Episode #149: How to Properly Position a Leveraged Estate Preservation Plan for Your Clients

Episode #149: How to Properly Position a Leveraged Estate Preservation Plan for Your Clients


Premium financing is one of the most attractive sales concepts in the financial industry because of its high commissions. Just one premium financing case can define your year as a tremendous success. But with such a high payoff comes a list of challenges due to its complexity and ever-moving parts.

In this episode of Money Script Monday, Luke reviews the estate tax liability high net worth individuals experience and unveils a NEW report that can help you earn and win premium finance business.


 

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This post is intended for financial professional use only.

Video transcription

Hello, and welcome to another edition of Money Script Monday. My name is Luke Geller, and today, we're going to be talking about how to properly position a leveraged estate preservation plan to your clients.

What is a leveraged estate preservation plan?

It's a report that we designed here at LifePro to help advisors, just like yourself, present and position premium finance cases to clients and to high net worth individuals.

The reason we did that is we have a ton of amazing reports already. We have our wealth report, our income report, our retirement shortfall report as well, and we wanted to create something for one of the largest sales in the life insurance industry, but also one of the most challenging because of everything that it entails.

There are a lot of moving parts, but also, again, it is talking about using life insurance for estate tax planning, and we're talking about high net worth clients.

Which means high death benefits and high commissions as well.

There’s a lot that can go into it and we want to give you every opportunity to earn that business and to win that business, and any tool that you can use to do that is something that you should be using. So, that's why we designed this.

What I want to talk about today is kind of how we designed it, how it's going to be beneficial for you, and then a way you can get these reports customized for you and for the client.

Again, these are extremely large cases and can make or break your year, and we want to do everything we can to help you out with that.

When we are designing a report, we look at what the problem is, what are some of the solutions, and we talk about comparing those solutions.

Estate tax liability

In this leveraged estate preservation plan, the main problem when we're working with premium finance is the client has their estate tax, so an estate tax liability.

We really wanted to dig into that problem.

Estate Tax Liability

One of the main things is, if your client has over a $10 million net worth, on average, 50% of their estate is not liquid.

If your client has a $40 million net worth, then we're looking at 80% of their estate being illiquid.

The reason for that is a lot of large estates have real estate involved, businesses involved - things that you can't just trade in for cash right away.

And if something were to happen to those clients, then their family would have to sell off assets to pay for that estate tax bill that they have.

Think about that. If something were to happen to your client today, their family, their beneficiaries, their loved ones would have to sell off parts of their legacy, their real estate holdings, their business holdings just to pay an estate tax bill to Uncle Sam, which is something that we want to try to prevent.

Another important aspect is, in 2026, there's going to be the expiration of the Tax Cuts and Jobs Act.

What that means is the unified credit that has been protecting some of these larger estates from having large estate tax bills is going to potentially be going away.

We can't see into the future, but what we can do is see the writing on the wall, and what that writing's telling me right now is that our national debt is enormous and continues to grow, especially with everything going on right now.

All the bailouts that are happening is just increasing the national debt.

We have an election coming up, we have all these changes that could be happening, and always on the top of the docket is the wealthy and taxing the wealthy.

Something that we don't know is what that estate tax bill is going to look like. The unknown is your client's estate tax situation in the future, but what we know now is that we have something that we can do so that they don't even have to worry about it, so that we can protect that.

In this report, we look at:

  • Current net worth in 2026
  • Potential estate tax liability
  • Current estate tax liability
  • Estate tax liability at life expectancy

We have a nice chart that goes through all of that.

It’s a beautiful piece that really talks about the problem.

Why leverage?

Once you have a problem, we need to talk about solution.

What are some of the different solutions that we look at?

Why leverage using life insurance

That main solution is life insurance and using leverage for life insurance.

How do we get your one dollar to turn into three, five dollars for your money?

Life insurance is a great tool, but when we're talking about $10, $20, $40 million death benefit policies, especially if you're a 50-, 60-year-old, those premium dollars are extremely expensive. They get up there rapidly.

A common saying is, "Everybody wants life insurance, but no one wants to pay for it."

So, how can we utilize and be the most efficient with those premium dollars to get you the maximum amount of coverage?

And what we do in this section is we talk about the benefits of financing the benefits of life insurance and financing that life insurance, but we also talk about the risks.

With any investment or with anything, there are risks to consider, and we want those right on the table for your clients to look at, to see, and to understand what they're getting themselves into.

It's going to save you a future headache, and I've seen it actually help with the sale and generate the sale when another advisor didn't talk about any of the risks involved at all, just saying how amazing this plan is, "You don't pay for anything,” but didn't talk about any of the risks associated with it - only the benefits.

We talk about those benefits, but we also go into that risks.

Finally, we now have different solutions.

Comparison of alternatives

There are different solutions that we lay out there. Let’s compare all of those together.

One of the most important things is this comparison of different plans and different solutions for your client because we want them to understand and see the writing on the wall.

"Here's the problem. Here are some of the solutions. Now, let's compare these solutions, and you can pick for yourself."

"What would you rather do?"

Comparison of premium financing alternatives

No Action Taken

When we look at these solutions, the first option is no action taken.

"Hey, if you do nothing, when you pass away, there's going to be a $30 million estate tax bill that your beneficiaries are going to have to pay. Do they have to sell off assets? What do they have to do to do that?"

That's something that you can point out right now and show them.

30-Year Level Term

We look at a 30-year level term. Again, a life insurance policy.

It's cheap, but if you look back, you just paid however much for that 30-year level term, you don't have any death benefit because it lapsed, and then you still have your estate tax bill.

Guaranteed Universal Life (GUL)

We also look at a GUL. That death benefit in the policy is going to be guaranteed, but it's also going to be extremely expensive. So, we look at the cost of that.

What is the cost of a GUL for a $20 million death benefit to age 100?

It can be pretty expensive.

If the client's willing to pay that, it's a great way to mitigate an estate tax bill, but they're still paying a ton of money for those premiums.

We want to give the client the best option and the best option for them specifically.

Premium Finance @ 6.5%

We then get into the finance options. We talk about what that premium finance policy looks like, what you're doing with your money, the dollars, what your one dollar gets you by using leverage.

Right now, with where the interest rate environment is, borrowing money is extremely cheap.

Interest rates are extremely low, which really helps this solution here.

We talk about what the interest rate is, what the collateral is, and where all that's at in one section here, and we compare it to the other sections as well.

Premium Finance Stress Test @ 5.5%

If you remember, I talked about the risks associated. We talk about that risk with a stress test. We have a premium finance stress test that goes into the numbers and compares it.

One thing we want to show is, look, not everything happens as planned. But what happens if a worse case or bad case scenario happens to your client?

We want to make sure they're prepared and that they know, even in a bad case or the worst case, that this premium finance solution is still cheaper and better than paying for a GUL, still better than doing nothing.

It still works for the client, and it's still the best solution, but if everything does go right and we see the returns that we normally see in an IUL, then look what else can happen.

Those are strong comparisons that you use in this report.

Download your free sample report

One of the biggest keys as a salesperson is being able to tell stories, being able to go through a concept and make it as simple for a client to understand as possible.

This report does it that for you.

It helps you go through all of this with a client.

The leveraged estate preservation plan is designed to help you have a tool in your toolbox for one of the most complicated sales out there in the industry.

If you look on the page of this video, you'll see a link there that says, "Click to download your free sample of this report." Go ahead. Feel free to click that at any time.

Also, if you want a customized report, contact LifePro. Ask for your field support representative (FSR), and they'd be happy to customize a specific report for a case that you're working on.

If you do have any questions, feel free to call LifePro at 1-888-543-3776. I hope you have a wonderful day, and thank you again for listening.

About Luke Geller

Luke Geller is a Field Support Representative at LifePro. He coaches hundreds of financial professionals on how to build effective financial strategies that achieve their clients' long term goals and helps them stay educated on the latest industry trends.

Disclaimer

This information is meant for educational purposes only.

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