Transcription
Hey, what's up, guys? What I'm going to say in this video could probably get me cancelled because it is the most specific, in-depth video that we've ever done regarding the six life insurance products and tax strategies that make our clients—AKA life insurance agents—an average of $51,300 in commission per case. So, after we cover these six strategies, I'm going to give you guys some examples of those strategies implemented with business owners, and then I'm even going to share with you how you can get the proper information and clients to work on these very large cases. But before we dive in, I need to make an important disclaimer, obviously. So here we go.
The information presented in this video is for general educational purposes only and does not constitute financial, tax, legal, or insurance advice. I'm not a licensed financial advisor, tax professional, attorney, or insurance agent. These strategies and products discussed are complex and may not be suitable for everyone. The examples shared are based on general information and hypothetical scenarios; actual results will vary on individual circumstances, market conditions, and other factors. Any decisions regarding life insurance, tax strategies, or financial planning should be made in consultation with properly licensed professionals who can provide advice tailored to your specific situation. Life insurance products contain fees, charges, and limitations; guarantees are backed by the claims-paying ability of the issuing insurance company. Tax laws and regulations are subject to change, which could impact the effectiveness of the strategies discussed. Some of the concepts discussed involve sophisticated planning techniques that may carry risk, including potential IRS scrutiny. No strategy can guarantee freedom from tax audits or penalties. This video contains references to commission structures and potential earnings for insurance agents; these figures are for illustrative purposes only and are not a guarantee of what any particular agent might earn. If you are interested in implementing any strategies mentioned in this video, please make sure to consult with a qualified financial professional in your jurisdiction who can properly evaluate your unique circumstances.
Now, with that important disclaimer out of the way, let's get into the content of today's video. I've been getting a lot of questions lately about what exactly are the life insurance products and strategies that our clients are selling to generate these $50,000-plus average commission. And, by the way, if you're new here, we help insurance agents and financial advisors acquire high-ticket business owner clients through our done-for-you lead generation and appointment setting services. And right now, our clients are averaging $51,300 in commission per case, according to the last 18 or 20 reported cases in our private high-ticket agents community. And today, I'm going to walk you through exactly what products they are using and why business owners are so receptive to these solutions.
Because we operate both in the United States and Canada, but the tax codes are very different and have different regulations, I'm going to need to make two separate videos. In today's video, I'm going to focus on the United States, but don't worry if you're a Canadian life insurance agent; make sure you subscribe because next week I'm going to release the same video, but with the Canadian strategies. So let's dive into the six specific products and strategies that our client agents—our client agents—are implementing. Number one is index universal life for corporate tax reduction; pretty basic. Number two, premium finance life insurance. Number three, structured ownership programs. Number four, Roth conversion alternatives. Number five, cash balance plans. And number six, executive bonus and payroll deduction. So let's dive in with the most simple one: the IUL for corporate tax reduction.
This applies to business owners with a C corporation, an S corporation, that can build tax-deferred cash value, and this strategy can also provide tax-free income through policy loans. It can help create tax-free debt benefits for succession planning and avoid additional taxation on retained earnings, as long as the C Corp and S Corp are filing taxes separately from the actual owners of the company. So it would be a corporate and a personal tax. This typical strategy involves funding the policy with $50,000 to $250,000 per year for about five to seven years.
Now, secondly, let's dive into premium finance life insurance. This strategy is primarily used in the U.S. due to banking regulations and carrier availability. It's applicable through carriers like Alliance, Nationwide, and National Life Group. I'm sure there's plenty more. It typically involves a 10-year financing term with major U.S. banks. Typically, the clients need to have a minimum net worth of about $7 million, even though some carriers, some IMOs, have some special programs that allow premium finance with no minimum net worth. So in this strategy, the client pretty much only pays the interest, which is currently about 6.25%. So a typical client might pay $75,000 in annual interest while the bank is funding the policy with $750,000 in annual premium, and that's how you can create a lot of leverage in your insurance policy.
Number three, structured ownership programs with IULs. So again, this is exclusively a U.S. strategy due to specific provisions in the U.S. tax code. It creates negative K-1s to offset ordinary income at an 8:1 ratio and capital gains at a 10:1 ratio. The strategy utilizes Series LLCs to allow business owners to save approximately 60% to 70% under their tax bill; that's why they want to do it.
Number four, Roth conversion alternatives using IULs. So the application here addresses RMD issues with qualified retirement accounts such as 401(k)s or IRAs. It creates tax-free income that will not trigger Social Security taxation. It utilizes the specific provisional income rules of the U.S. tax code.
Number five, cash balance plans combined with IULs. So this strategy is implemented under IRS Section 412(e)(3), which allows contributions of $300,000 to $700,000 annually and can create immediate tax deductions of 37% to 50%, depending on federal plus state.
Number six, the last one, executive bonuses and payroll deduction IULs. This is an employee retention strategy implemented under Section 162 bonus arrangements. It is a tax deduction for the business and it works with specialized IUL products from carriers such as National Life Group.
So let me show you some specific case examples of these strategies implemented with business owners. The first case study is a business sale capital gains mitigation. Here we have a 56-year-old business owner selling a company for $30 million and facing approximately $6 million in capital gains tax. With a combined strategy of number one, a charitable remainder trust to defer taxation; number two, a $10 million IUL with a $922,000 annual premium for five years; and number three, all this structured to provide tax-free income of $600,000 annually starting at age 65. Well, the commission on the first-year premium for this agent was $415,000.
The second case is a premium finance case for a physician group. Here we have a 39-year-old physician with a $2.5 million annual income. The agent has implemented a $750,000 annual premium IUL through premium financing. The client contribution is only $35,000 per year, which pays the interest payment, and this results in a $500,000 annual tax-free income starting at year 15, plus a $12 million debt benefit. In this case, the commission for the agent was $337,500 on the first premium.
Who are the ideal prospects for these strategies? Well, ideally, you want to work with people that have a taxable income of $500,000 plus annually. They have a tax liability of at least $200,000 federal and state combined. They own a business or multiple businesses such as S Corps, C Corps, or LLCs. And if we're talking about premium financing, it's ideal if they have a minimum net worth of $7 million.
Now, when it comes to a buy-industry breakdown, our most successful implementations have been with medical professionals such as surgeons—this one is very, very hard—anesthesiologists, or other kinds of specialized physicians. Secondly, professional service firms such as attorneys, accountants, or consultants. We've also had a lot of success connecting construction company owners to financial advisors, real estate investors or developers, technology company founders, or manufacturing business owners, as well as food service business owners that have multiple locations. So the common thread is they have significant income, substantial tax liability, and a desire for tax-efficient wealth accumulation. As long as they have these things, typically they'll be a good client.
Now, why are these products generating commissions that are so high? Well, let's break down the exact economics. An IUL policy first-year commission typically ranges from 90% to 110% of the target premium. A target premium on a $250,000 annual premium case might be $100,000, resulting in $90,000 to $110,000 in first-year commission, plus, obviously, the renewal commission, which is another 2% to 5%, which might be, you know, $5,000 to $12,500 annually.
Now, for the premium finance cases, the commissions are typically calculated on the full premium amount, not just the client's out-of-pocket cost. So a $750,000 premium with a target premium of $300,000 could quite easily generate $270,000 to $330,000 in first-year commission, plus some carriers actually offer enhanced compensation on premium finance cases.
In conclusion, you have here the detailed breakdown of exactly which products our clients—AKA life insurance agents—are using to generate $50,000 plus in average commission per case with business owner clients. Now, these are not simple insurance sales; they are comprehensive financial strategies that solve significant tax and wealth accumulation challenges specific to business owners. Now, if you are an insurance agent or financial advisor looking to serve this kind of market, I invite you to learn more about our high-ticket agent blueprint program. We send you eight to ten of those qualified appointments with business owners every single month, guaranteed, or we work for free and we pay your ads until you get that. So you can click the link below to watch our full offer video, and then if you're interested to book a call with our team to see if you qualify to become a high-ticket agent. And remember, the bigger you serve, the bigger you earn. So thanks for watching this video; don't forget to subscribe, and I'll see you in the next video. Cheers.