Life Insurance Insider: A simple way to explain a life insurance legacy

“What we have done for ourselves alone dies with us; what we have done for others and the world remains and is immortal.” -Albert Pike

The current market conditions have been unforgiving to all walks of life, but seniors and retirees especially feel the pain in their portfolio. As an advisor who deals extensively with seniors, many of my clients come to my practice with the desire to live on less money to enable them to leave behind a legacy for their children and grandchildren. Unfortunately, diminishing returns make it nearly impossible for them to have a financial legacy. In order to help them supplement their portfolios, we use what we call the “APPle©” method of planning.

How it works

“A” stands for “active investing,” where we use active investment management options. The first “P” is “passive investing,” where we chose passive investment management options. The last “P” represents “protected” investments, or lifetime income guarantees, such as life insurance-based income streams. Finally, the “le” stands for “legacy,” where a portion of their assets are used for purchasing life insurance to pass along the value of those assets to the next generation.

For instance, if my client has $1 million, to most wisely and effectively create a legacy, I might suggest using life insurance. If they decide to purchase the product, they can increase their distribution rate to 6.5 percent or 7 percent, rather than just a 4 percent distribution, while depleting their principal over a 30-year period. In this scenario, their life insurance becomes the legacy, tax-free.

People don’t understand what we do, but when we explain it this way, they understand the simplicity of our planning system. We don’t necessarily have all the right answers, but when we present our clients with the APPle© approach, they trust that the combination of these solutions may be the correct answer for them.

There are options

Even though the economy is not ideal and many prospects may come to you without the necessary savings to allow them to live comfortably through retirement, it’s important to stress to them that they do have options. They do not need to sacrifice leaving behind some money to help their grandchildren pay for college in order to financially survive retirement. With life insurance, they can assure their finances will last and create a legacy that will last as well.

“[Clients] do not need to sacrifice leaving behind some money to help their grand-children pay for college in order to financially survive retirement.”

From the April 01, 2012 issue of Senior Market Advisor

By Brian Heckert

Brian D. Heckert, CLU, ChFC, of Nashville, Ill., is president of Financial Solutions Midwest, LLC, an independent financial services practice. Securities and Investment advisory services offered through NFP Securities, Inc., Member FINRA/SIPC.


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