With the passage of the One Big Beautiful Bill Act (OBBBA), agents working in a certain segment of the high-net-worth market may have lost their estate liquidity sales. Moreover, they could find that their usual sales themes about the need to do planning and provide capital and liquidity are being met with a new set of objections from clients/prospects who don’t see the need or don’t want to spend the money.
Argument Against Life Insurance
The objection to purchasing insurance could be posed like this:
“We have a $30 million exemption, indexed, an unlimited marital deduction, full annual exclusions, Internal Revenue Code Section 6166 for the business, stepped-up basis for each other and the kids and, if we need them, all of the sophisticated wealth transfer vehicles our attorneys tell us about. Why should I buy life insurance?”
The Agent’s Response
Carriers and brokerage general agents (BGAs) should be helping agents break down and respond to each component of this overall objection. There are, in fact, talk tracks that engage prospects in a conversation that addresses them as well-informed, well-advised individuals first, spouses second, parents third and taxpayers fourth, which is totally opposite the way they’ve typically been addressed. These conversations don’t rely on, “Yeah, but if the Democrats get back in…”
I’ve published various articles that can give carriers and BGAs the basis for constructing presentations on many of the components of this overall objection. Two that come to mind are “A Presentation for Life Insurance Agents in the Advanced Markets” and “IRC 6166 and Life Insurance.”
Suggested Topics
Here are some suggested topics, presented as questions posed by clients, for webinars or podcasts by carriers or BGAs to their agents in the advanced markets. While the topics don’t focus on liquidity sales and even life insurance itself, they’re a segue to planning issues that may now be of far more urgency to clients and prospects. Clients and prospects might insist on resolving these issues before they’ll entertain more traditional conversations about the role of life insurance in their planning.
Getting a policy out of an irrevocable life insurance trust (ILIT). The client might ask: “I have a large policy in an ILIT. Even after OBBBA, I want to keep the policy. But I don’t want to keep the ILIT. Can you work with my estate-planning attorney to get the policy out of the ILIT and safely back into my hands? What information and materials would you need to get started?”
Terminating a split-dollar plan. The client might ask: “My ILIT owns a large policy subject to a loan-based split-dollar plan. Despite OBBBA’s permanent extension of the high estate and gift tax exemptions, I want to keep the policy in force. However, the split-dollar plan has become a dead weight on the policy that I don’t see being lifted for the foreseeable future. Can you help me, the trustee and my advisors figure out how to terminate the split-dollar plan and design a new approach to funding the policy that won’t make today’s solution tomorrow’s problem? If so, tell me about your process, resources and tools for this kind of a project.”
Deciding whether to fund or surrender an annuity. The client might ask: “I bought a variable deferred annuity a few years ago because I thought it could be a good hedge against a post-2025 increase in income tax rates. Thanks to OBBBA, the current favorable rates are here to stay. Can you help me and my tax advisor determine if I should continue to fund the annuity or surrender it and invest in low-cost, tax-efficient funds in my taxable account? What are your process and tools for that kind of project?”
Technical Topics
These topics/projects could take carriers and BGAs some time to develop because they involve highly technical content that must be presented to an audience that isn’t necessarily highly technical. However, they would give agents enough technical background and familiarity with the needed resources to play an important role in solving problems that are surely arising now that OBBBA is law. What’s more, these projects offer agents outstanding opportunities for networking with clients’ advisors at a time when networking could be a challenge.
#Helping #Life #Insurance #Agents #Develop #OBBBA #Marketing #Response