InsuranceNewsNet Magazine | September 2023

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Solving the retirement planning puzzle — with Todd Taylor PAG E 12 Redefining life insurance for high-wealth clients PAG E 30 Avoid costly mistakes when dividing retirement assets in divorce PAG E 42
16 THIS ISSUE: LIFE INSURANCE AWARENESS MONTH Life Insurance • Health/Benefits Annuities • Financial Services SEPTEMBER 2023
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The Inclusive Power of Underwriting and Technology

How Legal & General America is breaking out of the mold to close the life insurance coverage gap, making it more inclusive and accessible through underwriting and technological innovations.

Underwriting to Close the Gap

When it rains it pours – at least that’s how Brian felt with his Type II diabetes diagnosis in the fall. Recently married, he and his wife Olivia were starting the process of merging their finances and now their life insurance plan seemed turned on its head.

They had heard stories from relatives about how this certain diagnosis would surely make his premium skyrocket. Olivia thought that can’t still be the case in 2023, so she reached out to their financial advisor to discuss options. After understanding the situation, the couple’s advisor suggested applying for life coverage through Legal & General America (LGA), knowing the company’s dedication to research around diabetes and underwriting guideline innovations could help minimize their cost of coverage.

Olivia breezed through LGA’s digital application process on her smart phone – no bloodwork, no exam – and walked away with an instant decision and policy digitally delivered the same day. Brian worked closely with their advisor and even with his recent diagnosis, still received a Standard NT rate given the rest of his medical history. With both policies, the couple was even surprised with lower-than-expected premiums by getting their policies in their early forties.

Turn to page 2 for more information about how underwriting and technological innovations are working together to make the life insurance experience more inclusive and accessible for applicants and advisors alike.

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Inclusion Through Underwriting Innovation

“Our accelerated underwriting program coupled with our ability to connect with electronic health records (EHRs) automate some of the more tedious application processes, freeing up time for applicant, advisor and underwriter,” said Zach Pugh, chief underwriter at Legal & General America. “Our underwriters can then spend their time on the more complex applications that require a more hands-on approach.”

This technological innovation is also driving inclusivity through increased accessibility and accelerated risk assessment. These lanes merge into LGA’s underwriting superhighway, guiding the expansion of coverage through the underwriting guidelines that LGA employs -- all lanes aiming toward closing common industry coverage gaps.

Insurance is rooted in analyzing risk and yet no two risks are created equal. More complicated diagnoses are too often labeled as “impaired risk” without a second look. The instant decision apps and websites popping up on every corner tend to live in black and white: approved or declined. And yet, humans aren’t as binary as computers try to make them. They’re complicated, loving, funny, messy at times and multifaceted.

With humans at the center, underwriting can change from a singular focal point and expand to see whole new vistas and opportunities to help protect brighter tomorrows for more families. In 2018, Legal & General America (LGA) saw an opportunity to shift its, and the industry’s, approach to underwriting through digital transformation. By implementing technology with effective and relevant solutions it developed tools that support seeing the larger picture, and people for who they are.

Five years later, LGA is using advanced data analytics and incorporating medical advancements into underwriting assessments, to provide a more inclusive approach to underwriting. Well-informed underwriting decisions, under the guidance of experienced underwriters, can easily be accelerated with the assistance of advanced technologies and data.

Per the Centers for Disease Control and Prevention, 37.3 million Americans – about 11% – have diabetes, historically a hurdle for life insurance applicants. Knowing that there are constant improvements to treatments and ways to manage diabetes, but LGA supports a competitive pricing and underwriting approach to provide people living with diabetes affordable insurance rates.

Today, the team at LGA is leaning on its unique ability to blend underwriting and pricing with medical research. For example, vice president and chief medical director Dr. Edgar Fernandez and his team committed to researching diabetes to better understand its impact on long-term mortality, giving LGA the ability to offer standard plus rates as the baseline for diabetics. By lowering the premium prices, the carrier is opening doors to help protect more families and businesses.

Zooming out, by covering more people with diabetes, LGA in turn covers more historically under or uninsured groups. People from the racial and ethnic backgrounds that are most prone to adult-onset diabetes were also most likely to fall into the life insurance coverage gap. According to data reported by the American Diabetes Association in 2019, 14.5% of diagnosed adults were American Indian/Alaskan natives, 12.1% were nonHispanic Black and 11.8% were of Hispanic descent. Factor in that 48% of Gen Z is non-white, according to Pew Research, tackling diabetes can close not only diagnosis gaps in coverage but racial and generational gaps as well.

The Life Insurance Issue • Special Sponsored Section 2 InsuranceNewsNet Magazine » September 2023

“While not headline news, diabetes is an epidemic,” said Dr. Fernandez. “We want to provide appropriate coverage with pricing that makes sense for them as individuals, not a diagnosis. It’s a growing number of people and while it makes sense from a business perspective, we’re focused on the fact that it’s the right thing to do and helps close a glaring chasm that’s existed in our industry for years.”

Many carriers have set schedules for reviewing underwriting guidelines, some as infrequently as twice a year. But medical breakthroughs, developments and regulations are on no one’s timeline. LGA is prioritizing underwriting innovation to write more policies and expand the coverage offered to people, which is why it adopted a best practice of not updating on a set schedule but as developments in the medical and insurance communities come to fruition.

According to data reported by the American Diabetes Association in 2019, 14.5% of diagnosed adults were American Indian/Alaskan natives, 12.1% were nonHispanic Black and 11.8% were of Hispanic descent.

“We keep up with the research and listening, but some of the best assets for evolving our underwriting standards come from our broker partners acting as eyes and ears,” Pugh said. “LGA is positioning itself to not only be nimble enough to react to changes but to proactively drive positive change as well.”

Inclusive life insurance requires simultaneous innovation, both in the underwriting standards and the technological accessibility of applications. Underwriters were pioneers driving digital change to speed up the entire application process for those looking at protecting their families. By introducing an online application process, more families can protect their loved ones. Since launching its digital experience, LGA has found that 90% of applications started online are actually completed.

The benefits expand to distribution partners and advisors as well. With the automated application process and digitization of more underwriting practices, they can devote more time to growing their client list, ultimately increasing their commissions. After all, the average time to get a policy commission was previously 40-50 days of work. That has been cut by more than half with LGA’s experience, seeing policies on average delivered in 15-20 days, making the digital experience one that’s not only convenient but efficient and effective toward bottom lines.

To ensure a seamless experience, advisors should set the right expectations with their clients. The LGA application provides clear steps on what the journey will entail for the clients and from there, the advisor can predict any information that may require a closer look. As carriers and advisors continue to collaborate and communicate clear underwriting requirements and appropriate disclosures on client details, life insurance gaps will continue to close.

“We are working across all channels to improve our lab-free/instant decision and bespoke-type products for distribution partners that make securing a policy as smooth as possible,” said Michelle Buswell, senior vice president and chief operating officer. “This comes not only in the form of our underwriting philosophy but also in how we approach our data, looking at and analyzing it in new, creative ways.”

When more lives are protected, more families and businesses can enjoy brighter tomorrows. Through constant digital innovation and inspired problem solving, LGA is thinking differently across the board, with underwriting helping lead the charge to a more inclusive approach to life insurance. That’s a future the entire industry can get behind.

Metric reported for full month July 2023. “Instant decision” is defined as total instant decisions as a percentage of total decisions from all business submitted through Horizon in July 2023.

Metrics reported YTD through July 2023. “Lab-free Decisions” is defined as total lab-free decisions as a percentage of total decisions from all business submitted through Horizon through July 2023. “Lab-free Decisions” percentage includes instant decisions. CN07262023-5

The Life Insurance Issue • Special Sponsored Section September 2023 » InsuranceNewsNet Magazine 3
With LGA, more than 75% of applicants can apply without an exam and approximately onethird of applicants even receive an instant decision.

Life insurance shows potential to solve growing LTC concerns

A growing number of Americans are concerned about long-term care. Could life insurance provide a solution?

12

20 Life Insurance Special Section: September Thought Leadership Series

IN THE FIELD

24 The wealth warrior

ANNUITY

34 Annuities can help manage income risks in retirement

There’s an art to managing risks, and guaranteed income products play a role.

HEALTH/BENEFITS

38 Client communication adds value for employers, workers

An effective communications strategy can boost worker enrollment and well-being.

ADVISORNEWS

42 Avoid costly mistakes when dividing retirement assets in divorce

Help all parties understand the financial and tax consequences of dividing retirement assets.

IN THE KNOW

12 Solving the retirement planning puzzle Todd Taylor, head of retail annuities for New York Life, calls retirement the most challenging “financial planning puzzle” consumers face. In this interview with Publisher Paul Feldman, Taylor describes how understanding consumer behavior is key to solving that puzzle.

29 Gen Z and the future of life insurance

By

Life insurers must focus on technology, flexibility and communication to attract Gen Z consumers.

44 The AI apocalypse, or another tech trend?

As the industry moves to a greater adoption of artificial intelligence, it must do so ethically.

The strategic use of life insurance as an additional asset class can benefit ultrawealthy clients in several ways.

INSURANCE & FINANCIAL MEDIA NE TWORK

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4 InsuranceNewsNet Magazine » September 2023
INTERVIEW
By
Sarah Tinkler wants to arm her clients with the knowledge they need to tame their money anxiety. LIFE
30 Redefining life insurance for high-wealth clients
InsuranceNewsNet.com/topics/magazine View and share the articles from this month’s issue IN THIS ISSUE online » read it
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16 SEPTEMBER 2023 » VOLUME 16, NUMBER 09 INSURANCE & FINANCIAL MEDIA NETWORK 150 Corporate Center Drive • Suite 200 • Camp Hill, PA 17011 717.441.9357 www.InsuranceNewsNet.com PUBLISHER
Feldman EDITOR-IN-CHIEF John Forcucci MANAGING EDITOR Susan Rupe SENIOR EDITOR John Hilton CREATIVE DIRECTOR Jacob Haas SENIOR CONTENT STRATEGIST Lori Fogle EMAIL & DIGITAL MARKETING SPECIALIST Megan Kofmehl TRAFFIC COORDINATOR Sorayah Talarek MEDIA OPERATIONS DIRECTOR Ashley McHugh NATIONAL SALES DIRECTOR Sarah Allewelt NATIONAL ACCOUNT DIRECTOR Brian Henderson NATIONAL ACCOUNT DIRECTOR Tobi Schneier DATABASE ADMINISTRATOR Sapana Shah STAFF ACCOUNTANT Katie Turner Copyright 2023 Insurance & Financial Media Network. All rights reserved. Reproduction or
Paul

SPEAKING MILLENNIAL

CONNECTING WITH THE NEXT GENERATION OF CLIENTS

There are 53 million Millennials and Gen-Zers (ages 18 to 42) in the U.S. today who need, or need more, life insurance. 1 And as LIMRA puts it, it’s imperative that life insurers adapt and reach them — but how?

Transamerica is looking at ways to serve this crucial market, which is why we collaborated with Erin Lowry, author of the four-part Broke Millennial series and trusted financial translator to Millennials and Gen-Zers around the country.

Erin’s been featured in The New York Times, Wall Street Journal, on CBS Sunday Morning, and on CNBC.

The pages that follow are filled with her insight and wisdom, geared specifically to help agents connect with this burgeoning market segment.

1 “2023 LIMRA Barometer Study,” LIMRA, 2023
Erin Lowry Author, Broke Millennial Series, Personal Finance Expert

WHAT THEY DON’T KNOW MAY THRILL THEM

A generation faced with unique financial challenges, many Millennials juggle a “where should my money go?” conundrum. Paying off student loans? Socking away for retirement? Buying a home to build equity? Life insurance isn’t likely at the top of the list — but that doesn’t make it any less important. Thirty-eight percent of surveyed Millennials believe a 20-year, $250,000 term policy for a healthy 30-year-old costs $1,000 or more per year. In reality, such a policy costs under $200 per year.1

Having recently purchased a policy, Lowry was pleasantly surprised at how simple the process was.

“I think many Millennials postpone life insurance because they believe it’s more expensive than it truly is. They need to know that waiting will only result in higher premiums.”

Lowry suggests leading the conversation with cost savings and peace of mind.

THE RIGHT QUESTIONS

Instead of relying on the typical “what will happen when you die?” tactic, try asking, “Did you know the younger you are, the less expensive life insurance is?”

Make it clear they could save thousands of dollars over the life of their policy by starting young.

2
“There are often missed opportunities to bring warmth into the conversation,” says Lowry. “If someone in your life depends on you — and it doesn’t have to be the typical spouse or child — you need life insurance.”
1 “2023 LIMRA Barometer Study,” LIMRA, 2023

SAY IT LIKE THIS …

We all know why people buy life insurance, but dwelling on the death part may not get much traction with younger generations. Education is key: Remind them of the full potential of life insurance — protecting what you’ve earned, growth potential, cash value, etc.

Lowry elaborates, stating today’s early-to-mid 30s are the mid-20s of the last generation. They arrive at milestones later in life, but if they procrastinate getting life insurance, it will only cost them more.

“Position it like this: ‘Hey, you’re going to end up a millionaire one day and that’s going to be great, but if something happens along the way, make sure your loved ones get what you worked so hard to build.’”

Regarding student loans, many private lenders still don’t discharge debt upon your passing.

“If your mom, dad, grandparent, or whoever co-signed your loan and you pass away, that debt falls on them. It feels good knowing you have at least enough coverage to offset that debt.”

3
“I think a good messaging plan comes down to two parts: (A), the younger you are the better your rates — and making sure they really understand how much they could save over the life of their policy, and (B), co-signed student loans.”

PRIORITIZING SOCIAL SKILLS

For Millennials and Gen-Z, it’s no secret that social is where it’s at. Lowry recalls shopping for her first policy, and how helpful it was seeing posts in her social feed from various providers sporting different benefits.

79%

Of Millennials and Gen-Zers seek out financial advice from social media.1 For a few ideas on how to connect with them, check out transamerica.com/social-media-university.

“The idea is to capture them before it’s too late. Keep it quick. Attention spans are dwindling every day. If you post an article about why it’s important to get protected, insert a few bullet points at the top that sum it up. Give them a reason to care — this is how much it saves people, this is how it can protect your family, here are some additional benefits, etc.”

"I would have engaged a lot if I saw a social media ad at age 29 that said, ‘Hey, did you know if you wait to the age of 30 to get a life insurance policy, you’re going to pay an extra $3,000 over the life of the policy than if you locked in at 29?’ Insights like that work … people love a deal.”

1 "Nearly 80% of Young Adults Get Financial Advice From This Surprising Place," Forbes Advisor, 2023

4
“It was great being served the exact information I needed. Not the traditional, `what will happen when you die?' tactic, but optimistic facts about, say, how affordable and flexible policies can be.”
“When it comes to your social media presence, your approach should be swift, to-the-point, and targeted,” says Lowry.

A CONSULTATIVE APPROACH

Lowry says planting the seed of “who depends on you?” can really get the gears turning. This can vary widely, especially across different communities and cultures. It should go beyond the typical framing of protecting one’s spouse and/or children.

A proper life insurance policy should feel tailor-fit to the client, their timeframe, and their needs.

“All of this should tie back to goal planning and goal setting. Does X policy make sense for your client at this time in their life?”

Bottom line

Engage with clients to forecast their vision of financial wellness throughout their life, then show them how the right product(s) can help get them there.

SAY IT LIKE THIS

5
“I think we really need to diversify who we’re targeting. Agents could be missing out on big opportunities.”
“Take the time to speak in a straightforward manner,” adds Lowry. “Cut the jargon and acronyms, use examples that are relatable to Millennials or Gen Z, ask them about their lifestyle, what their wants are, what their goals are.”

TURNING EDUCATION INTO RESULTS

“As I touched on before, prioritizing where money goes is big for Millennials,” says Lowry. “One way into the conversation could be helping these clients conceptualize what they are worth. Maybe not right now, but 20, 30, or 40 years down the road. There’s possibility there, aspirations to tap into. Why wouldn’t they want to protect what they’ve earned, the life they’ve built with loved ones?”

Lowry adds that it’s really important to synthesize information into the simplest possible answer.

“What’s really hard about education is truly meeting people where they are, because waiting for a prospect to reach the ‘I need a financial advisor’ stage is often too late. Many people are going to wait five or 10 years longer than they should, because in their head, this is something the older, more mature, more financially stable person does. A healthy financial future involves far more than investing.”

“I HAVE IT THROUGH WORK”

"When I ask friends if they’re protected, a shocking amount tell me they have life insurance through work (and believe that’s sufficient). I ask them what happens when they leave their job, and they rarely have an answer."

The key is connecting with them early. Millennials with health and age on their side can get better rates with an individual policy, and it won’t expire when they change jobs.

6

NOT (REALLY) A PRODUCT PITCH

Customers are becoming more savvy about traditional selling tactics, upselling, and how agents make their money in general.

are many ways in.”

For growth-oriented products, Lowry has some advice as well.

“Anything that sounds too good to be true, especially right now, makes people nervous. What’s needed for this segment is clear language about how IULs work. Sounds simple, but giving Millennial clients a clear understanding, demystifying the particulars, can make a product that was previously out of consideration a top contender.”

7
“I think there’s a clever way to upsell that doesn’t smell like a sales pitch a mile away. Build it around the ‘why.’ What do they want their future to look like? Are they aware of the accumulation potential of certain products? Are they aware of the tax advantages? There

SOLUTIONS FOR EVERY STAGE OF LIFE

From Gen Z to the Silent Generation, Transamerica offers the products, resources, and guidance to keep customers protected at every life stage. Creating opportunities to help your clients live their best lives is at the heart of what we do, and as their needs evolve, we’re here to help pave the way forward.

2974222 06/23 © 2023 Transamerica
insurance products are issued by Transamerica Life Insurance Company, Cedar Rapids, IA, or Transamerica Financial Life Insurance Company, Harrison, NY. Transamerica Financial Life Insurance Company is authorized to conduct business in New York. Transamerica Life Insurance Company is authorized to conduct business in all other states. All products may not be available in all jurisdictions. Visit: transamerica.com
Corporation. All Rights Reserved. Life
people live longer, they have more to cherish and more to protect. Our life insurance solutions are designed to help your clients achieve a lifetime of financial security, no matter their age or needs. From index universal life and term to final expense, our broad portfolio helps make it easy for clients to find their perfect fit. 3023927 © 2023 Transamerica Corporation. All Rights Reserved. Learn more about our life insurance solutions today. Visit: transamerica.com Life insurance products are issued by Transamerica Life Insurance Company, Cedar Rapids, IA, or Transamerica Financial Life Insurance Company, Harrison, NY. Transamerica Financial Life Insurance Company is authorized to conduct business in New York. Transamerica Life Insurance Company is authorized to conduct business in all other states. All products may not be available in all jurisdictions. 06/23
WITH YOU AT EVERY STEP As

Charting the course of life insurance S

eptember, of course, is Life Insurance Awareness Month. While this designation invites us to revisit the state of life insurance at this time every year, this year — more than most — warrants that attention.

COVID-19 brought the need and awareness of life insurance to a crescendo. However, that interest has waned over the past year or so. Life insurance premium rose 18% in 2021, both because of the pandemic and due to tax law changes allowing higher premium per dollar of

investments than as death protection. This investment focus, of course, means targeting more affluent consumers with higher-face-amount policies.

Rising interest rates have not helped life insurance in the same way they have helped other investment products, according to Wink’s Sheryl Moore.

“My take is that the life insurance products haven’t been able to take advantage of increased rates as much, just because they primarily use portfolio crediting rather than new money,” Moore explained.

tinues to evolve over the rest of this year.

Expanding InsuranceNewsNet’s online experience

As part of our continuing efforts to serve our readers both through this magazine and on InsuranceNewsNet.com, we recently introduced several new sections on our website that we believe will provide additional content useful to our readers.

First, we have created a Companies section, which provides the latest news about some of the most important companies in the insurance industry, as well as individual pages that highlight some of the companies.

Second, we have created an Earnings section, where you can easily find the latest quarterly earnings news from top insurance companies.

death benefit to qualify as life insurance — and it continued to rise 11% in the first half of 2022. In fact, the tax law changes spurred what LIMRA saw as mainly a one-time increase, and demand for life insurance may already have started its decline despite the rising numbers.

As we roll through 2023, we follow a multidecade decline in the number of families covered, which reached a high at 85.4% in 1971 and decreased to about 60% in 2022. Following three straight quarters of declining sales, life insurance started to make a recovery in the second quarter this year, with LIMRA reporting $4.04 billion in new premium, a 2% increase.

There are a couple of factors at play here. One is that a large portion of the country remains underserved when it comes to life insurance. The second is that insurance companies have started marketing their products more as

But there are bright spots. Indexed universal life, for example, continues to be very popular, holding 22% of the total individual market in 2022 — although regulators continue to monitor IUL illustrations.

Combination life insurance/long-term care products are also beginning to materialize. This is hardly surprising, given the great concerns about longevity and the need for long-term care, along with rising fears that retirement funds may be inadequate due to recent inflation and market volatility.

Finally, the annuity market has heated up to supernova level with the rise in interest rates, along with those concerns about meeting retirement needs. Annuities certainly have taken some of the funds that might have otherwise gone to life insurance premium.

With all these parts in motion, it will be

Finally, we have added a Video section, where we will produce and add videos to highlight important and newsworthy conversations in the industry. Recently, for example, we covered the National Association for Fixed Annuities’ Annuity Leadership Forum and produced nine video conversations with some of the luminaries attending. We will continue to produce videos to make it easier — and more engaging — for our audience to follow insurance industry news.

In addition to using the QR Codes, you can find these pages using the TOPICS navigation menu at the top of InsuranceNewsNet.com.

WELCOME LETTER FROM THE EDITOR
6 InsuranceNewsNet Magazine » September 2023
Insurance companies have started marketing their products more as investments than as death protection.

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12814 7.23S

What’s in the news on InsuranceNewsNet.com

Climate disasters are having a disastrous impact on the insurance business, an industry association welcomes a new leader, and auto insurance policyholders and repair experts express their anger and frustration over mounting claims.

Yellen warns of insurance ‘protection gap’ due to climate disasters

But clearly a top concern of the council is what it called “gaps” in the supervision and regulation of insurers and the potential for major disruptions of private insurance coverage in areas of the country particularly vulnerable to climate change impacts.

‘Climate-related risks’ cited in report

“All state insurance regulators should prioritize efforts to adapt their regulatory and supervisory tools to incorporate climate-related risks,” a June report from the Treasury’s Federal Insurance Office said. “The National Association of Insurance Commissioners and state insurance regulators should also prioritize the creation of new and effective climate-related risk tools and processes for use by state insurance regulators.”

In a meeting of the Financial Stability Oversight Council, its chairwoman, Treasury Secretary Janet Yellen, warned of a “protection gap” for Americans trying to buy insurance against property losses from climate-related disasters, and said just 60% of the $165 billion in economic losses from extreme weather were covered by insurance last year.

“American households are already seeing the impacts, even if their own homes have not been damaged,” Yellen said at the Washington, D.C., meeting. “As a result, more households are turning to

residual markets for coverage or are forgoing insurance entirely.”

The meeting was to tout the release of the council’s update report on climate-related financial risk, which said the council has made progress in advancing recommendations made in an earlier Climate Report in addressing capacity building, disclosure, data, and assessment and mitigation of risks.

The council is charged by statute with identifying risks to the country’s financial stability as well as promoting market discipline and responding to emerging threats to the country’s financial system.

Government officials are particularly worried about the recent insurance company withdrawals from areas of the country prone to weather-related catastrophes, like Florida, California and Louisiana.

“In addition to challenges to households, we must also better understand the implications of changes in property insurance for real estate markets and financial institutions that rely on insurers to help manage risks,” Yellen said.

Read the full story online: https://bit.ly/yellengap23

8 InsuranceNewsNet Magazine » September 2023
[Editor’s
Note: These are some of the major stories to which we are devoting ongoing coverage at InsuranceNewsNet.com.]
ICYMI IN CASE YOU MISSED IT
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.

NABIP’s new CEO wants ‘to impact health care delivery in a meaningful way’

Health care touches almost every aspect of life, and the new CEO for a health insurance brokers’ professional association wants her organization’s members “to impact health care delivery in a meaningful way.”

Jessica Brooks-Woods will assume her new role as CEO of the National Association of Benefits and Insurance Professionals in September. She takes the reins from Janet Trautwein, who will step down as CEO of the 100,000-member organization after serving in that capacity for 26 years.

Brooks-Woods has nearly 20 years of experience as a business leader and health equity expert. She founded the Executive Action and Response Network (EARN) and EARN Staffing Solutions, a full-service diversity, equity and inclusion-centered consulting and talent-placement firm that played a crucial role in fostering

diversity, equity and inclusion within the greater Pittsburgh business community.

She served as president and CEO of the Pittsburgh Business Group on Health from 2013 to 2022 and served as a board member of the Pennsylvania Health Insurance Exchange. She also founded U.S. Health Desk, a solution for patients who are facing potential harm or an adverse outcome due to actual or perceived discrimination, lack of consideration, or inadequate treatment.

Read the full story online: https://bit.ly/nabip2023

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 X @INNsusan.

insurance claims complaints through the roof as problems mount

Despite the image projected by one leading insurer in a popular advertising campaign, the vehicle damage claim process is not working.

Repair experts are frustrated, customers are angry and insurance adjusters are often missing altogether. The Washington Office of the Insurance Commissioner reports a historic volume of complaints since 2021. In April 2023, for example, the office received 467 complaints, up from a historic average of 287, a 63% increase.

The OIC held a public meeting to hear feedback on what isn’t working. According to the parade of speakers, not

much is working well.

“I know supply chain issues have caused some repair delays,” Washington Insurance Commissioner Mike Kreidler said. “But I’m especially concerned with the increase in consumer complaints about the claims experience that do not involve supply chain problem.”

Read the full story online: https://bit.ly/complaints23

September 2023 » InsuranceNewsNet Magazine 9 TOP PICKS FROM INSURANCENEWSNET.COM ICYMI
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.
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Short-term health plans subject to new rules

Short-term limited-duration health insurance plans are in the crosshairs as three federal agencies proposed rules to clamp down on the plans that some deride as “junk insurance.”

The Departments of Health and Human Services, Labor and the Treasury issued proposed rules to distinguish short-term plans and fixed indemnity plans from comprehensive health coverage. In addition, the Biden administration wants these plans to be limited to no more than four months.

Under the rules, short-term health plans would last for three months and can be renewed for only one more month. This would reverse a Trump administration rule that allowed short-term plans to last for up to a year and be renewed for up to three years. A 2016 rule under the Obama administration limited these plans to three months.

AMAZON ADDS VIDEO TELEMED VISITS TO ITS LINEUP

QUOTABLE

BANK REGULATORS RELEASE SWEEPING PLAN TO OVERHAUL CAPITAL REQUIREMENTS

U.S. regulators announced plans to impose even tighter capital rules on big banks, setting up a battle with the industry over whether the push for financial stability will make the country’s lenders less competitive.

The measures released by the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency would force lenders to thicken their cushions to absorb unexpected losses. Banks with at least $100 billion in assets would have to boost the amount of capital set aside by an estimated 16%. The eight largest banks face about a 19% increase, with lenders between $100 billion and $250 billion in assets seeing as little as 5% more, according to agency officials.

The reforms are tied to Basel III, an international overhaul that started in response to the financial crisis of 2008. The issue became more imperative this year with the failures of Silicon Valley Bank and Signature Bank in March, and First Republic Bank in May.

Is there anything Amazon doesn’t offer? The online retail juggernaut moved further into the health care realm with its announcement that customers can visit its virtual clinic around the clock through Amazon’s website or app.

The clinic, which doesn’t accept insurance, offers care for more than 30 common health conditions. Amazon said textbased consultations cost $35 on average while video visits cost $75.

Amazon also sells prescription drugs through its Amazon Pharmacy business. Earlier this year, it also closed a $3.9 billion acquisition of the membership-based primary care provider One Medical, which had about 815,000 customers and 214 medical offices in more than 20 markets.

HOSPITALS ASK CONGRESS — AGAIN — TO DELAY FUNDING CUTS

Unless Congress acts by October, the federal government will cut $8 billion from this year’s budget — then make the same cut each year for the next three years — for a Medicaid program intended to help safety-net facilities that serve a large share of Medicaid and uninsured patients. The amount budgeted

varies annually, though in 2021 the program’s spending totaled about $19 billion.

Since 2013, Congress has voted 13 times to delay these cuts, siding with hospitals over their claims that losing the money would hinder the delivery of care. Hospital industry representatives visited the Capitol earlier this year to ask Congress again to delay the funding cuts.

The Medicaid Disproportionate Share Hospital payments program has drawn criticism amid evidence that a substantial amount of its funding goes to hospitals that do not primarily cater to low-income patients. According to industry groups, more than 2,500 hospitals — about 40% of the total in the United States — get the payments.

The cuts are part of a deal brokered with the hospital industry 14 years ago while the Affordable Care Act continued to be debated in Washington. At the time, hospitals agreed to accept $155 billion in Medicare and Medicaid funding cuts over 10 years, assuming the legislation’s promise to insure more patients would improve their bottom lines. A portion of those cuts were to Medicaid DSH payments.

10 InsuranceNewsNet Magazine » September 2023 NEWSWIRES
YOU KNOW ?
DID
Source: Million Dollar Round Table
I think there’s a decent chance the Fed is going to pull off a soft landing where we get inflation under control without severely damaging the job market.
— Chris Gorman, KeyBank chairman and CEO
56% of Americans have a negative outlook on the economy for the coming year.
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An interview with Publisher Paul Feldman

TODD TAYLOR, head of New York Life’s retail annuities, calls retirement the most challenging “financial planning puzzle” consumers face. Understanding consumer behavior, he says, is key to solving that puzzle.

INTERVIEW 12 InsuranceNewsNet Magazine » September 2023

Todd Taylor, as head of New York Life’s retail annuities business, has helped shape the business for an industry leader that had more than $22 billion in sales in 2022. He believes being a mutual company has given New York Life an advantage over competitors in riding the recent annuity juggernaut.

He has spent about half his 15-year tenure at New York Life working in the annuity business, first in an analytics and strategy role and then eventually leading the business, which he took over two years ago. An actuary by training, he said he “grew up in the company.”

Always interested in personal finance, Taylor said he “fell in love with the intricacies of retirement planning. It’s one of the most challenging financial planning puzzles.”

In this interview with Publisher Paul Feldman, Taylor describes how annuities can answer the question of “How do we help Americans solve this really challenging personal finance problem?”

Paul Feldman: The annuity market has been booming. What are you seeing from your vantage point as the head of New York Life’s annuity business?

Todd Taylor: The past 18 months have been pretty wild in the annuity business. The combination of market volatility, rising interest rates and — probably most materially — the pullback in bond fund returns reminded people that the 60/40 portfolio wasn’t foolproof. It sent a wave of money moving into basically anything guaranteed — that includes fixed annuities or multiyear guaranteed annuities but also indexed annuities, basically anything that gives you a rate of return with some kind of guarantee.

And so, the industry is up. We hit $300 billion as an industry; we’ve been trending at $200 billion a year for most of the past 20 years. So, there’s definitely some increased excitement in the space. And I think people are coming back to the understanding that annuities add a lot of value in this environment. I’ll argue they actually add a lot of value in nearly any environment.

Some of the value that an annuity provides over alternative assets, both in terms of the quantifiable value but also some of the behavioral benefits of annuities, is

evergreen. I’m glad there’s a lot of interest in annuities, but still, depending on how you count it, there are $50 trillion to $80 trillion of personal financial assets out there, and we’re a $200 billion- or $300 billion-a-year market.

There’s a lot of green space for annuities to be adopted by more advisors, by more consumers. So last year certainly helped. But I hope this momentum will continue to build and we’ll be able to attract more customers to use the products.

Feldman: What is needed to attract more people to annuities?

Taylor: I think a couple of things are needed. First, I think that as an industry, we’ve become somewhat tripped up on how we fundamentally explain the values of annuities or even other insurance products. The reason these products are valuable in a portfolio is they’re able to take risks off the table or materially reduce risks that are very expensive to insure using traditional assets. A great example of this is if you want to build a stream of income throughout retirement.

economics, and I know that the optimal amount of time to trade in your 401(k) is probably never. But I still respond to the market and do things like trade in stocks and bonds, even though I know it’s suboptimal. That’s how most people are. We respond to what we see in the news.

A lot of research shows annuities not only provide real, quantifiable benefits but also help people make better decisions. The intrinsic value of the products, as well as what they can do in a portfolio, are things that we as an industry must continue to get more advisors to understand — and eventually reach consumers as well — so that this doesn’t become a one-year blip of $300 billion.

Feldman: The market has been crazy, and yet New York Life seems to stay on the top of the annuity sales charts. What is your secret to maintaining your leadership position in this industry?

Taylor: One of the reasons we’ve been at the top of the annuity industry for the past decade and longer ties back to our structure. We’re a mutual insurance

If you do that with a bond ladder, you have no idea when you’re going to die and how long you’re going to need that income. So you must be very conservative with that bond ladder to do that.

If you take that bond ladder and replace it with a single premium immediate annuity or any other guaranteed lifetime annuity, you can generate more income because you’ve offloaded that risk — that risk that you can’t hedge by yourself — to the insurance company. That really is a form of insurance.

Second, the presence of that insurance not only helps the portfolio in unique ways, but it also actually changes the way people behave.

An example of this is the ability to buy and hold in a portfolio. I have a degree in

company. Our goal is to be here for the long run. We’re owned by our policyholders. We don’t have shareholders, so our view is long term. We want to pay guarantees. It’s tied to our mission. We want to be there for the future, and that’s how we approach the business.

We sell a consistent set of products, and we consistently distribute it, and we consistently service it year after year after year. We may not always have the flashiest rate or every single new feature, but we’re going to be in the market year after year after year.

Our distributors have responded to that. They know New York Life’s going to be there through the ups and downs. That has been why we’ve been consistently at the top.

SOLVING THE RETIREMENT PLANNING PUZZLE — WITH TODD TAYLOR INTERVIEW September 2023 » InsuranceNewsNet Magazine 13
A lot of research shows annuities not only provide real, quantifiable benefits but also help people make better decisions as well.

Feldman: How do you see the macroeconomic environment affecting annuity sales in the future?

Taylor: I do my best not to try to predict any macroeconomic moves into the future, but I will say the biggest driver now is uncertainty. There’s a lot of macroeconomic uncertainty, and there are more Americans than ever before who are right before or right after the typical retirement age. With fewer people having pensions, all this uncertainty means they must figure out how to take their nest egg and convert it into income. The uncertainty highlights the value of the guarantees that we can offer as an industry.

Feldman: How do you see the potential fiduciary rulemaking impacting annuities in retirement?

Taylor: It’s a complex question. I think there has been a lot of regulation around fiduciary standards, and obviously some of this is still in flux. We’ve adjusted to this, and I think this has codified much of what our agents were already doing in the market. We feel strongly the value of proprietary distribution on offering a wide set of solutions and making sure consumers have all the information they need in terms of the availability of product and the decision-making process. So, regardless of which way the regulation goes, we feel confident that we are more than compliant with where that stands.

On the other hand, we also distribute through external distributors and the annuity industry. It’s well documented that in the wake of the 2016 Department of Labor rule, there was a lot of what I would call “consternation” in the industry that in some ways stalled some of the momentum around annuities.

I don’t think that means that annuities are incompatible with a fiduciary standard. In fact, I think the opposite. I think there are many advisors out there who aren’t considering annuities in a retirement plan, and whether they choose to include them in a plan or not, I think they should consider them. I think the fiduciary standards in general will benefit annuities, but there is a lot of regulatory-driven noise, which I think causes many distributors to focus on how they comply with it and in some ways stalls out success on

having planning conversations.

I think that our products have demonstrated value that should fit into a planning conversation, regardless of the agent’s or advisor’s registration status.

Feldman: There’s a lot happening right now around SECURE 2.0 — that it’s already boosting annuities, that it will continue to boost annuities, and there’s even talk about the SECURE Act 3.0. What are your thoughts on the SECURE Act?

Taylor: Both the SECURE Act and SECURE 2.0 were great examples of bipartisan legislation that moved a number of retirement goals forward in terms of access and being able to expand the amount of money people can save for

beneficial to the consumer. I’m thrilled with much of the work that was done in SECURE 2.0.

Feldman: A lot of people are talking about index products these days. How do these fit into New York Life’s annuity picture?

Taylor: We offer an index option within a variable annuity. So it’s not technically an index annuity. It’s basically a variable annuity in which you have sort of subaccount sleeves, like a traditional variable annuity and then an index sleeve. We launched this product, called IndexFlex, about a year and a half ago. It’s one of the most successful product launches in our history, and there are a couple differentiators in there.

retirement. Many of these things were aimed largely at the folks who don’t have access to a large company 401(k) plan. While I think that there’s room to grow in the future, there’s a lot of benefit that can be generated from what has been already produced.

As one example of this, there were changes in SECURE 2.0 to the rules around qualified longevity annuity contracts, so that if people put money into a QLAC, they can essentially defer all their required minimum distributions. Basically, their RMDs can be passed on to the future. This provides great value to the consumer. They’ve got a longevity hedge, it makes their planning much easier. It also it gives them sort of a tax benefit. I think SECURE 2.0 just basically changed some of the rules that simplified how that was done, but it’s a great example of aligning tax incentives with something that nearly every academic says is

The first is, on the index slide side, we guarantee the cap rate for the duration of the surrender charge. So if you buy a seven-year product, your cap rate is guaranteed. It’s not going to go up, it’s not going to go down. Again, that has a lot to do with our mutual structure, our view that we don’t want to put ourselves in a place where we have to game those rates.

We think it’s a simple story to tell a consumer: This is the rate you’re going to get. And because it’s in a VA, you can move the money. There are restrictions on this, but you can move the money back and forth. It enables you to create this hybrid design that effectively lets you dial your risk exposure up and down. If you want to take more risk on the equity side, you put more money in the subaccounts.

The index product is fundamentally a bond replacement. If you want more money on the bond side, you have something to protect you in a down market

14 InsuranceNewsNet Magazine » September 2023 INTERVIEW SOLVING THE RETIREMENT PLANNING PUZZLE — WITH TODD TAYLOR
Todd Taylor (second from left) often speaks on why annuities are the key to a secure retirement.

or protect you and provide that cap and floor profile. We’ve had a lot of success positioning this as a traditional index annuity while but competing in the registered index linked annuity space with this kind of hybrid design that enables you to dial your risk up and down.

Feldman: Is New York Life considering offering a RILA?

Taylor: Not in the immediate term. We view this product, IndexFlex, as our RILA, and we can demonstrate that the risk return profile from putting half your money in the index sleeve and half your money in the subaccounts compares favorably to a RILA. With RILAs, you have a band with large losses and large gains where you either give up the upside or you’re exposed to the downside. Our view is with a 50/50 allocation between indexed and subaccounts, you will do better than with a RILA in a really bad market or in a really strong market. On average, it sort of works out to the same return, but we think the consumer is better off with that protection on the downside and exposure to the upside.

Feldman: How do people better incorporate annuities in retirement planning strategies?

Taylor: A lot of research on the way that we’ve done financial planning in the past is based on assumptions of human behavior that aren’t correct. So we developed something called the Efficient Income Frontier, and I’ll use that as an example. EIF is predicated on this idea that you know what people’s spend rate is going to be in retirement. So, if you say you’ve got a 4% withdrawal rate, in line with the 4% rule, I can give you a pretty good idea — based on your age and your gender and your life expectancy outlook and your expectation of the market, what an optimal mix of stocks, bonds and annuities is for you. It’s simply a math problem.

A couple years ago, our public relations team asked people, “What’s a safe withdrawal rate in retirement?” Our hope was that they were going to say all kinds of crazy numbers. Not 4%, but 12% or 15% and whatever else. And they did say all kinds of crazy numbers. But then we also asked the retirees, “What are you actually

spending?” And the answer was mostly “We’re not withdrawing.” So, I don’t know what the safe withdrawal rate is, but it doesn’t matter because I’m actually living off of interest and dividends. Now, financial planning says that’s nonsense, you’re supposed to accumulate assets for you to spend down in retirement.

But what this highlighted is that many retirees, because of all the uncertainty — the market’s all over the place, interest rates are all over the place, we don’t know how long we’re going to live, we’re worried about the cost of long-term care, we’re worried about our roof falling in — people learn to systematically sort of self-insure their retirements and hold onto those assets. They basically just spend interest or dividends or the money that comes out of their pension or whatever else. And what that tells me is that we need to adjust our approach for retirement planning to meet that reality. It’s irrelevant to talk about what’s the optimal strategy for a 4% withdrawal rate if someone’s spending at 1%, and I think that’s where we’ve leaned in on some of the positioning of our annuities.

You can show that systematic underspending I described. So, if someone’s going to spend 1% a year — just their interest and dividends — what that means is they’re likely to have this large bequest left over for their heirs. The problem with that is most people say they don’t want to do that; they want to enjoy their retirements. They want to spend more, but they don’t know how to. The data shows that if you control for other factors, the presence of an annuity helps people spend more in retirement, which is a great behavioral benefit. It’s helping people enjoy their retirement savings, and that’s a behavioral benefit of an annuity that we haven’t historically focused on.

Feldman: New York Life is one of the few companies selling long-term care insurance. How do you view LTCi alongside annuities?

Taylor: I think the two products complement each other. We’ve been in the longterm care market for a long time. We believe in the value proposition. There are health care expenses in retirement. The cost of health care has become relatively predictable. What’s not predictable is

that shock event when you end up having to go to a nursing home or you need home health care.

That’s a great example of a situation when insurance is valuable. Long-term care is not free, there’s a cost to the product, but it does provide this material benefit for people who need access to those services later in life. The Employee Benefit Research Institute did a study a couple years ago, and they found that those who owned long-term care insurance versus those who didn’t spent something like 30% or 40% more in retirement.

They didn’t have any more money; they just chose to spend it because they knew they had this backstop of the long-term care policy, and that’s a real benefit. You can successfully enjoy your retirement. In my mind, it’s similar to an annuity. An annuity is fundamentally hedging against longevity. This is hedging against later-inlife health care expenses.

Feldman: You talk to a lot of advisors. What advice do you have for them?

Taylor: Bill Sharpe, the Nobel laureate, said something to the effect that “retirement planning is the most complicated problem in finance.” I think that’s true, and I think that’s hard for folks to handle on their own. It’s important for people to engage with advisors and get advice from a human being.

What I often tell agents and advisors is that we must think about incorporating investments and insurance solutions together. They work together quite well. An annuity is not the answer to every financial planning need, and not everyone needs an annuity. But I strongly believe that every financial advisor in this country who works with pre-retirees and retirees should be able to offer annuities in their product set and be able to discuss the pros and the cons of annuities. And it’s not as a one-off. It’s part of an overall solution.

I think there are too many professionals who operate largely in the insurance lane and too many who operate only in the investment lane. To offer true, holistic advice and guidance, you must operate in both. From my perspective, that’s what the best advisors do and that’s how they make the biggest positive impact for their clients.

September 2023 » InsuranceNewsNet Magazine 15 SOLVING THE RETIREMENT PLANNING PUZZLE — WITH TODD TAYLOR INTERVIEW

A growing number of Americans say they are concerned about long-term care options. Many of them are turning to life insurance products for LTC coverage.

16 InsuranceNewsNet Magazine » September 2023 COVER STORY

Life insurance is a versatile product that Americans use for protection, tax planning, a savings tool and many other important life planning options.

Of late, Americans are turning to life insurance to solve longterm care concerns as well.

While life insurance-LTC combo products have existed for years, recent activism on LTC issues is pushing these products to the forefront. To put it another way, life-LTC is now a concept agents and advisors need to be fully educated about and prepared to sell.

“One common concern among clients is the potential depletion of assets and the impact on their ability to leave an inheritance due to long-term care expenses,” said Todd E. Wolfe, senior insurance associate with Telemus Capital in Southfield, Mich. “However, by incorporating long-term care benefits into a life insurance policy, clients can address this concern effectively.”

An estimated 7 million to 8 million Americans have private long-term care insurance, which can be costly and generally requires applicants to pass a health screening. Many assume Medicare covers long-term care, but that’s not the case except for limited care for skilled nursing or rehabilitation. Medicaid requires applicants to have low income and spend down all life savings to $2,000 or less to qualify.

In 2022, combination products represented 20% of life insurance sales based on total premium, while their share of annualized premium was 22%, LIMRA reported.

Two societal trends are behind the big LTC sales push. The first is simple demographics; millions of aging baby boomers are in or approaching retirement with the confidence they can live at least a couple more decades.

Many of those Americans saw their parents retire without long-term care protection and want to dictate a different outcome for themselves. Approximately 70% of people who turn 65 today will require long-term care at some point, according to the U.S. Department of Health and Human Services.

Secondly, public policy officials are trying to head off future costs by making LTC a priority. Washington state passed the nation’s first public LTC benefit, WA

Cares Fund, to be paid by for a controversial tax.

Washington workers started paying into the WA Cares Fund at the start of July. Each worker contributes .58% of their total pay per paycheck. The result is a lifetime maximum benefit of $36,500, with annual increases based on inflation.

Product details

Life combo products have been around for more than 30 years. For most of that time, however, the majority of carriers preferred to rely on acceleration-only risk through chronic illness riders.

products that remain on the market are selling well but reflect the continued evolution of LTC insurance from its beginnings as a nursing home care product in the 1970s.

The desire for long-term care coverage is stronger than ever. LTC continues to skyrocket. According to Genworth, the national average cost for assisted living is $54,000 annually, home health aides cost $62,000 annually and nursing homes cost $108,000 annually.

LIMRA research finds that one in four consumers is extremely or very likely to consider a life combination product when

Long-term care insurance existed as its own category and proved very popular throughout the 1990s and early 2000s. As time went on, many of the assumptions made by insurers proved inaccurate. People lived longer. Quality of care and options increased as seniors looked to long-term care as a life extension. They did not lapse their policies at rates anywhere close to what actuaries had predicted.

“Traditional long-term care is notorious for drastically raising your premiums,” said Kevin Ross, senior managing director of Bridgeway Wealth Partners in New York City. “Many traditional LTC policyholders have had to reduce their policy’s benefits in order to afford the skyrocketing premium and prevent the policy from lapsing. Additionally, you could pay into a long-term policy for 20 or 30 years, die and never get any benefit from the policy.”

Many carriers have either left the LTC insurance business entirely or are seeking repeated rate hikes. Meanwhile, the

shopping for life insurance. The top reasons they give for considering life combination products are:

» The ability to choose whether they receive care at home or in a facility.

» Coverage for temporary illnesses/ conditions.

» The ability to use benefits to pay for home modifications or equipment that helps them stay at home.

A life policy with an LTC component is very often a better experience for clients, Ross said.

“You generally have a level premium with your policy and don’t have to worry about your annual premiums skyrocketing,” he explained. “Additionally, if you paid into the policy for many years and then died before needing any long-term care, since it’s a life insurance policy, you have a cost recovery mechanism built in. Your beneficiary will receive the policy’s

LIFE INSURANCE SHOWS POTENTIAL TO SOLVE GROWING LTC CONCERNS COVER STORY September 2023 » InsuranceNewsNet Magazine 17
Reality: Younger generations expect to work with a financial professional to buy life insurance
Source: 2023 Insurance Barometer Study, LIMRA and Life Happens

full death benefit, which includes all of the cash value.”

Canceling a traditional LTC policy means all the premiums paid in the past are gone. But with cash value life insurance with a long-term care rider, owners are entitled to the full cash surrender value.

“It is no wonder that more and more people are turning to these hybrid or combo products to meet their long-term care insurance needs,” Ross said.

Other options can work

A chronic illness rider is the closely related cousin of the LTC rider. But it is important for advisors and clients to know the differences.

LTC riders typically require owners to have specific long-term care needs, while

in cash value growth,” Gilbert said. “We were successful for many widows, and that added peace of mind for them. Today, we never illustrate a policy without chronic and terminal illness riders. It does not make sense not to.”

A new trend known as a critical illness accelerated death benefit is becoming popular, Gilbert said. This concept offers a negotiated early death benefit amount if the owner’s quality of life is impacted by illnesses such as major body burns, disabilities, cancers or heart attacks that create a loss of income or increased medical bills that could drain other savings.

“But unlike the terminal or chronic illness accelerated death benefits, these are negotiated settlements with the insurance carrier to get a percentage of your death

life insurance online

the country, including in California and New York, which are developing programs similar to WA Cares.

In California, legislation to create a longterm care task force passed in October 2019. A 15-member board is made up of various care providers, consumer advocates and one industry representative.

Work has progressed steadily toward a goal of producing a final recommendation by the end of 2023. Insurance Commissioner Ricardo Lara’s office cited opinion surveys in launching the task force.

Two-thirds of respondents in the research said that they are apprehensive about being able to afford long-term care. Sixty-three percent of respondents worry as much about paying for longterm care as they do about their future health care.

That recognition and desire for longterm care coverage are certain to drive up demand. So will simple demographics. According to Pew Research Center, the rate of retirement for baby boomers has accelerated since COVID-19 began. Nearly 29 million boomers retired in 2020, 3 million more than in 2019. Seventy-five million boomers are expected to retire by 2030.

Surveys show that most LTC insurance purchases are made in the years leading up to retirement.

critical or chronic illness riders might not. Long-term care riders might require the payout to be used specifically for long-term care, while critical and chronic illness rider payouts can usually be used however the owner wants.

Some of the riders allow owners to accelerate the entire death benefit, while other types of riders only permit acceleration, a fraction of the death benefit.

The growth of LTC and chronic illness riders with many different options makes it a lot easier for advisors to tailor coverage to a client’s specific needs, said Kelly Gilbert, fiduciary investment advisor at EFG Financial in Grand Rapids, Mich.

“We began helping existing clients reapply to see if they could add chronic illness riders to existing policies for virtually no extra cost except the reduction

benefit now and forfeit the full death benefit at passing,” Gilbert explained.

Fluctuating sales numbers

As much as any product, life-LTC combo sales were influenced by economic and political trends in recent years. In 2020, sales fell off as COVID-19 raged. LIMRA research showed that there were nearly 559,000 policies sold in 2021, up 37% compared with 2020 results.

The 2021 sales binge was driven by WA Cares, which required Washington residents to get LTC coverage or face the LTC tax. Sales especially soared within whole life and fixed universal life products, LIMRA pointed out.

Washington’s payroll deduction approach to long-term care funding is getting the attention of policymakers around

All these trends are only making the advisor a more important asset to clients. LTC insurance comes with a lot of different benefits, noted Yair Klyman of Klyman Financial in Manhattan, N.Y. — for example, whether a home health aide is covered and whether in-home care is covered.

In New York, Klyman frequently recommends Nationwide for their cash indemnity feature, allowing clients to receive benefits even if they choose to stay at home for care rather than opting for a nursing facility. Other insurers, like National Life Group and American National Insurance, provide life insurance policies with chronic illness coverage at no additional cost, he added.

“These riders serve as a vital safety net, ensuring financial security for individuals and their families during challenging times,” Klyman said.

COVER STORY LIFE INSURANCE SHOWS POTENTIAL TO SOLVE GROWING LTC CONCERNS 18 InsuranceNewsNet Magazine » September 2023
The Associated Press contributed to this report.
Younger generations say they would prefer to buy
Source: 2023 Insurance Barometer Study, LIMRA and Life Happens

LIMRA: Young people want life insurance, but aren’t buying it

The concept of life insurance sells itself and always has. Few Americans argue against the idea of setting aside a few dollars for protection against the financial consequences of an untimely death.

Converting that popular concept into a life insurance sale is where the difficulty comes in. It’s a difficulty many producers are currently having with younger Americans.

New LIMRA research shows nearly half of Gen Z adults and millennials say they plan to buy life insurance this year. How they say they want to purchase suggests the insurance industry will need to pivot to meet the expectations of these consumers.

According to results from the 2023 Insurance Barometer Study, conducted jointly by LIMRA and Life Happens, more younger adults say they would prefer to buy life insurance online rather than work with a financial professional. While interest in online buying has been growing over the past decade, this is the first time the preference to buy online was the top choice, LIMRA said.

That does not mean eliminating the financial professional, however.

“No doubt, younger generations are living online — on average, younger adults report spending at least five hours on their devices every day,” said Alison Salka, senior vice president and head of LIMRA Research. “While they want to research online, they recognize they may not be particularly knowledgeable about life insurance, so they want to talk to an expert when they make the final decision to purchase coverage, because it involves the financial security of their loved ones.”

Gen Zers and millennials have

accumulated less wealth than Gen Xers or baby boomers and are more likely to buy now and pay later. They also tend to be less optimistic than other groups about the possibility of owning a home.

They also went through the financial crisis and experienced COVID-19. In addition, Gen Zers and millennials feel more stressed than other groups about their finances, said John Carroll, senior vice president and head of insurance and annuities, U.S. and Canada, LIMRA and LOMA.

In general, Carroll pointed out, baby boomers have done OK and Gen Xers are doing pretty well. But young adults tend to worry more about their finances and about “things” in general and are also concerned about job security. To make things worse, social media, which the older groups did not have, is amplifying the bad news that is out there.

Despite these issues, life insurance sales broke records in 2021 and 2022. In fact, in 2021, life insurance experienced an 18% growth in premium sales. There was only a 1% growth rate last year. While this was a big drop, Carroll said, it was still another good year, and the results from recent months remain strong.

Despite this growth in sales, the gap in the number of young adults who say they need life insurance and those who actually own life insurance has been growing, Salka pointed out.

“We conduct the Insurance Barometer Study each year with Life Happens, and in general, the need gap has been growing, especially among younger groups,” Salka said.

Low buy-in rate

Only 40% of Gen Zers have life insurance. There are many reasons young adults are not buying life insurance or not buying more life insurance, Carroll said.

He cited five common reasons:

1. They think it’s too expensive. “We have a perception problem here,” he said.

2. No one has approached them about buying it.

3. They have other financial priorities.

4. They are not sure how much or what type to buy.

5. They have not gotten around to it.

To address these challenges, agents and advisors need to understand that many young adults are more diverse than other groups, and they are digitally savvy. They expect everything to be done online, Carroll said. So why not insurance?

And they have high expectations, with a need for personalization, speed, ease and access. They have a crowded “financial mindshare,” which can keep the subject of insurance from standing out. Their desire to act is strong, Carroll said, confusion is high, and most of them remain inactive.

Gen Zers and millennials are on all social media platforms, including LinkedIn, X (formerly Twitter), YouTube, Facebook and TikTok. As a result, advisors can’t pick just one platform to communicate with them, Carroll said. Instead, different platforms should be used.

Many advisors are already figuring this out. Although 48% of them are using social media to communicate with their clients and prospects, 63% expect to use social media for communications in just a couple of years.

Many young adults spend four hours a day online, Salka noted. “It is really where they are,” she said. Why such heavy usage? Sixty-six percent said that it is more convenient and it is easier and faster than other types of media.

But reality is different, Salka pointed out. When they are making a purchase, many still prefer the security and knowledge they get when talking to a person.

“People live their lives online but want to talk to human beings when they are ready to buy,” she pointed out.

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 X @INNJohnH.

September 2023 » InsuranceNewsNet Magazine 19 LIMRA: YOUNG PEOPLE WANT LIFE INSURANCE, BUT AREN’T BUYING IT COVER STORY

YOUR ANNUAL “AWARENESS” BOOSTER

In this year’s Life Insurance Awareness Month Thought Leadership Series, leaders throughout the industry offer perspective on the trending sales, strategies and products dominating an ever-changing life insurance marketplace.

INSIDE

Pioneering a tech-driven future for life insurance with Michael Konialian of Modern Life

PAGE 21

Getting rid of the guesswork: Advisors are increasing quoting accuracy with automation with Kevin Pohmer of Hexure

PAGE 22

Whole life insurance: Is simple really better? with OneAmerica

PAGE 23

SPECIAL SPONSORED SECTION

Pioneering a tech-driven future for life insurance

While life insurance is a crucial component of any financial plan, selling life insurance is complex and challenging. From tricky underwriting requirements to long health questionnaires, many obstacles can make the process frustrating and time-consuming.

What if there were a better way?

Michael Konialian, co-founder and CEO of Modern Life, was inspired to start the tech-enabled life insurance brokerage when confronted with the complexities of the application process himself. It propelled him to channel the expertise he’d honed to build and scale several insurtech businesses into transforming the life insurance industry.

Tech savvy meets industry wisdom

Konialian understood that serving insurance advisors effectively demanded more than technical proficiency. The advantage was in marrying easy-to-use technology, advanced data analytics and industry knowledge.

“My co-founder, Jack Arenas, and I bring a wealth of experience from successful tech startups. Our distribution leaders have an understanding of the market derived from 50 years collectively at the helm of prominent brokerages and carriers. With this fusion of skills, we can advocate for our advisors, ensuring our platform delivers unparalleled value and impact.”

The power of advanced technology

Modern Life’s technology empowers advisors to increase conversion and place policies faster, while elevating their client service.

“Tech has been considered a four-letter word in the life insurance industry, largely due to outdated, error-prone, difficult-to-use legacy systems,” says Konialian. “However, when technology is built with the advisor in mind, it augments what the user can do and is enjoyable to use.”

Seamless technology improves the client experience, according to Jared Levy, CFP®, co-founder at Brix Partners: “Embracing technology allows advisors to streamline the buying process, leveling up life insurance capabilities and client satisfaction. Modern Life does it best.”

Modern Life analyzes clients’ health data and other key factors to help find an optimal match, which advisors can use to personalize client offerings, boosting the chances of successful sales.

quotes to applications and policy statuses. The advice experience is also integrated; advisors can compare quotes and complete an electronic application using the technology.

The platform’s flexibility allows advisors to engage the client as it fits their workflow and client needs. For instance, advisors can share life quotes directly with clients in a responsive, custom-branded experience.

Harnessing artificial intelligence (AI) for life insurance

Among Modern Life’s standout features is its proprietary generative AI for life insurance, a powerful tool that helps advisors delve into underwriting issues, strategize advanced sales and better advise on client needs.

The system, built on GPT-4, has been trained using a large set of proprietary life insurance content and data. It outperforms stand-alone AI models on financial protection topics.

First-of-its-kind digital life insurance journey

An integrated and intuitive agency management system is at the core of the Modern Life platform. It provides advisors with a consolidated view of their cases — from case details and

Seizing the moment

Konialian notes that the most successful advisors within Modern Life leverage technology to streamline and scale their financial practice and grow their book of business, placing large and complex cases.

According to Scott DeSantis, CEO at Civic Financial, “Modern Life’s offering has been exceedingly helpful in streamlining the underwriting process and securing policies quickly.”

Reflecting on the company’s inception, Konialian says, “We launched Modern Life during the pandemic, when the life insurance industry was undergoing some of the most rapid changes in its 150-year history. This period of flux provided an opportunity to introduce modern solutions for today’s top-tier advisors, setting the stage for the industry’s digital evolution.”

Added DeSantis, “Modern Life is a tremendous value-add to our firm on both the front and back end.”

To learn more about partnering with Modern Life, visit

www.modernlife.com/driven.

September 2023 » InsuranceNewsNet Magazine 21
“We are builders of technology versus buyers and integrators of technology.” — Michael Konialian
The Life Insurance Issue • Special Sponsored Section September 2023 » InsuranceNewsNet Magazine 21
Michael Konialian Co-founder and CEO

Getting Rid of the Guesswork

Advisors are Increasing Quoting Accuracy with Automation

Whether you realize it or not, quoting accuracy greatly impacts your success as an advisor. In particular, you need to be aware of the pitfalls of quoting clients using the wrong health class. These are easy errors to make but can cost you time and sales, and — worst of all — harm your reputation.

Some quoting solutions include an automated health analyzer. This tool increases quoting accuracy. It allows you to produce quotes based on carrierspecific underwriting rules.

How does it work? And why does it matter so much to advisors?

First-Class Accuracy

The industry’s top solutions have health analyzer tools built in. Don’t underestimate the effect this can have on your sales. Hexure’s sales platform, for example, can improve quoting accuracy by as much as 60% for advisors who use the health analyzer tool.

The advisor inputs basic client information, such as height, weight and tobacco use. The quoting solution automatically selects the health class per carrier and returns quotes based on each carrier’s build charts.

Even calculations like BMI are calculated automatically and factored into quotes for carriers who require it.

The key feature here is the automated quoting specific to each carrier. Every carrier has unique criteria for what qualifies for a given classification. The client in front of you may get a standard policy for Carrier A but qualify for preferred status with Carrier B.

Why It Matters to You

A health analyzer tool allows you to better serve your client. If you manually select the health class, you could be screening out policies that are a better fit. By automating the health class, your clients never miss out on a product they would have found more value in. Automation gets rid of the guesswork.

Plus, you save time. Without this automation you have more manual work to do. To be thorough, you would need to chase down each carrier’s specific rules. In addition to stealing your time away from other tasks, this makes the client’s experience worse. It takes longer and feels like a lot more work.

Maintaining Order

Automated health analysis ensures clients never miss getting the best policy based on their health category.

But what about the reverse? What about the cases in which the client does not qualify for a product you mistakenly thought they did?

Health analyzers help here, too. All advisors have experienced the dreaded not-in-good-order (NIGO) application. NIGOs delay the process by days or even weeks. They result in frustrated

clients. NIGOs feel even worse when you tell your client they do not qualify for the policy you thought they did.

Solutions like Hexure’s quoting platform automate selecting the health class to prevent these errors. When you quote, you see the products the client qualifies for based on each carrier’s specified rules. All without having to remember build charts or take the time to research.

You no longer risk submitting business that will be NIGO due to health class errors. Preventing NIGOs shortens your sales cycles, which gives you time for more important tasks. It also improves your client relationships by meeting their expectations for a streamlined sales experience.

Wider Benefits

It is not just advisors who benefit from improved quoting accuracy. Distribution firms and carriers have just as much interest.

NIGOs are costly for everyone, including the distributor and carrier. All parties involved save time, money and resources with fewer NIGOs.

Automated health analysis makes advisors more efficient and clients happier. Everyone wins when sales cycles are shorter and clients are matched with the life insurance policy that best meets their needs.

Plus, carriers and distributors can embed Hexure’s quoting solution into their websites or other systems via API. For example, they might add this as a quick health check on a consumer website to help identify the correct risk class behind the scenes before quoting. Or on an agent portal or within other daily processes.

A health analyzer tool also increases advisor adoption of digital quoting and application platforms. It makes the solution more reliable and easier to use, which is exactly what advisors are looking for.

Your agency and industry partners play a key role in supporting you with technology solutions. As an advisor, it matters that distribution firms and carriers see the benefits of using health analysis tools. They have as much interest as you do in quoting accuracy and matching clients with the right products.

Hitting the Mark

In today’s fast-paced, consumer-driven marketplace, you need quoting accuracy. You have to find the best policy for your clients’ needs. And you need to get it right the first time.

Hexure’s sales platform includes automated health analysis so you can get rid of the guesswork. Our solution saves you time, reduces costly NIGOs and helps you find the perfect product for your clients.

To learn more about how you can increase quoting accuracy for faster, in-good-order sales, visit hexure.com.

22 InsuranceNewsNet Magazine » September 2023
The Life Insurance Issue • Special Sponsored Section 22 InsuranceNewsNet Magazine » September 2023
Kevin Pohmer Chief Product Officer Hexure

Whole life insurance: Is simple really better?

In an era when simplicity has become the buzzword, one could argue that this relentless pursuit of overly simplistic and basic life insurance product design might be stripping away essential nuances and options that may provide important value to the client.

OneAmerica® believes the insurance carrier’s role is to educate clients by clearly communicating the value of the product and its associated options. We should be removing complicated messages and misconceptions about the product for clients, not eliminating intricacies that make the product valuable. By building relationships and having trusted conversations about whole life insurance with your clients, you can tailor coverage to their unique goals and needs.

Decoding complexity

Adapting coverage to specific needs is effectively done via optional riders. These riders add versatility to whole life insurance. But they can sometimes make the products seem more complicated. However, instead of removing these options, we just need to explain them better. This is one of the ways financial professionals bring value to their clients.

The goal should be to maintain whole life’s valuable complexities while making our communication about them more accessible. One approach is to categorize the goals that riders help achieve.

customization options that whole life insurance can offer to align the policy with the individual client’s needs and financial goals. As a result, what might seem like a complex decision becomes a clear, guided process.

Leveraging the power of customization

Whole life insurance, known for its guaranteed death benefits, cash value growth and fixed premiums, provides a sturdy foundation. Yet the true potential is in the customization options available through optional riders. The key is to build a client’s financial future on the guarantees and leverage the flexibility of the non-guaranteed elements to tailor coverage to specific needs and circumstances.

Consider a client scenario in the context of “goal aligners.” Suppose a client has embarked on a high-intensity career path — perhaps in sales. They plan to go full throttle for the next 10 to 15 years, fully aware that sustaining this pace for 30 years could lead to burnout. Their strategy includes a peak earnings period, during which they intend to overfund their insurance. However, they also foresee a career transition, during which they will shift gears rather than maintain that breakneck speed for the next two to three decades.

In such cases, the goal isn’t always to align the coverage with a retirement date. Instead, it’s about understanding your clients’ premium goals and time horizons and aligning the policy design as closely as possible with those horizons. This could mean, for instance, explaining a policy this way: “By using riders, I’ve customized your policy design to plan for intentionally higher premiums during your peak earning years, with a target of reduced premium requirements as you get closer to retirement and no planned premiums after retirement.”

Clarifying complexity to deliver value

As our world accelerates, automates and streamlines, it’s tempting to simplify products to keep pace. Yet the value of an insurance company and the financial professionals it partners with lies in the ability to clarify complexities, not eliminate them. Clearly communicating concepts to the client shouldn’t come at the expense of flexibility and potential for personalization. It’s essential not to lose sight of the true objective: to offer nuanced, adaptable solutions that cater to the diverse needs of clients.

To learn more about the power and adaptability of OneAmerica’s whole life products, scan the QR code.

These categories allow you to clarify the unique benefits of each type of rider, which may enable clients to better understand their options. In some cases, a single rider may span multiple categories. An additional term life insurance rider, for example, is designed as a coverage enhancer, offering a boosted coverage amount for a designated period. Simultaneously, it can add flexibility to the policy, enabling policyholders to adjust their coverage to align with their changing needs and goals. This includes creating capacity to add more permanent whole life coverage beyond what was initially purchased.

By using this framework, you can collaborate with clients to make decisions that go beyond the core benefits of whole life insurance. This approach opens a conversation about the various

OneAmerica® is the marketing name for the companies of OneAmerica. Riders may be optional and carry an additional cost. The long-term advantage of a rider will vary with the terms of the benefit and the length of time the product is owned. As a result, in some circumstances, the cost of a rider may exceed the actual benefit paid under that rider. Guarantees are subject to the claims paying ability of the issuing insurance company.

September 2023 » InsuranceNewsNet Magazine 23
Goal aligners: Adjust elements of the policy’s design to better match a client’s time horizons. Flexibility creators: Change coverage or modify premiums as needs or circumstances change. Progress protectors: Help ensure goal achievement despite life’s uncertainties. Coverage enhancers: Boost protection against a specific type of risk over a specified time frame. Goal aligners Flexibility creators Progress protectors Coverage enhancers Paid-Up Additions X X X Term Life/Blending X X X Waiver of Premium X Guaranteed Insurability Options X X Children/Spouse/ Other Insured X X Accelerated Death Benefit X X
The Life Insurance Issue • Special Sponsored Section September 2023 » InsuranceNewsNet Magazine 23

THE Wealth Warrior

SARAH TINKLER provides advice to clients in a way that makes them feel safe and in charge of their financial futures.

Everyone takes a different approach to their finances, but Sarah Tinkler sees some people who have what she calls “a constant money anxiety animal sitting on their shoulders.”

“Their philosophy is, ‘Let’s just spend all our money today and enjoy life today. Because I have no clue what the future will look like,’” she said. “And those folks do live wonderful, fun lives. But they have a constant money anxiety animal sitting on their shoulders.”

Tinkler is a wealth management advisor with Warrioress Wealth in Denver, Colo. She is associated with Northwestern Mutual.

She said she believes her role is to empower clients to leash the money anxiety animal by providing them with the knowledge they need to move forward and protect their financial futures. “Our purpose is to step into being a warrioress to empower you to own your story, heal, get out of your own self-sabotaging way and attract your wildest dreams.

“By giving my clients knowledge, I can get them to the mindset where they realize, ‘Hey, we’re going to be OK,’” she said. “By helping them develop a strategy and keep with it little by little, year by year, they find that they’re actually in good shape financially. And I think this realization helps people enjoy today more.”

Tinkler fell in love with the insurance and financial services business after originally dreaming about living abroad and working in an embassy.

She graduated from Valparaiso University with a degree in political science and international relations. During her time in college, she lived in China and Mexico.

After graduation, she applied for various international jobs while preparing to take the law school entrance exam. But Tinkler’s life was changed by a chance meeting at her sister’s wedding. Tinkler met her sister’s financial advisor, and her career path was set.

the Fıeld A Visit With Agents of Change 24 InsuranceNewsNet Magazine » September 2023

“He introduced me to the folks in the Madison, Wis., office of his wealth management firm,” Tinkler recalled. “They were hiring, and I decided to say yes to that opportunity to give myself a little bit of financial comfort as well as the benefits package and health insurance while I was looking for what my next role would be.”

She started her career as an associate financial representative in the Middleton, Wis., office of Northwestern Mutual in 2006. It didn’t take her long to find her purpose in the industry.

“When I started, I was astonished that this industry even existed. I had no idea that people went to school to study finance. I had no idea that this is how people have solid houses, take great vacations and send their kids to college without debt. That this is how people retire comfortably. That this is how people give money philanthropically in a big way. I had no idea that this industry enabled people to do those things.”

Tinkler said one of her early goals as an advisor was to break down the barriers that keep consumers from obtaining professional advice.

“A big portion of the wealth gap is actually a knowledge gap or an access gap. When I found out that so much of this is learnable, I took my nerdy self to learn all the things I possibly could about money — how to grow your money, how to build wealth, how to take those lessons of the 1% and take those on a smaller scale to the average American.

“That’s how I fell in love with this career and this industry. And I didn’t look anywhere else ever again.”

Tinkler moved to Denver in 2010 as she continued her career with Northwestern Mutual. Her practice serves about 600 households in 43 states, conducting most client meetings via Zoom.

“We have a broad range of clients — from people in their 20s to people in their 80s,” she said. “If I had to make a generalization about the types of clients we serve, I would say we serve people who really want and crave an authentic connection and a shame-free, judgment-free space for their planning.”

About half of her clients are women, many of whom are recently widowed or divorced. Tinkler is a member of

the LGBTQ+ community and serves a number of clients from that community as well.

“We are bringing in and onboarding new clients on every side of the political spectrum and every side of the age demographic and from all parts of the country,” she said.

“I think the people who choose us as their advisor want someone who doesn’t mansplain to them. I think people feel that a female advisor is willing to do a better job of listening to them and will be more empathetic and less judgy. So I have that working for me.”

No matter what someone’s financial situation is, many people have some shame or embarrassment over their lack of understanding about money. Tinkler said she aims to put clients at ease and help them overcome their money shame by creating an environment she describes as “gentle, safe and empathetic.”

ask my LGBTQ+ clients and the planning conversations I have with them are just open-ended, gentle, inclusive and vulnerable. I allow my clients to be vulnerable with me, and I’m vulnerable back with them,” she said.

Although her LGBTQ+ clients have many of the same needs as the rest of her clients, Tinkler said her LGBTQ+ clients need something extra.

“I would say that my clients in the LGBTQ+ community have their central nervous systems just a little more exhausted from constantly needing to be safe in any setting that they’re in. They always have to scan their surroundings and be aware of their physical safety, their emotional safety, their energetic safety when they’re out in public.”

Tinkler has made her office a safe space for her LGBTQ+ clients.

“My clients see that my office is proud and decorated. There are flags. There’s a

“Even some high-income earners will tell me they feel embarrassed to say, ‘I have no idea what my compensation package details are. I have no idea how my stock options work. I have no idea about my 401(k); I just did what someone told me to do years ago.’ I think some affluent people are embarrassed to say they have no idea where their money goes every single month or what their cash flow is. They have no idea about various tax diversification strategies. I’m not going to sit there and be a ‘financial bro’ who asks condescending questions. I’m always going to phrase things in a very gentle and safe way, so that even the affluent feel no shame and no judgment in having conversations with us.”

Tinkler’s judgment-free approach to working with clients also applies to her work with LGBTQ+ clients.

“I think so many of the questions that I

sign that this is a safe place. I have drag queen artwork on the walls. It’s just a colorful, vibrant, open and welcoming space, as opposed to a sterile mahogany office, and I think it helps LGBTQ+ clients relax a little and feel safer.”

Tinkler said that when she talks to her LGBTQ+ clients about her wife, her world and her vulnerabilities in her practice, “it shows that I’m a safe place.”

In addition to Tinkler’s LGBTQ+ clients having different emotional needs than the rest of her clients, they have different financial needs as well.

“LGBTQ+ clients have higher housing costs. They have higher family-starting costs. They might be getting a later start in life with saving and investing. They need to have a greater financial cushion in the event of job discrimination or career discrimination. They need to have their estate-planning documents and

THE WEALTH WARRIOR — WITH SARAH TINKLER IN THE FIELD September 2023 » InsuranceNewsNet Magazine 25
“Our purpose is to step into being a warrioress to empower you to own your story, heal, get out of your own self-sabotaging way and attract your wildest dreams.”

the Fıeld A Visit With Agents of Change

1 After completion of tele-interview or digital part 2.

Features and availability may vary by state or by product.

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 these policies may contain restrictions, such as surrender periods. Policyholders could lose money in these products.

their beneficiary arrangements more buttoned up than other clients do. They also have more of a need for planning for longterm care and end-of-life care.”

Putting the pieces together

Tinkler said that many of her clients already have done “bits and pieces of financial planning on their own.” But they need her help to create an overarching financial plan that pulls those bits and pieces together.

“For example, a lot of people may have a high-yield savings account. They have a couple of old 401(k)s. Maybe they have some idea of what their current job’s benefit package looks like. Maybe they have a few accounts here or there. But they don’t know how everything plays together in the sandbox. They have no idea whether they’re on track to reach their goals. They don’t know at what age they can choose to stop working or what money they want coming in after tax from the day they retire until they take their last breath.”

Tinkler’s interest in helping others live a full life extends outside the financial services realm. She is a Forrest-inspired flow yoga instructor, certified personal trainer and life coach. She teaches yoga about six times a year at a retreat aimed at executive women.

“I also teach a workshop for successful women — entrepreneurs and executives — about remembering who you are,

remembering how fierce you are, remembering your sixth sense, remembering the intuition and the instincts that you have. Society tends to cause women to doubt their instincts and doubt their intuition.”

She is mentoring nine advisors and helping them to find solutions to the challenges they face.

“I think it is a really good coaching style to be curious, be gentle, to ask lots of hard, thought-provoking questions. To help someone wrestle with their own barriers, their own limiting beliefs, and then help them come up with things that feed their soul — things that they could be doing more of in their daily life — to feel more authentic and to feel more unapologetic.”

Tinkler attributes her success to her love of people.

“I love people, and I respect all cultures. I get along well with people from all walks of life. And I truly just want people who haven’t historically had access to good financial advice to have access to good financial advice.”

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 X @INNsusan.

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 its products.

Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its 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. This material may not be reproduced in any form where it would be accessible to the general public.

26 InsuranceNewsNet Magazine » September 2023
Sarah Tinkler is a member of the LGBTQ+ community and strives to make her practice a safe space for all.
securian.com 400 Robert Street North, St. Paul, MN 55101-2098 ©2023 Securian Financial Group, Inc. All rights reserved. F100818-3 7-2023 DOFU 4-2023 2718360 We know you like fast underwriting. Your clients will like it too. Get your clients the coverage they need quickly, easily and — perhaps most importantly in today’s world — remotely with WriteFit Underwriting™. • No medical • No hassle • No delays WriteFit Underwriting offers streamlined underwriting — no medical or blood tests — for a positive client experience. If your client qualifies, approval and policy issue can happen in as little as 24 hours.1 Visit securian.com/life-underwriting or scan the QR code to learn more

Life insurance premium rebounds in 2Q

After three consecutive quarters of declining premium growth, total U.S. life insurance new annualized premium bounced back in the second quarter. Premium in 2Q was $4.04 billion, a 2% increase over the prior year, according to LIMRA.

The growth in premium in the second quarter was coupled with an increase in the number of policies sold. Policy count rose 4% in the second quarter, compared with the prior year. This is the second consecutive quarter of policy sales growth. While new annualized premium fell 3% to $7.8 billion in the first six months of 2023, policy sales increased 4% over the same period in 2022.

Whole life and term new premium increased 6% over the prior year, leading overall growth. Whole life new premium jumped to $1.6 billion in the second quarter, marking the largest growth in premium since first quarter 2022. For the second consecutive quarter, term products recorded positive sales growth. Carriers were most likely to report an increase in consumer interest and a growing use of automated underwriting as reasons for the growth in 2023. Term life premium held 19% market share in the first six months of 2023.

WHY ISN’T GEN Z BUYING LIFE INSURANCE?

The 143 million members of Generation Z in the U.S. are the nation’s most educated and most ethnically and racially diverse demographic group. Nearly half of them say they need life insurance. But only about half are buying it. Why?

• 49% of Gen Z said they need life insurance

• 44% plan to buy it this year

Source: Life Barometer Study

At a LIMRA event, experts discussed some reasons the younger generation isn’t buying life insurance and how financial professionals can address these issues. For one thing, Gen Z is joining the workforce more slowly than other age groups.

Gen Zers think life insurance is too expensive and they have other financial priorities. They don’t know how much coverage to buy or what type to choose. They also report they “have not gotten around to it yet,” and no one has approached them about buying it.

CONNING SUBSIDIARY GETS NEW EUROPEAN OWNER

Cathay Life Insurance is selling its Conning insurance investments and

QUOTABLE

buy life insurance this year, how they say they want to purchase suggests the insurance industry will need to pivot to meet the expectations of these consumers.

DID YOU KNOW ?

research subsidiary based in Hartford, Conn., to an affiliate of Generali Group, an Italian company that is among the 10 largest underwriters globally. Cathay Life spent $240 million for Conning in 2015, with the Taiwan-based company tucking in multiple large acquisitions since then under the Conning flag.

Conning has been based in Hartford since its launch by William Smith Conning, initially as a general investment firm but with the company building an insurance industry focus starting in the 1950s.

Nearly half of Gen Zers and millennials say they expect to research online for life insurance but work with a financial professional to ultimately purchase coverage.

The company went public in 1997, then was acquired by MetLife in 2000, which flipped Conning the following year to Swiss Re. In 2009, Swiss Re sold Conning to the New York City-based private equity investor Aquiline Capital Partners. In 2011, Conning acquired Goodwin Capital Advisers from Phoenix Cos., which was sold in 2015 to Nassau Financial Group.

YOUNG ADULTS SEEK A DIFFERENT BUYING EXPERIENCE

Even though nearly half of millennial and Generation Z consumers said they plan to

The 2023 Life Insurance Barometer study showed that while interest in online buying has been growing over the past decade, this is the first time the preference to buy online was the top choice. The study also showed that younger people are most likely to turn to social media platforms like YouTube, TikTok and Instagram rather than financial company websites to get financial advice and information.

Younger consumers may be attracted to the convenience and ease of buying online, but they also recognize the value of working with a financial professional. Nearly half of Gen Zers and millennials say they expect to research online for life insurance but work with a financial professional to ultimately purchase coverage.

Source: LIMRA

28 InsuranceNewsNet Magazine » September 2023 LIFE WIRES
This is our future, and we are not going back to what it used to be.
John Carroll, senior vice president, LIMRA and LOMA
Indexed universal life premium represented 23% of the total U.S. premium sold year to date.
Z
LIFE
GEN
AND
INSURANCE

Gen Z and the future of life insurance

Most Gen Z adults are hesitant to purchase life insurance because they see it as either too expensive or too complicated.

Generation Z represents one of the largest demographics in the U.S. — more than 68 million. This makes them a huge target market for the life insurance industry. However, given that only 37% of Gen Z adults are predicted to have life insurance by 2025, it’s clear that there’s a huge gap in the market.

Most Gen Z adults are hesitant to purchase life insurance because they see it as either too expensive or too complicated. To rectify this, life insurance carriers must adapt to meet the needs and preferences of America’s youngest generation.

I believe the answer lies in streamlining the life insurance sign-up process and in providing the right sort of flexible policies that can entice Gen Z to buy coverage.

Faster underwriting

As digital natives, Gen Zers are comfortable with technology. For carriers, this means embracing the latest technologies to provide a more streamlined and userfriendly experience. Although a lot of progress has been made in this area over the past few years, I believe there is room for improvement.

For example, recent advances in artificial intelligence have many potential applications in the insurance industry, including AI-driven underwriting. Although it’s unlikely that underwriting will ever become fully automated, the latest AI algorithms can reduce the workload of human underwriters by automating the approval or rejection of applications that are within certain risk scores. This could significantly reduce the time required to underwrite a policy from weeks to just a few days. For a generation

famous for its short attention span, that’s a big selling point.

Another big development is the use of AI-powered chatbots. Although chatbots have been around for decades, the latest ones are on another level in terms of speed and intelligence. That said, I’d advise insurers to remain realistic about what these chatbots can do. They aren’t quite at a human level yet. But they can provide helpful advice for customers stuck on their applications or unsure about the most suitable policy for their needs.

Tailoring policies to entice Gen Z

One notable characteristic of Gen Zers is that they aren’t interested in remaining with the same employer for their entire career. Instead, they prefer to job-hop every two or three years, viewing this as a faster and more interesting way to move up the career ladder. This behavior tends to exasperate many employers, partly because it means that employer-tied benefits, typically the bread and butter of most benefits programs, don’t appeal to Gen Z workers.

The good news is that the benefits industry recognizes this and is adapting. Instead of offering employer-tied benefits, employers are now increasingly providing employees with lifestyle accounts. These accounts give employees more flexibility to choose whichever benefits they wish. Most importantly, the account and the benefits stay with the employee when they switch jobs, offering exactly the sort of flexibility that Gen Z wants.

For life insurers, this shift toward lifestyle benefits accounts is a huge win

since it makes an individual life insurance policy appeal more to a Gen Z worker. Carriers should aim to lock in new customers by emphasizing how customizable their policies are, as well as how comprehensive and easy they are to sign up for.

Talking about life insurance with Gen Z

Gen Z is a highly proactive generation that knows how to research. But Gen Zers have had little exposure to what life insurance is and how it works.

I’d be willing to bet most Gen Zers don’t know that a permanent life insurance policy can function as a tax-free savings account through its cash-value component. This sort of thing could be enticing to Gen Zers who are just getting started in their careers and need a secure way to build wealth. However, this must be communicated to them effectively.

Life insurers must focus on technology, flexibility and communication to attract Gen Z consumers. Technology ensures your application process is as hassle-free as possible. Flexibility caters to Gen Z’s need for customizable coverage options. Communication will help clear any roadblocks in the prospect’s mind. With any luck, these areas will allow carriers to bridge the coverage gap among Gen Z.

Bob Gaydos is the founder and CEO of Pendella. He may be contacted at bob.gaydos@ innfeedback.com.

September 2023 » InsuranceNewsNet Magazine 29
LIFE

Redefining life insurance for high-wealth clients

Life insurance can be an enhanced planning tool for meeting the unique needs of wealthy clients.

David was raised by his paternal grandmother near Birmingham in the English Midlands. She left him the equivalent of several million dollars when he was in his late twenties and by then a U.S. resident. Over time, he turned that inheritance into more than $200 million through smart investing and his success in the medical equipment field.

But David always regretted the bite that estate taxes and other costs had taken from his grandmother’s estate — an estate he believed was a monument to her hard work and prudence. He also remembered how she had struggled to balance her desire to give her only grandson a head start in life with month-to-month money worries brought about by that very preoccupation.

David was a U.S. resident by this time. He was determined to shelter his own three children from the loss and bother he had experienced as the heir to his grandmother’s estate while remaining free to enjoy his wealth without undue worry about the future.

Like many ultra-high net worth people,

David wanted a solution that would prevent a significant portion of his estate from being depleted by taxes. And although he could see the problem, clear answers seemed out of grasp — not just to him but also to the financial advisors he consulted over the years.

Until, that is, David met with an advisor who understood how insurance can provide powerful solutions in cases just like his.

A whole new world

Top financial advisors and registered investment advisors are reassessing their approach to insurance. They see insurance not as a product to be sold but as an enhanced planning tool to be customized to the unique needs of their clients.

These advisors understand that many UHNW clients view insurance with skepticism, largely because it seems so complicated — and that view is not too far off the mark. The task of predicting and pricing specific risk scenarios in various time frames requires formulas, algorithms and tables that seem daunting to the uninitiated.

Additionally, the growing roster of insurance products, the numerous carriers out there, and the abundance of agents and brokers showcasing various strategies can leave HNW and UHNW individuals feeling overwhelmed and uncertain about the best courses of action.

Underwriting is another source of

complexity. The precise verification of client details such as age, health and other relevant circumstances determines optimal insurance solutions. For some clients, the sheer number of inputs, variables and caveats in the underwriting process makes it seem tenuous and untrustworthy.

Despite these intricacies, however, holistic wealth advisors are starting to see value in educating their clients about the benefits of aligning reliable and transparent insurance solutions with their clients’ broader financial pictures and long-term goals.

Deep discovery

The advisor David wound up with is a case in point. Well-versed in the nuance of insurance planning for UHNW individuals and family offices, she saw that David’s U.K. background added a layer of complexity to his financial situation. While David’s initial response to the U.S. insurance market was one of reluctance and distrust, the advisor took the time to understand his desire to shelter his legacy and live free from day-to-day balance sheet concerns while probing his background, circumstances and objectives.

Through this deep discovery process, David and his advisor decided that an insurance policy held in trust could effectively set aside more than enough liquidity for his children — and his own long-term peace of mind.

But making the most of insurance for

30 InsuranceNewsNet Magazine » September 2023

the wealthiest clients calls for collaboration between wealth advisors and independent UHNW insurance specialists. Optimally, these experts work with clients to weigh not just specific insurance products but also their impacts on the client’s financial picture and goals.

The UHNW difference

What delineates an UHNW life insurance advisor? Like all things for the ultrarich: the devil is in the details, and principally their client experience. With larger amounts at stake, both for the client and the carrier, advisors who cater to this end of the market don’t always have the ability to change the product. They do, however, have the power to change how products are delivered, designed and incorporated into the balance sheet management of these families. Understanding the structuring, tax, health and economic implica-

wealth is surprisingly hard. Bad investments, changing trends and taxation are continually eroding family fortunes.

Life insurance is one of the few investments that is both long term and tax advantaged. For these families, the risk/return exercise is worth allocating capital to complement their other riskier activities and control wealth within the family balance sheet. For the most part, families are using their life insurance payouts to pay estate taxes due at death of their loved ones — removing complexity and hard choices for the transfer of wealth. Done right, the allocation of funds to life insurance is a tool for anxiety reduction in addition to wealth creation (and defense).

By recognizing the complexity of the insurance landscape, and the overriding need to align insurance choices with the unique circumstances of HNW and

How can life insurance benefit the ultra wealthy?

- Reduce tax inefficiencies.

- Magnify portfolio growth.

- Pass an intact legacy to heirs and beneficiaries.

tions of life insurance offerings creates a potent planning outcome.

It’s rarefied air among the thousands of licensed agents across the country. To achieve the scale required of these families, the UHNW segment demands teams of underwriting specialists to manage medical affairs and in-house product experts to canvas the carriers and reinsurance market. It is a specialty business hidden within a highly commoditized space — much like the private jets flying in and out of our airports. We can’t change flight itself, but we can certainly revolutionize how it is delivered and what outcomes can be achieved.

Why are these UHNW families going through an insurance process if they are already wildly wealthy? Predictability, planning and taxes. Maintaining extreme

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ANNUITY WIRES

Q2 annuity sales break more records, LIMRA finds

Indexed annuities resonated with eager buyers during the second quarter. Total annuity sales jumped 12% year-over-year to $88.6 billion, LIMRA reported.

Registered index-linked annuity and fixed indexed annuity sales both hit record highs, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey.

Indexed products usually offer a zero floor but give owners a chance to earn capped market gains via an index. In the first half of 2023, total annuity sales jumped 28% to $182.7 billion.

It marks the highest sales ever recorded in the first six months of a year. First-quarter annuity sales also hit record highs, LIMRA said.

RILA sales totaled $11.6 billion in the second quarter of 2023, up 8% from the prior year. These are the highest quarterly sales for the product line.

In the first half of 2023, RILA sales were $22 billion, 8% higher than the same period in 2022. LIMRA is predicting RILA sales to have another record-breaking year in 2023, likely increasing at least 10%.

For the fifth consecutive quarter, FIA set a sales record. FIA sales were $25.4 billion in the second quarter, up 29% from the prior year’s results. Year-to-date (YTD), FIA sales jumped 35% to $48.5 billion.

AUGUSTAR BRINGS FORMER OHIO NATIONAL BACK TO ANNUITY MARKET

AuguStar Retirement is jumping back into the annuity market with all products in all channels, CEO Cliff Jack said recently.

AuguStar is the rebranded effort headed by Constellation Insurance, which took over Ohio National in 2022. Ohio National had burned bridges with producers with its controversial decision to eliminate trailing commissions in 2018. The insurer also ceased selling annuities that year.

AuguStar Retirement will market fixed indexed annuities, multiyear guaranteed annuities, variable annuities and registered index-linked annuities through banks, brokers/dealers, independent marketing organizations and insurance professionals, Jack said.

QUOTABLE

Double-digit equity market increases and stable interest rates have prompted investors

through alternative investments rather than their existing annuity contracts

The U.S. attorney’s office said investors gave Horvath investment funds with the expectation he would manage the funds for them. Instead, Horvath commingled their funds with his own and used the pooled money to pay personal expenses and repay earlier victims, the office said.

LINCOLN, FORMER AGENT SETTLE ON MEDIATOR FOR FIA LAWSUIT

Jack assembled a strong team of past colleagues and industry veterans on his AuguStar team, led by David Marlow, vice president, operations and IT, and Kimberly Plante, vice president, general counsel.

72-YEAR-OLD CONNECTICUT PRODUCER PLEADS GUILTY IN ANNUITY SCAM

Federal prosecutors say John Horvath, 72, pleaded guilty to annuity fraud and tax offenses in a Connecticut court.

Horvath was licensed by the state as a resident insurance producer, which authorized him to sell various forms of insurance. In that capacity, it said, he sold annuity contracts to clients that were issued by Allianz Life.

Beginning no later than July 2015 and continuing until April 2021, the U.S. attorney’s office said, Horvath defrauded several clients by advising them that they could achieve better rates of return

Lincoln Financial and nine plaintiffs — including a former Lincoln agent — suing over fixed indexed annuity performance agreed on a mediator to settle the dispute.

Both sides accepted John DeGroote of DeGroote Partners, a Dallas mediation and arbitration firm, according to court documents.

The nine plaintiffs allege that the insurer misrepresented the potential returns with its OptiBlend fixed indexed annuity. 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 led them to expect the consistent 6% gains illustrations showed.

Lincoln noted that all the plaintiffs signed an application in which they 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.”

32 InsuranceNewsNet Magazine » September 2023
to seek out greater investment growth opportunity through RILAs and FIAs.
— Todd Giesing, assistant vice president, LIMRA Annuity Research
DID YOU KNOW ?
Source: Allianz Life
Nearly seven in 10 (68%) workers would like more information about annuities as part of their plan.
Product Q2 sales (in billions) % change (YOY) Variable annuities $48.2 B -8% Fixed-rate deferred $73.2 B 10% Indexed $48.5 B 29% Fixed immediate $6.8 B 68%
Source: LIMRA

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Annuities can help manage income risks in retirement

How investing in annuities can help retirees generate more income while preserving other assets.

During their years in the workforce, employees spend decades accumulating retirement savings. But when it’s time to retire, the focus switches from accumulating savings to generating retirement income. The challenge is to develop a retirement income strategy that provides a desired lifestyle without concern over running out of money.

Compounding this challenge is that retirees face longer life expectancies, uncertain financial markets and rising costs.

There’s an ART to managing income risk, and Matt Johnson, manager of product and distribution strategy with American Equity, described what that means during a recent webinar held by the National Association for Fixed Annuities.

ART stands for Avoid, Retain and Transfer, three strategies for dealing with income risks retirees face, Johnson said. Annuities play a role in helping clients manage those risks.

Income can be produced from investments in a variety of ways, he said. The decision on how to obtain that income is based on the three ART strategies for managing risks.

1. Avoiding risk: In this scenario, the client is unwilling to accept significant risk. A client who wants to avoid risk will use Treasuries and certificates of deposit to produce retirement income.

2. Retaining risk: The client in this scenario is willing to assume all risk, and will use portfolio diversification and safe withdrawal rates to produce retirement income from stocks and bonds, managed money and mutual funds, and real estate.

3. Transferring risk: This scenario uses a strategy where a third party assumes risk by using annuities with guaranteed income.

Transferring risks by using annuities provides numerous advantages for a client who needs retirement income, Johnson said. Annuities may help improve the probability of successful retirement outcomes by helping reduce longevity risk with lifetime income payments and helping lessen portfolio volatility by hedging downside risk.

This strategy is ideal for a client who needs to take withdrawal rates higher than those considered safe and sustaining, he said. In addition, clients who are heavily invested in cash or fixed income, or who are nervous about market volatility would benefit from the risk transfer strategy.

Transferring retirement income risk improves outcomes, he said. Putting a portion of a client’s retirement portfolio into an annuity allows that client to put more money into the equities portion of their portfolio to achieve their desired income.

This also gives the client flexibility to increase their income when they need it.

Bridging the performance gap

Annuities also bridge the performance gap from retaining risk, Johnson said. A hypothetical 60-year-old with a $731,368 nest egg who desires $75,000 in annual income for life in five years would need an annualized return of 25.45% to reach an amount that can provide the same income as putting that same amount of savings into an annuity with an 8.25% simple return over five years.

When the time comes for a client to convert assets to cash flow, annuities are the choice for clients who want to transfer risk. Johnson showed a hypothetical example of a client who wants to generate $15,000 of annual lifetime income beginning at age 65. A client who wants to use the avoiding risk strategy would need

34 InsuranceNewsNet Magazine » September 2023 ANNUITY
Annuities may help improve the probability of successful retirement outcomes.

to invest $394,736 in a 10-year Treasury paying 3.8%. A client who wants to retain risk would need to invest $454,545 in a diversified portfolio with a 3.3% annual withdrawal rate. But a client who chooses an annuity would need to invest only $190,865 in a hypothetical fixed indexed annuity paying 6.6% at age 65 with an 8.25% simple roll-up with income at one year, or would need to invest $146,273 in the same hypothetical FIA with income at five years.

Transferring risk by investing some of a client’s retirement savings into an annuity frees up that client’s capital by using the annuity to generate income and allowing the rest of the portfolio to grow, Johnson said. That excess capital can be reinvested as well to grow over the client’s remaining life expectancy.

“By transferring risk, it doesn’t mean I’m giving up on the long-term growth potential of legacy assets. I’m growing it, not using it for income,” he said.

The ART of managing income risk

A = Avoid – Client unwilling to accept significant risk

R = Retain – Client is willing to assume all risk

T = Transfer – A third party assumes the risk

The advantages to freeing up capital

Freeing up capital and allowing it to grow while using an annuity for income can benefit a client who wants to self-fund future long-term care needs, Johnson said. The freed-up capital also can be used for gifting or for checking things off a client’s bucket list.

Understanding risks and their potential impact on a retirement strategy will lead to better planning decisions, he said. Building a solid retirement income model approach focused on minimizing risk

is vital to providing an income strategy for life. Transferring risk through using annuities can provide benefits that increase the probability of a positive retirement outcome.

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 X @INNsusan.

endorsed, sold or promoted by BlackRock Index Services, LLC, BlackRock, Inc., or any of its affiliates, or any of their respective third party licensors (including the Index calculation agent, as applicable) (collectively, “BlackRock”). BlackRock has no obligation or liability in connection with the administration or marketing of Product. BlackRock makes no representation or warranty, express or implied, to the owners of the Product or any member of the public regarding the advisability of investing the Product or the ability of the Index to track general market performance. BlackRock does not guarantee the adequacy, accuracy, timeliness, and/or completeness of the Index or any data or communication related thereto nor does it have any liability for any errors, omissions or interruptions of the Index.

September 2023 » InsuranceNewsNet Magazine 35 American Equity Investment Life Insurance Company® 6000 Westown Pkwy, West Des Moines, IA 50266 www.american-equity.com ● Call us at 888-221-1234 01AD-INN-MAG0923-2 08.28.23 For Agent use only. Not for use in solicitation or advertising to the public. ©2023 American Equity. All Rights Reserved. THE BLACKROCK® ADAPTIVE U.S. EQUITY 5% INDEX New & Exclusive to A dynamic approach to challenging market conditions with daily rebalancing. Available on IncomeShield and other fixed index annuities. To explore IncomeShield with BlackRock®, visit www.american-equity.com/incomeshield-annuity Annuity Contract and Riders issued under form series ICC22 BASE-IDX-B, ICC22 IDX-11-10, ICC22 BASE-IDX, ICC22 IDX-10-7, ICC20 E-PTP-C, ICC20 E-PTP-PR, ICC20 E-MPTP-C, ICC16 R-MVA, ICC20 R-EBR, ICC20 R-LIBR-FCP, ICC20 R-LIBR-FSP, ICC20 R-LIBR-W-FSP, ICC20 R-LIBR-W-FCP, and state variations thereof. Availability may vary by state. The BlackRock Adaptive US Equity 5% Index (the “Index”) is a product of BlackRock Index Services, LLC and has been licensed for
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use by
(“American Equity”) as a component of IncomeShield (the “Product”). BlackRock®, BlackRock Adaptive US Equity 5% Index™, and the corresponding
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is not
ANNUITIES CAN HELP

What will influence 2024 health premiums?

It’s time for health insurers to determine their premiums for 2024. The Medicaid redetermination, changes resulting from the end of the COVID-19 public health emergency and inflation are at the top of the list of reasons why health insurance premium rates for next year could see some changes. That was the word from the American Academy of Actuaries, which recently published a policy issue brief on the drivers of 2024 health insurance premium changes.

Although Medicaid eligibility redeterminations — also known as The Great Unwinding — will likely result in an increase in the individual health insurance market enrollment, the impact on the risk pool and health insurance premiums is uncertain, the academy said. Inflation and other factors will increase negotiated provider payment rates and will increase premiums.

The impact of long COVID-19 on medical costs and future health insurance premiums is one of the biggest uncertainties going into next year. The academy said little is known about how many people are affected by long COVID-19, how long it will last for those affected and how it will impact their personal health.

Recently, health care costs have been increasing at a rate above that of inflation. The reimbursement rates that carriers negotiate to pay providers are contracted in advance and are typically set on a multiyear basis. As these contracts come up for renewal, contracted rates are likely to increase significantly due to increases in providers’ operational costs. High demand, competition for workers and union negotiations may result in salary increases that exceed inflation.

The obesity drugs have fueled a 250% increase in costs for employer-sponsored health insurance in the first two months of 2023 combined compared to all of 2022, according to an analysis by Willis Towers Watson. Currently most insurers do not cover the drugs for weight loss, which is mostly an off-label use, but do for diabetes type 2.

QUOTABLE

develop such a strategy. Employers are acting in the following ways.

• 27% are collecting information on race, gender identity or other demographics to begin analyzing their company’s equity efforts.

• 40% are ensuring their workers can identify health care providers who are acceptable to them.

• 24% are using multilingual communications targeted to specific populations.

• 41% are providing equitable familybuilding benefits.

• 23% are offering coverage for doulas, midwives, birthing centers or other alternatives aimed at improving maternal outcomes.

• 49% are providing coverage for hearing aids.

NEW RULES TAKE AIM AT MENTAL HEALTH PARITY

ular medications Ozempic and Wegovy, also may factor in to health insurance premium increases next year.

Insurers in Michigan and Massachusetts are among those seeking approval for premium increases, attributing the surge to the mounting costs of Ozempic and similar drugs used for weight loss. Tyler Hutchison, chief actuary for insurer Health New England, said some analyses have suggested weight-loss drugs could increase pharmacy spending by more than 20 percent over the next few years.

DIVERSITY EXTENDS TO EMPLOYEE BENEFITS

A company’s workforce diversity ties into its performance, and that diversity extends to employee benefits. That was the word from a panel of Mercer experts who conducted a recent webinar on ways employers can offer their workers benefits that reflect the diverse nature of the workplace. More than three-quarters of employers surveyed by Mercer (78%) said they are currently taking action to advance health equity as part of their company’s diversity, equity and inclusion goals. Ten percent said they plan to

The Biden administration wants health insurers to increase their coverage of mental health treatments. Health insurance woes are even more common among those with greater health care needs.

New proposed rules would require insurers to study whether their customers have equal access to medical and mental health benefits, and to take action if necessary. The Mental Health Parity and Addiction Equity Act requires that insurers provide the same level of coverage for both mental and physical health care. The proposed rules are subject to a public comment period.

If finalized, the regulations would force insurers to study patient outcomes to make sure the physical and mental care benefits are administered equally. Insurers would have to take into account their provider network and reimbursement rates and whether prior authorization is required for care.

36 InsuranceNewsNet Magazine » September 2023 HEALTH/BENEFITS
Source: Milliman
2022 saw the lowest sales volume of traditional long-term care insurance in more than 20 years.
DID YOU KNOW ?
Employers have an opportunity to take the lead in increasing health care literacy rates among their workforces.
Kim Buckey,
vice president, client services, Optavise
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Client communication adds value for employers, workers

An effective benefits communication strategy can increase participation and improve employee well-being.

The role of a benefits broker or agent extends well beyond providing insurance options for their employer clients.

Clients rely upon agents to be consultants playing an active role as an extension of their team. As a trusted advisor, your role can span across many functions — from strategy, thought leadership and plan design to claim and cost management, insights analyzing data, support for human resource initiatives and compliance.

Your impact on your clients is even greater when you provide active support to your clients’ communications efforts. Effective employer communication can play a pivotal role in enhancing employee engagement, promoting wellness programs, and creating a culture of safety and health within organizations. When you add communications to your other efforts, you bring more value to your clients and their employees.

Employers usually offer a range of benefits that are designed to meet the diverse health, financial and personal needs of employees and their families. Communicating — some would call it advertising — the benefits that the employer’s plan offers is important because such efforts help reinforce or solidify a key

part of the employee value proposition. Employers want to see a return on their significant financial investment, and that return can be measured by the impact it may have on people’s lives.

According to the U.S. Department of Labor, benefit costs can represent on average 30% of the total compensation costs for private and federal workers and up to 38% for state and local government workers. Employers have a vested interest in promoting benefits to support employee engagement as well as employee productivity and work/life balance.

In addition to offering traditional benefits, employers are being called upon to support employees and their families across a wide range of well-being areas that address health, financial, social and emotional needs.

If communication is done properly, employer engagement in these areas can increase employee perception of how much their employer values them.

Feeling “cared for” at work was revealed as a key driver of employee holistic health and happiness in MetLife’s 21st annual U.S. Employee Benefits Trends Study. These drivers are strongly connected to employee productivity and job loyalty. Yet the study found nearly half of today’s employees (42%) don’t feel cared for by their employers. Targeting communications can help employees feel their employers value them.

According to WRN research, health and retirement benefits are growing in importance as attraction and retention

tools. Employers have a clear path to deliver communications that reinforce their support for employee needs.

A recent Optivise survey showed the growing demand from employees wanting to understand their benefits and manage health care costs as part of overall financial wellness. Brokers must be ready to meet clients’ changing needs so employees can become smarter, more informed health care and financial consumers. Here are some key ways to partner with your clients.

Plan in advance

Effective and thoughtful communication efforts take time and planning. This planning should consider client-relevant factors such as resource availability, budgeting and internal approval.

Start discussing communications needs with clients well in advance, using a project management mindset. Identify what resources may be needed to support each client’s goals while allocating sufficient time to put those resources into place. Developing a calendar of communications activities that incorporates the employer’s benefit priorities can manage expectations, position deliverables as achievable, and balance workload and resource availability.

You may want to include reminders about claim-filing deadlines and open enrollment dates. During your financial and claims management meetings, you may identify top health claim trends or drivers such as high rates of musculoskeletal

38 InsuranceNewsNet Magazine » September 2023

issues or low rates of preventive care. You then can use those trends and drivers to develop a communications campaign.

Target moments that matter

Benefit brokers and HR personnel often wear many hats, and communications could be one of the more challenging issues they encounter. Employers are required to not only inform but also inspire employees to take action during any number of critical touch points during the benefits life cycle.

Sometimes a simple reminder about a benefits feature or a required action item can help an employee avoid a poor financial decision. Using your knowledge of qualified life event rules, you can assist employers in targeting unique moments to enact change and avoid compliance issues. Promoting benefits during QLEs is another way to highlight that your benefits are a differentiator and how they’re a valuable part of the employee experience.

Examples of these moments could include:

» Birth of a child: Enroll in a flexible spending account or increase contribution to a health savings account.

» Marriage or divorce: Dependent enrollment changes impact payroll contributions; update life insurance beneficiary designations.

» Child turning age 26 or aging out of a plan: Removing a child from the plan in a timely manner; arranging for transitional support for COBRA or other health insurance plan options.

» Retirement or reaching Medicare eligibility age: Evaluate health plan elections, transition a 401(k) account to an individual retirement account or convert life insurance policies.

Which way works best

Find out the ways in which the organization communicates with employees and what resonates well with their workers. The employee base will often drive the way communications are delivered.

According to the WTW Emerging Trends in Healthcare Survey, 2 in 5 employees are expected to work remotely in the future. As a result, employers must communicate with employees where they are, no matter the location, time of day or device they use.

Electronic methods, including intranet

and email, are cost effective and increasingly relied upon. In-person meetings and periodic mailings are often more impactful and effective but require more lead time and coordination.

Leader support is often key and is required before any significant communication is delivered to employees. Getting buy-in in advance from leaders on an established yearlong communications strategy that includes specific details on the tactics, dates and methods of communications will make executing on the plan efficient and effective for everyone.

Leverage vendor resources

If your client has an internal communications team that can support content creation, offer to lend your expertise to develop engaging and informative materials. This would include sourcing and shar-

end-to-end fulfillment needs and even offering a wellness fund or credit that can be used to pay for third-party communications costs.

Measure success

Evaluate the effectiveness of client communications initiatives. Implement metrics and mechanisms to assess employee engagement, comprehension and satisfaction. Analyze the data, and provide clients with actionable insights to improve future communication strategies.

Start simple. Develop a scorecard or metrics in your reporting dashboard to measure year-over-year activity on programs that you’re focusing on through targeted communications campaigns, such as increasing adult preventive visits or enrollment in a health coaching program. Many intranet portals and bulk

ing pre-developed content from existing benefit plan vendors. To avoid reinventing the wheel, vendor materials and resources can be used as is or act as a starting point for content creation.

Remember, not all employers have the luxury of an in-house marketing team. This can be an opportunity for you to step in to help with content creation.

Employers may prefer communications to contain their own branding and voice. Helping collect key vendor resources such as flyers, videos and presentations is a great starting point for content creation. Vendors may be flexible in modifying their communications with the employer’s logo to help in brand recognition. A perfect example is a postcard mailer sent to employee homes. If the employee sees their employer’s logo on the postcard, they may be more inclined to read it and not think it’s junk mail.

Where needed, negotiate with vendors to support your client’s communication needs. This could include delivering on

email software systems can report on the number of eyeballs that read an article or click on a link.

Supporting your clients with their communications efforts is a powerful way to demonstrate your value as an insurance broker or trusted partner. By collaborating on content creation, educating employees and leveraging existing resources, you can enhance the effectiveness of your clients’ communications and ultimately contribute to their success. Remember, effective communication is the key to building strong relationships and fostering a culture of well-being in organizations.

William J. Pokluda, CEBS, is a certified benefits professional with more than 30 years of experience managing corporate benefits. He is the author of Maximize Your Health Insurance. He may be contacted at william.pokluda@innfeedback.com.

September 2023 » InsuranceNewsNet Magazine 39 CLIENT COMMUNICATION ADDS VALUE FOR EMPLOYERS, WORKERS HEALTH/BENEFITS
More than half of employers have taken action to enhance the enrollment experience, while another third are looking to do so.
Source: WTW Benefits and Enrollment Trends

Many advisors don’t spend enough time with clients

Nearly one-third of advisors say they do not have enough time to spend with clients, possibly affecting their ability to build deeper client relationships and negatively impacting advisor retention, according to a recent J.D. Power survey.

Advisors with not enough time to devote to their clients spend an average of 41% more time each month than their peers do on non-value-added tasks, such as compliance and administrative duties, according to the U.S. Financial Advisor Satisfaction Study.

So, what is keeping advisors away from their clients? They have various demands on their time beyond client interactions. These include performing general administrative duties, training, compliance and the like. These are either an element of their job as an employee of an organization or a necessity of running a business. J.D. Power found that more than 40% of all consumers report that they are receiving an experience that is merely “transactional” when working with an advisor.

Industry shows Americans face a shaky retirement future

Numerous surveys have identified a lack of retirement preparedness among Americans. For example, a survey by Mutual of Omaha said that although 88% of the study’s respondents believe that they have a responsibility to protect their own or their family’s financial fu ture, many expressed uncertainty about how to accomplish that goal And only one in four said that they feel confident in their financial future.

“I feel confident in my financial future 10 years from now.”

Americans investing more than in past decade

A near record 61% of Americans in 2023 said they own stock of some sort, whether individually or through a tax-advantaged retirement account like a 401(k).

But despite the swings of the market, why are more people investing in it than they have in the past decade, and where are they putting their money?

Source: Mutual of Omaha

Overall, just 26% of respondents can be considered Protection Confident, or feeling secure, about their financial futures both today and 10 years in the future. That leaves the remaining 74% either uncertain about their protected future or falling into the Protection Threatened category, the survey said.

2/3 say their financial planning needs improvement

Two-thirds of Americans (66%) believe their financial planning needs improvement, a 4 percentage-point uptick from the previous year. This was especially true among younger adults (79% for both Generation Z and millen-

Teach your children well

41% of retirement savers have used their retirement funds to pay for a family member’s education.

Source: Society of Actuaries

Magnifi, an investing app, analyzed data from Gallup and the Federal Reserve to illustrate how Americans invest their income across various assets today.

It found stock investors tend to belong to a class of white, non-Hispanic, college-degree-carrying millennials or older Americans. Today, women represent 62% of American investors who say they are invested in the stock market through direct stock holdings, ETFs, or mutual funds, compared with 59% of men.

According to Gallup, 84% of Americans making $100,000 per year or more say they’re invested, as opposed to 63% of Americans earning $40,000$99,000 and just 29% of those earning less than $40,000.

nials, up 5 percentage points from last year for each generation). One factor driving this could be the current economic landscape. Nearly one in five people (18%) say that recent economic uncertainty has led them to either begin working with a financial advisor or work with one at a later date.

Those were among the findings from a recent Northwestern Mutual Planning and Progress Study. The study also found that although Americans admit they could do a better job with their financial planning, only 37% work with an advisor.

Financial facts and figures powered by AdvisorNews.com

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209002 © 2023 Optavise, LLC

Avoid costly mistakes when dividing retirement assets in divorce

Divorce already makes finances complicated. Here is how to avoid making them even more so. • Mark E. Caner

“Happily ever after?”

Marriage statistics, unfortunately, say “Not always.”

In fact, some 40% to 50% of marriages end in divorce, according to Divorce.com. As for second and third marriages? Those rates are even higher — on the order of 60% and 73%, respectively.

“Money,” meanwhile, was cited as the most common reason for divorce by SurviveDivorce.com

Just as the motives for ending marriages are complex, so too are the financial aspects of divorce.

Consider the division or transfer of qualified plan benefits, individual retirement accounts and nonqualified annuities. Untangling ownership of such assets can be especially complicated. The results often carry unintended tax consequences

and sometimes turn an equitable distribution into one not so equitable.

Different Internal Revenue Code sections apply in the case of each of the following:

• Section 414(p) for qualified plan benefits.

• Section 408(d)(6) for IRAs.

• Section 1041 for nonqualified annuities.

Straying from the correct applicable tax rules could result in current taxation and, possibly, taxation of the wrong party.

Qualified plan benefits

Qualified plans under IRC Section 401 (e.g., defined benefit plans, money purchase pension plans, 401(k) plans) are subject to the anti-alienation provisions of the Employee Retirement Income Security Act of 1974 and the IRC. These provisions generally prohibit payment to a person other than the participant. A qualified domestic relations order is one

of a handful of exceptions to the provisions. A QDRO is a judgment, decree or order that awards all or a portion of a participant’s benefits to an alternate payee and that meets all the requirements under IRC Section 414(p).

A participant can transfer all or part of their qualified retirement plan benefits to a former spouse without being liable for income taxes on the transfer if the transfer is made pursuant to a QDRO.

If the alternate payee who is the participant’s spouse or former spouse receives a distribution by reason of a QDRO, the rollover rules apply to the alternate payee as if the alternate payee were the participant.

Thus, the former spouse/alternate payee can avoid the requirement of including the distribution in income to the extent any portion of an eligible rollover distribution is rolled over or transferred to an IRA or other eligible retirement plan within 60 days.

In the case of spouses who are younger

42 InsuranceNewsNet Magazine » September 2023 ADVISORNEWS

than 59½, it is important to keep in mind that the QDRO exception to the imposition of the 10% early withdrawal penalty applies only to distributions from a qualified plan. Once the distribution is rolled over to their own IRA, the exception no longer applies.

IRAs

IRC Section 408(d)(6) provides that the transfer of an individual’s interest in an IRA to their former spouse under a decree of divorce (or separate maintenance or a written instrument incident to such decree) is not considered a taxable transfer, and such interest is to be treated thereafter as the IRA of the recipient’s former spouse.

Even though there are only two requirements — (1) a decree/written instrument and (2) a transfer of an IRA interest — there have been many instances in which the IRA owner has been forced to include the distribution in their taxable income and, if applicable, pay the 10% early distribution penalty.

The catch is that the transfer must be to an IRA of the former spouse. Cashing out an IRA and endorsing the distribution check over to the former spouse has been held not to be a transfer of the IRA owner’s “interest.” Even if the former spouse wants to receive cash, it is essential that the IRA owner transfer the amount required in the divorce decree or separate written instrument to an IRA in the name of the former spouse and have the former spouse take the distribution from their own IRA.

Although dividing an IRA does not require a separate domestic relations order, it may be beneficial to have a separate order drafted and approved. Otherwise, the IRA owner will need to provide a copy of the entire judgment to their financial institution. A separate court order will allow the IRA owner to keep other aspects of the divorce agreement confidential.

There appears to be a difference of opinion regarding what is required to divide a SEP IRA — is it subject to ERISA and a QDRO or not? Are non-owner employees covered under the SEP IRA? A best practice may be to prepare a separate DRO that meets the requirements of a QDRO just in case.

A Bit on Beneficiaries

Always conduct a full beneficiary review after a divorce. Changing beneficiaries to remove a former spouse is the only way to ensure a client’s desired outcome and avoid costly and time-consuming legal battles. The ability of a court to disregard the beneficiary designation of a former spouse depends on whether the contract or plan is covered by ERISA and, if not, applicable state law. ERISA obligates administrators to manage ERISA plans “in accordance with the documents and instruments governing” them. Thus, the beneficiary form controls unless plan documents automatically revoke a former spouse upon divorce. Clients should still be counseled to name a new beneficiary even if plan documents include revocation language.

Several states have adopted revocation-by-divorce provisions. Some have adopted the Uniform Probate Code’s revocation-upon-divorce statute. Originally, the UPC’s statute addressed the failure of divorced spouses to execute or amend their wills after divorce. In 1990, the UPC revised the statute, in part, to apply the rules governing probate transfers to nonprobate transfers, such as revocable trusts, life insurance, retirement benefits and annuities. Other states have drafted their own revocation-bydivorce statutes, and still others have not addressed the issue at all. These statutes may work to keep the ex-spouse from receiving non-ERISA covered benefits — e.g., life insurance, IRAs or nonqualified annuities — in some cases. But not all states have such statutes, and even living in a state that does have one may not keep heirs out of court.

Nonqualified annuities

IRC Section 1041 provides that no gain or loss will be recognized on a transfer of property from an individual to a spouse or a former spouse during marriage or incident to divorce. Thus, the owner of the nonqualified annuity who makes the transfer or gift does not recognize income upon the transfer, and the transferee’s investment in the contract is the same as the transferor’s investment in the contract.

Transfers made within one year of divorce are presumed to be made incident to divorce. Such transfers do not have to be required by the divorce or separation agreement. Transfers made within six years after the date the marriage ends are considered to be related to the end of the marriage if required by a divorce or separation agreement.

Nontax considerations for annuities

Dividing an annuity between spouses can have nontax consequences as well. A change in ownership of an annuity contract may result in the termination of optional benefits and riders. Any distributions from an annuity contract, even those mandated by a court, can affect the account value, benefit base and lifetime income. It is important to discuss possible

contract- or carrier-specific consequences with either a financial professional or the insurance company.

In the case of annuities with strong guarantees and valuable riders, it may make sense for the parties to look at other assets that might be split. It may be less costly and a more effective financial solution to try to duplicate the benefit for the other spouse with an alternate asset rather than lose the benefit for both spouses.

Consequential decisions call for caution

Retirement assets typically are some of the largest assets owned by clients. Depending on the parties involved, dividing those assets in divorce can be difficult for both personal and financial reasons. Financial professionals must work with their client’s divorce attorney to ensure all parties understand and consider the short- and long-term financial and tax implications of decisions made during such trying times.

He may be contacted at mark.caner@innfeedback.com.

September 2023 » InsuranceNewsNet Magazine 43 AVOID COSTLY MISTAKES WHEN DIVIDING RETIREMENT ASSETS IN DIVORCE ADVISORNEWS

The AI apocalypse, or another tech trend?

The insurance industry must embrace the transformative power of artificial intelligence while keeping a keen eye on responsible and ethical implementation.

In the fast-paced world of technology, a convergence of cutting-edge innovation is reshaping our way of work. Some would say it’s even reshaping our very existence.

As the exponential rise of artificial intelligence unfolds, it bears an uncanny resemblance to the dramatic thriller “Terminator,” where robots come to life and take over the world. Here, the plot unfolds not in Hollywood scripts but in the very fabric of our day-to-day lives.

The insurance industry, generally viewed as a stable and reliable sector, now stands at the mercy of this AI uprising. Jobs that were once conducted by humans are usurped by cold, calculating algorithms, leaving a trail of uncertainty and displacement for workers. While AI augments the capabilities of carriers, producers and staff, it also stimulates the need for a more skilled workforce that can harmonize technology with human expertise to execute tasks.

For those counting clicks to completion, AI’s ability will revolutionize the speed at and efficacy with which risk is assessed, sales are made, policies are underwritten and how claims are processed. AI will be capable of mimicking the perception, the reasoning and the problem-solving of underwriters. Actuaries and claims handlers will require less input from the human brain due to the reliance on neural networks they have been modeled after. Data latency, a common concern across most insurance value chains, will be greatly reduced or even eliminated.

The exponential growth of AI has accelerated the digitization of data across

shared devices and networks. Data lakes — vast data repositories — will become useful, leading to seamless and real-time data accessibility. Experts from McKinsey estimate there will be up to 1 trillion connected devices by 2025, further fueling the data revolution in the insurance industry.

As in “Terminator,” enhanced robots and cognitive technologies will command attention. Deep learning methodologies will further invade imagery, voice and text processing, pushing the boundaries of what AI can achieve. As the insurance industry finds itself at the forefront of this technological revolution, it must embrace the transformative power of AI while keeping a keen eye on responsible and ethical implementation.

The rise of AI and its dramatic impact

As AI’s capabilities surge, so does its potential for exponential growth. From health care to finance and beyond, AI is altering the course of human action. Its power leaps beyond our imagination, quickly becoming an indispensable tool to the insurance industry. One reason for this is that AI offers unmatched capabilities.

It empowers, navigates uncertainty, makes informed decisions and enhances overall efficiency. It can sort and process legacy data and further incorporate realtime data and analytics at higher speeds than before. Like a machine learning algorithm refining its predictions, AI is adapting and evolving, becoming more powerful than its previous iteration.

However, as AI continues to evolve, concerns arise about potential job displacement and the ethical implications surrounding

the use of advanced algorithms. While AI offers remarkable capabilities, there is a need to ensure its responsible deployment and address the potential impact on the workforce and society as a whole.

As we navigate this unprecedented journey, our perception of AI’s impact on society will guide us as we wield its power responsibly. As insurance experts, we can prepare and educate ourselves and our clients so that we can help shape a future where technology empowers rather than subdues. Pivoting toward the digital economy will not be easy, but it will be necessary to establish the pathways to smooth the transition for ourselves and for our clients in this modern era.

Pivoting toward AI technology: The worker is also the client

The roughly 2.35 million insurance licensed individuals in the U.S. face a pivotal moment in their careers as they navigate the future of the industry. Insurance historically has been slow to adopt innovation, making the transition to technology-driven roles a special challenge. As the insurance industry lags in terms of innovation compared to sectors such as decentralized finance and fintech, it’s evident that AI’s infiltration into insurance job placement is inevitable. The older demographic within the insurance workforce adds urgency to this shift. It’s not a matter of if but when AI becomes embedded in every aspect of the insurance landscape.

Traditional roles in insurance will undergo a profound transformation, and adaptability will be key for individual

44 InsuranceNewsNet Magazine » September 2023 the Know In-depth
discussions with industry experts

success. Early adoption of AI and technology by each individual — not the enterprises alone — will be essential in distinguishing them and securing their roles in the future of insurance.

So what opportunities lie ahead?

AI in the insurance space can be both an ally and an adversary, depending on how individuals embrace its capabilities and adapt to change.

Here are a few examples of how AI enhancements improve job experiences in the insurance sector.

• Actuarial/pricing: AI and ML algorithms analyze historical data, predict outcomes, and drive data-driven decisions and consumer-centric product development. AI can transform how actuaries visualize and present their findings, which can bring a fresh, modern twist to everyday mundane tasks.

• Underwriting: AI tools streamline decision-making, eliminate manual work, and balance fraud detection and risk management while promoting continuous learning and skills development.

• Recruiting: AI can analyze candidate data through predictive analytics that will cross-reference resume, social media and even online behavior. It can improve candidate experiences, streamline onboarding and even gamify the experience for both recruiter and candidate.

• Administration: AI can automate 70%-90% of data input for human assistants, reducing task-handling times from 10 minutes to one minute. Tedious work becomes interactive, fun and enjoyable.

• Project management: Valuable insights with predictive capabilities identify potential roadblocks, forecast risk and allocate resources more efficiently. Increased transparency and real-time updates enhance project success rates. Project managers can focus on high-level strategic thinking.

• Sales professionals: AI promises to optimize operational efficiencies in the client management arena by 30%, enabling sales professionals with new business generation analytics and automatic portfolio monitoring. AI integration can boost productivity and turn prospecting and client exploration into an exciting journey.

• Marketing professionals: AIembedded customer relationship management systems offer deeper customer insights for marketing professionals to

create highly personalized content and predict promising leads for improved conversion rates. AI-powered contentgeneration tools can foster creativity and bring a sense of fulfillment in producing captivating material.

• Claims professionals: This area uses natural language processing for improved customer experience, faster claims processing and fraud detection. NLP enables machines to understand human language, reprocess text and speech data for analysis, and generate valuable insights. AI can reduce stress and bring greater fulfillment in this critical role.

AI is the new black

Considering the aging demographic of financial advisors (average age is 56), addressing AI opportunities must align with our labor force’s demographics. Recruiting new talent that matches our clients’ demographics becomes crucial for successful succession planning. Understanding distinct buying patterns of millennials, Generation X and Generation Z is essential for carriers to stay competitive and relevant. The collective purchasing power of these generations reshapes the financial and insurance decision-making landscape.

As millennials and Gen Z gain prominence in the workforce, their preferences significantly influence the industry. By leveraging AI trends, carriers have a unique chance to appeal to these generations, enhancing the insurance-buying process and growing market share and wallet share.

Millennials, known for their digital prowess and desire for personalized experiences, favor seamless and convenient processes. Gen Z, born into a tech-savvy world, values authenticity and quick responses. Gen X, on the other hand, seeks a balance between digital convenience and human touch. These generational preferences present a call to action for carriers to adopt AI-driven solutions that align with each demographic’s distinct needs while also attracting their talent to their organization to help drive company objectives.

Along with recruiting new talent, it is equally crucial for carriers to recognize the value of retaining senior talent as subject matter experts during business transitions. Their experience and expertise can play a vital role in guiding the integration of AI and driving companywide success.

Cracking the code between carrier and client involves understanding the unique buying patterns of current clients and new potential millennial, Gen X and Gen Z prospects. AI algorithms can understand the unique requirements of millennials, Gen X and Gen Z, tailoring coverage options accordingly.

AI enables carriers to identify underrepresented segments in the market, which also brings attention to the lack of representation by agents and brokers servicing these demographic segments. By bridging this gap with AI, carriers can create targeted marketing strategies that appeal to different generations and other underrepresented market categories, reaching them through their preferred digital channels.

AI’s power lies in its ability to enhance the insurance-buying decision, cater to diverse generational needs, bring fulfillment to the workforce and bridge the representation gap in the insurance industry. As carriers adapt their strategies to align with these tech-savvy demands, they have an unprecedented opportunity to expand their market share and build relationships with a new wave of employees and clientele.

By taking control of this transformative technology, carriers can shape the future of insurance and stay ahead in this dynamic and evolving landscape.

The future of the insurance industry will rely on striking a delicate balance between human expertise and the limitless potential of AI. By fostering collaboration, upskilling the workforce and embracing innovation, the industry can unlock a new era of possibilities, ensuring that AI becomes a true ally rather than an adversary. The stage is set for a gripping tale of technology and humanity, where responsible AI usage shapes a future of promise and prosperity for insurers, employees and customers.

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 teched knowledge within the broader insurance marketplace. She may be contacted at sue.kuraja@innfeedback.com.

September 2023 » InsuranceNewsNet Magazine 45 THE AI APOCALYPSE, OR ANOTHER TECH TREND? IN THE KNOW

Overcoming the all-or-nothing mindset

How advisors and the industry can overcome consumers’ tendency to procrastinate.

It is clear that there is a life insurance need gap — the difference between those who say they need life insurance and those who actu ally own it — and therefore a large opportunity for more individuals to obtain coverage. However, booming sales have not materialized. According to LIMRA, total U.S. retail life insurance new annualized premium fell 7% in the first quarter of 2023 to $3.7 billion. How do we grow this market?

One area to consider is helping consumers overcome the all-or-noth ing mindset. This mindset refers to a thought process where individuals per ceive things in extremes, considering sit uations or outcomes as either completely successful or completely unsuccessful. This mindset can make it challenging to find balance and to create realistic expectations. In many cases, individuals will just procrastinate and be inert.

According to the 2023 Insurance Barometer Study, conducted by LIMRA and Life Happens, today’s consumers are trying to manage a multitude of financial concerns. Things such as saving money, paying monthly bills and paying down debt, or burdening others with their expenses are top of mind. These financial concerns could lead to consumer paralysis or result in consumers coming up with excuses. Two key reasons for not purchasing life insurance are “having other financial priorities” and “haven’t gotten around to it.”

Here are three things agents/advisors could do to help close the need gap.

1. Help individuals focus on small goals. Let them achieve and make progress. It doesn’t have to be all doom and

gloom. Let them build momentum and see results.

In some cases, full-blown financial planning can be overwhelming and lead to customer concerns. According to a survey by Schroders, 76% of Americans say they feel overwhelmed by the thought of creating a financial plan and 56% say life is too uncertain for a plan to

3. Embrace digital in order to be relevant for younger consumers. For the first time, consumers are more likely to say they would prefer buying life insurance online than by any other method. This is especially true for young adults. They expect a seamless experience and streamlined process that enables them to purchase coverage quickly and easily.

Younger customers also appreciate flexibility and personalized options. As you build trust over time, having the ability to offer your customers customized coverage based on their specific needs and budget will be crucial. You could start with simple and easy product options like term life insurance and increase coverage with other products as

Consumers can more easily visualize small dollar amounts through mental accounting. How much insurance could you buy instead of buying a latte? A relatively small change can amplify positive outcomes at relatively minimal cost.

There is also the potential to use subscription-based terminology and marketing to align with the growth of plans such as Netflix or Amazon Prime. According to eLabs, 64% of respondents say that they feel which connected to companies with which they have a direct subscription experience versus companies whose products they simply purchase as one-off transactions. In addition, 78% of adults globally have a subscription service.

their circumstances change.

The financial services industry has always been based on relationships. That hasn’t changed. But to be effective, approaching these relationships must evolve to include a better understanding of clients’ needs, trying new sales tactics and embracing technology.

This will increase sales of life insurance across different and new demographics and help more Americans get the coverage they need to protect their loved ones.

46 InsuranceNewsNet Magazine » September 2023 More
than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.
INSIGHTS
Financial
Barometer Study, LIMRA and Life Happens
Concerns (Percentage saying “extremely” or “very” concerned)

Pursuing and providing the American dream

Insurance and financial services is a profession you really can make your own, and where you can create a strong imprint and be your own brand.

Inever liked math when I was growing up, so I am sometimes surprised I found my calling as a financial professional.

I went into banking because, after coming to the United States as a child and a Cambodian refugee, I had a strong desire to understand the American financial system. I wanted to learn how I could achieve the American dream and share that dream with members of my community. I developed a commitment to helping others from my mother, who told me to act as an interpreter and a sort of cultural guide for other refugees. That created the “why” that has motivated me throughout my career.

After eight years in banking, I discovered that financial services provided even greater opportunities for me to achieve my goals and serve others. A light came on when my father was retiring, and I saw how difficult that transition was for him in addition to other financial challenges my parents faced. I set out to learn how to ease that transition. That led to a career change, and I soon provided my parents with life insurance coverage.

I’ve been in this business for 10 years now, and I’m still learning. A great thing about our profession is that learning never stops. Every time I meet someone, a colleague or a client, I’m inspired by their story. It’s refreshing, and it makes me better at what I do. I hope my story may similarly inspire others in our industry.

Embrace a career with challenges and rewards

You must make yourself uncomfortable to succeed in this business. Each individual

is their own biggest limiting factor. For example, if you are a very private or introverted person, it can be tough. But there are introverts in our business who are highly successful. To do well, especially as a young advisor, you must test your limits.

If something isn’t working for me as a professional, I need to have resilience and put myself in a position where I am growing. If the outside world is not giving me that, then I need to chase after it and put myself in a position to find success. Successful advisors don’t wait for opportunities to happen.

For me, when I moved from banking to financial services, I had to become accustomed to not working a rigid 9-to5 day. In our business, you set your own schedule, and that requires discipline and self-motivation. You’re trained in our profession to produce, but you’re not really trained to run a business. Fortunately for us, there are many successful agents and advisors willing to share their knowledge. I’ve gotten to know many of them through my NAIFA membership. Networking with colleagues in a very genuine way, asking the right questions and taking it all in has helped me greatly in my career.

Mentors are also important. I encourage every advisor to have someone you can go to with questions and concerns and who can show you a process that works for them. Their process may not be perfect for you, but chances are good there are parts of it you can use to improve the way you run your own business. That’s another great thing about being an advisor — it’s a profession you really can make your own, and where you can create a strong imprint and be your own brand.

Be true to yourself

I tell everyone I mentor to find a passion and to volunteer for a cause that is meaningful to them. It makes you humble and keeps you grounded. It also puts you in the mindset of a student and inspires you to

keep learning. It often will give you guidance in your professional life.

As an immigrant myself, I understand many of the challenges of serving the immigrant space. For example, immigrants may be less likely to seek help or trust an advisor. I grew up in a multicultural environment and pride myself on being able to connect with almost anyone.

As a proud foodie with a passion for fusion food, one way I do this is through the cuisines of various cultures. Food is a great conversation starter that brings different cultures together. I meet so many people with one thing in common: We share an interest in foods from all over the world. Finding a shared passion is always a great way to break down barriers.

You often fail in this job. But when you help a client, you really do leave an indelible mark. I work with a married couple who are immigrants and never received even basic financial education. At our first meeting, I sat with them for three hours simply creating a household budget. I know that couple will never forget me, and they frequently send me referrals.

Our profession pays you well and also allows you to give back in a way that makes you feel aligned. It really has helped me achieve my American dream, but I’m not finished. This profession offers new inspiration and challenges every day.

My work isn’t over. It’s just beginning.

Rith Nou is a financial professional in Waltham, Mass. She has been a NAIFA member since 2017. She may be contacted at rith.nou@innfeedback.com.

September 2023 » InsuranceNewsNet Magazine 47 INSIGHTS
Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.

We are much stronger together and the results show it

A New York state regulation has been problematic for consumers looking for access to financial advice and more choices.

When 4 in 5 Americans tell a Wall Street Journal pollster they believe the state of the economy is “not so good” or “poor,” an overwhelming share of Americans aren’t confident their children’s lives will be better than their own. And when we see bank failures, such as what happened with Silicon Valley Bank, it’s easy to let pessimism set in.

But at Finseca, our mission is right there in our name: FINancial SECurity for A ll. And that’s why we will continue to draw attention to New York state’s Regulation 187, which — as the data show — has been problematic for consumers looking for access and more choices. It is because of what has happened in the Empire State that Finseca has been actively engaged with lawmakers in any state that is considering a similar proposal.

For example, when California State Sen. Bill Dodd, with the backing of the California Department of Insurance, introduced SB 263, which included a standard far more onerous than New York’s, we activated immediately.

Our coalition, led by the Association of California Life & Health Insurance Carriers — with the help of Finseca, the American Council of Life Insurers, the National Association of Insurance and Financial Advisors, the Insured Retirement Institute, the National Association for Fixed Annuities, Federation of Americans for Consumer Choice, and Independent Insurance Agents and Brokers of America — joined together to oppose the introduced legislation. We began our efforts by telling the story of the very troubling impact of NY 187.

Since its inception, NY 187 (according

to data shared by Life Annuity Specialist) has led to a decline in the number of people covered by individual life insurance. Specifically, in 2021, new policy count in New York stood at 362,207, down 15% from the total in 2018, the year before the rule took effect. But over the same period, the policy count nationally increased by 3%.

In addition to this, from 2019 to 2021, life insurance premiums from individuals climbed 11.5% across the United States, but only 3.6% in New York, based on data from S&P Capital IQ Pro. Meanwhile, over the same period, retail annuity premiums rose 8.9% nationwide but dropped 4.2% in New York.

Data from MIB, a life insurance industry leader in data collection and risk assessment, showed a 13% decrease in the number of new life insurance applications from 2018 to 2022 in the state of New York. In 2021 alone, New York saw a 3.16% decline in new life insurance applications from the prior year. In comparison, Connecticut saw a 5.87% increase in life insurance applications and a 3.39% increase on the national level, during that same time frame.

Consumers and clients need help

In addition to this, we’ve also heard about how burdensome it is for advisors to serve their clients.

When we share these reports and couple them with the stories about the work holistic financial security professionals do each and every day for countless individuals and families all over this country, it has resonance.

Candidly, our work seems to be one of

the few things today that can transcend partisanship. This work isn’t about left or right; it’s about up or down. We can help everyone get a leg up by ensuring they have more financial security, not less.

I want to commend Sen. Dodd, his team, and all the legislators in California working to bring attention to the issue of financial security. We certainly appreciated the constructive dialogue we’ve had in order to make sure we get this right. Expanding access and choice is so important at this juncture. Achieving financial security for all is only possible if we’re all working toward this goal together.

Though there is still some work to be done, I’m pleased to report that we’ve made significant progress toward this end. We’ve taken the initial California proposal and more closely aligned it with the NAIC Best Interest for Annuities standard, which has already been adopted in 39 states. It’s our hope that California will be number 40 in the coming months.

Remember, there are 60 million American households that have no or not enough life insurance. That means millions don’t have the benefit of the protection of a true financial security plan. Couple this with the roughly $12 trillion dollar protection gap, and our work should be squarely focused on ensuring consumers have more access and more choice instead of less.

48 InsuranceNewsNet Magazine » September 2023 INSIGHTS
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Don’t overlook life insurance in a qualified retirement plan

The Internal Revenue Code allows the use of life insurance in a retirement plan if it is incidental to the primary purpose of providing retirement benefits.

Life insurance in its basic form is a death benefit to provide financial security to loved ones, those you care for or who are dependent on you — a way to instantly provide financial security. However, life insurance has evolved, taking on many forms and providing for many needs.

Those of you in the business market may think premiums are tax-deductible if the employer is bonusing the key employee through an Internal Revenue Code Section 162 bonus arrangement. No. The premiums are not deductible.

The cash bonus to the key employee, whether paid directly to the employee or the insurance carrier, is deductible, and the employee pays tax on that bonus. A technical splitting of hairs, yes, but an important one.

The overlooked opportunity

The opportunity exists for tax deductions in an employer-sponsored qualified retirement plan such as a defined contribution plan (most prevalent is a profit sharing 401(k)) or a defined benefit plan. The opportunity exists whether there is an existing plan or the employer is establishing a new plan.

The IRC allows the use of life insurance in a retirement plan if it is incidental to the primary purpose of providing retirement benefits.

Therefore, life insurance may be purchased with tax-deductible (pretax) dollars if the premiums are less than 50% (using permanent whole life insurance) or not more than 25% (if using permanent insurance other than whole life or universal life).

Why life insurance in a qualified plan?

If there is a need or want for life insurance, it may be purchased with tax-deductible (pretax) dollars in a qualified plan. Here are some of the advantages:

• Access to insurance. Life insurance offered through the plan may be the only way some participants can obtain or afford life insurance protection. With the plan, there is access through payroll deductions or employer contributions. In some cases, a pool of seasoned or aged funds can also be used to provide such coverage.

• Survivor benefit. All plans have a death benefit. It is simply the accumulated vested account balance. However, including life insurance in the plan provides an exponential death benefit immediately. Survivors receive the accumulated vested account plus the life insurance.

• Favorable underwriting. In some cases, the life insurance may be issued on a simplified or guaranteed issue basis with limited or no medical underwriting.

• Policies available on a genderneutral (unisex) basis.

• Asset allocation. Permanent life insurance may be considered like any other major asset class and both acquired and managed according to an asset allocation for long-term value and maximization of benefits. Life insurance is not correlated to the markets and has aspects similar to a quality bond.

• Guarantees. Subject to the claims-paying ability of the carrier, the death benefit and the contractual guarantees are certain. Additionally, dividends may be paid if the carrier’s board of directors declares them.

• Income-tax-free death benefit. The face amount minus the cash value is paid to the beneficiaries free of income tax. The cash value, as with the other investments in the account, is taxable or may be transferred or rolled over to an individual retirement account.

• Portability. The employee may continue the policy beyond separation

from service. Several options are available, but some have tax consequences.

Tax benefit and cost

If the life insurance premium in the plan is paid for with employer contributions, there is no Social Security and Medicare (FICA) withholding. Unlike elective deferrals in a 401(k) arrangement or contributions in a Roth 401(k) arrangement, which are subject to FICA, employer contributions are not subject to such withholding.

Considering the pretax ability of premium payment, let’s look at a simple example. Assume a 35-year-old employee earning $100,000 in a 35% tax bracket and contributing 6% is offered life insurance as part of the investment lineup in their 401(k). The employee also needs life insurance but is finding it hard to come up with the discretionary dollars to pay for the premium of $2,000 per year. Mathematically, the problem is exacerbated by the fact that in a 35% tax bracket, the employee needs to earn approximately $3,076 to pay the premium after taxes. However, inside the plan, the cost is approximately $1,300 and the reportable cost to the employee is the economic benefit, which is the tax on the one-year term cost.

Hypothetically, if a $2,000 premium purchases a face amount of $120,000 of permanent whole life insurance, the economic benefit, using the IRS rate, is $118.80 (the Table 2001 rate for a 35-yearold is $0.99). Therefore, the employee would pay tax of $41.50. For $120,000 of permanent life insurance, the cost to the employee is $41.50. Would you rather pay $2,000 or $41.50?

Ernest

CLU, ChFC, CEBS, CPCU, CPC, CMS, AIF, RICP, CPFA, national president of the Society of Financial Service Professionals, is the director of qualified plans, business markets, for Consolidated Planning. He may be contacted at ernest.guerriero@innfeedback.com.

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September 2023 » InsuranceNewsNet Magazine
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