InsuranceNewsNet Magazine - May 2020 by InsuranceNewsNet

INSIDE: Premium Finance Quarterly â&#x20AC;¢ PAGE 17

May 2020

WHEN THE

GOES

WORLD

ZOOM

How COVID-19 Is Changing Everything

PAGE 18

What Will COVID-19 Cost Life And Health Insurers? PAGE 6

How To Mentally And Creating A Healthy Professionally Thrive Work-From-Home Through COVID-19 Space PAGE 12 PAGE 46

KCL_INNM-False-Cover.indd 1

4/13/20 8:27 AM

KCL_INNM-False-Cover.indd 2

4/13/20 8:28 AM

X A T D E C A F RESUR E H T M O R F Y G E T A R T S N O I S S E R P E GREAT D the

e s o l C s t n e g A Now Helping s e v i L r i e h T f Largest Cases o Right now, and for the next 10 years, it’s estimated that Americans will unload $25 trillion worth of taxable assets into the open market. Whether it’s from stocks, business, real estate or fine art sales — this historic transfer of wealth is also creating a historic tax burden. … a tax burden that one 90-year-old strategy (first discovered during the Great Depression) can eliminate forever! Knowing how it works can instantly help you... • Access an untapped multi-trillion dollar market

FOR EAL TS D N EW A N UR CLIE O Y

• Redefine your role from an insurance or annuity professional into genuine problem solver, capable of saving people millions of dollars • Capture the attention of powerful circles of influence • Close the largest life insurance and annuity cases of your life

Visit SaveClientsMoney.com to see for yourself how it works and why today is the greatest time in history to offer it.

Life Insurance & Long-Term Care

Long-term care needs change. Financial plans don’t have to. Introducing Brighthouse SmartCare, a hybrid life insurance and long-term care product. ®

Brighthouse SmartCare, a hybrid life insurance and long-term care product, gives your clients power over the unexpected. Its long-term care benefit and death benefit can grow over time, helping them to keep pace with rising costs. Better yet, if your clients never use the long-term care coverage, their money is put to good use through a death benefit for their loved ones. Brighthouse SmartCare offers: • Preparation for long-term care needs • Protection from unexpected events, such as premature death • The ability to grow benefits over time to meet rising future costs Brighthouse SmartCare is the smart way to gain power over the unexpected. Learn more at brighthousefinancial.com.

Brighthouse SmartCare® is an Indexed Universal Life Insurance Policy with Long-Term Care Riders issued by, with product guarantees that are solely the responsibility of, Brighthouse Life Insurance Company, Charlotte, NC 28277 (“Brighthouse Financial”). All guarantees, including any optional benefits, are subject to the claimspaying ability and financial strength of the issuing insurance company. Each issuing insurance company is solely responsible for its own financial condition and contractual obligations. Brighthouse SmartCare has exclusions, limitations, reduction of benefits, and terms under which the policy may be continued in force or discontinued. For costs and complete details of the coverage, please consult the product illustration. Not available in all states. Brighthouse Financial® and its design are registered trademarks of Brighthouse Financial, Inc. and/or its affiliates. 1904 BDUL648880 ICC18-AP1 • NOT A DEPOSIT • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT 5-18-AP1 AGENCY • NOT GUARANTEED BY ANY BANK OR CREDIT UNION • MAY LOSE VALUE

IN THIS ISSUE

View and share the articles from this month’s issue

» read it

MAY 2020 » VOLUME 13, NUMBER 05

FEATURE

When The World Goes Zoom By Paul Feldman and Steven A. Morelli

COVID-19 has forced advisors into a new way of doing business. Learn some lessons on how to adapt from some advisors who are adjusting to a new normal.

INFRONT

6 Pressure Grows On Insurers To Adjust Products, Modernize Process By John Hilton and Susan Rupe The pandemic could carry a high price tag for insurers, but the life insurance industry is looking at accelerated underwriting as a bright spot.

INTERVIEW

12 How To Mentally And Professionally Thrive Through The COVID-19 Crisis Everyone is suffering some level of grief as COVID-19 changes our daily lives. Amy Florian, an expert on the topic of grieving, tells Publisher Paul Feldman how advisors can acknowledge their own grief and help their clients through their grieving process.

online

www.insurancenewsnetmagazine.com

HEALTH/BENEFITS

38 HSAs: A Tool For Managing Skyrocketing Health Care Costs By Tom Torre Why direct primary care will become the go-to strategy to offset expenses in health care.

ADVISORNEWS

42 COVID-19 Underscores The Need For Advisors To Discuss Health Care By Joanne Giardini-Russell Making the wrong health care choices can put retirees at financial risk.

IN THE FIELD

26 L everaging His Way To Success By Susan Rupe Earl Luttner grew his agency from 21 advisors to a staff of 250 by hiring for unique skill sets.

LIFE

30 Cash Value: A Safe Harbor In Today’s Economic Storm By Marc Schechter and Jordan Smith When structured and funded properly, cash value life insurance policies are designed to provide moderate, steady growth with extremely low risk of loss.

ANNUITY

34 A nnuities: The Cure For The LowInterest-Rate Environment By Susan Rupe Some insights into why annuities make sense for retirement investors, even when the Fed cuts interest rates to zero.

INBALANCE 46 Creating A Healthy WorkFrom-Home Space

By John Hilton The right desk and chair are crucial, along with managing your time correctly and dealing with other family members.

BUSINESS

48 After The Storm: Helping Clients Assess Damage By Bryce Sanders Advisors need to plan now on ways they will be there for clients when the COVID-19 crisis passes.

INSURANCENEWSNET.COM, INC.

275 Grandview Ave., Suite 100, Camp Hill, PA 17011 717.441.9357 www.InsuranceNewsNet.com PUBLISHER Paul Feldman AD COPYWRITER EDITOR-IN-CHIEF Steven A. Morelli AD COPYWRITER MANAGING EDITOR Susan Rupe CREATIVE DIRECTOR SENIOR EDITOR John Hilton SENIOR MULTIMEDIA DESIGNER VP SALES Susan Chieca GRAPHIC DESIGNER VP MARKETING Katie Frazier MARKETING PROJECT MANAGER

James McAndrew Matthew Fishgold Jacob Haas Bernard Uhden Shawn McMillion Megan Kofmehl

MEDIA OPERATIONS MANAGER DIRECTOR OF MARKETING TECHNOLOGY NATIONAL ACCOUNT DIRECTOR NATIONAL ACCOUNT DIRECTOR NATIONAL ACCOUNT DIRECTOR CORPORATE ACCOUNTANT

Ashley McHugh Jennifer Larson Sarah Allewelt Samantha Winters David Shanks Trevor Alford

Copyright 2020 InsuranceNewsNet.com. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@ insurancenewsnet.com, send your letter to 275 Grandview Ave., Suite 100, Camp Hill, PA 17011, fax 866.381.8630 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 125, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 717.441.9357, Ext. 125, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 275 Grandview Ave., Suite 100, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein.

InsuranceNewsNet Magazine » May 2020

Navigate a strong path for your clients’

financial future with the Compass Elite IUL

Set your sights on the Compass Elite Indexed Universal Life (IUL) from Kansas City Life Insurance Company, which offers: • Streamlined design • Numerous riders designed to meet individual needs, situation and budget • Five types of Indexed Account options to build cash value while managing against potential market volatility • Competitive cap rates • Competitive target premium “Kansas City Life’s IUL product will set you apart from the crowd – it is easy to comprehend and great for the client.” — Tom Morgan, Vice President, Agencies

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.CompassEliteIUL.com

WELCOME LETTER FROM THE EDITOR

The New Route

y walking route to work used to take me past a senior living center where every morning I would see a man standing with his walker near the sidewalk. I couldn’t help but notice him because he frantically waved until I waved back. He was out there in all sorts of weather, except the most extreme. And whenever I was in a dark mood, his smile and wave would brighten my morning. I’d greet him, but he never said anything, just smiled. I made up narratives about why he didn’t speak, leaning toward stroke. On days when I did not see him, I would worry a little. One day I had a little more time, so I stopped to speak with him. It turned out he was Russian and did not speak English well. The next day he waved me over and introduced me to his wife, who was seated in a matching walker/wheelchair and seemed amused that her husband was doing this. After a shopping center was constructed near the building, the new traffic made crossing a nearby street challenging. When I rerouted, my commute no longer took me past the building. I enjoyed the novelty of a new route, but after a while I noticed I wasn’t getting that lift in the morning. I also realized that seeing the waver had helped me have good mornings at work, which translated into having better days.

Loss = Grieving

In the couple of years since then, I assumed the inevitable end would come for the frail, old guy. It seemed a little farfetched to be sad about something like that, but Amy Florian would say I was grieving. Grieving? Yes. It happens whenever we lose something. That is Florian’s message in this month’s interview with Publisher Paul Feldman. We had spoken with Florian before and used that conversation for two features last year. At that time, we spoke about grief in the context of helping clients through the death of their spouse. 4

InsuranceNewsNet Magazine » May 2020

She gave us perspective to rise above the vapid “So sorry for your loss.” This time she told us that grief is not just about death, but loss at any level. It can be as simple as losing a bit of a daily routine. Certainly, The waver and his wife. everybody is suffering some kind of grief during the COVID-19 crisis. It can be as dire as los- important of all, attaining acceptance ing a loved one or as seemingly small as does not mean it is over. Some things can not being able to go into the office. In be- trigger grief all over again. Some say that tween is a spectrum of difficulty, includ- widows and widowers are never “over” it. ing severe income loss. That dynamic is especially true in this A key point Florian made was that it current crisis. Just as we adjust to what is natural to discount the small losses we think the situation is, it changes. The experienced by clients, family, friends lockdowns will be longer than we expectand especially ourselves. “What right ed. The effects will be deeper and wider do I have to complain when so many than we can accurately predict. people are worse off?” How many times So, what can we do about it? Let it run have we said that to ourselves the past its course, be present and give people few months? room to heal. And lay off the platitudes. That thinking does extend gratitude for Let’s be real with each other. what we have and value to what we lost. We don’t know what comes next, but But we have to allow ourselves, and oth- we all know that we will see good outers, to absorb losses and try to move on. comes. While we remain clear-eyed about the negative effects, we can also The Crooked Line Of Grief watch for the positive ones. It is helpful to remember the stages of grief: When businesses and schools closed in our area, traffic dropped significantly, Denial: “This coronavirus thing is going allowing me to walk my old route. On the to blow over.” first morning, as I expected, the waver was not there. Anger: “Why are governments shutting On the way back home, I rounded the everything down?!” corner of the building to see him out in spite of the blustery day. His head popped Bargaining: “I promise to be sensible up and he waved like he wanted to shake with my money in the future if you make his hand off. it OK now.” I returned the wave and the smile. He approached and stopped, remembering Depression: “This is never going to end.” social distancing, I suppose. He gave me a “see ya later” wave and I was off, grinning Acceptance: “This is really happening. I into the wind. am going to get through it.” Steven A. Morelli Of course, not everyone will experience Editor-in-Chief each level fully. And even though Elisabeth Kubler-Ross presented the stages of grief model as a linear progression, we now know that it is more fluid than that. We can experience one level and skip the next one and come back to it. Most

STABILITY FOR YOUR CLIENT’S INVESTMENT NEEDS GUARANTEED INCOME WITH FIXED DEFERRED AND IMMEDIATE ANNUITIES

During times of uncertainty in the stock market, fixed deferred or immediate annuities have the ability to put stability back into your client’s investment portfolios. Multi-Year Guaranteed (MYG) Can lock in a level interest rate for 5 to 10 years worry-free of market volatility and declining rates. Single Premium Immediate Annuity (SPIA) For clients in the spending stage of life, a SPIA can transform savings into a lifetime of guaranteed income payments that ensures they won’t outlive their retirement savings.

Want to see our product portfolio? Call 1-888-501-4043 today or visit img.anicoweb.com for more information on our full line of products. Policy Forms Series MYGNQ, PQ; GMYGNQ-C; NSPA, ANY-NSPA (Forms May Vary By State). CA Form MYG16; NM Form: MYG17 (Forms may vary by state). American National Insurance Company, Galveston, Texas. Business is conducted in New York by American National Life Insurance Company of New York, headquartered in Glenmont, New York. Each company has financial responsibility for only the products and services it issues.

For Agent Use Only; Not for Distribution or Use with Consumers. 888-501-4043 | img.anicoweb.com

IMG22550 | INN 5.2020

INFRONT

Pressure Grows On Insurers To Adjust Products, Modernize Process Carriers scramble to drop products and rates while reducing friction in the sales process.

By John Hilton

Benefits Of An Application Triage Program

he COVID-19 crisis is hitting the life insurance industry in a few ways, but most profoundly in money coming in and going out. Income is dropping along with depressed bond yields. Insurers have massive portfolios tied up in safe, steady bonds. The 10-year Treasury note returned 3% in September, but fell to under 1% in March, once again impacting the yield curve. Meanwhile, demand has been intensifying for some annuities and there has been a bit of a scramble generally to sign for products before carriers further lower rates. Although some basics in the capital system are more sound now than in the 2008 crash, these kinds of pressure led regulators to require larger reserves, which prompted carriers to reduce product availability. Mortality risk is another issue that will test insurers’ hedging strategies. Even a particularly virulent flu season is enough to affect policy outcomes. The range of annuity products can serve as a natural hedge against losses on the life insurance side, and carriers tend to sell a mix of both. The financial impact is radiating to agents. And not all of those consequences are negative.

universal life sales were made with accelerated underwriting for the fiscal year ending Sept. 30, 2018. That figure was up from 16.8% during fiscal year 2017. But the numbers could be higher, and if they were, more policies could be processed without face-to-face contact. Speedy underwriting could emerge from the pandemic high on insurers’ todo lists, said Marc Cadin, president and CEO of the Association for Advanced Life.

Accelerated Underwriting

Underwriting

With life insurance sales stunted by stayhome orders, some are looking harder at accelerated underwriting for salvation. The industry has been slow to embrace big data capability, experts say. Depending on the insurer, accelerated underwriting is used on policies up to $5 million. Milliman found that 24.6% of indexed 6

InsuranceNewsNet Magazine » May 2020

• Money saved — via reduced medical underwriting requirements. • Time saved — issue policies faster, pay commissions faster. • Enhanced customer experience — fewer invasive procedures, while maintaining underwriting accuracy. • Resulting increase in application volume — due to ability to pay commissions commensurate with the work required.

“There’s more work that has to be done in terms of bringing the underwriting process fully into the 21st century,” he said. “So I think what we’re going to see is a period of explosive innovation where companies really think about the consumer process in a socially distant or lockeddown world.”

• Resulting increase in placement rates — due to faster time to issue and improved customer experience for applicant. • Resulting ability to optimize underwriter expertise — deploy underwriter expertise to complex cases that require manual review.

SOURCE: Deloitte

Discrimination Issues

Before insurers can go all in on accelerated underwriting technology, there are sensitive issues that still need to be settled. In particular, the ease of data collection could run afoul of data privacy statutes many states either have passed or are debating, said Shawn Davis, director of digital forensics at Edelson PC. “Insurers should pay particular attention to providing transparency to consumers and regulators regarding the use of data that may not fall under FCRA [Fair Credit Reporting Act] protections, as well as the use of artificial intelligence within risk algorithms,” Davis said. Davis gave a March presentation to the Accelerated Underwriting Working Group, which state insurance regulators formed in August. Discrimination is a growing concern given how data is

Attend Our Online Symposium

GET PAID $200! For a limited time, advisors can get paid to work from home! Sign up to learn how to make IUL sales from the comfort of your couch. › Best selling author Patrick Kelly will show you NEW ways to generate IUL leads › All attendees qualify for $100 Paid on Submit bonus › Complimentary virtual sales system

Hurry to secure your spot! Start making IUL sales from home today!

Visit OnlineIUL.com today or call 844.858.4498 This promotion doesn't apply to registered representatives or any affiliated with broker dealer/financial institutions • Agent can only receive the $200 one time for attending the virtual Sales Forum • Must be contracted with Simplicity • Simplicity ACH form and W9 required • Sales Forum attendance is required from start to finish and must be in good standing with Simplicity. May 2020 » InsuranceNewsNet1143048-0420 Magazine 7

INFRONT PRESSURE GROWS ON INSURERS TO ADJUST PRODUCTS, MODERNIZE PROCESS collected, Davis said. The potential exists to gather data that could be used improperly, he said. For example, facial analytics could flag skin tone. Minorities or LGBT members could be flagged based on magazine subscriptions or other purchases. This type of data collection “could lead to potential discrimination or inaccuracy within marketing and decision processes if used improperly,” Davis said. Otherwise, everyday nuances could be lost and lead to mistaken assessments. Let’s say someone signs a receipt for a large amount of alcohol that the person bought for clients. A perfectly innocent transaction could mean the data collection algorithm flags the buyer as a person with an alcohol issue.

Many Opportunities

If these issues can be worked out, there is a laundry list of positives to accelerated underwriting, said Chris Stehno, Deloitte managing director, human

capital practice. During an earlier working group call, Stehno said accelerated underwriting could cut an agent’s time spent selling a $500,000 policy from 20 hours to roughly five. That could lead to more life insurance sold to Americans who need smaller amounts for basic protection. “Right now, agents aren’t selling below a million dollars,” Stehno said. “What accelerated underwriting does is say, ‘Hey, a portion of those people, the young and healthy, I’m interested in selling to them again.’” Life insurance sales have been stagnant for many years, but Stehno said it’s actually much worse than the numbers show. Policy counts are declining as face value is rising because life insurance has become a tool for the wealthy, he said. “You talk to consumers and you find out that about 41% of Americans don't carry any type of life insurance,” he said. “Of those who do, almost half of them

have a coverage gap of at least $200,000.” Underwriters are using predictive analytics to triage applications, identifying healthy applicants for whom selected medical underwriting requirements can be waived, Stehno explained. The algorithm kicks a percentage of applicants out at the beginning, sending them to traditional underwriting, but actuaries are constantly tinkering with the testing methods, Stehno said. Results have been surprisingly accurate, he added. “There are some companies that have gotten up to maybe 40% of the applicants that they can take through the accelerated timeline or not ordering certain requirements,” he said. InsuranceNewsNet 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.

COVID-19 Could Carry Heavy Price Tag For Health Insurers By Susan Rupe

ealth insurers are taking steps to keep their policyholders from incurring costs due to COVID-19 testing and treatment. But that could come with a high price tag, a recent study revealed. America’s Health Insurance Plans hired Wakely Consulting Group to explore the potential costs of COVID-19 testing and treatment to U.S. health insurance providers for 2020 and 2021. The findings estimated that COVID-19 could cost the health care system anywhere from $56 billion to $556 billion over the next two years. The report considers the impact of COVID-19 on commercial, Medicare Advantage and Medicaid managed care plans. Assuming a 20% infection rate among the study population, the report estimates that more than 50 million Americans will become infected. Of those infected, at least 5.5 million will require hospitalization, and 1.3 million of that group will require intensive care. For each person admitted into intensive care, costs, on average, could exceed $30,000. 8

InsuranceNewsNet Magazine » May 2020

That’s the midline of three different scenarios that the Wakely report considered. In a best-case scenario, 10% of the study population would be infected, costing the health care system anywhere from $56 billion to $92.7 billion. But in a worst-case scenario, 60% of the study population would be infected, bringing the price tag to the health care system up to the $337.5 billion to $556 billion range. Going back to the study’s baseline of 20% of the population being infected with COVID-19, the study assumed that the infected population would include 35.3 million commercial insurance enrollees, 10.8 million who are in Medicaid managed care programs and 4.8 million who are in Medicare Advantage plans. The average cost for those who are hospitalized but do not require intensive care is $11,000, while those who do require the ICU will incur an average of $30,000 in costs. However, the study’s authors wrote that research published in the Journal of the American Medical Association found that

in 60% of confirmed COVID-19 cases, individuals had severe coughing symptoms that required medical care. The remaining 40% of COVID-19 cases are assumed to be mild, not requiring treatment. The researchers also considered the possibility that a COVID-19 vaccine would be available in 2021. “While the costs of the vaccine are unknown, they could be significant,” the report read. “For example, if a cost per inoculation is $500 and the majority (80%) of the population gets vaccinated in 2021, this alone would add over $100 billion to the total cost estimate.” 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.

INSURANCE INVESTMENTS

ARTICLE HEADLINE HERE INFRONT

RETIREMENT

Manatt. All 435 members of the House of Representatives and 35 of the 100 Senate seats are up for election in November. “In most cases, 60 votes would be needed for the Senate to pass major policy changes,” Orris explained. By Susan Rupe “TheSUPERIOR budget reconciliation process does provide a path to passing legislation A.M. Best uper Tuesday is in the rearview with only 50 votes. But reconciliation mirror and the once-crowded bills are subject to strict criteria that field of Democratic presidential limit provisions that may be included in candidates has narrowed to a two- that type of legislation to only changes VERY man race for the nomination. that impact spending or revenues. As a So what does that mean for health care? result, STRONG some policy ideas might not fit You can rely on us for your Fitch Manatt, Phelps & Phillips, a consulting firm, into a reconciliation bill and thus would individual life toand conducted a recent webinar breakannuity it down. require Ratings 60 votes, which will really raise The products race for the Democratic nomina- the stakes and influence the shape of tion pits Medicare for insurance All supporter Sen. policy going forward, depending on what • 8th largest Bernie Sanders, I-Vt., against 1 former the Senate margins look like.” company in the U.S. Vice President Joe Biden, who favors If Congress remains split, she conEXCELLENT billion in assets a more• $93.4 moderate approach to health tinued, Moody’s a new administration could set 2 care reform. Sanders is now the only health care policy through regulations, under management Investor Democratic presidential candidate fa- much asService the Trump administration has $26.6 billion in general voring •the government-run single-payer been doing with a Democratic-controlled 2 account health care systemassets after Sen. Elizabeth House and a GOP-controlled Senate. Or Warren• Comdex of Massachusetts dropped ranking: 963 out the federal courts could support or stall of the race following a disappointing administrative actions. Super Tuesday showing. “We’veVERY seen the current administration Sanders’ single-payer plan proposal becomeSTRONG particularly active on rulemaking Standard calls for a government-run system to take lately,” Orris said. “That’s at least in part & Poor’s of a new administrathe place of securian.com private insurance and other due to anticipation Visit public coverage programs. Biden, who tion or Congress or both, and a desire by was vice president when the Affordable the current administration to complete its Care Act took effect, wants to expand regulatory agenda and ensure that a new on the ACA, creating a federally backed Congress or administration can’t undo health plan from which individuals can regulatory activity next year.” buy subsidized coverage, also known as a If a new president is elected, and 1. A.M. Best’s Statistical Study, U.S. Total Life, July 22, 2019. Securian Financial Group, Inc., is a part of an insurance public option. achieve company a simple holding majoritygroup. in These ratings are assigned to the Based on 2018 direct life insurance business Democrats in force. More Americans support a public both chambers of Congress, Congress following Securian Financial Group member companies: 2. As of December 31, 2019. MinnesotaRule Life Insurance Company and Securian Life option than support Medicare for All, could use the Congressional Act to 3. Securian Financial has the 4th-highest Comdex ranking Insurance according a Kaiser Family Foundation rules issued less than 60Company. legislative possible.to The Comdex is a composite rankingrescind of an insurer’s Please keepwhich in mind that the primary reason to purchase a ratings assigned by independent making survey. More than two-thirds (67%)rating of re-agencies, days before the end of session, this life insurance product is the death benefit. it easier to a company across spondents ofcompare all political affiliations saidall insurers year is rated expected to be around May 19. by at least two rating agencies. More than 200 companies Life insurance products contain fees, such as mortality and they approve of a public option, while are ranked on a scale of 1 (lowest) to 100 (highest). The expense charges (which may increase over time), and may Susan Rupe is managing editor for 55% of respondents of of allEbix political affili-and is not a rating. Comdex is a product Exchange contain restrictions, such as surrender periods. InsuranceNewsNet. She formerly served as ations said they toas seeofMedicare for and This ranking is want current February 2020 subject to Insurance products are issued by Minnesota Life Insurance communications director for an insurance moreBut information, Allchange. becomeFor reality. there is a visit wideebix.com/vitalsales-suite. gap agents’ association Company states except New York. In New York, and was in anallawardA.M. Best Companyand rating (second highest 16 ratings); by Securian Life Insurance Company, newspaper products reporter are andissued editor. between Democrats Republicans on ofwinning Contact her at Susan.Rupe@innfeedback. Fitch rating (third highest of 19 ratings); Moody’s rating a New York authorized insurer. Minnesota Life is not an health care reform. The public option was com. Follow her on Twitter @INNsusan. (fourth highest of 21 ratings); Standard & Poor’s rating (fourth authorized New York insurer and does not do insurance supported by 85% of Democrats versus highest of 21 ratings). For more information about the rating business in New York. Both companies are headquartered 42% of Republicans. Medicare forratings All was agencies and to see where our rank compared in St. Paul, MN. Product availability and features may vary to other see ourbut website by state. Each insurer is solely responsible for the financial favored byratings, 77% ofplease Democrats onlyat securian.com/ ratings. All ratings information as of March 2019. obligations under the policies or contracts it issues. 24% of Republicans. Securian Financial is the marketing name for Securian But no matter who is elected president Financial Group, Inc., and its affiliates. Minnesota Life in November, their ability to achieve Insurance Company and Securian Life Insurance Company their campaign promises on health care are affiliates of Securian Financial Group, Inc. securian.com will be influenced by the makeup of 400 Robert Street North, St. Paul, MN 55101-2098 Not a deposit — Not FDIC/NCUA insured — Not insured Congress, said Allison Orris, counsel for ©2020 Securian Financial Group, Inc. All rights reserved. No matter who is elected president in November, his ability to enact health care reform will be influenced by the makeup of Congress, an analyst said.

Financial strength? Check.

A+

Aa3

AA-

Learn more

F94709 4-2020 DOFU 3-2020 1086947

by any federal government agency — Not guaranteed by any bank or credit union — May go down in value

May 2020 » InsuranceNewsNet Magazine

SPONSORED CONTENT

many consumers are not comfortable spending the money because they could outlive the coverage. An ROP life insurance policy offers a guaranteed death benefit that gives something tangible back — the return of all eligible premiums paid — when the level term period is up. Krebs also notes that policyowners can convert the ROP policy to any permanent plan that Kansas City Life currently offers, without underwriting, during the initial policy period. “We have an extremely strong return of premium policy where most companies have either increased their

At the time the IAO is added, the owner can select the amount, duration and frequency of the installment benefit payments and still maintain a lump sum benefit. Income stream payments may be made for a period of five to 30 years, either annually, semiannually, quarterly or monthly. The IAO affects only the way the death benefit is paid out and does not remove any flexibility or features of the life insurance policy. It provides added comfort that the policyholders’ hard work and planning will continue to protect their loved ones even after they have passed.

matching Kansas City Life’s product features to their individual situations. “We have state-of-the-art IUL products that have five different indexed account options,” says Krebs. “There is a lot of flexibility in those plans. They are popular and encompass a big part of our sales and our growth here at the company. We have also developed a winning sales strategy that allows our producers to showcase their credibility and competence at the point of sale, instilling confidence in their IUL prospects.”

Learn More About the Value of Security Assured

For 125 years, Kansas City Life has worked through significant crises to provide Security Assured to its customers. This has included past pandemics like the Spanish flu, two world wars, the Great Depression and other times of great challenges. Through all of those events, the company has focused on its insureds and agents to provide comfort and financial support in their times of greatest need. Today, Kansas City Life remains just as diligent during the current COVID-19 pandemic. •

sights on the Compass Elite Indexed Universal Life (IUL) m Kansas City Life Insurance Company, which offers:

d design Don Krebs, senior VP, sales and marketing and Tom Morgan, VP, agencies

riders designed to meet individual needs, situation Visit and 125YearsStrong.com budget

to access the full range premiums or exited this product line,” “We encourage our policyholders of Indexed Account options to build cash value while managing says Morgan. “We have also created to be knowledgeable about replacing a of solutions Kansas City turnkey sales systems around policyholder’s income for their family ential excellent market volatility our ROP product for ease of presenta- if they were to pass away,” says Morgan. Life offers to meet life’s tion that helps the clients understand it

e cap and rates increases sales for our producers.”

Kansas City Life’s Income e target premium Assured Option

Kansas City Life’s IAO is a no-cost enhancement that can provide an income stream as a death benefit. The option allows the policyowner to customize how the death benefit is paid out. “This is a unique product endorsement. I think we’re among only a handful of companies that have this valuable benefit, and one of even fewer that actually market it,” says Krebs. “It is available on all of our currently offered life insurance products.

“The industry usually uses a lump sum payout. However, if the policyholder is concerned about their family spending the entire lump sum death proceeds much sooner than the insured originally intended, our Income Assured Option is ‘real-world’ insurance that can help with that.”

Indexed Universal Life Insurance on about a vested independent contract With IUL from Kansas City Life, the customer is not only able to meet a City Life Insurance Company, call need but also gains the death benefit opportunity for higher cash value and the safety of downside protec, Vice President, Agencies 855-277-2090, tion against market volatility. Agents can provide overall value to clients by

.CompassEliteIUL.com

changing moments, and to download a free guide detailing how to position IUL with your clients in this environment.

How To Mentally And Professionally Thrive Through The COVID-19 Crisis Now Is Your Time To Be A ‘Super Advisor’ An interview with Amy Florian by Paul Feldman

InsuranceNewsNet Magazine » May 2020

HOW TO MENTALLY AND PROFESSIONALLY THRIVE THROUGH THE COVID-19 CRISIS INTERVIEW

hese are unprecedented times, when advisors can shine as leaders for their clients and for their communities. To do that, advisors need a deeper understanding of not only what is happening with their clients but also what is happening with themselves. It means understanding that everyone is suffering some level of grief and that takes different forms in different people. Some people withdraw — others can be impulsive. It is critical for advisors to recognize that and know how to help. Grief doesn’t come only from losing a loved one. It also comes from losing something. And we have all lost a few or a lot of things — even the day-to-day lives that we took for granted. There is no better guide for this terrain than Amy Florian. She has been helping people cope with grief ever since she herself became a widow with a baby when she was 25 years old. Florian has taught thanatology, the scientific study of death and loss, at Loyola University and Dominican University. Through her company, Corgenius, Florian works with professionals such as insurance agents and financial advisors on how to master the language of grief. She also wrote the book, A Friend Indeed; Help Those You Love When They Grieve. She was featured in the May and June 2019 editions of InsuranceNewsNet Magazine. I valued my conversation with her last year so much that she was the first person I thought of who can help us all cope and thrive in these difficult days. FELDMAN: These are anxious days, with advisors dealing with anxious clients. And they are doing this while dealing with their own anxiety. How can advisors help clients and themselves? FLORIAN: It’s not just anxiety, it’s grief. Grief is triggered whenever there's a break in an attachment. Whenever you have to leave behind something you like about your life, something you are attached to, your function, your role, your relationships, your dreams and plans, your trust in the institutions,

your everything — anytime you have to leave that behind and go on and learn to live without it, that triggers grief. Everyone in our country is grieving — financial professionals and their clients, everyone. Starting with the volatility and uncertainty in the markets, both domestically and globally. I mean, face it, it's been pretty easy to make money for clients and for

FLORIAN: The simplest one is simply acknowledging what you're feeling. It is not a sign of weakness to feel angry, to feel sad, to feel afraid, to feel pressured, to feel worried. It's all normal. It's all part of grief. Acknowledge what you're feeling. Share it with others, even if it has to be virtual, so that people can say, “Yeah, me too. This is tough. I'm exhausted.” To acknowledge

In the middle of all this immense disruption, we can’t be together. We are relational beings. This is a relational profession, both in the office and with clients. the advisors in the past 10 years. Many advisors and financial firms have never faced anything like this crisis. Even in 2008, there was a financial crisis, but it didn't disrupt daily life. It didn't put so many people out of their jobs. It didn't cause businesses to wonder whether they could survive. It didn't call into question everything that advisors and product companies and all the financial professionals do and how they operate. In the middle of all this immense disruption, we can't be together. We are relational beings. This is a relational profession, both in the office and with clients. Advisors and financial professionals are accustomed to working with colleagues in the office. They're accustomed to having a daily routine, to meeting clients personally, to taking people out to eat, to feeling more or less in control of their lives. Then with this personal distancing, it also impacts their personal life, not just their professional life. Not being able to visit relatives, being barred from seeing parents or grandparents, especially if they're in assisted living or nursing homes or memory care or hospitals. FELDMAN: One of the things that you have talked about is being able to deal with your own grief before you can help others deal with their own grief. What are some strategies to doing that?

what you're feeling instead of feeling like you have to be strong or, I like to call it, comparative grief studies. We engage in comparative grief studies. FELDMAN: Can you explain comparative grief studies? FLORIAN: I was talking to a national account manager yesterday. She said she was feeling so down and lost because she is really a people person. She hates this reality of being apart from everybody and not being able to be together. But then she said, "But what am I feeling down about? I have a job. I have a house. What's the matter with me? I shouldn't be feeling sad." I said to her, "Well, OK, let's extend that principle. Go to a couple who just had a miscarriage and say to them, ‘Oh, but you've got other children. You're young and healthy. You can try again. What are you complaining about?’ Or go to someone whose 88-year-old grandpa just died and say, ‘Oh, but he lived a good, long life. You know a lot of grandpas die younger than that. You're really lucky. What are you complaining about?’" You see, comparative grief doesn't work. Each person's grief is 100% to them. “Yes, I know I have other children, but I wanted this one.” “Yes, Grandpa lived a good, long life, and that's why this is so hard. I've May 2020 » InsuranceNewsNet Magazine

INTERVIEW HOW TO MENTALLY AND PROFESSIONALLY THRIVE THROUGH THE COVID-19 CRISIS

Learn how to let go. It can be as simple as physical things, like taking a ball, throwing it against the wall as hard as you can, catching it and throwing it against the wall again.

never been without him my whole life. I loved him dearly. I miss him." Yes, compared to someone else’s, your situation may be pretty darn good. Yet, you also have a right to your own grief for what you've lost. But then once you've done that — once you've expressed it, accepted what you're feeling — then you also remember to count your blessings and to rely on what you do still have because you haven't lost everything. Sometimes it's even helpful to make a list of all the things you feel you've lost and make a list of all the things you still have. It keeps some balance, but don't deny either part of it. Don't take the things you still have and say, "Because I still have some things, I don't have a right to be sad." Yes, you do. We need to be able to acknowledge and express the grief and to find ways to get that grief and tension out of our bodies. FELDMAN: How should advisors cope when they are hearing so much about grief from their clients and other people in their lives? FLORIAN: I tell advisors dealing with so much anger and emotion from their 14

InsuranceNewsNet Magazine » May 2020

clients not to take that personally. First of all, if you take all your clients’ emotions yourself and carry them on your shoulders, it will eat you alive from the inside out. It doesn't belong there. Keep boundaries, because everybody has grief and so do you, but we're not intended to take on the world. Now, I work with grieving all the time. If I came home from a support group meeting and I took on all the pain that I just heard and internalized it, I'd burn out. I couldn't do it. You learn in my profession how to release that tension. It is important for advisors too. Learn how to let go. It can be as simple as physical things like taking a ball, throwing it against the wall as hard as you can, catching it and throwing it against the wall again. It’s the motion of throwing something out. Even if you don't have a ball, but the throwing motion with both of your hands hard and fast helps. It throws out some of the tension that you've got stored in your shoulders and in your upper body. People think it's silly, but you can sit down and just take 10 seconds, stomp your feet as hard and fast and loud as you can just for 10 seconds. It releases some

of the tension that's building up in your body, and you know what? It's fun. You can do it with kids or with anybody who is in your permitted circle. Stomp your feet hard and loud and fast, and you end up smiling and laughing. It releases some of that tension. Dance like no one is watching. You might want to make sure that no one's actually watching and recording you and posting it on the internet. Sing even if you don't have a good voice. Even just listening to music. Listen to sad music if you feel sad and then switch to happy music. Listen to tap-your-toes music or some of the really inspirational "I can survive this. I can do this. I am strong." kind of music. Use music to help you process what you're going through and get yourself up for your client meetings. Breathe. Three times take a deep, deep breath all the way down into your belly. Just fill your whole body up, hold it for a little bit and then blow it out. Take longer on the exhale than on the inhale, and do that three times. It has an actual physiological relaxation response in your brain. Then after you do those three breaths and you get into this more relaxed state, just look around you at something beautiful. Look at the leaves that are budding out on the trees. Look at the blue sky or the stars at night or a piece of artwork that's in your home or your child's face or anything that brings beauty and joy. Let that in instead of all the tension. Find a way to connect with nature. Make sure you get out for a walk. See nature. Touch a leaf. Feel the breeze on your face. Feel the sun on your body, and appreciate your body's ability to move and stretch and support you. FELDMAN: I’m sure many people are having trouble sleeping these days. What do you recommend? FLORIAN: A lot of advisors are having trouble sleeping because when you go to bed, all your defenses are down and your brain starts going. You get that little hamster wheel effect. It's just over and over and over, all of these things going through your head. “You’ve got to remember to do this tomorrow. Why did you do that today?” All of these things start going through your head. One thing you can do is take a few

HOW TO MENTALLY AND PROFESSIONALLY THRIVE THROUGH THE COVID-19 CRISIS INTERVIEW minutes and write. Write in a notebook or a journal or anything. Write all that stuff that's going through your head. In fact, keep it by your bed. If you write and then you go to bed and it starts again, get up and write whatever's going through your head. If you wake up at 3:00 in the morning and it starts again, get up and write whatever's going through your head. Get it out of your head so you can have it in front of you when you get

that? The anxiety can be paralyzing, or it can lead clients to take drastic action. One thing that's really helpful is to have clients write down what they are afraid of. What are they anxious about; what are the worst things that could happen? Literally write it down because writing gets it out of the emotional part of their brain and into the more rational part of your brain when they actually write it down and see it out in front of them.

Then also at the same time, write down the best-case scenario. "My business survives. It might look different, but it survives. I don't get COVID-19, and neither does anybody I love." Look at the worst and the best cases and then look at the present moment. "OK, right now my business has not failed. I don't have COVID-19 and neither does anybody that I care deeply about. This is my present experience right now.”

Try to figure out as much as possible what you can control. You can’t control everything, and that’s very difficult to understand. But what can you control? What steps can you reasonably take to meet this perceived threat? up in the morning, you can see the list of things you have to do that day. Or you can remind yourself, "OK, yesterday I didn't do a good job at this. What can I do today to do it better?" FELDMAN: Some clients can really get overwhelmed. How can advisors best help them? FLORIAN: They can counsel clients about their fears and anxieties. There's a differentiation between fear and anxiety. Fear is the immediate threat. “Here's the snake. It's going to bite me.” Or “I have been diagnosed with COVID-19.” Anxieties are the perceived threat of things that could happen — “I could get COVID-19.” “My business could fail.” There are things in the future that could happen, and we get very anxious about those things. But what do you do with

Then once clients see these fears and anxieties in front of them, advisors can tell those clients two things. No. 1, brainstorm what you can do about it. What can you do if you're afraid you're going to get COVID-19? Well, we all know wash your hands, wear a mask, social distancing, don't touch your face. We all know those things. But also sleep at least seven to nine hours a night. Exercise, eat well, give your body as much to fight with as you can. All those things can be part of “OK, these are the strategies I have to take care of this. These are the strategies that I have to take care of that.” Try to figure out as much as possible what you can control. You can’t control everything, and that’s very difficult to understand. But what can you control? What steps can you reasonably take to meet this perceived threat?

Then try to live in the present, taking as much control as you can over future threats, but staying in the present, right now. "What do I have right now? Am I breathing right now? Am I OK right now? If these things happened, would I still be OK?” Doing that sort of multilayer strategy helps balance it all out.

Find more ways of dealing with grief at Amy Florian’s website, Corgenius.com. PLUS: Join INN and Amy Florian for an exclusive webinar, “Surviving and Thriving in COVID-19 World,” and discover how to be a hero and advise your clients through these challenging times! Register today, space is limited: innmb.com/florianwebinar May 2020 » InsuranceNewsNet Magazine

NEWSWIRES

COVID-19 Devastates U.S. Employment Remember in 2019 how employment hit record levels and businesses complained

they couldn’t find enough workers? That seems somewhere in the distant past now that COVID-19 has rocked the U.S. economy and led to a record 10 million Americans losing their jobs in the last two weeks of March. More than half of all households reported lost income since the pandemic hit the U.S., closing restaurants and retailers, shutting down factories and placing nearly 90% of the population under stay-at-home orders.

Initial jobless claims – aka layoffs – still soaring

QUOTABLE It’s impossible to know how deep and long the recession will be. It depends on the public health response. — Former Federal Reserve Chair Janet Yellen

SOURCE: Bureau of Labor Statistics

6.9 million

7,000,000 6.6 million

6,000,000 5,000,000 4,000,000 3,000,000

3.3 million 671,000

665,000

Sept. 1982

March 2009

2,000,000 1,000,000 week ending March week ending March week ending April 21, 2020 28, 2020 4, 2020

About half of all working Americans report some kind of income loss affecting themselves or a member of their household because of the coronavirus pandemic, with low-income Americans and those without college degrees especially likely to have lost a job, according to a new poll from the Associated Press-NORC Center for Public Affairs Research. The income losses include pay cuts, unpaid time off and reduced hours, as well as lost jobs, with 23% of adults who had work when the outbreak started saying they or a member of their household have since been laid off. A third of those in households making less than $50,000 a year say they or a household member have lost their job. Sixty percent of Americans reported the national economy was "poor” in April, a sudden turnaround from the 67% who called it "good" in January.

ECONOMY COULD REBOUND IN 4Q

The U.S. economy could be back on track for 4.5% growth in the fourth quarter, a Nationwide economist said. The key is to get the COVID-19 pandemic under control relatively quickly, added Ben Ayers, senior economist for Nationwide. But while 4.5% growth in the gross domestic product would certainly be good news, there is some pain to be felt first. The second-quarter GDP loss could be 10% or more, Ayers said. He is projecting a smaller -1.5% third quarter. DID YOU

KNOW

If the U.S. is able to overcome the virus in a few months' time, Ayers is predicting robust 4% average growth rates for the first three quarters of 2021.

COVID-19 AN ‘UNINSURABLE EVENT,’ EXEC SAYS

Many businesses hoped their commercial business interruption insurance would reimburse them for COVID-19 losses. But this insurance generally contains exclusions for war, flood and pandemics. Some state lawmakers are trying to apply retroactive coverage to those policies. That would be damaging to many insurers, said David A. Sampson, president and CEO of the American Property Casualty

Insurance Association. “Many commercial insurance policies, including those that have business interruption coverage, do not provide coverage for communicable diseases or viruses such as COVID-19," he said. “Pandemic outbreaks are uninsured because they are uninsurable.” One look at the bottom line reveals why the P/C industry couldn't realistically insure something as massive as a countrywide pandemic. The annual premium for all commercial property risks in the key insurance lines is $71 billion per year, or about $6 billion a month. Estimated small business losses due to COVID-19 are being adjusted northward from $255 billion to $431 billion per month.

NEXT STIMULUS ROUND COULD COST $1.5T

Round two of the federal COVID-19 stimulus is shaping up in Washington and that package of spending and possible tax cuts could add another $1.5 trillion to the more than $2 trillion already being spent. A legislative package of another round of stimulus could be produced by midMay, Wall Street executives say. Meanwhile, JPMorgan Chase CEO Jamie Dimon told shareholders he’s bracing for a "bad recession," while former Federal Reserve Chairwoman Janet Yellen warned it’s possible that the economy has already plunged into depression territory.

The average American household spends $7,728 per year on food.

InsuranceNewsNet Magazine » May 2020

Source: U.S. Bureau of Labor Statistics

MAKE SURE YOU CATCH THE REMAINING ISSUES OF

PREMIUM FINANCE QUARTERLY! Someone beat you to the punch and grabbed this month’s premium financing booklet!

TO GET A DIGITAL COPY GO TO

WWW.GETPFQ.COM

TO GET YOUR COPY TODAY! Premium financing has some additional risks not found when a client purchase a policy without financing. These include collateral, interest rate and other risks. Clients should always consult their qualified tax and legal advisor before purchasing a financed policy.

Available in: february | MAY AUgust | november In easily-digestible bite-sized chunks, our premium finance experts will guide you down the path to premium finance mastery, covering everything from: • An overview of how this special form of insurance works • Where to find the ideal candidates • Ethics of premium finance • Case design

COVER STORY WHEN THE WORLD GOES ZOOM

When The Goes

Mark Selvaggi is adjusting to the new normal of advising from his home in Scituate, Mass.

InsuranceNewsNet Magazine Â» May 2020

WHEN THE WORLD GOES ZOOM COVER STORY

World ZOOM How agents and advisors are turning to tech to save the sale By Paul Feldman and Steven A. Morelli

2020 was

shaping up to be Mark Selvaggi’s best sales year. The New York Life agent had about $60,000 in total commissions during January and February; he was meeting with clients, going to the office and closing cases even as COVID-19 news grew dire. Selvaggi just put his head down and did the work. That is, until one evening in early March when he returned to his Scituate, Mass., home and his wife asked a question. “My wife asked, ‘Yeah, you’re not going to keep seeing people, are you?’” Selvaggi recalled. “And I said, ‘I guess I am.’” His wife replied with an understatement, “‘That’s probably not a good idea.’” At that moment, Selvaggi joined other agents and advisors who were realizing that not only was COVID-19 sickening and killing people, it was also changing the way of life for all Americans, especially those who rely on personal contact for their livelihood. Life insurance agents have been associated with kitchen table conversations for at least a century. The most effective agents are often talented at making a personal connection with prospects and clients. They rely on visual cues in the home, as well as body language, to read their clients. Stay-at-home orders broke that connection. On top of that, historically low interest rates were compelling life insurance companies to change terms and pull products. Even a venerable company such as Prudential stopped selling 30year term life insurance. Could life insurance even be sold in this new reality? Selvaggi, along with every other agent and advisor, was about to find out.

The Future Comes Fast

The life insurance industry has long been considered stodgy and slow to change. Even as financial services experimented with faster and easier processes for May 2020 » InsuranceNewsNet Magazine

COVER STORY WHEN THE WORLD GOES ZOOM going to change my lifestyle.’” But that’s not his style. “The reality is I like to work. I like to help people. And they still need my help,” Selvaggi said, adding that clients were calling at a feverish pace. “But I don’t like to talk on the phone, and I had never done videoconferencing before March of this year.” Those were the first steps on Selvaggi’s learning curve. He had to learn not only the mechanics of online tools and videoconferencing but also how to communicate effectively through a computer screen. It’s a skill he said he is perfecting every day, and he had some observations that might help other agents get up to speed.

“I had never done videoconferencing before March of this year.” advisors and clients, life insurance companies and agents were still using paper applications and relying on in-person medical exams. For years, companies have been promising and predicting a reduction in the 45 or so days it often takes for applications to be processed and approved. The interminable wait even to find out the client’s risk classification can be galling to consumers who are used to processes that take seconds rather than weeks. On the sales end, agents were still working leads the same way they had for decades — calling prospects, setting appointments, meeting clients, filling out apps and submitting the paperwork. Economic downturns such as the 2008 crash might have changed some aspects of the business, such as products and prospecting, but an agent plucked out of 2007 and dropped into 2009 could still know how to do business. However, an old-school agent lifted out of February 2020 and thrown into April 2020 wouldn’t recognize this new reality. Suddenly, there are no in-person appointments. Parameds in many states won’t even do medical exams anymore. Favorite insurance and annuity products 20

InsuranceNewsNet Magazine » May 2020

might have been pulled or had rates substantially reduced. Some agents with enough financial security (or enough frustration) are walking away from the business. Others, like Selvaggi, are not only racing up the learning curve — but also finding out they enjoy the challenge. Life carriers that were slow to offer nonmedical underwriting or only offered it on low-value face amounts are hustling to stay relevant with marketers and agents. Companies that used to offer nonmed coverage for up to $500,000 or $1 million are raising the limits. Carriers are racing to remove friction points from sales. Crises have a way of fueling urgency. The changes brought on by this crisis thrust carriers and agents squarely into the 21st century, ready or not. Selvaggi was not necessarily ready for these changes, but he was prepared for change. “The good news was I’ve always been a good saver,” he said. “I had a nice emergency fund where I didn’t really have to go to work, unlike a lot of the people I work with. So I had the ability to say ‘Hey, I could pack it in for the next year. It’s not

Setting And Conducting The Meeting

Selvaggi found that the COVID-19 health crisis was motivating prospects and clients to talk about insurance products. But how could Selvaggi meet with them? He used to have three choices — meeting them in his office, their home or business — but all those choices are off the table now. Step one was learning everything he could about Zoom, the videoconferencing software now familiar to everybody from grandkids to grandparents. Selvaggi went straight to YouTube and watched about a dozen tutorials. Even some high-producing agents at New York Life offered how-to videos on conducting virtual meetings. But as Selvaggi became familiar with the tools, he was still assessing whether he even wanted to go to this new reality. “I had to ask, ‘Does this fit in my profile? Does this fit my business model? Will I be relevant over a computer screen?’” He realized he was missing an essential element of his presentation style. He likes to draw out his points, literally, with illustrations to illuminate points. That called for an iPad Pro with a stylus, which he learned to use. Then he learned how to share his screen on Zoom, and it all came together. Zoom not only made it possible to meet with prospects and clients again, it also opened all sorts of efficiencies and access. In the past, he would have spent considerable time coordinating multiple schedules to meet with a couple and then

WHEN THE WORLD GOES ZOOM COVER STORY get on the road to meet them. “Half of my day was really carved around transportation and making my schedule fit into my client’s schedule,” Selvaggi said. “The byproduct of the Zoom call was I was able to meet with very busy people in the middle of the day, where before it always had to be after work.” When meetings used to be a week or so down the calendar, and often postponed, now they are held within days. His process is much quicker. Those were the pleasant surprises from switching to virtual meetings. But there were also some new obstacles. “The biggest challenge I’m having is what I call the effective rate,” Selvaggi said. “When I would go and meet with a client, I was 95% sure I was leaving with some form of commitment from that client.” He is not getting as firm a commitment from prospects. Part of that has to do

with the medium of videoconferencing, but another is the uncertainty everybody is feeling. That apprehension is leading to a new kind of objection: “Now everyone’s like, ‘Well, when all this settles down, we’ll get together. We’ll do something.’”

From Dogs To Desk

One way to close the deal in one call is to start the application with the prospect on the phone or video. That is a technique that Jimmy McMillan learned in sales over the phone. But he and other remote sellers say the closing ratio is definitely lower than with in-person meetings. It is more of a numbers game — the more you call, the more you sell. McMillan discovered that when he transitioned from a shoe-leather, faceto-face salesperson to selling by phone and video. Once he made that change, though, he never looked back. Or when he does look back, it is not

“The byproduct of the Zoom call was I was able to meet with very busy people in the middle of the day, where before it always had to be after work.”

Photo by Cadu Rolim/Fotoarena/Sipa USA

with regret. He doesn’t miss those upclose-and-personal days. “I have been chased out of yards by big angry dogs. I’ve walked in on people’s barbecues,” McMillan said. “I walked in on a guy that was fixing his truck while changing a serpentine belt. I have done all of those things just to get an application.” And if it wasn’t dogs chasing him, it was hurricane seasons unsettling his part of Northeast Florida every so often. It got him to thinking that there had to be a better way to do business. “I went from spending all my time driving all over God’s green earth to now working out of my office and spending more time on the phone,” McMillan said. “I’m licensed coast to coast now, just calling people who actually want my help versus people peeking behind the blinds and pretending like they’re not there when we had an appointment set up.” Although agents are now navigating the change from in-person to virtual contact with prospects and clients, McMillan had to do that in addition to building a new way of prospecting. When McMillan was contending with snarling dogs and helping with car repair, he was with a company selling 401(k)s to small and medium-sized companies, and then cross-selling life insurance to their employee participants. He pivoted to focus on a niche, prospects with high-risk medical conditions that made them hard to place. He started writing about how people can qualify for life insurance after a heart attack and posted it on his website, HeartLifeInsurance.com. His family had a history of cardiac issues, so he was intimately aware of the difficulties of getting life insurance. But he also knew its value, because his grandfather had coverage when he died of a heart attack. It took a half a year to get enough web traffic to start getting leads from his site. He also uses social media, but that is a very soft sell. In fact, it’s closer to teaching than selling. He doesn’t use ads on Facebook because getting specific about demographics can get an ad declined. “But you are able to participate in groups that are related to heart conditions,” McMillan said, explaining that some groups focus on one specific condition. “As long as you’re not overtly out May 2020 » InsuranceNewsNet Magazine

COVER STORY WHEN THE WORLD GOES ZOOM

Establish Rapport

there pushing products on people, you can jump in and answer questions not only about life insurance but health insurance too. Those people who interact back with you, you are able to market to them through Facebook Messenger.” Because McMillan’s prospects have indicated a need for life insurance, they tend to be receptive to the message. From there, he links them to his business page to get a quote. His clients are typically in their 50s and 60s and get up to $1 million in term coverage. He gets enough business from his website to qualify for the Million Dollar Round Table.

“The first step on the phone is establishing some quick rapport, telling them why they should listen to me, verify some information really fast so they don’t just hang up on me thinking I’m another telemarketer,” McMillan said. “Then it’s, ‘Well, let’s see if we can help you. What do you really want? Whom do you want to get this money when you die?’”

Make It Real

“When you’re face-to-face, you can read clues from body language, but you don’t have that over the phone,” McMillan

app-out rates are higher because I’ve got a very motivated client. A lot of them have been declined before. They’ve also been on the table with their chest open, and they have a newfound respect for life insurance they might not have had before.” That appreciation of mortality might be more pronounced now. Even as the pandemic was rolling through the country, McMillan has been closing more business, typically with several apps in a day. “Leads for me are down but slightly, 12%,” McMillan said. “But engagement is up. There are a lot of people answering the phones right now. There are a lot of really good conversations happening.”

Conveying Professionalism Virtually

Jimmy McMillan does not miss in-home visits in his corner of Northeast Florida. McMillan estimates he closes 25% of his cases in one call, which he said is lower because some applicants are too difficult to get a manageable premium or even to place. When he started remote selling, he learned quickly that he had to change his approach and his language in order to be effective over the phone. Here were some of his lessons.

Keep It Simple

McMillan started remote selling when phone calls — instead of videoconferencing — were the norm. Phone calls are still appealing to him because of a lesson he learned early: Keep it simple. On his website, readers can find an article and a form next to it to set up a meeting, and little else to distract them. In communication, he likes not having the hurdle of prospects who might not be comfortable with formats such as Zoom.

InsuranceNewsNet Magazine » May 2020

said. “So, you have to make this real, using words like ‘When you die, what do you think your wife’s going to do with the money? What’s the first bill or thing she’s going to pay off?’ Those kinds of things.”

Get The Details

Typically, the last part of the first conversation begins with “Let’s get the application so that we can get you an approval.” No one wants a longer-than-necessary life insurance process.

Track, Track, Track

McMillan can tell you to the precise percentage point how many leads he is pulling in, how many leads convert to meetings and how many he closes. If the number drops in one area, he fixes it. If it rises in another, he learns why. He estimates he closes a quarter of the cases on the first call. “The rule for telesales is going to be 7% to 8% app out,” McMillan said. “My

Peter D’Arruda has been selling virtually by using many tools, including some from the TV and radio studios he uses for a radio show and video projects in his home base at Capital Financial and Insurance, Raleigh, N.C. D’Arruda, known as Coach Pete, has been helping other agents for decades. In his own shop, he has been getting his agents to reach further than they can with a car. “Because we have such a wide network with the radio shows, we have a lot of people who have called, who are three, four, five hours away,” D’Arruda said. “And I told my guys that rather than being road warriors, we need to become experts on how to do a good virtual appointment, with good visuals and good audio and all that. And we’re lucky enough to have TV studios and audio studios in our offices.” His operation had a running start on the web tools that many advisors are now grappling with, such as Webex, join.me and Zoom. But he cautions that it is just the first step in the process. The next is getting prospects and clients to be comfortable with the technology. That has a lot to do with the rest of how an advisor does business, he said. “You have to seem like a professional,” D’Arruda said. “If not, you’re no different than the guy that pulls up in the driveway, trying to see somebody at home, and is basically getting all of the stuff out of the trunk of his car. You don’t want that.” His 27,000-square-foot office is set up to impress. When they have prospects visit, the building helps make the sale by

WHEN THE WORLD GOES ZOOM COVER STORY

6 Tips For Advisors Doing Business In A Pandemic By John Hilton

can be a lonely time for independent advisors trying to negotiate the pandemic while in isolation. That’s why some independent marketing organizations are stepping up support for their advisors. During an April conference call, Nathan Lucius, president of Gradient Financial Group, and Matt Tarkenton, executive vice president of Tarkenton Financial, shared the advice and techniques they are providing their advisor teams. In this call from the National Association for Fixed Annuities, the pair covered six main areas advisors should focus on to stay in a winning frame of mind.

Have a plan. It’s important to have a plan and embrace the work-from-home environment, Tarkenton said. He mentioned one advisor who has a disciplined schedule of calling existing clients in the morning and prospects in the afternoon. “Working from home, you can be a lot more productive,” he added. “If people start their day at nine and work for an hour and a half or two hours, they may be able to get the equivalent of three or four hours of work done because, in theory, there are no distractions.”

Don’t wallow. The COVID-19 pandemic lends itself to so many potential stressors beyond a changing work environment. Control what you can control, and that means tackling the work with a positive attitude, Tarkenton said. “When you're in a crisis, it’s easy to crawl under a log and just say, ‘There's nothing I can do.’ There’s a ton we can do,” he said. “You need to dust yourself off, get back up, and go out and help people. The mission of business is to help people.”

Set limits. With the laptop, phone and desk always there, it is easy to go overboard on the work. Good mental health starts with maintaining that separation between work and family. “I am encouraging folks that when it’s time to turn off the computer at the end of the day, turn off the computer,” Tarkenton said. “If you need to take a break in the middle of the day to feed your kids or walk the dog, do it.”

Embrace technology. Do not look at the work-from-home office as a temporary thing, Lucius said. Home-office technology is here to stay, and the pandemic is showing companies how valuable it can be. “To me, it’s forced people to adapt to doing the things that we should have been doing all along,” he said. “And we can certainly make a positive change when we get back to a normal sense of life, using and making those tools as efficient as they can be.”

Talk to clients. Clients need to hear from you, Lucius said. And those conversations need to be more transparent than ever about potential downsides, he added. “Anybody who thinks business isn’t going to slow down ... just hasn’t quite got to the reality of where we’re at,” Lucius said. “And so people are scared. They want answers to something that nobody can give them answers to.”

Celebrate yourself. While it might be tough times for a lot of people, those folks who have benefited from sound financial planning are out there. If one of them is your client, tell that story, Tarkenton said. “If you’ve got the right retirement plan that provides guaranteed income, whether it be from Social Security, pensions, annuities, taxfree income from IUL, whatever it is, those people aren’t worried right now,” he explained. “And a lot of our best advisors have talked about their clients calling them to thank them for being in a good position.” InsuranceNewsNet 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.

May 2020 » InsuranceNewsNet Magazine

COVER STORY WHEN THE WORLD GOES ZOOM

Peter D’Arruda says professionalism is just as important in remote sales as it is in person. conveying the 30-year history and solidity of the company. The trick is conveying that sense virtually. They project professionalism through the videos and podcasts they produce that confirm their thought leadership. But it is also their process and presentation. “When we share documents with clients, we do it in a secure way,” D’Arruda said. “A lot of advisors need to be very careful. If they email stuff to people, those emails are not secure. They need a secure server to upload and download documents that they share.” Then there is literally showing professionalism. D’Arruda said two of his advisors were perfect illustrations of the difference. “I have two good advisors,” D’Arruda said. “And one advisor always wears a suit and a tie. And the other guy wears pullovers.” The older advisor is the one dressing down a little. Because the other is 28, he wants to be taken seriously and wears a suit. They get the same kind of leads. One gets them one day, and the other gets them the next. But they have different outcomes. The suit usually wins. “You have to approach a virtual appointment just like a real, in-person one,” he said, adding that it is not just sartorial. “Prep ahead of time. Send the prospects some information ahead of time.” 24

InsuranceNewsNet Magazine » May 2020

Going virtual put his office in a position to scale as demand for annuities increases. Last year, his relatively small staff wrote $80 million in annuities. Sales have been so strong these past few months that they are on track to double that in 2020. But that assumes annuity companies will still be offering enough product at attractive rates. “Insurance companies are already killing the rates,” D’Arruda said. “So then as fiduciaries, we have to weigh whether that’s a good thing to recommend to our prospects, if we’re going to trap them in something that has low rates.” Because of that, he has been looking for a particular feature in annuities. “If the annuity has inner portability, which will enable the client to move into different options as the options get better, then that’s OK,” he said. “Especially with some of the insurance companies that are pretty proactive on increasing rates when things go up instead of just jumping out there and lowering rates any time something bad happens.”

‘This Will Be The New Normal’

While D’Arruda is already comfortable in the world of remote selling, Selvaggi, the New York Life agent in Massachusetts, is eager to have a little bit of his old life back. Even though he is learning to cope and maybe even thrive in this new

environment, he can’t help wondering whether he is losing something. On the one hand, carriers are helping smooth the way by waiving medical exams in some cases and enacting other underwriting efficiencies. But on the other, he senses a break in connection. “The good news is that the velocity of the transaction is picking up,” Selvaggi said. “But the tackiness or the stickiness of the relationship, I believe, is eroding.” With that is something that went beyond business but really is a way of life. “I have over a thousand clients, and I personally mail everybody a handwritten birthday card, and I call every single person on their birthday,” Selvaggi said. “When I do that, I can picture their living room in the back of my head. I can picture what their kids look like and sort of what their passions are, because I’ve been in their living room and I know a little bit more about them than just what’s in their portfolio or what their insurance protection looks like.” But when he looks at all the miles of travel he no longer has to do and a new way of looking at advising, he knows that there is much to hold onto when COVID-19 becomes just a bitter memory. “I had to learn a whole new skill,” Selvaggi said. “The skill is how to have rapport over a computer screen, and that’s a new discipline that I’d been learning every day. This will be the new normal. And the in-person visit, I don’t know. I think maybe we used our personalities as a crutch to fill the vacuum of being properly prepared. And that this new normal is going to make people be a little bit more disciplined and aware.” Paul Feldman is publisher of InsuranceNewsNet.com. He was a third-generation insurance agent and marketer when he started InsuranceNewsNet in 1999. He can be reached at paul.feldman@innfeedback.com. 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@ adnewsfeedback.com.

WHEN THE WORLD GOES ZOOM COVER STORY

d e ir a p Im r u o Y e v a S to w Ho Risk Clients Up to 85% on Term Conversions ds I want to help the millions of insure ative that are like me, so I created a lucr program for agents. rts when Hi, I’m Andy Hyman. My story sta

AND

Y HY M

I was classified as impaired risk.

t of and was horrified at the high cos 60’s my in m ter my of end I reached the I realized s able to afford it at the time, but wa kily luc I . icy pol m ter my g conver tin life insurance. opportunity for a new concept in an saw I . not ld cou s can eri Am most

77% at least one chronic disease, and e hav lts adu er old of 80% ly “Approximate have at least two.” — NCOA.org s in-force with 11 million individual term policie Those statistics come out to “over RA ted to permanent coverage.” — LIM only 1-2% of those policies conver professionals, uaries, medical and underwriting act ing lud inc s ert exp of m tea a With er™ for insureds que program called Term Lifextend we developed and launched a uni ender™ June, 2019. Utilizing Term Lifext in ent pat a ed eiv rec ich wh er age 60 and old you. usands with high commissions for tho of s ten nts clie ed air imp r you can save n — you owe it to conversion period is ending soo If you have a client whose term about this program today. them and yourself to learn more

your noVisit GetTermExtender.com™for les Kit and obligation Term Lifextender Sa using this find out how I saved a client 73% ission. m m co 8K $1 an g in rn ea le hi w program May 2020 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

EARL LUTTNER: LEVERAGING HIS WAY TO SUCCESS

An insurance agency CEO says he has never had a bad day in the business because of his method of connecting with the right people. By Susan Rupe

on’t tell Earl Luttner that the road to success in the insurance business is paved with rejection. “I’ve never been rejected a day in my life,” said the CEO and chairman of Luttner Financial Group and Lifetime Financial Growth, based in Pittsburgh. That statement is the result of optimism and positive perspective he has maintained throughout his more than half-century in the business. Luttner entered the insurance business in 1967, when he was fresh out of Robert Morris College. Today, he heads an agency that he grew from 21 agents to more than 250 financial advisors spread across nine locations. Luttner is the recipient of GAMA’s 2020 Hall of Fame Award. He was recognized for his leadership, mentorship, advocacy efforts and commitment to improving the client experience. He credits his success to his strong belief in the value of insurance to a family’s financial stability and peace of mind. “If you really believe in what our products do, it’s not hard to be successful in

InsuranceNewsNet Magazine » May 2020

LEVERAGING HIS WAY TO SUCCESS IN THE FIELD

our industry,” he said. “When I was an agent, I always believed I could talk to people about protecting their families; but if they chose not to do anything, that was on them, not on me.” A native of Latrobe, Pennsylvania, Luttner was already experienced in sales by the time he graduated from Robert Morris with an accounting degree. He sold clothing and furniture while he was in high school, and he sold furniture to pay his way through college. A small insurance company called Fortune National Life recruited him as an agent right after he graduated. “They were selling simple savings plans with the story that you will earn a fortune. People don’t plan to fail; they fail to plan. Pretty basic stuff. This made a lot of sense to me, and I started working really hard.” His hard work paid off, and he earned $41,000 in 1967, his first full year in the business. Luttner said his years of selling clothing and furniture laid much of the groundwork for his insurance success. “Early on, I knew how to communicate with people,” he said. “So when I started selling insurance, it was a matter of having a certain number of appointments. Because you’re going to have success when you see X number of people.” He became an agency director by the time he was 26. In 1974, he joined General American Life. His agency of 21 agents affiliated with Guardian Life in 1991.

Earl Luttner, his wife Dr. Rosanne Kowalsky, and their daughters Nadia (left) and Katerina (right) are active in a number of causes, including the Make-A-Wish Foundation of Greater Pennsylvania and West Virginia. He served as chairman of the board of the International Assistance Group for 20 years and has been instrumental in helping U.S. families adopt more than 2,900 children.

Luttner said that when he began leveraging some of his clients’ employees among other agents and sharing commissions, he saw his practice grow. In addition, he created loyalty among the other agents “because they knew I could help them.” Eventually, Luttner’s knowledge of accounting led him to another opportunity. “I became involved with a company in New York called Multiple Funding,” he said. “I love the tax code, so I was combining the understanding of how taxes affect business owners with life insurance. I fell in love with whole life insurance through the book The Magic of the

As he recruited agents, Luttner said, he looked for personality. “People do not buy from people they like; they buy from people they trust. I know that to be true. I would see people who had the kind of personality that attracted others to them. But at the same time, they had to be someone others could trust. I can think of a lot of people whom I like, but I’d never buy anything from them or trust them with my financial matters. Some persons, however, you may like them, and you may trust their integrity, but you don’t trust their competency.” Luttner uses a recruiting system known as the unique ability model to identify what a potential employee is good at doing. The model begins with recognizing your own natural talents that you are good at, that give you energy and that you love to do. After that, you hire others with behaviors and skills in areas where you are weak so they can provide strength. Once employees are hired, Luttner expects them to concentrate on their unique qualities. “I’m a big believer in saying, ‘Stay in your lane; focus on what you do best,’” he said. “In our firm, I don’t just need people who can sell. I need people who can do all the duties that need to be done. So I’ve attracted people who have talent in the areas in which we need it. It’s all about hiring for unique abilities.” In addition to his special way of

“People do not buy from people they like; they buy from people they trust.” Luttner said he soon realized referrals were the key to taking his production to the next level. “I always had a lot of recommendations early on,” he said. “But I discovered more agents didn’t get recommendations. After a couple of years in business, I realized I did better talking to certain types of people more than others. For example, if I sold to a contractor, I didn’t want to talk to all the workers. I would sell the contractor supervisor and then the supervisor would give me more names. I would then leverage that and take a percentage of the names and give those to some other agent on a sharing basis.”

Whole Life Contract by Emil Budnitz. It was very powerful.” Another major factor in his success is that he believes in doing only the things he is good at and likes to do. The rest can be done by someone else. “There were two things I hated to do: I hated to prospect, and I hated to service my clients,” he said. “So I hired someone who was 25 years old and put them in charge of servicing my clients. Then I started hiring agents, and I surrounded myself with people who could prospect well. And I was able to put a plan together, get prospects to take action and then have them serviced correctly.”

May 2020 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

Pushing That Snowball Uphill Luttner described how his agency is structured differently from most. “First of all, we have a board of directors,” he said. “Then we have an executive leadership team. We have a president at each location, and that president is also a shareholder. Then in each location, we have our talent acquisition people and our optimization people, who would be called sales managers in most other places. We also have executive directors of various business lines, such as life brokerage, disability brokerage, training, retirement planning, etc. “We bring real expertise into our agency, and that helps create the leverage for our people. So even if someone in our organization may not be an expert on a particular subject, we have that expertise within our organization.” Luttner’s agency has 250 career agents plus an administrative staff of about 100 people. “And we have thousands of brokers who do business with us,” he said. He said there are many ways to recruit people into the business, but “the best way is through personal observations and recommendations from other representatives. “We have a bonus program for all of our people, [so] if they recommend someone and that person meets certain criteria, the recommender as well as their nominee gets a new custom-made suit,” he said. “As people do well, the recommenders can get additional bonuses in their first and second years.” Recruiting people into the business “is the right thing to do,” Luttner said.

recruiting and hiring, Luttner said his business has grown because of leveraging. “You look at what you do well, and you decide that’s what you’re going to do,” he said. He used mowing the lawn as an example. “A lot of people cut their grass on Saturday. That’s not smart, in my opinion. They should be using that time to work on their business and hire someone who makes a lot less than they do to cut their grass.” Luttner’s point is that people must recognize what they do best and what has the highest payoff for them, and then delegate lower-value tasks to others. As he plans for his agency’s future, Luttner has been working with a professional coach, Carl Hicks, for a number of years. “Earl has a great vision — he’s always three chess moves ahead of everyone else,” Hicks said. “We are working to plan not only his replacement but also his replacement’s replacement.” 28

InsuranceNewsNet Magazine » May 2020

“The American public is underserved in life insurance, in disability insurance, in guaranteed retirement income,” he said. “There are not enough people helping the public with this. This is an opportunity. You have to understand that you are not out there selling something; you are helping people.” Luttner has been in the insurance industry for more than five decades, and he has big plans for the future of his agency. His goal is to double the size of his agency in the next three years. Doubling the size of his agency will mean a greater emphasis on recruiting talent, he said. “We are putting an emphasis on bringing career-changers into this business. We are bringing in CPAs, people with law degrees. We also are looking at veterans who have returned from the military.” As he looks ahead, he sees exciting times while he prepares for his agency’s future growth. “I feel like for the first 50 years, we’ve been pushing a snowball toward the top of the hill — and it’s a pretty big snowball right now. But we’re about to come down the other side and have an avalanche.” — Susan Rupe

Hicks said Luttner has “unbelievable optimism.” “Everyone he meets is either a potential employee or a potential client. He brings out the best in other people, and he surrounds himself with other good people.” One of Luttner’s two daughters is in his agency’s business development department. He also has a niece and a nephew working in his agency. Today, in addition to its Pittsburgh headquarters, Luttner has offices in four Ohio cities — Cleveland, Canton, Columbus and Cincinnati — as well as in Detroit and Louisville. The company insures every Major League Baseball team and many National Football League coaches as well as major employers such as Akron Children’s Hospital, Cincinnati Bell and Cleveland Clinic. Early in his career, Luttner counted a fellow Latrobe resident, the late golfing great Arnold Palmer, as one of his clients. “But we will protect everyone’s earned and unearned income,” he said. “It

doesn’t matter whether they’re large or small. We just want to make sure that we do the right thing for them and for their families.” 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.

Got a Story? Tell Us!

Do you know someone who would make a compelling profile story? Shoot us a quick email telling us who it is and why you think so. Send it to editor@insurancenewsnet.com, and put PROFILE in the subject line.

LIFEWIRES

Universal Life Is The Biggest LEVERAGING HIS WAY TO SUCCESS IN THE FIELD Piece Of The 2019 Pie

What’s Behind The Rise In Life Insurance Sales? Was it the untimely death of NBA legend Kobe Bryant? Or

Whole Life 33%

Term 21%

UL 38%

VUL 8%

was it because of a shift in mortality tables? Whatever the SOURCE: LIMRA reason, life insurance sales are up, according to LIMRA, the MIB Index and True Blue Life Insurance. True Blue, an online aggregator and comparison site for life insurance, reported the volume of life insurance application requests and submissions spiked in the days after Bryant died in a helicopter crash on Jan. 26. The volume of submitted applications increased by 58% on the day of Bryant’s death — a Sunday — and 61% the following day. Meanwhile, LIMRA reports the new individual life insurance annualized premium jumped 15% in the fourth quarter, compared the same quarter in the prior year. LIMRA said the increased sales were because all life insurance products were required to shift to the 2017 Commissioners Standard Ordinary mortality table by Dec. 31, meaning many companies reported increased sales of products using the 2001 standard. The MIB Life Index told a slightly different story, with life insurance application activity increasing 5.6% year over year in February, fueled by a 7% increase among younger buyers. The impact of COVID-19 on life insurance sales was not known at the time the survey came out, but “it is anticipated to show up in the next few months,” MIB said in a news release.

NEW YORK REQUIRES DELAY IN COLLECTING PREMIUM

Insurers are required to delay collecting premium on life insurance and annuity contracts written in New York for 90 days under an emergency regulation. The directive covers consumers experiencing financial hardship due to the COVID-19 pandemic, the New York Department of Financial Services said in a news release. Consumers and small businesses experiencing hardship may defer paying premiums for property and casualty insurance for 60 days. Premium finance agencies are required to provide the same relief as insurers. The 134 members of the Life Insurance Council of New York, which represents more than 80% of the life insurance industry in that state, agreed to extend to 90 days the grace period for the payment of premiums and fees, and for the exercise of DID YOU

KNOW

policyholder or certificate holder rights, under life insurance policies and annuity contracts in cases of financial hardship due to the COVID-19 pandemic.

INDUSTRY GROUPS WANT TO EASE LICENSING REQUIREMENTS

Producers who cannot complete regular licensing requirements because of the COVID-19 outbreak would get a break if some industry groups are successful in urging state insurance regulators to ease up on the rules. Leaders of the National Association of Insurance and Financial Advisors, AALU/ GAMA and the National Association of Independent Life Brokerage Agencies sent letters to every state licensing authority requesting temporary licensing accommodations. Due to the public health crisis, many third-party testing centers have closed,

QUOTABLE An alarming knowledge gap persists when it comes to understanding how life insurance can solve financial challenges. — Adam Winslow, CEO of life insurance, AIG Life & Retirement

and it is impossible for licensees to appear in person to be fingerprinted in many jurisdictions. The letter notes that demand for life insurance among members of the public has increased, but many would-be producers are unavailable to serve consumers because of the licensing backlog. Some states have taken action to provide temporary licenses prior to applicants completing testing and fingerprinting requirements. Most states give insurance regulators the authority to waive licensing requirements when it is in the public interest to do so.

PRUDENTIAL SUSPENDS 30-YEAR TERM SALES

Prudential temporarily suspended taking applications for 30-year term life insurance policies, effective April 13. The suspension, which will last until June, is in response to “unprecedented market volatility over the past month and the anticipated low interest rate environment for the foreseeable future,” Prudential said in a statement. Prudential is believed to be the first insurer to suspend term life insurance due to market volatility fueled by the COVID-19 pandemic.

China Oceanwide’s acquisition of Genworth Financial has been delayed to June 30 because of the COVID-19 pandemic. Source: Richmond (Va.) Times-Dispatch May 2020 » InsuranceNewsNet Magazine

LIFE

Cash Value: A Safe Harbor In Today’s Economic Storm In times of turbulence, cash value life insurance can provide a stabilizing influence on the overall portfolio and a potential source of cash that can be drawn upon without having to incur market losses. By Marc Schechter and Jordan Smith

n light of recent market challenges that have affected our clients’ investment portfolios, many have asked how the cash values in their investment-oriented life insurance policies are weathering the storm. Whole life, universal life and indexed universal life have traditionally maintained their values through tough economic times because they are designed with that very goal in mind. Today is no different. When equity markets are up and the economy is running smoothly, it’s sometimes easy to overlook the value of the 30

InsuranceNewsNet Magazine » May 2020

downside protection clients get from using life insurance as an investment. Life insurance will never be a client’s best-performing asset when things are good — it’s not supposed to be. But in times of turbulence, it can provide a stabilizing influence on the overall portfolio and a potential source of cash that can be drawn upon without having to incur market losses. When structured and funded properly, these policies are designed to provide moderate, steady growth with extremely low risk of loss. It’s important to educate your clients on a few key differences between insurance companies and other corporations, including banks, so they can understand why insurance companies are generally more financially stable than banks, particularly during times of market volatility. 1) Investment risk. Insurance companies invest the premiums that they collect from policyholders in long-term assets, such as bonds, to ensure that they can pay out insurance claims as they

occur over time. The vast majority of life insurance company assets are required to be used for high-quality investments, with approximately 85% invested in investment-grade corporate bonds and U.S. Treasuries, both of which traditionally perform better than stocks when corporate finances weaken. This means that insurance company investments are generally less risky when compared with the investments made by banks and their affiliates, whose structure and regulations do not limit their investment of lender deposits in a way that corresponds to their anticipated liabilities. 2) Insurance carriers are not allowed to use leverage. Unlike they do with banks, investment funds and operating companies, government regulations prohibit insurance companies from using leverage to enhance their performance. This prevents any losses from being compounded during market downturns. 3) Insurance carriers are heavily regulated. Insurance companies can

A SAFE HARBOR IN TODAY’S ECONOMIC STORM LIFE

3 Reasons Why Insurance Brings Stability To A Portfolio 1. The vast majority of life insurance company assets are required to be used for high-quality investments.

2. Insurers are prohibited from using leverage to enhance their performance.

3. Insurers are heavily regulated.

I Am Catholic Order of Foresters Sell life products designed exclusively for Catholics and join a team that succeeds together: • “You’re not selling life insurance, you’re selling Catholic values.” — Agent Tom Kaelin

become insolvent. However, these scenarios are historically rare. This is because the states that regulate insurance companies take poorly performing insurance companies into receivership if or when their assets drop to approximately 90% of their liabilities. At that point, the insurer has approximately 90 cents on the dollar to pay off their liabilities. In contrast, most financially challenged corporations are left with an extraordinarily small amount of assets or value when they go bankrupt, and creditors are typically fighting for a much smaller 10 cents or 20 cents on the dollar. Insurance companies have failed in the past, but due to state oversight and intervention, the companies and the industry ensure that payment of the company’s guaranteed obligations are made to policyholders. In challenging economic times such as these, clients are even more appreciative of the slow and steady 4% to 6% tax-free compounded long-term returns that cash value insurance designs offer. Many of the dollars that our clients have allocated to these products are longer-term dollars that would otherwise have been invested in stocks or bonds. Some of our clients own these contracts inside their estate (in cases where they intend to access tax-free dollars during their lifetime), while others have invested dollars that they had already transferred to an irrevocable trust for

the benefit of their children or grandchildren (where the death benefit component of these policies will ultimately enhance the amount of wealth that passes to the next generation). In either case, it is in an environment like we have today that these policies are most appreciated because their value is unlikely to be impacted in any significant way by the volatility that is currently battering the rest of the economy. While these are turbulent times, policyholders can rest assured that their assets at these life insurance companies are secure in an industry that has secured such assets for hundreds of years. Marc Schechter is senior managing partner at Schechter Wealth, Birmingham, Mich. Marc may be contacted at marc.schechter@innfeedback.com. Jordan Smith, JD, LLM, is vice president of advanced design at Schechter Wealth, Birmingham, Mich. Jordan may be contacted at jordan.smith@ innfeedback.com.

Like this or any other article?

Take advantage of our award-winning journalism, licensure and reprint options. Find out more at innreprints.com.

May 2020 » InsuranceNewsNet Magazine

• “It has been a blessing to have joined a committed team that’s 100% flexible.” — Agent Holly Schweitzer • “The Home Office team provides unbeatable support.” — Agent Antonio Alvarado

70,112,021+ registered Catholics are in the U.S. Referrals could be next door! Visit GreaterLifeCOF.com to receive an exclusive Find Success and Grow Your Business with Catholic Order of Foresters whitepaper!

ANNUITYWIRES

Indexed Annuities Set 2019 Sales Records Clients fell in love all over again with indexed annuities during 2019, with sales numbers shattering records. Overall 2019 indexed annuity sales were $73.2 billion, although the year ended with a downturn, reports “Wink’s Sales & Market Report.”

Indexed Annuities Lead 2019 Sales (in millions) $20,000 $15,000 $10,000 $5,000 $0

QUOTABLE Don't make any promises you can't keep. If the guarantee requires certain actions by the consumer, then we need to say that. — Maureen James, a principal with Summit Compliance, on marketing annuities during COVID-19

4Q09

4Q10

4Q11

4Q12

4Q13

4Q14

4Q15

4Q16

4Q17

4Q18

4Q19

SOURCE: “Wink's Sales & Market Report”

Indexed annuity sales for the fourth quarter were $17.1 billion, down 8.1% when compared with the previous quarter, and down 10.6% when compared with the same period last year. But Sheryl J. Moore, CEO of Wink, said she expects another year. “Given the recent volatility in the markets, coupled with even lower fixed interest rates, I suggest we are going to have a repeat in 2020,” she said.

JACKSON RETAKES NO. 1 SPOT

Jackson National did not settle for second place after being eclipsed by American International Group Inc. in the 2018 annuity sales rankings. According to the Secure Retirement Institute U.S. annuity sales rankings, Jackson reclaimed its crown as the top seller of total annuities in 2019. It did so through “staggering” growth, said Todd Giesing, SRI senior annuity research director.

“Jackson has dominated the variable annuity market for the past seven years. In 2019, Jackson diversified its annuity sales to focus on growing its fixed annuity market share, which propelled its overall growth in 2019,” Giesing said. “Jackson’s fixed indexed annuity sales

jumped a staggering 1,293% in 2019, while their fixed-rate deferred annuity sales climbed 169%.” Total annuity sales were $241.7 billion in 2019, an increase of 3% over 2018 results, representing the highest annual annuity sales recorded since 2008. The top three carriers represented 22% of the market share in 2019, down from 25% market share five years ago (in 2014).

ANNUITY RATES PLUMMET

Annuity companies have been cutting their rates across all fixed products — some several times amid the crash in equity markets and Treasury yields, said an annuity analyst. Sheryl J. Moore, CEO of Wink, said rates were as high as 3.5% this year and had dropped to about 1.8% in early April. Those lower rates are sure to slam fixed annuities without indexed features. Multiyear guaranteed annuities and other fixed products are already in the doldrums. “The next thing I anticipate seeing is reductions in premium bonuses,” Moore said.

ANNUITY SELLERS FACE COVID-19 COMPLIANCE RISKS

Market downturns can create annuity sales opportunities, but agents and advisors need to take steps to protect themselves and prepare for a new compliance world. Although compliance risks exist during typical times, advisors’ exposure increases as clients take losses from investments, and even as a result of action by a broker who might be upset about money that they were managing moved to annuities, said Maureen James, a Summit Compliance principal. Also during this period, sales due diligence might not be as rigorous as it is in normal times, James said. Advisors should be extra diligent about conduct and documentation.

6 Compliance Risks • Insurance carrier actions • Complaints/chargebacks • Lawsuits • Regulatory enforcement actions • Criminal charges • Bad press/reputational damage

All of these risks, but criminal charges in particular, are especially heightened right now because advisors are not able to meet clients face to face, James said.

DID YOU

KNOW The National Football League Players Union negotiated increased annuity benefits in

the recently signed collective bargaining agreement with the NFL.

InsuranceNewsNet Magazine » May 2020

Source: The National Football League

ANNUITY

Annuities: The Cure For The Low-Interest Rate Environment Why annuities could be a good vehicle for those who want to thrive despite dropping interest rates. By Susan Rupe

ith low interest rates deepening after a decade of lows, is now a good time for clients to consider an annuity as part of their retirement income plan? After all, we are a long way from the 1990s, when interest rates of 8% were not unheard of. Adam Brown, vice president of actuarial product development at Allianz Life, told InsuranceNewsNet he Adam Brown expects the low-interest rate environment to continue being the norm, especially in the wake of the market volatility brought about by the COVID-19 pandemic. And that makes annuities attractive to clients who need to generate lifetime income without worrying about interest rates dropping into the cellar. The Federal Reserve cut its benchmark interest rate to 0% in mid-March in response to the risks the COVID-19 pandemic poses to the economy. In addition, the 10-year Treasury had fallen to all-time lows in March as investors fled to the safety of bond markets amid the downturn in equity markets. A 0% interest rate scenario prohibits clients from living off the income from investments in retirement. Even if interest rates go to 0%, a 65-year-old male could expect to receive $5,048 each year for the rest of his life from annuitizing $100,000. So what should advisors tell their clients about annuities in a low-interest rate world? 34

InsuranceNewsNet Magazine » May 2020

4 Ways Annuities Benefit Investors, Even When Interest Rates Are Low 1. Will still pay a guaranteed interest rate. 2. Provide tax deferral. 3. Provide a guaranteed rate of return. 4. Provide a lifetime income stream. “A good place to start is discussing the core of what annuities can provide, which is first and foremost longevity protection,” Brown said. “We’ve been through the last 10 years of fairly low interest rates and we’ve asked ourselves: Are rates going to go up and annuity products get more attractive again? Will we ever see the benefits like we saw in 2006 and 2007?” Brown said that investing and working in the bond market have given carriers the knowledge of bond market prices. That, in turn, has given carriers a good idea of long-term expectations. “Our long-term expectation is that interest rates will be low and that’s impacting all our investments. That’s why you have to start with longevity protection.” Insurance provides that ability to share risk among clients, he said. Regardless of where the markets are, and the benefits and richness of features that carriers adjust or fluctuate, that core lifetime income is something that will always provide value. The second component that makes annuities attractive even when interest rates are low, Brown said, “is that annuity

products have long provided asset protection and sequence of return protection. “And I think that’s really critical at this time. As the markets are going back and forth, we’re getting used to these whipsaws of very large opens and very large closes, and positives and negatives coming day after day. For the advisor or client, that’s a pretty dangerous situation in that you never know quite when to act or how to prepare. So, I think the asset protection allows clients and advisors to take a step back, breathe a little bit and not necessarily have to react momentarily to what’s going on in the market.” With a fixed indexed annuity, an advisor can show a client that their investment is protected even if the rest of their portfolio is experiencing losses, Brown said. He noted that over the past several years, carriers have rolled out indexed annuity features that enable owners to lock their performance partway through the year, to make the most of their gains. “If you look year over year at some of the index performance and some of the crediting methods, they’re still positive,

ANNUITIES: THE CURE FOR THE LOW-INTEREST RATE ENVIRONMENT ANNUITY even though we’ve gone through these uncertain times,” he said. “We’ve seen quite a bit of utilization of those locks where clients are able to protect gains and lock them in before the market correction.” Advisors should frame this in the context of asset protection for clients, Brown said. “Not only how are you protecting your principal, but how do you protect those past gains?” When the market eventually settles down and begins to pick up steam again, Brown said clients will wonder whether an annuity still makes sense. He said advisors should guide them to a decision by asking two questions.

» How can we prepare for longevity? » What would asset protection look like? “And when you think of asset protection, it’s not just your investment today

but any gains that you might realize between now and when you eventually turn this product on.” Interest rates are at rock bottom as a result of the COVID-19 pandemic’s effect on the economy, but how long will they stay there? Brown said he doesn’t know, but “the challenge will be — and where we’re putting our time, effort and energy — whether rates will stay where they are or go even lower for a significant period of time.” How will carriers adapt to a world where low interest rates will be the norm? Brown gave some insights. “I certainly think we will see some new annuity products or an adaptation of products that are already on the market. When you go back to the financial crisis of 2008-2009 and look toward today, you’ll see there has been a lot of innovation in the annuity market. The 10-year bull market followed by what we’re experiencing currently will certainly impact product design.” Ultimately, Brown said, “insurance

companies will lean into what we do best. And what we do best is asset protection and longevity protection.” “I think the core of this is that, for insurance companies, we’re here to make sure that we can be as conservative as we can be in these times. The protection they provide goes in and out of favor at times, but I think that as a result of these recent market corrections and low interest rates, it will be a strong time for annuities. Consumers will be looking for more protection, and I think you’ll see the industry step up and find new ways to offer that protection.” 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.

HEALTH/BENEFITSWIRES

60% Of Medicare Agents Lost Money To COVID-19 COVID-19 has taken its toll in the Medicare market, with

60% of Medicare insurance agents reporting their income declined as COVID-19 shut down businesses and forced Americans indoors. The online poll was conducted by the American Association for Medicare Supplement Insurance. Thirty percent of agents said the pandemic had “no real impact” on their business, while 42.5% said their business income is down 1% to 49%. Another 17.5% said their income is down 50% or more, while 10% of respondents said their income is up. Despite the downturn in the Medicare business, agents said they weren’t planning to be idle while Americans were sheltering in place. Seventy-two percent of agents said they planned to spend April contacting current clients, building or improving their practices, and watching educational videos.

FEDS REFUSE TO REOPEN ENROLLMENT

Losing your job — and your employer-b a s e d he a lt h insurance — in the middle of a pandemic is a frightening prospect for those who found themselves unemployed in the wake of the COVID-19 crisis. The Trump administration said it would not reopen the federal health insurance exchange for a special enrollment period, although some states that operate their own health marketplaces said they would do so. People who lose their employer-sponsored health insurance already qualify under existing rules for a special enrollment period. But those who have been uninsured or are underinsured would not be able to purchase a plan on HealthCare.gov outside of the regular enrollment period. But the administration announced a plan to reimburse hospitals and health care providers for uncompensated care given to COVID-19 patients who do not have health insurance. Hospitals and health care providers would be reimbursed at Medicare rates for the treatment of uninsured patients. Providers would be banned from balance billing patients or sending them a DID YOU

KNOW

surprise medical bill to make up the difference in costs not covered by the government.

AMERICANS FEAR COVID-19 COSTS

A survey showed that Americans — even those who have health insurance — fear the cost of COVID-19 treatment. Nearly half of Americans surveyed said they worried they won’t be able to meet the costs associated with the virus, a Healthcare.com study revealed. Twenty-three percent of respondents said that were “not very confident” and 25% said they were “not at all confident” in their ability to meet costs of care associated with the disease, called COVID-19. In addition, more than 40% indicated they would potentially need to take out bank loans, borrow money from family or run up credit card debt to cover any medical treatment they needed. Only 31% of respondents said they could meet expected costs by using their savings. Of those who did not have health insurance, 59% said they were “not at all financially prepared” to deal with the cost of care associated with COVID-19. One in four of

Aflac will acquire Zurich North America’s group benefits business. Source: Aflac Source: Associated Press

InsuranceNewsNet Magazine » May 2020

QUOTABLE This would be the first recession since the Affordable Care Act went into effect, so we are in uncharted territory. — Larry Levitt, executive vice president, Kaiser Family Foundation

those on Medicare or who receive insurance coverage through the Affordable Care Act shared this concern.

MEDICARE PATIENTS CHALLENGE OBSERVATION STATUS

For years, hundreds of thousands of Medicare beneficiaries have struggled under crushing medical bills resulting from their hospitalization status. Now, a federal judge in Connecticut has ruled Medicare beneficiaries have the right to challenge denials of benefits. The ruling came after nine years of a class action suit brought by Medicare patients around the country whose benefits were cut when hospital review boards, pressed by federal regulators, made unappealable decisions that switched their hospitalization status from “admitted” to “under observation.” The switch in status can lead to financial catastrophe for seniors. For example, in the past, patients covered by only the free version of Medicare, Part A, have been personally responsible for costs of hospitalization and follow-up care or rehabilitation in a nursing home — costs that routinely reach into tens or hundreds of thousands of dollars. Under Medicare rules, Part A beneficiaries had no right or means to challenge a change in status, which elderly patients sometimes were not aware of until they received bills. The decision applies only to Medicare Part A patients. Those with Part B or other supplemental insurance have coverage regardless of in-hospital status.

We can help make the long-term care conversation easier.

1 2 3

Let’s talk about: Protection that could become an asset you can pass on to your loved ones. Making sure you and your spouse are protected — under one policy. The only lifetime benefit that you can’t outlive.

Let’s talk about protecting your client’s income during retirement.

Visit www.TalkLTC123.com to download our free financial professionals’ guide.

www.TalkLTC123.com OneAmerica® is the marketing name for the companies of OneAmerica. 20-00852

HEALTH/BENEFITS

HSAs: A Tool For Managing Skyrocketing Health Care Costs Tips for leveraging health savings accounts to lower costs for workers and their employers.

By Tom Torre

he cost of health care has and will continue to rise over the next decade. Consolidation of providers into larger networks has effectively reduced competition, particularly in less populated regions, resulting in fewer competitive options and higher costs for consumers. Even in situations where individuals are able to shop and compare a variety of services before choosing a particular provider, a lack of true pricing transparency makes it difficult for consumers to select a low-cost, high-quality option. Making the situation even more challenging, the trend for the past couple of decades has been to shift the cost of health care from employers to individuals through increased premiums and higher deductibles. Strategies used by some hospitals and providers to maximize their billing — such as out-of-network services 38

InsuranceNewsNet Magazine » May 2020

being provided within an in-network facility — are also driving up health care costs, putting the onus on individuals to pay for out-of-network fees after visiting an in-network hospital for an emergency, for example.

Expenses Hit Individuals And Employers Alike

Rising health care costs obviously harm consumers financially, however the lack of affordability also affects consumers’ ability to proactively care for their personal health. In fact, for many individ-

life, and likely set them up for more complex health issues in the future. Employers are also affected by ever-rising health care costs. As organizations are faced with having to spend more on health insurance premiums, they suddenly have fewer financial resources available for other operating expenses, such as employee salaries, office space or technology investments. Not only does such a sacrifice hinder an organization’s long-term business growth, it also makes them less competitive to prospective new hires and other market players.

With the 2020 tax season extended to July 15 because of the COVID-19 pandemic, here are three tips brokers can give their clients and their workers on how to best leverage HSAs... uals, health care costs comprise such a large portion of their personal income that they’re forced to forgo necessary health care measures. This can negatively impact their overall health and quality of

3 Tactical Tips For Leveraging HSAs

Health savings accounts have emerged as a valuable tool for helping consumers manage these health care cost challenges. Designed to help individuals with

HSAS: A TOOL FOR MANAGING SKYROCKETING HEALTH CARE COSTS HEALTH/BENEFITS high-deductible health insurance plans, HSAs are tax-advantaged savings accounts that frequently include an investment option. Contributions to HSAs are not subject to federal income tax and earnings in accounts grow tax-free while any unspent money rolls over at the end of the year, making it available for future health care expenses. Additionally, all HSA withdrawals for eligible health care expenses can be made tax-free.

previous year, they can either leave those funds in the account to use for future expenses, or the funds can be invested and grow tax free.

artificial intelligence and automation to receive custom and seamless features that help maximize the benefit of HSAs. The fight to afford quality health care impacts everyone. Employers should review their benefit offerings and providers each year to ensure they have the most cost-effective offering and plan design for their organization and employees. Workers should take advantage of various

2. Submit thorough tax returns. U.S. tax codes are complex and can be difficult to navigate. Recommend employees leverage tax professionals or tax preparation products to help ensure important items aren’t missed, tasks are

COVID-19:

That ‘Someday’ Event Everyone Said To Prepare For COVID-19 is a great example of the mythological “event” that everyone tells you to prepare for “someday.” In the case of COVID-19, an HSA is the ideal tool to help individuals pay for health care and provide financial wellness support. If an individual enrolled in an HSA tested positive for COVID-19, they would be able to easily withdraw and use funds for their health care expenses untaxed, without penalties or the need to pay it back. If an individual tested negative and did not need to use the account to pay off medical bills, the funds already contributed will continue to grow similar to how money grows in a retirement account, providing the individual a nest egg to fall back on for the next health care event that may occur. Having this type of nest egg can be especially comforting during difficult financial times. With the 2020 tax season extended to July 15 because of the COVID-19 pandemic, here are three tips brokers can give their clients and their workers on how to best leverage HSAs in a world of skyrocketing health care costs: 1. Take advantage of tax breaks. To maximize HSA-related tax deductions, accountholders should contribute the maximum amount allowed each year by the IRS. If this is not realistic for your situation, advise workers to be sure to track all medical expenses each year and contribute that amount (at the very least) to their HSAs. Even if an employee needs to make an HSA contribution and immediately reimburse or pay for a medical expense, they are still reaping the tax benefit of their HSA contribution. If they don’t end up using the full contribution from the

automated where possible and data collection is simplified. To make sure all supporting documentation is in order before beginning the tax filing process, advise workers to make a checklist of all sources of income and deductible expenses each year. After the filing process is complete, advise employees to take the time to plan ahead for the coming tax year by determining whether HSA and/or 401(k) contributions should be increased. 3. Leverage related technologies. Although the HSA industry hasn’t historically been known for its product innovation, technological advancements are now being made that prioritize user-centered design and significantly enhance customer experiences. Lean on modern HSA platforms and/or architectures that incorporate machine learning,

tools available in their benefits packages (such as transparency/shopping tools and mail order pharmacies) and prioritize preventive health care (such as annual physicals and wellness programs) to help reduce the longer-term costs of health care. Both organizations and individuals should embrace HSAs. In doing so, consumers can better prepare for out-ofpocket medical expenses, and for those who have the financial ability, they can begin treating HSAs as a long-term vehicle to reduce current tax obligations while also growing savings tax-free for future tax-free use on medical expenses. Tom Torre is CEO of Bend Financial. Tom may be contacted at tom .torre @innfeedback.com.

May 2020 » InsuranceNewsNet Magazine

Financial facts and figures powered by AdvisorNews.com

From Confident Highs To Terrified Lows

Will it be a plain ol’ recession? Or maybe a deep once-in-a-10-year depression? It is a little early for financial advisors to know, but they can be certain about one thing — people are scared. A recent LIMRA consumer survey showed that sentiment about the economy peaked and then pirouetted into a swan dive in just a couple of months. In January, LIMRA recorded its highest percentage, 56%, of consumers having a favorable view of the economy since the organization started tracking the metric in 2008. By the end of March it plummeted to 25%. Underlying that overall economic unease is a basic fear for safety. The combination is creating a unique challenge because the economy and a sense of security can’t stabilize until COVID-19 is under control.

6 in 10

investors would maintain their investments or put more money into them.

4 in 10

investors would maintain their current risk levels.

SOURCE: LIMRA Consumer Sentiment Survey

“Uncertainty about the coronavirus pandemic undercut the economic growth we have experienced over the past several years,” said Alison Salka, senior vice president and research director for LIMRA. “Consumers are not only worried about their health and well-being and the health and well-being of family and friends, but they are also worried about the economic impact this will have on them now and in the future.” Consumers were already in a shaky position, even though they might have been confident in the economy. Americans have been amassing credit card debt and are less able to bank emergency funds to deal with surprises. And certainly, nothing was more surprising than most of the U.S. economy closing down. In the latest LIMRA consumer study, 71% of respondents said they believe the economy is likely to enter a recession. Half said the recession will not allow them to save for retirement or even an emergency fund.

‘Good-Faith’ Reg BI Effort OK With SEC

The Securities and Exchange Commission issued two alerts letting broker-dealers know that regulators will be looking for a “good-faith effort” to comply with the impending Regulation Best Interest.

Reg BI takes effect June 30 and holds brokers to a best-interest standard. The alerts were issued through the

SEC’s Office of Compliance Inspections and Examinations. Initial examinations of Reg BI will focus on assessing 40

InsuranceNewsNet Magazine » May 2020

Morgan Stanley CEO Recovers From COVID-19

Morgan Stanley CEO James Gorman told his staff on April 9 that he has recovered from COVID-19. The Wall Street Journal has reported that the 61-year-old was the most senior Wall Street executive to have contracted the disease. He began experiencing flu-like symptoms in mid-March and was diagnosed soon after. A week earlier, Peg Brodbent, the 56-year-old CFO of the Jeffries investment bank, died of COVID-19.

Don’t Know Much About Social Security

Some key findings about Social Security from MassMutual’s 2020 poll of Americans nearing retirement (age 55-65).

94%

are able to correctly answer that if they take benefits before full retirement, they will be reduced for early filing.

69%

current law.

responded correctly to a statement about full retirement age under

33%

of Americans near retirement (age 55-65) failed a basic knowledge quiz about Social Security retirement benefits.

got an A+ by answering all 12 true/ false statements correctly.

whether broker-dealers have made “a good faith effort

to implement policies and procedures reasonably designed to comply” with the new rules, “including the

operational effectiveness of broker-dealers’ policies and procedures,” the office said in a press release. Reg BI is part of a package of rules the SEC adopted on June 5, 2019. The package includes Form CRS, a new disclosure form designed to better explain the relationship between broker and client.

Your Ignite Your Clients’Clients’ ncome Income Potential Potential

Ignite

Your Clients’Your ncomeClients’ Potential

hat projected payout What projected payout ould clients get with could a clients get with a % rate of return? 4% rate of return?

POTHETICAL EXAMPLE** HYPOTHETICAL EXAMPLE**

Income Potential

-year deferral = 10-year deferral = 10,853 increasing payout. $10,853 increasing payout.

Strategically designed to be a leader in performanceyear deferral = 5-year deferral = driven income, the new IncomeMark Select fixed 6,925 increasing payout. $6,925 increasing payout. index annuity from “A” rated* Ameritas Life Insurance

hat projected payout DARE TO COMP ARE! Visit DARE TO COMPARE! Visit rformanceIncomeFIA.com PerformanceIncomeFIA.com ould clients get with ato instantly download to instantly download herate Competitive Advantage, The Competitive Advantage, % of return? Corp. doesn’t require sky-high returns to produce competitive income payments.

If IncomeMark Select with the MyGrowth Income

RiderSM† can achieve these projected results with a

reasonable 4% rate of return, imagine the potential

two-page PDF comparing a two-page PDF comparing payouts in a bull market! And that’s on top of: payout potential of** top payout potential of top • Choice of level or increasing payouts. income products. income products.

POTHETICAL EXAMPLE

• Optionaldeferral income booster for impairment -year = in 2 of 6 activities of daily living—with care at home or in a qualified facility. 10,853 increasing payout. What projected payout †

year deferral = could clients get with a 6,925 increasing payout.

issuedIn approved by Ameritas states, IncomeMark Select Life Index Annuities Insurance (Form 2705 with Corp. 2705-B-IMS-SCH (Ameritas) or 2705-L-IMS-SCH) and riders located are issued by Ameritas at 5900 Life Insurance O Corp. Street, (Ameritas) located at 5900 O Street, oup®. Ameritas Lincoln, NE 68510. Products are designed in conjunction with Ameritas and exclusively marketed by Legacy Marketing Group®. Ameritas and Legacy Marketing Group are separate, independent and Legacy Marketing Group are separate, independent ndex interest entities. IncomeMark options. Select Index Annuities The are single index premium deferred options annuities thatare offer a fixed not interest securities. option and index interestKeep options. The index in options mind, are not securities. Keep in mind, vary and your clients may are not participating not be in theavailable market or investing in any in stock all or bond. states. Policies, index strategies, Optional and riders may features vary and may not beand available inriders all states. Optional features and riders meritas mayLife have limitations, Insurance restrictions, and additional Corp. charges. Refer Product guarantees to brochures are based on the claims-paying for ability additional of Ameritas Life Insurance details. Corp. Refer to brochures for additional details. d, any IncomeMark person Selector and MyGrowth entity Incomereferenced Rider are service marks of Legacy herein Marketing Group. is not Unless otherwise an affiliate specified, any personof or entity Ameritas referenced herein is not or an affiliate of Ameritas or ormation any of itspresented affiliates. Withdrawals may here be taxableis and, ifnot taken prior intended to age 59½, a 10% penalty as tax tax may also or apply. other The information legal presentedadvice. here is not intendedFor as tax or other legal advice. For application of this information to your client’s specific situation, your client should consult an attorney.

4% rate of return?

meritas (Excellent) for insurerHolding financial strength. This Company’ is the third highest ofsA.M. ratings Best’s 13 ratings.include Rating as of 3/28/2019. Ameritas Ameritas Mutual Holding Life Company’s Insurance ratings include Ameritas Life Insurance * A Mutual Corp. and Ameritas Life Insurance Corp. of New York. , 4% average ** Hypothetical example annual assumes 55-year-old growth, male, $100,000 nostarting withdrawals, value, 100% allocated to multiple noindex step-up, options, 4% average aannual current growth, no withdrawals, no step-up, a current Life option, 2% compound Increasing Premium AccumulationPayout Rate for 10 years,Option, a current 250% interest and credit 0.95% multiplier for 10 years, annual Single Life option, rider Increasing charge. Payout Option, and 0.95% annual rider charge. cal, does Hypothetical notexamples guarantee are not reflective of future actual annuity performance. results. Past performance, whether actual or hypothetical, does not guarantee future results. der With † Included Booster for a current annual (not charge of available 0.95% for the MyGrowth in Income all Rider states). and 1.05% for the MyGrowth Income Rider With Booster (not available in all states).

** HYPOTHETI C AL EXAMPLE DARE TO COMPARE! Visit

CONSUMERS. AL1198v0320_INN

FOR AGENT USE ONLY. NOT FOR USE WITH CONSUMERS.

COVID-19 Underscores The Need For Advisors To Discuss Health Care Too many retirees have suffered financial harm because they didn’t make the right Medicare selection. • Joanne Giardini-Russell

began writing this article while COVID-19 formed our national backdrop. The virus has been devastating to our individual health, our health care system and our economy as a whole. At the beginning of 2020, our news headlines were focused on the upcoming election, “Medicare for All” proposals, surprise medical bills received by consumers and increased costs for prescription drugs. There doesn’t seem to be a better time to discuss how important it is for financial advisors to incorporate health care planning for their clients. Our area of the health insurance world is Medicare — and only Medicare. We help people answer the following questions: Do I need Medicare? Should I get it? How do I get it? How much does it cost? What else do I need to buy with it? And then we guide the client through each step along the way, ending with their receiving their Medicare ID cards in their mailbox. We spend each day with clients who are generally age 65 and over. We hold seminars for credit unions and financial firms, and we provide community education. What amazes me are discussions that come out of these sessions, such as one we held for a credit union in January. Because I am not speaking for a financial firm, I love to ask this simple question of credit union audiences, “Who in attendance thinks of your financial professional as a resource for Medicare assistance?” The answer? Never has one hand gone up. Never. I find this amazing. I also find this wrong, as I believe you, your clients’ financial quarterback, trusted advisor, fiduciary — however you want to refer 42

InsuranceNewsNet Magazine » May 2020

to yourself — should be their go-to gatekeeper for something as important as their health care decisions. Here are some reasons why I believe you should be their first stop. One, I can tell you that your clients are seeking good information regarding Medicare. Your clients will open their doors and their ears to others in the industry, and you have no idea that these conversations are even occurring or what products beyond Medicare are being pitched. Two, and more important, is that the

» NURSING FACILITIES: People hav-

ing to move to skilled nursing facilities where the family can’t afford the copay of $175 per day.

» PHARMACEUTICALS: Cancer med-

ications that take $3,000 per month from the family checkbook, even though the patient has a drug plan in place. » LONG-TERM CARE: Countless families that assume that Medicare will pay for long-term care services, or the higher-income earner who had no idea that Medicare would cost $18,000 annually for him and his wife.

Long-Term Services And Supports Are Expensive, Often Exceeding What Beneficiaries And Their Families Can Afford $91,250

$45,760

$20,090 100% FPL For A Family/Household Of Three, 2015

Median Annual Care Costs, By Type Of Service, 2015

$17,940 Nursing Facility

Home Health Aide

Adult Day Health Care

SOURCES: Genworth, Genworth 2015 Cost of Care Survey, U.S. Department of Health and Human Services, 2015 Poverty Guidelines

topic of Medicare is so important to clients and their families, but in some cases, we’re leaving these conversations off the table. So instead of seeking help from their financial advisors, clients are going elsewhere — for example, to a session at their credit union. I know so many stories of families that suffered financial harm because someone made a poor coverage selection. Here are just a few points:

These are daily conversations that we have. Our health care world, in my opinion, is at an inflection point. Average people cannot afford certain premiums. They can’t afford to be disabled; most don’t have disability income insurance. They can’t afford to be hospitalized with a $7,000 health insurance deductible. They can’t afford to get Dad some custodial care when he’s 87 and requires

COVID-19 UNDERSCORES THE NEED FOR ADVISORS TO DISCUSS HEALTH CARE

Inadequate DI Coverage Puts Americans At Financial Risk • At least 51 million working adults in the United States are without disability insurance other than the basic coverage available through Social Security.

• Only 48% of American adults indicate they have enough savings to cover three months of living expenses in the event they’re not earning any income.

help. People believed Medicare would cover that, and now they are surprised to hear that it will require private payment. Families are doing a last-minute scramble of Medicaid planning in order to preserve their assets if possible. Each situation causes great stress and loss of dollars. We pay as a society in the long run. We need to have more and better conversations with clients so we can assist them in making good choices. A great example in my world is cancer insurance. The majority of our clients have no idea that they can purchase a cancer policy. A cancer policy is simply providing the client with a policy for $10,000, for example. That policy will cost $25 per month beginning at age 65. If the policyholder receive a cancer diagnosis, they receives a check for $10,000 to offset unanticipated costs. Pretty simple. Rather inexpensive, and many of our clients love the idea and say, “I didn’t know you could buy that.” I believe that many financial advisors don’t quite know how to bring up these topics, so I’ll give you a few areas to begin with. Beginning the conversation is half the battle. The client will open the floodgates once they realize that you may be able to help them in these areas. Here are three conversation starters: 1. Advisor: Mr. Smith, you’re turning 65 in the fall. Have you thought about what you’ll do related to Medicare? Not everyone has to sign up for Medicare at age 65, but we should double-check what you should be doing.

• Almost half of American adults indicate they can’t pay an unexpected $400 bill without having to take out a loan or sell an asset. SOURCE: Council for Disability Awareness

Client: What? I thought everybody had to sign up at age 65! I’m going to work until I’m 68, so how do I compare my work insurance to Medicare and figure out what I should or shouldn’t do? 2. Advisor: Mr. and Mrs. Jones, are you both enrolled in Medicare, since you are age 66? Yes? What products did you purchase to go with the Medicare? Client: We’re not sure, but here is the ID card. We pay zero for the product since we’re pretty healthy. We didn’t see the need to buy anything else, right? The point here is that people don’t know what they have. They potentially will choose the wrong product out of the gate and may regret it a few years down the road. Preexisting conditions do appear in the Medicare landscape. Many clients do not know this, and it could cost them thousands of dollars later. 3. Advisor to the 60-year-old client: Mr. and Mrs. Cook, let’s look down the road. Do you realize that the cost of Medicare insurance for you is based on your income? It is, so let’s start talking that through each year. Did you realize that Medicare will not cover things such as custodial care if you ever needed it? Right, that’s when you might need someone to come to your home and cook or be an attendant if either of you were ill. Let’s talk through how you might have to handle that. Just those three scenarios will get people talking. You will hear lots of things, such as, “Oh, that happened to my friend

Jerry’s parents,” etc. Create a cheat sheet with bullet points until it becomes natural in your client conversations. Just start the conversation. Clients need our guidance for the “what they don’t know.” I’ll leave with this quick story. Yesterday, I received a call from John, who told me that his wife, Jane, died last week. John retired last year at age 75, and he and his wife were an adorable couple. They didn’t have a lot of money, but they spent a lot of time learning about Medicare coverages, and he wanted the best for Jane. They chose Medigap coverage, as she was to have heart surgery in November. She spent most of her last six months in hospitals, in surgeries and in rehabilitation centers. Had they enrolled in a Medicare Advantage plan, she would have had two calendar year maximum out of pockets of $5,300. John doesn’t have $10,600 in medical bills right now. He paid her $198 deductible. I couldn’t help Jane to live, but I can leave John with no bills. That’s the little bit of impact a little old Medicare conversation can have on a family. Joanne GiardiniRussell is a Medicare specialist and owner of Boomer Health Group in Brighton, Mich., an independent provider of Medicare products nationally. Joanne may be contacted at joanne. giardini-russell@innfeedback.com. May 2020 » InsuranceNewsNet Magazine

INBALANCEWIRES

A Little Forgetfulness Could Be A Good Thing

So, you forgot where you put your cellphone or your mind briefly went blank when you had to recall the name of your sixth-grade teacher. Is that short spell of forgetfulness a guidepost on the road to dementia? Not so fast, researchers said. A little bit of forgetfulness actually could be good for your brain. Letting go of some information helps your mind work better, according to a study in the journal Neuron. The researchers concluded your brain’s main goal is to make good decisions in the future, not to remember every little detail of your life. Because your brain is always flooded with new information, your brain would be totally overwhelmed if it had to remember everything. Even worse, you would have to sift through countless details before you could make a decision. So, your brain needs to shed some of the useless stuff to enable it to make decisions.

CONTROL YOUR ANGER, LIVE LONGER

"When angry, count to 10 before you speak. If very angry, a hundred," said Thomas Jefferson. It turns out that his advice has some benefits to our longevity. Researchers at the University of Rochester found that people who suppress their anger may die sooner than those who are better at expressing their emotions. When you’re angry, stress hormones are released, which put you at risk for anything from type 2 diabetes to depression. But expressing rage isn’t the answer, either. A study published in the journal Circulation found that people who had a heart attack were more than twice as likely to report being angry in the hour before their heart attack compared with a control time period. So what’s the healthiest way to handle anger? The researchers said that the anger itself isn’t bad, it’s the extreme highs and lows that take a toll on the body. Researchers recommended paying attention to what triggers your anger or taking a cool-off period before telling someone why you are upset. DID YOU

KNOW

3 WAYS TO LOWER YOUR ODDS OF DIABETES

Type 2 diabetes is raging through the U.S., with 1.5 million Americans diagnosed with it each year, the American Diabetes Association reports. How can you keep from becoming one of those 1.5 million? Nutritionists spell it out for you. Eat one serving of plant protein and one serving of vegetables at every meal, said Toby Smithson, author of Diabetes Meal Planning & Nutrition for Dummies. Lowcarbohydrate plant foods such as nuts and soy are good sources of plant-based protein. Signing up for a prevention program can give you an edge in the fight against diabetes, said Ann Albright of the Centers for Disease Control and Prevention. More than 1,700 organizations around the country, such as the YMCA, Medicare and Kaiser Permanente, offer versions of the National Diabetes Prevention Program, led by the CDC.

20% of people who have an anxiety disorder also have an alcohol problem. Source: National Alliance on Mental Illness

InsuranceNewsNet Magazine » May 2020

QUOTABLE A 12-ounce soda suppresses immunity by 30% for three hours. — Jacob Teitelbaum, M.D.

Vitamin D can lower the risk of developing diabetes, said Dr. Brian Jameson, an endocrinologist at Geisinger Medical Center in Danville, Pa. It’s difficult to get sufficient amounts of Vitamin D through sunlight exposure or diet alone, so taking 2,000 international units daily should be sufficient.

DO DISINFECTANT WIPES REALLY WORK?

Disinfectant wipes have been flying off the store shelves, and it seems as though everywhere you go, you see someone wiping down any surface that may have been touched by human hands. But do these wipes really kill bacteria and viruses? First of all, there’s a big difference between cleansing wipes and disinfectant wipes, according to the CDC. Cleansing wipes will remove dirt and reduce some bacteria. But to get rid of viruses, you need a disinfectant wipe. It takes 10 minutes for the chemicals in a disinfectant wipe to kill the bacteria, viruses and fungi that live on a surface. Disinfectant wipes should have an Environmental Protection Agency number on the label, indicating that they’re not intended to be used as a personal care item on the skin and body. And what about products labeled as “sanitizing wipes”? They can reduce the amount of bacteria on a surface, but they can’t kill viruses, mold, mildew or fungi. They are often ineffective on a surface that hasn’t been precleaned with soap and water.

Short Term Disability Ins. Long Term Disability Ins. High Limit Disability Ins.

Are your clients familiar

ÂŽ

with the three types of Disability Insurance? Most consumers are not aware that supplemental income protection is available nor

ÂŽ

is it something that they need. Discuss High Limit Disability with your clients.

(800) 345-8816

www.piu.org

piu@piu.org

INBALANCE

Creating A Healthy Work-From-Home Space Working from your kitchen table might suit your needs in the short term, but there are ways to create a healthier and more productive home-based workspace that meets your long-term needs. By John Hilton

as your bed, couch or kitchen table suddenly become your new workspace? If so, you could be inviting long-term physical distress. But ergonomic experts say it’s worth the effort to create the right work-from-home workstation. The key pieces of the puzzle are your chair, your posture, taking frequent breaks, listening to your body and just using general common sense. “In an office setting, we get up to use the bathroom, grab a coffee, go to a meeting, talk to a co-worker, etc., etc.,” said David Lewis, president and CEO of OperationsInc, a human resources consulting firm. “At home, we tend to stay seated more. Get into the habit of standing while working, and taking walks in and around your home.” 46

InsuranceNewsNet Magazine » May 2020

Little Warning

When the COVID-19 pandemic started forcing Americans indoors in early March, many workers scrambled to set up home-based work areas with little preparation. It was particularly jolting for many in insurance and financial services who are used to either being in an office, or out in the community meeting with existing clients or prospecting for new business. One side effect of the quick work-fromhome move can be the lack of a healthy and efficient workstation. An office dweller who likely spent years finding just the right chair, desk height, monitor, keyboard and work routine can throw away the benefit of all that with a haphazard home office. That can mean a return of that troublesome neck, shoulder and back pain. Experts say once the pain is back, it’s often too late to easily help it. A good home office setup starts with the right chair, Lewis said. Your feet should rest flat on the floor, and your lower back should fit snugly against the back of the chair. Chairs with arms are key to allow your elbows a resting place, Lewis added, and elbows should rest at a 90-degree angle.

“If you plan to work from home for the long term, get yourself a standard desk and a chair rated for office-computer work, with adjustable arms as well as good back and lumbar support,” he said. The standard desk height is 29 inches, Lewis explained, and is not something to be overlooked. “It is important to check your kitchen/ dining area tables for the height, as many of us are using these as desks,” he said. If you don’t already have a home office, the location of your workspace can sometimes depend on what square footage your family members are willing to surrender. This can get tricky. In general, look to set up shop in a place that “has good ventilation and is distraction free, and allows a setup that ensures all wiring is done carefully, out of the way and to code,” Lewis said. Beyond setting up a healthy and productive workstation, you’ll likely have some new work neighbors with whom you will be sharing space. Matt Berman, chief distribution officer for Foresters Financial, covers this issue and offers additional work-from-home tips:

CREATING A HEALTHY WORK-FROM-HOME SPACE INBALANCE

1. Get Your Technology Set Up

Take your laptop and charger home, make sure you know what software your team will be using, and check it is all installed — Microsoft Teams, Skype, Zoom, VPN access, etc. Be sure to use your company’s VPN, so that you have the full access and experience you have in the office, with the added security. Get into the habit of leaving your VPN connected as often as possible — it’s always safer to have it on. Make sure you have the contact details for your IT support and other related manuals and resources at hand, to troubleshoot any connectivity and access issues. Be mindful of the importance of privacy and general information security, particularly if you are in a business and role that involve customer information. If you print anything confidential, shred it or save it somewhere secure to take back to the office to shred.

2. Manage Your Bandwidth, And Set Ground Rules

If your bandwidth is low and you’re on a video call, shut down other programs to lighten the load on your connection. If your connection is choppy, shut off the video portion of a call and participate with audio only. Try to keep others in the household offline when you’re on a conference call or stagger your video meetings with your partner or other family members, if possible. Where you are sharing your workspace, set broader ground rules. If you have children, be clear about what they can and cannot do. And divide up household tasks to make sure everything doesn’t fall to you — protecting your productivity and sanity.

3. Get In The Mindset

It’s hard to divide home and office when you’re at home. But to the extent possible, create a comfortable space that looks and feels like your office. Try to maintain normal work hours, and shut things down when you would normally leave the office. And remember to take breathers throughout the day — go for a walk, break for lunch, etc. Changing your venue and staying active can help you be more productive when you’re working.

Find a work area that has good ventilation and is distraction free, and allows a setup that ensures all wiring is done carefully, out of the way, and to code. Your elbows should rest at a 90-degree angle. Find a desk that meets the standard height of 29 inches. Your feet should rest flat on the floor, and your lower back should fit snugly against the back of the chair. Focus on the positives! You’re not commuting. You’re able to save money by making your own lunch. You have more control over your schedule and more time with family.

4. Stay Connected

Casual chats in the office help us all feel connected. Consider alternatives to office chitchat by scheduling online social time for these touch points that add color to our day in the office. Try video calling and webcams so you can see each other. Also, keep up your one-on-ones with your direct manager — you’ll know that you’re on track, and your manager will stay in the loop on exactly what you’re working on. Provide structure to virtual meetings by sharing an agenda in advance with a clear goal. When you’re on a conference call, make sure everyone has an opportunity to speak. Finish the call with a clear understanding of expectations and next steps.

5. Be Realistic

Realistically assess the work-life responsibilities of working from home. We need to be able to work as effectively from home as we do when we are in the office. If you require more direction or support

to achieve performance expectations, you need to ensure you are in regular contact with your manager and ask for guidance and support. When working from home, it is important to keep a regular schedule. For example, log on to Skype, or your equivalent corporate tool, when you would normally be in the office. Be present while you’re working from home. Maintain an open dialogue with your manager. Going remote is a new experience for many of us, and it is important to be honest about what is working and what isn’t, so your manager can do their best to set you up for success.

6. Plan Activities For The Kids

Stock up on books and puzzles, and use streaming services. Play dates are a no-no, but you could consider virtual get-togethers using video chat (bandwidth allowing!). Insurance N ewsN et 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.

May 2020 » InsuranceNewsNet Magazine

BUSINESS

After The Storm: Helping Clients Assess Damage With the end of the crisis on the horizon, it is time to help clients repair damage and put the lessons to good use. By Bryce Sanders

ost clients have been cooped up and anxious for a month and a half, with only a glimmer of normalcy on the horizon. You made your initial contacts with clients and tried new ways of prospecting, but now it is time for the next phase of helping clients. There are few models to go by in such an unprecedented time. Americans are used to outcomes with winners and losers. Football. Hockey. Baseball. Any sport you can imagine. But this definitely is nothing like that. These days might be similar to the aftermath of a hurricane. Every homeowner who was in the storm’s path steps outside and surveys the damage done to their property. Except in rare cases, every homeowner suffered, but to varying degrees. Let’s consider three types of clients in your book: » The business owner. » The individual as an employee. » The individual as an investor.

The Business Owner

Business owners are often great clients. They have policies and coverage related to the business. They likely have a retirement plan, health insurance and other benefit plans in place. The owner is likely a client with personal insurance. There might be a key person insurance policy in place for succession planning. Businesses come in all sizes and shapes. This includes manufacturing and 48

InsuranceNewsNet Magazine » May 2020

services. This is a time when you can also be a business consultant. Why? Because insurance agents likely have a friendly, long-term relationship with clients. You know about their industry because you insure similar businesses. They value your advice. Your involvement might not lead to immediate business, but it strengthens the relationship and might generate some referrals.

side of the equation too. When are they up for review? Anything you can do to save them money will be appreciated. Now we get into your role as business consultant. Maybe this client runs a restaurant. They need servers and kitchen staff. Why? They are full every night now. They had job vacancies in January when the unemployment rate was historically Your involvement might not lead to immediate business, but it strengthens the relationship and might generate some referrals.

There are some either/or decision points here. Your clients’ business will either survive or fail depending on how they ride out the storm and the aftermath. How can you help? Policy review is an excellent strategy regardless of the condition of the economy. Money will be tight. Does the business have adequate coverage moving forward? Are there better deals for the coverage they need? Are their employees satisfied with their benefit plans? They may have had firsthand experience visiting their family physician for COVID-19 testing and possibly treatment at the local hospital. They may have opinions about their health insurance. Is the business owner current on the firm’s contributions to employee retirement plans? Is the owner current on their insurance policy premiums? You can help on the personal insurance

low. You know about other restaurants that aren’t going to survive. Employees there will need jobs too. This becomes a “who knows who” situation, and you might know people you can connect with those businesses.

The Individual As An Employee

Now we look at people. Some of your clients might work for a big corporation. They were instructed to work remotely. They collected their salary. Their biggest problem might be not getting a Christmas bonus. Middle managers might fit into this group. Next, you have the furloughed employees. They temporarily lost their income, but they got called back. They lost pay but collected unemployment benefits in the meantime. Department store employees might fit into this category. What about people who lost their jobs? The company downsized. People

AFTER THE STORM: HELPING CLIENTS ASSESS DAMAGE were laid off. They may be collecting unemployment, but have no job. The gig economy adds another layer — the self-employed people who pick up jobs when they can. They may not be collecting unemployment.

Retirement is likely their major investment objective. How are they doing in reaching that objective?

How can you help? The salaried workers who continued collecting paychecks will be addressed later in this article, when we look at individuals as investors. Let’s concentrate on people who were furloughed, laid off or have no gigs. When people are facing financial stress, they don’t want to hear from someone who wants them to write checks and spend money — with one exception. People who have been terminated usually have assets in the company retirement plan. On one hand, they are upset with the company and want as much distance from it as possible. On the other hand, moving the assets might not be their highest priority. You have potential rollover business, yet you need to help them get settled and reduce their anxiety level. You can help by reviewing their personal insurance coverage. For those who are laid off, talk about health insurance. Although they might have some temporary coverage from their previous employer, they will need to replace it. Dental and vision too. Tactfully confirm whether they are current on premium payments. You might shop around, see whether you can get them a better deal, and modify their coverage to secure a lower premium. They should have a financial plan in place. Now is a good time to review the plan. Problems might not be as big as they feared. If they are age 62 or older,

should they consider applying for Social Security? Do they have any workplace annuities from previous employers? Can they start drawing benefits, at a reduced rate? These are strategies you can discuss with them if it’s unlikely they will find another position. Have they built up cash value in whole life or annuities? Financial planning should look at income vs. expenses and help with this planning. As a person with a long-term relationship, you want to help them find another position if possible. You have LinkedIn connections. You can provide objective advice.

When people are facing financial stress, they don’t want to hear from someone who wants them to write checks and spend money — with one exception.

The Individual As An Investor

People have short memories. The bull market in stocks ran about 11 years. People forgot about the Great Recession. If you have clients who are investors, they are hurting after the market’s steep drop. Although historical charts show the stock market has done well over time, you can’t make any guarantees in that regard. The

BUSINESS

stock market also runs in cycles and the lengths of those cycles vary. How can you help? It’s time to revisit their financial plan. Retirement is likely their major investment objective. How are they doing in reaching that objective? The picture might not be pretty, but they may have a long time horizon. They must continue to make contributions to their retirement plan. If you have them in a program of monthly investments, this should continue, maybe even increase. Review the insurance products they own, specifically ones such as whole life insurance that builds cash value regardless of stock market volatility, and annuities that offer downside guarantees and upside potential as the markets recover. Asset allocation and diversification are important investment concepts. So is protection. Your clients may now see the value of gradually moving money from the stock market into some insurance products. You want this market volatility connected to the pandemic to be a teaching moment. Just like after any storm, insurance professionals should be with clients when the clients need them. Bryce Sanders is president of Perceptive Business Solutions, New Hope, Pa. He provides high net worth client acquisition training for the financial services industry. He is the author of Captivating the Wealthy Investor. Bryce may be contacted at Bryce. sanders@innfeedback.com.

May 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.

Go Above And Beyond With Estate Planning To provide a differentiated, above-and-beyond approach to estate planning that exceeds client expectations, financial advisors should consider implementing additional valueadded services.

includes a discussion and review of tax consequences to the beneficiary as well. As you can imagine, it is very helpful to be aware of all assets and how they will transfer at death so you can truly assist the family at a time when they need you most.

By Juli McNeely

Partner With A Qualified Estate Planning Attorney

f you describe yourself as an estate planner, what are the primary services you offer clients? Do you provide a life insurance review or a survivor needs analysis? Do you interface with an estate planning attorney to ensure legal documents are in order? Perhaps you dig deeper to ensure the client’s wishes are carried out and all aspects of their life estate plans are ready. I believe that as advisors, we are obligated to do as much as we can to discuss risks and make contingency plans whenever possible. To provide a differentiated, above-and-beyond approach to estate planning that exceeds client expectations, financial advisors should consider implementing additional value-added services.

Review Beneficiaries Annually

It surprises me how often clients forget to modify beneficiaries, probably due to not

Connecting your clients to qualified attorneys helps your estate planning process to be more comprehensive and fully integrated. For example, we have an attorney who meets with clients in our office one to two days per month. We schedule the appointments and will sit in with our clients during all meetings if they desire. Because our clients already feel comfortable in our office, meeting with an attorney suddenly doesn’t seem so daunting, especially when we are willing to join them. Since we implemented this practice, more of our clients than ever complete their legal documents and, with release of information signatures, we can keep up to date on any shifts or changes, especially to the power of attorney.

Encourage Client Organization

As part of our ongoing service model, our business has created an initiative called L e gac y Fo ot pr i nt , which provides our cliWe as advisors can do so much to with access to files. ensure our clients’ estate plans are ents The Legacy Footprint solid and ready for action should file includes several the unforeseen day come. tools that allow clients to get organized and being fully ingrained in the financial world keep everything in one secure place. This every day. Annual reviews of these desig- way, family or loved ones can easily locate nations are critical to make sure financial financial resources and understand how resources get paid to the intended individ- to access them. uals at death. With more and more personal inforConsider conducting an annual review mation being stored in the cloud, family of all beneficiaries, including those asso- and friends will appreciate knowing the ciated with products you didn’t write, extent of their loved one’s digital footsuch as employer-sponsored retirement prints so that efforts can be made to plans and even bank accounts. This often secure the data. Consider how you can 50

InsuranceNewsNet Magazine » May 2020

encourage client organization by providing the appropriate family members with physical copies of pertinent files and critical information.

Conduct Family Meetings

If your client desires to review the estate with their children, consider offering to host a family meeting. Sometimes clients choose to disclose all assets, and other times, we keep the actual amounts private and speak in general terms. These types of meetings serve two purposes. First, clients’ children have an opportunity to see that their parents have planned well for their financial security. A secondary purpose is to facilitate a learning moment for the children where they can ask questions about finances and perhaps even begin making their own decisions for their financial future. I truly believe we as advisors can do so much to ensure our clients’ estate plans are solid and ready for action should the unforeseen day come. Adding these types of services to your offering will only tie your clients and their families closer to you in the long run. Sorting through estate plans can be an overwhelming experience that is often riddled with uncertainty and disagreements. We can play a significant role in reducing a financial crisis and allow the family to focus their emotions on the loss of a loved one. A 24-year veteran of the financial services industry, Juli McNeely, LUTCF, CFP, CLU, is president of McNeely Financial Services in Wisconsin. She is a past president of the National Association of Insurance and Financial Advisors, and served as its first female president. She is author of No Necktie Needed: A Woman’s Guide to Success in Financial Services and founder of Juli McNeely Consulting. She is also a 13-year member of MDRT. Juli may be contacted at juli.mcneely@innfeedback.com.

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.

Adding Retirement Plans Brings More Revenue To Your Practice A conference speaker outlined how using retirement plans can give you more assets under management and make you a valuable resource to business clients. By Ayo Mseka

he business case for having retirement plans in an advisor’s practice is compelling, said Jennifer Miller, a retirement plan advisor with American Funds/ Capital Group. Miller spoke at N A I FA - G r e a t e r Wa s h i n g t on’s Success Summit earlier this year. Miller explained Jennifer Miller how attendees can increase their practice’s revenue by making use of retirement plans. Retirement plans can: » Provide the advisor with more assets under management. » Help tie the advisor to the business owner. » Offer the advisor a steady stream of income. Most workers get paid every other week, she added, which is how frequently money goes into their 401(k) plans. Many studies have shown that once participants decide on their plan contributions, they usually do not change their decisions, regardless of what the market is doing. So when there is a market correction, 401(k) plans can provide regular contributions during lean years. » Help advisors accumulate assets. If advisors meet with employees regularly, they will soon be seen as the “financial

face” for these employees and will likely get new clients. Miller said that as advisors search for prospects, they should: » Reach out to current clients. Some clients may have discretionary authority over a company’s retirement plan, while others may be willing to refer them to their retirement plans’ decision-makers. » Reach out to family and friends. These people may not be direct prospects for advisors, Miller said, but they can still serve as a valuable resource in reaching direct prospects. “So let them know that you not only help individual clients, you also help companies with their employee retirement plans,” she said. » Connect with centers of influence. Look for people who, by their role or their standing in their community, can help open doors to retirement plan sponsors. Officers or directors of local chambers of commerce are good examples of these types of people, Miller said. » Make good use of LinkedIn. On LinkedIn, advisors can click on the “Jobs” button, look for companies that are hiring, congratulate them and discuss business. Miller also said that, in their search for prospects, advisors should make it a point to look for newly hired human resource employees. This is because these newly hired HR workers likely have not had time to build ties to any company, they do not have any gatekeepers yet, and they have not had time to accumulate hundreds of email messages. Once they have acquired prospects and are about to meet with them, advisors should make sure they have done their homework by creating a value proposition statement that outlines their role as plan advisors and the services they can provide

to the employer and to employees, Miller said. Advisors should also put together a list of key questions that can help them identify possible areas of opportunity.

Tips From Award Winners

Attendees received tips for moving ahead in their practice from those who received NAIFA-Greater Washington’s 2020 Four Under Forty Awards. The award winners and panelists were: Alex Abbenante with Equitable Advisors, Gaffar Chowdhury with First Financial Group, Matthew Grace with First Financial Group and James Hicks with J.L. Hicks Financial Group. Panelists said that to succeed in today’s competitive market, advisors should: » Stay focused. » Try to work with clients they resonate with. » Focus on things they can control, such as prospecting and marketing activity. » Hold at least 15 meetings a week. » Create a script they can use with clients and prospects, study it thoroughly, and use it consistently. » Be willing to receive a no from a prospect — this is all part of doing business. » Give instead of take; it will always come back to you. Ayo Mseka is editor-in-chief of NAIFA’s Advisor Today magazine. She may be contacted at ayo.mseka@ innfeedback.com.

Like this article or any other?

Take advantage of our award-winning journalism, licensure and reprint options. Find out more at innreprints.com.

May 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

Why Are Some Advisors Successful While Others Are Terminated? LIMRA analyzed the factors that lead to higher production and a lower likelihood of termination.

The Influence of Agent Tenure on Premium Production $500,000

By Vikram Kamath

InsuranceNewsNet Magazine » May 2020

Premium Production

hy is it that some agents leave soon after they start, while others stay with the company for years? Why do some agents produce huge amounts of premium, while others are less successful? To help answer these questions, LIMRA’s Center of Excellence for Analytics built predictive models that analyze the factors influencing agent productivity and retention. Predictive modeling is a statistical analysis technique that looks at data about what happened in the recent past in order to make predictions about what might happen in the future. The goal is to find the variables in the data set that are most predictive of the outcome variable being examined. In this case, our outcome variables were life premiums and whether an agent would be terminated for any reason in a given year. LIMRA’s analysis identified some of the factors that are associated with higher life premium production and lower likelihood of termination. For example, agents who hold licenses to sell securities (such as Series 6, Series 7, and Series 63/65/66) are both more productive and more likely to be retained into the next year than those who do not hold these licenses. The effect on premium also aligns with agents who hold multiple securities licenses doing even better in terms of life premiums than those who have only one license. We believe that licenses increase life premiums because agents who hold them have more opportunities to present life insurance as an option for their clients. When it comes to terminations, however, the effect of multiple licenses does not seem to be a factor. Agents with multiple

$450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 1

Agent Tenure

licenses are no more or less likely to terminate than those with just one license. We found that older agents are more successful — up to a point. Agents between the ages of 45 and 65 tend to perform the best, and average premium production peaks at age 64 before declining. These midcareer agents are also the least likely to be terminated. Agents who have been with their company longer also tend to be more productive, with the caveat that the shortest- and longest-tenured agents perform worse than those in the middle of their career. For most agents, premium production peaks when the agent has between 10 and 25 years of experience, then declines steadily after that. It was no surprise that both the shortest- and longest-tenured agents are also more likely to be terminated than those in the middle of their careers. The termination likelihood drops significantly after an agent has four years of experience and gets more established in their career, and only slightly rises again for agents with more than 30 years of experience, suggesting that those terminations are due to retirements. We also found that agents who build early momentum, with high premium

production in their first few years, tend to stay successful. These agents are much less likely to be terminated in the following years, and are more likely to continue to be highly productive. This is in line with another one of our findings: Agent performance tends to stay fairly consistent from year to year. It is unusual to see wild swings in premium production, especially after an agent has more than a few years of experience. Of course, an individual agent can dramatically improve or decline in performance from year to year, but most do not. All of these findings and more are included in a recently published paper from the LIMRA Center of Excellence for Analytics, titled “The Drivers of Agent Production and Retention: Predicting Who Makes a Good Agent.” This paper and a companion piece explaining our modeling process are available to LIMRA members at limra.com. Vikram Kamath has been director of the LIMRA Center of Excellence for Analytics since it was founded in August 2017. He may be contacted at vikram.kamath@innfeedback.com.

THINK YOUR BUSINESS WON’T BE AFFECTED?

THINK AGAIN.

The financial services industry is facing legislation and regulation that could have a substantial impact on our business ... even if you are already a fiduciary. If states adopt their own policies and standards without regard to the comprehensive regulatory landscape, it could: • Create confusion, particularly for those who serve clients across state lines or are dually licensed • Make doing business more costly and more complex for all agents and advisors • Mischaracterize products that elicits misguided regulation • Limit consumer access to products and professional advice they want and need With the future of best interest standards, implementation of the SECURE Act, additional retirement policies, and uncertainty regarding a new DOL fiduciary rule and more hanging in the balance, it’s more important than ever to keep current on legislation and regulation impacting your business. That’s why now is the time to make plans to participate in NAFA’s 11th annual Annuity Leadership Forum & Hill Walk.

June 8-10, 2020 | The Mayflower Hotel | Washington, DC Do one thing that is in everyone’s best interest: Join NAFA to make your voice heard and help Americans hit their target in planning successfully for the future.

Independent annuity professionals use the promo code BULLSEYE to join NAFA for just $99!

STRONGER Together TO SUCCEED, YOU NEED STRENGTH. As an industry leader, we help advisors stay strong and overcome adversity.