CENCO STREET JOURNAL. May is Disability Insurance Awareness Month. Sales Idea of the Month. Check Out The Cenco Website:

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1 A Special Publication for CENCO Related Agents CENCO STREET JOURNAL Volume 16, Issue 5 May 2016 Check Out The Cenco Website: You will have access to: Quotes Forms Introduc on Kits for Our Core Carriers Archived and current issues of the Cenco Street Journal and the Cenco enews Inside this issue: Basics of Annuities Sales Idea Open Doors with BOE Insurance 2 3 May is Disability Insurance Awareness Month Think about it. All of your clients plans for the future - from buying a home, to putting their kids through college, to building a retirement nest egg - are based on the assumption they will continue to earn a paycheck until they retire. But what happens if those paychecks suddenly stop if they are unable to work because of illness or injury? 27% of Americans say they would have difficult financially supporting themselves immediately following a disability; 74% say they would face financial trouble within six months. Almost three in 10 of today s 20 year olds will become disabled before reaching age % of all people will have a long-term disability event prior to age 65. The number of disabled workers in America has risen by 35% since When your clients have individual disability income insurance, they will receive a monthly benefit that is based on their salary and bonus income. Should they change jobs, their disability insurance coverage remains intact - even if their duties change or they lose their job - as long as they continue with their scheduled premium payments. A disability can happen to anyone...at anytime; grow your business with individual disability insurance. Sales Idea of the Month Beneficiary Review Most people have a good idea who they want to name as beneficiaries, but often, many fail to keep beneficiary designations in step with their intentions. Marital changes and changes to family status may require a change to their current beneficiary designations. For the client, the review is an opportunity to match current beneficiary designations with his/her desired disposition of assets. For you, the producer, the process of collecting data about client assets and their disposition will help you identify insurance shortcomings, and, in many cases, point to the need for more detailed and separate insurance review and the potential for a new insurance sale.

2 Page 2 A Special Publication for CENCO Related Agents Basics of Annuities Sales Idea Annuities can be very powerful tools, whether your client is looking for growth in their investments or if they need income. The challenge is getting past their perceptions about annuities and educating them about how they work. An annuity can be an integral part of your clients long-term retirement planning strategy, providing direction to help them overcome unnecessary risks and important optional benefits to help protect their financial future. Annuities offer guaranteed death benefits and payment options to help meet retirement income needs. People want safety and security, without sacrificing growth potential. When planning for retirement, there are challenges to be addressed: Looking beyond defined benefit plans and Social Security for retirement income Guarding against outliving one s assets Finding a way to protect assets from market downturns Increasing burden on planning for one s retirement Understanding the impact of taxes Investments such as savings accounts, certificates of deposit and mutual funds generally don t provide a lifetime income. An annuity can turn assets into a steady, guaranteed income stream. This means your client can always depend on this source of income, no matter how long they live. Americans are living longer while healthcare costs continue to rise. There has been a significant increase in the life expectancy of 65-year-olds over the past quarter century. Additionally, healthcare costs for the average 65-year-old will be $250,000 over a 20-year retirement and nearly $500,000 over a 30-year retirement, further necessitating the need for lifetime income. While annuities provide many benefits, most people don t understand them. In a recent study, 54% of 44 to 75-year olds express distaste for the word annuity, despite the fact that 80% find an annuity-like solution attractive when it is described to them without calling it an annuity. Two financial products were described: one with a 4% return and a guarantee against losing value and another that offered an 8% return but was subject to market risk. Approximately 80% preferred the first product - an annuity. In reality, people who actually own annuities expressed overwhelming satisfaction with 76% saying they were very happy with their purchase. Consumers ranked annuities second highest in satisfaction among all financial products. Start your discussion without trying to sell an annuity. Find out what is important to your client. What do they want their money to accomplish for them? What is their attitude toward risk? Have they identified retirement expenses that will be essential and discretionary? Educate them on what options are available and what benefits they provide. This conversation may lead them to see why an annuity is suitable for their needs. Call Cenco so we can help you with your annuity sale!

3 Volume 16, Issue 5 Open Doors With BOE Insurance Page 3 Business owners understand the importance of cash flow. If you can help them understand the likelihood of disability and the effects it can have on that cash, you can help them understand the importance of business overhead Expense (BOE) Insurance. That can open the door to other discussions, including the business owner s need for additional disability and life insurance coverage. Business owners have a great need for revenue to help keep the business doors open if they become too sick or hurt to work. BOE is designed to help cover the fixed-cost expenses and obligations of the company or practice. The essential component in most small businesses is the business owner. It s the owner who holds the company together and keeps it running. If the owner becomes too sick or hurt to work, it could be detrimental to the business. Besides the normal monthly expenses of employee salaries, rent or mortgage payments and other company expenses; the owner may also need to consider hiring a temporary replacement in order to keep their business functioning. BOE has some significant advantages in the marketplace: Few agents market BOE. The product has tax advantages and is relatively inexpensive versus other disability products. Allows you to focus the interview and discussion not only on the immediate needs of the business, but also the needs of the owner. Target Market Business Overhead Expense Insurance is for medical/dental professionals and small business owners who are actively engaged in their business on a full-time basis. The day-to-day presence of these business owners is vital to the business and a disability will result in a definite loss of revenue to the company or practice. These businesses have a great need for income in order to keep the doors open, retain current customers or patients and remain viable if they suffer a disability. Consider prospecting with BOE to help further your efforts in reaching out to these markets. It may lead to additional business or personal protection strategies using insurance. Key Selling Points The product is designed with relatively short elimination periods (30, 60 or 90 days). This lessens the need of the business owner to use receivables or other savings to keep the doors open. The benefit periods are 12, 18 or 24 months. This recognizes that it is likely at some point that the business owner will look at other options if the disability looks like it will go long-term. Those options might include bringing in other like-professionals or selling the business. The policy recognizes both residual (partial) and total disability days towards the satisfaction of the elimination period. Benefits like these recognize that every disability is unique and these features provide the most protection for the owner and their business. The policy provisions can handle the variable nature of business expenses. Expenses vary month to month, and the BOE policy can deal with those fluctuations throughout the course of the disability. A BOE policy is tax-deductible to the firm as a normal business expense. While benefits received upon claim approval are treated as income, the income is used to pay covered deductible expenses, generally resulting in net tax-free benefits.

4 CENCO INSURANCE MARKETING CORPORATION 1501 El Camino Ave., Suite 1 Sacramento, CA Discussion Topics For Your DI Prospects Look Inside For Details! Phone: (916) (800) 45-CENCO Fax: (916) HELPING AGENTS SUCCEED..IS OUR BUSINESS! We re on the web! AIG Partners Group Quality of Life...Insurance portfolio offers solutions for a variety of clients and needs. Learn more about their insurance products and sales resources by visiting: Life Insurance You Don t Have To Die To Use! The Definitive Marketing Publication For Life & Disability Insurance Did You Know?... 61% of surveyed wage earners personally know someone who has been hurt or sick and missed at least 90 days of work. Most people underestimate the lifestyle risk associated with income lost due to an illness or injury. 90% of disabilities are caused by illness rather than accidents. People don t plan for disabilities that can occur in an instant, they need your help. Off your clients disability insurance to protect their income!

5 INSIGHTS from ADVANCED MARKETS Breaking the Ice with Business Owners Life insurance can provide a solution for many of the needs and concerns faced by business owners. Unfortunately, business owners often fail to recognize these issues until it s too late. The below questions provide a starting point for you to break the ice with business owners on these issues and begin exploring if life insurance makes sense for their business plans. INTRODUCTORY QUESTIONS How is your business doing? How big is the business today? Is the business impacted by the current economy? Has it faced any special challenges? If the business is succeeding, what would you attribute it to? QUESTIONS REGARDING KEY ISSUES ISSUE TOPIC OPENERS COMMON CONCERNS Key Person Insurance Coverage Executive Bonus Liquidity to Buy Business from Partner s Estate Do you have any key employees? Who do you turn the keys over to when you go on vacation? Do you know who the key people are and what makes them so crucial to your business? Have any of your employees recently left? Are you ever concerned about any of your employees leaving and going to work for one of your competitors? If your partner dies, who gets the stock? Can your business survive the loss of one of your key employees? What have you done to help protect against lost revenues if you were to lose a key employee? Would you need funds to keep the business afloat while you replaced the key employee? Are you providing enough benefits to keep your employees happy? Have your employees ever indicated dissatisfaction with their compensation package? Would you have the cash to buy out your partner s spouse/heirs if something were to happen to him or her unexpectedly? Are you okay with your partner s spouse/heirs becoming your new business partner(s)? Have you documented and funded a Buy/Sell agreement to purchase the outstanding stake of the business if your partner dies or becomes disabled? AAM2077 (09-15) For Agent Information Only Not for use with the Public

6 Insights from Advanced Markets ISSUE TOPIC OPENERS COMMON CONCERNS Financial Security for your Family Fair Treatment of Children Not Active in the Business Liquidity for Estate Taxes Retirement Foreign Nationals Estate tax If you die, who gets your stock? If one of your children will take over the business, do you have other children who are not involved? Are you planning to give all a share of the business? What do you believe your net worth is? Does your net worth expose your estate to taxation? Are you saving a sufficient amount for your retirement? Did you know that non-u.s. citizens may be impacted differently under federal estate tax law? Can your business survive without you? Can one of your family members continue the business? What will happen to your family if the business fails after you die? What about your key employees? Do you have a plan with a successor who is qualified to run the business? Do you have Buy/Sell agreement documented and funded? How do you plan to fairly distribute your estate between children who are both active and not active in the business? How will the children who have worked hard to operate the business feel if their siblings suddenly also become owners? Do you have liquidity to give the non-active children a share of your estate without making them owners? If you died today and an estate tax is due, how will your estate pay the tax? Will your estate need to sell the business or take an expensive loan? Even if your current estate is under the exemption, could it grow to a point where it will be taxable? Will your estate have to pay state estate taxes? Does your company offer a retirement plan? If so, are you able to put away enough money for your retirement in your company plan? If not, how are you saving for retirement? Did you know that the unlimited marital deduction (tax-free transfer between spouses) is not available for a transfer to a non-citizen spouse, even if he or she is married to a U.S. citizen? Are you aware that if you are not a permanent resident, you are still taxed on U.S. situs property and have a lifetime exemption of only $60,000 in 2015? For more information on these topics, please contact Accordia Life Advanced Markets at (855) , option 2 or via at advancedmarkets@gafg.com. Our highly qualified, experienced Advanced Markets department can provide personal sales assistance for your business prospects and help you identify business needs, as well as assist with traditional advanced markets issues, as well as develop innovative, custom-tailored solutions for your challenging advanced sales situations. AAM2077 (09-15) For Agent Information Only Not for use with the Public

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