Drill-Down For Proposing A 419 Plan Or Straight Life

After the agent answered this, the software then asked the agent to enter for additional factors that might be important. (See box.)

Some or all of the additional factors might be important. The software indicated what solution might be available based upon the selections made, and it recognized that some characteristics were incompatible. For example, if control by the employer was essential in a particular case, a business deduction would not usually be available.

Similarly, if the number one priority for a customer is to have a tax deduction for the premium, then split-dollar would be out, but executive bonus would not.

Applying this to the question about using a Section 419 plan versus a straight life proposal, the critical starting point is to ask, "What is the purpose of the insurance?" After that, look at the questions in the box and any other issues important to the customer.

For example, if the customer does not like complexity and wants control over the insurance by the employer, then a Section 419 plan probably would not be appropriate. If answers to questions are incompatible, then the customer has to prioritize them. That is, the customer must choose what is more important among the characteristics. Once this is done, it might turn out that deductibility of the premium may well not be as important as the other issues. This helps in the decision-making.

The key to the sale, then, lies in knowing 2 things. First, know what the need is. Second, know what aspects of the sale are important to the customer, and in what priority.

To determine the second requirement, be sure to find out the aspects of the various available solutions. That way, the agent can assist the customer in choosing a solution.

If you know these 2 things, you will not be flummoxed just because a competitor tells your prospect that a tax deduction is available and you did not propose it. Indeed, a non-deductible premium may be just what is needed when considering the need and the aspects that are important to the customer.