The Software that Tells the Whole Truth about All Things Financial

Tutorial Life Insurance Values

Hello and welcome to a tutorial on a new Truth Concepts tool called Life Insurance Values.  Todd Langford will show how you can use the Life Insurance Values tool to cut down the time you spend copying and pasting information into the Truth Concepts calculators and drastically show the whole truth about life insurance.  Go ahead Todd.

The new tool is called Life Insurance Values and right here under the Tools menu at the bottom we see Life Insurance Values.  And this is a place that we can load 6 permanent life insurance policy illustrations and 4 term life insurance illustrations and all that information gets saved into the data file.  The idea behind it is that we can then pull information from this calculator into the other calculators while we’re working with a client so we don’t have to spend time copying and pasting information.  We can just put it in here save it open it up with the client and pull from these numbers in to a particular calculator as a particular calculator becomes appropriate.

So here I put in some information:  We need to have a start age, we need to have a description that will help us later when we need to figure out what we put in here and then also we need at least the premium values, the net cash value, and net death benefit.  We have the ability to put in some additional information withdrawals, loans, repayments, all of that could be done whatever you’ve done in the illustration you just copy that information and put it in here.  Now this tool also calculates a couple of additional columns automatically.  One of them is the Total IRR on Cash value and this is a running total many of you have seen this as an optional column you can include in  your illustrations where you could have the illustrations software calculate that for you.  Here, we’ve done it for you. 

 And what it does it’s got a running total of the Internal Rate of Return based on the cash value and we also have one based on the death benefit and what you’ll see in the two of them is on the death benefit we start with a 7000% in the start of this particular illustration and the IRR drops over time.  The opposite is true of the cash value it starts very low and increases over time, we start with negative 100% because we have zero cash value in the first year but the IRR appreciates and increases over time. 

We have a third column here between the two of them it’s called Annual Rate of Return on Cash Value and what it does is calculate the ROR on the cash value for every year without carrying the baggage from previous years.  Whereas the IRR calculation even when you get down here in the 10th year it also has all the previous negative years that are weighing it down.  The annual RoR on Cash value looks at each year separately, we have a positive annual return on cash value here in the 4th year of  .93%.  Where’d that come from what it means is if we started with the previous year’s cash value of 23902, we add 14200 to it, in order to end up with the 38,455 we have at the end of the year, it means that those dollars earned .93% in that particular year, so every year is treated individually. 

This calculation is actually used in a little while in another calculator which we’ll show in a while when we actually import it. 

For the purpose of learning I have a calculation here where I have not put in the net death benefit I put everything else but just as a review so you can see how to put these figures in.  If I pull up an illustration that I printed to adobe just to show you.  First thing I’m going to do is change the zoom on the screen to 75% to have an entire page on my screen. If I were to just click when it turns into an I bar and drag down it will highlight the entire illustration but I can’t use these numbers to paste into the software.  So what I do is go to the column which I’m looking for which in this case is a net death benefit column curser is an I bar I’m going to hold down the alt key and you’ll see a rectangle form in the middle of the I bar that’s one of the press my mouse down highlight just that one column right click somewhere in the blue area select copy then I can go back to the Life Insurance Values tool click on the death benefit right click and paste values.  I would encourage you to put every year in here.  If you put them all in here you’ll have whatever length of years you’ll need with that particular client in that calculator. 

Back to my pdf with illustration, scroll to next page, hold down alt key hold down the mouse and highlight net death benefit column, right click and copy paste values next 40 years.  I’ve got a this one named L95 $25,000 premium for 25 years.  I can close this screen and it saves the data file it doesn’t lose the information like with some of the other calculators.  So I can save it under a particular client name this information will also be stored in there.  As a way to shorten the process with the client we could Preload all the information in here, even though there’s no calculators it will shorten the timeframe.    And it will save all the data in the file with it. 

I’m going to open up a funding calculator so we can see how it pulls in.  Change the current age to 25 and projected age I’m just going to put age 70.  Now I want to pull in my life values so I’m just going to click on stored life insurance data it’s going to give me a list of everything I have currently loaded in the Permanent Life Insurance Value tool.  The one we were just working with is that L95 $25,000 premium for 25 years, I can we have the option of Interpolate these values, by clicking the interpolate right here  I can change that right here from 1Million to 2 Million let’s say and the software will automatically change everything to the new and you can do that on death benefit, based on premium we could change the premium scenario and say like on this one we put $25,000 in on premium it would basically double everything that was there. 

The last thing we can do from an interpolation standpoint is based on in cash value I could put in a year that I want to hit a certain cash value so let’s say here in the 20th year I want to have a million dollars cash value and figure out what it would take to grow that cash value and adjust everything to have a million dollars of cash value in the 20th year. 

For this let’s just use the illustration as is and turn the interpolation off, pull in the illustration it will ask me if I want to replace the information that I already have, as a safety feature to make sure you don’t lose any data.  What year do I want the first year, typically that’s going to be the age of the start of the PLI illustration, but you may want to pull in say from age 50 and see what it’s going to be from there, you have the ability to do that, it’s going to pull in the information anything I had in there it pulled into the funding calculator.  I’m also going to pull in some term insurance into this calculator, again I could interpolate these numbers if I wanted to, I’m just going to use the 30 year level pre loaded into the Life Insurance Values.  It’s going to ask me again “Do I want to override the term that I have in the funding calculator” I don’t have any in there so yes I do.  I’m going to start at age 35 I can tell it over here to include the term insurance.  You can change the age to cancel term to cut it off at the point in time when the term insurance would be cancelled.  So you can see how easy it is just to pull that in, you can do this with any of the calculators that have any life insurance values.    

One of the things I mentioned earlier is that Annual Rate of Return column that we have on the Life Insurance Values worksheet.  What I want to do here is pull up one of the calculators that uses that directly.  That’s the borrowing Strategy Calculator.   I’ll show you how it works and why it’s important.  In this particular calculator, if I go to let’s say 35 years and I want this to illustrate a life insurance policy then I can put the information in by doing this I can put in 50000 premium even though our life insurance illustration is 25 I can put in 50. On the present value I’m not going to put in anything that would assume some existing cash value on the policy.   I’m going to load the PLI ROR’s, that rate of return we were talking about and we can pull in that ROR column and yes I want to overwrite the values I have here, I want to start at age 35, it pulled in that one column, it didn’t pull in any of the other columns, it pulled in my rate of return so then if I want to run an $50,000 illustration this end of year account balance. 

 And if I were to run a $50,000 this ROR column would match what I have.  Because it’s going to follow that permanent life insurance curve.  Here we have the information in (on left) here we have the results (right) and now we have a picture of what the life insurance illustration should actually look like.  With this new tool you can load the data in directly out of the pdf, some illustration software let’s you export to an excel sheet copy the columns and put them into the life insurance values tool and pull them into any calculator you want right in front of the client without a huge hassle.

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