Get Clients Emotionally Involved To Take Action On INsurance

The next question he asks is, "What do you want to happen when you go into a nursing home?" Given the current demographics of the population, people shouldnt expect much from Medicaid down the road, he said. Mueller asks, "Do you want the government to get your money; do you want the nursing home to get your money; or do you want your family to get your money?"

People will usually say they want their family to get their money, he said, but often "the way they have it set up now, its not going to happen."

The final question on Muellers emotional fact finder is, "What do you want to happen when you retire?"

The ensuing discussion involves where they want to live and how much money they may need to maintain the lifestyle they want to lead.

After going through all these questions, Mueller has a full understanding of what his clients want, and his clients have started to think about what they want given all these situations.

Another tool Mueller uses to gain insight into his clients desires is to present them with a list of items. "I ask where do you want your money to go?" The list includes a nursing home, the IRS, their children, their grandchildren, a special person and a charity. "Please put these in order of your preference," he tells them.

Mueller explains to his clients that unless they take some action, their wishes will not come true. He tells his clients he can help them make these wishes happen.

Another idea involves how he explains the power of compounding and tax deferred compounding to his clients.

Mueller first makes a few assumptions to illustrate this to clients. He assumes someone who is age 40 has $100,000 to invest, assumes a 9% return, and also assumes a 33% tax bracket. Even though in his example Mueller was using a 9% return, he noted that this concept holds true for any return used.

Looking at a taxable investment earning a 9% return, which nets to 6% after tax, the $100,000 will grow to $200,000 by age 52. By age 64, that amount will grow to $400,000. "If clients just did this, it would be spectacular. This shows the miracle of compounding," he said.

Next, taking those same assumptions and applying them to a tax-deferred vehicle, the $100,000 will grow to $200,000 by age 48. By age 56, it will grow to $400,000, and by age 64 to $800,000.

Compared to the taxable illustration, "you have twice as much money in the same time frame," he said.

Even though the $800,000 is subject to taxes, and Mueller assumes an aggressive 50% tax rate at retirement, the tax-deferred account totals over $400,000 at age 64.

Mueller asks his clients, "Which would you rather have?"

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.