“And Here’s How I Sold That BIG CASE” – Part 3

Top Producers Share the Secrets Behind Their Hard Won Cases

THE LORE OF THE INSURANCE business is strewn with tales about big insurance cases that fizzled. But some professionals have a far more compelling story to tell: how they landed a really big case despite client uncertainty, complex needs and wants, and very long timelines. Following are examples from advisors who have successfully landed big cases in life insurance, annuities or estate planning. These stories are rich with detail about working with high-net-worth clientele. They show clients who don’t want to plan, others who object and quibble, and still others who don’t want to spend a dime, not even on themselves. They showcase advisors who overcame hurdles with patience, perseverance and sensitivity to each client’s unique circumstances, needs and emotions. The strategies vary from case to case, but most share a few common threads. The big case experts work with, and through, other professionals in the community who serve high-net-worth clients; listen to what the client wants and what the client’s other advisors are saying and then address the underlying need; don’t pander to the clients; do educate the clients; and work on the case for a long time, sometimes as long as a year or more. Each advisor agrees that big cases are complex. It is their job to pull the pieces together into an orderly and effective solution.

For David B. Malkin, big cases are all about working with other professionals and strategic partners, from start to finish. It’s also about “touch, touch, touch,” says the president of NJL&C. To illustrate, he points to a big, but complicated, business owner case. A general insurance broker in the property/ casualty business asked Malkin to talk with two brothers who co-owned a large construction firm. He did, and that was the start of a sale of $50 million in convertible term life insurance on each brother, a death of one of the brothers 16 months later and some intense work with the survivors after that. Through it all, Malkin says he kept things moving along. “I’m the catalyst for making things happen. I move everyone to take action,” he says. Here are the details. Malkin says he was surprised to learn in his first meeting with the brothers that they did not have a shareholders agreement. He called an attorney immediately, and four days later, he joined the brothers in the attorney’s office. That visit helped the brothers realize that, should one brother die, the surviving brother would find it difficult to treat his nieces and nephews the same as his own children, Malkin recalls. So they decided to arrange for a buyout of the deceased’s heirs and spouse. The buyout amount would be determined by appraisal. They agreed that all children of the deceased would be out of the business. “This was an arm’s-length transaction for closely held corporations, under Chapter 14 of the Internal Revenue Code,” explains Malkin. “It treats family members as if they are not related.” Since the business was worth approximately $200 million at the time, Malkin says he recommended funding the agreement with $100 million life insurance on each brother. The brothers objected to the premium and decided instead to buy $50 million life insurance each, under the assumption that business cash flow would be sufficient to cover the remaining $50 million, with interest, over 10 years. Seeing that the brothers would not budge on the amount of life insurance, Malkin set about helping them apply for $50 million each. That started the next step of coordinating things with professionals. He personally drove the brothers to the hospital for physical exams, for instance. He picked up the attending physician’s statements. He took other steps to speed the underwriting along. “With business owners in their 50s and 60s,” he explains, “you need to get this done quickly, because anything could happen.” The insurance was issued, but 16 months later, one of the brothers died of a heart attack while deer hunting. That death brought Malkin back into the picture and into more meetings with the family, attorney and others. It also brought some difficult moments with the survivors. “The brothers never told their families about the terms of the agreement,” Malkin says. “They thought they were in the family business to stay.” So, when the children learned that they would be bought out, the oldest son attempted to physically attack the uncle during our meeting in the attorney’s office, and the other children were very upset. The family is fractured forever.” Next came a meeting with the surviving brother. “I recommended that he borrow $50 million from a bank and pay off the sister-in-law immediately.” This was a very stressful relationship, he explains, and the sister-in-law had already sued the brother-in-law in an attempt to win a larger buyout. Finally came assistance with making a claim for the $50 million of life insurance. The claims examination picked up 24 prescriptions the deceased had not disclosed on the medical exam. That was blocking payment of the claim. So Malkin says he met with the doctor who wrote the prescriptions and discovered that the medicine was for the spouse. He secured letters from the physician and the pharmacist confirming that fact, and the claim was paid. In big cases, Malkin concludes, “you have to be involved all the way, in everything that goes on. You have to keep in touch with the clients all the time, use your strategic partners and keep building relationships.”


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