If you’ve been relying on the changes in the Income Tax Act to encourage your clients to finally start their estate planning, it’s probably too late for them to benefit from the existing rules — unless you’ve done some preliminary work.
There are plenty of changes planned for 2017. These include changes in mortality tables, increased taxation, increased rates of life insurance and changes in the calculation for net cost of pure insurance. Many of these changes may require a second look at corporate arrangements using life insurance levering strategies.
On some of these points, it’s not too late. Some plans will still benefit from the old rules if they are implemented this year, thanks to grandfathering provisions. You could segment clients into three groups:
- Those with whom you have already begun the conversation and have presented recommendations.
- Those who you think would benefit from implementing a plan now and would benefit from the grandfathering.
- Those who should be on target to begin discussions.
Let’s look at each of these three groups.
Consider the first group as the low-hanging fruit. You’ve met with them, agreed to a plan, and you just need to set up the insurance contract. Contact them today and let them know that most companies will not be guaranteeing that a product will be issued before year-end unless all requirements, including medical and financial, are supplied by the end of October. After that, there are no promises the contracts issued will be grandfathered under the old rules.
The second group is clients who are receptive to your recommendations and are willing to implement them without undue delay. Some might be your A-list clients. You want to be sure that they don’t miss out on the opportunity. Send them an email or just pick up the phone.
In particular, consider clients who have term policies that can be converted without having to submit medical evidence.
The third group is clients who will be able to take advantage of the existing insurance rates before they are increased during 2017. Next year, the rules might be more restrictive, but it’s unlikely all companies will increase rates en masse on January 1. So, keep looking into your files for clients you want to approach in early 2017.
How are you preparing clients for the insurance rule changes? Comment below (moderated) or email us.