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Roughly 10,000 Baby Boomers turn 65 every day. A significant number of them own businesses. Most of those businesses have no formal succession plan, no funded buy-sell agreement, and no advisor who has ever asked them the right questions. That is not a planning problem — it is a market opportunity.

The Scale of Opportunity

The small business market in the United States is enormous and chronically underserved. According to the Small Business Administration, there are approximately 33 million small businesses in the U.S., and small businesses account for 98% of all U.S. employers. They employ more than 40 million people. These are not abstract statistics — they represent the clients already sitting in your book, and the prospects working in the office park down the street.

The demographic wave behind this market is just as compelling. Baby Boomers — the generation born between 1946 and 1964 — founded or built the majority of closely-held businesses in America. They are now in their 60s and 70s. Research consistently shows that approximately 40% of business owners expect to retire within the next ten years. That means the succession planning clock is running on a large portion of your potential market right now.

And yet, despite the urgency, up to 60% of business owners have no formal succession plan in place. Think about that number for a moment. Six out of every ten business owners have built something of significant value and have done nothing meaningful to protect it, transition it, or fund the transfer of it. For family-owned businesses — which represent 80% to 90% of all business enterprises — the situation is even more sobering: only 30% survive into the next generation, and just 12% remain viable into the third generation.

The gap between what business owners need and what they actually receive from their advisors is not anecdotal — it is documented and quantified. Research from the Spectrem Group surveyed affluent investors on the services they expect from their primary financial advisor versus the services they actually report receiving. The results are striking across the board. But one data point stands completely apart.

Business succession planning: 80% of business owners expect their advisor to address it. Only 1% report actually receiving it.

That is a 79-point gap — the single largest service gap in the entire Spectrem study. Investment management shows a 7-point gap. Even estate planning shows a 71-point gap. Business succession planning sits at the absolute bottom of the “services received” column while ranking among the highest in client expectations. The data could not be clearer: this is the most underserved planning category in the entire advisor-client relationship.

What Business Owners Actually Need

The term “succession planning” is often used loosely, and it is worth being precise. Succession planning is the broader process of identifying the key factors that make a business successful and creating a blueprint for what happens when the owner is no longer involved — whether through retirement, disability, or death. A buy-sell agreement is one critical component of that plan, but it is not synonymous with the whole.

For advisors working in this market, the buy-sell conversation is often the most immediate, most fundable, and most neglected piece of the puzzle. A buy-sell agreement is a legally binding contract that governs what happens to an owner’s interest in the business upon a triggering event: death, disability, retirement, divorce, or bankruptcy. Without one, the consequences can be severe — an unwanted co-owner, a family forced to liquidate, a thriving business dissolved because no one planned for the obvious.

There are two broad categories of buy-sell client, and both deserve your attention:

• Multi-owner buy-sell: Co-owned businesses — two or more owners who need a mutual agreement that addresses what happens to each owner’s interest if any one of them cannot continue.
• One-way buy-sell: Single-owner businesses with a designated successor — a family member, key employee, or management team member who is expected to acquire the business. This is the classic one-way buy-sell, and it is a larger market than most advisors recognize.

Over the course of my career, the single-owner client with a named successor has been one of the most consistently productive sources of buy-sell business. The owner has built something of value, knows who should carry it forward, and in most cases has never had a structured conversation about how that transfer gets funded. Life and disability insurance are the natural solution — and the conversation almost always opens a broader relationship.

Consider what is actually at stake for these clients. For most small business owners, the business is not simply a source of income — it is their single largest asset and, in many cases, their de facto retirement plan. Research from the Federal Reserve’s Survey of Consumer Finances found that the median net worth of self-employed families is more than four times that of wage-earning families. That wealth, however, is overwhelmingly concentrated in one place: the business itself. According to SCORE, 34% of entrepreneurs have no formal retirement savings plan of their own, and 18% intend to fund their retirement primarily through the sale or transfer of their business.

That is the hidden vulnerability in every single-owner buy-sell conversation. It is not just about what happens to the business at death — it is about whether the business transition actually produces the retirement resources the owner is counting on. A successful, funded succession plan is not a business planning document. For many owners, it is their retirement plan. When that transition fails — when the business dissolves, is sold under duress, or transfers without adequate funding — the financial consequences for the owner’s family can be severe and irreversible. That urgency belongs in every buy-sell conversation you have.

Why Disability Is Half the Conversation Advisors Are Missing

When advisors think about buy-sell planning, they typically think about death. Death is dramatic, it is certain eventually, and it is easy to illustrate. But research consistently shows that a business owner is significantly more likely to experience a long-term disability before age 65 than to die before that age. And in many respects, disability is more financially damaging to a business than death.

At death, the buy-sell is triggered cleanly. Insurance proceeds fund the purchase. The estate is settled. But disability creates ambiguity: Is the owner coming back? Who makes decisions in the interim? How long does the business wait before triggering the buy-out? An owner who is disabled but not deceased can become an involuntary silent partner — entitled to distributions, unable to contribute, and legally difficult to remove without a properly drafted and funded agreement.

Every buy-sell engagement should include a parallel conversation about disability insurance funding. The two coverages are complementary; they address the same fundamental risk from different angles, and the disability piece is often where the most significant planning gap exists. When you lead with both life and disability insurance in the context of buy-sell planning, you are providing the complete solution — and differentiating yourself from the vast majority of advisors who stop at life insurance alone.

Structure Matters: Matching the Agreement to the Client

Not every buy-sell is structured the same way, and the structure has meaningful planning and tax implications. There are six primary structures in common use, each with a distinct profile of advantages and considerations:

• Entity Purchase (Stock Redemption): The entity purchases the departing owner’s interest directly, funded by business-owned life insurance. Simple to administer, especially with three or more owners — but now carries meaningful estate tax implications following the Supreme Court’s 2024 ruling in Connelly v. United States.
• Cross-Purchase: Each owner personally owns insurance on the lives of the other owners, and uses the proceeds to purchase the departing owner’s interest. Provides a cost basis step-up for the surviving owners. Works cleanly with two owners but can become administratively complex with three or more.
• Cross-Endorsement Buy-Sell (CEBS): Each owner owns a policy on their own life and endorses a portion of the death benefit to the co-owners. Preserves personal ownership and basis step-up advantages. However, the endorsement of a death benefit for a rental charge may itself constitute a transfer for valuable consideration under IRC §101(a)(2) — a risk that is particularly acute for C and S corporation owners, where no clean statutory exception applies. The standard solution is to establish a partnership or LLC among the owners, bringing the arrangement within a recognized transfer-for-value exception. Note also that CEBS applies to life insurance only; disability must always be funded separately.
• Insurance LLC: A newly formed LLC owns the policies on all owners’ lives, providing the administrative simplicity of entity ownership while preserving basis step-up benefits and avoiding the Connelly estate tax issue.
• Trusteed Buy-Sell: An independent trustee holds and administers the policies, providing professional oversight and continuity. Particularly useful when owner relationships are complex or when impartiality in administration is valued.
• One-Way Buy-Sell: The business owner agrees to sell — and the designated successor agrees to buy — the business interest at a specified triggering event. The successor’s life insurance provides the funding. A simple, powerful structure for the single-owner market.

The Connelly Decision: A Review Trigger, Not a Crisis

In June 2024, the Supreme Court issued its ruling in Connelly v. United States, confirming that life insurance proceeds owned by a closely-held corporation are included in the fair market value of that corporation for estate tax purposes — without any offsetting deduction for the corporation’s buy-sell obligation. This was not entirely unexpected by tax practitioners, but it formalized a risk that had previously been theoretical for many entity purchase buy-sell clients.

The practical implication: business owners with entity-owned life insurance and meaningful estate tax exposure now have a planning problem that did not exist — or at least was not confirmed — before this ruling. For clients whose combined estate value (including the inflated business value) exceeds the applicable federal or state estate tax exemption, the entity purchase structure may no longer be the right answer.

For advisors, Connelly is not a crisis — it is a review trigger. Any client with an entity-owned buy-sell funded with life insurance warrants a structured conversation about whether the current structure remains appropriate given their estate size, ownership structure, and the magnitude of the death benefit relative to business value. The alternative structures — cross-purchase, CEBS, Insurance LLC — all avoid the Connelly problem while preserving the buy-sell function.

It is also worth noting that the urgency of a Connelly review is proportional to the client’s estate tax exposure. The One Big Beautiful Bill Act increased the federal estate tax exemption to $15 million per individual ($30 million per married couple), effective January 1, 2026, and made it permanent. Business owners whose total estates are comfortably below that threshold may have limited immediate exposure. However, for business owners in higher-value industries — or those whose business value, life insurance proceeds, real estate, and personal assets combine to approach or exceed $15 million — the Connelly issue is very much alive. And in the 17 states plus the District of Columbia that impose their own estate or inheritance taxes, the relevant threshold is often far lower, meaning state-level exposure can exist well before federal taxes come into play.

Three Questions That Open Every Door

The buy-sell conversation does not require a complex technical presentation to get started. In my experience, three questions — asked in the right context — open virtually every door:

1. When did you last conduct a formal valuation of your business?
2. When did you last review your buy-sell agreement and confirm your coverage is still adequate?
3. If you are the only owner – who buys this business when you are gone, and how will they pay for it?

The first question exposes the valuation problem — most owners either have no formal valuation or have not updated one in years, which means their coverage is almost certainly out of date relative to what the business is actually worth today.

The second question surfaces the review need — buy-sell agreements age poorly when untended. New owners join without being added to the agreement. Businesses grow, but coverage does not. The legal document says one thing; the funding says another.

The third question — the single-owner question — is often the most powerful one in the room. Most sole proprietors have never been asked it directly. They know who they want to take over the business. They have never had a conversation about how that person actually pays for it.

The Market Is Wide Open — For Those Who Ask

Here is the honest picture of where the buy-sell market stands today. The need is enormous, well-documented, and growing as the Boomer generation ages into retirement. The awareness among business owners of their own exposure is limited — not because they are unsophisticated, but because no one has walked them through the right questions. And the advisor community, broadly speaking, has underserved this market for years.

The service gap is real. Business owners consistently report that their financial advisors do not raise business planning topics proactively. The advisors who do — who develop fluency in buy-sell structures, who understand the Connelly landscape, who can speak to both life and disability insurance in the same conversation — are building practices that are meaningfully different from the competition.

Business owners are fiercely loyal clients. When they find an advisor who understands their world — who asks the questions no one else has asked, who brings solutions rather than products — they do not leave. And they refer. Every satisfied business owner client is a pathway to the next business owner client.

The tools and structures exist. The need is undeniable. The market is wide open. The only question is which advisors show up prepared to serve it.

Contact the AgencyONE Advanced Markets Department at 301.803.7500 for more information or to discuss a case!

Unique circumstances, unique needs, and unique opportunities require unique solutions.

Did you know the average NFL player’s career lasts just three years?

Financial planning for professional athletes presents both extraordinary opportunities and significant challenges. Earnings potential is often concentrated into a very short window, requiring advisors to think long-term and plan well beyond the athlete’s active career. In addition, the unexpected death or disability of a professional athlete can leave a spouse and family in serious financial difficulty if income abruptly stops.

Underwriting life, disability, and long-term care insurance for professional athletes introduces additional complexity due to carrier limitations and elevated risk factors. If an opportunity arises to insure a professional athlete in ANY sport, it is strongly recommended that you call AgencyONE first to discuss the appropriate underwriting path to achieve the client’s goals.

Definition: Professional Athlete

Individual professional athletes in sports such as tennis, golf, skiing, and auto racing are evaluated on a case-by-case basis; however, many of the same underwriting concerns apply.

Underwriting Risk Class

It is a common misconception that all professional athletes qualify for preferred or best risk classes. In reality, several carriers offer ONLY Standard rate classes for certain sports.

Because most professional athletes are younger, the pricing difference between Standard, Standard Plus, and Preferred may appear minimal – until coverage amounts reach millions of dollars, at which point the impact becomes significant.

Medical Exams and Testing

Despite the perception that professional athletes are young and exceptionally healthy, insurance carriers require full underwriting exams, including blood and urine testing.

Please refer to AgencyONE’s Exam Prep Video for guidance on all cases requiring paramedical exams.

Retention Limits and Carrier Risk Exposure

Team sports present a unique challenge due to concentration of risk – entire teams travel together. As a result:

• Carriers impose limits on coverage amounts
• Roster checks may be required prior to final underwriting
• Only one carrier currently offers flexibility beyond standard limits

Foreign Travel and Foreign Residence

Professional athletes frequently engage in off-season contracts abroad, and some U.S. citizens play for non-U.S.-based teams. These situations introduce additional underwriting risk and require specialized consideration.

Addendum: Amateur Athletes – Opportunity

With the implementation of NIL (Name, Image, and Likeness) agreements, student athletes – sometimes even at the high school level – can now receive financial compensation.

While very few will ultimately become professionals, this creates a powerful planning opportunity:

• Life insurance
• Disability insurance
• Long-term care contracts and riders

These solutions can be put in place before the athlete is classified as “professional,” avoiding many of the underwriting limitations that apply later.

Something to consider as you watch college football, high school basketball, or the Olympics.

Case Studies

Mr. Jones – Professional Basketball Player

This case really highlights excellent coordination under pressure. With $35 million of existing coverage already layered across multiple carriers, navigating the reinsurance JUMBO line was no small feat. The team’s ability to align capacity across reinsurers within just a few days – and secure Select Preferred rates despite the extensive drug and alcohol screening requirements common for pro athletes – is impressive.

The end result: a fully underwritten, permanent trust-owned solution of up to $50 million that matches the client’s substantial income and planning needs.

Mr. Smith – Professional Race Car Driver

This case represented a very compelling, multidimensional risk. Between NASCAR, multiple racing classes, and deep‑water scuba diving (150‑foot shipwreck dives), the hazards are both occupational and avocational. The split placement – Whole Life for the personal need and Term for the racing team’s Key Person protection – was a smart structural approach.

The end result: the negotiated Preferred base rating plus a modest flat extra reflects strong advocacy and thoughtful reinsurance alignment.

Overall, these cases highlight careful coordination, strategic carrier selection, and insightful reinsurance partnership – great examples of how complex risks can still result in favorable outcomes.

Conclusion

AgencyONE routinely addresses the underwriting complexities unique to professional athletes across all sports. One size does not fit all – we have a deep bench of solutions ready to deploy.

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Contact the AgencyONE Underwriting Department at 301.803.7500

for more information or to discuss a case.

While your client was aware that LTC costs could be high, they were shocked when they saw the current costs. Long-term care coverage had always been something your client meant to consider, but now it is urgent.

Between standalone LTC coverage, LTC riders, hybrid policies, terminal illness riders and Accelerated Benefits Riders (ABRs) there is a tremendous amount of information to digest. Luckily, the AgencyONE case design team can help you sort through all the options to deliver the best solution for your clients.

There are three main options for LTC coverage:  

• Traditional LTC Insurance;
• Hybrid LTC (Asset Based); and
• Life Insurance with LTC Rider.

Traditional LTC Insurance: There are a limited number of carriers that provide this option. It only covers long term care costs and is usually funded on an all pay basis. Premiums and/or benefits are not guaranteed and if coverage is unused the premiums are gone – use it or lose it. This is purely an LTC protection product.

Hybrid LTC Insurance or Linked Benefit Insurance: This combines LTC benefits with life or annuity coverage depending on the product solution and can be funded for specific product durations – 1, 5, 10, 15 years, age 100. It also accepts 1035 rollovers from other existing life/annuity products. These options pay LTC claims if needed but provide a death benefit to heirs if not used.

Life Insurance with LTC Rider: This is a life insurance product design with an optional LTC rider added. The focus is on death benefit but if the client experiences an LTC need they can advance a portion of the death benefit to cover LTC costs. Amounts not used for LTC pass to the beneficiary as a death benefit.

The chart below shows a comparison between the three options.

The best place to start this LTC conversation is by gathering information about the client’s needs, goals, and assets:

1. Is there a death benefit need, or is covering LTC costs the primary focus? If the main priority is death benefit, then Life with an LTC rider should be the focus. If the client wants LTC with growth and longer benefit periods, a hybrid LTC product would be more appropriate. For a younger client, an increasing benefit is usually attractive.
2. Do they have an inforce policy with cash value that can be repurposed?
3. Will the client have changing budget restrictions and need premium flexibility? Client age and payment duration are critical factors here. The older the client, the more limited the options become. Age helps us determine the available options and the pay periods offered. Life with a rider is the most flexible when it comes to premium pay periods. Hybrid/LTC may be limited to 1, 5, 10, or 15-pay or life pay based on issue age.

With these basics as a starting point, AgencyONE can build designs using different options to assess the benefits and drawbacks of each:

Monthly benefit need or starting premium: Determine the monthly benefit needed for LTC or determine the premium the client wants to pay to start. Most cases require a second run after the initial premium since costs can be more than the client expects to pay. We need to stay within their budget.

Duration of benefit: This is sometimes driven by either the agent’s or the client’s experience with an LTC claim. Most life policies pay a 2% of face amount LTC benefit for 50 months. Hybrid/LTC policies can be designed for as little as 2 years to a maximum lifetime benefit.

Married/couple considerations: If the client is married or part of a couple, ask if they want individual coverage, a shared pool of months, or something unlimited. Different products and carriers are available for each option.

I find it helpful to discuss these types of cases with the advisor to fine-tune the design and explain the differences. We can also illustrate both designs and help explain the pros and cons of each option.

Let’s review a sample case that AgencyONE recently worked on. The request was for $15,000 a month in Long Term Care Benefits on a 60-year-old male and a 58-year-old female. These clients have a family member in a facility who has been under care for almost 4 years. The advisor wanted a level premium on a lifetime basis to keep the premium lower. He did not have a premium commitment yet but was asked by the client to provide $15,000 a month in LTC benefit.   The advisor wasn’t sure if a death benefit was needed, but he preferred life policies with LTC riders because he was unfamiliar with how hybrid LTC products worked. This scenario required running both product types. I won’t get too deep into product specifics here, since the available options – UL, IUL, GUL, and SUL – could easily fill another ONE Idea.

The Life Insurance with Rider Design: to obtain $15,000 a month for 50 months we need a policy death benefit of $750,000 for each client.

• 60-year-old male client, Preferred, $750,000 with LTC rider. Annual premium would be $12,900 per year.
• 58-year-old female client, Preferred, $750,000 with LTC rider. Annual premium would be $10,219 per year.
• Survivorship IUL guaranteed to age 105. Provides $15,000 a month of benefit for each client for 50 months. Annual premium would be $23,573 per yr.

The Hybrid/LTC Design: obtain $15,000 a month benefit for 5 yrs. This option doesn’t offer a 50-month choice, and the client wanted more than 4 years of coverage due to their recent LTC claims experience.

• 60-year-old male client, 5 year benefit without inflation. Annual premium is $13,503
• 58-year-old female client, 5 year benefit without inflation. Annual premium is $12,946
• Joint Hybrid LTC product with a 96 month shared pool benefit. Annual premium is $18,027
• Joint hybrid LTC product with a lifetime benefit available for each client. Annual premium to age 95 is $20,340

These are just starting numbers, but they offer plenty to review. Here are some key observations:

Life Insurance with LTC Rider:

• The death benefit is fixed to obtain the $15,000 monthly benefit
• We can shorten the solve age or pay period, but the client will need $750,000 of death benefit to obtain $15,000 per month for 50 months.

Hybrid Policy:

• Has a more fixed premium structure, but we can save some money by starting with a lower monthly benefit and adding inflation protection.
• Would allow us to obtain $15,000 a month at a future point – for example, $15,000 a month at age 70, with the benefit continuing to grow each year.
• An inflation strategy can be built into a hybrid LTC design but not a life with LTC rider.

I have not seen many cases sold with a $15,000 a month benefit – the premium may be too high for most clients. AgencyONE can scale these back to smaller policies that fit into the client’s budget.

For hybrid LTC products AgencyONE has carrier prequalification information that may help you determine if your client qualifies for coverage. We can also submit quick-quote requests to carriers, as needed, on any medical issues.

There are many ways to illustrate LTC and Life coverage. The first step is determining what the client ultimately wants to protect. This requires collecting information about budget, benefit requirements, and any underwriting concerns.

Reach out to the AgencyONE Case Design team at 301.803.7500 on your next case to talk about your clients and how we can help.

The $2 Million Estate Planning Opportunity Your Clients Can’t Afford to Miss

With the One Big Beautiful Bill Act of 2025, the federal estate tax exemption increased from $28 million per married couple to $30 million, effective January 1, 2026. For your sophisticated clients who already maxed out their previous exemptions with gifts to irrevocable trusts or otherwise, this raises a critical question: What’s the smartest way to use this additional $2 million of exemption capacity?

I ran the numbers on three different strategies for clients who already have substantial wealth both inside and outside their estates. The results tell a compelling story about leverage, timing, and tax efficiency.

The Scenario

Consider a married couple—he’s 65, she’s 62—with over $50 million in total assets. Before 2026, they took advantage of the full $28 million exemption gift to a series of irrevocable trusts (including SLATS for each other). Now, as of January 1, 2026, they have an additional $2 million in exemption space and substantial assets still in their taxable estate.

They have three clear options:

Strategy 1: Keep the $2 Million in the Estate
Leave the money in their taxable estate, invested at 7% return (2% dividends, 5% growth, 0.5% advisory fee). At death, the accumulated value gets hit with 40% federal estate tax. (Note: If your clients live in a state with estate or inheritance taxes—such as New York, Massachusetts, Connecticut, Maryland, or Oregon—the results become even more dramatic, as combined federal and state transfer taxes can reach 50-56%.)

Strategy 2: Gift to Trust, Invest the Assets
Transfer $2 million to an existing irrevocable trust and invest it with the same 7% return. This avoids estate tax entirely, but assets don’t get a step-up in basis at death. Heirs pay 28.8% capital gains tax (federal, state, and NIIT) when they liquidate.

Strategy 3: Gift to Trust, Purchase Life Insurance
Transfer $2 million to the trust and have the trustee purchase second-to-die survivorship life insurance. No estate tax, no income tax on death benefits, and immediate 4.6-to-1 leverage.

The Numbers Tell a Powerful Story

Here’s what happens to that $2 million gift under each scenario at key ages:

At Age 70 (5 years):

• Strategy 1 (Keep the $2 Million in the Estate): $1.66 million to heirs (after estate tax)
• Strategy 2 (Gift to Trust, Invest the Assets): $2.63 million to heirs (after capital gains tax)
• Strategy 3 (Gift to Trust, Purchase Life Insurance): $9.71 million to heirs (tax-free)

At Age 85 (20 years):

• Strategy 1: $3.76 million to heirs
• Strategy 2: $5.47 million to heirs
• Strategy 3: $9.71 million to heirs

At Age 95 (30 years):

• Strategy 1: $6.47 million to heirs
• Strategy 2: $9.16 million to heirs
• Strategy 3: $9.71 million to heirs

The chart below shows the complete wealth transfer projection:

Summary of Values chart shows projected wealth transfer to heirs across three strategies from age 65 to 100:

1. The green line (insurance strategy) remains flat at $9.7M throughout; however, for the first four years, the Estate Preservation Rider substantially increases the death benefit if the proceeds are brought back into the estate due to the three-year contemplation-of-death rule.
2. The yellow line (invested trust) starts at $2.1M and gradually increases, reaching $9.2M by age 95.
3. The orange line (keep in estate) starts at $1.3M and grows more slowly, reaching $6.5M by age 95.]

The Critical Insights

Insurance (Strategy 3) provides massive early advantage. In the first 20 years, the insurance strategy delivers $4 – 7 million more to heirs than the invested trust. If death occurs at age 70 (well within life expectancy for a 65-year-old couple), the insurance delivers $7.08 million more than the invested alternative—even assuming the invested portfolio achieves a robust 7% annual return.

The invested trust (Strategy 2) narrows the gap over time, but insurance still wins. By age 95, after 30 years of 7% compounding, the invested trust has grown to $9.16 million—coming within $556,000 of the insurance death benefit. This demonstrates that even with enhanced market returns (7% year over year) the tax-free leverage of life insurance remains superior throughout the most statistically relevant timeframe.

Keeping assets in the estate (Strategy 1) loses at every age. The 40% federal estate tax hit is substantial enough to make this the worst option throughout. Even after 30 years of growth, heirs receive only $6.47 million—$2.69 million less than the invested trust and $3.24 million less than insurance. For clients in states with additional estate or inheritance taxes (New York, Massachusetts, Connecticut, Maryland, Oregon, and others), the gap widens even further as combined transfer taxes can reach 50-56%.

The Real Question: How Do You Bet?

This isn’t just about math—it’s about risk and certainty.

Strategy 2 (invested trust) requires betting that:

• Both spouses live past age 95 (beyond joint life expectancy)
• Markets deliver consistent 7% returns for 30+ years with no major downturns
• There are no significant market corrections near death
• Capital gains tax rates don’t increase from current 28.8% combined rate
• The family can afford to wait decades for the invested trust to catch up

Strategy 3 (insurance) provides:

• $9.71 million guaranteed from day one, regardless of when death occurs
• Zero dependence on market performance or sequence of returns
• Complete tax exemption (no income tax, no estate tax)
• Maximum benefit during the statistically most likely timeframe (ages 70-90)

Even with optimistic 7% return assumptions on invested assets, the certainty of insurance outweighs the possibility of earning an extra $500K-$1M if both spouses live into their late 90s and markets cooperate perfectly for three decades.

The Preliminary Funding Account (PFA) Structure

The life insurance is funded through a Preliminary Funding Account (PFA), a tax-efficient structure that makes this strategy elegant:

• Client makes one $2 million gift to the trust (using the new exemption)
• PFA earns 4.25% guaranteed interest on the balance
• PFA automatically pays four annual premiums of $531,636
• Interest earned ($126,542 over four years) effectively reduces net cost
• Avoids Modified Endowment Contract (MEC) classification

Total premium outlay: $2,126,542 creates $9,712,276 in guaranteed death benefit. That’s 4.6 to 1 leverage on day one—leverage that would take the invested trust 30 years to approach.

Beyond the Numbers: Strategic Advantages

Certainty vs. Uncertainty
With insurance, the family receives $9.7 million tax-free regardless of market conditions, interest rates, or timing of death. There’s no hoping the portfolio performs well or that death doesn’t occur during a market downturn.

Liquidity When It Matters Most
This couple already has $28 million in their trust plus substantial assets in their estate. Adding $9.7 million in liquid, tax-free insurance proceeds provides flexibility at death—pay estate taxes without forced sales, equalize inheritances among children, fund charitable intentions, or provide business succession liquidity.

State Tax Amplification
The analysis shown here reflects federal estate tax only (40%). For clients in the 17 states (plus DC) with state-level estate or inheritance taxes, the advantage of moving assets out of the taxable estate becomes even more pronounced. Combined federal and state transfer taxes can reach 50-56%, making both Strategy 2 and Strategy 3 significantly more attractive relative to keeping assets in the estate.

Protection Against Legislative Changes
Once the gift is made, it is permanent. If Congress reduces the exemption back to $5 million or $10 million next year, they are grandfathered. The decision is locked in regardless of future policy changes—an important consideration given political uncertainty.

Complements Existing Planning
The couple’s $28 million in previous gifts is invested and compounding in their trust, providing long-term wealth accumulation. This additional $2 million used for insurance provides immediate leverage and guaranteed liquidity—a balanced, diversified trust strategy.

Addressing the Objections

“But the invested trust eventually catches up and could even surpass insurance.”
True—if both spouses live past age 95-96, markets consistently deliver 7% annual returns for three decades, and there are no major corrections near death. But that’s a 30+ year bet on longevity and exceptional market performance. During the first 25 years (the statistically most likely timeframe), insurance delivers $2.6 million to $7.1 million more to heirs. Most families don’t optimize estate plans for the best-case scenario—they optimize for certainty.

“What if they live to age 100?”
Even at age 100, assuming continued 7% returns with no significant market disruptions, the difference is modest. The invested trust would reach approximately $11.5 – 12 million while insurance remains at $9.7 million—an advantage achieved only after 35 years of above-average market performance. That’s a 2% annual advantage in exchange for 35 years of market risk and uncertainty.

“Can’t the trust hold assets indefinitely and avoid capital gains tax?”
In theory, yes. In practice, trusts eventually distribute or liquidate positions for various reasons—death of beneficiaries, changing needs, trust termination. When liquidation occurs, the 28.8% capital gains tax applies. The trust doesn’t get a step-up in basis at death.

“What if estate taxes are eliminated?”
Then they have a $9.7 million tax-free death benefit in a protected trust. Given current federal debt levels ($36+ trillion) and political uncertainty around wealth transfer taxes, betting that estate taxes disappear permanently seems optimistic.

The Conversation Your Clients Need Today

For clients who have already maximized their $28 million exemption and now have access to an additional $2 million, this is the discussion to initiate:

“On January 1st, you received an additional $2 million in estate tax exemption. This could be temporary—Congress could reduce it again. You’ve done excellent planning with your existing trust. Now you need to decide: what’s the smartest way to use this last $2 million of exemption space?”

Walk them through all three scenarios:

Strategy 1 (Keep in Estate): At age 85, heirs receive $3.76 million after estate taxes—$5.95 million less than insurance.

Strategy 2 (Invest in Trust): At age 85, heirs receive $5.47 million after capital gains taxes—$4.24 million less than insurance. By age 95, this narrows to $556,000 less than insurance.

Strategy 3 (Insurance in Trust): At every age from 65 to 95, heirs receive $9.71 million, tax-free, regardless of market performance or timing.

For sophisticated planners, the analysis often clarifies quickly. They can see that:

• Strategy 1 is clearly inferior at all ages
• Strategy 2 requires 30+ years to approach insurance benefits
• Strategy 3 provides immediate, guaranteed leverage with zero market risk

The question becomes: Do you want certainty and maximum benefit during the most statistically likely timeframe, or do you want to bet on exceptional longevity and perfect market performance?

Why This Matters Right Now

Your clients who maxed out their $28 million exemption are your most sophisticated planners. They understand proactive wealth transfer and have already demonstrated commitment to moving assets out of their estate.

This $2 million represents an opportunity under current law to leverage gifting exemptions. Given political uncertainty and federal debt levels, there’s no guarantee this expanded exemption will remain available.

For clients with $50+ million in total wealth, this decision is about optimization and completing their estate plan. The difference between acting strategically and doing nothing could be $3-4 million in additional wealth transfer to the next generation.

Next Steps

For clients who previously maxed out their estate tax exemptions:

1. Identify prospects: Focus on ultra-high-net-worth households who made substantial gifts to trusts prior to 2026 and now have access to the additional $2 million exemption space
   
2. Run customized illustrations: Prepare analysis showing specific leverage and benefits for each client’s exact age and health profile
   
3. Coordinate with existing advisors: Work with client’s estate attorney and CPA—the trust structure is already in place, which simplifies execution
   
4. Present the complete analysis: Show all three strategies and let clients see the trade-offs between certainty (insurance) and potential upside (invested trust after 30+ years)
   
5. Execute efficiently: Once decided, move quickly to structure the PFA, secure policy approval, make the gift, and implement premium payments

The $2 million planning opportunity is here for your most sophisticated clients. They’ve already done the hard work of establishing their trust and making substantial gifts. This is the final chapter—using that last $2 million of exemption space to create maximum benefit and certainty for their family.

The window may not stay open indefinitely. Don’t let it close without having this conversation.

For detailed illustrations demonstrating how this three-scenario analysis applies to specific client situations, please contact Gonzalo Garcia, CLU, directly at 301.803.7520 or gonzalo@agencyone.net. Customized projections are available for clients across a range of ages and estate values.

For as long as I have been in this business, I’ve heard the same refrain from otherwise thoughtful financial planners: “Just buy term and invest the difference.”

It sounds clean, rational, and data-driven. Term insurance is inexpensive, markets are presumed to cooperate, and spreadsheets can be built to show very attractive results. On paper, “buy term and invest the difference” (BTID) seems almost unassailable.

But “on paper” is not where our clients live.

In that world, a pure investment-only or BTID approach is often fragile at precisely the time when clients need the most certainty.

That is why I paid very close attention to the recent Ernst Young (EY) / Finseca research on holistic retirement planning. It does something many of our industry debates do not: it runs the numbers objectively and then tests how integrated strategies behave in the real-world scenarios our clients actually face.

The short version? The BTID / investment-only mantra does not fare well.

In this article, I will walk through what the EY / Finseca work shows, why BTID fails the retirement reality test, and how you – as an advisor – can reposition permanent life insurance (PLI) as a core, intentional asset in your clients’ retirement plans, not a product to be defended or apologized for.

What Is BTID, Really?

Let’s define our terms.

“Buy term and invest the difference” is the idea that a client should:

• Purchase a relatively low-cost term policy to cover temporary protection needs; and
• Take the premium savings versus permanent life insurance and invest that “difference” in a diversified portfolio, capturing market returns and ultimately self-insuring.

Conceptually, this is not crazy. Term insurance is a powerful tool when budgets are tight and liabilities are clearly time-limited. The problem is not that BTID is always wrong. The problem is that BTID has been elevated to near-religion in some corners of the planning world, especially by those who see permanent life insurance as “too expensive” or “just a bad investment.”

The EY / Finseca research is a needed corrective to that narrative.

What EY & Finseca Analyzed

Their conclusion was clear: when you blend permanent life insurance and deferred income annuities with increasing income potential into a plan, those integrated strategies can outperform investment-only approaches across key measures of success.

The more recent EY / Finseca study updates and extends that work. It looks at multiple household types, different ages, and a range of contribution patterns and retirement ages. It stress-tests retirement outcomes not just under rosy market conditions, but also under scenarios where Social Security benefits are reduced and market returns are less generous than historical averages.

A few themes emerge from the research:

• Integrated, “holistic” plans win. Across scenarios, strategies that combine investments with permanent life insurance and deferred income annuities tend to deliver better results than pure investment-only portfolios, especially when the client wants a combination of income and legacy.
• You don’t need to “over-insure.” In many of the modeled cases, allocating roughly 30 cents of each dollar of retirement savings to PLI and annuities – and 70 cents to traditional investments – produced superior outcomes versus putting the full dollar into an investment-only strategy.
• It’s not just about returns. The integrated strategies generally provided more stable income, better downside protection, and more reliable legacy values – particularly when markets underperformed or when Social Security benefits were cut in the stress tests.

In other words, this is not a “whole life vs S&P 500” cartoon. EY is looking at full household outcomes: after-tax income, sustainability of withdrawals, legacy values and resilience to adverse scenarios. And when you look at the whole picture, integrated planning that includes permanent life insurance and annuities tends to look objectively better for most households than an investment-only or BTID approach.

Why BTID Looks Good in Theory but Fails in the Real World

There are several reasons.

1. BTID assumes perfect behavior. BTID only works if clients actually “invest the difference” consistently, stay the course through volatility, and resist the temptation to spend the surplus or de-risk at exactly the wrong time. Many of us have seen the opposite:

• Contributions get skipped during market downturns or when budgets get tight.
• Clients shift to cash after a correction and miss the recovery.
• Lifestyle creep quietly absorbs the “difference” that was supposed to be invested.

Permanent life insurance, by design, forces a level of disciplined funding. Premiums are not optional. That “forced savings” quality is exactly what many households need if they are ever going to accumulate a side fund that can act as a tax-advantaged buffer in retirement.

2. BTID ignores sequence-of-return risk. BTID illustrations usually assume straight-line returns. Real portfolios do not cooperate. The order in which returns are earned – especially in the early years of retirement – has an enormous impact on sustainability.

When the only tools you have are volatile investments and maybe a term policy that expires, your client’s entire retirement income plan is exposed to market shocks. When you add permanent life insurance cash values and guaranteed lifetime income from annuities, you have levers to manage sequence risk:

• Clients can take tax-advantaged loans or withdrawals from life insurance cash values during down markets instead of selling equities at a loss.
• Deferred income annuities can provide a floor of guaranteed income that does not care what the S&P 500 did last year.

The EY research shows that these “shock absorbers” matter. Integrated strategies are simply more resilient when the sequence of returns is unfavorable than investment-only or BTID designs.

3. BTID focuses only on dying early, not living long or getting sick. BTID is implicitly a “die young and healthy” strategy. Term insurance is cheap and effective if a client dies during the level term period, while the portfolio is still growing. But what if they live a long life? What if they suffer a health shock that forces early retirement or long-term care expenses?

Permanent life insurance and annuities address multiple risks simultaneously:

• Mortality risk – provide liquidity whenever death occurs, not just during the cheap term window.
• Longevity risk – especially when combined with lifetime income annuities that hedge against outliving assets.
• Morbidity risk – when policies are designed with long-term care or chronic illness benefits, or when death benefits can be used to replenish assets spent on care.

BTID typically has only one lever: “hope the portfolio is big enough.” That is not a strategy; it is wishful thinking.

4. BTID underestimates the tax advantages of permanent life insurance.

The tax treatment of permanent life insurance is unique. Cash values grow on a tax-deferred basis, and when structured properly, withdrawals to basis and policy loans can provide access to cash values with very favorable tax treatment. Death benefits are generally received income-tax-free by beneficiaries and can be structured to mitigate estate and transfer taxes in larger cases.

Investment-only or BTID strategies create taxable friction almost everywhere: dividends and interest, capital gains when rebalancing, ordinary income taxation on qualified accounts, and potentially estate and income tax layers at death.

EY’s modeling incorporates these tax dynamics. Once you account for taxes over a full lifetime – not just during accumulation – integrated strategies have a structural advantage that a simplistic “term plus side fund” illustration often misses.

How to Reframe the Conversation with Clients – and Other Advisors

Following are a few practical reframing ideas you can use.

1. Talk about risks, not products. Instead of opening with “whole vs term” or “annuities vs investments,” start with the four big household risks we are supposed to help clients manage:

• The risk of dying too soon (mortality risk)
• The risk of living too long (longevity risk)
• The risk of getting sick along the way (morbidity and long-term care risk)
• The risk of paying too much in taxes (tax drag during life and at death)

Then ask: “Which of these risks does a pure investment-only or BTID strategy actually solve for? And which are left completely unhedged?”

That is where permanent life insurance and annuities start to feel less like “products” and more like risk-management tools built into the family balance sheet.

2. Position permanent life insurance as a retirement asset, not just a death benefit. The EY / Finseca work reinforces what many of us have seen in practice: permanent life insurance behaves like a multi-purpose asset in retirement:

• A source of tax-advantaged supplemental income
• A volatility buffer during market drawdowns
• A dedicated pool of tax-efficient legacy capital
• A funding source for Roth conversions or tax-accelerating strategies
• A way to backstop long-term care and health shocks

When the only story we tell is “life insurance is for when you die,” we make it very easy for a client (or their investment-only advisor) to say, “You don’t need that anymore – you’re retired.”

3. Use BTID as a phase, not a religion. There are absolutely times when term plus aggressive investing is appropriate. Young families with limited cash flow and big human capital may need maximum death benefit per premium dollar. I am not arguing that permanent life insurance must be the answer in every situation.

What I am arguing – and what the EY work supports – is that BTID should be seen as a phase in a client’s financial life, not an ideology that must be defended until death. At some point, clients transition from “maximum leverage per dollar” to “maximum certainty, flexibility and control.”

That is where intentional, well-designed permanent coverage – sized appropriately and integrated with the overall retirement and estate plan – begins to shine.

A Simple Advisor Checklist

1. Has this plan explicitly addressed mortality, longevity, morbidity and tax risk – or only investment risk?
2. If markets underperform in the first 5–10 years of retirement, where will income come from without permanently impairing the portfolio?
3. If Social Security benefits are reduced in the future, what levers exist to replace that income?
4. How will this client pay for long-term care or a significant health shock without cannibalizing their legacy goals?
5. What tax rate will the next generation pay on inherited IRAs, annuities and other tax-deferred assets – and do we have a plan to fund that liability?
6. If the answer to any of the above is “we hope the portfolio is big enough,” could permanent life insurance and annuities play a more intentional role?

The Bottom Line

The EY / Finseca research is not an insurance carrier brochure. It is independent, quantitative work that asks a fair question: “What happens when we integrate permanent life insurance and annuities into retirement planning compared to investment-only strategies?”

The answer, across a wide range of reasonable assumptions, is that holistic plans that combine investments, permanent life insurance and guaranteed income solutions tend to produce better outcomes for real households – more sustainable income, more reliable legacy, and more resilience when the world does not behave according to our Monte Carlo assumptions.

As advisors, our job is not to defend a slogan like “buy term and invest the difference.” Our job is to help clients navigate uncertainty – mortality, morbidity, longevity and taxes – with as much intentionality and evidence as possible.

BTID had its moment. The data – and our clients’ lived realities – are telling us it is time to move on.

Contact the AgencyONE Advanced Markets Team at 301.803.7500 for more information or to discuss a case.

Policy reviews may not be the flashiest topic, but they are a vital part of what we do every day at AgencyONE. Many consumers (and even some advisors) assume that once a life insurance policy is purchased, you can “set it and forget it.” But life doesn’t work that way. Your clients’ circumstances evolve, and their life insurance protection should evolve with them. Regular reviews ensure their coverage continues to support their goals, needs, and financial future.

As your clients’ families, incomes, and liabilities grow, their needs can too. They may want to pivot to a cash value-oriented policy to provide future income or to pay for college.  As your clients age, their needs may shift toward estate planning or preparing for long-term care needs.

A straightforward question like “When was the last time your policy was reviewed?” may be just the nudge a client needs to schedule that meeting you’ve been trying to get on the calendar.

Reasons Your Clients Need Inforce Policy Reviews

• Adapting to Life Changes: Major life events such as marriage, divorce, the birth of a child, purchasing a home, or a new job can significantly alter a client’s financial obligations and require updates to their coverage.
• Ensuring Adequate Coverage: A policy review helps determine whether the current death benefit is still adequate to cover existing debts – like a mortgage – and future expenses – such as college tuition or retirement needs. It also highlights potential coverage gaps that could leave beneficiaries financially vulnerable.
• Updating Beneficiary Designations: Life events often necessitate changes to named beneficiaries to ensure the policy proceeds go to the intended individuals, avoiding legal complications or unintended payouts down the road.
• Optimizing Costs and Benefits: The insurance market continually evolves, and new products with better features, lower costs, or improved underwriting opportunities (eligibility changes after positive health improvements like quitting smoking) may be available. These updates can save your clients money or significantly enhance their coverage.
• Evaluating Policy Performance: For policies with a cash value component (like whole or universal life), reviews ensure the policy is performing as expected and not at risk of lapsing due to underfunding or lower-than-projected growth rates.
• Estate and Tax Planning: A review helps ensure that the policy continues to align with broader estate planning objectives, including tax efficiency and asset distribution strategies. 

How Inforce Policy Reviews Benefit the Advisor

• Building Trust and Credibility: Proactive, regular check-ins position you as a trusted advisor who genuinely cares about the client’s long-term financial well-being, rather than just being a transactional salesperson.
• Enhancing Client Retention and Loyalty: Clients who feel well-served are less likely to shop around for insurance or financial advice elsewhere. This helps to improve retention rates and foster long-lasting relationships.
• Identifying New Business Opportunities: Reviews naturally uncover new needs or coverage gaps and lead to opportunities for cross-selling additional policies (e.g., disability riders, long-term care options) and/or gaining referrals from satisfied clients.
• Professional Oversight: It is a professional best practice that helps ensure policies remain “in force” and appropriate for the clients’ circumstances over time. Reviews also help to protect the client and the producer from potential issues in the future.

You have successfully scheduled a meeting with your clients to review their in-force coverage, but it’s been a while since you last discussed their estate or life insurance plans. What exactly do you need to conduct a thorough policy review?

Option A: The Quick “High Level” Review

You can then better gauge what is important to the clients. While a new premium may be higher, including a living benefit, a longer guarantee, or shorter premium duration may be attractive. Conversely, some clients may no longer need the same level of death benefit and would be happy to learn they can reduce coverage and premiums or eliminate them entirely with a full paid-up contract. To provide a meaningful evaluation of their current coverage, in-force illustrations are essential.

Option B: The “Detailed” Review

If you wrote the original policy, AgencyONE can help obtain inforce solves. If you are not the agent on the inforce policy, we recommend calling the carrier along with the policy owner, who will authorize the carrier to speak with you. We can then review the information with you to determine whether new coverage might be a better fit or if adjustments to the existing policy could enhance its overall design.

Option C: The “Works” Review

A detailed review helps us narrow those needs, allowing our Underwriting team to negotiate the best possible offer and deliver the right result.

Real Examples of AgencyONE Inforce Reviews

Case One: Male age 54 with an inforce whole life policy.  Dividend performance had been greatly reduced and, as a result, the projected death benefit did not show much growth over time.  Current death benefit was $890,000, the premium was $8,000 annually and the current cash value was approximately $180,000.  While cash value was not the focus, the advisor still wanted to show alternatives that would maintain cash accumulation inside the contract. 

1. Maximum death benefit – using an Indexed UL, the full 1035 of $180,000 and premium of $8,000 annually will buy $1,257,580 of death benefit guaranteed to age 105 with the upside of index-based interest crediting.
2. Introduce LTC benefit – the same no-lapse solve to age 105 but with a $500,000 pool of LTC allowing for a $10,000 monthly benefit and 50-month benefit period.  The new death benefit solve – Guaranteed to age 105 with LTC – is $1,204,650.  While this is a small reduction from option A, it adds a valuable Living Benefit.
3. A full 1035 to fund an LTC focused hybrid policy.  This option has a more robust LTC benefit with a 6-year benefit period and monthly benefit that grows 3% annually.  Initial monthly benefit was $12,794 per month.  The advisor believed the monthly benefit was too high and was not sure if the client would think it was necessary.
4. Since the hybrid solve generated too much monthly benefit, we designed a split 1035 design using the original premium and dump in.  Using about a third of the 1035 we were able to buy a hybrid policy with a $5,000 monthly benefit with a 3% COLA. We used the remaining $110,000 of the 1035 and the $8,000 premium to buy a Guaranteed IUL to age 105 resulting in $925,000 of guaranteed coverage on top of the increasing LTC pool.

The result? The advisor and client liked the combined death benefit and hybrid options but also wanted to see a shorter payment stream.  The advisor will obtain a short-pay inforce illustration for AgencyONE to review and compare once it is received.

Case Two: Male age 60 with a $1.1MM Whole Life policy.  He pays $7,000 annually and has a current cash value of $510,000.  Ideally, the client wants to get more death benefit and eliminate the $7,000 premium he pays.  The initial conversation revealed that the client’s wife – 56 years old – is underinsured. The couple would consider buying up to $1MM of coverage on her if the premium was not considered too high.  AgencyONE proposed several alternatives including:

1. A $510,000 1035 exchange, with no premium, provides $1,695,630 in guaranteed death benefit to age 105.
2. The same $510,000 1035, with no premium, can buy $1,580,488 of death benefit guaranteed to age 105, along with a full LTC rider.  This would provide 4 years of LTC with a maximum monthly benefit of $32,927 monthly.
3. The additional $1,000,000 coverage on his wife would cost $11,753 per year. 
4. Since the client wanted to eliminate his $7,000 premium, we added another scenario applying that amount of his current premium to his wife’s new policy.
5. $7,000 of premium annually will buy $592,666 of coverage guaranteed to age 105.
6. Adding the LTC rider and keeping the premium the same would drop the death benefit to $519,562, guaranteed to age 105.  This adds an LTC monthly benefit of $10,824 for 48 months.

The result? To be determined, however, while the clients are still considering their options and obtaining another round of inforce illustrations, they intend to move forward with an application on the wife using the reallocated premium.  

Case Three: A review of a family insurance portfolio.  This family had 4 inforce Whole Life policies. Two on the husband and two on the wife.  All of the policies were over 20 years old and, unfortunately, both clients are now considered uninsurable.  They had a few missed premium payments over the years which resulted in loans on 3 of the 4 policies.  After obtaining the inforce ledgers, AgencyONE was able to make the following recommendations:

1. Policy one had no loans and large enough dividend payments to cover the premium payments.  We changed the dividend option to reduce the premium with the remainder going to paid-up additions.  This freed up premium for reallocation towards loan repayments on policy 4.
2. Policy two had a smaller loan.  We used the dividends to reduce the loan over the next 3-4 years.  The client was advised to keep paying the premium as scheduled and the loan would eventually be paid off using the dividends over time.  After the loan is extinguished, we will review switching the dividend option to reduce premium and paid up additions.
3. Policy three was paid up but had a small loan.  Again, we used the dividends to reduce the loan over time and then plan on switching to paid up additions after the loan is extinguished.
4. Policy four was quite over loaned with the current dividends purchasing paid up additions. We modeled a surrender of the non MEC paid up additions pool to reduce the loans significantly. Changing the dividend options to reduce the loan will eliminate the remaining loan balance over the next 7-8 years.  The client will need to pay premiums in full and possibly use some of the savings from policy one to further pay down the loan.  As the loan is repaid it will allow the death benefit to increase slightly, and once the loan is eliminated, we can revisit dividend options again.

The result? While a new sale was not possible due to the client’s health challenges, the above policy changes better positioned the family moving forward by eliminating the liability, improving long-term death benefit performance and freeing up some premium budget for other needs.

As a benefit of this in-depth policy review, the advisor obtained referrals to other family members and will be meeting with them in the future.

Policy reviews can be more than routine check-ins. They are a strategic service that protect your clients, strengthen relationships, and uncover meaningful planning opportunities. As the case studies demonstrate, established policies can drift off course or reveal new potential when revisited. Whether you are addressing changing family needs, evaluating market improvements, or optimizing existing coverage, a review ensures clients’ insurance continues to work for them. In return, you build trust, uncover opportunities, and reinforce your role as a truly indispensable advisor.

At AgencyONE, we support every step of that process, from high-level comparisons to detailed design analysis and underwriting consultation – servicing your every need in one place.

Contact the AgencyONE Case Design Team at 301.803.7500 for more information or to discuss a case.

About ten months ago, I wrote a ONE IDEA article titled “Underwriting & The Economic Impact of Non-Disclosure.” That piece examined the rise of Accelerated Underwriting Programs and the resulting shift in responsibility toward clients, who now provide information directly to carriers during telephone interviews or through electronic, non-medical Part B online forms.

While these programs can increase efficiency and reduce turnaround time, they do not absolve advisors of their duty to ensure that a client’s signature on any delivery requirement accurately reflects the truthfulness and completeness of the case.

HEALTH STATEMENT ON DELIVERY:

PLEASE NOTE:

A routine medical check-up conducted after the exam or Part B signature date is regarded as a change in health status – even if no adverse findings are identified. Additionally, some carriers include language in their delivery receipts requiring disclosure of any upcoming or planned medical procedures.

ELECTRONIC DETECTIVES:

These same systems can automatically re-check medical codes after three or six months, potentially revealing undisclosed conditions on the original application or delivery receipt. When discrepancies are detected, a prompt investigation – including a review and update of medical records or electronic health record (EHR) summaries – can reveal attempted fraud.

The immediate remedy in such cases is rescission of the policy due to non-disclosure. During the two-year contestability period, carriers are fully within their rights to take this action. The consequence, of course, is no coverage for the client and a chargeback of any commissions earned, depending on the carrier’s policies and the specific circumstances involved. 

BOTTOM LINE:

In today’s environment, particularly with accelerated underwriting cases that involve less agent interaction, it is absolutely essential to confirm a client’s current health status before signing the delivery receipt. In every case, when that receipt reaches you for your signature, take the time to ask whether there have been any changes in the client’s health since the application was submitted. While every advisor wants to finalize delivery quickly, this step represents your final responsibility to the carrier before the life insurance coverage is placed in force.

Remember, rescission is never a good outcome – for the client, the advisor, or the carrier.

Contact the AgencyONE Underwriting Team at 301.803.7500 for more information or to discuss a case.

When advising clients on estate planning, advisors, clients, and their families would be well served to focus on gift planning.

The term “estate planning” is often interpreted as “estate tax planning” for High-Net-Worth individuals and\or families, specifically those that have a net worth more than the Federal Estate Tax exemption, currently $13,990,000 ($27,980,000 for married couples) in 2025. This amount will go up to $15,000,000 for individual taxpayers and $30,000,000 for married couples with the passing of the One Big Beautiful Bill Act of 2025 and is incorrectly deemed as “permanent”.   The reality is that this only means that the Federal Estate Tax exemption will not sunset as it was scheduled to do at the end of 2025.

Historically, the Federal Estate Tax exemption and the rate of tax have been a political bargaining chip for years. If you look back to 1916 when the estate tax was first enacted and forward to today, you will see many changes depending on which political party was able to move their own agenda. I am sure that the future will be no different.

That said, I think that it is safe to say, that to most people in the United States today, the federal estate tax is not a concern. In fact, it is estimated that only one quarter of one percent (.25%) of the US population will have to file an estate tax return and even less will have to pay a tax.

The Federal Gift Tax exemption, which is intrinsically related to the Federal Estate Tax is where the planning opportunity is. Let’s unpack this.

A Primer – Estate Tax vs. Gift Tax

The Federal Estate Tax and the Federal Gift Tax have the same amount of exemption. What that means is that any US taxpayer can gift $13,990,000, as an individual, to anyone they choose or to an irrevocable trust, and file a gift tax return (IRS Form 709) reporting the gift. A gift tax return is only required for gifts over the annual exclusion amount, which is currently $19,000.

Once the lifetime gift has been made (and reported) in excess of the annual exclusion amount, the Federal Estate Tax exemption is reduced by said amount. To explain it a different way, if a US taxpayer reports a gift of $13,990,000 in 2025 the remaining Estate Tax Exemption for that year would be ZERO at death, unless otherwise increased by the allowable indexing amount, typically in the following year.

So that begs the question, why don’t High Net Worth people (defined by more than the exemption amount) make gifts every chance they get, whether annual exclusion gifts, or a more meaningful use of the Lifetime Unified (Estate and Gift Tax) Exemption? There may be several reasons:

1. They don’t want to lose control of the asset because once it is gifted to another individual or to an irrevocable trust, the asset is no longer theirs to enjoy (think gifts of cash, investments, real estate, privately held stock, etc.);
2. They feel that they could need the asset for lifestyle\retirement at some future point in time; and/or
3. They don’t understand how gifting works.

This is where an estate planning practitioner may be helpful.

For the rest of this discussion, let’s assume we are talking about an individual who is considering a gift to an irrevocable trust for the benefit of their spouse, children, possibly grandchildren and future generations, such as in a dynastic trust.

The most important concept that people need to understand with respect to gifting is that EVERY dollar gifted today, PLUS any growth on that dollar, is forever removed from their taxable estate. Think of someone throwing money over a wall from their taxable into their non-taxable estate.

If you think of the fact that money doubles every 14.4 years at 5% (Rule of 72), in 28.8 years, a $1,000,000 gift to a trust will grow to $4,000,000. If the individual is 60 years old, that is at around life expectancy. The increase of $3,000,000 is not taxed for Federal Estate Tax purposes. Had the money been left in the estate, it would be taxed at 40% in today’s environment. If the individual is younger or lives longer, the benefit will simply compound further.

Imagine the impact of gifting the entire Gift Tax Exemption amount of $15,000,000 in 2026. That gift would have the potential to double and then double again using the Rule of 72 at 5% in the same 28.8 years. That is $60,000,000 FREE FROM ANY ESTATE TAXES, regardless of what the politicians in DC decide to do with the Federal Estate Tax regime.

Further, be mindful of any states that also have a wealth transfer tax. There are 17 states that have a wealth transfer tax of some kind and varying degrees of exemptions and tax rates. For more detailed information please see Estate and Inheritance Taxes by State, 2025.

Once people understand this concept, the likelihood that they will engage in gifting will greatly increase. But it doesn’t have to be all or nothing, or even all at once. If the financial wherewithal of an individual or family only permits annual exclusion gifting, or some modest amount of exemption gift, or some combination thereof, that works as well.

Losing Access to the Asset

While not the main subject of this article, the concern of losing access to the funds if needed at some future time can be overcome simply by creating trusts that have Spousal Access Provisions.

LegalClarity.org describes the Spousal Lifetime Access Trust (SLAT) as follows:

“A SLAT operates by transferring assets from the grantor into the irrevocable trust, which constitutes a completed gift for tax purposes. This transfer effectively removes the gifted assets from the grantor’s individual taxable estate. The beneficiary spouse can then access trust assets for their health, education, maintenance, and support (HEMS standard), or according to other defined terms within the trust document. This arrangement provides the grantor with indirect access to the assets through their spouse.

A primary estate planning effect of a SLAT is the exclusion of these transferred assets from the grantor’s taxable estate. This exclusion can also extend to the beneficiary spouse’s estate, depending on how the trust is drafted, thereby reducing potential estate tax liabilities. Upon the death of the beneficiary spouse, the remaining trust assets typically pass to the designated remainder beneficiaries, such as children, outside of the probate process.”

Competent tax counsel should be consulted when drafting a SLAT.

How Life Insurance Plays into Planning

Notice that so far I have not even mentioned life insurance. The bottom line is that life insurance as a trust asset for liquidity purposes can be a very effective strategy. It can also provide a foundation for a broader trust investment portfolio.

Assume that an individual chooses to give $1,000,000 to a trust and that this money is invested earning 5% (dividends, interest, capital gains, etc.). That is $50,000 of income per year. If we simply peeled off the returns of $50,000 per year to purchase a permanent Universal Life policy, it would purchase $3,245,253 of life insurance on a 60-year-old male at preferred rates AND the trust would also have the $1,000,000 invested with some possible capital appreciation beyond the 5% assumed return. The insurance alone creates a 5.34% TAX FREE rate of return at death assuming death at age 88; that is a pre-tax equivalent of 8.90%. The individual could also choose to make annual gifts of $50,000 to the trust and leave the $1,000,000 in their estate. Please note that the $1,000,000 asset value would be subject to a 40% federal estate tax and hence worth only $600,000 to the heirs.

Alternatively, if the policy was paid as a single premium of $1,000,000 using a Guaranteed Variable Universal Life (GVUL) policy, assuming a 7% return net of fund management expenses, it would purchase a guaranteed death benefit of $2,541,431 but with investment growth could be worth $4,464,519 at age 88. This is a 5.49% TAX FREE return or 9.15% pre-tax return.

These are not unattractive as a “safe money” option and the great thing about life insurance is that it does not care what is going on in the capital markets – it is uncorrelated to any other asset class. It is worth exactly the death benefit, tax free and fully liquid at the time of the insured’s death, when it is needed. 

See comparison below of a particular carrier’s insurance solutions using both the $50,000 annual premium and the single premium of $1,000,000. These do not constitute the entire market of insurance companies or product solutions available and are for comparative purposes only.

There is no right answer as to product type or funding pattern and this comparison is only made available to highlight two different solutions with different funding patterns. However, what is meaningful is the following:

1. Making gifts to an irrevocable trust (with or without insurance) removes assets from a taxable estate.
2. All growth in the value of the gifted asset, be it stocks and bonds, private equity, commercial real estate, etc. is forever outside of the taxable estate.
3. If the gifted assets or income from those assets are leveraged to purchase life insurance, either single life or second-to-die, which provides even more leverage than the example provided, the value of the trust can be further enhanced.

Consumers with taxable estates, who can comfortably afford to “throw bags of money over the wall” should be educated on the value of the very attractive Federal Gift Tax exemptions that exist today and were made even more attractive with the passing of the ONE BIG BEAUTIFUL BILL ACT of 2025.

Contact the AgencyONE Advanced Markets Team at 301.803.7500 for more information or to discuss a case.

As October winds down and Q4 settles in, it’s the perfect time to help clients reassess their savings strategies. With interest rates easing and inflation eroding fixed returns, Certificates of Deposit (CDs) may no longer be the best option for conservative investors. CD Replacement Month is an ideal opportunity to consider alternatives like Multi-Year Guaranteed Annuities (MYGAs) – especially the new Axonic VantagePoint Fixed Annuity, which offers both safety and performance.

Why MYGAs Make a Great CD Alternative

Multi-Year Guaranteed Annuities (MYGAs) function similarly to CDs in that they offer a guaranteed rate over a fixed term, but the similarities stop there. MYGAs go a step further by providing additional features that enhance both growth potential and financial planning flexibility.

Here’s how MYGAs outshine CDs:

• Competitive Guaranteed Rates: For example, the Axonic VantagePoint Fixed Annuity offers a 5-year guaranteed interest rate of 5.55% for deposits of $100,000 or more. That’s well above most CD rates available today. Click here to see the current rates.
• Tax-Deferred Growth: Unlike CDs, interest earned in a MYGA grows tax-deferred until withdrawal, potentially reducing annual tax liability and compounding more effectively.
• Beneficiary Protection: MYGAs allow policyholders to name beneficiaries, enabling the remaining value to pass directly to loved ones—avoiding probate delays and costs.
• 10% Free Withdrawals Starting Year 2: While CDs typically penalize early withdrawals, MYGAs offer more flexibility. Starting in the second year, clients can access up to 10% of the contract value annually without penalty.

Not sure how to present the case? Start with the linked CDs vs. MYGAs Comparison tool to lay it out side-by-side: showing real numbers, outcomes, and advantages. It’s a simple but effective way to guide your clients through the decision-making process.

Spotlight on the Axonic VantagePoint Fixed Annuity

If you’re looking for a CD replacement strategy with standout features, the Axonic VantagePoint deserves a closer look.

Key Benefits:

• 5.55% guaranteed for 5 years (for deposits of $100K+)
• Strong alternative in a declining interest rate environment
• Backed by a highly-rated insurer with a reputation for transparency and service

For clients seeking safety, predictability, and better yields, the Axonic VantagePoint stands out as a smart, straightforward solution.

Win-Win for Clients and Advisors

For financial professionals, the topic of CD Replacement Month or CD versus Annuity is an opportunity to have conversations with your clients about their financial goals and risk tolerance. MYGAs, including the Axonic VantagePoint, can be a valuable addition to a diversified portfolio aimed at preserving capital and generating steady, tax-efficient returns.

Final Thoughts

While CDs may still have a place in some portfolios, they are no longer the default safe haven they once were. In today’s environment, your clients deserve options that protect their principal and reward them with higher, more tax-efficient returns.

Help your clients explore annuities, including the Axonic VantagePoint Fixed Annuity.

Learn more about today’s annuity landscape and the emerging opportunities by registering for AgencyONE’s Annuity Webinar on October 29 at 3:00 pm ET. Our featured speaker, Sal Sigleski, VP of Annuity Sales at BSMG and AgencyONE’s trusted annuity expert, will share his industry knowledge and help you navigate this evolving market.

Register for the webinar HERE, and please contact the AgencyONE/ BSMG Annuity team at 617.686.0697 for more information or to discuss a case.

1. Field Underwriting: It is more important than ever for you to be well-versed in field underwriting. With opportunities for Accelerated Underwriting decisions with drop tickets, you need to be aware upfront of any possible underwriting hurdles your clients might have.
   
2. Client Education: Drop tickets are great tools that can simplify your case workload by eliminating the need to complete forms. However, they can also reduce opportunities for client education. It is vital that you prepare your clients for what to expect during the underwriting process. Whether it involves prepping for the online underwriting experience, the telephone interview, or the insurance exam, setting proper expectations, and helping clients prepare are critical steps – even when using accelerated underwriting options.

This week’s ONE Idea will focus on these two areas and how they help AgencyONE position your clients’ cases for the best possible underwriting consideration.

AgencyONE knows you want to provide a seamless and uncomplicated experience for your clients. Educating your clients on what to expect engages them and results in a much smoother process for everyone.

Informal Inquiry

AgencyONE maintains an updated Informal Inquiry to ensure we get the information needed from your clients to pair them with the right insurance solution and carrier. Our Informal Inquiry is specific, organized, and easy to understand (you can find a copy of the Informal Inquiry on your AgencyONE website’s personal Dashboard under “For Client Use” or contact AgencyONE for a copy). 

Your client’s Informal Inquiry is very important, and its accuracy is crucial so a wet signature, on the most up-to-date Informal Inquiry, is required (some carriers and medical facilities will only accept a wet-signed copy so it is best to get that up front.) This document is necessary for us to obtain Electronic Health Records (EHR) and prescription checks, as required. Remember, we are happy to brand our Informal Inquiry for our AgencyONE 100 advisors – just provide us with your company name, contact info and high-resolution logo.

Client Preparation & Engagement is CRUCIAL

Once your client has thoroughly completed our Informal Inquiry and signed the HIPAA, call the AgencyONE underwriting hotline at 301.803.7550. Your client may be eligible to go immediately to a formal application, drop ticket, e-app or perhaps Instant Issue! Remember, as we get further into Q4, AgencyONE and our carrier partners will move to processing formal applications only.

Underwriting VIDEOS

AgencyONE has created a set of easy-to-follow underwriting videos designed to help you and your clients better understand the process. You can review and share them with your clients using the links below.

Interview Prep – This video emphasizes the importance of and how to prepare for the insurance interview.

Medical Exam Prep – This video thoroughly prepares your clients for the medical exam and how the underwriters will evaluate their performance.

Senior Supplement Prep – This video helps your older clients (those 70+) prepare for the questions and tasks on the senior supplement exam.

AgencyONE designed these videos to be client-facing, ensuring they are easy for your clients to understand. Watching the videos, listening to the explanations, and reviewing the accompanying printed materials in the Informal Package will help prepare your clients. Research shows that clients are more likely to engage with video content than with printed materials alone – so be sure to encourage your clients to take advantage of these resources.

APS Records & Copy Service Delays

The last page of the AgencyONE Informal Inquiry – “Accessing Your Lab Results” – includes a step-by-step explanation on how clients can access their own carrier exam results. This information is critical to AgencyONE’s underwriters and may help to cut down on APS record requirements and the copy service delays, both of which can affect the time it takes to process your client’s case.

Research shows that individuals who have access to their own medical records, including lab results, are more likely to take an active role in their health decisions and follow-through, leading to better outcomes. When clients understand that strong lab results can directly impact their premiums, it becomes a personal incentive to perform well. Financial savings are a powerful motivator and when clients see how their actions affect both their health and their wallet, they are far more likely to stay engaged.

Your guidance and encouragement are key to your client’s motivation. By tapping into your client’s competitive spirit, you can help them set clear goals and understand what they need to accomplish at each stage of the underwriting. When clients know what is expected and feel supported along the way, they remain more responsive, invested, and eager to move the process forward – resulting in smoother underwriting and better outcomes for everyone involved.

Case Study

AgencyONE’s underwriting department received a case for a 67-year-old female with limited information about her medical history and no clear record of which providers she had seen. The only physician listed in her file was noted as deceased. To move the case forward efficiently, we leveraged an Electronic Health Records (EHR) retrieval service.

Within 24 hours, we received summary records detailing this client’s medical history and identifying additional providers involved in her care. Accessing these records electronically not only saved weeks of delay typically associated with traditional copy services but also delivered accurate, organized, and complete information that allowed our underwriting team to develop a good understanding of the client’s treatment history.

The EHR data proved instrumental in directing the case appropriately and positioning it for a faster, more informed underwriting decision — demonstrating how digital health record retrieval can save time, improve accuracy, and enhance client outcomes.

By encouraging your clients to take a proactive role in the underwriting process – from preparing for their insurance exam to obtaining their medical records – you empower them to play an active part in achieving the best possible outcome. This not only helps AgencyONE present your clients cases in the strongest light, but also clearly sets you apart from competing advisors by demonstrating a higher level of care, preparation, and professionalism.

Contact the AgencyONE Underwriting team at 301.803.7500 for

more information or to discuss a case.