American Equity presents a hypothetical case study in helping clients prepare for unknown health care costs – page 11
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1) Cash-Out Rider may not be available on all substandard rated policies and some may only qualify for the Cash-Out option in the 15th Policy anniversary. 2) The riders are offered at no additional premium. However, the accelerated payment will be less than the requested death benefit because it will be reduced by an actuarial discount and an administrative fee of up to $500. The amount of the actuarial discount is primarily dependent on American National’s determination of the insured’s life expectancy at the time of election. A request for an accelerated benefit may only be advisable if the qualifying event results in a significant reduction in the insured’s life expectancy. A shorter life expectancy will result in a larger benefit offer. Outstanding policy loans will reduce the amount of the benefit payment. SGUL18; GCOR15; ABR14-TM; ABR14-CH; ABR14-CT ND & SD Form Series ABR22-CT, ABR22-CH and ABR22-TM (Forms may vary by state). The contract and riders may not be available in all states. See Policy for details and limitations. American National Insurance Company, Galveston, Texas. For Agent Use Only; Not for Distribution or Use with Consumers.
By John Hilton
Indexed products are topping the sales charts and making regulators uncomfortable. Where will these hot-selling products go from here?
18 Patience pays off
By Susan RupeChristina Ma’s mother wanted her to join in her family’s practice but waited until the time was right.
LIFE
24 10 questions carriers don’t want you to ask about life and LTC insurance
By Adam BezmanHow to get smart about hybrid products.
8 Putting the ‘life’ into life insurance
John Hancock president and CEO Brooks Tingle believes the industry must focus on its customers’ health and well-being. In an interview with Publisher Paul Feldman, Tingle describes his company’s efforts to use digital tools to enhance its clients’ lives.
28 Four words that move the annuity conversation
By
Susan Rupe
How to have clear, concise and compelling talks about income plans with protected lifetime income.
31 Connect employee benefits to workplace culture
By Denise StefanOffering a diverse array of employee benefits helps employers meet the needs of a diverse workforce.
ADVISORNEWS
34 Guiding clients through a realistic retirement budget
By John ShrewsburyYour job is to help clients map out future goals and calculate whether they can afford them.
36 Tips to sharpen your networking skills
By Ayo MsekaMany advisors believe traditional networking is “tired” and not meeting their needs anymore.
38 The data privacy landscape is plagued by fragmentation
By Sue KurajaThe twists and turns in data privacy law keep insurance advisors and carriers on the edge of their seats.
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Copyright 2023 Insurance & Financial Media Network. 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 150 Corporate Center Drive, Suite 200, 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.comor call 717.441.9357, Ext. 125, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 150 Corporate Center Drive, Suite 200, 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. Address Corrections: Update your address at insurancenewsnetmagazine.com
In recent years, the financial industry has witnessed a significant surge in the popularity of index-based annuities, marking a major shift in the retirement planning landscape. These innovative products offer individuals the potential for market participation while providing downside protection. However, alongside annuities’ rising popularity, a multitude of complex and arcane indexes have emerged to support these annuities, presenting both opportunities and challenges for investors.
created. These indices often incorporate a combination of factors, such as volatil ity, momentum or even nontraditional assets. Although these sophisticated indices hold the promise of enhancing returns and reducing risk, they can also be difficult to comprehend for the average investor. There is also now some discussion of AI-driven indices, which would allow for using massive amounts of data to drive an index. Many of these indices are so new that many don’t have a substantial history available to use as a basis for investment decision-making.
cacies of these indices and weigh them against their risk tolerance and long-term financial goals. With AI-related products, this evaluation may become much more difficult for both advisor and client.
To navigate the complexities of index-based annuities and the associated arcane indexes, investors can benefit from improved financial education and access to professional guidance. Educating individuals about the underlying mechanics, risks and potential benefits of these products will empower them to make more informed decisions that align with their financial objectives.
As the number of indexed annuities continues to grow, and as the indices become more complex and potentially AI-powered, the guidance provided by advisors — already crucial — will continue to grow in importance.
Index-based annuities have gained traction because of their unique blend of features. These products offer investors the potential to participate in the upside of the market, mirroring the performance of specific indexes while also providing a level of protection against market downturns. Such characteristics appeal to individuals — particularly those approaching retirement — seeking to balance growth opportunities with risk mitigation.
To underpin the performance of index-based annuities, a variety of complex and arcane indexes — currently estimated between 150 and 180 — have been
So it’s not surprising that one of the primary concerns surrounding the explosion of complex indices is the potential for investor confusion and lack of transparency. Many of these indices employ intricate methodologies, incorporating derivatives, leverage or unconventional weighting schemes. Consequently, investors often struggle to understand the underlying mechanics and how they translate into annuity performance.
With AI and even greater amounts of data driving an index, consumers’ understanding will become further reduced. While the complex nature of these
In this month’s In the Know section, Sue Kuraja takes a deep dive into the twists and turns of data privacy law. The risks in this area include cybersecurity breaches, data breaches, identity theft and malware — just to name a few. Understanding laws and regulation, risks, and consequences are crucial as the technology to both breach and protect data privacy enter new levels of complexity. A veteran of more than 20 years in the insurance industry, Kuraja takes on complex topics and brings them into focus for the rest of us. This month’s article is the first of three in which Kuraja will tackle such complex issues for INN readers.
John Forcucci Editor-in-chiefDrive new life insurance sales and stay ahead of your competition with more effective client engagement this summer. We offer:
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The financial landscape is challenging. But we have the roadmap to more sales.
Insurance adjusters say they are working longer for less pay and less authority; self-funding long-term care is not always the best plan for wealthy clients; and Geico became the latest insurance company to require employees return to the office.
“Over the past six months, we have noticed a significant increase in our workload accompanied by unrealistic deadlines and objectives,” the email read. “While we understand the importance of meeting targets and providing quality service to policyholders, the current expectations have become overwhelming and impractical. This has led to a detrimental impact on our well-being resulting in heightened stress levels, burnout, and a decline in job satisfaction.”
by John HiltonAdjusters are often the first representative of the insurance company on the scene to assess a home destroyed by fire or storm damage, or a vehicle totaled in an accident.Nationwide recalled the message the following morning, a source said. An emergency meeting held later in the day did little to placate employees, the source added.
Traditionally, insurance adjusters filled a key and respected role in arbitrating between often-distraught victims and their insurer.
Those days seem to be in the past, industry leaders say. Compensation, working conditions, dwindling responsibility and increased regulations are all thorny issues for insurance adjusters.
“There’s a lot of disgruntled adjusters for various reasons,” said Caeden Tinklenberg, CEO of Swift Public
Adjusters. “A lot of adjusters haven’t made out really well for a long time as far as what they are getting paid. And the freedom and authority that they enjoyed to settle claims as they saw fit, a lot of that has gone away.”
There are an estimated 285,270 claims adjusters, examiners and investigators in the United States, according to the most recent data from the Bureau of Labor Statistics. The mean annual compensation is $73,380.
In an internal email this spring, a group of Nationwide adjusters aired complaints that “expectations have become overwhelming and impractical” and made six demands for change.
An emergency meeting held later in the day did little to placate employees, and sources say little has changed.
The message claimed Nationwide is understaffed and asking its claims adjusters to take on too many hours. It asked for the company to undertake a workload study to determine what is the appropriate output for a claims adjuster. A Nationwide spokesman acknowledged the email message but did not provide a comment.
Chris Aldrich is president of the National Association of Public Insurance Adjusters. While not speaking specifically on the Nationwide complaints, he said compensation is an issue in the industry. One independent adjusting firm recently offered to pay adjusters $75 per report, he said.
Aldrich estimated that a legitimately done site inspection and report will take at least four hours, usually more.
By Ayo Mseka
Although some high net worth individuals might want to self-fund their long-term care needs instead of buying a long-term care insurance policy, self-funding is not always their best option. Tom Riekse, managing partner of LTCI Partners, recently shared a few points that agents should bring up for discussion with high net worth clients who are considering the self-funding route.
Here are some reasons Riekse offers to high net worth clients to consider longterm care insurance:
1. Dealing with loss aversion. Riekse said that in the same way that it is less painful to pay with a credit card for a $100 dinner as opposed to laying out $120 in cash, spending money from a brokerage account every month to pay for care will be more difficult than having a third party (i.e., an LTC insurer) pay those costs. “Can your client visualize making these
monthly care payments?” he asked.
2. Impact on care choices. Similarly, imagine shopping at two stores, Riekse added. One of the stores has a full retail price on every item and accepts only cash, while the other charges an annual membership fee but discounts every item at 80%. “This is similar to the experience of someone having LTC insurance,” he said. “The policy gives you the comfort of purchasing additional services because much of the care is paid for by the policy.”
3. Underestimating the cost of care. Long-term care costs can be tricky to estimate and range widely by geographic location. In the past couple of years, the cost of home care has increased dramatically. According to Genworth’s care trends study, the cost of home care increased 12.5% in 2021. Core inflation, immigration and demographics mean that this trend is likely to continue in the future, he said.
4. Timing and liquidity of self-funding. For high net worth clients who
demands of employees, he said.
choose to self-fund their care, it is critical that they identify the assets they would use for care. They don’t want to be in a situation in which they have to sell investments or real estate in a down market. So there is no misunderstanding, Riekse said, it’s recommended that people complete and sign with their advisor an asset identification form that tells people where the funds for care will be found.
5. Tax considerations. Another consideration is taxes. What are the tax implications of withdrawals for paying for care? Retirement planning includes considerations of the most tax-efficient withdrawal strategies to avoid higher tax brackets and expenses. Will LTC expenses paid then be deductible as medical expenses, subject to the 7.5% of AGI rule? “A benefit of LTC insurance is that benefit payments are typically tax-free,” Riekse said.
Read the full story online: https://bit.ly/wealthyltc2023
Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.
Maintaining the right to work remotely is a hot topic among rank-and-file P/C insurance employees. Companies like Geico, Allstate and State Farm employ tens of thousands of employees, many of whom were hired as remote-only workers.
by John HiltonGeico is the latest property and casualty insurer to mandate a return to the office.
In July, Geico employees began working from a company office two days a week, said Lonnie Konikoff, who handles auto underwriting.
Konikoff is among a group of employees leading Geico United, an effort to unionize and collectively bargain for wages, benefits and working conditions. While the effort has ebbed and flowed, it flows every time Geico makes new
“They went back on their word about returning to office,” Konikoff said. “Before, it was all based on your performance. If you did very well, you will not have to come back. You could stay at work from home. And they changed all of that.”
The return-to-work announcement resulted in “literally hundreds of people from across the country” signing on to the Geico United effort, Konikoff said.
“People were really, really busting their butts, working extremely hard to try to complete a number of policies or complete their work because most of our grade now is based on our efficiency and how much we produce,” he added. “So, people were really, really exhausting themselves. Well, that was all taken away.”
Farmers Insurance recently informed its employees that anyone located within 50 miles of a Farmers office is required to be in that office at least three days a week beginning in September. The Wall Street Journal reported on widespread employee unrest with that decision.
P/C insurers compete fiercely to fill such positions as agents and claims adjusters. Insurers such as Allstate embraced remote work.
Read the full story online: https://bit.ly/geico2023
InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com.
•
• In
• In West
• In Tennessee, 9.4% of one’s income goes toward health insurance (without employer coverage).
People who live in Mississippi pay the highest percentage of their annual income for insurance, while Utah residents pay the least, according to an Assurance survey. Mississippians spend an average of 11.2% of their annual income — or $5,501 — on insurance. Meanwhile, people who live in Utah spend an average of 5.52% — or $4,368 — on coverage.
When looking at the dollar amounts spent on coverage by residents of the 50 states, New York residents pay the highest annual average amount, at $8,084, for auto, life and health insurance. Idaho residents pay the smallest annual average amount, at $4,168.
Americans spend an average of 8.26% of their annual income on insurance, the survey found.
The Department of Labor’s environmental, social and governance rule is needed to correct the “chilling effect” a previous Trump administration rule placed on those ESG investment options, U.S. attorneys argued in a court brief.
The brief ac companies a request earlier this month ask ing a Texas judge to toss out a lawsuit by Republicanled states seeking to strike down the ESG rule. The government maintains that its ESG rule — which took effect Jan. 30 — is appropriate under the Employee Retirement Income Security Act of 1974.
A group of 25 Republican attorneys general sued the DOL earlier this year over the Biden administration regulation, which gives retirement plan sponsors more freedom to consider ESG factors when selecting investments.
The retirement confidence of American workers dropped significantly last year, the largest one-year drop recorded since 2008, the Employee Benefit Research Institute reported.
The 2023 Retirement Confidence Survey Report showed that among the workers not feel too confident or did not feel confident at all about re, some had little or no savings, some were unprepared financially, or some could not afford to retire.
Some workers were also concerned about numerous aspects of the economy and the retirement system. And some
thought that the level of inflation will remain high for at least the next 12 months, the U.S. economy will go into a recession or the U.S. government will make significant changes to the American retirement system. Others believe that interest rates will continue to go up or the stock market will be increasingly volatile and unpredictable.
Generation Z grew up amid technological change and easier access to investing. So it should come as no surprise that these young adults are flocking to cryptocurrency as an investment. The CFA Institute and the Financial Industry Regulatory Authority’s Investor Education Foundation reported that crypto is the most common investment held by Gen Z investors.
More than half (55%) of Gen Z investors currently invest in crypto, according to the report. But Gen Z hasn’t given up on more-traditional investments. Individual stocks ranked second among this cohort, held by 41% of Gen Z investors, followed by mutual funds (35%), nonfungible tokens (25%) and exchange-traded funds (23%), the report said.
ify the average share of Gen Z investors’ portfo lios allocated to crypto.
Source: CNBC Delivering Alpha investor survey
Right now, the Fed’s job is not clear-cut. While they may not be done with rate hikes, perhaps they don’t have much more work to do.— George Mateyo, chief investment officer for KeyBank
The majority of Wall Street investors believe stocks have entered a new bull market and the U.S. economy will skirt a recession in 2023.
In New York, 4.5% of one’s income goes toward auto insurance.
Mississippi, 1.1% of one’s income goes toward life insurance.
Virginia, 3.6% of one’s income goes toward health insurance (with employer coverage).Source: Assurance
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John Hancock President and CEO Brooks Tingle has helped rethink what life insurance can mean to the consumer by helping improve customers’ health and well-being and providing security.
An interview with publisher
Paul Feldman
One of Tingle’s goals is to marry all the upside that comes with being a 160-plusyear-old company with the best of the modern digital economy.
As part of rethinking the business, Tingle led the company to implement its groundbreaking behavioral insurance solution, John Hancock Vitality, which helps life insurance customers earn savings and rewards for taking steps toward living longer, healthier lives.
“In the modern digital economy,” he said, “offering a product that is no fun at all to own and really hard to buy is not a winning formula.”
In this interview with Publisher Paul Feldman, Tingle talks about his journey to becoming president and CEO of John Hancock and his vision for the company’s future.
Paul Feldman: I want to congratulate you on 100 days as president and CEO of John Hancock. Tell us about your journey.
Brooks Tingle: My journey has probably been a little bit different than that of many people these days. I’ve only worked for one brand my whole career, and that brand is John Hancock. Now I joke that I’ve worked for two very different companies, because Manulife acquired John Hancock in 2004. And we have certainly become a different company.
I started with John Hancock very, very early in my career, almost right out of school, right on the front lines. And those times were invaluable in terms of
working with customers, working with agents and advisors every day on operations and customer service issues. I ran our operation’s group claims, call centers, premium and billing. Ultimately, I led IT as it related to those areas and then moved into other functions. But those early years — working directly with our customers, directly with advisors — are years that I wouldn’t change for anything.
Feldman: Tell us about your experience working with advisors. How does that inform your role as president and CEO today?
Tingle: I’ve always had a great affinity for our distributors, the folks who bring our solutions to life with customers. And one of the first jobs I had was handling agent commissions. If you want to learn
Feldman: John Hancock has been a pioneer in technology and product development, and I know that you played an important role in the John Hancock Vitality program. Tell us a little bit about that and how that works for you as a company.
Tingle: One of the things that most excites me about leading John Hancock is the ability to marry all the upside that comes with being a 160-plus-year-old company — financial strength, trustworthiness, experience, expertise, reliability, resilience — with the best of the modern digital economy. That’s what makes John Hancock special and what I plan to accelerate under my leadership. We’ll bring all that strength, all that foundational expertise, and pair it with innovative, strategic thinking.
In many ways, let’s act like we’re starting anew. If we were building new life insurance solutions today, how would they be different than what they’ve looked like for the past 100-plus years?
I think the first thing any insurer would do if they were starting from scratch is say, “Gosh, it’s a really good thing for us and our customers if they live longer and healthier.” Rather than just hope for that, I think any reasonable insurer would try to engage their customers and help achieve that outcome. And that’s what we started doing several years ago with John Hancock Vitality.
The other thing I think you would say is if you were starting fresh today with a life insurance company, you would be far more digitally enabled than our in-
about the business, handle commissions. Obviously, it’s essential that we provide the customer with great value and great service. But early on, I learned to recognize the importance of providing our distribution partners with the same great value and great service.
dustry has been. I would say our industry collectively has been a laggard as it relates to the modern digital economy. Think about all the experiences we have as consumers today. Things are more personalized, and they’re more engaging. You hear more from a company in
Although he’s only ever worked for one insurance company, John Hancock’s recently named president and CEO, Brooks Tingle, has wide-ranging experience, from being on the front lines of the insurance business to leading marketing and strategy and operations, and now attaining the top leadership position.
If you were starting fresh today with a life insurance company, you would be far more digitally enabled than our industry has been.
a way that’s unique and relevant to you.
Yet in the life insurance industry, we generally still issue policies — we send somebody a stack of paper, and they tuck it away. Somebody hears from their insurance company once or twice a year, when they get a bill or a privacy notice. And we know those privacy notices aren’t the most exciting.
So, we’re trying to turn that upside down. Just as a matter of values and
convictions, at John Hancock we try to help our customers live a longer, healthier, better life. And in doing so, we’ve transformed the business. While our industry typically has one or two interactions a year with customers, we’re now interacting with our customers 20 to 30 times a month.
Feldman: That’s impressive. What types of interactions are those?
Tingle: We send them content about wellness, and they play wellness-related games as they earn points for doing things that correlate with longevity. And we’ve been able to build on that platform. We started with a heavy emphasis on physical activity, then we added a healthy food component to it. Many of us, including myself, have learned you can’t exercise your way to good health at a certain age. Nutrition really matters.
We’re showing up in our customers’ everyday lives. We started with physical activity, offering people a wearable device, and then added nutrition. And now in sort of a marketer’s dream, our customers can get a 25% discount on fresh produce purchases at more than 17,000 grocery stores nationwide. And when they make the purchase, they get a receipt that says “$5 bag of apples minus $1.25, John Hancock Vitality.”
We spun that forward during COVID-19. We were able to respond far more effectively than any traditional insurer could have, offering people points for getting the COVID-19 vaccine. We held a virtual 5K run and offered all sorts of relevant specialized education around COVID-19.
Most recently, we’ve been able to bring onto the platform something from a company called GRAIL — the Galleri multicancer test, which is what’s called a liquid biopsy. Through a simple
significant burden for many individuals and their long-term income strategy. According to the U.S. Bureau of Labor Statistics, households in the U.S. led by someone age 65 or older spend an average of $6,668 a year on health care1
That’s not insignificant. Is it any wonder that 3 out of 4 Americans say that they would be “significantly set back financially” if they received an unexpected medical bill today2?
clients weather the unforeseen health changes that sometimes happen during the golden years. Let’s look at the hypothetical case of Natalie, a near-retiree who worked with her financial professional to purchase an IncomeShield 10 fixed index annuity at age 60. Natalie liked the 10% premium bonus, and she chose a Lifetime Income Benefit Rider with Wellbeing Benefits that could double her income if she experienced a health event that left her unable to perform 2 out of 6 activities of daily living (ADLs).
Unexpected costs – especially health care costs – can pose a significant burden for many individuals and their long-term income strategy. According to the U.S. Bureau of Labor Statistics, households in the U.S. led by someone age 65 or older spend an average of
That’s not insignificant. Is it any wonder that 3 out of 4 Americans say that they would be “significantly set back financially” if they received
Retirement Goal: Have enough income through retirement
Annuity Contract: Age Purchased Contract: 60
Retirement Goal: Have enough income through retirement
Age Turns on Income: 67
Premium: $100,000
Annuity Contract:
Age Purchased Contract: 60
Age Turns on Income: 67
Income Generated: $11,904 Annually
Premium: $100,000
Income Generated: $11,904 Annually
At age 69, Natalie slipped and fell after suffering a stroke. Now unable to perform two of the ADLs, she activated the Wellbeing Benefit. That doubled her income payment to $23,808, which helped her cover the increased expenses. Her income will return to the original $11,904 after she has recovered allowing her more assurance that the rest of her retirement savings were not impacted.
$11,904 Guaranteed Annual Income Before and After Health Event
At age 69, Natalie slipped and fell after suffering a stroke. Now unable to perform two of the ADLs, she activated the Wellbeing Benefit. That doubled her income payment to $23,808, which helped her cover the increased expenses. Her income will return to the original $11,904 after she has recovered allowing her more assurance that the rest of her retirement savings were not impacted.
Hypothetical example shown for illustrative purposes only
A fixed index annuity, like those from American Equity, can help clients weather the unforeseen health changes that sometimes happen during the golden years. Let’s look at the hypothetical case of Natalie, a near-retiree who worked with her financial professional to purchase an IncomeShield 10 fixed index annuity at age 60. Natalie liked the 10% premium bonus, and she chose a Lifetime Income Benefit Rider with Wellbeing Benefits that could double her income if she experienced a health event that left her unable to perform 2 out of 6 activities of daily living (ADLs). $110,000
Hypothetical example shown for illustrative purposes only
To learn more about IncomeShield 10 and to get a client-friendly flyer with Natalie’s case study, call American Equity Sales Support today at 888-647-1371.
1 Timmons, M. (2020, March 31). 61% of Americans Have Been Surprised by an Unexpected Medical Bill — and 37% Pay Without Question. ValuePenguin. https://www.valuepenguin.com/unexpected-medical-bills
2 Insured Retirement Institute and American Equity. “Aligning Retirement Expectations with Financial Resources. IRI Retirement Readiness Research Series. 2022
To learn more about IncomeShield 10 and to get a client-friendly flyer with Natalie’s case study, call American Equity Sales Support today at 888-647-1371.
Annuities and Rider issued under form series ICC22 BASE-IDX-B, ICC22 IDX-11-10, ICC20
ICC20
ICC20
ICC16
ICC20
ICC20
ICC20 R-LIBR-W-FCP, ICC20 R-LIBR-W-FSP, and state variations thereof. Availability may vary by state.
1 Timmons, M. (2020, March 31). 61% of Americans Have Been Surprised by an Unexpected Medical Bill — and 37% Pay Without Question. ValuePenguin. https://www.valuepenguin.com/unexpected-medical-bills
2 Insured Retirement Institute and American Equity. “Aligning Retirement Expectations with Financial Resources. IRI Retirement Readiness Research Series. 2022 Annuities and Rider issued under form series ICC22 BASE-IDX-B, ICC22 IDX-11-10, ICC20 E-PTP-PC, ICC20 E-PTP-PR, ICC20 E-MPTP-C, ICC16 R-MVA, ICC20 R-LIBR-FCP, ICC20 R-LIBR-FSP, ICC20 R-LIBR-W-FCP, ICC20 R-LIBR-W-FSP, and state variations thereof. Availability may vary by state.
Lifetime Income available through optional Lifetime Income Benefit Rider. The wellbeing benefit can only be activated one time after a two year waiting period. Bonus available on 1st year premiums. Each year after the 1st contract year, clients become vested in a percentage of the bonus, until 100% vested at the end of the 10th contract year. Vested amounts of the bonus are the amounts not forfeited as a result of an early withdrawal or surrender. Bonus, surrender charges, and vesting schedules may vary by state. See brochure and disclosure for details.
Lifetime Income available through optional Lifetime Income Benefit Rider. The wellbeing benefit can only be activated one time after a two year waiting period. Bonus available on 1st year premiums. Each year after the 1st contract year, clients become vested in a percentage of the bonus, until 100% vested at the end of the 10th contract year. Vested amounts of the bonus are the amounts not forfeited as a result of an early withdrawal or surrender. Bonus, surrender charges, and vesting schedules may vary by state. See brochure and disclosure for details. American Equity Investment Life Insurance Company® does not offer legal, investment or tax advice. Each client has specific needs that should be discussed with a qualified legal or tax advisor.
American Equity Investment Life Insurance Company® does not offer legal, investment or tax advice. Each client has specific needs that should be discussed with a qualified legal or tax advisor.
blood sample, they can detect the presence of more than 50 types of cancer. We’ve now had several customers and an advisor who have learned that they have cancer by virtue of taking this test, offered through their John Hancock Vitality membership.
So, when you think about that as a life insurer, it’s great for the customer, which we deeply value, but also good for us.
Feldman: As part of your many roles in this industry, you’ve been involved in the sales process. How has the sales process changed in recent years?
Tingle: It’s changed a lot. There have been a lot of trends. There are certain things that are still truisms about our business. For example, “Life insurance is sold, not bought.” And that’s not because it’s not a remarkably valuable and important product, which it is. I think it’s because it’s complicated to buy and not a topic that people like to think about a lot.
Generally, a sale occurs because a conversation — human contact — has occurred. All the prognostications that I heard throughout most of my career about direct-to-consumer being the way of the future have been dramatically overstated. We’ve tried direct-to-consumer ourselves. It’s very, very difficult.
Now, that’s not to say that distribution isn’t evolving and doesn’t need to evolve. But I don’t think direct-to-consumer sales is the answer or the only winning formula.
We do need to bring much more digital enablement to the traditional advisor-involved selling methods to make the activities of the advisor far more efficient, their offices far more efficient, the inner workings of underwriting and issuing of a policy far more efficient.
To me, bringing some of those digital capabilities that might have existed in a direct-to-consumer world to the advisor space is the winning formula. We’ve seen some interesting things with spikes in demand for life insurance during COVID-19 and coming out of COVID-19. But I would say it is still very much an advisor-driven process.
I give a lot of credit to some of these insurtechs that are trying to reach consumers digitally, because I think, just due to economics, the advisor in the business tends to gravitate toward the upper end of the market.
And while COVID-19 proved many things, it certainly proved that our industry must do a better job serving all Americans, not just the wealthier among us. And we must figure out a way to help distribution.
Feldman: I think a lot of companies simply want to perform well on spreadsheets. I recently went through an underwriting process, and it was very time-consuming — it took three months to schedule my medical examination.
Tingle: You’re absolutely right about spreadsheets — and I understand why spreadsheeting occurs. I understand for certain size policies, you can only spend so much time doing all these detailed comparisons.
I do think to ultimately serve customers best, you must look at value versus just price on a spreadsheet. If you’re one of those customers who found out they have cancer well before they otherwise would have because they happened to have a John Hancock life insurance policy and had access to the Galleri test, what value do you put on that? How does that show up in a spreadsheet?
I do think we must go beyond a position on a spreadsheet. People used to ask me if I was worried about Amazon or Google getting into the insurance business. I don’t think those companies ever had or do have a desire to be in our business, but you’d have to be super naive not to realize that they’re disrupting our business in different ways.
One simple way that Amazon has
disrupted our business is by changing consumers’ expectations about what it should take to buy something in the year 2023. Amazon’s famous one-click buying process informs people’s perception of how easy it should be to purchase something.
If somebody lives in a one-click world and then they go to buy life insurance, they’re like, “Wait a minute — you have to send somebody to my house to have me stand on a scale and take my blood, then I‘ve got to wait however many weeks or months?”
We — and, frankly, most in the industry — are investing a great deal in ways to make it easier and faster for more Americans to acquire the life insurance they need, such as by leveraging electronic health records, and we’ll see what artificial intelligence can ultimately do there.
But we must make life insurance not only more valuable and enjoyable to own, like what we’ve done with Vitality, but a heck of a lot easier to buy. Because in the modern digital economy, offering a product that is no fun at all to own and really hard to buy is not a winning formula.
Feldman: We’re at a point where 10,000 people are retiring every day. With inflation, where do you see the growth in the market? What are the challenges?
Tingle: One of the challenges is how the insurance industry can serve all U.S. consumers better. How do we reach more people, especially those who are in different income strata?
This goal is challenging, particularly with inflation having been what it’s been the past year or two. If you’re a young family and gas prices rise so that now it costs $80 to fill your gas tank instead of $50, or the weekly trip to the grocery store is $300 instead of $200, you might want life insurance — but do you have the budget for it?
We compared retail gas prices at the pump to life insurance applications of $500,000 and below, and you’ll never see something more perfectly correlated: When gas prices went up, life insurance applications went down.
We must get really creative on how to reach more people with easy solutions, affordable solutions, but still with that element of advice that people need from an advisor.
Feldman: COVID-19 also led to some changes in the workforce, especially with work-at-home policies. Do you see that changing?
Tingle: We have a number of people who are full-time remote. They might be underwriters, for example, or in other roles, such as individual contributors. Those who traditionally would’ve come into the office, by and large, are now hybrid. Currently, those hybrid colleagues come in the office Tuesday and Wednesday of each week, and then they work remotely the other three days of the week.
I don’t think remote policies are going to change radically in the next few years.
Feldman: Technology continues to be a game changer. AI is huge right now. Some people are scared of where this technology might lead us. Do you think we should be afraid of it, or do you think that it’s going to enhance our productivity?
Tingle: I think in every disruptive time, disruptive technology creates enormous opportunities. I’ll talk to teams of people who perform a certain job that say, “I think this job ultimately might be able to be done through an AI solution.” I’ve said, “Maybe. We’ll see. But what a great opportunity for you to embrace that and become the person that helps the company figure out how to apply AI to, say, claims payments.”
I’m generally excited about it. AI is not going to go away, so how do we harness the power of AI for good outcomes for our colleagues and customers?
Feldman: As president and CEO of John Hancock, what kind of legacy do you want to leave?
Tingle: We want John Hancock to be a company that has a profoundly positive impact on our customers’ lives. Our mission is to help people live longer, healthier, better lives. It’s motivating for our teams. I hope our advisors are inspired by it. And it makes sense to customers.
I would challenge you to find a person who doesn’t understand why their life insurance company would want them to live a longer, healthier life.
It seems that every insurance company wants a product tied to an index these days. And why not? Indexed life insurance and annuity products are selling faster than contracts can be processed.
Literally. Many producers complain of processing delays as new business backs up.
When business is hot, innovation generally follows. American Life & Security Corp. is the latest insurer to get creative with an indexing option.
The Lincoln, Neb.-based insurer recently announced its American Fusion multiyear guaranteed index annuity. While it remains to be seen whether “MYGIA” catches on as the newest industry product acronym, the marriage of a traditional MYGA and a fixed indexed annuity is unique.
The five-year MYGIA works like this: An annual guaranteed 4% rate return is augmented by a potential “bonus interest credit” at the end of the term. If the S&P Index grows by 25% over the five years, a 14% bonus is applied to the contract, giving owners a 6.76% annual yield.
The product “threads the needle,” said Thomas Bumbolow, head of distribution & business development for Midwest Holding, a subsidiary of American Life, allowing the insurer to capitalize on the index craze while still giving consumers safe, guaranteed growth.
The product is right for agents as well since they can collect a higher commission on an indexed product.
“It’s a tweener product, so we tried to come up with a tweener commission,” Bumbolow explained. “Make it fair and give everyone a reason to focus on this, not just the clients but the agents as well, and it has to work for the carrier. I think we’ve threaded the needle the right way.”
Index products seem to include something for everyone — from the consumer who gets to participate in the market to the agent getting a higher commission to the carriers and marketing middlemen looking for big sales numbers.
But troublesome disrupters remain close at hand.
In particular, regulators and consumer advocates are ratcheting up the pressure
on proprietary indices. The illustrations generated by these immature indices are fodder for class-action lawsuits.
Then there are the ever-changing economic indicators. Rising interest rates mean fixed-money investments are suddenly yielding up to 5.5% in some cases.
But despite all of that, analysts expect indexed products — both life insurance and annuities — to lead the way in sales for at least the foreseeable future.
“As folks are moving from the accumulation stage in their pre-retirement to retirement, they’re much more sensitive to being able to have principal protection and not have to go through some of the market corrections and volatility that they may have gone through in the past,” said Sutton White, head of annuity product at Life Innovators.
Equity indexed annuities first appeared in 1995 as an innovative new product design that gave consumers a path to earn interest based on the performance of a stock market index, most commonly the S&P 500, without any downside risk.
By 2006, the industry realized the word “equity” proved too confusing. Products were renamed “fixed indexed annuities” to help avoid any perception of a direct investment in the stock market.
The perception of all fixed products grew following the great recession of 2008-09. Millions of near retirees were crippled financially when retirement accounts lost a huge chunk in the market collapse. “Flight to safety” entered the retirement planning lexicon as new indexed products offered the opportunity
to participate in market gains without ever losing valuable retirement dollars.
On the life insurance side, Transamerica offered the first indexed universal life product in 1997. IUL caught on quickly. IUL offers permanent life insurance protection with the opportunity to earn market-like returns inside the policy.
IUL offers benefits similar to a Roth IRA: cash value grows tax deferred, and income can be tax free. Policyholders can access this growth at any time their policy is in force on a tax-deferred and tax-favored basis.
IUL is a little bit different from a fixed indexed annuity because the cost of insurance is embedded in the contract, White noted.
“If the performance doesn’t meet a certain threshold, you actually could wind up either losing money because of cost of insurance or even having your policy lapse,” he said. “So the performance on the illustration for an IUL is much more important in terms of how the policy is going to behave, than with a fixed index annuity.”
At last count, more than 50 insurers offered an IUL product. In the first quarter 2023, the most recent quarter available, Transamerica Life’s Transamerica Financial Foundation IUL was the No. 1 selling indexed life insurance product for all channels combined, Wink, Inc., reported.
Total 2022 indexed life sales hit $2.7 billion, an increase of 10.9%, according to Wink data. Fourth quarter sales saw both a record-setting quarter and a record-setting year for indexed life sales. IUL held about 25% of the total
Index products seem to include something for everyone — from the consumer who gets to participate in the market to the agent getting a higher commission to the carriers and marketing middlemen looking for big sales numbers.
individual life insurance market in 2022.
Meanwhile, indexed annuities posted monster sales in 2022 and, so far, in 2023. Annuity sales totaled $310.6 billion in 2022, surpassing the prior annual record set in 2008 by 17%, according to LIMRA data.
Fixed indexed annuity sales were $79.8 billion, up 25% from 2021 and 9% higher than the record set in 2019. In the first quarter 2023, FIA sales were $23.1 billion, up 42% from the year-ago quarter and 4% higher than the record set in the fourth quarter of 2022.
Registered index-linked annuity sales reached $41.1 billion in 2022, 6% higher than the prior year and a new all-time high for the product line’s sales. RILA sales totaled $10.4 billion in the first quarter of 2023, up 8% from the prior year.
But regulation is threatening to skewer 2023 sales — for the good and bad.
On the life side, sales for the first quarter were $635.5 million, down 15.5% compared with the previous quarter, and up 0.8% compared to the same period last year, Wink reported. Overall indexed life sales include both indexed UL and indexed whole life.
“Indexed life was the only product line not to experience a decline in sales, over this time last year,” said Sheryl J. Moore, CEO of both Moore Market Intelligence and Wink, Inc. “Sales for the [second] quarter will likely prove challenging, thanks to the implementation of AG 49-B.”
Actuarial Guideline 49-B took effect May
1. Put forth by the National Association of Insurance Commissioners, AG 49-B requires that index accounts cannot be illustrated above the benchmark index account and the maximum illustrated rate must include bonuses. The guideline also limits illustrated rates to a maximum of 145% of whatever an IUL portfolio is earning.
AG 49-B amends AG 49-A and is the latest NAIC attempt to rein in illustrations, particularly around uncapped volatility-controlled indexes with a fixed bonus. AG 49-B is seen as a patch until the NAIC reopens illustration regulation.
The NAIC wrote and adopted the overall life insurance illustration model in an
acrimonious process that concluded in 1997, well before IUL existed.
Speaking at a LIMRA conference in April, Tim Pfeifer predicted that an AG 49-C is likely to come. Pfeifer is president of Pfeifer Advisory, which offers consulting services on life insurance product designs.
The growth of proprietary indices is what gives regulators heartburn. At one time, the S&P 500 was used in almost all index products but came with limited ability to design product features. So, carriers created their own indexes and haven’t looked back.
Since then, more than 150 indexes have been created. Unlike the S&P 500, few of them have any solid history to draw from.
“The interest rate environment is really what drove the proliferation of it because it was just impossible to get a competitive cap rate on the S&P,” White explained. “Even two years ago, we were seeing caps on the S&P at 4% or 3.5%. That’s where you can offer a proprietary engineered index with a much higher cap and/or participation rate.”
With no history to draw from to support illustrations, insurers created “backtested” hypothetical performance from proprietary index components. But critics say this results in misleading illustrations untethered from reality.
Illustrated rates are expected to come down now that AG 49-B is in place. IUL sales might follow. Lower illustrated rates are likely to suppress IUL sales up to 15%, Moore said.
Unsurprisingly, those shaky illustrations and complex product details have prompted lawsuits — against both IUL and indexed annuities.
IUL is a target for many class-action-oriented law firms, as well as consumer advocates who claim it is confusing and rife with scam funding mechanisms.
A 2022 lawsuit filed in Arizona bankruptcy court described one such scam. The three plaintiffs purchased Minnesota Life IUL products from producers. According to their lawsuit, the plaintiffs were sold IUL policies accompanied by a future income payments feature.
Using various marketing efforts, producers allegedly targeted pensioners with the FIP strategy by offering them a lump sum in exchange for a portion of their future pension payments. Scammers pushing FIP allegedly used brokers and insurance producers to find investors — often retired veterans, teachers and firefighters.
Unknown to many investors, the future pension payment terms required them to pay what often equated to an annual interest rate exceeding 100% over a five-year term.
Insurers settled several such class actions over IUL over the past two decades.
Fixed indexed annuities are drawing similar litigious scrutiny over illustrations. In Texas, a former Lincoln Financial agent is a lead plaintiff in one such suit. The nine plaintiffs allege that the insurer misrepresented the potential returns with its OptiBlend fixed indexed annuity.
Former agent Henry Morgan and eight other plaintiffs, all Morgan’s clients, signed FIA contracts in February 2020, court documents say. Plaintiffs say Lincoln led them to expect the consistent 6% gains illustrations showed.
The lawsuit claims a Lincoln marketing consultant “made several oral representations to Henry Morgan and, on information and belief, made the same misrepresentations to other brokers, agents and customers, that when the market was no longer in the bull direction a return would still be generated because of the dividend stock mix in the index.”
In its response, Lincoln claimed the marketing information referenced in the lawsuit was emailed to Morgan and other Lincoln agents and marked, “For agent use only. Not for use with the public.”
Lincoln further noted that all of the plaintiffs signed an application in which he or she acknowledged that “all payments and values provided by the contract, when based on experience of the index account, are not guaranteed as a dollar amount.”
That case has been ordered to mediation by the judge.
There are many consumer advocates who would like to see all indexed products
Sales for the first quarter of 2023 were $635 million, compared with sales of $629 million for the first quarter of 2022.
First-quarter indexed life sales were down nearly 16% when compared with the previous quarter, and up less than 1% as compared to the same period last year.
Total Q1 2023 indexed life sales were $635,516,112
regulated as securities by the Securities and Exchange Commission. At present, only RILAs face that higher level of scrutiny.
The so-called Harkin Amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act was intended to keep fixed-index annuities outside the SEC’s jurisdiction. IUL is similarly protected by Dodd-Frank.
Assuming that indexed products remain state-regulated for the near term, sales forecasts appear strong.
Expectations are for FIAs to continue to reach new record levels as investors seek out solutions with a balance of protection and growth, LIMRA said. A majority of the growth projected in the FIA market will be in products without a guaranteed living benefit. The growth is anticipated to flatten out between 2023 and 2027.
IUL sales should remain strong but could flatten out or decline slightly due to regulation pressures and a post-pandemic dip in life insurance activity.
Insurers will certainly keep tweaking index products in response to changing economic conditions and demographic profiles. RILAs have sold so well, the concept is being replicated on the life side by eager insurers.
The question remains whether RIUL spreads throughout the life insurance world, Pfeifer said. Brighthouse has filed for its own RIUL product, he added.
Source: Wink, Inc.
“Is this the next thing we’ll see?” Pfeifer asked during LIMRA’s Life Insurance and Annuity Conference this spring. “This will be a securities-type product that will be structured like an IUL. ... So, this would be kind of a counterpart to the RILA product.”
The Dow Jones gained more than 40% over the past five years, despite a worldwide pandemic, the Russia-Ukraine conflict, generational inflation and associated economic upheaval. As long as equities give out those gains, indexes will remain hot.
For a smaller insurer like American Life, taking a creative index product like American Fusion to the market is a possible path to a bigger profile.
“We’ve seen some unprecedented moves in the stock market, and folks certainly don’t want to miss out on that,” Bumbolow said. “Being able to have a product that is principal protected, while also giving you a little bit of the upside for some of these indices. I think that’s the real driver behind this.”
InsuranceNewsNet
Senior Editor John Hilton 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.
CHRISTINA MA’S mother saw that her daughter’s talents would make her a good fit to eventually become part of the second generation to serve in her family-oriented practice.
By Susan RupeChristina Ma described her mother as a trailblazer as well as someone who believes in planning and patience. She always hoped her daughter would join her in her insurance and financial services practice, but she didn’t push — she knew the time would be right someday, and that time eventually came along.
Ma started her career as a certified public accountant before joining her mother’s Prudential office in Houston, Texas. But after her first few years in public accounting, Ma yearned for some work-life balance. Her mother took notice.
“My mother is the ultimate planner. She laid out a 10-year plan for her business that included me,” Ma said. “My mother saw some strengths and personality traits in me that she thought would fit in well with a financial services career. But she never really introduced me to the business. She let me do what I wanted because she had patience and she saw that I would come in to the business when I thought it was right for me.”
When Ma became dissatisfied with public accounting, she looked at her mother’s business.
“I saw that my mom had balance in her life that I didn’t have,” she said. “I started asking her how she accomplished that.”
Meanwhile, Ma’s brother began working with their mother, and Ma saw how much he enjoyed the business.
“I said, ‘It seems like you have something fun going on here. Let me check it out.’”
Ma started out as her mother’s assistant and said she “fell in love with the impact my mother had on her clients and the relationships that she built with them.”
She eventually transitioned into advising and said she believes advising and planning “are in my genes.”
“When my mother joined this profession more than 30 years ago, it was a heavily male-dominated industry. She
is Asian and a woman and didn’t speak English as well as her peers. She is an incredible trailblazer for me and for other women in this field.”
Ma said her family’s practice is aligned with their personal values of protecting others financially and taking care of each other, and she said her mother taught her those lessons before Ma entered the business.
“For example, risk management. I got a life insurance policy when I was in my 20s. And the way that we talked it through was, even though I didn’t have any dependents at the time, I wanted to make sure that if something happened to me, I had something for my parents — kind of as a thank-you and making sure that I’m not like rolling in my grave, not knowing if my family will be taken care of or not. So I think that’s something that our family values aligned with, knowing that there’s something out there to provide that protection for your family.”
Asian Americans also place a high value on taking care of older family members, Ma said, which led her to purchase a
clients are drawn to her practice “because they feel more comfortable in speaking with someone who understands their culture. For example, taking care of our elders, having them move in with us — it’s a foreign concept to some people. But for a lot of Asians, that’s the norm — it’s part of the package.”
Ma said her firm takes clients through an initial process to help identify whether they are a good fit.
“At the beginning, we have a conversation where we ask what brought them to speak with a financial planner,” she said.
“From there, we are able to identify: Are they looking for someone only to help implement a product and put it in place? Are they looking for someone to manage their investments? Are they looking for some advice and guidance to help us identify a path for us to move forward together? Are they looking for all three?”
Ma said she believes being a woman in the business helps her clients “because one thing about female advisors is that we make sure everyone has a seat at the
long-term care policy to ease the financial burden of future care.
“By mixing our business with our family values, it’s incredible the impact we can have on ourselves as well as our clients,” she said.
Ma’s practice serves Asian American clients as well as clients from other ethnic groups who fit her practice’s values.
“The clients we work with all have the same values we do,” she said. “Whether they are Asian American, African American, Hispanic — I find we align based on our values. So ethnicity put aside, gender put aside, as long as you are a good fit for our firm, we are happy to work with you.”
But she believes Asian American
table and is included in the planning and decision-making process.”
As an example, she cited a couple who began working with her when she first started in the business.
“They were getting ready for retirement and wanted to make sure they knew what their finances would look like and planning all that out. We helped them make that projection, and now every year, we hear from the husband as well as the wife, telling us they are grateful we included both of them in the conversation.”
Ma said her clients have introduced her to their children as well as their children’s friends, opening opportunities to serve a younger generation.
I want all my clients to be healthy and happy, but we put everything in place for them in case that doesn’t happen.
Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.
“We do a lot of multigenerational planning,” she said. “I want all my clients to be healthy and happy, but we put everything in place for them in case that doesn’t happen. We make sure everyone in the family knows who we are so that if anything happens, they know who to call.”
Ma’s brothers, Jason and Marcus, also work in her mother’s practice, and everyone has a special role.
“I am the one who goes out and speaks with our clients,” she said. “I’m on the front end of talking with people and networking, and then I get Jason into the client conversations. Jason is the complete opposite of me personality-wise. He is the most patient man you will ever meet, kind and caring. Jason helps walk our clients through the different stages of our planning process. I do the initial meetings, we build out the plan and we discuss the plan together.”
Meanwhile, Marcus works with his team to service existing clients.
“This is how we work together,” Ma said. “I think it’s amazing that we are able to work together the way we do.”
In addition to working with clients and their children, Ma said her firm obtains clients from centers of influence.
“People who know what we do and why we do it and enjoy our relationship will introduce us to more people,” she said. “I work with a lot of physicians. I’m married to a physician, and I know exactly what they go through financially, what hurdles they encounter. I do a lot of educational sessions for the physician market, and that’s my way of giving back to that community.
“Once people know that you care about them and you’re looking out for them, it’s amazing what happens. When you do good, good comes back to you.”
Ma and her husband have a daughter who is 1 ½ years old, and they are expecting their second child soon.
They love traveling but are equally as happy to stay in Houston and travel around the city’s restaurant scene.
“We have the most amazing, international, eclectic city,” she said. “We have so many local foods, places from all over the world. We have a great Chinatown, a Koreatown, a Pakistani community. Any type of food you want, it’s served here.”
In looking back at her time in the insurance and financial services business, Ma said the biggest tip she would give someone looking to enter the business is “the first three years are the hardest you will ever go through. They test you on a daily basis. I was lucky to have a good mentor and a great business coach.
“But when you get through those initial years, and when you’re able to find the right people to surround yourself with, this is such a beautiful career. You can help so many people within your natural market, through the relationships you develop and then help society as well.”
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.
Life insurance products contain charges, such as Cost of Insurance Charge, Cash Extra Charge, and Additional Agreements Charge (which we refer to as mortality charges), and Premium Charge, Monthly Policy Charge, Policy Issue Charge, Transaction Charge, Index Segment Charge, and Surrender Charge (which we refer to as expense charges). These charges may increase over time, and the policies may contain restrictions, such as surrender periods. Variable life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. There may also be underlying fund charges and expenses, and additional charges for riders that customize a policy to fit individual needs. Charges and expenses may increase over time. The variable investment options are subject to market risk, including loss of principal. The no lapse guarantee is subject to the terms and conditions contained in the policy and may not be in effect even if premium payments are made. Please review the policy carefully. Additional agreements may be available. Agreements may be subject to additional costs and restrictions. Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements. You should consult your tax advisor regarding your own tax situation.
Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.
Life insurance products contain charges, such as Cost of Insurance Charge, Cash Extra Charge, and Additional Agreements Charge (which we refer to as mortality charges), and Premium Charge, Monthly Policy Charge, Policy Issue Charge, Transaction Charge, Index Segment Charge, and Surrender Charge (which we refer to as expense charges). These charges may increase over time, and the policies may contain restrictions, such as surrender periods. Variable life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. There may also be underlying fund charges and expenses, and additional charges for riders that customize a policy to fit individual needs. Charges and expenses may increase over time. The variable investment options are subject to market risk, including loss of principal.
These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person's individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its subsidiaries, have a financial interest in the sale of their products.
Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. Securities offered through Securian Financial Services, Inc., member FINRA/SIPC, 400 Robert Street North, St. Paul, MN 551012098, 1-800-820-4205.
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The no lapse guarantee is subject to the terms and conditions contained in the policy and may not be in effect even if premium payments are made. Please review the policy carefully.
Securian Financial is the marketing name for Securian Financial Group, Inc., and its subsidiaries. Minnesota Life Insurance Company and Securian Life Insurance Company are subsidiaries of Securian Financial Group, Inc. For financial professional use only Not for use with the public. T This material may not be reproduced in any form where it would be accessible to the general public.
Additional agreements may be available. Agreements may be subject to additional
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Global Atlantic Financial Group announced it stopped selling new fixed indexed universal life policies, effective July 1, and is suspending its IUL sales.
“During the last several years, sales of our indexed universal life insurance products have been steadily declining, from 16% of total Individual Markets’ new business production in 2013 to less than 3% today,” said Rob Arena, co-president and head of individual markets. “During that same time, we have continued to drive growth in our annuity and preneed platforms. The decision to focus on these opportunities is the right one for our business today.”
The decision to exit the fixed IUL market does not impact existing policyholders, Arena said. “We will continue to service those policyholders and deliver on our com-
A Missouri widow is not entitled to life insurance benefits after her husband died before paying his initial premium, an appeals court in that state decided.
26, 2019, and that the $250,000 death benefit was payable to her. Principal denied the claim. Rothenberg had been covered for many years by a Jackson National Life policy, court documents say, but he let that policy lapse just 12 days before his death because “the policy’s premium would substantially increase upon renewal.”
Following two years of double-digit growth, total final expense life insur ance premium dropped 5% in 2022 from the prior year. Total final expense life insurance premium was $640 million in 2022, according to a survey of 22 com panies in the final expense market. This is the first drop in final expense premium since 2018, according to the Life Insurers Council.
Despite the 2022 decline, final ex pense premium remains well above prepandemic levels, said Dean Lambert, LIC executive director.
LIC reported more than 783,000 pol icies sold in 2022, with an average face amount of $935.
DID YOU KNOW ?
On April 26, 2019, Dr. Robert P. Rothenberg of Ballwin, Mo., signed documents in the office of his insurance broker on a $250,000 term life policy with Principal National Life Insurance, according to court documents. Rothenberg suffered a fatal heart attack later that day. He intended to make a lump sum payment for his annual
The life settlement market saw a strong rebound in 2022 after a brief COVID-19-induced slowdown the previous year, according to The Deal. Life settlements have shown significant growth over a five-year period, moving from 2,027 policies with a total face amount of $2.8 billion in 2017 to 3,057 policies with a total face amount of $4.5 billion in 2022.
Coventry First emerged as the top buyer in 2022 (representing 52% of the entire market), followed by Abacus Settlements, Life Equity and Maple Life
claim to Principal, contending that the policy had become effective on April
42% of those identifying as LGBTQ+ own life insurance.
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• Unique ability to add a commissionable policy enhancement that allows the policyowner to customize the way the death benefit is paid out
Stability
• Founded in 1895, a producer-focused Company with fourth generation family leadership that has great financials and no debt.
For information about a vested independent contract with Kansas City Life Insurance Company, call Tom Morgan, Vice President, Agencies, 855-277-2090, or visit join.kclife.com.
The market is trending toward hybrid products, and you must be certain of each product’s strengths and weaknesses.
By Adam Bezman
We have seen plenty of discussion recently about the growing need for long-term care; rising costs of care, demographic changes and legislation are top of mind for many brokers and employers in 2023. Some people believe the market may be trending more toward hybrid life and long-term care solutions in the years ahead. But we know there’s clearly a need for long-term care, and if the market is trending toward hybrid products, it begs the question:
What’s the right life insurance and long-term care solution for your clients?
The truth is, there are a lot of products on the market, each with relative strengths and weaknesses. Different situations will call for different products.
So, you need to get smart about these hybrid products. And that means asking carriers lots of questions! As you start to dig in, you’ll quickly realize there are hundreds of different ways to take a conversation about life and care products. To focus your conversations, I think there are several key areas you can target with questions that will allow you to differentiate the products in the market. Let’s explore 10 of these questions now.
Product structure can often break down into a question of stability versus flexibility.
Question #1 is: What type of life insurance product is being offered?
We’ve seen these products built on different chassis: whole life, universal life and even term. Each of these structures has benefits and drawbacks, and even within these types of life insurance there can be significant differences from one insurer to another. Knowing the structure can often lead to other questions.
Question #2: How much flexibility is available?
Products such as universal life can be structured many ways, with benefits designed to last to many different ages and with some more or less conservative in design. Universal life typically offers the flexibility to adjust payments or the death benefit, but policyholders must be thoughtful about how this impacts their policy.
On the other hand, some permanent life products may be fully guaranteed and can offer more stability, but you may sacrifice having the flexibility of universal life and may pay more in premiums. There’s a trade-off either way, and you’ll want to understand the products and your clients’ needs for flexibility versus stability.
Question #3: Can the product change? Are premiums fixed or flexible? Could costs increase based on claims experience? Do the same terms apply to both the life and long-term care portions of the contract (e.g., is one guaranteed while the other is not)? This will help you in understanding where there is risk in the contract. Insurers have much more experience with life insurance than benefits for long-term care, so it’s important to understand what parts of the contract — if any — the insurer has flexibility to change.
The appeal of these hybrid life and longterm care products can often come from the fact that they are not “use it or lose it” propositions. Even if the insured never requires care, their beneficiary will receive a death benefit. Although the death benefit payment may seem straightforward, you might want to consider the questions below.
Question #4: Is death benefit restoration available, and how does it work? You may be able to restore the death benefit that’s advanced to pay for care. But it’s important to know exactly how the death benefit gets restored. Is it fully restored to the original amount? Is it restored immediately?
Question #5: Is it possible to reduce the death benefit in later years as needs change?
Some products allow for changes in the death benefit (either scheduled or at the policyholder’s discretion as discussed previously). With some products, this will impact the long-term care benefits, but with others it will not. It’s important to understand the difference in how the reductions operate and how they may affect the care benefits (particularly at a time when they may be needed most).
Question #6: What happens if a policyholder doesn’t want to pay for coverage anymore?
Some policies may include cash value that can fund the policy for a period after payments stop (or be taken as cash if the coverage is no longer needed). With other policies, you may be able to maintain a level of coverage even after you stop paying premiums. Be sure to ask what that
looks like and what options are available.
The rise in the need for long-term care means that, for many, care benefits take on even greater importance. For them, the care benefits are the most important part of the hybrid policy, so make sure to ask the questions below.
buying coverage for the long-term care benefit, what options are available to maximize care protection?
Question #10: Will the policyholder be able to collect long-term care benefits up to the full face amount of the policy?
As addressed in Question #5, some hybrid products have a death benefit that reduces
Question #7: What kind of long-term care benefits are available?
Different clients will have different care needs. Are benefits available for professional care only? Or can your client receive benefits for family caregiving as well? Look carefully at the costs of care and who may be most likely to be the care provider.
Question #8: Is permanency a requirement?
Benefits covering care can take various forms — each with different pros and cons. One of the more common areas of confusion is the question of permanency when it comes specifically to chronic care benefits. These products may require that the policyholder’s need for care be permanent before they’ll pay benefits. This may not always be the best fit, particularly if you’re dealing with a younger demographic. It’s possible they may go on long-term care due to sickness or injury from which they expect to recover.
Question #9: Can you extend care benefits?
Features may be available to extend the amount of care benefits available to policyholders. With many policyholders
at some point during the life of the policy. Depending on the product design, the care benefit may or may not reduce when the death benefit reduces. Other products may pay a discounted care benefit, meaning that the death benefit will be reduced by a greater amount than the care benefit collected. It’s important to know how the product will function so there are no surprises when your client collects care benefits.
With a growing need for care and a growing focus on hybrid life and care solutions, the care conversation is more important than ever. These questions can help you begin to determine the right products for your clients, but they are by no means exhaustive. Your best bet may be talking to a sales representative who you trust, get to know them and their products, think carefully about your clients’ needs and don’t be afraid to make your rep squirm a little bit with these tough questions.
A three-year, impressive lob bying effort is paying off as best-interest annuity sales rules inch closer to full adoption in all 50 states.
As this issue went to press, California legislators neared passage of an annuity sales rule based on the best-interest model law put forth by the National Association of Insurance Commissioners.
California would be the 40th state to adopt the best-interest standard based on the NAIC model law.
After months of discussion with the office of state Sen. Bill Dodd (D), who spon sored the annuity sales bill, the Independent Insurance Agents and Brokers of California and the National Association of Insurance and Financial Advisors agreed to support the bill.
The trade groups agreed on “enhanced training” for agents who sell more complex products, the groups said.
Lincoln led them to expect the consistent 6% gains that illustrations showed.
previous offers, a 35% premium on American Equity’s stock price when it was announced in late June. American Equity stock shot up on the takeover news being first reported by Bloomberg. American Equity’s board was reviewing the proposal with advisors as this issue went to press.
A spinoff of Canadian private equity firm Brookfield Asset Management, Bermuda-based Brookfield Re is the latest equity-backed investor to bet they can convert long-term retirement insurance contracts into big profits.
A Texas judge ordered Lincoln Financial and nine plaintiffs suing over fixed indexed annuity performance to mediate the dispute.
U.S. District Judge Ed Kinkeade closed the case until he rules on motions to dismiss. “The parties shall mediate this case by April 5, 2024,” Kinkeade wrote.
The nine plaintiffs — including an ex-Lincoln agent — allege that the insurer misrepresented the potential returns from its OptiBlend FIA. They seek class-action status in a lawsuit filed in the Northern District of Texas.
Former agent Henry Morgan and eight other plaintiffs, all Morgan’s clients, signed FIA contracts in February 2020, court documents say. Plaintiffs say
Lincoln countered by noting the disclosures signed by the plaintiffs spelled out the risks and the potential for zero returns.
A fraud case against a Massachusetts advisor may hinge on what hat he was wearing when he sold millions of annuities.
Brookfield Reinsurance executives say FIA sales will continue without disruption after its acquisition of American Equity.
Brookfield is buying all the American Equity shares it doesn’t already own for $55 apiece, a transaction valued at $4.3 billion. Several suitors attempted to acquire American Equity in recent years, including a takeover bid that led to a partnership with Brookfield.
The Brookfield offer is well above
On March 17, the Securities and Exchange Commission filed charges against Jeffrey Cutter and his advisory firm, Cutter Financial Group, for “recommending that their advisory clients invest in insurance products that paid Cutter a substantial upfront commission without adequately disclosing Cutter’s and CFG’s financial incentive to sell the products.”
Starting in 2014, Cutter generated more than $9.3 million in commissions from the sale of 580 annuities to his investment advisory clients, the SEC said.
Cutter is both an insurance agent and a registered investment advisor. According to the SEC complaint, Cutter earned 7%8% commissions on annuity sales as an agent, compared to 1.5%-2% fees while managing assets as a fiduciary advisor.
“Cutter and CFG also failed to disclose the free marketing services and payments of more than $1.1 million that Cutter received from marketing firms in exchange for peddling annuities to his clients,” the SEC complaint reads.
I don’t think they can do it that quickly.Brad Campbell, partner at Faegre Drinker, on the Labor Department’s goal to publish a fiduciary rule in August.
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Nearly two-thirds of workers feel stressed about preparing for retirement.
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Consumers are seeking annuities as part of a holistic investment portfolio that offers them upside potential while guarding against market volatility. But they don’t often know how to articulate that to their advisors, leading to a gap that can be bridged by the right conversation.
That was the word from Adam Rivituso, director of insurance and sub-advisory with Invesco Retail Retirement, who presented ways to have a better annuity conversation in a recent webinar for the National Association for Fixed Annuities.
“People are driven by emotions and language,” Rivituso said. “Facts and figures are important. But when you make big decisions in life, you’re typically not driven by facts and figures — you’re driven by the emotions of the experience.”
Rivituso said the goal is to help advisors have clear, concise and compelling discussions with their clients about income plans with protected lifetime income.
Consumers know they need lifetime income in retirement, and they believe lifetime income is valuable — yet financial professionals are reluctant to discuss lifetime income, Rivituso said. He pointed to a 2018 Guaranteed Lifetime Income Survey conducted by Greenwald and CANNEX that showed:
» 70% of investors think financial professionals have a responsibility to present products that provide guaranteed lifetime income.
» 73% of investors perceive guaranteed lifetime income as valuable.
» 42% of financial professionals often or always recommend annuities as part of retirement plans.
If your financial professional recommended you put [a portion of] your portfolio into a single, well-diversified fund that seeks to maximize the potential for growth while minimizing your downside risk , would you be likely or unlikely to do it? LIKELY 90% UNLIKELY 10%
When advisors recognize the opportunity that exists to present annuities as a solution, and when they acknowledge clients’ emotions surrounding the need for lifetime income, “they become more than just a money manager,” Rivituso said.
Rivituso said, “it’s not what you say, it’s what they hear.” He described the four words that drive a better conversation about annuities.
1. Positive. Clients have become more worried about minimizing losses and less concerned about maximizing gains, Rivituso said. He pointed to Invesco research that found in 2007, 63% of investors would rather see their money invested in something that maximizes gains, while 37% would rather invest in something that minimizes losses. By 2020, though, that gap narrowed, with 55% concerned about maximizing gains, while 45% wanted to minimize losses.
“What if you can marry the concept of maximizing gains while minimizing losses?” he asked, pointing to Invesco research that showed 85% of investors were most interested in an investment that could maximize their gains while protecting their assets.
“People are looking for upside potential with downside mitigation,” he said. “Lead
with the fact that what you offer minimizes the downside.”
When choosing investments, consumers believe it is most important that those investments are cost-efficient, high value and low cost, Rivituso said.
2. Plausible. A simple change of phrase can increase a client’s interest in an annuity, Rivituso said. He pointed to an Invesco survey that showed 50% of consumers responded positively when asked the following question: “If your financial professional recommended you put your portfolio into a single, well-diversified fund that seeks to maximize the potential for growth while minimizing your downside risk, how likely would you be to do it?”
But when that question was amended to ask consumers how likely they would be to follow that recommendation if the financial professional recommended they put a portion of their portfolio into that same fund, 90% of consumers responded that they would do it.
“Sometimes only a single word can change a no to a yes,” he said.
Consumers also told the Invesco researchers that they are more interested in an investment strategy that anticipates the market (88%) as opposed to a strategy that predicts the market (12%).
“You’re anticipating the risks that exist but not predicting they will happen,” Rivituso said.
3. Plainspoken. Clients often fall victim to what Rivituso called “TME,” or “too much education.”
“What clients tell us is, ‘We just want to know what it does,’ when discussing a product.”
In explaining “what it does” when discussing annuities with clients, he suggested advisors describe them as “designed to provide you with protected income for as long as you live for a better chance of enjoying a comfortable retirement.”
He also suggested describing annuities as moving a client from what they already
know to something that’s new to them.
“Annuities are a little like the home and auto insurance you already have. The difference is that annuities are designed to protect your savings.”
4. Personal. When Invesco asked investors the top services they want a financial professional to provide to them, the three most common answers were: creating a financial plan that fits life goals, finding the right investments and building a portfolio with complementary investments.
Using “you” and “your” in the annuity conversation can show clients how annuities can fit into a plan that helps them achieve their life goals. Rivituso provided a way to begin the conversation that addresses the “why now,” leads with the potential benefits and anchors the discussion to something the client already knows.
Begin with the client. “Because I am your financial professional, your goals are my priority, and I am constantly looking for ways to help you achieve long-term
financial security.”
Add the why now. “With that said, we’re seeing specific trends that I believe we should address, like market volatility, higher taxes and economic uncertainty.
So I’d like to discuss a strategy to address these trends for a portion of your portfolio.”
Emphasize three points, leading with the potential benefits. “The first potential benefit of this strategy is that you will protect the money that you have earned from market and economic uncertainty. The second potential benefit is that we could reduce your tax bill using a taxsmart and tax-efficient approach made possible with this type of investing. The third potential benefit is that we could gain additional choice and control over your portfolio through options that are not currently available to you.”
Anchor to the known. “Annuities as part of a plan may be a strategy. Annuities are a little like the home and auto insurance you already have. The difference is
that annuities are designed to protect your savings.”
Address costs. “It’s important to note that we’re smart with your money. What you pay matters to us. We feel that it is important for you to know exactly what you pay so there are no unexpected or unexplained costs. So we’ll discuss the transparent costs with this option”
Close. “I believe this move will keep you well positioned to accomplish your goals in today’s markets. If this is of interest to you, I recommend we schedule some time to discuss the specific details of our recommendation.”
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.
During its eight years in operation, Friday Health Plans grew quickly and now has fallen just as fast. The company announced it would cease operations by the end of the year in the seven states in which it does business.
“Friday Health Plans has grown incredibly quickly, which is a testament to the strength of our mission of delivering affordability, simplicity and outstanding customer service,” the company said on its website. “Unfortunately, Friday has been unable to scale our financial infrastructure to match the pace of our growth and secure the additional capital required to run our business. While we are deeply disappointed, we agree with the decision of our state regulators that it is necessary to wind down Friday’s business operations over time in accordance with the regulations in the states where we are operating.”
Friday stopped offering coverage in Texas and New Mexico in November amid concerns about the increasing costs of enrolling more members. North Carolina placed the company in receivership in June, while Colorado sought a rehabilitation order against the insurer.
The bad news is that the disjointed nature of our health care system has made it hard for consumers to even understand the financial side of their care.
Health insurers are also feeling the squeeze of higher median prices for new drugs as well as increasing prices on existing drugs.
Baby
are most motivated to see the doc
64% of baby boomers say they visit a doctor regularly. They are followed by:
• Generation X (45%)
• Millennials (35%)
• Generation Z (29%)
Adults are opting out of regular checkups, and the Aflac Wellness Matters Survey dug into some of the reasons why.
The survey found that 1 in 4 skip regular checkups because they are feeling healthy. Other reasons cited include conflicts with work hours (23%), not thinking about it (22%), dislike of going to the doctor (21%), insurance issues (21%), fear of hearing bad health news (18%), and time commitment to go to the doctor (16%).
About half of adults surveyed have avoided at least one common health screening, including tests for certain diseases and other exams. At the same time, 51% of respondents who have had cancer
DID YOU KNOW ?
said their diagnosis came as a result of a routine checkup or screening.
High inflation. Rising inflation. Workforce short ages. They all add up to drive health care costs to increase by a projected 7% next year, according to a PwC Health Research Institute report. The report said this increase is primarily influenced by changes in the price of medical products and services, prescription medications, and the number or intensity of services used.
Key drivers of the cost growth include new gene therapies — which can cost millions of dollars — and the weight-loss drug space as well as increased consolidation among hospitals and other health care facilities.
Some positive changes in the pharmaceutical market and care setting — including biosimilars coming to market and care shifting to outpatient settings — are expected to help counteract the cost pressures caused by inflation.
More than half (58%) of Americans who have health insurance said they had at least one problem with their coverage in the past year, KFF reported. These problems included such things as denied claims for care they thought was covered, difficulty finding an in-network doctor or other provider, and delays and denials of care that involved an insurer’s prior authorization. Health insurance woes are even more common among those with greater health care needs.
Two-thirds (67%) of consumers who rate their own health as fair or poor encountered a problem in the past year. About three-quarters (74%) of those who received mental health treatment in the past year reported a problem. More than three-quarters (78%) of those who received a lot of health care services (more than 10 provider visits in the past year) reported a problem.
At least 1.7M Americans rely on health sharing plans to pay for health care.— Tom Policelli, CEO, HPS/ PayMedix
boomers
Help your employer clients optimize the value of their benefits program.
By Denise StefanBenefits are a big investment by employers and should be an investment that helps attract new employees while creating value that drives employee satisfaction. Open enrollment each year offers the opportunity for employers to reinforce their culture and drive the value that employees take from their benefits.
So how do you help clients optimize the value of their benefits programs?
First off, today’s programs are not onesize-fits-all. It’s great to offer a diverse array of benefits because everyone has unique needs and not everyone values the same thing in a benefits offering. If a client hasn’t reviewed the demographics of their workforce or if they want to attract a certain demographic
of employees, now is the time to suggest changes to their benefits.
Despite all the changes we’ve seen in the past few years, employer-covered health care benefits remain the most important benefit to workers, according to a Forbes Advisor poll. But the needs of different generations are also driving new changes. The same study revealed that more than 30% of those between the ages of 18 and 41 are most concerned with having pet insurance as a benefit. Nearly 40% of workers aged 42 to 57 are more likely to prioritize mandatory paid time off, while more than 80% of those over age 42 are seeking roles that offer health insurance. The post-COVID-19 period has seen a big uptick in employees seeking additional resources for mental wellness and programs that focus on family needs such as child care or elder care benefits.
Second, what is equally as important to workers is how those benefits get communicated. This is where we often see
employers lose that opportunity to create value. Employers must think about what they want employees to “feel” about their benefits. The communication strategy should have a a look and feel similar to the rest of the company culture and communication strategy.
Pixar, for example, has a culture that focuses on storytelling, teamwork and learning, so their benefit strategy should have that storytelling approach so it reflects all the company values. Southwest Airlines values customer service and employee empowerment and a family-based approach to how it addresses its employees, and the benefits communication should have that same feel to it. What is your client’s company culture? What would make employees feel like they belong?
After an employer determines how they want that communication strategy to look and feel, the third step is to find the best way to organize the information so it focuses on the pieces of the benefit
offering that create the most value. Some companies want the investment they make through their contribution to their medical plan at the forefront of their communications because it is where they feel they provide the most value; so the contribution information the employer makes should be front and center.
In other cases, the support of family services, day care benefits, financial services and loan options for families might be the value that they are looking to drive, because it supports their focus on helping employees and their families so that information should be at the beginning of the communication.
Setting the right structure and organization for the benefit program is key in driving home the value of the benefit story.
Once the tone of the communication is set and the material is organized so that it tells the culture story, the fourth step is to find the best way employees will hear that story and to present it in a way that they will get the most value from it. The traditional way was through a packet of materials and fliers that employees could read through and pick out what was most important to them.
But today, no one wants a pile of paper, and clients want to control where the focus is placed, so it is centered on the areas that they think drive the value they are hoping to create. Much of today’s communication is obviously done online.
There are many options for creating open enrollment sites that have the look and feel of the company culture and communication strategy and that can be a launch pad for all the content the client
wants to include. There are companies that do custom communications. There are videos available from insurance companies and product vendors. There are infographics that talk through the more complex topics to help streamline them and make them easier to understand. All of these can be embedded into the open enrollment experience.
Finally, ask your clients what they really know about the value they’re getting from their benefits programs. When employees don’t participate or aren’t using benefits, we can’t blame employers for wondering whether they should cut back or make changes.
Brokers are in a unique position to help their clients define the return on investment of their benefits program because they see across a vast array of industries and cultures and guide their clients down new pathways. The simplest way to start is to help the client survey and track what the employees value in a benefits program. Add a series of questions to the onboarding process of new employees or during the exit interview of employees who are leaving.
This will help guide where an employer should make the investment and continue to invest. If paid time off is critical in the business, that requires a different investment than is needed for employees who value family or financial resources.
Once you’ve helped develop the program, the communication strategy and the best medium for engagement, measuring how the program performs is critical to ensure that you help your client continue to make the right investments.
The world will continue to change. Ensuring that your clients’ benefit investments change with it will ensure you maximize their return on investment, as well as the productivity and satisfaction of their employees, for years to come. You’ll maximize your value as a trusted advisor as well.
Denise Stefan is president, Engage Insurance. She may be contacted at denise.stefan@innfeedback.com.
Financial professionals are interested in recommending alternative investment vehicles for their clients but are concerned about the lack of liquidity and overall cost associated with those investment vehicles.
That was among the findings of the 2023 Trends in Investing survey by the Financial Planning Association and the JournalofFinancialPlanning, which looked at where investment professionals were looking for opportunities for their clients as the COVID-19 pandemic winds down.
The survey found some planners indicated a general lack of trust in the ability of alternative investments to meet client needs. In addition, more than 90% of investment professionals surveyed said they use or recommend exchange-traded funds for their clients, and nearly half said they plan to increase their usage over the next year.
Exchange-traded funds topped the list of investment vehicles that professionals said they use or recommend for their clients in 2023 as opposed to 2019. Ninety percent of those surveyed said they use or recommend ETFs in 2023 while 88% said the same in 2019. Private equity funds and structured products saw the biggest increases in use or recommendation between 2019 and 2023, the survey showed.
Younger generations struggle with accessing financial advice and they are often unsure about how to get it or if they can even afford it.
According to a recent intelliflo survey, millennials and Generation Z particularly want to talk about professional finance advice , with 84% of millennials and 82% of Gen Z saying there are financial topics they need advice on. However, despite this need for advice, 76% of Gen Z and 71% of millennials report that they have not sought it.
Why aren’t these young adults seeking help? According to the survey, 38% of Gen Z and 27% of millennials have not sought advice from a financial advisor when they need it because they are not sure where to find the right advisor for them, while 33% of Gen Z and 31% of millennials have not sought help because they don’t think they have enough money to hire a financial advisor.
Investment fraud has become the costliest type of fraud in the US with a record $3.82 billion stolen in 2022, up from $1.6 billion the previous year, according to Carlson Law, an investment fraud law firm.
The 10 states with the highest average losses per victim are: New Hampshire ($204,447), California ($176,463), Nebraska ($163,565), Wyoming ($161,472), Kansas ($156,790), Kentucky ($151,253), Montana
Small and midsize business owners are increasingly concerned about economic conditions in the U.S., with two-thirds of them expecting a recession in the next six months, according to a new Nationwide Retirement Institute survey. Of those business owners who expect a recession, 72% believe it will be similar to or even worse than the Great Recession of 2007-09.
71% of advisors expressed confidence in the ability of the traditional 60/40 stocks and bonds portfolio to perform similarly to how it has historically.
Source: Financial Planning Association
Only 19% of small-business owners and 39% of midsize business owners rate business conditions in the U.S. economy positively. Nearly two-thirds (64%) of small-business owners and half (50%) of midsize business owners cite inflation and rising prices as the most significant challenges facing their business over the next six months.
The good news is the survey shows that small and midsize business owners have a much rosier outlook for their own operations than they do for the U.S. economy overall. Of those surveyed, 74% of midsize and 55% of small-business owners rate conditions for their business as good or excellent.
($149,920), Oregon ($144,386), Arizona ($143,829) and South Dakota ($142,691).
Carlson Law said the unprecedented rise in fraud is due to crypto-investment scams, which stole a record $2.57 billion last year; traditional methods such as Ponzi and pyramid schemes, and artificial intelligence “deep fake videos” and “voice cloning,” which make you falsely believe you are investing with someone you know and trust.
Help clients envision the retirement they want and let them know what it will take to make it happen.
• John ShrewsburyAs financial advisors, we don’t have one-size-fitsall programs to offer our clients. Everyone who comes to us for advice has their own unique needs. They are aware they need a plan, but most have little idea where to start. It’s our role to ask questions, listen and make recommendations that could help our clients relax. We help them envision the retirement they want and let them know what it will take to make it happen.
Good advisors know investing does not take place in a vacuum. Worn-out investment advice might have sounded like this: “Let’s invest, watch what happens, and then figure out what you can spend in retirement.” Today, however, we can better determine what clients want to accomplish during retirement and structure assets to meet their goals.
According to Morningstar research, informed decision-making about retirement planning can increase retirement income by 31%. This doesn’t mean we must know everything our clients want to get out of retirement immediately; it simply means we must enable them to make informed decisions as their plans take shape.
I like to picture asset allocation in terms of floors and buckets. The “floor” is a client’s basic income needs, including food, clothing and insurance. While some clients can cover their basic needs with reliable income like Social Security and a pension, others can fill the gap with an annuity. If you don’t enable clients to establish a firm foundation of guaranteed income, their entire retirement plan will be shaky.
Once clients lay a solid floor, they can think of the rest of the plan in terms of three buckets: conservative, moderate and aggressive. Prompt them to fill the conservative bucket with short-term investments, such as treasury bills, to
allow spending for years. They can fill the moderate bucket with securities like real estate investment trusts or dividend exchange-traded funds to provide steady income and appreciation. Finally, clients can fill the aggressive bucket with stocks.
Annual gains from your clients’ moderate and aggressive buckets will enable them to replenish their conservative bucket. While some point out that this approach leaves potential gains on the table, clients can rest easy knowing they will have enough money during their golden years.
Giving up a career should be an informed decision. Your job is to help clients map out future goals and calculate whether they can afford them. When planning a realistic retirement, there are three primary factors to explore:
1. When people choose to retire.
2. When people choose to claim Social Security.
3. How much people choose to spend during retirement.
Before your clients leave their jobs, make sure they have the facts. Finding work for those closer to retirement age can be difficult. So if your clients discover they miss their jobs or need more money, jobs comparable to those they left behind will be scarce. Research from the Stanford Longevity Center says that clients who are 66 years old can actually increase their retirement income by over 7% by working just one more year.
Losing a full-time job also means losing benefits. Forbes estimates benefits value to be:
• $5,000 to $30,000 for health insurance.
• $500 to $1,500 for health savings accounts.
• 2% to 6% of a salary from matching retirement contributions.
• $1,500 to $4,500 for dental insurance.
• $2,000 to $5,000 for disability insurance.
• $250 to $500 for life insurance each year.
Your clients are eligible to claim Social Security benefits at age 62. Rather than joining as soon as possible, your clients should explore the best time to sign up based on potential insurance value and lifetime payout.
Spending levels during retirement become limited as soon as full-time work ends. For this reason, you must help clients understand the importance of paying down debt before they retire.
As soon as clients retire, everything they spend will come from either Social Security or their retirement portfolio, although Social Security alone is unlikely to meet living expenses, especially for those who claim early. The Senior Citizens League finds that while Social Security benefits have increased 55% over the past 21 years, cost-of-living expenses such as prescription drugs, Medicare premiums, homeowners insurance and food increased by 101.7%.
When clients rely on their 401(k), they must determine how much they can afford to withdraw. This amount is based on changing circumstances, such as how
the portfolio is currently invested, how volatile investment returns are, how long clients expect their retirement to last, and how much they will cut back on withdrawals if the market takes a dip.
Most of your clients will have heard of the 4% rule. In a nutshell, this rule recommends accessing 4% of your savings and investments during the first year of retirement and adding 2% to the total to account for inflation each year after. While this rule is easy to understand, a dynamic withdrawal strategy offers your clients the opportunity to change annual distributions based on market performance. There are many different types of dynamic withdrawal strategies, and each can be tailored to meet clients’ needs.
Essentially, investors on autopilot use the 4% rule until their assets are depleted. Informed investors revisit their retirement horizon, asset allocation and maximum withdrawal percentage every year to determine the optimal amount they can spend.
Where your clients place assets and how they withdraw them make a difference in the amount they have to spend during retirement. Instead of keeping the same asset allocation for tax-deferred and taxable accounts, your clients can learn the benefits of filling tax-deferred accounts with bonds and taxable accounts with stocks. Rather than withdrawing randomly from each, they can learn the importance of efficient withdrawal
sequencing by spending taxable accounts first, then tax-deferred accounts. What clients must know about planning for the unknown
A client’s retirement plan should answer their nagging “what if” questions. What if they live longer than expected? What if they encounter a serious health issue? What if the stock market tanks right after they leave their job?
Devoting some financial assets to guaranteed income products will relieve many of these concerns. Many people ignore annuities as a retirement income option because they gamble on whether they will live long enough to need them. A wiser course of action, however, is to allocate some of the portfolio to an income annuity at retirement while investing the same amount in stocks. This way, clients won’t need to worry about outliving their savings.
A realistic retirement plan is not just a group of investments that will make your clients money. Each plan is crafted to meet specific goals. It’s a collaboration between you and your client and is built on changing goals, needs and circumstances.
John Shrewsbury is co-owner of GenWealth Financial Advisors.
He may be contacted at john.shrewsbury@
innfeedback.com.Three industry experts share their thoughts on how to enhance this valuable skill.
By Ayo Mseka
Because most advisors know that networking is the key to attracting and retaining clients, many are on the lookout for steps they can take to enhance this valuable skill. Three industry experts share their networking tips for advisors.
Many people feel that traditional networking is “tired” and is probably not meeting their needs anymore, John Pojeta , vice president of business development with The PT Services Group, said.
“How many times have we gone to an event where one of two things has happened?” he asked. “First, we already know everyone in the room. Second,
Pojetawe may not know everyone, but we don’t come away with any useful new connections. I’d wager this happens too many times.”
A better way to approach networking, Pojeta said, is to focus on building a network of connectors.
“Think about where your clients spend money and what types of people could be helpful to them,” he said. For example, advisors should think of people like:
• CPAs.
• Attorneys.
• Real estate agents.
• Travel agents.
• Luxury and classic car salespeople.
• Art gallerists.
• Boat salespeople.
• Those who serve hobby enthusiasts like golf professionals, fishing experts, hunting guides and perhaps yacht captains, depending on your location.
Most advisors probably have existing mutual relationships with one or two CPAs
and attorneys, Pojeta pointed out, but they should consider casting a wider net.
“Expand your relationships to multiple people,” he said. For example, he added, “Connect with a variety of attorneys, each with different practice areas. When you’ve built a trusted web of professionals, you can then expand your role into that of a trusted advisor to your clients. When they are looking for an introduction or for a new relationship, you can recommend people in your web without hesitation.”
It also should go without saying that this web will help expand the advisor’s business. As those contacts connect others, they will be inclined to do the same for the advisor, he added.
For Troy Korsgaden , an insurance carrier consultant and principal of Korsgaden International, the Business Introduction Program is an effective strategy for networking with business owners and building relationships over time.
This program gives owners a chance to get to know the agent, while offering the agent an opportunity to fully understand owners’ needs. These are not sales meetings, Korsgaden pointed out. “They are brief, five-minute meetings for you to introduce yourself and your business,” he said.
“Start by committing to meet with four new business owners every day,” he continued. “Because the meetings are brief, they are easy to fit into your schedule. Plan on stopping at a different business on your way to work, on your way to lunch, on your way back from lunch and on your way home. Make it fun and memorable. Bring cookies or candy to leave for the staff.
“You may leave a business card or brochure, but don’t go through the brochure during the meeting. Your goal is to get to know the business owners and have them get to know you.”
Korsgaden shares a “talk path” he uses to introduce himself:
Hi, I’m Troy Korsgaden. I’m in the area getting to know people, and I thought I’d stop by and introduce myself. I didn’t come by to try to sell you anything.
I have no reason to believe you’re interested in buying insurance or changing insurance companies. But I believe that people do business with people they know and trust.
So, what I’d like to do, with your permission, is to stop by occasionally, and maybe drop off some candy or cookies.
And, if you ever think of changing insurance companies — whether it’s one year from now, five years from now or 10 years from now — I hope that you’ll think of me first. Would that be OK with you?
The next day, the agent should call to thank them and add them to their marketing and communications program. They should then schedule time on their calendar to stop by again in two weeks, on the same day and at the same time.
“Then follow up at other appropriate times. As they get to know you, they will feel comfortable asking about your business and the services you provide. When that happens, you can schedule an appointment for them to come into your office to review their needs and current coverage in more detail,” he said.
Agents should use a COI program as they network for clients. But rather than approaching COIs and immediately asking for referrals, they should think of these meetings as networking opportunities that will bring future referrals over time, advised Michelle Hubert, a Million Dollar Round Table qualifier with a track record of success in owning and
operating a financial services agency and coaching and developing leaders.
“Take time to get to know COIs and learn about their business,” she added. “Most people are happy to help once you’ve built a connection.”
Hubert shares the following approach she uses to introduce herself to new COIs:
Hello. My name is Michelle Hubert, and I’m with ABC Agency right here in Manhattan, Kansas. As a business owner in the community, I’ll be meeting with leaders and business owners over the coming year.
The purpose of the meeting is to learn about your professional journey, pick your brain and get your advice as I continue to build my business.
I promise I will not be asking for your business, only your professional insight and advice.
Would you be available for breakfast or lunch in the coming week?
“When you meet with a COI, always ask who else in the community you should talk to, and then schedule similar meetings with them,” Hubert said.
“Follow up every meeting with a handwritten thank-you note. Keep in touch with your COIs, and let them know of your progress — when you try out an idea they suggested or meet with another professional they recommended, for example. And always remember the golden rule of networking: Give value before you ask for value. Look for opportunities to support their organizations and business goals.”
Hubert added that if an agent commits to meeting with at least one COI each week, at the end of the year, they will have developed 52 new advocates for their business and gained some valuable business insights along the way.
Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.
remember the GOLDEN RULE of networking: Give value before you ask for value. Look for opportunities to support their organizations and business goals.
Data privacy laws weave a web of intrigue around the globe as insurance carriers and producer groups find themselves sifting through mountains of legislation searching for truth and guidance.
Cybersecurity risk. Data breaches. Identity theft. Malware. Are they the making of a suspenseful dramatic thriller like “The Firm,” or a boring chapter in your annual online anti-money laundering training requirement?
Akin to Tom Cruise’s harrowing journey in “The Firm,” when the law itself became his adversary, the twists and turns in data privacy law keep insurance producers and carriers on the edge of their seats.
In our era of interconnectedness, when data flows freely and information becomes a prized commodity, the financial and insurance sectors stand willing to safeguard sensitive and personal data. Yet, our current data privacy landscape is plagued by fragmentation and a lack of comprehensive regulation.
Although some states have taken steps to enact legislation, the absence of a unified federal framework leaves a void in addressing the unique challenges posed
by the Fourth Industrial Revolution. The current pace of innovation has outpaced our preparedness to tackle critical issues about data privacy.
Expert reviews of data privacy policies between the U.S. and nations including Australia, the European Union and Brazil reveal staggering inconsistencies across the legislative landscape. Some of the privacy policies we know today have been around since the 1970s.
causing Christie’s phone in Sydney to ring incessantly.
If you wonder how this affects you here in the U.S., we turn to current trackers, as reported by iapp.org. With more than 50 pieces of pending state legislation currently in review, only nine states have signed regulations that are currently enacted. These states are California, Colorado,
“We have to accept our regulatory system and structure and understand it to navigate towards our mutual big goals. We have to make certain the model law we are rolling out is not outdated; it needs to be iterative.”
Former Arizona Department of Insurance Director Evan Daniels“While the European Union’s General Data Protection Regulation serves as the gold standard among data privacy regulations, Brazil’s complex privacy laws remain a close competitor,” said Alec Christie of Clyde & Co., based in Sydney, Australia. “The less complex we make the rules, the better chance we have to apply them.”
As the race intensifies, Australia gears up for a modernization battle, unleashing 116 proposals for change and
Connecticut, Indiana, Iowa, Montana, Tennessee, Utah and Virginia, according to the U.S. State Privacy Legislation Tracker from iapp.org updated May 26.
While Australia, Brazil and the European Union contend with fair and proper client onboarding and off-boarding standards, the United States struggles to maintain consistency in standard consent to process sensitive data. Other countries require client-specific consent to process
their sensitive information.
In the U.S., the prevailing approach to data privacy revolves around the concept of opting. This principle puts the burden on individuals to actively seek out and request to be excluded from data collection and usage. This may seem like a reasonable option on the surface, but it creates several problems and much disparity when compared to the more stringent opt-in principle under the General Data Protection Regulation in the European Union.
A primary concern with the opt-out approach is that it assumes individuals have knowledge their data is being collected and processed. In reality, many consumers are unaware of the extent to which their personal information is collected, shared and monetized by various entities. This lack of awareness undermines the concept of informed consent and limits individuals’ ability to exercise control over their own data.
Moreover, the opt-out principle often leads to a situation where individuals are inundated with complex privacy policies and settings requiring significant effort and time to navigate. This puts an undue burden on consumers, who must wade through convoluted terms and conditions, locate the opt-out options, and manage their preferences across multiple platforms and services. As a result, individuals may unknowingly surrender their privacy rights or become frustrated with the cumbersome process, leading to a lack of trust in the industry.
In contrast, the GDPR’s opt-in principle, known as “explicit consent,” places the onus on organizations to obtain clear and affirmative consent from individuals before processing their personal data. This approach empowers individuals by ensuring they are actively involved in decision-making regarding the use of their information. It promotes transparency, accountability and a greater sense of control over personal data.
For firms and their producers undergoing business transformation efforts, this means that intermediaries or middlemen who have been hired to help optimize a practice, automate a process or even modernize a product platform have
access to extensive client data. For firms and their producers in the U.S., the current less-stringent privacy laws present a concerning reality. Under the current U.S. privacy landscape, intermediaries hired by insurance companies and firms can easily access vast amounts of client data without having robust safeguards in
The Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, addresses data privacy concerns in the insurance and financial services industry by requiring financial institutions to establish safeguards for protecting consumer information. Under the
The International Association of Privacy Professionals is a resource for professionals who want to develop and advance their careers by helping their organizations successfully manage these risks and protect their data. IAPP is the world’s largest and most comprehensive global information privacy community.
place. This poses significant challenges to maintaining the privacy and security of client information, as these intermediaries may not be held to the same stringent privacy standards as are the primary entities they work for.
Some of the states mentioned previously have data privacy laws that carry safety provisions. The California Consumer Privacy Act and the recently enacted California Privacy Rights Act include provisions related to de-identification. At the federal level, however, there is no overarching requirement for companies or intermediaries to de-identify personal client data. Again, the absence of comprehensive federal data privacy legislation leaves gaps in regulatory standards and best practices, leading to variations in data protection practices across industries and, more notably, the insurance space.
Given that the first American insurance company was established hundreds of years ago, it’s hard to imagine a time before the enactment of the Health Insurance Portability and Accountability Act of 1996, which established crucial privacy standards that continue to govern our clients’ data. HIPAA has played a pivotal role in raising awareness about data privacy and personal information in the insurance industry. HIPAA introduced comprehensive regulations establishing a critical foundation for safeguarding sensitive data.
act, institutions must develop privacy policies and provide customers with notice about how their information is collected, shared and protected.
There are obvious differences in the scope and application of privacy through HIPAA and GLB that primarily apply to health care providers, health plans, and the broader financial services and insurance industry. Their data privacy guidelines and disclosures focus on the protection of personal health data and consumer information sharing practices in these specific industries, while on the other hand, the stringency of GDPR extends its reach to any organization that processes personal data of individuals within the European Union, regardless of industry or sector. This broader scope ensures a more comprehensive and consistent approach to data privacy across various domains — including insurance.
In today’s rapidly evolving digital landscape, where data breaches and cyberthreats loom large, the National Association of Insurance Commissioners has stepped forward as a guiding force, shaping data privacy laws and regulations in the U.S. The patchwork nature of data privacy legislation in the U.S. poses significant challenges to offering sound guidance to businesses, organizations and communities. With varying laws and regulations at the federal, state and local levels, the absence of a comprehensive and harmonized framework hinders
the establishment of clear and consistent guidance on data privacy strategies.
Through its dedicated working groups and proactive initiatives, the NAIC has recognized the paramount importance of data privacy in the insurance industry and is working diligently to enhance cybersecurity practices and provide invaluable guidance to insurance carriers and producer groups.
On the matter of privacy protections as seen in the work of the H Committee, NAIC’s committee on innovation, cybersecurity and technology brings promise to a model law that will make its way to the state level for consideration. Former Arizona Department of Insurance Director Evan Daniels states, “We have to accept our regulatory system and structure and understand it to navigate towards our mutual big goals. We have to make certain the model law we are rolling out is not outdated; it needs to be iterative.”
As an attorney at Mitchell Sandler, Daniels expresses his concern over the sheer volume of moving legislation and the legal community’s inability to offer guidance on matters that are still unsettled. Daniels is a national leader on insurtech/fintech matters, advising clients on regulatory strategy in the U.S.
As producers continue to flourish in remote and hybrid work conditions, their ability to keep up with global standards establishing safer working conditions
becomes challenged. In the wake of the pandemic transition, a staggering 73% of remote workers were not provided with any cybersecurity guidance for their new work-from-home conditions.
Although larger corporations may deliver internal resources to guide their employees on data protocols, the everyday insurance producer working remotely is left in the dark. The guidance they seek is still scarce, leaving them unsure about where to obtain the necessary information to protect their clients’ data.
Independent insurance workers find themselves distanced from the resources and knowledge centers that corporate employees have access to, so the burden of securing their Wi-Fi, encrypting data, and upgrading their hardware and devices falls squarely on their shoulders.
Insurance carriers, represented by producers, may be inclined to operate under GDPR-like guidance. However, intermediaries such as broker general agencies and independent marketing organizations have their own privacy standards. These privacy standards become further watered down once intermediaries enter the relationship, as they are one step removed from the creation of the insurance product and the stringency with which the client-to-carrier data collection process operates on a day-to-day basis.
Although a standard business manual from brokers’ favorite BGA/IMO may appear comprehensive, it fails to address governance for data privacy. This can raise concerns for both the client/
insured and the broker/producer, which can expose the insurance carrier to unintended data privacy breaches.
Through collaborative efforts, shared expertise and a commitment to empowering insurance professionals, can we bridge the gap and ensure that every individual, regardless of their work environment, can protect themselves and their clients from the threat of data breaches and the inappropriate sharing of personal information? In the high-stakes world of data privacy, the line between protection and vulnerability is razor-thin.
The absence of a comprehensive federal data privacy law in the U.S. leaves organizations on a precarious edge. There is no explicit requirement for companies or intermediaries to de-identify personal client data, so it becomes crucial that organizations take a proactive approach to data privacy and consider implementing de-identification techniques and other security measures as part of their privacy strategy.
In the insurance space, where multiple parties are involved, nascent blockchain solutions have shown potential for safeguarding techniques. Despite its lack of adoption, this distributed ledger technology can store, encrypt and share personal client data within a network to address data privacy challenges. The transparency of these ledgers allows all parties across the value stream to access the necessary information, while ensuring confidentiality and anonymity.
As data privacy concerns intensify, we seek to grow closer to the truth through sound legislative guidance and trustworthy systems, which become paramount to earning the trust of future clients in the rapidly evolving insurtech space.
Sue Kuraja has been in the financial services industry for 20 years, with more than 15 years of experience in business development, scaling insurance and financial services product distribution. She is an avid researcher of emerging trends in the tech space and their ability to modernize the insurance industry. Sue is dedicated to transforming the insurance industry and growing tech-ed knowledge within the broader insurance marketplace. She may be contacted at sue.kuraja@innfeedback.com.
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Multiline customers tend to be loyal and informed consumers.
By Donna B. ChaffinMultiline agents can deliver the trifecta of products: auto, home and life insurance. They — as well as consumers — can benefit from doing so. A recent LIMRA study confirmed that multiline customers are more loyal and likely to recommend their insurance company than other customers (as reflected by a strong Net Promoter Score of 64). In comparison, customers who solely have auto insurance or a combination of auto and homeowners insurance had scores of 32 and 36, respectively.
rather than focusing on price. Only 12% of customers who have life coverage with their auto carrier say price was the top reason they initially chose the company for auto coverage, compared to 30% of those who do not have life insurance with the carrier.
» Self-reliant and independent. Multiline customers recognize the expertise of auto insurance agents in life insurance matters, and they value accessibility and convenience in their interactions with financial professionals and companies. But they also rely on their own knowledge and judgment when making financial decisions.
» Different demographically. Multiline customers tend to be younger and wealthier and possess a higher level
“I strongly or somewhat agree that agents who sell auto insurance are knowledgeable about life insurance.”
Have Life Insurance with Auto Carrier?
Results show that multiline customers are not just loyal because they also own life insurance; they tend to have a “stickier” nature to begin with. The research shows multiline customers are:
» Informed and discerning decision-makers. As with most of their other purchases, multiline customers do their research when selecting their auto insurance carrier. These customers prioritize factors such as the carrier’s reputation and having an accessible agent,
“I strongly or somewhat agree auto insurance companies should ask their customers about life insurance needs.”
Have Life Insurance with Auto Carrier?
life insurance. The findings also highlight the positive outcomes resulting from efforts to address this challenge. Awareness increases with the duration of the customer relationship, having someone they consider their personal auto agent and the frequency of contact.
Customers who remember their auto agent or a company representative talking to them about life insurance are more likely to have a positive perception of auto insurance agents’ competencies when it comes to life insurance. A majority believe auto insurers should be talking to their customers about their life insurance needs.
Half of customers who recall discussing life insurance say the agent initiated the conversation. The other half either reached out themselves or were contacted directly by the company. As you’d expect, motivated customers who initiated the conversation were more likely to purchase coverage (70%) compared with those who were contacted by an agent or the company, at 37% and 23%, respectively.
Customers initiating the conversation were often motivated by acute needs or life events. Nearly half of all customers who remembered discussing life insurance say the topic came up during their initial meeting with the company or agent. While conversations often began over the phone, customers who remember in-person contact were the most likely to buy.
of education compared with some other customer groups. Additionally, a significant proportion of multiline customers have children under 18, indicating a potential need for family-focused coverage such as life insurance.
LIMRA’s study also sheds light on some of the challenges multiline agents and carriers face, including customers’ lack of awareness about the life insurance offering. Where offered, less than half of those with auto insurance (45%) are aware that their carrier also sells
It’s important to understand the reasons customers choose to purchase or decline life insurance from their auto carrier after discussing the product. It’s not all about price. Company reputation, having the right product and the presence of a helpful local agent are mentioned most often. Conversely, customers who did not purchase life insurance from their auto carrier often cite reasons similar to those for not owning life insurance in general — lack of need or interest, timing and affordability.
Donna B. Chaffin is associate research director, distribution research, LIMRA. She may be contacted at donna.chaf-
fin@innfeedback.com.
federal government from proposing more draconian measures, and they provide groups like NAIFA with a foothold in their efforts to oppose unworkable proposals.
NAIFA has a strong working relationship with the NAIC, and the input of the agent-advisor community helped shape the annuity transactions model. We also worked with the SEC during the drafting and revision of Reg BI. The influence of agents and advisors helped remove some proposals that would have prevented financial professionals from working with many Main Street Americans. In the end, these smart regulations enhance consumer protections while allowing us to stay in business and retain a variety of business models that work well for our clients.
Best-interest
Alaska to Florida and from Michigan to Texas to adopt the model.
This is obviously good for our clients, but it also benefits us as advisors.
By Mike Struebing
Professional insurance and financial advisors work in their clients’ best interests. It’s fundamental to what we do. It’s a key part of the code of ethics
I agreed to abide by when I joined NAIFA. It’s also the law.
More than three-quarters of U.S. states, including my home state of Nebraska, have enacted laws or regulations based on the National Association of Insurance Commissioners model for annuity transactions, which is in accord with the Securities and Exchange Commission’s Regulation Best Interest. Both the NAIC model and Reg BI enforce a best-interest standard for financial transactions.
The widespread success of the NAIC model is largely due to the advocacy efforts of NAIFA and our friends at the American Council of Life Insurers. Grassroots efforts by agents and advisors have influenced policymakers from
There are two big reasons we have advocated in favor of these measures. First, it’s the right thing to do. Consumers need to know that the agents and advisors they work with have their interests at heart and are committed to their financial success. Bolstering consumer protections enhances the reputation of our industry.
Public policy such as the NAIC model and Reg BI — what NAIFA past President Robert Miller has often referred to as “smart regulation” — helps crystalize the professionalism of agents and advisors in the minds of consumers, while keeping potential bad apples at bay. Strong regulations supported by our industry help build trust.
Second, interstate models and well-conceived federal actions ensure that the rules are consistent nationwide. They prevent a mishmash of confusing and potentially contradictory regulations. They discourage states and the
I am proud of the advocacy work I have done over the course of my career on behalf of my business, clients and community. I know it makes a real difference. I know that advocating for laws and regulations that promote financial security and benefit consumers is another way I work in my clients’ best interests.
No one understands better than agents and advisors how laws and regulations can either improve or hinder our ability to serve our clients. Even well-meaning politicians — who are not elbow-deep in Main Street Americans’ finances and fully invested in their success on a daily basis — can’t be sure what unintended consequences their actions might cause. They can’t know unless we tell them.
That is why I support smart policies and why I stay politically involved.
standards are good for our clients and also benefit us as advisors.Mike Struebing, LUTCF, CLU, LACP, RICP, CLTC, from Omaha, Neb., is the vice chair of NAIFA’s National Grassroots Committee. He may be contacted at mike. struebing@innfeedback.com. 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.
Noone understands better than agents and advisors how laws and regulations can either improve or hinder our ability to serve our clients.
The financial security profession must focus on recruiting more women into this profession and making this profession worthy of the women who enter it.
By Suzy JacobsWomen are underrepresented in a number of professions. And research has shown there are many barriers that prevent women from establishing careers in male-dominated professions. Some examples of these barriers are being excluded from male-focused networks, stereotyping women as technically incompetent, perceiving women first and foremost in terms of sexuality and appearance — and these are just a few.
However, there are women who manage to forge successful careers over many years in work environments dominated by men, and that includes the financial security profession. Although women make up more than half the U.S. population, LIMRA reports only 26% in the career channel and 17% of independent advisors are women. Barron’s reports that women make up only 15%-20% of advisors in the broader financial services profession. But the winds of change are blowing, and a transformative movement is underway.
Thanks to the leadership of so many titans in our space and their partnership with Finseca, we are creating change quickly, and we expect it to shape our profession for generations to come. The efforts to elevate female financial security professionals wouldn’t be possible, though, without the perseverance and visionary leadership of female role models like the president and CEO of Allianz Life, Jasmine Jirele; the president and CEO of Thrivent, Teresa Rasmussen; and the retired president and CEO of John Hancock, Marianne Harrison, to name a few.
These women, and so many others, have prevailed and risen to become experts in their fields. They also recognize the immense value that diverse perspectives bring to the table, and they are taking proactive steps to dismantle barriers and foster an inclusive environment — something we need more of, not less.
Finseca’s Women’s Community is growing to be one of the largest groups of women in the profession. It’s a community built by women for women. Our speakers provide insights and share their expertise to help all women in this profession reach their maximum potential.
Our goal is to not only help women hone their skills but also to help facilitate connections needed to build their female networks and grow their influence. The financial security profession must focus on recruiting more women into this profession and making this profession worthy of the women who enter it.
Ultimately, if we’re to drive lasting change for women, we must lay the foundation for women to be successful in their careers, and in our world, that means expanding and growing their businesses. Intentionality and awareness will lead to a greater highlighting of success stories, break stereotypes and inspire the next generation of women.
We are living in an era of change, when success stories are emerging from every corner. Let’s celebrate the remarkable
women (and men who have helped them) who have shattered glass ceilings and defied expectations. By highlighting these stories, we break stereotypes and inspire the next generation of women to fearlessly pursue careers as financial security professionals. Remember, we are not just making history; we also are paving the way to a brighter future.
Again, the financial security profession is undergoing a profound transformation, driven by the commitment of industry leaders and organizations like mine. The barriers that have hindered the progress of women in our field are being dismantled, paving the way to greater gender diversity and inclusivity. By embracing change, challenging norms and nurturing the next generation, we are creating a profession that will thrive for many generations to come.
According to Carson Group’s 2022 State of the Women in Wealth Management Report, only 16.42% of respondents agreed with the statement “Industry organizations and firms effectively promote a career as a financial advisor as attractive to female students.” More than half (52.84%) of respondents flatly disagreed with the statement, indicating an industrywide self-awareness that the profession does a poor job promoting itself to new entrants — particularly young women.
Women, however, were significantly more pessimistic than men, with 57% strongly disagreeing or disagreeing with the statement above, as opposed to 39% of male respondents. So Finseca is committed to making that change, celebrating the progress we have made and continuing to work to shape a future when women in the financial security profession excel and flourish.
Creating an applicable financial plan requires clients to share sensitive information, which can make them feel vulnerable. That discomfort they feel can impact your advice — not getting a sense of who they are can make it difficult to understand what they need. I’ve found that sharing aspects of my own circumstances has helped put clients at ease and opened the door for a deeper relationship.
For example, most of my clients are single-by-choice, divorced or widowed women. I know how difficult it can be to open up about these topics, so I often share the story of my mom being unprepared for my father’s death and how that shaped my career today.
Establishing client relationships lays the groundwork for a long-term, mutually beneficial connection.
By Pamela J. SamsYou likely spend most of your days talking with clients. For a financial professional, it’s easy to get into the habit of approaching client meetings as another item on the to-do list.
Avoid the temptation to generalize about clients, and instead take the time to hold more personal, open conversations that will help build deeper connections and more trusting relationships.
As you work with clients daily, you may start to apply general rules of thumb to most of your clients. Remember that no
two clients are the same, regardless of their similarities.
You can miss important details about the client in front of you when you approach the client meeting with the idea that it will be like the last one. Be intentional about reviewing each client’s profile and listening to their needs so you’ll be more prepared to share outstanding advice down the line. To ensure a clear understanding of your clients’ needs, spend more time listening than doing anything else.
Give your clients the space to share as much information on their financial and personal backgrounds as they feel comfortable doing — the more details you can capture, the more fine-tuned your advice will be. For example, during initial client meetings, spend little to no time talking aside from introductions.
This will showcase your dedication to helping them receive tailored, best-inclass advice.
With this being such a relatable experience for many women I work with, it allows us to connect on a deeper level. Take some time to determine how you can relate or connect to clients on more than a surface level. Being a bit more vulnerable with them will help show that your main interest is to help them exceed their goals, not critique their past.
Establishing client relationships is far more than setting up meeting times and going over agenda items — it’s laying the groundwork for a long-term, mutually beneficial connection. Offering more openness to clients will showcase your dedication to their growth, setting both of you up for continued success.
Pamela J. Sams, CRPC, is the president of Jackson Sams Wealth Strategies and has been helping women improve their personal and financial wealth for more than 20 years. She is a 4-year MDRT member. She may be contacted at pamela.sams@innfeedback.com.
To ensure a clear understanding of your clients’ needs, spend more time listening than doing anything else.
Individuals annually earning in excess of $500,000 need disability benefits that can keep pace with their affluent lifestyle - they need High Limit Disability. The benefits of a recently-insured surgeon, making $1,100,000 consisted of:
⌂ $10,000/month Group LTD
⌂ $15,000/month Individual DI
⌂ $32,000/month High Limit DI
*Also available on a GSI basis for groups. Call (800) 345-8816 or visit www.piu.org for more information.
Occupation: Surgeon
Age: 51
Income: $1,100,000
Total Benefit: $57,000/month
CA License #: 0591207 When