If you are an RIA who has not considered life insurance as part of a comprehensive financial plan for your clients, you might want to take a new look, especially at fee-based variable universal life Insurance. This flexible product can help meet some important needs in your clients' financial plans while allowing you to engage your clients more deeply and to build the value of the client-adviser relationship.
For example, say you have a 40-year-old married, male client who needs the security of life insurance to provide for his loved ones in the event of a premature death, but he also is interested in investing in the market so he has the opportunity to accumulate money that he can use for a variety of purposes.
- •A permanent death benefit. As long as there is enough cash value to cover the internal insurance charges, the policy provides death benefit protection. That gives him the security of knowing that his family and/or business will be protected, no matter what happens to him.
- •Low cost. The Ameritas Advisor VULŽ is a no-load product, which helps to keep his costs down. All insurance policies have costs, but without the additional cost of sales loads, no load policies usually cost less. He pays less in fees, so he gets to keep more of the money his account earns.
- •Complete liquidity. The Ameritas Advisor VUL has no surrender charge.
- •Professional management. As his adviser, working with the client, you can direct the cash value portion of the account into a variety of funds. That allows you to manage those funds within the context of the investment choices you are making with the rest of his portfolio.
- •Investment selection. The investment options open to you include funds from providers such as Vanguard, Dimensional, T. Rowe Price, PIMCO, Fidelity and more.
- •Favorable tax treatment. The death benefit passes tax-free to heirs in almost all cases. And the cash-value part of the account grows tax-deferred until the client uses the money. However, unlike other tax-advantaged options such as a qualified retirement plan or a college savings plan, there are no penalties for withdrawing money from this account. That can make this option particularly attractive to younger investors who want to save for retirement or college but are concerned about penalties and taxes if they need the money for something else. With the Ameritas Advisor VULŽ , the client gets the tax advantages without concern about penalties.
- •Tax-Deferred Growth Potential. In the case of the 40-year-old investor, assuming a hypothetical gross rate of return for the investment portion of the policy is 7%, which is a hypothetical net yield of 5.7%, when the client reaches age 60 the policy would have a surrender value of $143,420 and a death benefit of $643,420. By the time he is 75, the surrender value would be $286,527. (Note: These represent hypothetical values; actual values could vary.*)
Ameritas Advisor Services makes it seamless for you to provide your clients with a no-load VUL. There is no contract or appointment paperwork for you to sign. You always have access to our support team to answer product questions, run illustrations, help you analyze existing policies, complete applications, and helping you implement new VUL strategies for your clients' portfolios.
Plus after the policy is issued, you'll have on line access to view the policies, trade amongst the investment options and get data feeds to your portfolio management software. This allows you to provide ongoing management of the VUL as part of your clients' total portfolio.
You also don't have to introduce another professional into the relationship. You and your client work directly with Ameritas . You maintain control and you help to establish yourself as the quarterback of your client's financial life.
And that, in turn, allows you to bring additional value to the adviser-client relationship. You can demonstrate your ability to think creatively and to look at all possible ways to help your clients build strong financial futures.
The Ameritas Advisor ServicesTeam is focused on helping you maintain your independence and objectivity by providing straightforward, low-cost strategies. No product push and no conflicts for your business. Let our salaried professionals show you how the Ameritas Advisor VULŽ can help your clients meet those needs. For more information call Ameritas Advisor Services at 800-255-9678 option 3 or e-mail us at email@example.com .
*Assumes cost of insurance charges for a 40 year old male, Preferred Plus rate class. The net rate includes assumed weighted average fund management expenses of 0.522%, and daily deduction of the Risk Charge (at a current annual rate of 0.70% in years 1-15, 0.10% in years 16+; 0.90% maximum in years 1-15, 0.30% in years 16+). Actual fund management expenses will differ by portfolio. Other charges include: Premium Charge (3.5% current, 5% maximum), Monthly Administrative Charge ($7.50 per month current, $10.00 per month maximum).
Variable products are subject to investment risk, including possible loss of principal. Before investing, carefully consider the investment objectives, risks, charges and expenses, and other important information about the policy issuer and underlying investment options. This information can be found in the policy and investment option prospectuses. Prospectuses are available online at ameritasdirect.com , or you can obtain copies from us at 800-255-9678. Read the prospectus carefully before investing. Product not approved in New York.
PF 651 ed 7-14
This content is made possible by Ameritas; it is not written by and does not necessarily reflect the views of InvestmentNews' editorial staff.