We've compiled four situations where advisors who are experienced in the cross-sell see opportunity knocking.
1. Annuity arbitrage
When tax-favored wealth transfer is the goal, it's hard to match the benefits of cross-selling an annuity with permanent life insurance. John Freiburger says the best environment for using the two is within the framework of an irrevocable life insurance trust. For the insurance component, he favors universal life policies from a highly rated carrier that offer a guaranteed death benefit and a fixed premium. The annuity component can be a fixed, equity-indexed or variable product, depending on the profile of the client. In cases where income is a priority, Freiburger says he often recommends an immediate annuity of some form.
2. An insurance exchange with an LTCI upgrade
If, following an evaluation of a client's life insurance policy, it's clear the policy is outdated and not delivering the value it should for the price, financial consultant H. Stephen Bailey, RFC, CSA, principal at HB Financial Resources in Charlotte, N.C., will suggest the client exchange that policy for a new one via a tax-favored 1035 exchange. Then he'll often suggest tacking on a long term care insurance rider to the new policy, using value created by the exchange to cover the cost of the rider. This is a cost-effective maneuver, especially for seniors in good health who lack LTCI coverage.
