Develop your Supplemental Retirement Income Sales


Retirement (Photo credit: 401(K) 2012)

Help Clients Meet Their Estate Planning Needs

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The supplemental retirement income strategy uses permanent life insurance to provide clients with death benefit protection while offering the potential to supplement their income during retirement. Topics covered below include:

  • Client profile
  • Helpful tips
  • Illustration software tips
  • Samples cases

Product Strengths

Here are some characteristics of supplemental retirement income clients:

  • Ages 30-60
  • Need of life insurance protection
  • Middle to high income
  • Concerned about family’s financial needs if death occurs during work years
  • Looking to supplement financial security in retirement years
  • Self employed, member of a partnership, or corporate employed


Product Strengths

There are several benefits to discuss with your clients, including:

  • Death benefit protection during both working years and retirement years.
  • Cash values inside of a life insurance policy grow tax deferred.1
  • No income contribution limits and generally tax free withdrawals and loans to the cost basis (assumes non-modified endowment contract status (MEC).2,3,4,5


Product Strengths

  • Avoid modified endowment contract (MEC)5 status.
  • Aim for a minimum non-MEC death benefit that meets your clients’ needs for life insurance protection—lower death benefits may allow the policy to accumulate greater cash value.
  • When using the guideline premium test (GPT), if consistent with the client’s needs, it may be beneficial to use the increasing death benefit option during the funding years, while changing the death benefit option to level during the income years. This may allow for greater cash value accumulation.
  • The policyowner has the option to choose between net zero cost6 loans and variable interest rate loans. For variable interest rate loans, consider running the illustration at several loan interest rates to understand how the rate impacts the illustrated performance.
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Sample Case One: Builder IUL

Take a look at Builder IUL® to help your clients build long term cash value growth. This indexed universal life insurance product offers a guaranteed interest bonus on the index account along with several index selections to help build the potential for long term cash value accumulation.  View illustration 

Sample Case Two: Rapid Builder IUL

Rapid Builder IUL® is designed to help build early cash values and offers a Waiver of Surrender Charge Option.View illustration 

Sample Case Three: Survivorship GIUL

A second-to-die indexed universal life insurance product with an optional death benefit guarantee8 and a Waiver of Surrender Charge Option.View illustration

1. The tax-deferred feature of universal life or indexed universal life insurance is not necessary for a tax-qualified plan. In such instances, your client should consider whether other features, such as the death benefit and optional riders make the policy appropriate for the client’s needs. Before purchasing a policy, your client should obtain competent tax advice both as to the tax treatment of the policy and the suitability of the product.
2. Neither North American Company nor its agents give legal or tax advice. Please advise your customers to consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.
3. In some situations, loans and withdrawals may be subject to federal taxes. North American Company does not give legal or tax advice. Clients should be instructed to consult with and rely on their own tax advisor or attorney for advice on their specific situation.
4. Income and growth on accumulated cash values is generally taxable only upon withdrawal. Adverse tax consequences may result if withdrawals exceed premiums paid into the policy. Withdrawals or surrenders made during a Surrender Charge period will be subject to surrender charges and may reduce the ultimate death benefit and cash value. Surrender charges vary by product, issue age, sex, underwriting class, and policy year.
5. For most policies, withdrawals are free from federal income tax to the extent of the investment in the contract, and policy loans are also tax-free so long as the policy does not terminate before the death of the insured. However, if the policy is a Modified Endowment Contract (MEC), a withdrawal or policy loan may be taxable upon receipt. Further, unpaid loan interest on a MEC may be taxable. A MEC is a contract received in exchange for a MEC or for which premiums paid during a seven-year testing period exceed prescribed premium limits (7-pay premiums).
6. Zero Cost Loans are loans charged and credited at the same percentage for a net zero cost. The policy year and amount available vary by product.
7. Available for an additional charge per $1,000 per month, depending on issue age and underwriting class.
8. Subject to premium payment requirements



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