InsuranceNewsNet Magazine - September 2020 by InsuranceNewsNet

Special Section: Life Insurance Thought Leadership â&#x20AC;¢ PAGE 25

September 2020

Using The Principles Of The Samurai To Serve Your Clients

Will Annuity Regs Get Trumped In November?

PAGE 14

PAGE 6

ACCELERATED OVERWRITING 3-2-1 CONTRACT

How COVID-19 Is Rapidly Rewriting How Life Insurance Is Done

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September 2020

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SEPTEMBER 2020 » VOLUME 13, NUMBER 09

HEALTH/BENEFITS

FEATURE

46 Happy New Year! Changing Medicare Advantage Plans

By Steven A. Morelli

Carriers, distributors and producers are using a technology that everybody had been slow to adopt.

6 Will Annuity Regs Get Trumped In November?

INTERVIEW

8 A Busy Advisor Is A Happy Advisor Scott Brennan tells how he learned the fundamentals of effective sales and combined that with a genuine caring about his community in South Bend, Ind.

IN THE FIELD

23 Fighting To Serve

By Susan Rupe Amir Ali is inspired by the ancient samurai to defend his clients.

By Elie Harriett Plans change their benefits every year, so your clients might miss important information if you don’t update them.

ADVISORNEWS

50 COVID-19 Erased Americans’ Financial Gains Of Past 3 Years By Susan Rupe Fewer Americans are confident in their financial situation than they were before the pandemic hit.

INFRONT

By John Hilton The insurance and financial services industry has much on the line in the November election.

online

www.insurancenewsnetmagazine.com

INBALANCE

25 Life Insurance Thought Leadership Series Respected minds share their leading thoughts on trending products, cutting-edge technology and unique sales techniques.

54 Don’t Forget To Show Your Immune System Some Love By Susan Rupe Incorporate the building blocks of immunity into your daily activities.

BUSINESS

LIFE

36 Life Insurance In A DB Plan: An Extra Benefit For Self-Employed By Shrideep Murthy There are tax advantages as well as the opportunity to provide an additional benefit.

ANNUITY

40 T he 6 Retirement Planning Myths

By Brian Haney Address these misconceptions directly and empower your clients in the process.

56 The Unexpected Benefits Of Writing A Book By Joseph Conroy Writing a book is a huge commitment, but it can benefit you and your practice in ways you might not have considered.

Corrections

In the August 2020 edition of InsuranceNewsNet Magazine, the photos of Mike James and Wes Thompson were switched because of a production error. In addition, Wes Thompson was inaccurately identified in his photo. He is the president and CEO of M Financial Group.

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InsuranceNewsNet Magazine » September 2020

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WELCOME LETTER FROM THE EDITOR

Make The Call

he edge of autumn is a strange place this September. After this broiling summer, when COVID-19 flared rather than faded, we are missing our routines. Usually in the cooling refuge of September we can settle into the reassuring rhythm of the kids going to school and our pushing back into serious business leading up to the holiday season. This year, school is anything but normal, with many destined to revert to remote operations after COVID-19 outbreaks. Insurance sales and financial advising were supposed to have returned to some semblance of the old normal in the fall, enriched with some of the skills and wisdom we earned during the shutdown. The events of the summer led many of us through a hard pivot to the understanding that we likely will have some degree of COVID-19 restrictions until next summer. And we will be living with deep economic repercussions for years beyond that.

Producers Produce

This Life Insurance Awareness Month finds the whole industry struggling for footing. As we went to press, public companies were releasing second-quarter results revealing a bloody lot of red ink. Much of that was due to difficulties with sales, but low interest rates were even more damaging to the bottom line. As a result, carriers are changing and replacing products and reduced sales to older age groups, although companies are slowly reopening to older applicants. In this month’s feature, we meet a few people in different levels of AmeriLife, an insurance marketer that is broadly diversifying its business and sales techniques. Other marketers are doing similar things, and AmeriLife is just an example of one that has been able to build business by scaling up part of its operation rather than having to reinvent itself. But an important point that became clear in the story is that although the company’s organization might have helped individual producers be successful, it was ultimately up to the person. 4

One of the company’s office managers said the people who usually got things done continued to get things done. “Our top producers have figured out a way like they always do,” Joe Young said. “There are several in my office who haven’t missed a beat. There are some who have had their challenges, but I think with technology today, you can pretty well figure it out.” Activity breeds activity — it’s as true today as it has ever been. In fact, Scott Brennan, the person featured in this month’s interview with Publisher Paul Feldman, said he still uses the metric he learned from the One-Card System decades ago: 10-3-1. That means for every 10 calls, a salesperson can expect meetings with three prospects that will yield one sale. Al Granum developed that system during his insurance career following his Navy stint in World War II. Granum used the tracking system as the manager of Northwestern Mutual’s Chicago office, supposedly getting almost all his agents to qualify for the Million Dollar Round Table back when a million bucks was really something. Granum worked until he died at 91 in 2014. His passion and drive were represented in what he called the Magnificent Obsession, which was to get 1,000 active clients in a career. With that kind of base, a producer was guaranteed a rich vein of business in follow-ups and referrals.

The Scary Thing

Like Granum, Brennan is still at it with no sign of quitting. Although he is not working as hard at 64 as he did in his hungrier years, he is still putting in the time and making connections. Perhaps the most illuminating thing he said during an interview filled with gems was that he is still making the calls that scare him. Here is someone who has won all the awards you can win in the business, and certainly does not have to worry about a secure retirement. But he is still challenging himself by pushing himself outside his comfort zone. For someone of that caliber even to

InsuranceNewsNet Magazine » September 2020

admit being scared on a call is a testament to his character. He wants his colleagues in every stage of their career to know this business never magically becomes easy. Brennan wants people to know that they are not alone — everybody struggles. Most salespeople have to pysch themselves up for that tough call. A lot of older agents decided to retire rather than try to sell in this crazy time. Brennan is hitting the phones and figuring out how to use tech to make his sales when he could just as easily take a well-deserved rest on his laurels. It is not that he’s a machine. Brennan admitted that he has thought about quitting hundreds if not thousands of times. The discipline keeps him going. A sense of community with fellow agents also drives him. He called what he shares with his colleagues a “hard-won dignity” that is tested day after day. He emphasized community and a sense of gratitude. His gratitude is hard-won as well. We were not able to get this into the issue in the edited version of an interview filled with great material, but Brennan has battled leukemia for the past 12 years. That experience has left him with sensitive taste for the sweetness of life. He treasures his days and counts himself as lucky as George Bailey at the end of It’s a Wonderful Life, when Jimmy Stewart realized how wealthy he was in having friends and family. We are all having some degree of that experience. These are days when we see how easy it is to lose everything. These are times when it is not about winning at all costs but earning the hard-won dignity of being there when people need you, of showing up and being there when it counts — even when you’re scared. Steven A. Morelli Editor-in-Chief

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INFRONT

Will Annuity Regs Get Trumped In November? Regulations are finally realigned, but what will happen if Joe Biden wins? By John Hilton

he weeks ahead will feature almost nonstop presidential election news, debates, commercials and polls in a historic election. Simply stated — there is much on the line in the choice between President Donald Trump and Democratic challenger Joe Biden, particularly for the economy and those in the insurance and finance industries. As this issue went to press, Biden held a commanding lead across most polls and swing states. Should Biden deny Trump a second term, the former vice president is expected to reverse many key economic poli-

» The Department of Labor investment advice rule. The rule has two main parts: a new exemption allowing advisors to provide “conflicted” advice for commissions, and a reinstatement of the “five-part test” from 1975 to determine what constitutes investment advice. From the industries’ points of view, the new rules are a positive step toward a harmonious best-interest standard it can live with. On the other side, Democrats and consumer advocates say the lack of consequences make the best-interest principles meaningless.

A Matter Of Timing

There is a section titled “Guaranteeing a Secure and Dignified Retirement” in the recently released 2020 Democratic Party platform draft. It outlines the party’s

rules have veered left and right for at least a decade is their place on the priority list, which is to say, decidedly low. Specifically, it took the Obama administration until April 2016 to publish a tough fiduciary rule that was years in the works. The DOL initially put out a version of the rule in 2010, only to withdraw it amid fierce industry criticism. The DOL under Obama claimed commission-based “conflicted advice” costs investors $17 billion annually, a figure widely disputed within the industry. Despite the lengthy delays, some aspects of Obama’s fiduciary rule went into effect in June 2017. A federal appeals court later tossed out the entire rule. By then, the Trump administration was enduring its own delays completing a replacement rule. It wasn’t until 2020 — under Trump’s third secretary of labor nomination,

“We will take immediate action to reverse the Trump administration’s regulations allowing financial advisors to prioritize their self-interests over their clients’ financial well-being,” — Democratic Party platform cies. A pair of regulations that are likely to be targeted: » The Securities and Exchange Commission’s Regulation Best Interest. Reg BI imposes a “best interest” standard of conduct on broker-dealers when making a recommendation to a consumer for any securities transaction or investment strategy involving securities.

commitment to reversing the best-interest rules. “We will take immediate action to reverse the Trump administration’s regulations allowing financial advisors to prioritize their self-interests over their clients’ financial well-being,” the draft stated. If victorious, a commitment by the Biden administration to act fast could change the game. One of the main reasons the industry

InsuranceNewsNet Magazine » September 2020

Eugene Scalia — that the DOL finally completed work on the investment advice rule. As this issue went to press, the DOL had wrapped up a comment period that generated sharp criticism of the rule. In a comment letter, Morningstar said that the DOL could go further to protect all investors receiving rollover advice in a variety of contexts. The DOL should revisit the “regular basis” prong of the five-part test to either eliminate this requirement or presume that it is satisfied

WILL ANNUITY REGS GET TRUMPED IN NOVEMBER? INFRONT in the context of a rollover. Nonetheless, Fred Reish, partner at Faegre Drinker Biddle & Reath, said he expects the rule to be published in the Federal Register around Jan. 1, 2021. Should there be a change of administrations, it would put Biden in the same position as Trump was in January 2017: inheriting a rule on the books, but not yet effective. And Biden would likely do what Trump did and issue a memorandum ordering a departmental review of the rule.

Why It Could Be Different

The seeds of a rule to tighten regulation of product sales with retirement dollars can be traced to the Bush administration nearly 15 years ago. While civil servants

struck down in court and refused to fight for the Obama-era rule even though every previous court had upheld it.” While Congress can override an agency rule, it almost never happens. Instead, lawmakers can stymie legislation by holding hearings, questioning agency heads or withholding funding. Any administration wanting to enact permanent rules changes is certainly helped by a sympathetic Congress.

States’ Rights

So the runway is clear for Democrats to take over investment advice rulemaking, right? Not quite. If it were that easy, these rules would probably already be consistent across the board. Instead, the state insurance depart-

suitable, the recommendation has to be in the best interest of the consumer without placing the producers’, or the insurers’ financial interests ahead of the consumers’ interest.”

‘A Significant Year’

There are many weeks to go until Nov. 3, but industry executives say plenty is at stake when it comes to the regulatory landscape. David Wolfe, counsel at Advisors Excel, the nation’s largest insurance marketing organization, said the Trump administration’s recasting of regulations helped open the door a bit wider for annuities in the retirement market. “This was already shaping up to be a significant year in our industry,” said

“The proposed exemption would authorize a wide range of investment advice models and relationships, consistent with the fundamental goal of ensuring that workers and retirees receive investment advice that is in their best interest.” — Trump administration often serve through multiple administrations, they issue rules at the whim of the ideology in power. Hypothetically, a Biden administration could break through with a definitive rule early in its tenure. In addition to its stated urgency expressed in the party platform, the administration could find sympathetic partners in Congress. Polling and pundits give Democrats an even-money shot at taking control of the Senate, which would turn committee chairs over to lawmakers such as Sen. Patty Murray, D-Wash. Ranking member of the Senate Health Education Labor and Pensions Committee, Murray ripped the DOL investment advice rule. “It simply does not do enough to make sure clients’ interests come first,” she wrote in a letter. “Like so much of our retirement policy, the fiduciary standard needs a serious update. And the frustrating thing is we had one, but the Trump administration stood by and let it get

ments are exercising their autonomy over insurance regulation. And they are quickly moving to a best-interest standard set out by the National Association of Insurance Commissioners in a February model law. Since then, Arizona and Iowa have adopted the rules, which establish a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. As of press deadline, regulators from Idaho, Ohio, Rhode Island and Kentucky said they are working on updating their annuity rules based on the NAIC model. Eric Arnold, an insurance and finance lawyer with Eversheds Sutherland, said the big news is the rule’s shift from suitability. “The large font headline is that it moves from suitability to best interest,” Arnold said. “What’s required now with respect to recommendations is rather than making sure that the recommendations are

Wolfe, who hosted the webinar. “We got broad changes to state and federal rules and regulations covering sale of annuities, new legislative initiatives intended to broaden the availability of annuities in retirement accounts.” I n s u r a n c e N ews N e t Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback. com. Follow him on Twitter @INNJohnH.

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September 2020 » InsuranceNewsNet Magazine

INTERVIEW

‘A Busy Advisor Is A Happy Advisor’ n a n n e r B Scott es his shar thods e m n e v e pro r o m g n i to writsurance life in 8

InsuranceNewsNet Magazine » September 2020

‘A BUSY ADVISOR IS A HAPPY ADVISOR’ INTERVIEW

he story of Scott Brennan has almost a sepia hue to it with his comparisons of his own life to Jimmy Stewart’s character, George Bailey, in It’s A Wonderful Life. It might even be tempting to file his story and career in a metal file cabinet drawer labeled The Way Things Used To Be. But that would be your loss. Brennan tells how he learned the fundamentals of effective sales and combined that with a genuine caring about his community in South Bend, Ind. His example tells how the best interest of the public can be served by people who sell products effectively — a very modern concern. Although he started his career under a good mentor, he was just as hungry and scared as any young person is when start-

family to go to college and graduate. He had a long career. I saw all sides of it — good, bad and indifferent. In my senior year in college at Indiana University, I started selling life insurance. There was really a kind man, a great guy who gave me a contract. He was a Northwestern Mutual general agent in Indianapolis named Gene Koch. He died about a month ago in his mid90s. He didn’t hire me for what I was. I know that he hired me for what I might be able to become. I didn’t know anything. I was only 21. Upon graduation, he had an office ready for me and a desk and a phone. I started just like anybody else would in the mid’70s. It’s been a great life. I started under what was called the One Card System that a man out of Chicago

was more appreciative than the trustees I actually gave the $5 million to. They didn’t teach me that in career school. That was one of the things you learn as you get older and a little more mature. I’m 64 now. I just shake my head. I’m fascinated how the way certain things remain the same and certain things really change. I have more than 50 lawyers as clients. I have three dozen CPAs as clients. I have tried to be a business and community leader. Everybody knows I’m in the life insurance business. Everybody kids me about it, which is great. It doesn’t bother me. Everybody knows when I call on them, it’s no mystery why I’m calling. My odds are no better or no worse than what Al Granum said they would

The best salespeople I’ve known in the life insurance profession — those who wrote the most — usually weren’t the greatest salespeople. They were usually the best prospectors. ing a sales job. He began at 21 in a new city with an old car and $400 to his name. Brennan would later qualify for the Million Dollar Round Table for more than three decades and serve as its president, but he said he wouldn’t have even qualified for an end table in his early years. He learned the basics and trained like an athlete with Northwestern Mutual and then MassMutual. He credits Al Granum’s One Card System and 10-3-1 principle, which emphasize sales activity — every 10 calls yield three appointments, leading to one sale. Which still holds true today. His story is infused with gratitude for a fulfilling career. In this interview with Publisher Paul Feldman, Brennan reveals the script that anyone can follow to have an equally wonderful life. FELDMAN: For those of our readers who aren’t familiar with you, tell us a little bit about yourself and how you got into this business. BRENNAN: I grew up in a home where my dad was actually in the life insurance business. He was the first one in our

named Al Granum had developed. The One Card System — I wouldn’t be talking to you today if I hadn’t been on it. But at the same time, I needed to make some small changes to it in the way that I went about things. It was a system based on activity, and a busy advisor is a happy advisor. FELDMAN: It is all about the activity, isn’t it? BRENNAN: The best salespeople I’ve known in the life insurance profession — those who wrote the most — usually weren’t the greatest salespeople. They were usually the best prospectors. And that’s what really makes the difference between someone who really makes a go of it and somebody who struggles. I tell you humbly that I’ve written life insurance on a garbage man and I’ve written life insurance on the CEO of a Fortune 100 company. My first death claim was for $5,000. We used to write policies that size. I had a death claim a couple years ago for $5 million. The family I took the $5,000 to

be. Through association work, like being deeply involved in the Million Dollar Round Table, the Forum 400 and NAIFA, I learned how to add zeros to cases. I learned how to prospect for bigger cases. FELDMAN: It seems like you are still hard at work. BRENNAN: Do I work as hard some days as I used to? No. Do I still work as hard some days as I had to? Yes. Do I still try and call on people I’m afraid of? You bet. Do people buy from because I’ve been president of the Round Table and the Forum 400 and the recipient of the John Newton Russell Memorial Award? No. They know I’ve received all those nice accolades, but I still have to make the case for it. I still have to ask people to buy. I still have to ask for appointments. It’s an honor. It’s not what society owes me, it’s what I owe society. I kind of have a bias for action. If somebody really doesn’t want to talk to me, it’s OK. If somebody doesn’t want to buy what it is I’m suggesting, it’s OK. I’m

September 2020 » InsuranceNewsNet Magazine

INTERVIEW ‘A BUSY ADVISOR IS A HAPPY ADVISOR’ not going to chase them down and be as persistent probably as I might have been 40 years ago. FELDMAN: What else changed in your approach over those 40 years? BRENNAN: Sometimes when I’m visiting with people, I’ll ask, “What does contentment look like to you?” And I’ll let them talk and they’ll tell me. Sometimes I’ll ask, “What one word would you use to describe the life you now have?” They’ll think about it and tell me. When people look like they’re upset, or they’re having a hard time, or

Scott Brennan salutes after finishing his presidential address at the 2012 MDRT annual meeting in Philadelphia.

they’re making a move like they’ve left an employer or a career after many, many years, I’ll ask, “Is there peace in your heart?” I’ll listen. I’ve probably become a pretty good listener. A lot of people in our profession talk too much. I like to pick up the phone and be a ray of sunshine for people. I’ve got a list of about 35 names I call, especially during this pandemic, where I just talk to them, 10

check in with them, sometimes leave them a voicemail. FELDMAN: Are you reaching out to fellow life agents in those calls? BRENNAN: Yes. I think when you concentrate on something, it expands. So, if you’re homeless, you know a lot of homeless people. If you’re a supermodel, you know a lot of beautiful women. If you’re a great baseball player, you know a lot of other great baseball players. If you’re really good at writing a lot of life insurance, you know others who are really good at it. We don’t keep a secret very well. We tend to talk to one another. We tend to go to meetings with one another. We like to eat lunch with one another or dinner or breakfast with one another, and we cheer each other on. This is a hardwon dignity. It’s hard. It’s tough. I know some days a lot of people in this profession feel like they’ve been beaten up or mugged. But the truth of the matter is to just hang in there and have positive expectation, which means I expect to meet good people. I don’t expect to meet people who aren’t going to show up. I expect to meet really good people. I always think abundance is a state of mind. It’s not hard for me to be upbeat and in a good mood. I’ll say to people, “I don’t want to be the king of good intentions, but there’s something about your situation that bothers me. Could we sit down for a minute?” And I’ll have an idea for them. I’ve built this clientele, and it’s been block by block, person by person, one file

InsuranceNewsNet Magazine » September 2020

at a time. I know it’s been a good one if I have to think, “Were they a friend first and a client second? Or were they a client first and a friend second?” I think optimism is an intellectual choice. FELDMAN: Do you have some tips that can help younger agents? BRENNAN: A couple of things have really helped through the years. One is if I’m not early, I’m late. I’m always early for stuff. It’s a great stress reliever. The other is knowing my purpose. Occasionally there are moments of great clarity when certain things happen. I had six death claims last year. I’ve had four this year. Every time I’m delivering money like that — and I don’t care whether it’s $15,000 or $15 million — I know why I was put on this earth. FELDMAN: How were you able to get as involved in your community as you have? BRENNAN: I don’t think anybody’s geared to do this selling of life insurance or prospecting for life insurance 24 hours a day. Some days, it just beats me up too much. I have to lean on other things in order to adjust my brain so it’s always in a good attitude. I’ve been president and chairman of all kinds of volunteer things just because I love doing them. I’ll tell you one quick story. I was flying through Nashville about 25 years ago, and I saw the wealthiest woman in our hometown sitting there waiting for the plane. Her father had started the biggest bank here and owned some other things, one of them you’d be familiar with. And I went up to her and said, “Thanks for all you do for South Bend. I really appreciate it. I love the way you lead from in front.” She said, “Well, aren’t you nice?” We smiled, and I went over and took my seat. When they were calling rows, it was my lucky day, I got to sit next to her. She had a lap full of work she wanted to do. I said to her, “Before you start, I need to borrow your brain for a few minutes.” She said, “What’s on your mind?” I told her that I wanted to be a business and community leader, but every time I ended up calling on people, they practically turned and ran the other direction. She asked, “Tell me again what it is you

‘A BUSY ADVISOR IS A HAPPY ADVISOR’ INTERVIEW do? I know your face, but I can’t remember.” I told her I was in life insurance. She said, “OK, this is easy. Learn how to raise money.” I said, “That’s it?” She said, “That’s it.” I took her advice and worked on a lot of campaigns. It has been an honor to ask people to do the right thing. It’s more like selling life insurance than anything else I’ve ever known. It’s the same set of

come over and visit with you.” It’s never easy, but it’s probably the best way that I know. Most people don’t want to refer you to others. However, they usually will introduce you. I would always use the word “introduction.” I would always also say, “I’m going to call on Steve; would it be OK, Paul, if I said to Steve you and I do business together?” It wasn’t like I said,

When I first started, the list of things I didn’t like was very long. The list of things I did like was pretty short. Today, the two lists have flipped. All the things I didn’t like early on, I got used to, or I figured it out.

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reasons why they want to do it, and it’s the exact same set of reasons why they don’t want to do it. That part of it has been fascinating. FELDMAN: How do you prospect? BRENNAN: I would always look for people who were doing well, who I could meet under favorable circumstances. I’d hear something about somebody building a building, or I’d be driving by and I’d see a sign, and I would think, “Geez, I don’t know that person; I’ll bet I know somebody else that knows them,” and I would try and warm it up a little. I had certain clients who really seemed to know what was going on. I’ll tell you who they were: commercial printers, loan officers, funeral directors. They really know what’s going on in town. I’d written all three of those. We’d be somewhere and they’d say, “Do you know Harry over here? No? Boy, you got to get to know him. He’s really doing good things.” I’ll still pick up the phone or write somebody a letter and say, “I’ve heard great things about you, and I’d love to

“Steve, Paul told me to call on you.” But I would say, “I’d love to visit with you someday. I’m pretty sure you know Paul, and he and I have worked together for a long time.” Little things like that. I would always try and work up, not down. I’d love to get to the top — the nicest people are always up there. They had the sharpest assistants. It doesn’t mean they’re all going to buy whatever it is I have, but it just means they probably have the means to buy it if I can make a case for it.

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FELDMAN: What would you say to an agent who is thinking about quitting?

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BRENNAN: I would say, “I’ve thought about it, too.” I’ve thought about it hundreds if not thousands of times. I would just say, “If I make a list of all the great things in the life insurance profession on one side of a legal pad, and you make a list of all the things you don’t like on the other, my list is going to be a lot longer.” When I first started, the list of things I didn’t like was very long. The list of

September 2020 » InsuranceNewsNet Magazine

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INTERVIEW ‘A BUSY ADVISOR IS A HAPPY ADVISOR’ things I did like was pretty short. Today, the two lists have flipped. All the things I didn’t like early on, I got used to, or I figured it out. I’ve gone out many times to talk to groups, especially young people, MBA students or undergrads in business school, and I start out by asking them, “How many of you value your independence?” Every hand goes up. Then I’ll ask, “How many of you think that will change when you’re my age?” I value my independence. I don’t think I would’ve been very good working for someone else. But it is hard, tough, and it is demanding. It’s basically a job of prospecting. Al Granum was right — activity breeds activity. If I’m an old agent like I am and I have a new agent in the office looking at me, I’m going to ask, “Let me see your book,” or “Let me see your schedule,” because an unhappy agent will have a very short list of appointments. A happy producer is a busy one, and he or she will have had a lot of appointments. I had a young man in my office in December; he’s a sharp young guy, he’s 31 years old. Within five minutes, he came to me for advice, and in the first five minutes he said, “I want you to know I have no intention of working as hard as you have.” I said to him, “Are you kidding me?” Every person I know who has really done well in the life insurance profession worked at it like a second religion. I mean, I still look for good clients the way I’d look for a piece of lost jewelry. I’m thinking about it all the time. I work at it all the time. FELDMAN: How do you keep your enthusiasm up? BRENNAN: I’ve had four death claims this year, and all that money was really important to those families that were 12

involved. The six I had the year before, all that money I brought in, it was really important. Do I try and deliver them in person? I do. I love MassMutual, it’s my primary company, but they’re not too crazy about sending money to agents anymore. Even though I wrote it, they’d rather send it

“Well, you should own it.” I asked her if she needed the money. She said, “Not really.” I said, “Can I ask you a question? Did you have a good relationship with your father?” There was a long silence, and then she said, and she was choking back tears, “I guess so. Why do you ask that?”

Scott Brennan receives an MDRT Foundation Excalibur Knight pin from Jerry Semler in 2012.

to the beneficiary, and I’m sure the legal department has a million reasons why. FELDMAN: Yes, I also can imagine the company has many reasons not to send the check to the agent. But it really is severing a connection, isn’t it? BRENNAN: Yes. A widow or the child of a person who thought enough of them to leave this behind, this love letter, I think they want a human being to go out and explain it. One day I was getting ready to put the key in the door at about a quarter to six, and the phone rang and a woman was on the other end who said, “I’m so upset with MassMutual I could scream. They won’t do what I’m asking.” I said, “What is it that you’re asking?” She said, “I want to cash my policy in.” I asked for her name, and I brought it up. I told her, “Well, your father still owns it.” She said, “He’s been gone.” I said,

InsuranceNewsNet Magazine » September 2020

I said, “Because your dad loved you. This is living proof. This is written proof that your dad loved you. He bought this for you when you were two months old, before he even really knew who you were.” Then the tears flowed. “I’d hang on to this if I were you,” I said. “The dividends are three times bigger than the premium, and if you don’t need the money, the gain on this is in double digits. Let’s make you the owner. Let’s come up with a new beneficiary, but let’s keep it in force.” She said, “OK.” Those little victories, which I can afford to do now, it’s very tough when you’re trying to make a living. When you don’t have any money, any amount is a fortune. I cannot tell you how difficult it was to do things like that when I was a brandnew agent, but as an older producer, as a middle-aged man, it’s my honor to do things like that.

NEWSWIRES Economic Busts In US History

GDP Marks Worst-Ever Slump In 2Q

Quarterly drops on an annualized basis. -32.9% - 2Q 2020 -28.6% - 2Q 1921 -19.1% - 2Q 1981 -8.4% - 4Q 2008

The U.S. economy saw its biggest quarterly drop in history, as second-quarter gross domestic product plunged 32.9% on an annualized basis, the Commerce Department reported. But despite the GDP seeing its deepest quarterly dive since mid-1921, the silver lining is that the drop was a bit less than previously feared. A Dow Jones survey of economists predicted that the GDP would slump by 34.7%. The drop was fueled by sharp reductions in personal spending, exports, inventories, investment, and spending by state and local governments. Personal consumption took away 25% from the second-quarter GDP, with consumers spending less money on health care and goods such as clothing. Motor vehicle dealerships led the list of those that spent less on inventories. Despite the sagging GDP numbers, personal income rose during the second quarter, thanks mainly to government payments associated with the COVID-19 pandemic. Personal income rose more than sixfold to $1.39 trillion, while disposable personal income went up 42.1% to $1.53 trillion. SOURCE: St. Louis Federal Reserve

AMERICANS TAPPING THEIR 401(K)S

The CARES Act a l low s t ho s e a f fected by the pandemic to take emergency withdrawals of up to $100,000 from their retirement plans. But how many Americans actually tapped their retirement accounts? An ADP analysis of plans it manages showed that 17% of all distributions taken by savers between April 6 and June 26 were related to COVID-19. Two percent of Vanguard’s retirement plan savers took a pandemic-related distribution through May 31. Of these, 4% were for the maximum amount of $100,000. Fidelity reported 711,000 individuals took a CARES distribution between April 1 and June 30, accounting for 3% of the company’s eligible 401(k) and 403(b) plan participants. Savers took a median coronavirus-related distribution of $4,800 from their plans, but some 18,600 participants tapped their accounts to the tune of $100,000. DID YOU

KNOW

MERCHANTS, INSURERS BATTLE OVER COVID-19 COVERAGE

Shutdowns and crowd restrictions imposed by state and local governments to limit the spread of COVID-19 have resulted in more than $1 trillion in estimated losses for thousands of small businesses that have struggled to stay afloat. Business interruption insurance policies have seen a flood of claims, which have been rejected almost universally for a variety of reasons, including boilerplate provisions inserted by insurers after the SARS outbreak in 2003 to exclude disruptions caused by virus and bacteria. So many lawsuits have been filed against insurers in the U.S. that a federal judicial panel held a hearing to decide how to manage them all in the months — and The insurance industry will pay possibly years out $107 billion in — ahead. The pandemic-related panel reviewed claims. more than 200 SOURCE: Lloyd’s of London federal complaints. Insurers say most business interruption policies were designed to cover shutdowns caused by catastrophes such as hurricanes and terrorist attacks while excluding pandemics that cause widespread

QUOTABLE It’s a very deep and dark hole and we’re coming out of it, but it’s going to take a long time to get out. — Mark Zandi, chief economist at Moody’s Analytics

losses too staggering to cover. Lloyd’s of London estimated the insurance industry still will pay out $107 billion in pandemic-related claims. That’s more than the combined amounts doled out after the terrorist attacks of 9/11 and Hurricane Katrina in 2005.

PANDEMIC MAKES SPARE CHANGE SCARCE MARKET

The question, “Brother, can you spare a dime?” took on new meaning as COVID-19 squeezed the nation’s coin supply. The scarcity of spare change led the Federal Reserve to establish a U.S. Coin Task Force to “mitigate the effects of low coin inventories caused by the COVID-19 pandemic.” What caused coin supplies to shrivel during the pandemic? One factor was fewer people spending at change-heavy businesses such as laundromats or buying things from vending machines. Some consumers, fearing that currency carries the COVID-19 virus, chose plastic or apps over cash. The rise in online shopping led to less cash spending. On top of all that, COVID-19 restrictions hindered production at U.S. Mint facilities during March and April. A number of businesses across the nation had trouble accessing coins from their banks over the summer and asked customers to pay for their purchases with exact change, cards or electronically. The mint is on track to produce 1.65 billion coins per month for the remainder of 2020, amounting to a production level of 19.8 billion circulating coins, U.S. Mint The financial industry could shrink its presence spokesman Michael White said. It’s an inin New York City by 20% as more employees crease from 2019, when 12.4 billion circuSource: LIMRA Source: Economic Policy Institute Source: The Partnership for New York City lating coins were produced. continue to work from home. September 2020 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

FIGHTING TO SERV E 奉仕するために戦う

Amir Ali uses the principles of the ancient samurai to serve his clients. By Susan Rupe 14

InsuranceNewsNet Magazine » September 2020

FIGHTING TO SERVE IN THE FIELD

hen you think of a samurai, you picture the elite Japanese warrior who fought for his daimyo, or master, with absolute loyalty, even unto death. Amir Ali looks at the samurai and sees more than the swords or the fighting. He sees someone who serves. It’s from that desire to serve others that Ali calls himself The Insurance Samurai. Ali’s Washington, D.C., practice works with 10-15 different partners outside of his office to provide a wide range of services — both on the life insurance and financial side and the property/casualty side. “I have clients who are millionaires, clients who barely have two nickels to

sion of New York Life that sold health insurance, providing support for agents. After graduation, Ali began working as a health educator but realized the nonprofit sector wasn’t where he wanted to be. Six months later, he returned to New York Life and assisted the health brokers, doing their quotes and helping them prepare for client meetings. It didn’t take long for him to realize that assisting brokers wasn’t where the money was. “I saw the bonus checks some of the brokers received, and they were more than my annual salary,” he said. “So I got licensed.” After a couple of years, Ali went to work for a husband-and-wife brokerage firm, and then in 2002, when he was 27,

honed my craft by reading everything I could about the industry.”

A Mentor’s Wisdom

Ali found a mentor in Galen Kimbrue, pa r t ner i n The Versia Group, a Washington-based professional services firm providing risk and organization solutions to businesses and nonprofits. Today, Ali is the firm’s vice president of commercial insurance. “He gave me such wonderful information that helped propel me forward,” Ali said. “And there were a bunch of other people as well who took the time to give me their wisdom and allowed me to convert it to my wisdom.” Ali said one piece of that wisdom that stuck with him is to always be listening.

T H E SE V EN V I RT U E S OF BUSH I D O Gi Integrity

Rei Respect

Yu Heroic Courage

Warriors make a The true strength full commitment of a warrior Heroic courage to their decisions. becomes is not blind. It is apparent during intelligent and difficult times. strong.

rub together — and a lot of people in between,” he said. The 45-year-old Ali became interested in the financial world when he was still in middle school. “I saw the movie “Wall Street,” and I had this dream of being Gordon Gekko — minus the prison sentence,” he said. He began studying the stock market listings in the daily newspaper and reading as much as he could about the business world. As a student at Howard University, Ali took a temporary job with a divi-

Meiyo Honor

Jin Makoto Compassion Honesty And You cannot hide If an opportunity Sincerity from yourself.

does not arise, they go out of their way to find one.

he started his own practice. “I wanted to do my own thing because I was young, and I knew everything there was to know about everything,” he laughed. “And I was moderately successful in spite of myself.” Ali’s love for learning was as great as his love for the industry, so he set out to educate himself. “I really dug deep,” he said. “I was hungry to learn everything I could about the industry. I went to as many industry trade shows as I could, and I studied and

Speaking and doing are the same action.

Chu Duty And Loyalty

They remain fiercely true to everyone they are responsible for.

“It’s the adage, you have two ears and one mouth.” Another nugget of wisdom that Ali said helped him in his career is to develop relationships with the “behind-thescenes” employees with the companies he works with. “Go talk to the underwriters and develop a relationship with them, learn how they think. The people in the claims department, the people in the enrollment department — form relationships with them because all those people will help

September 2020 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

you do your job successfully. Make sure you understand how the insurance company’s internal operations work.” Kimbrue said Ali’s samurai approach to his work “is what makes him special.” “His approach to the business is useful to clients; he is very well-rounded, and he wants to serve,” Kimbrue said. “When you look at someone like him who has the wide-ranging background, who has great relationships in the industry, who has the versatility — all of that gumbo makes him valuable to clients.”

I defend my clients by making sure they have the proper protection in place to defend themselves and to protect themselves, their loved ones, their assets, their businesses.

Inspired By The Bushido

Ali loves to read about history, and that love led him to study the Bushido, the code of honor of the samurai of feudal Japan. The Bushido emphasizes courage and loyalty. He said he was inspired by reading a book, , which tells the story of a man who was taken from Africa as a child and eventually ended up in Japan with some Jesuit priests who were setting up churches there. The African man later lived with one of the Japanese shoguns and became a samurai in his household. “I finished the book, and I said to myself, ‘Perfect. Someone is trying to tell me something here.’ I was thinking about how to brand myself, and I thought, ‘What does an insurance professional do?’ And the word that came to me is ‘serve.’ That’s the meaning of the word ‘samurai’ — someone who serves. “So I married those two philosophies. What I do every day is serve my clients, serve my family, serve my community. I defend my clients by making sure they have the proper protection in place to defend themselves and to protect themselves, their loved ones, their assets, their businesses. And then I serve them as necessary.” Ali said his favorite clients are small-business owners, particularly new entrepreneurs. He also does some government contracting work and works with a number of nonprofits. He said he has a multicultural client base of Blacks, whites, Hispanics and Asians. Denise Lloyd-Withrow is president and CEO of D.H. Lloyd and Associates and has worked with Ali in the past. “Amir is fearless,” she said. “There is never an account too challenging for him. He is 16

excited about the industry, and he always looks for opportunities to solve client issues. He’s like the Energizer bunny, and he never stops learning.”

Reaching Out To The Next Generation

The mentorship Ali received in his early years has inspired him to expose college students to the insurance and financial services profession. He has spoken to students at Howard, and he has plans to reach out to several historically Black colleges and universities in the BaltimoreWashington area whenever the COVID19 restrictions ease up. “I don’t hear much about where the next generation in this industry will come from,” he said. “I think it’s kind of frightening, and we need more people to reach out to college and university students.” Ali said he believes the insurance business “gets a bad rap for being boring.” “But think about it, insurance touches every aspect of our lives. When you think about the way insurance has a place in everything from the life insurance policy that helped fund someone’s education to the roller coaster you ride in the amusement park to the Uber that drives you

InsuranceNewsNet Magazine » September 2020

across town, you’ll quickly understand that insurance is not boring. “I try to get students to understand that insurance can be as exciting as you want to make it. It touches every aspect of your life. And if you stick with it, you can make a lot of money.” Ali said his 6-month-old son Langston Xavier is his inspiration for continuing to find ways to serve his clients and to improve himself. “The way to be successful in anything is to stay with it and become better every day,” he said. “There’s something in the Bushido that says, ‘Your life is something you build every day. You must convince yourself that you surpassed yesterday. And tomorrow, you must feel that you have surpassed today. In this way, there is no end to your mastery.’” Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

A BOUNTIFUL HARVEST IN THE FIELD

THE JOURNEY STARTS HERE Let’s move forward together. As needs evolve, so must financial guidance. Today’s workers are concerned about healthcare costs, retirement readiness, and protecting their family’s quality of life. We’re here with the tools and support you need to help clients:

SAVE: For a fulfilling future INVEST: For a brighter tomorrow PROTECT: Themselves and their loved ones RETIRE: On their terms

Visit: transamerica.com September 2020 » InsuranceNewsNet Magazine

THE TRANSAMERICA MISSION A LIFETIME OF FINANCIAL SECURITY

For financial professional use only. Not for use with the public

OUR STORY … In 1904, a young entrepreneur named Amadeo Giannini, with a reputation for helping small merchants and immigrant farmers, founded the Bank of Italy in a converted San Francisco saloon.

His goal was to make financial services available to everyone — an innovative concept at the time. Two years later, in the chaotic days after the devastating 1906 earthquake, Giannini set up a makeshift bank with a desk made of whiskey barrels on the San Francisco docks. He gave people loans secured with only a handshake to begin to rebuild their businesses and lives. That’s where our story begins. Giannini formed Transamerica Corporation in 1928 and spent his life influencing industries with inventions that still resonate. We believe he’d be pleased with Transamerica today, not only for earning a reputation as one of the world’s most respected financial institutions, but also because we’ve never lost sight of the vision he gave us … To support the needs of others.

“Serving the needs of others is the only legitimate business today.” Amadeo Giannini, 1870–1949

… CONTINUES TO EVOLVE Times change, and so do we. Since our founding, we’ve adapted to the times by creating innovative solutions designed to help individuals with their financial needs throughout their entire life. That’s how we came to be one of the first financial services companies to recognize the connection between Wealth + HealthSM, and make it a priority in our mission. We want people to live well, now and in the future. Over the years, during good markets and bad, it’s been our goal to be there with customizable strategies for a wide variety of needs. Because we know helping people achieve a lifetime of financial security requires smart planning and flexible solutions that can be tailored to any life. And while our experience is rooted in financial services, we know protecting a person’s health today can preserve their wealth tomorrow, and we won’t forget how important that is. This means helping people save for the future they want, to invest for their needs, to protect their lives and their loved ones, and to retire on their own terms. We’re uniquely positioned to offer a robust selection of strategies designed to meet those needs, no matter the stage of life. Our mission is to help clients along step of their journey. Just as we’ve done for more than 100 years.

SAVE: For your clients’ future INVEST: For your clients’ needs PROTECT: Their lives and their loved ones RETIRE: On their terms

OUR STORY | TRANSAMERICA

INDIVIDUAL SOLUTIONS

HOW WILL YOUR CLIENTS SAVE? People want to live long, healthy lives with the financial means to do so, and saving is essential to creating a secure financial future. About 76% of workers are saving for retirement through employer-sponsored plans, but is it enough? Median retirement savings among all workers is an estimated $50,000; Baby Boomers have put away an average of $144,000, and Generation X is at $64,000.1 Considering that healthcare costs alone could amount to $405,000 in retirement,2 that’s hardly the retirement of anyone’s dreams. History tells us the average client wants to save and grow a portfolio over the course of their life, but they usually want safety first. They want strategies that let them stay within the level of risk they’re comfortable with. Those strategies should be age appropriate, as well. Because the savings needs of someone

in their 20s will be much different than a Baby Boomer who’s facing rising healthcare costs and the chances they’ll live to 90 or beyond. We have solutions designed to suit a variety of objectives at any stage of life. Permanent and whole life insurance can help your clients build a tax-deferred cash value that’s safeguarded from market downturns while they protect their lives and loved ones. Investments providing risk mitigation can offer added stability as they build their portfolio. We also have strategies that allow for market participation and account growth combined with guaranteed protection.

Total median retirement savings: $50,000 ARE WE SAVING ENOUGH?

Baby Boomers savings: $144,000 Generation X savings: $64,000

”Retire Security Amid COVID-10: The Outlook of Three Generations,” 20th Annual Transamerica Retirement Survey of Workers, Transamerica Center for Retirement Studies®, May 2020 2 ”Healthcare Costs in Retirement,” Annuity.org, June 2020. 1

HOW DO WE PUT THE INVESTOR FIRST? Investors are looking to their financial professional to help them build their portfolio, regardless of how far away retirement is. They’re seeking solutions that fit their risk tolerance and life stage, so their portfolio is one they can stick with in the long run and feel confident about their financial future. We aim to provide a variety of options designed to meet wide-ranging objectives. That’s why we offer access to an array of mutual funds and exchange-traded funds managed by some of the industry’s leading investment firms, all carefully selected according to our Investor FirstSM process.

This philosophy helped us become a pioneer in the sub-advised mutual fund business. We know how to select and monitor a diverse array of money managers, to seek better results for your clients. THE INVESTOR FIRST PROCESS 1. Quantitative Analysis 2. Qualitative Analysis 3. Investment Manager Recommendation 4. Continuous monitoring

The Investor FirstSM Process is our ongoing commitment to making sure you have access to the investments you deserve from some of the best asset managers in the industry. This process only applies to funds advised by Transamerica Asset Management, Inc. (TAM) and not to non-proprietary funds. TAM is an SEC registered investment adviser.

HOW WILL YOUR CLIENTS SAVE? | TRANSAMERICA

It starts with our belief that no single investment firm is the best at managing every asset class. We take a diversified approach that applies the portfolio management experience of numerous and varied asset managers throughout the industry to give your clients a full range of investment strategies. We subject each potential manager to four rigorous steps – we analyze their data, evaluate the managers, select the best after a comprehensive review, and continuously monitor their performance – to find the managers we can feel proud about working with. Those who fail to perform as expected may be replaced.

HOW WILL YOUR CLIENTS PROTECT WHAT MATTERS MOST? If the unimaginable happened, how could a family maintain the lifestyle it worked so hard to build? Making smart decisions today may help people prepare for the expected — and unexpected. Life insurance might be one of the most important purchases your clients ever make. It can help replace lost income, pay off debt, or pay for a child’s education. No one can predict the future, but the actions your clients take — physically and financially — to prepare for it may help safeguard the long-term financial security of their family long after they’re gone. Nine in 10 life insurance owners agree it serves to protect their families and provides peace of mind, and they say buying it is the responsible thing to do. Yet 37.5 million households in the U.S. do not own life insurance, and the rate of ownership in recent years has significantly declined. Most people don’t know it costs less to insure a healthier person, and less for younger people.3 Regardless of age or financial situation, we offer a wide variety of life insurance solutions, including term, guaranteed* whole life and index universal life. And since your clients may need life insurance protection throughout all of life’s ups and downs, our solutions also provide powerful living benefits** that can be tailored for specific needs. Because life happens.

TOP 5 REASONS FOR OWNING LIFE INSURANCE4 1. Burial/final expenses 2. Transfer wealth/inheritances 3. Replace lost wages/income 4. Supplement retirement income 5. Help payoff mortgage

”The Facts of Life and Annuities,” LIMRA 2019 update. ”2020 Insurance Barometer Study,” LIMRA. * Guarantees are based on the claims paying ability of the issuing company. **Riders are available at an additional cost. Riders and rider benefits have specific limitations and may not be available in all jurisdictions. Benefits paid under accelerated death benefit riders, including the long term care rider, will reduce the life insurance policy’s death benefit and policy value. For complete details including the terms and conditions of each rider and exact coverage provided, please refer to the policy or riders. 3

WHAT WILL RETIREMENT LOOK LIKE? After a lifetime of saving for their futures, establishing healthy behaviors, investing for their needs, and protecting their lives and loved ones, your clients can finally savor retirement. These years should be their best, when decades of sound planning and smart, comprehensive solutions pay off with the retirement they’ve dreamed of.

Having enough money for this time of life remains a top concern for many Americans. Nearly half of Americans approaching retirement doubt they’ll receive enough income from Social Security and pensions to cover their basic expenses in retirement,6 including healthcare costs, which will cost the average retired couple $363,000.7 We know a sound strategy is about more than dollars and cents, and we aim to help people prepare for every part of their financial future, so they can live their retirement on their terms.

That’s what sets us apart.

*Guarantees are based on the claims-paying ability of the issuing company. 5 ”Social Security Administration Calculators: Life Expectancy, 2019 6 ”The Facts of Life and Annuities,” LIMRA 2019 update. 7 ”2018 Retirement Healthcare Costs Data Report,” Healthview Services, 2018. 8 An optional living benefit is available for additional fees.

WHAT WILL RETIREMENT LOOK LIKE? | TRANSAMERICA

As your clients enter this special time, a Transamerica annuity combined with an optional living benefit8 can provide an important piece of a diversified financial strategy. Besides the opportunity for tax deferral, professionally managed investments, and a death benefit, they can offer the confidence that comes with knowing they’ve secured a guaranteed income stream for life that can never be reduced or outlived.* Clients have the opportunity to potentially grow that income to help keep pace with inflation. And they can customize special features to meet changing needs, including investment flexibility, legacy protection, and more.

PROTECTING THEIR FINANCIAL FUTURES LIES AT THE HEART OF EVERYTHING WE DO. Today, people are living longer than ever, and they need solutions to help them pursue the financial means to live life on their terms. They don’t want to fear the unexpected. They want to be in control, and prepare for the future they deserve. Our passion makes us different. We use the link between Wealth + Health to optimize how people should plan for their future. Our robust selection of strategies are backed by a strong company with high financial strength ratings and the goal of helping clients add not only years to their lives, but life to their years. We’re excited to help your clients along every step of the journey.

When preparing for your clients’ futures, there’s no time like the present. Let’s get started today.

Visit: transamerica.com

Annuity withdrawals of taxable amounts are subject to ordinary income tax and may be subject to a 10% additional federal tax if withdrawn before age 59½. Variable annuities and mutual funds are subject to investment risk, including possible loss of principal. Your clients should consider a variable annuity or mutual fund investment objectives, risks, charges, and expenses carefully before investing. Go to transamerica.com for prospectuses containing this and other information. Encourage them to read it carefully. Insurance products are issued by Transamerica Premier Life Insurance Company, Cedar Rapids, IA, Transamerica Life Insurance Company, Cedar Rapids, IA, or Transamerica Financial Life Insurance Company, Harrison, NY. Transamerica Financial Life Insurance Company is authorized to conduct business in New York. Transamerica Premier Life Insurance Company and Transamerica Life Insurance Company are authorized to conduct business in all other states. All products may not be available in all jurisdictions. Variable annuities and mutual funds are underwritten and distributed by Transamerica Capital, Inc. 1801 California St., Suite 5200, Denver CO 80202, FINRA member. FINRA member. 258491 © 2020 Transamerica

09/20

COVER STORY

ACCEL OVERW

How COVID-19 Is Rapidly Rewriting How Life Insurance Is Done For producers in a pandemic world, complex and slow are out, simple and fast are in. by Steven A. Morelli

For all the difficulties that 2020 has dealt the life insurance industry, one positive is that this year has packed the industry into a catapult and flung it into the future. This Life Insurance Awareness Month finds carriers, distributors and producers using the technology that everybody had been slow to adopt, and building teams that a notoriously solitary field force had been reluctant to form. Travis Frier said those two elements have been key to success from his vantage point as the Dallas/Fort Worth managing director for AmeriLife, a 18

growing insurance marketer that is widening its presence in new markets such as the investment advising space. But Frier would throw in another important factor that he sees for a producer’s success. “It always goes back to the mindset,” Frier said. “There are individuals in life insurance and in any industry who will just make something happen. Regardless of what’s going on around them, they’ll find a way to make it, do it. And there are other people who will find excuses not to do it. For those who have chosen to find a reason to do it, Zoom and virtual meetings have become the new way of life and, quite honestly, have been very effective. So, I don’t know that they will completely go away once COVID-19 has gone away.” The “it” Frier is talking about is the advancement that the pandemic accelerated within the industry. But it may take until the next Life Insurance Awareness Month to get to a point where COVID-19 has gone away, at least as a disease. Frier But just as with the

InsuranceNewsNet Magazine » September 2020

positive effects, the negative effects will radiate long after the disease subsides. These are among those negative effects. LOW INTEREST RATES: The industry has been struggling with low interest rates since the last recession. It is difficult not only for carriers to make safe money but also to price products attractively. That pressure already had carriers trying innovative product enhancements such as synthetic indexes, which have drawn regulator scrutiny. Now interest rates are closer to zero than ever, forcing carriers back to the charts and tables for more creative products. MORTALITY DISRUPTION: Soon after the industry brought new mortality tables online in January, along came a pandemic that may be resetting those projections. Because COVID-19 seems to be showing a surprising variety of long-term effects, no one can confidently say how the disease will affect Americans’ health over the next few decades. It is that sort of long-term modeling on which carriers build the financial structure that supports Americans’ life insurance coverage. FINANCIAL STABILITY: The rising tide of the COVID-19 recession is lift-

ACCELERATED OVERWRITING

COVER STORY

LERATED WRITING ing the richest boats but submerging the poorest. The middle class is treading water, but how will they hold on as job losses pile on and less money flows around the economy? Even the top side of the middle class might be reducing expenses to the essentials. And “essentials” might not include life insurance, no matter how essential insurance is to a family’s economic future. Those are some of the key challenges. But Frier described some of the reasons to be optimistic about the industry’s future. Many of those trends that rose to meet the challenges of 2020 started long ago. They are: ACCELERATED UNDERWRITING: Although carriers and the rest of the industry have been working for decades on speeding up and simplifying underwriting, it still seemed to take the process about 45 days for most permanent life policies, especially those above $500,000. Now carriers are rushing to raise the face amount limits on simplified underwriting. TEAMS: Carriers, distributors and associations have long been advocating a team approach in field sales, even among independent agents. That is not only to help diversify individual practices but also to help fill in the talent and capabilities that individuals might lack. A LIMRA study showed that more than half of producers know that being part of a team is a route to success, but only 6% were in a formal team environ-

Out With The Old Life insurance applications were up slightly despite a plummet in the number of over-60 applicants, which is usually the strongest age group in sales. The application decrease in the oldest age band is not surprising, because most carriers limited or banned sales to that group starting in March. Companies just started reopening to older applicants in July.

MIB Life Index Age Groups by QTR. YOY

10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0%

10% 5.0%

3.3% 3.4%

1.3%

1.8%% 0.9%

-0.2%

-0.1%

-0.7%

-4.0%

-5.7%

Q3-’19/’18 Q4-’19/’18 Q1-’20/’19 Q2-’20/’19

0-44

45-59

60+

Second-quarter earnings were just being revealed at press time, with early indications showing that companies had performed better than expected but were still down significantly year over year. AIG and Prudential, for example, reported that they were suffering more from the historically low interest rates than from the direct effects of the COVID-19 pandemic. Life applications reversed the usual trend, with the youngest age group being the strongest, increasing 3.7% in June, year over year, according to the MIB Life Index. Applications were down 5.8% for the over-60 group. Overall, applications were up 1.2%. Agents and marketing organizations that specialize in simple-issue, smaller-face products have been reporting more sales, whereas those who sell fully underwritten, complex cases have been hardest hit. Those larger cases tend to involve older people whose coverage options have been limited, and pandemic restrictions have made medical exams difficult or impossible. — Steven A. Morelli

September 2020 » InsuranceNewsNet Magazine

COVER STORY ACCELERATED OVERWRITING ment. However, prospecting and selling in the midst of a pandemic are showing the power and resiliency of teamwork. TECHNOLOGY: Even producers who started 30 years ago can probably recall hearing some discussion about the promises of technology around the time when they first started. Even though Frier is 32 years old and comfortable with tech, he had been doubtful that the life insurance industry would have been ramping up any time

smaller-face term sales. That process wouldn’t come easily to older producers dealing with bigger cases involving permanent products. In fact, Frier said a purely remote process was rare in that group. “That’s never happened before,” he said. Frier is the youngest of his 37 people. They were accustomed to the traditional way of doing business. But Frier found that if he could just help producers pivot their mindset and approach from the

were face to face, if not more so, Frier said. “It’s definitely a coaching process. And the more you do it, the better you get at it,” Frier said, adding that patience and planning are required because clients will struggle with the technology. “So, you’ve had to block out some more time for meetings. Maybe not an hour this time. Maybe you need an hour and 30 minutes because you might need 20 minutes just to get somebody connected.”

“If you asked me a year ago if retirees would be willing to transact business over the internet using Zoom or GoToMeeting, I would’ve told you, ‘No way.’” — Travis Frier soon. He was even less hopeful about the typical client and prospect. “If you asked me a year ago if retirees would be willing to transact business over the internet using Zoom or GoToMeeting, I would’ve told you, ‘No way.’ And I would have been completely wrong. They are doing it by the truckloads.” His three offices of 37 staffers are writing more business than last year. Mastering the tools of remote selling had everything to do with it. “It’s a testament to the resolve of the agent in saying, ‘I’ve been provided this resource to utilize and I’m going to use it to the best of my ability,’” Frier said. “And if they’ve got a positive outlook on it, then so will my client. There’s a lot of puppetry and mirroring going on in that.”

Coaching Is Key

Frier did not think tech adoption would come quickly, even though he was part of an AmeriLife program to build a process in which the advisor meetings and client transactions all would be virtual. Although some, usually younger, independents had been doing their whole process online or over the phone, it was a small group, often dealing in 20

first phone contact with a client, they would be able to help clients — even older clients — down the tech track. “You might get a phone call that says, ‘Hey, somebody told me to call you. Can we sit down and talk?’” Frier said, turning to the producer’s response. “Yes. I would love to sit down and talk to you. However, due to social distancing guidelines, we are using Zoom. Have you used Zoom before?” At the beginning of the pandemic, few older prospects were familiar with video platforms, so producers had to adopt the zen of a patient IT helper. After clients said they were not familiar with Zoom, the producer could respond, “I’m going to send you an install link. I want you to put it on your phone or on your computer, whichever one you prefer. When you get the link, I want you to call me so that I can step you through making sure you can activate it. And then when it’s time for the meeting, I’ll call you again to make sure you can activate it and make sure your audio is connected.” Once the prospect or client had been walked through the process, they were as comfortable meeting virtually as they

InsuranceNewsNet Magazine » September 2020

Tough Country For Old Guys

Getting on board and comfortable with tech is one reason why some older independent agents ran into trouble when the pandemic closedown started clanging shut across the nation. Another factor is the difficulty in getting large cases sold and underwritten. More complex cases require more meetings, often involving other players such as lawyers and accountants. Not to mention that the higher-end clients are used to a certain level of handling that might not translate well over Zoom. Then underwriting is difficult or impossible because of the medical exam that carriers require of high-face-value policies. It has been so difficult to get prospects and clients to undergo medical exams that a large paramedical firm, EMSI, closed so suddenly in July that carriers asked agents to resubmit requests for medical exams that EMSI was fulfilling to other agencies. “EMSI has become a casualty of these unprecedented times, as the pandemic has severely depressed service volumes,” the company announced on its website. Fully underwritten, large cases tend to be written by more advanced, older agents. AmeriLife focuses on the near-retirement market, but the marketer relies more on simplified-issue whole life and term — so business has been good. Sales have not been as free-flowing for larger and more complex cases, said AmeriLife CEO Scott Perry. “Fully underwritten life business has definitely been hit the hardest,” Perry said, estimating that only 20%

ACCELERATED OVERWRITING of the company’s life business is fully underwritten. Insurance companies were not prepared to change their underwriting processes so suddenly on larger cases any more than older agents were. On top of that, large, complex Perry cases tended to come from the Northeast, which was harder hit earlier in the pandemic. But AmeriLife tends to sell more simplified issue through the 150,000 agents and advisors who write business through the organization. Business is up for the simpler products because the processes lend themselves to a remote sale. And it is making even more financial sense for life carriers to

COVER STORY

client. It’s a win for the agent.” Another area that is a boon for younger agents but not as much for older independent agents is the trend toward a more holistic, team approach to selling. AmeriLife has received a bit of attention for the number and the wide array of acquisitions, seven this year, as of press time. One of those this year was adding FormulaFolios to AmeriLife’s Brookstone, creating a $6.5 billion registered investment advisory. It is one of many businesses AmeriLife added to offer full service to clients. That multidisciplinary model has been promoted by regulators and associations to serve clients better. But adopting that model also helps distributors, because they don’t have to hand off clients who have needs that the company cannot fulfill.

“The long-term goal is to assemble a platform that allows us to address the holistic financial planning needs of those people near and in retirement.” — Scott Perry make the jump in the bigger cases — and quickly, Perry said. Insurers are losing revenue in covering fewer large cases and also because of bringing in less return on long-term investments. Carriers need to find ways to cut expenses. “Because if you have to make up for margin that you’re losing in your investment return, you’re going to look for other places to find margin,” Perry said, adding that cutting underwriting and processing costs can provide big returns. “If you could go from 100% of your $500,000 to $1 million face amounts being fully underwritten the old-fashioned way to 100% of that business or even 50% of that business not being touched by an underwriter and being turned around in seven to 10 days versus 30 to 45, it’s a huge difference, big savings,” Perry said. “It’s a win for the

“The long-term goal is to assemble a platform that allows us to address the holistic financial planning needs of those people near and in retirement,” Perry said. “So, think about protection needs, income needs and legacy needs.” The platform is growing while the company develops its ecosystem of partnerships and collaboration. “So, we can really provide the omnichannel customer experience, where the customer may come in via the call center because they have a protection need,” Perry said. “But they may also have an income need and a legacy need.” Perry said he had a few ideas why that system might not be so appealing to older agents. HABIT: Agents who have been successful for decades selling life insurance a certain way just may not see the need to add other products such as health or

September 2020 » InsuranceNewsNet Magazine

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COVER STORY ACCELERATED OVERWRITING property and casualty. “They think, ‘It hasn’t hurt me so far, so I can’t really think about retooling my business, even if you make it easy for me,’” Perry said. OWNERSHIP: They’re protective of their clients. The agents know they serve their clients well, but can they trust another agent or advisor to do the same? RISK AVERSION: If agents dramatically change the business and it is not successful, or not quickly successful, older agents don’t have decades left to rebuild their business, Perry said. “As opposed to a younger agent, who’s earlier in their career and building their business, who sees the way collaboration is working in other industries and other markets outside of ours and says, ‘This is obviously the future.’”

Old-School Lessons

Although AmeriLife is building tech platforms and ecosystems, one of its most successful offices still relies on fundamentals to pull in business even in difficult times. Joe Young, general manager of AmeriLife’s offices in central Florida’s Polk County, said his operations went mostly virtual early in the pandemic but now they are more of Young a mix, with some agents coming into the office and others remaining remote. Some are even going to in-person meetings again, while wearing a mask and observing safety protocols. Success was a matter of drive. “Our top producers have figured out a way like they always do,” Young said. “There are several in my office who have not missed a beat. There are some who have had their challenges, but I think with technology today, you can pretty well figure it out.” In many cases, figuring it out meant pushing harder with more outreach. “Really it’s just more activity to get more people to want to talk to you,” Young said. “Maybe you’ve got to make more phone calls than you did previously, going back and following up with existing clients where you have that relationship.” They also did campaigns in which they did such things as explain how the 22

InsuranceNewsNet Magazine » September 2020

Why Don’t Independents Want To Team Up? Independent producers know that building a team environment is the way to succeed in today’s life insurance sales world, but trust issues might be holding them back, according to a LIMRA researcher. “We thought that we would see more advisors in the formal team models because there’s a lot of interest in the industry around that,” said Patrick Leary, vice president, distribution research, referring to a survey report, “Leverage and Collaboration: How New Practice Models Are Changing the Game.” The survey found interest in teams among agents themselves. Half of the independent agents among the respondents said they were interested in being part of a team. But only 20% of independents had access to support staff and expert help from professionals such as tax attorneys. Most independent producers came from career shops and pushed off on their own to have control of their own operations and results, Leary said. It is difficult to turn around decades of independence and become part of a team — even if they do see the benefit. “It’s the kind of thought, ‘I can do it better myself. Why should I give up advantage for a cut of half?’” Leary said. “We found in this report that when you’re

Insurance Advisor Practice Support Models MLEA*

Independent insurance agent

All respondents

17%

25%

19%

Has one support person (full or part time) who is responsible for administrative functions, who may also provide limited marketing, client services or other support functions.

Has access to multiple dedicated or shared support staff. Each may have specialized roles in administrative, marketing or client support functions.

Has access to not only support staff but also more advanced support professionals such as tax accountants and attorneys.

Career agent

Is a solo practitioner with no support staff.

Insurance advisor

* Small base (n=74)

ACCELERATED OVERWRITING

COVER STORY

Why Team Up?

part of the team, one of the big concerns is surrendering that control of client, best practices, et cetera.”

More Business: A big plus to going with a team model is the leveraging opportunity, which means producers would be able to expand their own personal capacity.

Even agents who might want to take the leap would have to figure out how to find the right people and build the practice model to include them. Quite the task when they are also trying to prospect and sell.

“So, if I’m an advisor, I’m doing my own thing, I have a limited amount of hours in the day and my personal capacity is limited,” Leary said. “I start leveraging other professionals, specialists, and I partner; I can bring things to the marketplace, both with my own clients as well as bringing on new clients.”

They need help to do it, and their favorite marketing organization just might be the one that can do it, Leary said. “That’s where the intermediaries come in for those guys,” Leary said. “Leaning on the BGAs and IMOs to provide that support.”

More Happiness: New advisors especially thrive in a team environment. That is a crucial issue when turnover is a problem throughout the industry.

But even with that support, there are the control issues. And that is not necessarily a bad thing. Independent agents built their business and reputations serving one client at a time and don’t want to hand over what it took them decades to construct.

More Complexity: As advisors work their way up the income ladder, they find more complex cases that require more expertise. “The established advisors are saying, ‘OK, how do I meet those needs? I’m not an expert in some of these.’ So, it’s estate planning, high-level corporate upside investment strategies, tax planning and all sorts of advanced skills.

“’What if my clients that I’ve had for 10 years — and we have this great relationship — clashes with whoever I’m bringing in?’” Leary said. “’Uh oh, that could create an issue, and I may lose that client.’”

— Steven A. Morelli

Interest In Joining A Formal Team By Type Of Insurance Advisor Not very/not at all interested

All respondents Career agents MLEAs Independent insurance agents

22% 19% 20%

25%

Somewhat/very interested

53%

23%

58%

27%

24%

Neutral

53%

26%

50%

Reasons For Not Wanting To Be Part Of A Formal Team Do not want to put client relationships at risk

44%

Do not see the benefit/do not know enough about such an approach

34% 30%

Do not want to rely on others Lack of company support Advisor can make more money on his or her own Potential reward not worth the risk

23% 20% 19%

September 2020 » InsuranceNewsNet Magazine

COVER STORY ACCELERATED OVERWRITING CARES Act works and how it will affect consumers and their health plans. In those cases, it wasn’t email or direct mail but getting on the phone that was the most successful. The COVID-19 closedown was tough on Young’s own production because he had relied on seminars for about half of his prospects. When COVID-19 closed that door, he turned to his book of business to do the reconnecting that he did not have the time for in the past. “It forced me to get back to things I’ve been wanting and needing to get back to, instead of chasing the next seminar,” Young said. “I was able to close several deals over the phone and several over Zoom.” That last part was a big change for an old-school guy who likes to hit the phone and stand up in front of a roomful of people. The room he stands up in now is a studio in the office. “A lot of these people, quite honestly, who are willing to do the Zooms, especially the ones that have truly quarantined themselves, are ecstatic to talk to somebody via Zoom,” Young said. He also found something else has changed — the retirees. Earlier in his ca-

reer, retirees tended to be from the silent generation and had no use for technology. Now retirees are aging baby boomers. True, there is the “OK, Boomer” stereotype, but boomers are more willing to give tech a chance.

“A lot of these people, quite honestly, who are willing to do the Zooms, especially the ones that have truly quarantined themselves, are ecstatic to talk to somebody...” — Joe Young “It’s no big deal for them to click on a link and join a Zoom,” he said. While agents and office staff are trying out new things, they are grabbing the tech that works, whatever that tech is, and building a new way to sell, even when they do an old-fashioned in-person meeting. “We’ve worked on some best practices where new agents — or any agent, for that matter — go out, and if they get

Insurance Advisor Collaboration Models* Few independent agents have a formal team arrangement. MLEA^

Independent insurance agent

All respondents

41%

36%

50%

45%

Occasionally partners or conducts joint field work with other professionals with certain types of clients or in special product situations.

Regularly partners or conducts joint field work with other professionals for certain types of clients or in special product situations.

Is part of a formal team of sales and/ or other professionals who share clients, revenue, expenses or support.

None of the above.

Career agent

Regularly refers clients to other professionals.

Insurance Advisor

*Multiple responses ^ Small base (n=74) Source: Leverage and Collaboration: How New Practice Models Are Changing the Game, LIMRA

stuck or they need the help of a specialist in the office, they can quickly throw out on our WhatsApp, ‘Hey, can somebody pop in and help me?’ and then pull that life insurance specialist or financial specialist into a Zoom meeting on the

InsuranceNewsNet Magazine » September 2020

agent’s iPad and bring them into the meeting like they just walked in the front door,” Young said. “We’re trying to set up days where the specialists have multiple appointments booked and they’re sitting in their office where they’re just getting brought on via Zoom from an agent who has a company-issued iPad,” Young said, adding that the pandemic has forced him and his agents to take a leap that they might not have made for years. Electronic applications and platforms, along with communication technology, all came together at the right moment. Not only are they helping make sales in a tough environment but they also have agents and managers such as Young rethinking how they sell. “Usually in a situation where I’ve got somebody who wants to talk to me and they’re eight hours away, in the past, I would have probably just referred them to an office up in that area,” Young said. “Now, I can have that meeting. So, it’s really helped us. We’ve grown tremendously as an agency and as an office, and I am thinking about things a little bit differently.” Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at smorelli@innfeedback.com.

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The Life Insurance Issue • Special Sponsored Section

The Future of the Independent Practice

as the combination of a global pandemic and ever-tightening regulations revealed the weaknesses in traditional producer groups, independent marketing organizations (IMOs), brokerage general agents (BGAs) and broker-dealers (B-Ds)? Brian Murphy, executive director of Lion Street, believes it likely has. And he has one piece of advice for high-producing independent financial professionals and advisors wishing to continue thriving — adapt to a new model or risk being left behind. While some firms in the insurance and financial space have fared better than others recently, Lion Street has continued its growth trajectory by helping its network of firms focus on the most relevant client strategies for the uncertainties of the present while designing the firm of the future. A firm that tends to the broad needs of its clients is more technologically innovative and better able to serve its communities. Today’s Minimum Viable Product Lion Street’s elite firms are some of the finest in the industry. These independent firms long ago transitioned from product based to solution based. Firms that are a part of this group have engineered themselves to appeal to the high net worth, family office and business markets by being full service, multigenerational, specialized and completely independent. Lion Street firms are unified in a belief that this is now the minimum viable product to succeed as a financial professional. It is difficult to build a firm that fills so many client needs and can deliver lifelong service. This is why Lion Street exists: to bring together firms dominating part of the marketplace, work with them to uncover their map forward, provide expertise and guidance for the journey as well as help them think about their own firm succession strategies, broaden their horizons into new solutions and markets, and facilitate achieving their goals and the goals of their clients. “The financial services market for independent advisors is a two-sided market. On one side, it is an ever-fragmenting group of providers, carriers, manufacturers, fintech companies and more. On the other side are independent firms and advisors with varying goals and structures. Lion Street brings these two sides together in a customized and rational fashion to help firms achieve better outcomes for their clients,” says Murphy. Lion Street believes it starts with understanding the needs of the client. What do Americans need in the future to deal with all of life’s moving parts? In the past, they settled for individual products from multiple agents, an investment broker and some do-it-your-

InsuranceNewsNet Magazine » September 2020

self dabbling. Now, savvy consumers are awakening to the fact that everything is connected, brought home in meaningful ways during the pandemic. Lion Street’s Integrated Platform Instead of the fragmented approach of others, Lion Street built an integrated platform to bring the two sides together more efficiently. Virtually everything a firm needs to serve its clients is on this single platform. This allows an advisor to truly select the best client option, regardless of whether it is a security, alternative, life insurance policy, corporate solution or specialty product. “Our goal is to have an answer to any question,” says Murphy. “The way we see the future growth of independent practices, for those catering to more sophisticated clients, involves groups of advisors coming together. Their role is to serve different parts of the consumer world in their own specialty, and [it also] is structured to allow for multigenerational control. Each firm then can become truly multidisciplinary, and as a team present to a client [those] cases and products that are designed to have 20, 30 or 40 years of sustainability,” Murphy added. This design allows consumers to feel better about their financial decisions because they know there is an entire team behind them that understands each client’s specific needs, wants and desires and who will be there for the clients and their loved ones in the future, rather than clients needing to contact a series of people individually. This sophisticated framework offers near-limitless strategies and client solutions across product and regulatory spectrums, leaving zero gaps in service offerings and no compliance concerns.

A Full Spectrum of Products, Services and Expertise Lion Street has built a platform on which advisors can base their financial service practices and benefit from strong partnerships, VIP access to carriers and providers, and the right balance of expertise and technology to help serve their clients efficiently and objectively. Hybrid Structure Lion Street’s unique hybrid structure blends the benefits of producer-group-like relationships with seven core insurance carriers with the choice of dozens of other carriers on a single platform, ensuring firms get the best solution for their clients. Backed by Lion Street’s expert team of advanced case designers and underwriters, Lion Street firms are assured access to the latest in planning techniques and the knowledge to set up plans for optimal tax outcomes.

The Life Insurance Issue • Special Sponsored Section

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applications. Alongside eStreet are other solutions Lion Street has innovated over the past few years, including a multi-carrier, single-entry product comparison, quoting and illustrations tool. This made the work of creating side-by-side illustrations from many different carriers

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September 2020 » InsuranceNewsNet Magazine

The Life Insurance Issue • Special Sponsored Section

Everyone Deserves A Guardian The power of life insurance in uncertain times

ncertain times have solidified the need for financial stability and dependability, and both can be provided by life insurance. Term and whole life insurance products provide guaranteed1 liquidity and confidence for the future to fulfill commitments and help protect your clients or their loved ones when life doesn’t go as planned. Nothing has highlighted the impact of the unexpected or the fragility of our lives and circumstances more than the events of the past several months. Life insurance is reassurance that your clients can live life to the fullest knowing their family will be financially protected, whethMichele Lee Fine, RICP er it’s for retirement, for busi(CEO and Founder) Cornerstone Wealth Advisory ness opportunities or in the event of their passing away. The absence of life insurance in one’s financial plan can be devastating on a financial level and can add significant stress on loved ones. Any amount contributed to a life insurance policy can pay back more throughout one’s lifetime, or at one’s death, to those who matter most. Why Now For Term And Permanent Life Insurance? According to Guardian’s Financial Wellness report “Protecting those we love: The role of life insurance in financial wellness,” 8 in 10 people whose spouse passed away but had no life insurance say they have not yet fully recovered financially from their spouse’s death. In America, 75% of households that experience the premature death of a primary wage earner without life insurance report they are living paycheck to paycheck.2 Having protection in place on one’s spouse is important at all times and is something that may be underestimated. Without guidance and leadership from an experienced financial representative, clients often may overlook this area of planning. These times have shown that life is completely unpredictable — no one knows what the future holds. The advantages of participating cash value whole life insurance, in addition to the guaranteed amount of money beneficiaries receive when the policyholder passes away, are that the policy builds tax-favored, guaranteed cash value;3 is insulated from the market; and can provide money your clients can use during

InsuranceNewsNet Magazine » September 2020

their lifetime — a reassuring, tax-advantaged and valuable benefit in uncertain times.4 Term life is another approach that provides temporary coverage for a specific period of years. It can fill a gap when income is lower and life’s demands of a growing family or business can be high. Short term, it offers a relatively low outlay for an exponentially higher temporary benefit. Designing a term policy with the option to convert to a participating cash value whole life policy when cash flow permits can provide a greater level of optionality to the client in the future. This can be a valuable benefit for young clients, clients who are recovering from the financial impacts of uncertain times, or those who see the value of whole life and want to have the option to

A time to reflect on future financial needs In a year marked by change, there’s no better time for clients to review their circumstances, assess their financial future and consider the impact of their death on their loved ones and colleagues. Questions for your clients to consider: • If you pass away and don’t have life insurance, what costs could be a burden on those around you? • Do you have enough life insurance to replace your income and cover all your expenses for a given amount of time? Will your family be able to cover these expenses that may include commitments to your children, including education, camp, weddings, mortgages and all other unforeseen circumstances that your spouse and loved ones will have to face without you? • If you are a stay-at-home parent and were to pass away unexpectedly, how would your spouse pay for child care or other services that a single working parent might rely on to help keep the household running? • Will future access to potential tax-favored cash value to withdraw or borrow funds for any reason — such as buying a home, adding to retirement income or paying a mortgage — be of value to you? • How would your business be affected by the death of one of your key employees? In times of instability and uncertainty, finding the right coverage with a strong company can offer the dependability your clients need and want.

The Life Insurance Issue • Special Sponsored Section

transition to that if their financial situation or cash flow improves in the future. It’s always a good time to connect with clients about protecting who and what matters most in their lives. I take a holistic approach to understanding my clients’ goals, priorities and concerns, and I assess where the opportunities are and what makes clients vulnerable. For instance, you may discover an individual is focused on protecting their family and helping a charitable organization they are passionate about. If that is the case, I might discuss Guardian’s term policy with a charitable benefit rider. The rider will pay an additional 1% of the death benefit, independent of what their beneficiaries will get, to the charitable organization of their choice for no additional premium.5 For those who are philanthropically inclined, a Guardian term policy is a way to honor their financial commitments and create a legacy. Why Strength Matters Most clients are interested in forming relationships with companies that are poised to grow with them. Purchasing term life from a company that also allows conversion to whole life allows clients to work with companies that are equipped to help their clients grow and sustain their wealth as their income rises. These companies also may be better suited to provide new products that can be personalized to clients’ individual goals and objectives, such as the term life with a charitable rider. In addition, it’s important to consider the type of insurance company you choose to work with. Many of the top mutual companies have been around for more than 150

years, with solid financial strength ratings and billions of dollars in excess reserves and liquidity. These highly regulated companies have to pay out claims, maintain financial strength and may pay a portion of profits to policyholders in the form of a dividend.6 When your clients are looking for long-term financial confidence, it’s important to help them choose an insurance company they can trust, a company that has survived uncertain times over the past century, and has never missed a dividend payout to policyowners, even in the worst of economic periods. Life insurance is a valuable asset that is intended to provide guarantees and value through benefits that may not be found in other financial vehicles. The integrity, service and results a company provides in their products and services are a pivotal part of the decision-making process.

For more information on Guardian’s life insurance solutions, including a Guardian term policy with a charitable benefit rider, visit www.TermToWhole.com.

Registered representative and financial advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial representative of The Guardian Life Insurance Company of America® (Guardian), New York, New York. PAS is a wholly owned subsidiary of Guardian. Cornerstone Wealth Advisory LLC is not an affiliate or subsidiary of PAS or Guardian. Cornerstone Wealth Advisory LLC is not registered in any state or with the U.S. Securities and Exchange Commission as a Registered Investment Advisor. California Insurance License #0F81001. Material discussed is meant for general informational purposes only and is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. 1. All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims-paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash value. 2. https://www.guardianlife.com/life-insurance/study/protecting-those-we-love 3. Some whole life policies do not have cash value in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information. 4. Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a modified endowment contract (MEC), loans are treated like withdrawals but first as gain, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal also may be subject to a 10% federal tax penalty. 5. All registered 501(c)(3) organizations are available as your charitable benefit rider recipient, up to a maximum of $100,000. Subject to state availability. 6. Dividends are not guaranteed. They are declared annually by Guardian’s board of directors. Whole life riders may incur either an additional premium or cost. Riders may not be available in all states. The Guardian Network® is a network of preferred providers authorized to offer products of The Guardian Life Insurance Company of America (Guardian), New York, New York, and its subsidiaries. Guardian® is a registered trademark of The Guardian Life Insurance Company of America. www.guardianlife.com

2020-105411 Exp. 7/22

September 2020 » InsuranceNewsNet Magazine

The Life Insurance Issue • Special Sponsored Section

Four Ways an Indexed Universal Life (IUL) Policy Can Help Reduce Retirement Risks

Minimizing the Risks to Your Clients’ Retirements By Ron Lee JD CLU ChFC, Vice President, Advanced Markets and Brokerage Field Relations Mutual of Omaha I think we can agree that there is a lot of uncertainty in our world right now. This uncertainty might do one of two things to your clients — it may make them proceed with their retirement plans without due regard to the risks they face, or it may paralyze them with fear. That’s why it’s more important than ever in today’s environment for you to help your clients make informed choices that move them toward a safer and more successful financial retirement. In this article, we will discuss four retirement risks that your clients may face and how an indexed universal life (IUL) policy can help manage those risks. 1

465430 30

Market Performance Risk – Let’s start with what’s on everyone’s mind right now and that’s the concern that the market will not perform well going forward. Of course, we know that it will go up this year. Unless it goes down. Or stays about the same. If your clients are planning for retirement and make an IUL a part of their strategy, they can eliminate the risk of market loss with the money they have in their IUL policy. Keeping a portion of the retirement portfolio where there is downside protection through a floor on the crediting rate can provide comfort to your clients and stability to their retirement plans.

InsuranceNewsNet Magazine » September 2020

Inflation Risk – Your clients could avoid all market risk with certain savings tools, but that doesn’t address inflation risk. Interest rates that hover not far above zero don’t provide nearly enough protection for your client’s purchasing power. Groceries, utilities, health care, travel, etc. will surely cost more twenty years from now when they are in their retirement years. An IUL product provides the opportunity for greater gains without the risk of market loss which can help cover those cost-ofliving increases over the years.

The Life Insurance Issue • Special Sponsored Section

Sequence of Returns Risk – We all hope that while the market has ups and downs, it will climb higher as the economy begins to turn around. Imagine how your clients who retired before March of this year felt about the security of their retirement. The market dropped so precipitously, and fear set in, as many retirees realized they needed the money in their retirement account for basic expenses. They would have to start spending down their retirement assets before their accounts had time to recover. Those with a properly-funded indexed universal life policy were not forced to take distributions from their retirement account because they could use the cash value in their IUL policy as an alternate source of retirement income.

Health Care Risk – Perhaps even more importantly, what about the risk of needing long-term care? Spending down those other retirement assets prematurely to pay for long-term care services not only depletes those assets, it may also cause greater taxes, thus accelerating the spenddown even further. Some IUL policies include chronic illness and/or longterm care riders that can provide early access to the death benefit which can be used to pay for chronic illness and long-term care services so that the other assets can continue to grow. This is something their IRA investments won’t do.

These are just four of the risks that IUL can help manage for your clients. Help your clients manage these risks and know that they can have a better planned and more secure retirement. Mutual of Omaha has a detailed Retirement Risks brochure that will help you understand the risks your clients might be facing or could face in an uncertain economy, and how an accumulation-focused IUL product like Income Advantage IUL could help them plan for these risks. If you want to learn more about other risks or to get your own a copy of the Retirement Risks brochure, contact Mutual of Omaha’s Advanced Markets Team at advanced.markets@mutualofomaha.com.

Our Solutions* Whether your clients are just starting out or are looking to build a legacy, we have financial solutions you and your clients can count on. Visit mutualofomaha.com/sales-professionals for details.

Medicare Solutions | Medicare Supplement, Prescription Drug Plans, Dental Insurance with optional Vision Benefit rider

Life Solutions | Indexed Universal Life with optional Long-Term Care rider, Term Life Answers, Term Life Express, Living Promise (Final Expense), GUL Express, Children’s Whole Life

Health Solutions | Long-Term Care, Critical Illness, Cancer, Heart Attack/Stroke, Disability Income *Coverage my not be available in all states.

For producer use only. Not for use with the general public. September 2020 » InsuranceNewsNet Magazine

The Life Insurance Issue • Special Sponsored Section

OneAmerica LTC Claims Deliver Dedicated Service, Efficiency and Empathy Claimants Receive Five-Star Service From Care Solutions Care Benefit Concierge Program

t doesn’t take long to discover Amy Chinn’s deep passion for he lping Care Solutions clie nts of OneAmerica navigate a long-term care (LTC) event or her abundant pride in her team of care specialists who support these clients’ families. As vice president of claims operations for OneAmerica, Chinn sees the power of the OneAmerica Care Benefit Concierge program at work every day. This differentiator puts a care specialist — who serves as an LTC professional, compassionate friend, active listener and project coordinator — at the disposal of Care Solutions policyholders and their families to provide support Amy Chinn, vice president of at what might be the hardest claims operations time in life: an LTC event. “A long-term care event is a time of great uncertainty for our customers and also their families. We are there when they call us,” Chinn says. “We want to be there for the claimant and their family from the very beginning. With that initial call, the relationship is formed.” Chinn notes that policyholders and their powers of attorney are encouraged to reach out early — when an LTC event might be on the horizon. “At that time, our care specialists can explain all the benefit options, walk them through the process and help them understand what that looks like,” she says. From that point, the claimant has opened their file and will have a dedicated personal representative — a Claims Concierge care specialist — with them through the entire process to provide complete support to help reduce stress. “We know long-term care. Our specialists are very skilled,” says Chinn. “They are highly trained on the tangible pieces around long-term care, such as facilities, the policy plan of care and working with physicians, but also on the intangibles — like empathy and compassion. They seek to understand and ask the right questions to keep the process on track. We take ownership so that our customers do not have to worry and can focus on other things.” Chinn notes that ownership is a real point of differentiation and appreciation from clients. For example, if there are questions for physicians or facilities, the care specialist will make contact and get those questions answered. “One thing we hear a lot is praise for our care specialists,” Chinn says. “Clients work with the same

person throughout the LTC journey. Family members are so grateful that we take care of everything so they can focus on their loved one and the time they have together.” Chinn says they also take time to do discovery to ensure the process is as clear and simple as possible. When they found that the biggest delay to claims processing for many clients was a lack of power of attorney, her claims team updated the process to ensure this need was made known to policyholders early in the process. “We now proactively talk to people about power of attorney if they call in before there is a claim,” says Chinn. “We want them to be able to establish that before it becomes difficult, such as if they develop a degenerative disease.” One reaction that care specialists consistently register from family members is relief when they realize there is no need to become an overnight expert in medical diagnosis and LTC in order for their loved one to have the best experience with claims or receiving care. With the Care Solutions lifetime benefit option, clients can’t outlive benefits, which include the support of a care specialist.

“We are so honored to be a part of the families’ journeys, and a long-term care event can go on for years. It is really rewarding.”

InsuranceNewsNet Magazine » September 2020

Chinn adds that her team members’ training helps make them successful. OneAmerica has a selective process in choosing the right candidates for the role — candidates who meet competency requirements for emotional intelligence and empathy. In addition, OneAmerica invests in its care specialists and claims process with ongoing competency-based training and quality review as well as many consumer-facing education materials to help policyholders understand the basics of LTC. “With OneAmerica Care Solutions and Care Benefit Concierge, you tell your story once and talk to and rely upon the same person for the duration. That’s how OneAmerica delivers on our promises when a customer needs us most.”

To learn more and request your free Claims Concierge Sales Kit, visit www.LTCkit.com.

OneAmerica® is the marketing name for the companies of OneAmerica. Products issued and underwritten by The State Life Insurance Company® (State Life), Indianapolis, IN, a OneAmerica company that offers the Care Solutions product suite.

The Life Insurance Issue • Special Sponsored Section

Crump Life: Setting the Stage for the Next 100 Years

hen advisors seek to find success in an ever-changing industry, they inevitably discover the helping hand of Crump Life Insurance Services. President Rob Carney is leading a bright future for insurance professionals with the tools, tech and experience that come from a legacy that spans more than 100 years. Q: Congratulations on your 100th anniversary. A lot of innovations have happened in the past century. What are some of the core values that have stayed the same? Rob Carney, President, We keep the client at the center Crump Life Insurance Services of everything we do and strive to contribute to the communities we serve. We do this through responsive, empowered, engaged teammates. Clients see our associates as the face of our company, and equipping them with the training and tools they need to be successful every day is key. We use the phrase “One Crump” a lot. We can accomplish anything with the power of the team. It is important to us that people wake up every day feeling energized about what they do. This helps them bring the right attitude and approach as they serve their clients. Q: In its 100-year history, your company has weathered a depression and is now staying strong during a recession. Do you have any words of advice for advisors out there doing business in the current environment? In 2020, the pandemic certainly helped us evolve and think about how we need to do business — supporting our producers and helping them support their clients. Focusing on solutions for clients is key, along with remembering that what we do is important, and the products we offer support families and businesses during very difficult times. Remaining focused on clients with active listening to understand what customers want and need provides the resiliency to successfully work through today’s environment and find our next normal. Q: Why is life insurance more important than ever? With the market turbulence and heightened focus on life’s risks, we believe the products we offer are more important than ever — certainly life insurance and retirement products are. We also offer annuities, disability insurance and support for long-term care needs. These products are front and center to meet people’s needs during challenging times. The key from our

perspective is to focus on clients and the problems they have that our products can solve. The pandemic has raised awareness and increased interest from younger generations as well, as they begin to understand the need to plan for life’s difficult moments. Q: How have you enhanced your digital capabilities, and how will that help the advisor? I am proud of the capabilities we provide at Crump, and certainly we are never done. We recently launched the Crump Transaction Center, which is a digital hub where we offer all our product lines. It is a multicarrier solution that helps advisors support their clients through an efficient processing platform. It improves cycle time, increases placement ratios and provides flexibility in terms of how our producers do business — whether that is in submitting electronic applications or making it easier to download and upload paper documents. Producers can also use our Drop Ticket feature, which offers sales assistance and app completion. We’ve centralized contract quoting and provided other tools and resources, like calculators for underwriting and marketing information. All of this helps producers be effective and allows them to work with their clients anywhere, anytime. Digital transformation has been a big focus of ours over recent years, and the pandemic has been a catalyst for change in terms of adopting some of these tools. Q: Crump is a leader in our market; what can the industry expect from you in the future? Simplistically, I would say growth. Growth for us and growth for the clients we serve. Helping financial professionals grow their practices is our focus each and every day. With the strong financial support of our parent company, Truist, we are well positioned to continue to invest in our people, process and technology and ensure that we remain successful in the future. I am excited for the future. I look forward to setting the stage for the next hundred years for Crump.

To learn more about the Crump Transaction Center and sign up for a 10-day free trial, visit www.Crump100.com.

September 2020 » InsuranceNewsNet Magazine

If I c doing thaattch you a tan your hgain I’ll ide!

LIFEWIRES

QUOTABLE

Insurers Back Off Age Restrictions Several life insurers reversed COVID-

19 restrictions on underwriting, even as the pandemic continued to infect record numbers of Americans. John Hancock resumed issuing policies up to and including age 90. The insurer paused issuance of policies for anyone between ages 80 and 90 for three months, a spokeswoman said. Pacific Life reinstated underwriting for applicants (in a standard or better risk class) up to age 81. On April 7, Pacific Life temporarily limited underwriting to age 75 and below. The insurer was among many that restricted underwriting as the COVID-19 pandemic spread across the United States. Those decisions were very difficult for insurers because the age 60+ group is a big potential customer pool for life insurance. And the tightened underwriting hurt overall policy counts. initiatives and nonprofit organizations committed to racial equity, inclusivity, economic equality and social justice. In 2019, Mutual of Omaha and its foundation contributed more than $2 million to nearly 60 charitable organizations.

PRUDENTIAL SUSPENDS GUL

MUTUAL OF OMAHA SAYS BYE TO LOGO

It may be best known for the long-running TV show “Wild Kingdom,” but Mutual of Omaha also is noted for the profile of the Native American that has served as the company’s logo since the 1950s. Mutual of Omaha officials said they would remove the Native American image from its logo immediately as part of the company’s initiative to address racial equality and social justice. The company has allocated $1 million in additional funding for community-based DID YOU

KNOW

Prudential pulled its UL Protector product from the market, and one industry analyst expects many more products to join it on the sidelines. The problem is that ultra-low interest rates make it difficult to support guaranteed universal life designs, explained Sheryl J. Moore,

president and CEO of Moore Market Intelligence and Wink. Meanwhile, Prudential reintroduced its Term30 product after the carrier had suspended applications for its 30-year

It’s time to stop selling insurance and start providing dignity to clients. — Shane Westhoelter, founder of Gateway Financial Advisors in Albuquerque, N.M.

term life insurance policy on April 13. Prudential’s UL Protector product was the second best-selling life insurance product for the first quarter of 2020, per Wink’s Sales & Market Report.

MASSMUTUAL EXPANDS FREE LIFE INSURANCE

MassMutual is supporting frontline health care workers who are affected by COVID-19 by providing them with free life insurance. The carrier announced the nationwide expansion of its HealthBridge program, which provides eligible health care workers at licensed health care facilities with free three-year term life insurance policies. These guaranteed-issue policies will be paid to trusts in the name of designated beneficiaries for up to $25,000 in the event of a policyholder’s death. Previously, HealthBridge was only available in MassMutual’s home states, as well as those hardest hit by COVID-19. It is now available to health care workers nationwide.

Craig DeSanto was named president of New York Life. Source:The NewWall YorkStreet Life Journal Source:

InsuranceNewsNet Magazine » September 2020

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For information about a vested independent contract with Kansas City Life Insurance Company, call Tom Morgan, Vice President, Agencies 855-277-2090, or visit www.ReturnThePremium.com

LIFE

Life Insurance In A DB Plan: An Extra Benefit For Self-Employed When a life insurance policy is purchased inside a defined benefit plan, there are tax advantages as well as the opportunity to provide an additional benefit to the plan participant. By Shrideep Murthy

any life insurance agents are unaware of the fact that a life insurance policy can be purchased inside a defined benefit plan. The premiums for the policy are paid from the contributions made to the defined benefit plan. Because these are pretax contributions, the premiums are also deductible. Even though this sounds like a good idea, insurance inside a DB plan is highly regulated, and great care must be taken while purchasing a policy within a DB plan. I am not discussing 412(e) plans in this article, as those are fully funded by life insurance and annuity contracts. These days, DB plan participants want to have a market exposure as well as the ability to invest a portion of the money while also purchasing life insurance in the plan. Let’s delve deeper into these concepts with a brief overview of the technical aspects. DB plans come in various sizes. For the purpose of this article, we will refer to DB plans maintained by self-employed individuals or small-business owners. Given all the negative press surrounding DB plans, it may seem surprising that small-business owners would set one up. However, a DB plan is the only retirement plan that can allow self-employed individuals to contribute thousands of dollars each year while receiving tax benefits. This gives them the opportunity to catch up on retirement savings if they didn’t already save enough in their earlier days. These plans are extremely popular with medical offices, law practices or any business with significant free cash flow. 36

DB Plans: A Brief Overview

A DB plan is based on the individual participant’s age and the compensation. Let’s assume we have a small-business owner with no employees whose business is incorporated as an S corporation Based on IRS guidelines, only W-2 compensation can be used for compensation purposes, and the maximum amount that can be used for calculations is $285,000 for 2020. A business owner with at least $285,000 in W-2 compensation for three consecutive years and at least 10 years to retirement can accumulate $2.85 million in the DB plan, based on the mortality tables for 2020.

Life Insurance In A DB Plan: What You Should Know

1. 2. 3. 4. 5.

olicy premiums are paid P from contributions made to the DB plan. he contributions are tax T deductible. he life insurance premiT ums are paid with pretax money. ontributions to the plan C are based on the owner’s age and income. he entire DB plan contriT bution cannot be used to pay premiums.

SOURCE: PensionDeductions.com

The IRS permits a business owner to earn a maximum of 100% of their compensation as income from a retirement plan subject to limits imposed by Section 415. The actuary then uses IRS-prescribed mortality tables to estimate the life span

InsuranceNewsNet Magazine » September 2020

and calculate the amount of money the DB plan needs to have when the participant retires. This amount is typically referred to as the “lump sum at retirement.” These numbers hold true for large groups, but the same concept is used for a single life DB plan. It is very likely that the participant may outlive their retirement savings or can die before exhausting the balance in the retirement plan. This is one of the reasons why DB plans for small businesses are better looked at from the perspective of being tax-saving instruments. The actuary will then calculate the annual contributions that need to be made to the DB plan to fund the lump sum. The plan gives the business owner the flexibility to contribute more in the good years and lower the contributions when the business isn’t doing well. The plan may need to be amended from time to time so that the theoretical benefits in the plan equal the sponsor’s ability to contribute to the plan.

Life Insurance In The Plan

A portion of these contributions can be used to purchase a life insurance policy in the DB plan. The actuary needs to know whether the policy to be purchased is a whole life or a universal life insurance policy. The actuary will then use the highest three-year average of the participant’s compensation to determine the maximum lump sum that the participant can accumulate in the plan. This amount is then converted using actuarial equivalency to determine the monthly annuity the participant can get. The maximum amount of life insurance face value that can be purchased in the plan is 100 times the monthly annuity benefit. The good news is that the actuary will do all of these calculations and neither the participant nor the agent needs to worry about the technical details. The life insurance agent only needs to coordinate with the insurance agency

LIFE INSURANCE IN A DB PLAN: AN EXTRA BENEFIT FOR SELF-EMPLOYED LIFE to determine the premiums that would be applicable for the participant based on age and health conditions. There are other methods to determine the amount of premiums that can be paid from a DB plan, but they may put the client at the risk of an audit, as the face amounts can be significantly higher. With insurance in a DB plan, it is always beneficial to err on the side of caution.

Other Policy Considerations

A plan may purchase a life insurance policy as a means of providing a death benefit in the plan, so the death benefit must be â&#x20AC;&#x153;reasonable.â&#x20AC;? The life insurance policy should also be incidental to the main purpose of providing retirement benefits. These principles are adhered to when the policy face value is less than the maximum face value calculated by the actuary. Life insurance provides a higher death benefit in the early years of the plan, and the death benefit amount in excess of the policy cash surrender value is free from income tax to the beneficiary.

Plan Termination

The DB plan needs to be terminated when it has reached its full potential. Smallbusiness owners typically prefer to take a lump-sum payment from the plan, instead of a monthly annuity, and roll it over into an individual retirement account. This saves them the annual cost of maintaining the plan in retirement. Large DB plans may or may not offer a lump sum option, based on the funding status of the plan. An IRA typically cannot hold a life insurance policy, and there are a couple of options that can be exercised. The policy can be surrendered to the company for its cash value, which can be rolled over to an IRA along with the other investments. This would eliminate the death benefit for the participant. Another option would be to distribute the cash value of the policy, but this would be a taxable event and the tax amount could be significant. The third option is for the participant to buy out the cash value from the plan by depositing an amount equal to the cash value. The

participant would now be the owner of the policy, and the entire cash proceeds in the plan can then be rolled over into an IRA. Some participants also establish an irrevocable trust that purchases the life insurance policy at plan termination as a part of their estate planning. DB plans are complex to administer, and an actuary is required to certify the funding status of the plan annually. Actuaries will typically charge an annual administration fee to ensure that the plan remains compliant with all IRS regulations. Agents are always better off working under the guidance of the actuary while purchasing a life insurance policy inside a DB plan. Shrideep Murthy, CFA, is a manager at Pension Associates with significant experience in designing and administering defined benefit plans for small-business owners and self-employed individuals. Shrideep may be contacted at shrideep. murthy@innfeedback.com.

September 2020 Âť InsuranceNewsNet Magazine

ANNUITYWIRES

2Q Sales Take A Tumble

Key year-over-year 2Q product sales numbers » Variable annuity sales dropped 20% to $20.5 billion.

Everyone expected the pandemic to bludgeon annu» RILA sales were $4.5 billion, ity sales – the only question was how bad would it up 8%. be? LIMRA’s Secure Retirement Institute delivered » Fixed indexed annuity sales the answer early in the reporting season: down 24% fell 41% to $11.9 billion. year-over-year from second quarter 2019. » Single premium immediate Total annuity sales were $48.8 billion, a decline annuities sales were $1.5 that reflected very dire circumstances, said Todd billion, down 44% Giesing, senior annuity research director, SRI. He called the sales drop-off “a direct result of the global pandemic and its economic fallout. In addition to the record-low interest rates and continued market volatility, social distancing has significantly disrupted business operations for companies and advisors over the past three months.” The news was not all bad, he added. Fixed-rate deferred and registered index-linked annuities “were able to maintain and even grow business,” Giesing said.

4 MORE STATES WORK ON SALES RULES

State insurance regulators have seemingly put annuity sales rules on the back burner since the pandemic. But work has been going on behind the scenes. Kentucky, Ohio, Rhode Island and Idaho are busy with best-interest rules to mirror the National Association of Insurance Commissioners’ suitability in annuity transactions model law that was adopted in February. So far, Iowa and Arizona have passed the new rules. States have different methods for the adoption of regulations. Arizona, for example, required legislative approval of its new annuity regulation, while in Iowa, the insurance department issued rules on its own. The model articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation.

The rule, which replaces the Obama-era fiduciary rule, has two main parts: a new exemption allowing advisors to provide conflicted advice for commissions and a reinstatement of the “five-part test” from 1975 to determine what constitutes investment advice. The Trump administration hopes to have the rule finalized by the end of the year. But Bradford P. Campbell, who headed up the Employee Benefits Security Administration under President George W. Bush, is not a fan. The five-part test change came via a “sub-regulatory guidance” that Campbell criticized as “misguided.” Among other things, the guidance reverses the long-standing DOL definition of “regular basis” in the context of providing financial advice. “They were very unclear as to exactly what types of recommendations, advice,

EX-DOL OFFICIAL: NEW ADVICE RULES LACKING

If the Department of Labor thought it finally satisfied pro-industry factions with its new investment advice rule, it was wrong. DID YOU

KNOW

QUOTABLE The large-font headline is that it moves from suitability to best interest. — Eric Arnold, insurance and finance lawyer with Eversheds Sutherland, on new state annuity sales rules.

services on an ongoing basis might be fiduciary and which might not,” Campbell explained. “So, it calls into question the notion of if I have an ongoing relationship but it’s a sales relationship, is it now converted to a fiduciary one?” Campbell, a partner at Faegre Drinker Biddle & Reath, went on to note that the Trump administration specifically issued an executive order in late 2019 to prevent agencies from using guidance orders to essentially change the rules.

NAIC CONSIDERS 0% ANNUITY FLOOR

A National Association of Insurance Commissioners’ committee plans to study a model law to drop the standard minimum nonforfeiture interest rate for individual deferred annuities from 1% to 0%. Industry groups say the nonforfeiture floor reduction is needed by insurers due to COVID-19 impacts. The 10-year Treasury rate fell well below 1% amid the virus outbreak in March and has not recovered. Nonforfeiture means the amount an insurer must pay a consumer who surrenders a cash-value policy or any policy with such a nonforfeiture benefit. The benefit is based, in part, on an interest rate to reflect earnings on policyholders’ money.

Sixty-one percent of respondents in a recent survey say they want more information on availability of annuities in their retirement plan.

InsuranceNewsNet Magazine » September 2020

Source: Allianz Life

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The 6 Retirement Planning Myths Misconceptions can hold clients back from making important decisions that affect their post-employment years. By Brian Haney

ver had this happen to you? You were called in to meet an affluent couple in their mid40s who have a healthy amount of investable assets and need advice on what to do with them. The get-to-know-you part of the meeting was going well, and you felt the good rapport building as you navigated through this couple’s goals and concerns. As the conversation arrived at the point where you mentioned some potential options for them, you were stopped dead in your tracks when the husband said to you, “Oh, we heard annuities are really bad and we don’t ever want to buy them.” Whether you’ve experienced that, or even something similar, it’s a common occurrence to have to navigate clients around so-called bad ideas and misconceptions. Tackling these can be challenging if you’re not sure how to address them. There are many commonly held misconceptions about retirement planning that can make it hard to know what to do, and misconceptions can hold clients back 40

from making important decisions. Let’s tackle several of the most significant ones out there so you can dispel these myths!

1. Retirement means I can stop investing.

In the past, retirement was viewed as an “end” in many ways. These days, though, retirement is often seen as an opportunity to return to one’s passions, or it’s viewed as just another of life’s many chapters. That doesn’t mean your clients should stop investing, however. In fact, many retirees find this new season of life brings new opportunities that they want to invest for! Not only that, but with Americans living longer, the need to potentially generate higher returns than what might be accomplished conservatively, for a longer period of time than previously anticipated, is far more a reality now than it has been in decades. The bottom line is, your clients might need more money and they might need it for longer.

2. My taxes will be lower.

Not necessarily. That depends on your client’s situation. Some may earn less in retirement. This could lower their tax bracket, which could reduce their overall taxes. On the other hand, some retirees may end up losing the tax breaks they enjoyed while working. It’s also virtually impossible to predict where tax brackets

InsuranceNewsNet Magazine » September 2020

will be when we retire because these can change legislatively over time. Remind clients not to assume too much about taxes being a certain way. And help them prepare for several tax-related scenarios. This can be an ideal time to build rapport with a CPA in the process!

3. I’ll live on less when I’m retired.

Maybe. This one depends on how your client approaches retirement. In the later phase of retirement, people often choose to live on less money. But for many, the first few years of retirement mean traveling and new adventures. In other words, taking a realistic look at where your clients would like to be in retirement makes all the difference when it comes to estimating their retirement costs. Clients also may woefully underestimate medical and long-term care costs. Your best approach is to help clients be as honest and realistic as they can be so their chances of targeting the right number are good.

4. The “everyone needs to do it this way” myth.

I like to use an engaging story here that really works: Imagine picking up the newspaper and on the front page is an article titled, “Beloved doctor embroiled in massive malpractice scandal.” You go on to read that a local family doctor is being

THE 6 RETIREMENT PLANNING MYTHS ANNUITY investigated for malpractice for prescribing the same medication to all of his patients. Investigators discovered that, regardless of the patient’s symptoms, health history, age or background, or whether they presented with headaches or broken arms, the doctor prescribed the same medication and dosage to everyone he saw over a period of several years. While some patients had no ill effects, several experienced negative reactions ranging from severe bowel discomfort to hives to internal bleeding, and in two cases, to death. Shaking your head as you put the paper down, you can’t help but think, “That’s unbelievable. Who would do such a thing? The same prescription can’t work for everyone! He must be crazy!” Although the article I described is fiction, its underlying point is apropos: There is no one-size-fits-all approach to retirement. While that logic should make sense, it’s hard to avoid the growing number of authors, journalists and television pundits who expound upon the virtues of

COVID-19’s Impact On Retirement Planning The Society of Actuaries published a report in April titled “Impact Of COVID-19 On Retirement Risks.” Some of the highlights:

1. 2. 3. 4. 5.

mployees are concerned about managing their 401(k) plan E investments, and those nearing retirement are wondering whether they need to work longer. Some households may need to deplete their retirement savings to manage through the immediate period. COVID-19 reinforces the need for rational distribution strategies and to help people think through their distribution options. COVID-19 has prompted concerns about whether a 401(k) plan offers sufficient retirement security. Loss of income through unemployment or reduction of hours may push people into claiming Social Security earlier.

SOURCE: Society of Actuaries

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ANNUITY THE 6 RETIREMENT PLANNING MYTHS some specific investment strategy, vehicle or method. Remind your clients that the problem with sweeping generalizations when it comes to retirement planning is: Retirement is not general; it’s personal. What you need and what your neighbor needs are likely two very different things. And there’s no TV personality or journalist who knows your personal situation. We understand why you can’t arbitrarily hand out the same prescription to everyone, nor can you take that approach with planning for retirement. The key is to determine what’s right for your clients, and conversely what isn’t. Empower them by saying, “You’re the only one who can set the right goals for yourself. You get to determine your risk appetite. You decide what investment vehicles make sense and what allocation strategy fits. None of that is arbitrary and there isn’t one right approach.” Help them understand your role is to lay out all the available tools to help them determine what’s right for them!

5. The “annuities are bad” myth.

I remember an interesting conversation I had with a friend that started when he sat down next to me and exclaimed, “I read that Ken Fisher hates annuities. He says they’re terrible and no one should ever use them. What do you think about that?” His comment caught me a bit off guard but made me laugh. He quipped, “Why is that funny?” I responded, “It’s like saying coffee is bad. You can create a proof to support it that seems reasonable, but at the end of the day coffee may be bad for some but good for others. It all just depends.” He laughed a bit, we went on to have a nice lunch and ended up talking mostly about sports. Like the myth that says there’s one right approach that everyone should follow, and the others are wrong, the myth here says some investment vehicles are “bad” while others are “good.” It’s a fallacy to think that way. Be calm and clear with clients in telling them that financial instruments by themselves are not inherently good or bad. A hammer isn’t good while a nail is bad — each has a role to play in building a house. Each financial vehicle has its pros and cons. What’s important for clients is understanding what financial vehicle they are considering and how it works. 42

You can calmly say, “While one instrument, like an annuity for example, might be right for your uncle, it may not be appropriate for your situation. Your uncle isn’t bad or wrong for using an annuity, nor are you good or right for not using one. Each of you has your own needs, goals, risk tolerances and objectives.”

6. The “Line them up head-tohead to see who wins” myth.

Financial instruments are not inherently good or bad, nor do they compete against each other. Help clients recognize that saying one investment vehicle is better than another is also a fallacy. Stocks don’t compete against bonds. Neither do annuities compete against investment portfolios. Each is unique with its own set of advantages and disadvantages. Stocks can do things bonds can’t; annuities can do things that investment portfolios can’t. Tell clients that rankings and ratings do have their place in helping assess the individual vehicles themselves to see how they fare against their peers. Your job is to help your clients understand what a particular investment is designed to do, how it will achieve its objectives, what risks are associated with it, the drawbacks and limitations it may have, and what costs are associated with it. I never fail to remind clients that my role as a professional is simple: I lay out all the instruments for them and help them understand what they do, what they don’t do, what they cost and how they may fit their situation. Once clients are aware of all the options, it should be easier to select the things they feel comfortable with. As advisors, we don’t need to get hung up when our clients do. These objectives are really opportunities in disguise! Win in two ways by addressing these myths logically and empowering your clients in the process! Brian Haney is a Certified Income Specialist who loves helping clients put the retirement puzzle together. Brian is a Registered Representative of Coastal Equities and an Investment Advisory Representative of Coastal Investment Advisors. He is founder and vice president of The Haney Co., Silver Spring, Md. Brian may be contacted at brian. haney@innfeedback.com.

InsuranceNewsNet Magazine » September 2020

1. After completion of the tele-interview. For eligible clients. Statistics as of May 15, 2020. WriteFit and WriteFit Express are available under our WriteFit Underwriting program. These statistics only apply to WriteFit and are based on Securian Financial’s experience with WriteFit and traditional underwriting. Insurance policy guarantees are subject to the financial strength and claimspaying ability of the issuing insurance company. Please keep in mind that the primary reason to purchase a life insurance product is the death benefit. Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of their products. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates. Minnesota Life Insurance Company and Securian Life Insurance Company are affiliates of Securian Financial Group, Inc. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

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September 2020 » InsuranceNewsNet Magazine

HEALTH/BENEFITSWIRES

COVID-19 Could Leave 10M Uninsured Along with record-setting job losses, COVID-19 also is forcing millions to lose

their health coverage. More than 10 million people could lose health insurance due to a pandemic-related job loss by the end of the year, according to the U.S. Department of Labor. However, many of those Where Do The Unemployed Turn For Insurance? kicked off their employers’ Of those who lost jobs during the pandemic: health plans will regain cov34% had insurance through a family member’s job erage by other means, leaving 27% had insurance through Medicaid or CHIP an estimated 3.3 million uninsured, an analysis of labor deOf those who got coverage elsewhere: partment data showed. 32% will get on a family member’s plan Earlier predictions said un27% will enroll in Medicaid insured rates would soar as The 6% will seek coverage on the marketplace SOURCE: unemployment rose because Urban Institute employer-sponsored health insurance is the most common type of coverage for individuals under age 65. But an Urban Institute analysis found that most of the people who lost their jobs during the pandemic weren’t getting health insurance through their employer to begin with. The COVID-19 recession affected a disproportionate number of low-wage workers, who are the least likely to have employer-based coverage.

HOME IS WHERE THE HURT IS, UNUM FINDS

More people are staying home as a result of COVID-19 restrictions. And although people think they may be safe from the virus, they are more likely to suffer an injury at home, a Unum survey found. Not only are people spending more time inside their four walls, but they are also engaged in more high-risk, accident-prone do-it-yourself projects. One difference in the types of accident insurance claims filed this year as opposed to a typical year, Unum said, is that fewer children are experiencing injuries from participating in organized sports.

PATIENTS WARY OF IN-PERSON CARE COVID-19 fears are keeping people from visiting the doctor DID YOU

KNOW

in person, a DocASAP survey found. Just how afraid are people of going to the doctor? More than two-thirds (68%) of respondents have postponed or canceled an in-person health care appointment due to COVID-19. This number was higher among men (73%) than women (64%). Additionally, 43% of respondents said that they wouldn’t feel comfortable going back to see a health care provider in person until at least the fall.

COVID-19 Keeping People From The Doctor 68% have postponed or canceled a doctor visit. 26% believe it’s safe to go to the doctor. SOURCE: DocASAP

The perception of visiting a health care facility has been negatively affected during the pandemic. When asked, “Right now, which of the following facilities do you feel are safest to enter?” the majority of respondents (42%) selected a grocery store over a hospital (32%) or doctor’s office (26%). At the bottom of the list, the three destinations deemed least safe were entertainment/sports facility (9%), followed by urgent care/emergency room (12%) and public transportation (13%).

QUOTABLE Actuaries are less likely to get fired if the plan prices too high than if the plan prices too low. — Michael Johnson, former Blue Shield of California executive

Consumers are turning to telehealth to manage their care needs. Almost half of survey respondents (40%) said they have scheduled a telehealth appointment. An overwhelming majority of respondents (91%) who have had a telehealth appointment said they are more likely to schedule a telehealth appointment instead of an in-person visit in the future. In addition, nearly half of all respondents (45%) said if a provider offers telehealth appointments, it would influence their decision to use them.

TRUMP TAKES AIM AT DRUG PRICES

President Donald Trump signed four executive orders aimed at lowering prescription drug prices for consumers. The first order allows pharmacies, states and wholesalers to import drugs approved by the Food and Drug Administration from foreign countries for sale in the U.S. Another order would change the way Medicare pays for certain drugs administered in a doctor’s office, including many cancer medications. In addition, federally funded community health centers were directed to pass discounts they now get for insulin and EpiPens directly to low-income patients. The last order would ensure that the rebates drugmakers pay to benefit managers and insurers get passed on to consumers.

Six states are taking a multiyear approach to financing long-term care costs.

InsuranceNewsNet Magazine » September 2020

Source: Center for Consumer Engagement in Health Innovation

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Happy New Year! Changing Medicare Advantage Plans It’s a new benefit year, so it’s time to get ready to help your client cut through the noise and get the best plan for their needs. By Elie Harriett

ith a new open enrollment period coming up soon, your client might be thinking about changing their Medicare Advantage plan. I want to share some advice that I give to any financial or insurance advisors about clients who are on Medicare. This is the most heavily advertised and politicized area of insurance in the U.S., surpassed only by Affordable Care Act plans. Because of this, there is more misinformation out there about how Medicare-related insurance works. There are probably more well-intentioned but poorly informed people providing “advice” in this area than in any other area of insurance. Therefore, your clients who say they are satisfied might very easily 46

miss some important information that comes their way. This can quickly create dissatisfied clients. The most important fact an outside advisor needs to keep in mind about Medicare Advantage is: Plans change their benefits each and every year on Jan. 1. The plan must continue to provide, at minimum, the same benefits as Medicare Parts A and B. But that’s where the similarities end. Each year, a plan can change all its copays, deductibles, premiums and, most important, out-of-pocket maximum. That means, if you are helping your clients prepare a long-term financial plan for the year and you budget a $0 Medicare Advantage premium and a $3,000 maximum financial liability for medical expenses, the following year the plan could potentially add a $50 monthly premium and double the out-of-pocket maximum to $6,000. The basic Medicare coverage won’t change, but a hospitalization could potentially increase your client’s costs in terms of number of days with copays being charged or higher copays overall.

InsuranceNewsNet Magazine » September 2020

If your client chose a plan because of the dental coverage, which is not a Medicare-covered benefit, the plan could drop that coverage, leaving a client with a medical plan but no dental. To be clear, I am describing how a plan could decrease its benefits because that is where potential dangers lie. The insurance could just as easily increase benefits as well, offering lower copays, a lower out-of-pocket maximum and additional non-Medicare benefits at no charge. What I’m saying is, even though the plan might retain its same name, it might not be the same plan the next year. Satisfaction is not guaranteed.

Network Coverage Changes

How many times have you heard, “My doctor takes [insert company name here]” with the presumption it will be sufficient? The hard reality is that contracts between medical providers and insurance carriers do not necessarily go from January to December, even though the insurance plan does. And an insurance company typically has multiple networks, whereas

HAPPY NEW YEAR! CHANGING MEDICARE ADVANTAGE PLANS HEALTH/BENEFITS your client will be enrolled in only one of them. Providers come and go regularly. If your client is in an HMO, and they really want to go to that one doctor, they have to wait until the end of the year to change plans. Always remember that most clients value their doctors more than the insurance that pays them. If you are advising someone who wants to keep a doctor the insurance does not cover, then you have an unhappy client. And changing insurance plans could possibly break a few things currently unbroken.

Drugs Change

Each year, plans choose which drugs they will cover. They must cover at least one each of every FDA drug class, but if there are multiple drugs that can be offered, the companies can choose to drop a drug or two the next year. Even if drugs remain covered, the plans can choose to “re-tier” a drug from one year to the next. That means they can make a preferred drug nonpreferred and thus more expensive, or they can make it subject to a deductible when none existed before. If you don’t advise your client, there’s a good chance they’ll get their advice from an idiot. I am not making judgments on other insurance advisors. The sad fact is, I am not even talking about other insurance advisors. At some point, you have to defend your insurance recommendations to a client against the advice of their friend, a neighbor or someone else they know who “deals with” or “understands” insurance. Or maybe your client wonders why his insurance doesn’t make him as happy as the people on the TV commercials. You will have to sit there, patiently listening to them explain how they were told that they need company A, B or C because that company paid the bill with no problems for their friend, or something to that effect. This happens in every line of insurance. But for Medicare insurance, you have to dial that meter up to 11. The noise generated on Medicare products is unbelievable to those not already familiar with them. There is a seemingly never-ending bombardment of advertising from TV, radio, magazines, emails, web ads, seminars, direct mailings, cold calls

— an illegal practice that only stops honest agents, by the way — and agents with booths in supermarkets and community centers evSigning Up For Medicare ery year from September through To Do List December. This constant barrage is The next open enrollment period will run all dedicated to getting your client from Oct. 15, 2020, to Dec. 7, 2020, for to buy their Medicare insurance coverage effective in 2021. product. In addition to that, your clients have children or friends who - The annual five-star Medicare Advantage enrollment period is Dec. 8-Nov. 30. are absolutely certain that one particular company pays all the bills. - The Medicare Advantage open enrollment is My point in all this is: There Jan. 1-March 31. are so many choices regarding - The Part A/Part B general enrollment Medicare insurance, and clients period is Jan. 1-March 31. in many cases must do something. If they do not receive qualified adSOURCE: Medicare.gov vice from a trusted advisor, they will go someplace on their own. year, so treat your client servicing duties And where they go is usually toward the as if they are brand-new to you as well. loudest voice in the room or to the name And what if you’re not in the Medicarethey recognize the most, and they are related insurance business? Be aware this concerned only with the lowest premium problem exists and can impact the oththey can find. er work you do for your clients. As the Health insurance does not operate ef- eHealth survey suggests, a significant ficiently for people without a deep dive number of people will not look at making into its benefits and terms. Clients need changes because their satisfaction level is to know what their financial exposure high. But you now know satisfaction this could be. They need to know whether year does not equate to satisfaction in the the services they need and the drugs they next. need are covered. This does not come Get with someone you trust who is from anecdotal hearsay, but from diligent in this business and does annual checks research by competent professionals who on Medicare Advantage or prescription understand what to look for. drug plans and is willing to take referSo with everything that’s going on, rals from you during this time. And what can you do if you are not in the then make sure your clients call them Medicare-related insurance business (Medicare rule: Clients must initiate and you have a client who is “satisfied” first contact from referrals). Medicare with their coverage? There are two main Advantage plan benefits are not forever. things. The first is to counsel your client Making clients stay on the ball annually to have the plan evaluated every year. It will help cement your place as an advisor is a basic human trait to not check on they want to speak with and refer friends something we don’t fully understand un- to every year. less we absolutely have to. And your clients do not fully under- Elie Harriett co-owns stand Medicare Advantage. Clients get Classic Insurance & Financial Services, an an annual notice of change each year be- independent agency fore the enrollment period begins, which specializing in individual says how their plan is changing. But what Medicare-related insurit doesn’t tell them is how the plan is ance. He may be contacted at elie.harriett@ innfeedback.com. changing in relation to other plans. They could have the absolute best insurance for them in 2020 with no guarantee it will even be an appropriate choice for them WANT MORE HEALTH NEWS? in 2021. Recheck the appropriateness Take advantage of our award-winning journalism in our weekly Health Newsletter. of client plans for them as if they were Sign up today at bitly.com/INNNL a new client every year. The Medicare Advantage plan will be brand-new each

Financial facts and figures powered by AdvisorNews.com

‘Rich’ Loses Luster In COVID-19 Times

It’s like the world is awakening from a Scrooge-like dream since Christmas, and people are cherishing the important things in life, according to the latest wealth survey from Charles Schwab. More than half, 57%, said they, or a close family member, have been financially affected by COVID-19, but they said that relationships drive their happiness more than twice as much as money does. And that is putting money on a lower pedestal. When asked what it takes to be financially comfortable now, Americans said it takes much less than it did in January — respondents cited an average of $655,000 in net worth when surveyed in June 2020, down nearly 30% from January 2020, when their comfort level stood at an average of $934,000. They also lowered the overall assets they thought would make them feel wealthy. Today they feel that an average of $2 million in net worth equates to wealth, down 23% from a loftier average of $2.6 million in January.

36%

are more likely to have savings to cover emergency expenses.

40%

are more likely to be saving more in general compared with before the pandemic.

24% 22% are more likely to have a financial plan.

are more likely to start investing.

Also in the good news department, see the chart to the left.

But they are a little more stressed about their retirement savings. They believe

Fed Would Like A Bit Of Inflation

The Federal Reserve is getting ready to take its hand off the wheel and let inflation drive. Since Paul Volcker ruled the Fed in the 1980s, the central bank has been eager

to pump the brakes on inflation by preemptively lifting interest rates to depress

inflation. Anybody who remembers the bad ol’ days of double-digit inflation would be quick to approve of keeping it in check. But after more than a decade of near-zero interest rates and inflation about as low, even they would be saying it’s getting old. Safe money can’t make money, and inflation has not reared its fiery head much above the Fed’s target 2% in years. So, do we still need the ultralow rates?

Inflation Rate

they need to save $1.9 million for retirement, which is up

from $1.7 million last year. So, 41% made changes to their 401(k) as a direct result of COVID-19. And of those who consulted a financial professional, 67% made changes in their 401(k).

-10 1980

2000

2020

Fed Chairman Jerome Powell hinted at a press conference that the bankers will be wrapping up a strategy review and a new approach will come soon.

Maybe The Rich Aren’t Getting (That Much) Richer?

Source: Federal Reserve Economic Data

Percentage Change

10 5 0 -5 -10

Total Net Worth Held by the Top 1% (99th to 100th Wealth Percentiles) Total Net Worth Held by the 90th to 99th Wealth Percentiles Total Net Worth Held by the 50th to 90th Wealth Percentiles Total Net Worth Held by the Bottom 50% (1st to 50th Wealth Percentiles)

-15 Q1 2019 48

Q2 2019

InsuranceNewsNet Magazine » September 2020

Q3 2019

Q4 2019

Q1 2020

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COVID-19 Erased Americans’ Financial Gains Of Past 3 Years Only about half of American adults have been financially healthy since the pandemic struck, according to a study. • Susan Rupe

he economic fallout from the COVID-19 pandemic revealed how many Americans are financially fragile. We’ve already heard the dire statistics from the U.S. Department of Labor: a record-breaking 30 million people have been thrown out of work, and more than 100,000 small businesses are shutting down permanently. More than half of U.S. adults saw their finances compromised as a result of COVID-19, according to the Prudential Financial Wellness Census. The study showed that the pandemic largely reversed the past three years of financial gains in the U.S. and brought the percentage of Americans who are financially healthy down to 50%. Some 26% of respondents saw their income disrupted through furlough, reduced compensation or reduced work hours. Nearly one in five (17%) saw their household income fall by half or more in the months following the COVID-19 outbreak. Fourteen percent lost their jobs as a result of the pandemic. Of those with job loss or income disruption, 17% also lost employer contributions to their retirement plan. The Prudential study showed that since the pandemic hit, fewer Americans described themselves as “financially confident” as they did in 2019, while more said they are “financially discouraged” or “financially pessimistic” since last year. The percentage of “confident” shrank to 36% from 40% last year. Meanwhile, the percentage of “discouraged” grew to 33% from 31% in 2019, and the “pessimists” increased to 14% this year from 12% the previous year, making a total of 47% who are unhappy 50

about their financial prospects. That combined percentage of discouraged and pessimistic Americans remained relatively the same even in 2017 — 49% — during the longest economic expansion in U.S. history.

Source: Prudential

The fact that nearly the same percentage of Americans is dissatisfied about their finances over the 2017-2020 period “revealed a sense of financial inertia out there,” said Jessica Gillespie, senior vice president and head of distribution at Prudential Group Insurance.

InsuranceNewsNet Magazine » September 2020

“The pandemic is not necessarily the cause of the financial instability, but it has really exposed the cracks in Americans’ financial preparedness.” The study showed lower-income Americans were hurt far worse by the crisis than were higher earners. More than one-third (34%) of those with annual household income of less than $30,000 have been unemployed during the pandemic, while only 8% of those with household income 0f more than $100,000 were jobless. The unemployment rate for Black Americans nearly tripled from a near-record low of 7% in December to 18% in May. As a result, nearly half (48%) of Americans said they are anxious about their financial future. This was a jump from the 38% who reported the same feeling in 2019. The highest percentage of those who are worried about their futures are caregivers (58%), followed by retail industry employees, Black Americans and Latino Americans (56%); Generation X (53%); and women and millennials (52%). The list of financial worries plaguing Americans varies by income group, the study showed. Nearly 60% of those with household incomes of less than $30,000 said they were most concerned about their financial future, compared with 40% who have more than $100,000 in income. But nearly half (48%) of those in the $30,000-$50,000 income bracket said they were most concerned about their children’s or grandchildren’s financial futures and about forces they can’t control (such as the economy) hindering their finances. Other financial concerns revealed by various income groups in the study were: F Current finances: 53% of those with less than $30,000 annually; 33% of those

COVID-19 ERASED AMERICANS’ FINANCIAL GAINS OF PAST 3 YEARS

Among those who had established an emergency fund, the median account balance rose to $9,000 from $5,800 in 2018. By May 2020, 86% of those with emergency savings said they still had emergency funds on hand. “The pandemic has exposed, in sharp relief, the precarity of our public health and economic systems, the pervasive extent of racial and social inequity, and Americans’ low immunity to financial disruption,” the report said. “This crisis will not be the last test of our country’s financial health, and has raised the stark question of whether financial resilience is truly possible. The answer is not a

This crisis will not be the last test of our country’s financial health, and has raised the stark question of whether financial resilience is truly possible...

Source: Prudential

with more than $100,000 annually. F Ability to earn enough money to achieve financial goals: 51% of those with less than $30,000 annually; 40% of those with more than $100,000 annually. F Ability to save or invest enough money to achieve goals: 46% of those with less than $30,000 annually; 41% of those with more than $100,000 annually. F The likelihood of getting sick: 43% of those with less than $30,000 annually; 34% of those with more than $100,000 annually.

F The ability to pay off debt: 44% of those with less than $30,000 annually; 27% of those with more than $100,000 annually. F Rising inflation that will erode buying power: 41% of those with less than $30,000 annually; 36% of those with more than $100,000 annually. Despite this generally pessimistic view of their finances, Americans’ ability to save money prior to the pandemic appears to be paying off. The study showed 71% of respondents saved money for emergencies in 2019, an increase over the 61% who said they did the same in 2018.

simple yes or no, so the prescription for recovery neither can be surface level. We must solve deep systemic vulnerabilities and boldly reimagine how people live and work, and how we earn, save, and protect against financial risks. In short, we must rebuild to enable inclusive and sustainable financial security.” Among the recommendations made in the report are providing greater access to retirement savings vehicles and exploring ways to give all sectors of society the flexibility needed to withstand future economic disruptions. Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.

September 2020 » InsuranceNewsNet Magazine

INBALANCEWIRES

More People Chowing Down, Drinking Up More

About the same 5%

Less

23%

Eating, Drinking, Ouching From Home People are eating and drinking more and feeling more phys-

50%

59% 51%

42%

36%

26%

ical pain as working from home enters a second quarter for people who were able to work remotely as the COVID-19 pan- Snacking Eating Source:Drinking Chubb demic closed offices. Those were a couple of the downsides of working from home revealed by a survey conducted by Chubb. But despite the negatives, a large majority of workers want to keep at least partly working from home after the pandemic subsides. As they worked from home, many of the respondents were having some trouble creating a work/life balance. Many were able to maintain regular work hours, but the separation invariably broke down from there. Many were also hurting more, with aches and pains affecting 41% of the respondents. The groups who reported being more productive — the wealthier and younger respondents — also said they were experiencing more pain. Part of the reason for the extra pain might be the tendency to not set up their workspaces appropriately, with only about a quarter of remote workers setting up ergonomically safe spaces. But what people are definitely doing more of while working from home is eating more food and drinking more alcohol. Forty-two percent said they were snacking more and 26% said they were hitting the bottle more often.

MIND YOUR DIET FOR BRAIN HEALTH

The way to keep your brain sharp is by paying MIND to what you eat. We’re talking about the MIND (MediterraneanDASH Intervention for Neurodegenerative Delay) diet, which combines the best of the Mediterranean diet with the Dietary Approaches to Stop Hypertension diet. A 2015 study published in Alzheimer’s & Dementia found that the MIND diet can turn back the time on your cognitive age by 7½ years. So what’s in the MIND diet? Here are the top nine foods included in this eating plan: berries, green leafy vegetables, beans, whole grains, poultry, fish, nuts, olive oil and (optional) red wine. But it’s not enough to eat the foods recommended by the diet, researchers said. To reduce your risk of Alzheimer’s disease, you

DID YOU

KNOW

also must reduce your intake of less-healthy foods. Those who reduced their risk the most also cut their consumption of cheese and fried foods to less than once a week, red meat less than four times a week, and sugary treats less than five times a week.

QUOTABLE There is no evidence that food or food packaging plays a significant role in spreading the virus. — Centers for Disease Control and Prevention

someone who doesn’t swim as well will expend more calories, said Lori Sherlock, associate professor of exercise physiology at West Virginia University. A few laps in the pool are good for your cardiovascular health, while the low-impact nature of swimming makes it a good form of exercise for those with joint or mobility problems. Some studies also suggest swimming can help improve lung function, making it a safer form of activity for someone with asthma.

SWIM AWAY THOSE CALORIES

Feeling stressed? Want to exercise in a way that lends itself to social distancing? Jump into the nearest swimming pool! Swimming is an aerobic exercise that can reduce the risk of chronic illnesses like high blood pressure and diabetes. Swimming is a full-body workout, and different strokes work for different muscle groups. It’s also a great way to burn calories, and being a not-so-good swimmer can actually work in your favor where calorie burning is concerned. A skilled swimmer will move through the water more effortlessly, while

Nearly 1/3 of Americans believe in COVID-19 conspiracy theories. Source: Business Insider

InsuranceNewsNet Magazine » September 2020

COULD YOU HAVE A STRESS FEVER?

Here’s one more sign that your mental health can impact your physical health. Stress can trigger a fever. Stress fevers are uncommon but they can occur, particularly in someone, who suffers from anxiety or chronic stress, said Dr. Bindiya Gandhi of Atlanta. Gandhi said stress fevers are often triggered by an event or situation (from lack of sleep to poor eating habits to traumatic incidents like car accidents and divorce) accompanying an increase in core body temperature. Stress fevers can range from lowgrade fevers to running a high temperature, Gandhi said, but require a treatment different from that for a fever that has a physical cause such as an infection or a virus. Medication such as acetaminophen can treat a physical fever. For a stress fever, talk therapy or antianxiety medication are the most effective ways to get your temperature back to normal.

Many INvestors

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the money

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Visit Jackson.com to see how your clients can protect and grow their income in any market. Variable annuities are long-term, tax-deferred investments designed for retirement, involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. Before investing, investors should carefully consider the investment objectives, risks, charges, and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact The Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money. 1

Add-on benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity. Only one add-on living benefit and one add-on death benefit may be elected per contract. Once elected, benefits may not be cancelled or changed, please see prospectus for specific benefit availability. The long-term advantage of the add-on benefits will vary with the terms of the benefit option, the investment performance of the variable investment options selected, and the length of time the annuity is owned. As a result, in some circumstances the cost of an option may exceed the actual benefit paid under that option.

Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York and do not apply to the principal amount or investment performance of the separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

On the contract anniversary on or immediately following the designated life’s attained age 59½, the for-life guarantee becomes effective provided: 1) the contract value is greater than zero and 2) the contract has not been annuitized. If the designated life is age 59½ on the effective date of the endorsement, then the for-life guarantee becomes effective on that date. All withdrawals reduce the GWB and, depending on the amount of withdrawals taken, adjusted for any GWB step-ups and, any applicable bonus, the GAWA may be reset to a lower amount when the for-life guarantee becomes effective. In certain states, we reserve the right to refuse any subsequent premium payments. Variable annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These products have limitations and restrictions. Contact the Company for more information. Jackson® is the marketing name for Jackson National Life Insurance Company® and Jackson National Life Insurance Company of New York®.

Firm and state variations may apply. For institutional use only. Not for public distribution or use with retail investors.

Not FDIC/NCUA insured • May lose value • Not bank/CU guaranteed Not a deposit • Not insured by any federal agency CNC18960A 04/20

INBALANCE

Don’t Forget To Show Your Immune System Some Love Easy ways to incorporate immunity-boosting activities into your daily life. By Susan Rupe

all means shorter days, cooler temperatures, more time spent indoors and the approach of the dreaded cold and flu season. Add COVID-19 to the list of health threats, and you may be thinking about how you can ward off illness in the cold-weather months. It’s time to help your immune system help you stay healthy. The road to a healthy immune system begins in the mouth, said Kim Segiel, a registered dietitian with Geisinger Medical Center in Danville, Pa. Eating foods rich in immune-boosting vitamins and minerals as well as maintaining a healthy weight are two basic factors in helping the body fight disease. “Sometimes I think we’re all looking for like that magic supplement, a magic pill to help boost our defenses, but it’s really 54

about a good, balanced diet that extends all year long,” Segiel said. “I recommend people think about a better balance in their diet and a better balance in their lifestyle to help prevent illnesses.” It’s not only eating the right foods but also keeping your weight at a healthy level that will help you maintain your immunity defenses, Segiel said. “Especially with COVID-19, we are seeing that one of the risk factors is obesity,” she said. “And we do have a high

hypertension and cardiovascular disease. “And that goes back to maintaining a healthy weight and eating a healthy diet,” Segiel said.

All About The Vitamins

When it comes to an immune-friendly diet, it’s all about getting the vitamins and minerals that can jump-start the body’s natural defenses. Vitamin C tops the list of vitamins that boost the immune system, Segiel said.

When you’re stressed and you’re not sleeping, that chronic lack of sleep can wear down your immune system. incidence of obesity in the U.S. So losing weight or maintaining a healthy weight can help you fight off illnesses or help alleviate some of the complications that can occur if you get sick.” Other risk factors for COVID-19 are

InsuranceNewsNet Magazine » September 2020

Citrus fruits such as oranges and grapefruit are the most common sources of vitamin C. A daily dose of orange juice also can give the body its vitamin C, she said, but noted that the orange juice should be a small serving if someone is watching their

DON’T FORGET TO SHOW YOUR IMMUNE SYSTEM SOME LOVE INBALANCE orange juice are fortified with vitamin D. You also can get vitamin D from eggs or from fatty fish such as salmon.” But sometimes food and sunlight aren’t enough to get your vitamin D levels up. “I would suggest that if someone feels they may be deficient in vitamin D, to get a blood test from their physician to find out whether they do have a vitamin D deficiency,” she said. A vitamin supplement may be needed.

of sleep also is shown to lead to weight gain. So people who are chronically sleep deprived run a higher risk of gaining weight and possibly developing obesity.” There is a link between exercise and a healthy immune system, she noted. “People who exercise regularly tend to get sick less often. Exercise also helps with cardiovascular health and helps to keep our weight in check, so all that ties in to the immune system.”

The Building Blocks Of Immunity

ZINC

VITAMINS C AND D

N IO R AT

EXERCISE

HYD

IC S BIOT

BETACAROTEN

HEALTHY WEIGHT

P RO

weight. Vitamin C also can be found in other fruits and vegetables. “Strawberries are a rich source of vitamin C. But thinking outside of sweet fruits, you can get vitamin C from tomatoes and tomato products, broccoli and bell peppers.” A vitamin C supplement also may be taken, but Segiel encouraged people to rely on getting their vitamin from eating whole foods instead of popping a pill. Zinc is a mineral believed to reduce the severity of a cold when taken at the onset of symptoms. Segiel said people frequently take zinc lozenges when they feel a cold coming on. But zinc also can be found in food. “You can find high amounts of zinc in beef,” she said. “But for people who are relying more on plant-based foods, zinc can be found in legumes such as black beans or chickpeas. Also, nuts are good sources of zinc, so we’re talking about peanuts, almonds, cashews, all the nuts. Nut butters such as peanut butter also are good ways to add zinc to your diet. And for those who don’t eat meat, tofu also is a source of zinc that you can incorporate into your diet.” Wheat germ is a source of zinc and also is high in the antioxidant vitamin E. It has the added benefits of being high in fiber and healthy fats. There are all kinds of ways to sneak wheat germ into your diet, Segiel said. “Wheat germ may not be as popular today as it was 10 or so years ago when people were pouring it into everything, but you can put it on your oatmeal or blend it into your smoothie. You can add it to yogurt or mix it into meatloaf or meatballs.” Beta-carotene, the red-orange pigment that gives orange and yellow vegetables their rich color, is an antioxidant that boosts the immune system, Segiel said. “You find beta-carotene in sweet potatoes, in carrots, but also in tomatoes, broccoli and spinach.” Vitamin D is also known as the sunshine vitamin. Spending a few minutes in the sunlight each day will help the body produce vitamin D. But the shorter days and colder temperatures of fall and winter mean less opportunity to be outside. It’s time to find vitamin D sources in our food. “People who are deficient in vitamin D are more likely to have a suppressed immune system,” Segiel said. “Milk and

SLEE

Herbs and aromatics such as garlic, turmeric and rosemary also have immune-boosting properties, Segiel said. “They certainly are tasty as well as something that can improve our health to a degree, so it’s certainly worth cooking with them.” A protein deficiency can harm the body’s immune system, Segiel said, so making sure we obtain adequate protein in our diets is an important part of staying healthy. When we think of protein, we often think of meat or animal products, but protein also can be found in plant-based sources, she said. “Beans, nuts, nut butters — all are good plant-based sources of protein. And try quinoa, which is a grain that has a much higher protein content than other grains and is a good source of fiber as well.”

It’s Not Only Food

Sleep is as important as diet in keeping the immune system healthy, Segiel said. “When you’re stressed and you’re not sleeping, that chronic lack of sleep can wear down your immune system. Lack

E IN T O PR

Water also plays a role in immunity. Proper hydration by drinking water, as well as proper hand-washing techniques and correctly washing fresh produce before eating it are all ways to give our immune system a boost. The intestinal tract is the first line of defense in immunity, Segiel said. Taking probiotics can help the intestines absorb nutrients from food. Probiotics can be taken in pill form but they also can be consumed through foods such as yogurt, buttermilk, kimchi or kombucha. “Don’t eat them only once a week. Eat them two, three, four times a week to help keep that population of good bacteria at a healthy level.” Susan Rupe is managing editor for Insurance NewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com. Follow her on Twitter @INNsusan.

September 2020 » InsuranceNewsNet Magazine

BUSINESS

The Unexpected Benefits Of Writing A Book An advisor found doors opening and prospects looking at him in a new light after he became a published author. By Joseph Conroy

he typical career progression of financial advisors follows this path: chasing clients and prospects, staying in the business long enough to start generating referrals and finally attracting more business than we are able to manage effectively. I have uncovered a successful marketing strategy that overcomes some of the challenges of the typical financial advisor who is happy to constantly chase clients and prospects with the same message as every other financial advisor.

Marketing Options Of The Past

We can invest lots of time and money into marketing options, most of which rarely work. Seminars identified clients well in the past, but then the seminars became expensive and the people they brought us became less attractive. There

prospect knows it, and whether you are in the front of a room full of retirees with a PowerPoint or in a conference room holding a preset meeting from a paid lead source, your potential client is awaiting — and expecting — your pitch.

Writing A Book Of Your Own

A yearslong desire to author a financial planning book provided me with the unintended benefit of elevating me to the status of thought leader and authority among my prospects. And the results have been amazing. Prospects are no longer waiting for the pitch; they are asking for my insights. They are no longer sitting through a meeting; they are eager to learn from an author. Writing a book is something that many people dream of accomplishing but few will achieve. I have met scores of people who have been “working on” their book for more than 10 years.

Joseph Conroy on Fox 45 Maryland Business Report.

understand or are willing to attempt. I’d liken it to training for running a marathon, but I didn’t have time to train and run one because, well, I spent every free moment I could find writing a book.

The Results Are Worth The Work

My book has been out for about a year and it has, without a doubt, taken my practice to a different level. My book opened doors for me that I never anticipated. Shortly after my book was released, I was invited to appear on a local news station for an interview. I have been asked by various reporters across the country and several media outlets for my opinion on various personal finance and investing topics. I had a podcast in-

My book has been out for about a year and it has, without a doubt, taken my practice to a different level. My book opened doors for me that I never anticipated. is zero appeal for an advisor who isn’t interested in or good at public speaking. Advisors can pay for vendors to arrange meetings with qualified leads, but these programs are often ineffective, and the vendors sometimes stretch the definition of “qualified lead.” Several more options share the same flaw. You get positioned in the worst possible way: as a salesperson. Your 56

Going through the process, I can understand why. Writing a book is a daily grind that requires you to devote time that is easier spent with family, friends, paperwork, golf — anything but looking at a blank screen, knowing you have to somehow find 200-plus pages of anecdotes, insights and engagement to make a credible book. It’s daunting in a way that few

InsuranceNewsNet Magazine » September 2020

terview with an audience mostly made up of entrepreneurs. From a business growth perspective, I wasn’t quite sure how this would lead to more assets under management and more revenue. Then I learned something: I became infinitely more referable as a result of writing my book. Before I wrote my book, my business was built completely on word of mouth

THE UNEXPECTED BENEFITS OF WRITING A BOOK BUSINESS Not only did the book bring in many more referrals than ever, but it helped initiate referrals in which the people asked me to take their accounts. These referrals came to the meeting not to get a pitch, but to make a move forward. Gone for me are the days of prospects kicking the tires and my having to chase people around to try to get them to open accounts — all because of the book. When I meet people at various networking events, I lead by telling them I’m an author. Published authors are rare, and everyone has a book in their heads that they want to write. It is a great icebreaker and topic of conversation. Instead of giving business cards, I hand out a signed copy of my book, with a business card as the bookmark. I have discovered that a signed book is often placed prominently in someone’s office or home, eliciting inquiries from others who see it. Can you say that about your business card?

New Clients Look For Me

and referrals. And no matter how good we are, only a certain percentage of our clients will open their mouths to refer us. My referral rate didn’t change as a result of the book, but the rate at which I was seeing and closing new referrals increased dramatically. Most prospects seek reasons to work with one advisor over another. Centers of influence such as CPAs and attorneys want a safe option to refer their clients to. I now have a published book for sale on Amazon, I write monthly for Kiplinger and I have a long list of media placements. These give CPAs, attorneys and my clients great reasons to encourage people to meet with me. The fact is that my book and resulting media exposure make my resume stand out among the crowded field of recommendations from prospects’ friends, family members and other experts. I stand out by an extremely large margin, or so I am told at nearly every first referral meeting.

The funny thing is that I am still the same advisor giving the same advice I was before I wrote the book. The only thing that changed is that the book brought more people to me and allowed me the opportunity to share my thoughts and experiences with more people. Simply put, becoming known as an expert and thought leader has turned me from trying to look for new clients to having new clients looking for me. Now that I can spend less time looking for new clients, I can spend more time with my current clients. The book also has had a great effect on strengthening existing client relationships. The weight of my advice in review meetings is much more powerful now. I get less pushback on recommendations, which is leading to better decision-making by clients. The competition for financial advisors is stiff. We are facing attacks on many fronts. There is an attack on fees. Robo advisors are gaining market share. We are typically competing against other advisors who all look the same to the casual observer. Publishing a book, and the opportunities that come along with it, can set you apart from other advisors, strengthen existing relationships, provide many more referrals and provide the reasons prospects are looking for to select you as their advisor. Simply put, it’s a game changer. Joseph Conroy, CFP, is a financial advisor at Synergy Financial Group in Towson, Md., and the author of Decades & Decisions: Financial Planning At Any Age. He may be contacted at joseph.conroy@innfeedback.com.

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September 2020 » InsuranceNewsNet Magazine

INSIGHTS

The Million Dollar Round Table is the premier association of the world’s most successful life insurance and financial services professionals.

Financial Planning Isn’t Just For Retirement Establishing the “why” for owning life insurance will convince your client of its importance. By Jed Levene

hen people think of financial planning, the first thought that often comes to mind is saving for retirement. Although this is a very important aspect of financial planning, it is only one piece of the puzzle. Saving $1,000 a month won’t accomplish much for someone if there is a premature death, disability or illness one year into their plan. No one likes to think about their death or other potential misfortunes; however, the reality is that ignoring these unpleasant events can throw a serious wrench into your financial outcomes.

Communicating An Individual’s Economic Value

We have all heard someone utter the phrase “I’m worth more dead than alive” in jest. However, it is unlikely anyone is worth more dead than alive. Many clients haven’t considered what their economic value might be. We all insure our cars, homes and other material assets, but not many people can say they insure their ability to earn an income. In fact, when asked, most people will tell you that their largest asset is their home, which likely pales in comparison to their income-earning ability. Consider this: a 30-year-old earning $5,000 a month who receives a 2% raise each year has potential earnings of more than $2.9 million by the time they reach age 65. Pose the following question to your client: “If you had a money-making machine in the basement that was going to produce $2.9 million between now and retirement, would you insure it?” Of course they would. Protecting this asset 58

should be a top priority, and insurance is a great way to do just that.

Establishing The ‘Why’

Asking what a client’s goal is if they die prematurely can be an uncomfortable subject to broach; however, it is an important question to ask because there is no right or wrong answer and different people have different goals. Remember, these should be the individual client’s goals — not the agent’s, not the father-inlaw’s and not the co-worker’s. Everyone has an opinion, but prioritizing clients’ needs takes precedence and helps eliminate buyer’s remorse. Any advisor can use basic needs analysis tools to reach a number. By simply adding the reason for each of those goals, clients will have a lot more conviction about what they decide to purchase and the value you bring to their financial planning. Presenting life insurance as a tool used to help achieve a goal can be an effective approach. For example, those with dependents may want to ensure that their survivors can stay in the family home, as it represents security and the memories of their lost parent. While a needs analysis tool might ask for the balance of the mortgage, the agent should ask why it is important that the survivors are able to continue living in the family home, so their coverage can include and align to what they feel strongly about. Others may not feel the same connection to the family home, but the same conversation should take place for other immediate needs such as debts or their children’s education. It is important for advisors to

InsuranceNewsNet Magazine » September 2020

have these conversations and help determine the “why” behind the life insurance purchase.

Instilling Confidence In Policies

Many clients can tell you how much life insurance they own, but telling you why they own that amount is another story. Shifting their mindset is an easy process for an advisor to undertake, yet this is not common in the industry. Still not convinced? Which of the following clients will have more conviction in their policy: Client A, who can tell you they own $500,000 of life insurance, or Client B, who can confidently state that they have enough life insurance to pay off their mortgage and all other debts, provide each of their children with $100,000 toward their education, and replace their income until their youngest child is 25? The bottom line is that establishing a need for life insurance and the “why” is an integral part of the financial planning process that must be treated with the same level of attention and detail as retirement income planning. Every advisor has similar tools at their fingertips. Advisors who focus on the planning side of life insurance and who establish strong needs that are important to their clients will always separate themselves from the pack. Jed Levene, CLU, CFP, is a financial planner with Rockwater Wealth Management in West Orillia, Ontario, Canada. He is an 11-year MDRT member.

INSIGHTS

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.

New Skills Required to Thrive In The Midst Of COVID-19 The pandemic has forced advisors and clients into new ways of doing business. By Ayo Mseka

OVID-19 has drastically changed the financial services landscape, leaving many advisors looking for the skills they need to deliver the best financial outcomes for their clients while building a rewarding financial practice. To identify some of the skill sets that are in high demand today, we spoke with a couple of industry experts, and this is what they shared. (From Robert Arzt, CEO of Polaris One. He coaches professionals who want to achieve more.) Living during the COVID-19 pandemic has been a challenge for almost everyone. Our ability to remain positive and bounce back from disappointments or business setbacks is perhaps one of the most important skills we can possess if we are to achieve our goals — even if they need to be revised this year. Our outlook on life and our resilience are key drivers that can determine whether our efforts end in success or in failure. People who are resilient have the best chances of succeeding in business and in life. Resilience is one of the most important emotional intelligence competencies you can possess — especially now. Here are some attributes that resilient people possess. I hope that one or more of them will inspire you to create a plan of action that you can begin to implement immediately. People who are the most resilient: » Have a deep sense of purpose and passion for what they do, and find meaning as well as purpose in their struggles. » Have a strong faith in something bigger than themselves. » Keep their energy reserves built up with regular periods of rest, reflection and renewal.

» Have people they can depend on, and who know and love them as they are. » Build their day around rewarding and high payoff activities. » Use their peak time effectively and attack high priority items at the time of day they are most mentally sharp and alert. » Know their feelings, label them correctly and express them routinely to others. » Are emotionally and physically flexible enough to recover from disappointment and fatigue. They select new paths to follow, even if that means temporarily moving backward or sideways to eventually move forward again to continue their pursuits. » Know when they need help, and don’t hesitate to get it.

Following Through

The COVID-19 pandemic has no doubt caused you to re-think how you do business. You may need to implement new strategies, tactics or systems. What can you do to successfully implement those changes? Here are some follow-through strategies to help you along the way. » Don’t get too discouraged. » Create bold, compelling reasons why you need to follow through on your new strategy or system. » Start small and get into the habit of getting started. Then build on this habit by adding the actions required to achieve your end result. » Reward yourself for both getting started and staying on track. (From Bryce Sanders, president of Perceptive Business Solutions. He provides high net worth client acquisition training for the financial services industry.) We might never actually experience a “post pandemic” world. Instead, we might simply experience a cycle of “recovery and recurrence.” Traditionally, advisors interacted with clients in the office or in the client’s home or workplace. Now the advisor’s home may be a third point of interaction. As

such, advisors must learn how to work successfully from home. To do this, they will need a home office where they can “go to work” and close up. Likely, this will mean repurposing another room for part of the day when they are working from home. A key element will be seeing people via videoconferencing. Previously, this was a technology add-on for an advisor’s business. Now, it may be the next best thing to meeting in person when in-person meetings are impractical. While they are working from home, advisors will need to become comfortable with the major videoconference platforms. These will likely be WebEx, Zoom, Skype and FaceTime. Advisors at all experience levels will need to learn related technical features. Sharing your screen for presentations and messaging is a good example. Since advisors may receive as well as send calls, they also need to know that their calls may be recorded. Advisors will need to “dress for work,” especially with the prospect of receiving incoming calls from clients. If they look professional in the office, their “video self” must measure up too. The area that appears on camera must be neat and organized, similar to their office or conference room that is set up for client meetings. Advisors also need the ability to access client documents in a secure online format. Calls to the office will need to be forwarded to the advisor’s remote location. Checks mailed to the office need to be deposited, and mail sent to the office needs to reach the advisor. Although correspondence may have shifted online, there are still prospecting projects involving surface mail. Compliance oversight will be needed. Most firms will likely address these needs on behalf of the advisor, for purposes of standardization. Ayo Mseka is editor of NAIFA’s Advisor Today magazine. She may be contacted at ayo.mseka@ innfeedback.com.

September 2020 » InsuranceNewsNet Magazine

More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.

INSIGHTS

Advisors Talk About Fraud In 401(k) Plans Fraud is an evolving threat to defined contribution plans. By Ryan Scanlon

t is well known that fraud follows the money, so it may seem like it was only a matter of time before fraudsters expanded into what are many consumers’ largest individual accounts: their 401(k) plans. The Secure Retirement Institute has been exploring the evolution of this threat with consumers, plan sponsors and major record-keepers. In a recent survey, the SRI asked more than 250 financial advisors in the defined contribution industry to describe the impact of financial fraud and the importance of fraud prevention programs within the institutional retirement space.

Largest Advisors Most Likely To Report Growing Risk

For most financial advisors in the DC industry, advising 401(k) plans represents a relatively small part of their practice. In fact, more than half (51%) of respondents derived less than 20% of their professional income from advising DC plans in the preceding year, while only 15% had earned at least half of their income from these plans. In our analysis, we use advisors’ share of income from 401(k)s to create three profiles: occasional (1%-19%), medium (20%-49%) and core (50%+). These three advisor segments report considerably different experiences and expectations regarding fraud. Similar trends emerge when considering an advisor’s number of plans or their assets under manage-

Attempted Fraud Since January 2018 by AUM Since January 2018, has the rate of attempted fraud within DC plans you advise ...?

The study found that recent experience with fraud — and concern about future events — are far stronger among the largest advisory practices, with momentum seemingly driven by their plan sponsor clients. However, fraudsters tend to target individuals and not the plans themselves. So advisors with smaller DC practices may want to take more of a lead, particularly as an avenue to strengthen relationships with (current or potential) wealth management clients, who are often the most likely to be targets. 60

ment. In each case, the advisors with greater exposure to the DC market have far stronger concerns about and expectations for fraud prevention. Advisors with at least $100 million in AUM are significantly more likely than their peers to report that fraud had increased over the past two years. For most advisors, fraud experience had not changed significantly over that term. Nearly half of all advisors (47%) feel that the rate of attempted fraud within their DC plans had stayed the same

InsuranceNewsNet Magazine » September 2020

since January 2018, with another quarter (26%) indicating they were unsure. While 14% of advisors reported an increase in the rate of fraud attempts, they were nearly matched by the 13% who reported an overall decrease. Among advisors with at least $100 million in AUM, however, more than one in three (35%) had seen an increase over two years, fully five times the rate observed among advisors with less than $25 million in AUM.

Concern Is Being Driven By The Sponsors

Although relatively few advisors reported an increase in fraud, far greater numbers (43%) indicated that they and, to an even greater extent, their plan sponsor clients (51%) are growing increasingly concerned. While the disparity here is not particularly large, it is notable that advisors across the board report higher sponsor concern than personal concern. For example, while 55% of core advisors are increasingly concerned about fraud, 66% report the same for plan sponsors. On the other end, only 36% of occasional advisors are personally growing more concerned, while 44% believe their plan sponsor clients are. As such, increased awareness and focus on fraud prevention programs seem to be driven more by plan sponsor clients than by the advisors themselves. More than half of advisors (52%) believe their prospective plan sponsor clients are raising their expectations for retirement plan service providers’ fraud prevention capabilities, but this rate improves to 78% for advisors with $100 million in AUM. Those with more exposure to the market, or a focus on the large market, are far more likely to see plan sponsors raising their expectations. While advisors to smaller plans may feel less pressure to prioritize fraud prevention, the value of proactively bringing this concern to the attention of potentially unaware clients should not be overlooked. Ryan Scanlon, analyst with Secure Retirement Institute, is the project director for four institutional retirement benchmarking surveys and runs the Not-for-Profit Study Group. Ryan may be contacted at ryan.scanlon@innfeedback.com.

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