If you had been killed in a car accident and someone else had been responsible for your death, how much would your family sue for? (File: Technique Book; Insurance Planning/MDRT Index; 4400.00)

People insure the golden eggs for full value, but they forget about insuring the goose. This graph puts things in perspective. (File: Technique Book; Insurance Planning/MDRT Index; 4400.00)

Ben Franklin said, “People are best convinced by reasons they themselves discover.” Questions are the keys to the doors of discovery. (File: Technique Book; Financial Data/MDRT Index; 2600.00)

This page presents a collection of thoughts about life in general. (File: Technique Book; Miscellaneous/MDRT Index; 5000.00)

Here’s an updated version of one of my all-time favorite one pagers. If wealthy prospects are unwilling to meet with you, you might suggest that they read this and then get their reaction. (File: Technique Book; Estate Planning/MDRT Index; 2500.00)

Most people do not have a game plan when it comes to their money. Perhaps this will help spur their thinking. (File: Technique Book; Overview/MDRT Index; 3900.00)

Here’s a way to give your prospects and clients an overview of the overall work that you do. No one has covered all of the bases. (File: Technique Book; Overview/MDRT Index; 3900.00)

This provides an overview of the key issues faced by most business owners. It can serve as a checklist or as an agenda to

Financial ConceptsHOWARD WIGHT’S Ideas That Will Help You Make A Difference

© 2013 Howard Wight

Number 359 • November 2013

❏ Why Affluent Individuals AcquireLife Insurance

❏ Money Management Maxims

❏ Personal & Business Planning

❏ Business Planning Issues

❏ How Much Are Your Tomorrows Worth? (Chart)

❏ How Much Are Your Tomorrows Worth? (Graph)

❏ Power Questions

❏ Random Thoughts on Life

Random Thoughts on Life

What’s Inside the November 2013 Issue?

Why Affluent Individuals AcquireLife Insurance

Power QuestionsPersonal & Business Planning

Money Management Maxims

How Much Are Your Tomorrows Worth? (Chart)

Business Planning Issues

How Much Are Your Tomorrows Worth? (Graph)

discuss what the individual has done and what still needs to be accomplished. (File: Technique Book; Business Planning/MDRT Index; 1400.00)

Why Affluent Individuals Acquire Life InsuranceWhy do affluent individuals who are worth $5,000,000 or $10,000,000 or $20,000,000 or even $100,000,000 or more acquire life insurance? Does life insurance really make sense for them and their families?

The estate tax exemption is now $5,000,000 plus an adjustment for inflation. With proper prior planning, a married couple can have a combined exemption in excess of $10,000,000.

When you spend your entire lifetime building your family fortune, wouldn’t you prefer that it go to your children, grandchildren, or favorite charities rather than to 300,000,000 strangers? The IRS is not going to put up a building with your name on it. Giving money to the IRS estate tax collector in the form of estate taxes is not a very effective way to benefit society. Wouldn’t you rather decide who gets your money?

The more you have…the more you have to lose. Your estate is the tangible representation of your lifetime. When you die, the IRS estate tax collector is going to want up to 40% or more of everything you have spent your lifetime building. The estate taxes are due and payable in cash within nine months of your death. Could you write a check today for up to 40% or more of everything you own without it hurting just a little bit? If you can’t write that check…how will your children be able to write it? On the other hand, if you could write a check each year for about 1% or 2% of the value of what you own, the insurance company will ultimately write a check that can be used to help pay the estate taxes.

Some people are concerned that inheriting a lot of money will ruin their children. Malcolm Forbes, the late publisher of Forbes, started with an inheritance and built on that. He then purchased huge insurance policies to help minimize the tax impact on his family fortune, so that he could pass the inheritance on to his children rather than to the IRS. There is never too much money…only to little character. Do you really think that paying estate taxes will build character?

continued…

“Rich or poor, none of us want to be remembered

for paying too much in taxes or giving our money away

foolishly.” Robert W. Wood Tax Attorney

Why Affluent Individuals Acquire Life Insurance (continued)

Everyone in a family pays a price for success. You pay the price. Your spouse pays the price. Your children pay the price. Everyone pays the price. Why compound the problem by having them pay the price again in the form of estate taxes when you are gone? Why should your dreams die when you die, especially if there is an affordable option?

Life insurance represents a viable alternative to the liquidation of your lifetime. It can normally be acquired without changing your standard of living one iota. Most people think in terms of buying life insurance out of cash flow, and thus the cost seems to be prohibitive when large amounts of insurance are being considered. In larger estates, it is normally acquired by merely repositioning capital or by using a small portion of the growth. Using life insurance will generally result in a higher return after income taxes and estate taxes than can be achieved with any other investment alternative.

Doesn’t it make sense to set aside a little bit today during your lifetime rather than transferring a massive problem to your children tomorrow? If you can’t handle a small payment today, how will they handle a huge payment when you are gone? Would you rather pay a lot to the IRS or a little to the insurance company?

Even you have adequate cash available to pay the estate tax, wouldn’t it make sense to use just a small portion of the cash each year to purchase insurance? An estate worth $20,000,000 might mean estate taxes and related costs in excess of $6,000,000.

By transferring about 1% of your estate each year to life insurance, you could protect the other 99%. Wouldn’t that make more sense than your children having to liquidate up to 40% of everything you own all at once? Why be forced to sell a cash cow if you can sell a little milk instead? Wouldn’t it make sense that a liability should not outlive the person who created it?

The current law enables a decedent to leave his or her entire estate to the surviving spouse without incurring any estate tax. This has lulled some

continued…

Why not let 1% of your estate each year help

protect the other 99%? Doesn’t that make sense?

Why Affluent Individuals Acquire Life Insurance (continued)

individuals into a false sense of security. The tax is merely deferred until the death of the surviving spouse. The tax must still be paid. In fact, it will be even larger if your estate continues to grow, which is highly probable. In some situations, it may even make sense to pay some taxes at the first death, especially when significant growth is anticipated. In the unlikely event that Congress eliminates the estate tax, there will still be income taxes to be paid on distributions from qualified and non-qualified retirement plans, annuities, and IRA’s. In other words, there will still be death taxes to be paid. Why not use life insurance to pay what has to be paid? Sometimes other advisors recommend against acquiring life insurance, but it’s not their money that’s going to be used to pay the taxes. They are not going to provide money for your heirs…are they? Purchasing life insurance will mean more money for your heirs coupled with greater flexibility.

Why do affluent individuals acquire life insurance? Given a choice between using their money to pay estate taxes and using insurance, they choose to use insurance. Wouldn’t you prefer to use other people’s money? With life insurance, the event that creates the problem also creates the solution to the problem. Why not explore how the leverage of life insurance will enable you to leave a larger legacy to your children, your grandchildren, and your favorite charities? Why not let about 1% of your family fortune each year help protect the other 99%?

The best way to determine whether or not life insurance makes sense for you is to examine your options and to take a look at the bottom line numbers.

Plan. The only real security is that which you create for yourself and your family. Don’t count on your company to provide you with financial security. Look at the big picture from a multigenerational standpoint. The planning you do now will have an impact on your children and your grandchildren and beyond. Establish goals and deadlines. A goal without a deadline is a wish…not a commitment. What are your priorities? Have you covered all the bases? My experience is that no one has ever covered all the bases. Advisors. Don’t try to do the planning all by yourself. It has been said that the attorney who advises himself has a fool for a client. Select a dream team to help you achieve your dreams. Avoid piecemeal planning, which means getting different advice from different people at different times. The typical result of piecemeal planning is that hundreds of thousands of dol-lars, and in some cases millions of dollars, will fall through the cracks unnecessarily. When was the last time you met with all of your advisors at the same time? Why? From time to time, it makes sense to get a second opinion. Your primary loyalty should be to yourself and your family, not to your advisors. Remember, it’s your money. You need to be comfortable with the philosophy and game plan that you develop with your advisors.Pay yourself first. Invest as much as you can… as often as you can…starting as soon as you can. Try to invest 10% to 20% of your gross income systematically each month. You cannot control the investment results. You can, however, control how much and how often you invest. Diversify. Don’t put all of your eggs in one basket. As has been proven over the past few years, the stock market does not always increase in value. If one assumes the stock market is ultimately going to go up over the long term, then asset allocation and dollar cost averaging still make sense. Diversification always looks best in retrospect after a prob-lem has occurred. By then, it’s too late. When you’re highly concen-trated in one investment, and things are going well, it’s hard to justify diversification. That’s just the reason that it’s so important to do so. Exit strategy. When you get into something, it’s a good idea to have an exit strategy. For example, it makes sense to have a plan for maximizing the

Money Management Maximsmoney in your retirement plans so that it benefits you and your family as much as possible. Retirement plan distribution planning is a very special-ized area of planning, so it makes sense to get advice from a specialist.

Time in the market is more important than timing the market. Most studies on the subject indicate that market timing does not work. Buying low and selling high is a great concept which unfortunately few have con-sistently done over the long haul. Invest as much as you can as soon as you can to take advantage of the combined power of time and compound interest.

Insurance. Insure first that which you can least afford to lose…your income, your health, and your life. Make sure you have adequate health insurance, disability income insurance, and life insurance. When it comes to life insurance, buy as much as you can get and afford. For most people, a combination of term and cash value insurance is the best approach.

Estate planning. Where do you want your money to go? Probably not to the tax collector. It’s not how much you leave, but how much is left that counts. Make sure you have up-to-date wills and trusts. If you have a large estate, death taxes and related costs could result in the loss of up to 40% or more of your estate. For that reason, many wealthy individuals choose to use life insurance to pay the estate taxes rather than have their heirs absorb the loss of more valuable growth and income-producing assets. Why not let 1% of your estate each year help protect the other 99%?

Don’t let the tax tail wag the dog. On the other hand, you can’t afford to ignore taxes. For many wealthy people, cash value life insurance becomes a good place to accumulate and warehouse money because of its inherent tax advantages, especially when coupled with its use in conjunction with sophisticated estate planning strategies.

Review. Review your overall planning annually with your advisors. Circumstances change. Address mistakes quickly. If something does not go according to plan, discuss alternative strategies with your advisors. It often makes good sense to get a second opinion.

© 2013 Howard Wight

❏ DisabilityIncome

Planning

❏ Estate

Planning

Personal &

Business Planning

❏ Retirement

IncomePlanning

❏ FamilyIncome

Planning

❏ Fringe

BenefitsPlanning

❏ EducationFunding❏

BusinessContinuation

Planning

❏ Selective

CompensationPlanning

❏ Gift

Planning

❏ Charitable

GivingPlanning

Have You Covered All of the Bases?

What Do You Want to Accomplish with Your Life and Money?

What’s Really Important to You?

What’s Your #1 Priority?

What’s Important About Money to You?

❏Exit

Strategy

❏Succession

Planning

❏RetirementPlanning

❏FamilyIncome

Continuation

❏Death TaxFunding

❏Buy & SellFunding

❏Key

ManagementLoss Impact

❏Selective

CompensationPlanning

BusinessPlanning

Issues

❏Disability

SalaryContinuation

How Much Are Your Tomorrows Worth?

$25,000

50,000

75,000

100,000

250,000

500,000

1,000,000

CurrentEarnedIncome

Assumed%

Increase 10 Years 20 Years 30 Years 40 Years

$250,000

314,447

500,000

628,895

750,000

943,342

1,000,000

1,257,789

2,500,000

3,144,473

5,000,000

6,288,946

10,000,000

12,577,893

0%

5%

0%

5%

0%

5%

0%

5%

0%

5%

0%

5%

0%

5%

$500,000

826,649

1,000,000

1,653,298

1,500,000

2,479,947

2,000,000

3,306,595

5,000,000

8,266,489

10,000,000

16,532,977

20,000,000

33,065,954

$750,000

1,660,972

1,500,000

3,321,942

2,250,000

4,982,914

3,000,000

6,643,885

7,500,000

16,609,712

15,000,000

33,219,424

30,000,000

66,438,848

$1,000,000

3,019,994

2,000,000

6,039,989

3,000,000

9,059,983

4,000,000

12,079,977

10,000,000

30,199,944

20,000,000

60,399,887

40,000,000

120,799,774

Example: If you are now 35 years old making $100,000 per year, your Potential Earning Power to age 65 would be $3,000,000 if your income were to remain the same.

Potential Earning Power

How Much Are Your Tomorrows Worth?

What’s Wrong With This Picture?

$$3,000,000

$100,000 per year

for 30 years

$6,600,000

$100,000 increasing at 5% annually for 30 years

$200,000of Life Insurance

Current Age: 35Retirement Age: 65Current Earned Income: $100,000Potential Earning Power Assuming No Increases: $3,000,000Potential Earning Power Assuming 5% Annual Increases: $6,600,000

Does it make sense to insure an asset worth between

$3,000,000 and over $6,000,000 for only $200,000?

❏ What are your thoughts on life insurance?❏ What role does life insurance play in your overall planning?❏ What do you know about how life insurance is taxed?❏ How much life insurance do you now have?❏ How did you decide on that amount?❏ Who was the agent, and how did you select him or her?❏ What are your thoughts on buying term insurance and investing the difference?❏ Do you want your life insurance to be in force when you die?

Power Questions

Random Thoughts on Life

The ultimate master key to life, happiness, and success is to focus on first things first.

❏ You cannot do what needs to be done today if you are anchored in the past.

❏ You win some. You lose some. Either way, you have to go on.

❏ Most people are silently begging to be led.

❏ The only real security is that which you create for yourself and your family.

❏ The only way you can truly thank those who have helped you is by helping others.

❏ “Never make the same mistake once.” Jerry Gerovac

❏ The primary difference between men and boys is the price of the toys.

❏ Achieving a dream requires that you first have the dream.

❏ “To be what we are, and to become what we are capable of becoming, is the only end in life.” Robert Louis Stevenson

❏ Be the best of whatever you are.

❏ Most people are too busy to accomplish anything important.

❏ When someone does not want to do something, almost any excuse will do.

❏ The third leading cause of death is doctors.

❏ What gives you the right to judge another’s character?

HOWARD WIGHT’SFinancial Concepts

Caveats, Comments and Options

For Customer Service, Please Contact:Wight Financial Concepts Corporation

P.O. Box 15490 • Brooksville, FL 34604Phone: 800-486-SELL • Fax: 352-797-5473

E-mail: ideas@howardwight.comwww.HowardWight.com

Filing

Technique Book Section MDRT IndexOverview 3900.00Financial Data 2600.00Investment & Tax Planning 4000.00Estate Planning 2500.00Business Planning 1400.00Executive Benefits 2400.00Insurance Planning 4400.00Disability Income 100.00Misc. – Motivation 5000.00Misc. – Efficiency 5600.00Misc. – Prospecting 6000.00

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Filing. For those subscribers who have bought the TECHNIQUE BOOK, we suggest that you use the newsletter to keep it updated. Each page of the newsletter can be filed in the appropriate section, or you can establish a separate set of proposal files.

Repetition, Reinforcement, and Timing. Repetition and reinforcement are the keys to learning, expertise, excellence, and success. We will repeat ideas from time to time…but almost every time the idea will contain a new nuance. A great idea at the wrong time is no better than a bad idea. Timing is everything. The right idea at the right time…can change a lifetime…perhaps yours…or that of a client.

Ideas. If you are willing to share your ideas with others, please send them to Howard Wight, 1330 Jones Street, Suite 404, San Francisco, CA 94109, fax them to (415) 922-9740, or call him directly at (415) 776-6022.