of OAS
*Assume 45% tax rate
Limited Pay Insurance and RRSPs
At some point, RRSP represents major tax liability
Guaranteed pay insurance provides flexibility in planning; no loss in retirement income
OAS will not be affected
Bonus - $300,000 of Life Insurance fully paid at age 65
EDB to age 60
Summary
Comprehensive, written Needs Analysis provides Professional assessment of client’s position using THEIR numbers
Highlights total current financial situation
Exposes both short term and long term needs
Summary
Insurance products enable client to:
Achieve financial and life-style goals Provide greater security Introduce flexibility into family budget
All the above, at no additional “cost” to the client
Win – Win
From - 21/04/23
2006 Sales and Marketing Initiatives
AXA LAUNCHES IT’S BUSINESS BUILDING PROGRAM FOR
BROKERSTO HELP YOU BUILD A MORE
PROFITABLE BUSINESS IN 2006 AND BEYOND
Sales and Marketing
Business Building Program - 2006
BEST Program - Life
BEST Program - Living Benefits
Activity Incentives
Productivity Rewards
Conference 2007
Achieve your goals!!!
Sales and Marketing
Business Building Program - 2006
Sales and Marketing
Broker Education Sales Training - LIFE
8 week classroom program; No cost to broker Sales development - Prospecting, referrals,
seminars Total needs selling - Fact finding, Probing;
Wills/PA’s Closing the sale - Positioning, objections, role
playing Selling concepts – Needs, not products Product discussions - Whole life, Term, UL Case study - Family, business, single need
Contact your MGA more information about BEST
Sales and Marketing
Broker Education Sales Training-LIVING BENEFITS
Industry leading faculty (Munich Re, Dr.’s, consultants etc.)
3 day, 2 night seminar program
The living benefits market and uncovering needs The role of Wills and Living PA’s Placing your case: Underwriting living benefits Product discussions - guaranteed vs non
guaranteed premiums Sales concepts - keyperson, buy/sell, family, single
need By invitation; must have sold an AXA living benefit
product
Sales and Marketing
Activity Program
Incentives for Submitting UL, Term, CI, LifeBeat, A&S and Mortgage applications
$100 upon submitting first 3 applications
$50 for EVERY application there after
Program starts Feb 15th and closes June 30th, 2006
Rewards paid at the end of April and end of June; money will be directly deposited to your bank account
SUBMITTED APPLICATIONS
Sales and Marketing
Productivity Program
In addition to usual FYC and bonus:
Additional Reward based on net FYC $5,000 - $500 $10,000 - $1,000 $15,000 - $1,500 $20,000 and over - $2,000 $25,000 – conference qualifier and
$2,000
Paid in January 2007, deposited directly to your bank account
Sales and Marketing
2007 Sales Conference
$25,000 Net First Year Commissions
10 Applications
Past conference locations Mexico-March 2006 North Africa-2005 Dominican Republic-2004 Cuba-2003
Settled business from January 1st, 2006 until December 8th, 2006
Sales and Marketing
To Help You Achieve Your Goals
50% FYC plus bonus on T-10, T-20 and T-70
Extreme Disability Benefit at no additional cost
T-10 Indexed: option to double face amount included at no Extra cost!
CI $100,000 offer included with issued Preferred T-10
New Investment Options on UL
55% FYC on LifeBeat