Case Study: Leading with Listening & Education

Every once in a while a case comes along that stands out. Sometimes it’s a unique product. Sometimes, a unique situation.

But most of the time we get to creatively solve a problem for a hardworking client, like you, by working as a team, listening to our client’s goals, and finding a solution that meets those goals.

The Appointment

Our most recent case study started as a Medicare appointment for a woman about to turn 65. During her appointment, one of our agents took her through a comprehensive review called a Client Needs Assessment, something Sams/Hockaday agents routinely do to ensure we don’t miss anything. Her Client Needs Assessment revealed she had approximately $78,000 in a 401(k). Next, she was asked two direct questions:

1. When did she plan to use the money?

2. How much did she plan to use at that time?

Initially, her answers were uncertain. Like many clients, she had accumulated as much as she could throughout her working years, without much thought to what would come after she retired. However, as she and her agent unpacked those two important questions, a thoughtful goal began to contextualize.  

The client explained she wasn’t concerned about receiving retirement income from her 401(k). In fact, she didn't anticipate needing much additional income beyond her other retirement resources. What mattered to her was ensuring her son received a meaningful inheritance when the time came. She was interested in learning if there was a way to use her 401(k) to purchase a life insurance policy with her son as the beneficiary.  

Was there a way to do that? Indeed, there was.

The Team

Her primary concern about her 401(k) was that it consisted of all pre-tax dollars, so every time she withdrew to pay the life insurance premium, she would be hit with income tax.  

The agent began exploring ways to accomplish her goal of purchasing a life insurance policy to benefit her son, without having to withdraw “income” each month.

After reviewing available options, a strategy developed involving a rollover of approximately $75,000 from the existing 401(k) into a fixed annuity. The rollover itself is a non-taxable event, allowing the retirement assets to remain tax deferred. However, the interest the annuity would generate would be available after the first year and could be used to pay the premium of a life insurance policy.  

From there, the agent worked with the brokerage team to determine how much life insurance coverage could reasonably be supported by the interest generated from the annuity. Based on available rates at the time, the projected annual interest amounted to slightly more than $4,500.

The next step was simple: Determine how much approximately $4,500 per year could purchase in life insurance coverage.

The Outcome

Several illustrations were reviewed, including lower premium scenarios, to give the client a complete picture of her options. Ultimately, quotes indicated that a premium of roughly $4,500 annually could support a whole life insurance policy with a death benefit of approximately $150,000 (subject to underwriting approval).

For the client, that strategy immediately made sense.

Instead of simply leaving a retirement account to her son, she could potentially leverage the interest generated by a portion of those retirement assets to create a substantially larger death benefit. The annuity would remain intact, the interest would provide an ongoing source of premium funding, and the life insurance policy could create a legacy benefit that fit the client’s goals.

Conclusion

The opportunity did not begin with a discussion about annuities. It did not begin with a discussion about life insurance. It began with a client who was struggling to articulate what she truly wanted to accomplish. By taking the time to ask questions and understand the reason behind the retirement account, her agent gained insight into a concern that might otherwise have gone unnoticed.

In this situation, a Medicare appointment evolved into a legacy for the next generation. It was driven by understanding what mattered most to the client and building a strategy around that goal.