Banks that market insurance solely as a death benefit are not offering the full range of variable universal life insurance benefits to their customers.

The "new" life insurance, built for lifetime benefits as well, could be the solution to many of your clients' diverse financial planning needs.

By updating the way your bank markets variable life products, you can reach or better serve high-potential markets, including high-net-worth people and business owners. This doesn't require committing additional bank resources. It's simply a matter of understanding and communicating the full range of variable life benefits.

Variable life sales have grown 30% a year since 1992. Policy owners are realizing its benefits, and with a little creative marketing there is more opportunity for growth. Indeed, variable life sales in 1998 surpassed sales of all other life insurance products.

Variable life is an investment-oriented life insurance product. Unlike traditional insurance, the policy owners - not the insurance company-make investment decisions.

Policy money is invested in products managed by well-known investment managers such as Dreyfus Corp., Fidelity Investments, Neuberger & Berman, and OppenheimerFunds.

And as variable life policies become increasingly popular and competition among insurers grows, pricing for the insurance coverage becomes more competitive.

Variable life insurance can be the solution for financial planning needs such as:

Supplemental retirement planning. A Chicago bank customer contributes the maximum to his 401(k) plan each year, has fully funded other retirement vehicles, and wants to save even more money for retirement on a tax- deferred basis while meeting the increasing life insurance needs of his family.

He begins funding a variable universal life policy once he reaches the maximum contribution for his 401(k) and other investments.

The variable life policy protects him and his family with insurance but allows his premiums, which are invested at his discretion, to grow tax- deferred. Assets and premiums can be moved among underlying investment options without tax penalties.

Repositioning assets. A client has a fixed annuity that he originally bought for retirement income but now wants to leave to his children at his death.

Currently, the fixed annuity would be subject to estate and income taxes as high as 50% upon his death. He could improve this situation by repositioning these assets to provide a survivor benefit free of income and estate taxes. To do this, he would "annuitize" the existing annuity, or start a regular income stream, which he would then use to fund a variable life plan.

The new plan can be structured to supply an income-tax-free death benefit payable to the beneficiary that would exceed that of the annuity. With an annual gifting strategy and an irrevocable trust as the original owner of the policy, this survivorship benefit could be estate-tax-free as well.

Wealth transfer. A California couple has $3.4 million in savings accounts and certificates of deposit. When both spouses die, they would leave behind an estate tax bill of about $1 million.

To "discount" these taxes, the couple could buy a $1 million survivorship variable life policy that would pay a death benefit upon the death of the second spouse.

Assuming a 10% return and the second death occurring before the policy's maturity date, an annual premium of $13,400 beginning at age 65 would provide the death benefit needed to pay the projected estate tax liability.

Even if one spouse lives to age 100, total premiums paid would be only $469,000, yet the policy would cover the $1 million tax bill. Careful restructuring is required to avoid the inclusion of the life insurance death benefit in the surviving spouse's gross estate.

Business planning. A small-business owner wants to reward and keep a group of executives who are vital to the business' success.

Using variable life, he created a bonus program that compensates key employees upon meeting business goals. Since these nonqualified benefit plans are not subject to the same restrictions as qualified retirement plans, they can be customized for key employees and be offered as an extra benefit for top performers.

College funding. Variable life insurance can provide tax-advantaged money to pay college expenses. It also gives death benefit protection should the breadwinners die prematurely.

Variable life insurance for college funding is popular with parents who are starting families later in life. The policy may be set up both to fund college and to supplement retirement income.

If your bank already offers variable life in its stable of investment products, take advantage of it! Start marketing all the benefits of the "new" life insurance to better serve your customers.

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