This type of investing and planning
should never be approached as if our clients are
farmers planting corn in May and planning to
harvest a few months later.
get the tools and
information to help
solve your clients’
laws in place, meaning the taxes and/or
benefits could easily change. The recent
fiscal cliff debate sparked many interesting conversations, one of them being the
need for a permanent estate tax law that is
clear and not subject to a sunset in a few
years’ time. In general, the life insurance
profession deserves immense credit for its
consistent and persistent communication
with Congress, which enabled a permanent law to be enacted.
The importance of life insurance
All Americans need to think about the
legacy they plan to leave behind when
they die. For most of our clients, taxes
will not play into this too extensively.
However, all should approach this plan-
ning with ideas about what they hope
their future generations will look back
and remember them by. For some of our
clients, this may mean ensuring family
possessions — land, family heirlooms, a
business, etc. — can transfer to the next
generation and continue the story. Other
clients may strive to guarantee they treat
all loved ones equally, providing a busi-
ness inheritance to one and a monetary
inheritance to others.
One thing we must convey to our clients is the detriment that can be caused
by leaving our loved ones behind with
unresolved business matters or significant amounts of debt. This type of planning, more often than not, leads to a conversation surrounding the life insurance
product — the unique financial tool that
can turn into liquid cash when needed
most. This cash can then be used to accomplish previously discussed goals,
including paying taxes and/or debts,
covering unresolved business matters,
completing unfinished projects or donat-
ing to a charity. It is imperative we do
not leave this feature of life insurance
out of the conversation when communicating with our clients.
One last life insurance characteristic
we need to convey to clients is the rate of
return they will receive in two distinct circumstances. When addressing the death
benefit of a life insurance policy, we can
assure our clients that, if they leave life
too early, the rate of return is unparalleled.
On the other hand, if your client is fortunate enough to live well past his or her
life expectancy, the rate of return is still as
competitive as a conservative investment.
With this new, permanent estate tax
law in place, there is no excuse to not
be communicating with our clients
about estate planning. Thanks to the
many advocates in our profession, we
now have certainty to help our clients
and their families make long term
plans — like planting an acorn and
turning it into an oak tree. This new
law helps advisors immensely, as it
makes it easier to suggest options to
help our clients build their own tailored financial strategy.
Phil Harriman, CLU, ChFC, works with family-held and nonprofitbusinessesinthear- eas of retirement planning, business continuation arrangements and estate planning. Phil is a
30-year Million Dollar Round Table (MDRT)
member with 17 Court of the Table and 13
Top of the Table qualifications. He was
president of MDRT in 2007 and currently
serves on the AALU’s board of directors.
Harriman also served four terms (1992-
2000) as a senator in Maine, representing
the 23rd district.