Life Insurance Selling - January 2011

GOOD WILL FUNDING

Wills are like dentists. Everybody needs one. Nobody ever wants to use one. Still, wills are a family preservation fundamental. They are the very footing of the financial planning priority pyramid.

Many life insurance agents used to take on the responsibility of promoting wills. They knew first-hand the trouble a messy estate could cause. Lawyers couldn’t be counted on to promote wills because messy estates pay them much better than neat ones. It became the agent’s job.

me, and I’ll send you a copy.)

The idea of good will funding and the Un-Will adds instant relevance to the life insurance buying process for consumers. Rather than losing them in a gimmicky or alternative-use discussion, will funding focuses on the essential, plain-vanilla use of life insurance — tax-free cash at death.

This works because wills create obligations for estate trustees or executors that require cash for fulfillment. Read yours. If these obligations are underfunded, the will’s intentions will not be fully realized. If unfunded, they will not be done at all. Neither outcome is desirable for a family. The will writer’s legacy is lost.

Good will funding helps prospects create a will that reflects their wishes. It then ensures there is sufficient cash to make those wishes a reality.

It also avoids the costly alternative of a court-written will. If you don’t have a will, the courts will create one, adding great expense, delay and disruption at the worst possible time. The will you write is much less expensive than the one you don’t.

funding with life insurance guarantees your legacy. It also ensures that the debts you create don’t last any longer than you do. Your dreams can live on even when you don’t. Life insurance backs up your financial planning.

The impact is great. To a family, the money they don’t have to fund your will obligations is much more important than the money you do have for, say, your retirement (much of which ends up with the tax-man anyway).

Here’s the good news: The cost to adequately fund a will (buying term life insurance for 1% or 2% of the amount necessary) is similar to that of managing your retirement assets (at 1% or 2% MER). This way, will funding explains life insurance needs simply.

Consider “pre-funding” wills. Life insurance can arrange for the needed cash before you make a will. If you have to do one, fund it before you write it. And remember that today is the only day you can be sure to do pre-funding. No one has a lease on tomorrow.

“Good will funding helps prospects
create a will that reflects their wishes.
It then ensures there is sufficient cash
to make those wishes a reality.”

Regrettably, that role faded as agents became financial planners, consultants, and advisors. But the need for wills and “good will funding” never faded.

The “Un-Will” was a key tool in this approach. It was a humorous, silly, will-like list of the unintended consequences of not having a will. It started discussions and made it so prospects could give the matter serious thought.

But when I searched for the Un-Will recently, I found no trace of it anywhere. So, I rewrote it from my recollection. (E-mail

Finding the funds

There are only four ways to fund your will:

1. Sell assets for cash after death at fire-sale prices.

2.Borrow against assets that you’ll likely sell later, at fire-sale prices, if possible.

3. Win just the right amount of cash at the right time — also known as the Lottery Method.

4. Buy life insurance today.

There is just no other way. Good will
And, when you start with your own
good will funding, your conviction will
make you that much more effective with
prospects. Then, everyone will win… ex-
cept maybe the lawyers.

Jim Ruta re-energizes performance for life insurance professionals. He is an MDRT Main Platform alumni and president of Expert Institute, Productivity and Performance Consultants. Connect with Jim on LinkedIn, Twitter and Facebook. Reach him at jim@jimruta.com.