Wealth2k® Launches DB-by-INS™.
Retirement Strategy Utilizes Life Insurance to Create Personal, Defined Retirement Income Benefits.
HINGHAM, MA -- (Marketwire - June 18, 2007) -- Wealth2k, Inc., a strategic marketing consulting firm for the financial services industry, has launched DB-by-INS™, a contemporary approach to retirement income planning designed to create predictable, tax-advantaged retirement income.
According to Wealth2k chief executive David Macchia, the name DB-by-INS™ refers to the defined benefit nature of the retirement income provided and the finding vehicle used to provide it: life insurance.
"The decades-long transition to Defined Contribution plans has diminished retirement security for millions of workers," explains Macchia. "This is due, in part, to statutory limitations on retirement plan contributions that make it impossible to fund an adequate level of post-retirement income. Workers who can afford to supplement their 401(k) or another pension plan's contributions will be attracted to a strategy that provides a pre-determined retirement income benefit and carries the big advantage of being income tax-free."
Research published in 2006 by the Retirement Income Industry Association (RIIA) reveals that there are nearly 5.6 million households in the US categorized as Affluent Builders (ages 35-49) and almost 4.7 million households categorized as Affluent Pre-Retired (ages 50-64). Together these market segments make up 15% of households and control $5.8 Trillion in assets. Plus approximately 70% of Affluent Builders and Pre-Retired agree with the statement, "I am concerned about having enough retirement income." (www.riia-usa.org)
"The belief that life insurance could be an attractive strategy for boosting personal retirement security may strike many as questionable. Yet, a critical analysis reveals a number of reasons why it may be a significant advantage for the right market segment: the affluent, aware of their future retirement security challenges, and ready to meet those challenges," asserts Macchia.
The reasons life insurance can be an attractive funding mechanism for a personal defined benefit plan in the affluent market include:
-- There is no cap on annual premiums ("contribution levels")
-- A myriad of investment choices within a variable universal life insurance (VUL) policy create substantial accumulation potential; or, if an indexed universal life (IUL) policy is chosen, it provides cash accumulation potential by linking cash value growth to an external index (i.e. the S&P 500).
-- Pre-retirement, self-completion benefits are inherent in the life insurance death benefit
-- At retirement, the money can be accessed income tax-free via loans against the cash value at net rates as low as zero percent.
How DB-by-INS™ Works
DB-by-INS™ focuses on defining a specific retirement income objective; much like employer defined benefit plans have done for employees in the past. An administrative system monitors policy performance and provides guidance to policyowners about how the annual contribution (premium) should be adjusted upward or downward to keep the cash value accumulation on pace to deliver the desired retirement income benefit.
DB-by-INS™ may be funded by variable universal life (VUL) or indexed universal life (IUL) policies. In additional to the normal life insurance application process, individuals must make three decisions related to the future retirement income goal:
1. Identify a desired annual retirement income
2. Select a retirement age
3. Select an Assumed Investment Return (AIR)
"DB-by-INS™ is also on the right side of compliance and policyowner treatment. Unlike purchasing typical interest-sensitive life insurance policies, the DB-by-INS™ strategy has a higher probability of delivering on projected benefits," says Macchia. "This is due to its linkage to an administrative system that supplies more information and greater transparency to policyowners than they are typically provided."
Next-Generation Marketing for the DB-by-INS™ Strategy
"Marketing the DB-by-INS™ strategy is fraught with challenges that can be successfully overcome," he continues. "Balance must be observed. Consumers must understand that life insurance is funding the strategy, that it costs money to have life insurance, and that there may be limitations on liquidity."
While insurance companies have their own rigorous compliance standards that seek to make sure that purchasers of life insurance understand what they are buying, DB-by-INS™ also ensures proper sales and marketing practices through Wealth2k's web-based Traject™ communications network.
Distribution Opportunities Life Insurance Companies
Macchia believes that registered representatives and registered investment advisors serve the affluent customers who would benefit most from DB-by-INS™. "What these advisors need is a marketing ecosystem combined with the appropriate product offerings and the administrative capabilities that will allow them to effectively extend their influence into this new opportunity," he says. "We want to talk with insurance providers that wish to grow their businesses in this strategically important market space."
According to Macchia, distribution of the DB-by-INS™ strategy is managed in a way that assures consistency of message across multiple channels of distribution. "A combination of streaming video, personalized advisor micro sites, real-time monitoring and dynamic disclosure generation create the capacity for large numbers of advisors to convey the 'story' in a consistent, compliant, and understandable manner."
About Wealth2k®
Wealth2k® (www.wealth2k.com) is a strategic marketing firm focused exclusively on the financial services industry. It provides a unique combination of marketing content and technology designed to help financial services companies and their intermediaries increase market share, improve sales practices, and capitalize on emerging marketing opportunities.
Hailed as a "marketing guru" by Research magazine, David Macchia (www.davidmacchia.com), president and CEO of Wealth2k, Inc., is one of the financial services industry's top strategic marketing consultants and the marketing mind behind the highly regarded The Income for Life Model® retirement income strategy.
