Powerball Life Insurance Agent Could Hit Lottery of Their Own!
The lucky insurance agent(s) providing policies to Wednesday’s Powerball winners could earn commissions as high as $2.5 million each. Powerball officials announced three winning tickets sold in Florida, California and Tennessee. The winners will split the record $1.5 billion jackpot. That means if you are a licensed agent in one of those states, you could get a chance to broker a policy to offset estate taxes on $500 million.
The insurance would be needed to cover potential estate taxes on the Powerball jackpot, should the winner(s) opt for a 30-year period certain annuity. That is because even though the payout would be annual, the estate tax on the total winnings would be due immediately. The top federal estate tax bracket is 40 percent, although the state of residence may also levy an estate tax. The 40 percent federal tax is the whopper, and can bankrupt heirs should it come due unexpectedly.
That means a potential $200 million tax bill for a $500 million winner. In reality, the winners will likely be advised on shielding some money from taxes, or making tax-free charitable contributions. But for the purposes of our discussion, let’s assume those things are offset by state and other taxes, making the total tax bill in the $200 million neighborhood.
Below are the calculated premiums on a $200 million generic variable universal life policy for the four hypothetical lottery winners. All are considered “preferred” customers, non-smokers in good health. The approximate premiums would be:
– 35-year-old woman: $1.2 million (agent commission: $600,000)
– 40-year-old man: $1.8 million (agent commission: $900,000)
– 55-year-old woman: $3.1 million (agent commission: $1.55 million)
– 60-year-old man: $5 million (agent commission: $2.5 million)
Although it is not clear how an agent would structure the Powerball winner’s estate tax strategy, it is readily apparent that it would be like winning the lottery.
BB Insurance Marketing is a full-service insurance agency located in South Florida that specializes in business, personal and benefits insurance. Childcare, gas stations, pest control and restaurants are just a few of the niche markets we work in. BBIMI’s insurance expertise extends all across the state, so we’ve got you covered with a quality policy you can depend on!