Helping
high net worth clients sleep at night Serve HNW clients by addressing their unique concerns. PAGE 14
Crafting financial success — with OneAmerica’s Scott Davison PAGE 10
The man with the $50B plan — with Eugene Mitchell PAGE 18
What obesity management drugs mean for obtaining life insurance PAGE 23
Life Insurance • Health/Benefits Annuities • Financial Services FEBRUARY 2024
For those who want the
ultimate win-win FIA product for their clients The Tough Choice Holding Clients Back From Achieving a Worry-Free Retirement … Has Been Eliminated! With the launch of this FIRST-OF-ITS-KIND product to the independent distribution channel, your clients no longer have to choose. They can take advantage of strong stock market rallies AND lock in today’s high interest rates over multiple years — without sacrificing protection from potential risks.
And if that’s not enough … They can also choose a premium bonus, get GUARANTEED AND ENHANCED INCOME FOR LIFE, leave a legacy and more.
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M&O Marketing wants to help you kick off 2024 with a BANG… By helping you give more pre-retirees and baby boomers the many benefits of a “paycheck for life.” Available exclusively through M&O Marketing, this product, brand new to the independent distribution channel, will help your clients secure today’s high interest rates and much-needed retirement security. So that no matter what 2024 has in store, they come out ahead. This is the first time the multiple advantages, growth potential, and protections clients are clamoring for in retirement income solutions are available in ONE product — AND available to independent agents. Take a look at what makes the “IPA” uniquely valuable to your clients. And can make you TRIPLE what you’d expect from a guaranteed fixed annuity.
Get all the details on PAGE 7 or visit GiveMeTheIPA.com
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IMG23112 | INN 02.2024
WELCOME LETTER FROM THE EDITOR
Navigating the maze of long-term care insurance
A
s the population ages and life expectancy continues to rise, the need for longterm care insurance has become increasingly evident. While the demand for such coverage has grown, so too have the challenges associated with selling LTCi. A recent study showed that the average person who obtains private LTCi has a household net worth of $1.4 million. Obviously, there is a greater need for such coverage beyond those with a high net worth. Financial advisors must recognize the changing landscape of aging demographics and the importance of developing expertise in this complex field. The challenges of selling LTCi are multifaceted, ranging from client misconceptions to the intricacies of policy options. One of the primary hurdles is dispelling the myths surrounding LTCi. Many individuals believe that their health insurance or Medicare will cover the costs associated with long-term care, only to discover the reality when they face substantial bills for services such as nursing home care, assisted living or in-home assistance. Clients must be educated about the limitations of existing health care coverage and the financial risks associated with long-term care. Moreover, the stigma attached to aging and the reluctance to confront the possibility of needing assistance add to the challenge. Advisors must approach the conversation with empathy and tact, emphasizing the importance of proactive planning to secure a comfortable and dignified future. In a world where people are living longer, LTCi is no longer a luxury but a necessity. With advanced medical technologies and improved health care, the aging population is experiencing increased longevity. Although this is undoubtedly a positive development, it also underscores the importance of preparing for the potential need for long-term care services. 2
As individuals age, the likelihood of requiring assistance with activities of daily living rises, making it imperative to have a financial safety net in place. Clients should understand that planning for long-term care is not just about protecting assets but also about maintaining independence and quality of life in the golden years. LTCi acts as a crucial tool in achieving this goal, providing the
Another innovative approach involves riders that can be added to life insurance or annuity policies to provide long-term care benefits. These hybrid solutions offer flexibility and a broader range of choices for clients with different financial needs and preferences. The key is tailoring the solution to the individual, considering factors such as health, budget and risk tolerance.
means to access necessary care without depleting one’s savings or burdening family members with exorbitant caregiving responsibilities. Many of those obtaining LTCi say they do so in order to help prevent their family from taking on the burden of providing care should the need arise. To navigate the diverse landscape of LTCi products, advisors must develop expertise in the various options available. Traditional LTCi policies, which provide coverage for nursing home and home health care services, are just one piece of the puzzle. Hybrid or linked products that combine life insurance with long-term care benefits have gained popularity, offering a death benefit if care is not needed and addressing concerns about “use it or lose it” inherent in traditional policies.
The challenges of selling long-term care insurance should be seen as opportunities for advisors to make a meaningful impact on their clients’ lives. As people live longer, the need for financial protection against the costs of long-term care becomes increasingly urgent. Advisors must overcome misconceptions, address the emotional aspects of aging and develop expertise in the evolving landscape of LTCi products. By doing so, they can guide their clients toward comprehensive and personalized solutions that not only safeguard their financial well-being but also contribute to a dignified and independent aging experience.
InsuranceNewsNet Magazine » February 2024
John Forcucci Editor-in-chief
IN THIS ISSUE
View and share the articles from this month’s issue
» read it online InsuranceNewsNet.com/topics/magazine
FEBRUARY 2024 » VOLUME 17, NUMBER 02
FEATURE
Help high net worth clients sleep at night
14
By Susan Rupe Wealthy clients have their own set of concerns. How you can address them.
By Susan Rupe
Eugene Mitchell spearheaded a movement to grow generational wealth in the Black community by getting 200,000 families to buy life insurance.
10 C rafting financial success with time-honored tools OneAmerica President and CEO Scott Davison describes how his company’s expertise and strength in whole life insurance and hybrid long-term care insurance have made it one of the country’s fastest-growing mutual insurance companies.
LIFE
23 What obesity management drugs mean for obtaining life insurance By Emily Bancroft
These medications have skyrocketed in popularity, but what do they mean for underwriting?
ANNUITY
28 R emoving roadblocks to choosing annuities
Paul Feldman John Forcucci Susan Rupe John Hilton
Today’s health savings accounts offer easy-to-access online features that will appeal to younger generations.
ADVISORNEWS Six ways advisors can help clients with the emotional and financial aspects of settling an estate.
BUSINESS
38 Thrive and grow: 4 ways to protect and grow your business By Todd Villeneuve
Finding additional ways to serve clients will keep them loyal to you.
IN THE KNOW
40 G rit: Embracing the daily grind in pursuit of your goals By Joseph Templin
It’s all about doing the things we need to do, even when we don’t feel like doing them.
By Susan Rupe
The four uncertainties around the annuity decision and how advisors can lead clients to make the right choice.
INSURANCE & FINANCIAL MEDIA NETWORK PUBLISHER EDITOR-IN-CHIEF MANAGING EDITOR SENIOR EDITOR
By Steve Rosenthal
By Danielle Miura
18 T he man with the $50B plan
INTERVIEW
32 Tech-savvy younger clients can find HSAs a strategic tool
36 Your client is the executor. Now what?
IN THE FIELD
10
HEALTH/BENEFITS
CREATIVE DIRECTOR SENIOR CONTENT STRATEGIST EMAIL & DIGITAL MARKETING SPECIALIST TRAFFIC COORDINATOR MEDIA OPERATIONS DIRECTOR
INSURANCE & FINANCIAL MEDIA NETWORK 150 Corporate Center Drive • Suite 200 • Camp Hill, PA 17011
717.441.9357 www.InsuranceNewsNet.com Jacob Haas Lori Fogle Megan Kofmehl Sorayah Talarek Ashley McHugh
NATIONAL ACCOUNT DIRECTOR NATIONAL ACCOUNT DIRECTOR DATABASE ADMINISTRATOR STAFF ACCOUNTANT
Brian Henderson Tobi Schneier Sapana Shah Katie Turner
Copyright 2024 Insurance & Financial Media Network. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@insurancenewsnet.com, send your letter to 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011, fax 866.381.8630 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 125, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 717.441.9357, Ext. 125, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein. Address Corrections: Update your address at insurancenewsnetmagazine.com.
February 2024 » InsuranceNewsNet Magazine
3
IN CASE YOU MISSED IT
What’s in the news on InsuranceNewsNet.com
Life insurance illustrations are left in the lurch, junk fee regulation is receiving a hard look in Massachusetts, and long-term care coverage remains both rare and expensive... [Editor’s Note: These are some of the major stories to which we are devoting ongoing coverage at INN. Visit our website to sign up for our free newsletters at insurancenewsnet.com/subscribe and don’t miss another important story!]
Illustrations rewrite not on the agenda in 2024
by John Hilton Consumer advocates and industry analysts say we are long overdue for a full update of the life insurance illustrations model act. All that’s left is for regulators to agree, and so far they are not budging. Birny Birnbaum and Brenda J. Cude urged regulators to tackle illustrations during the National Association of Insurance Commissioners’ fall meeting in December. Birnbaum and Cude are NAICdesignated consumer representatives. “Clearly there needs to be a reengineering of illustration regulations for a 4
consistent approach for both index annuities and life insurance,” said Birnbaum, executive director of the Center for Economic Justice. “We need to stop the incentives for illustration unrealistic accumulation competition, eliminate hypothetical historical results and projection of non-guaranteed outcomes.” Illustrations often show inflated gains. In particular, the growth of proprietary indices is bothersome to many in the industry. At one time, the S&P 500 was used in almost all index products but came with limited ability to design product features. So, carriers created their
InsuranceNewsNet Magazine » February 2024
own indexes and haven’t looked back. Since then, more than 160 indexes have been created. Unlike the S&P 500, few of them have any solid history to draw from. With no history to draw from to support illustrations, insurers created “back tested” hypothetical performance from proprietary index components. But critics say this results in misleading illustrations untethered from reality. “Engineered indices are optimized to deliver not just lights-out illustrated performance for the most recent 10-year period but also to maintain higher returns in the worst 10-year [period],” Birnbaum noted. “Carriers and agents play this up as a can’t lose situation where the worstcase scenario is still double-digit returns. This is a fundamentally misleading characterization.” The current illustrations regulation was adopted in 1997, well before indexed universal life insurance or proprietary indexes even existed. Still, regulators recall the lengthy, often acrimonious, journey to complete the illustrations regulation and have expressed little interest in repeating it. Philip Barlow, associate commissioner for insurance with the District of Columbia Department of Insurance, Securities and Banking, is the lone apparent exception. “Looking at some of those sample illustrations, they seem to be things that are not plausible for somebody who has any level of financial literacy,” Barlow said during the December NAIC meeting. “That they can be used with people seems to be a big problem.” Read the full story online: https://bit.ly/illustrations24 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.
TOP PICKS FROM INSURANCENEWSNET.COM
Trade groups steer Massachusetts’ regulators away from life insurance by John Hilton Industry trade groups are lobbying to defeat a proposal by Massachusetts Attorney General Andrea Joy Campbell to prohibit hidden “junk fees.” The proposed regulations would require Massachusetts businesses to “clearly disclose the total price of a product at the time it is presented to consumers, provide clear and accessible information on whether fees are optional or required, and simplify the process for canceling trial offers and recurring charges, amongst other rules,” Campbell’s office said in a news release. “Millions of Massachusetts consumers are being harmed daily by businesses that charge hidden or surprise fees for profit,” Campbell said. “By prohibiting junk fees and requiring transparency, these proposed regulations will ... ensure that consumers know what they are actually paying for when buying a good or service.” The state describes junk fees as hidden or surprise fees above the advertised
price of a good or service. These fees, sometimes termed “convenience fees” or “service fees,” are often not disclosed or explained, or they are disclosed only near the end of a purchase, rather than at the outset, the release stated. But the proposal is moot when it comes to life insurance, wrote the Life Insurance Association of Massachusetts, the American Council of Life Insurers and the Insured Retirement Institute. Life and annuity carriers are already “highly and ably regulated” by the Massachusetts Division of Insurance, their letter explained. “Disclosures specific to life insurance-related fees must be sent to consumers, advertisements are strictly regulated and must be approved by the Division, and the Massachusetts insurance commissioner and regulators in other states have extensive authority to perform market conduct examinations and request information and data from licensees,” they wrote. “Inclusion of the life insurance
Study: LTC coverage rare, costs remain high by Doug Bailey Only 15% of the elderly have private longterm care insurance, and just 12% of the cost of nursing home care is financed by private insurance, leaving the government or private sources to meet the everescalating costs of long-term care through Medicare and Medicaid. That data comes from a recent white paper posted at the National Bureau of Economic Research. “Those with private insurance are wealthier and have higher income than those without, but they do not appear to be in significantly worse health,” wrote the paper’s authors, Jonathan Gruber and Kathleen M. McGarry. “This pattern arises from two offsetting forms of selection in the market. Those purchasing private insurance include both those who expect
to use more care than average (adverse selection) and those who are particularly risk averse — the latter population is healthier on average, and thus ‘positively selected.’” Gruber is considered the architect of Massachusetts’ universal health insurance program, which was the model for the Affordable Care Act, or Obamacare. McGarry is a researcher and economist at Stony Brook University, specializing in acute health care expenses and long-term end-of-life care expenses.
industry in the regulation is unnecessary and inappropriate and would be harmful to our policyholders.” A number of sections in the proposed regulation “are problematic for life insurance companies,” the letter explained. For example, a section of the rule would make it a violation to fail to “disclose the Total Price of any Product prior to requiring a consumer to provide any personal information, including billing information, unless said information is collected specifically, and only to the extent necessary, to determine whether the Sale of such Product to the consumer is legal, or whether the Product is available in the consumer’s geographic location.” Read the full story online: https://bit.ly/massreg24 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.
Their paper, “Long Term Care in the United States,” is a chapter from an upcoming book on the global issue of longterm care that will be published by the University of Chicago Press. It could become a major influence for policymakers and a credible source of information for agents, advisors, insurers and others dedicated to working with the issue. The lack of a strong private insurance program for long-term care can be blamed on many factors, the authors said, including a misunderstanding of Medicare coverage, suspicions regarding whether insurance companies will agree to pay for covered care if it is needed, the solvency of such companies, the high cost of policies, and the risk of future premium increases. Read the full story online: https://bit.ly/ltcrare24 Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.
February 2024 » InsuranceNewsNet Magazine
5
NEWSWIRES
QUOTABLE
What will tech do to underwriting? Senior underwriters are convinced that emerging technology innovations will
Interest rates took the elevator going up but are going to take the stairs coming down.
substantially transform their business in the coming years, but at the same time they express significant concern and anxiety about how the changes will personally affect them. These are some of the findings in a “Big Underwriting Survey” of more than 300 senior underwriters by Send, an Insurtech software company. About 82% of respondents said they were concerned that technology will negatively impact the scope of their role. At the same time, more than twothirds said they were unable to obtain all the data and information they needed to make risk decisions quickly and efficiently. Moreover, 72% said that artificial intelligence will reduce the number of underwriters in the insurance industry over the next 12 months. While fears about technology exist widely, the underwriters also confessed that they spend a huge amount of time on manual and repetitive tasks that could more efficiently be done by machines. Indeed, a large percentage of respondents said they don’t have enough time to build quality relationships with top broker contacts, implying that computerized tasks would free them up to better pursue person-to-person communications and sort through submissions.
— Greg McBride, chief financial analyst for Bankrate
accredited by having a $200,000 annual earned income, or $300,000 for married couples. Individuals or couples can also qualify with a total $1 million net worth, not including the value of their primary residence.
One major driver of this wealth surge was the jump in home values and stocks during the pandemic, which benefited older generations, which were more likely to own a house — or two — and hold equities or mutual funds.
THE OVER-70 CROWD SEE THEIR WEALTH SURGE
Some people imagine older Americans half-dosing their medications and keeping the thermostat at 58 degrees because they can’t afford life’s necessities. Americans ages 70 and older have seen their share of collective wealth surge during the pandemic. As a group, these older baby boomers have accumulated more than $14 trillion in additional net worth since the end of 2019, based on Federal Reserve data. Their share of the country’s wealth jumped to a record 30% in Q3 2023, even though they account for 11% of the population. In 25 years, the aggregate wealth of Americans aged 70 and older has risen sixfold to $43.3 billion. Over the same period, the wealth of those under age 55 rose by about 2.5 times. DID YOU
KNOW
?
6
INFLATION GIVES MILLIONS NEW ACCESS TO INVESTMENTS
The number of “accredited” investors swelled to 24 million in 2022, according to the Securities and Exchange Commission. That’s 8 million more than in 2019, and the number is poised to keep growing. Americans must generally be “accredited” to invest in private companies and vehicles such as private equity and hedge funds. To qualify, households must meet certain requirements — like a minimum net worth or annual income — which helps ensure they’re financially sophisticated and can sustain the risk of loss from private investments. Individuals can generally become
YOUNGER WORKERS’ RETIREMENT BALANCES TOOK A HIT DURING PANDEMIC
Retirement balances for workers in their midcareer years (older millennials and younger Generation X) took a dive during the years 2019 through 2022, according to the Center for Retirement Research at Boston College. Median combined 401(k) and individual retirement account balances for 35- to 44-year-olds declined to $50,000 in 2022 from $63,500 in 2019. Meanwhile, retirement balances for older age groups increased during the same period. Savings for 45- to 54-yearolds jumped to $119,000 from $105,800, while those for 55- to 64-year-olds increased to $204,000 from $144,000, the study found. However, the share of Americans ages 35 to 44 who have access to a 401(k) plan at work increased by more than two percentage points between 2019 and 2022, according to the report. Since new, younger savers tend to have small 401(k) balances, they dragged down the median balances for the whole age group.
The U.S. Treasury Department will study a possible federal cyber insurance program.
InsuranceNewsNet Magazine » February 2024
Source: U.S. Treasury Department
Puritan’s New IPA: A refreshing take on growing and protecting retirement assets A win-win for clients and independent agents
A
couple questions for you … Will interest rates be as high as they were in 2023, or will they be cut this year? Are we going to have a recession? Will the S&P 500 hit all-time highs? While these questions may lack definitive answers, clients need a way to grow their retirement assets and, just as importantly, protect those earnings for the future — regardless of what happens in the economy. M&O Marketing has opened the door to a new opportunity for independent agents and their clients to do just that.
And the timing couldn’t be more favorable. As we exit a record-setting year in annuity sales, the appeal of fixed and fixed indexed annuities has been boosted by equity market growth and attractive caps and participation rates. It’s an opportune moment for pre-retirees, retirees and their advisors to take full advantage of the benefits of annuities and historic rates while they’re available. The Puritan Interest Plus Annuity (IPA) gives clients guaranteed retirement asset growth and even greater upside potential with downside protection they seek — in ONE product that has it all. It’s
“Individuals continually seek innovative solutions for retirement planning, and the Puritan Interest Plus Annuity, designed to enhance retirement security, aims to benefit as many people as possible through collaboration with M&O — a strategic partner aligned with our mission of delivering exceptional value.” — ROBERT DEFOE, CEO, PURITAN LIFE Traditional product offerings can create a dilemma, forcing individuals to choose between locking in high guaranteed rates for longer periods with a multiyear guarantee annuity (MYGA) and tapping into the potential of the market through the index-based growth in a fixed indexed annuity (FIA). In an FIA, if clients want to allocate a portion of their assets to a fixed account, the rate might be unimpressive and only guaranteed for one year. In a MYGA, they miss out on the ability to capitalize on index-based growth. However, as M&O and their carrier partner have proven, an innovative new product eliminates the need for such trade-offs by incorporating both options seamlessly, offering simplicity for retirement portfolios and expanded choices for clients.
essentially a MYGA within an FIA. By working with M&O Marketing to access this option for your clients, you can help them prepare today to protect themselves from whatever the future holds, with the only financial product — an annuity — that provides a “paycheck for life.” The Puritan Interest Plus Annuity, specifically, gives clients the ability to lock-in today’s high interest rates for 1, 3, 5, or 7 years as well as take advantage of S&P 500 index-linked tax-deferred growth — while still receiving protection from S&P 500 index losses. With the Interest Plus Annuity, the client also has the option
to add the Guaranteed Lifetime Income Withdrawal Benefit Rider (GLWB) and elect the Enhanced Withdrawal Benefit Rider (EWBR), which enhances income payments if the owner needs assistance with Activities of Daily Living (ADLs). On top of that, clients can boost their accumulation value immediately with an optional premium bonus that is also added to their Benefit Base if they have the GLWB Rider. In addition, the IPA offers policyholders the ability to offset the costs of a nursing home stay, as well as terminal or chronic illness, and lets them leave the full accumulation value as a legacy to beneficiaries. So why have clients choose between a MYGA and an FIA when they have an option where both are incorporated seamlessly.
Who is Puritan Life?
Established in 1958, Puritan Life has a rich history of offering financial solutions to clients from their peak earning years to retirement. Thousands of clients have placed their trust in Puritan Life, evidence of the company’s expertise and financial strength with over $300 million in inforce business and assets exceeding $400 million. Puritan Life is rated favorably in terms of strength and stability. The Puritan Life Interest Plus Annuity is well-suited for the current landscape and presents a valuable opportunity for policyholders and advisors.
To help clients secure a worry-free retirement with the Puritan Interest Plus Annuity, visit
GiveMeTheIPA.com
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JOHN HANCOCK’S
Commitment to life John Hancock is a business built on trust, expertise and longevity. Today, they are marrying the best of a 161-year-old company with leadingedge innovation to not only make life insurance easier and faster to buy, but to fundamentally help people live longer, healthier, better lives. As you know, technology is reshaping many aspects of the insurance business; digital touchpoints and real-time access are accelerating the buying process, but also driving preferences when it comes to sales support and relationship management. In this interview, we talk with Fred DeMinico, Head of Sales, and Michelle Dauphinais, Head of Distribution, about how John Hancock is modernizing while staying true to the foundation on which it was built. Fred, as the life insurance industry continues to evolve, how is John Hancock adapting to meet customers’ changing needs? Customers are at the center of everything we do; we don’t have a job without them. I want to emphasize that in our business ‘customer’ refers to both our distribution partners and our end customers. We know they
both expect John Hancock to provide innovative thinking and deep expertise and are constantly evolving to meet them where and how they want to be met. We’ve always viewed distribution
DeMinico
Dauphinais
support as a core competency and are continually investing in ways to better engage our customers. We have focused considerable effort on both customer-facing and virtual support, at the same time, adding layers of subject matter experts to accentuate the model. We are also committed to enhancing our capabilities when it comes to advanced markets, competitive intelligence, inforce management, and specialty markets like foreign nationals and multi-life. We can’t talk about modernization without addressing artificial intelligence (AI). Michelle, AI has the power to transform the life insurance industry — what are some practical applications you see adding value to your business in the next few years?
Customers today expect the brands they to choose to know them, and they demand tailored experiences like they get from Netflix or Amazon. They want their insurance providers to offer the same level of customization and engagement, and AI can help us enhance our efficiency, better serve our customers, and meet this demand with the relevant information they need in a personalized way. This customization should also extend to our distribution partners in how we reach them in the market and deliver our unique offerings. At John Hancock, we’ve already begun using AI to empower our sales team to better understand our distributors and modernize our interactions by tailoring products or planning techniques that match their individual markets and customers. Fred, how has the innovation in the industry impacted the way John Hancock designs their products and structure of your distribution model? From a pure product standpoint, we are proud of our strong general account capabilities that deliver leading policy value, stable designs that work well for customers in all economic conditions, and meaningful
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choice where the cost and benefit can be readily understood. But, our mission at John Hancock is really to make sure every product or concept stems from a customer need. When we introduced John Hancock Vitality in 2015, we made a commitment to sell insurance products that add value to the customer’s life from the day they buy the policy. The program aims to reward healthy behavior and helps customers improve their health and longevity. It has fundamentally changed the way we engage with our customers and run our business. Knowing that illustrative performance can be fleeting, we design our offerings — and build our team — to deliver a uniquely unparalleled value that goes beyond sheer policy value. John Hancock’s brand is anchored in trust. Michelle, how can we as an industry build transparency and trust around AI in the insurance buying process? AI is a powerful tool that can help enhance the insurance buying process, making it faster and easier. As an industry, we have a responsibility to collaborate around regulations and standards that place the end customer front and center, including education and transparency around how artificial intelligence is being applied. Like any modern purchase process, our industry will evolve to facilitate customer preference, allowing opt-in
or opt-out routes and creating ways for customers to share feedback. We can maintain trust by putting a customerfirst focus on protecting data and privacy while using innovation to make our product and services easier to purchase and own. As you mentioned, Fred, so much of this business relies on relationships. How do you balance the need to digitize with the importance of the human element? Yes, we pride ourselves on having fantastic relationships with our distributors — a core competency of our business which has allowed us to stand the test of time. But, even the best relationships will deteriorate if you deliver poor experiences. A well prescribed digital strategy coupled with those deeply rooted relationships becomes a differentiator and key competitive advantage if executed properly. Personalization is a gamechanger in our industry. The data and advanced analytics we have allow us to further understand customer needs and recommend tailored solutions to fit evolving demands, which in turn makes our distributors job much easier.
The rise of digital and omnichannel distribution, which offer more convenience, choice, and customization to customers. Customers will expect to access life insurance products and services anytime, anywhere, and through any device. Not only do new policy sales benefit from personalization, as Fred talked about, but there are also plenty of cross-selling opportunities to deliver proactive and personalized offers at the right price point. Innovation should align with customer demand and behavioral insurance platforms are where our end customers are telling us they want to engage. If we combine AI, behavioral insurance (like John Hancock’s Vitality Program) and modern digital experiences, we can help more consumers access the important protection, and added value, our products offer through a simple purchase process. These are exciting times to be in the industry and shape a new era of innovation. We can build deeper relationships throughout the entire customer journey, engaging differently and more personally, every step of the way.
Michelle, looking forward, what do you think are the most significant factors that will shape the future of the life insurance industry?
For Financial Professional Use Only. Not intended for use with the General Public. Vitality is the provider of the John Hancock Vitality Program in connection with the life insurance policy and Healthy Engagement rider. Insurance products issued by John Hancock Life Insurance Company (U.S.A.), Boston, MA 02116 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595. MLINY122023250-1
INTERVIEW
Crafting financial success with time-tested tools OneAmerica’s longevity — as well as its expertise in hybrid long-term care insurance and strength in whole life insurance — is among the factors that have driven it to become one of the fastest-growing mutual insurance holding companies in the U.S., said chairman, president and CEO Scott Davison. An interview with Publisher Paul Feldman
10
InsuranceNewsNet Magazine » February 2024
CRAFTING FINANCIAL SUCCESS WITH TIME-TESTED TOOLS — WITH SCOTT DAVISON INTERVIEW
O
neAmerica is focused on its mission and “serving the needs of our clients and also the needs of the advisors who serve them,” said Scott Davison. Davison said he entered the insurance business as a complete accident. “I picked my city first (Portland, Maine) and then found someone who would actually give me a job” — Unum Insurance, where he stayed for 14 years. “I had the privilege of learning and growing there.” In 2000, Davison joined OneAmerica as vice president of strategic planning and corporate development. He was appointed president in 2013, CEO in 2014 and chairman of the board in 2017. OneAmerica’s stability as a 140-yearold company and its wide range of products — from life insurance to hybrid long-term care insurance to retirement — provide a strong basis for continued success, Davison said. “We’re focused on growing all of those businesses and continuing to compete, to develop, to change with the industry and serve those clients every day.” In this interview with publisher Paul Feldman, Davison described his history in the industry and his vision for OneAmerica. Paul Feldman: Tell me a little about OneAmerica, because you have a very fascinating story in the industry. Scott Davison: We are a mutual company, so we are focused on the mission and, long term, serving the needs of our clients as well as the needs of the advisors who serve them. So we have a number of businesses. We start with our traditional life insurance business, which is focused on whole life. We are also a market leader in asset-based long-term care, or hybrid long-term care. We’ve been in that business for 30 years, and we really know it inside and out. It’s one of the things that we would consider ourselves to be expert in and an innovator in that market. We also have a small but growing employee benefits business, group life and group disability, both traditional and voluntary. And then we have our recordkeeping business: 401(k), 403(b), 457. You name it in the retirement space — we do it. And finally, we have an institutional
markets space, mostly focused on pension risk transfer. That has been a very fast-growing and a very helpful business for us. We’re pretty well diversified. We have the tools that your typical client will need to build their financial future. Feldman: Tell me about OneAmerica’s whole life business. That’s key to OneAmerica’s roots, correct? Davison: We started as a fraternal organization in the 1870s. Life insurance was the start of what we do, and it continues to be a product that we think almost every consumer in America should own. That is right at the heart of our mission. It’s a participating policy, being mutual, and it’s very competitive in the marketplace. It’s focused on providing the flexibility for
or an annuity platform, it’s financially sustainable for the insurance company, for the carrier. When you combine those things, it is the ultimate suitable sale for a client who’s starting to think toward retirement. It’s a great way to reposition some assets for those clients so they can cover their long-term care needs and also to put them in a product that is going to pay a benefit no matter what — whether they keep the policy, whether they choose later to let the policy lapse, whether they die early, whether they need long-term care or not. This product really responds in all those scenarios. One of the reasons we love it so much is that it puts us on the same side of the table as the client, because they’re going to get a benefit whether they live, die or quit. We hope the client stays with the policy and
If you look at the demographics in the individual life and annuity space, the demographics for long-term care are the most promising over the next couple of decades of any product. people to be able to use the cash value in the policy while they’re alive, and also on providing death protection in the event of a premature death and being an effective part of an estate plan. So it is very much part of what we, and it is at the core of our traditional mission. Feldman: Let’s talk about your longterm care hybrid. OneAmerica is a pioneer in this marketplace, and longterm care is a huge issue for everybody. Davison: There is such a need out there. If you look at the demographics in the individual life and annuity space, the demographics for long-term care are the most promising over the next couple of decades of any product. And the asset-based long-term care — the hybrid long-term care — is the most sustainable model. It’s sustainable for the clients because the rates are guaranteed, so you’re not going to get a large rate increase in your old age when you can least afford it. And because it’s built on a life insurance
lives a happy, healthy life. But we know at the end of the day, we are going to be the pay window, one way or the other, providing a great benefit for that client and their family. Feldman: So much has been said about having security in retirement and being happy. I think that your product provides that in many ways. Davison: I think so, and it does something else that I think is important. I’ve been going through a long-term care journey with my own parents. My mom was in longterm care recently and died December 2022. My dad’s in care today; he is mostly independent but needs some level of care to be able to live his life to the fullest at age 95 1/2. So it gives independence and dignity at the later stages of retirement, which I don’t think most of us really think about until we’ve been through it with our own parents or another loved one. For my father to be able to live on his own, to not have to depend on family members to provide care all the time, is
February 2024 » InsuranceNewsNet Magazine
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INTERVIEW CRAFTING FINANCIAL SUCCESS WITH TIME-TESTED TOOLS — WITH SCOTT DAVISON
Scott Davison and Katie Ledecky at the 2023 Indiana Sports Corp State of Sports Presented by OneAmerica in October 2023.
such a gift. We — my sisters and I — can be his children, can be his emotional support, but not have to worry about every last detail of his daily care. I think as we can get that story out to consumers, more and more of them will seek out this product, especially a product that is guaranteed. You know what you’re buying, and you know you will get a benefit.
growing market. It does take some investment of time, though, to learn about the product, to learn how to approach a client with it, and there are tools that can help advisors learn that fairly quickly.
Feldman: What would you tell advisors who do not offer this type of product today?
Davison: I think it’s just the change, because this is something new. It’s a bit of a pivot. It does take some energy to learn how these products work. They’re a little bit more complex in some ways. They have some more options. Also, there’s learning the process of having those critical conversations with the client about long-term care and why this is a better alternative than trying to self-fund it or hope that Medicaid is going to pay for it.
Davison: I would say you’re missing an opportunity. To best serve your client and take your practice to the next level, you should invest some time in exploring how these products work. If you’re familiar with life insurance, our products are built on a whole life chassis and a fixed annuity chassis for our annuity care suite of products. We have all sorts of tools to help advisors make that transition to broaden their practice to include asset-based longterm care. I think they’ll find that if they have trusted relationships with consumers, this is a very easy pivot to both help grow their practice and help clients. In a time in which we’re all under scrutiny for suitability, making sure that our sales are in the best interest of the clients, it’s hard to find a circumstance with a client who has some savings for retirement where this isn’t the right thing for them. It’s a win for the client; it’s a win for the advisor. I would hate to see people miss that opportunity, because it’s also a huge and 12
Feldman: What are the biggest challenges advisors face to getting into this and adding this to their portfolio?
Feldman: Does your whole life product have that long-term care protection? Davison: We do have an accelerated benefit on our whole life, which is a little bit different. The difference when you go to the hybrid product is that it is built on a whole life chassis but it also has long-term care riders attached to it. The product must go through two different reviews with departments of insurance when we file it around the country. It is a fully integrated product that is much different from simply a critical illness rider on a whole life policy. It provides a much more meaningful long-term care benefit.
InsuranceNewsNet Magazine » February 2024
For many clients, they want to build their whole life portfolio, or universal life or whatever products they choose, and they want to have an asset-based longterm care product alongside that. That’s what I did personally, and that’s typically what we recommend to people. Have your basic life coverage — whole life, term, whatever you’re buying. Then also set aside a life- or annuity-based product specifically aimed toward supporting your long-term care that includes these deep long-term care benefits, as opposed to just relying on the critical illness rider to support your long-term care needs. And there are many benefits. When advisors get into the learning process, they’ll see that these products are well worth it, but it is a different product from just a plain vanilla whole life policy available in the market today, even with the critical illness rider. Feldman: What is your opinion on individual long-term care insurance at this point? Because it doesn’t seem to have worked very well for a lot of carriers. Davison: It certainly has been very difficult for carriers. Especially if you look at the historic versions of that product that were written back in the 1980s and the 1990s, it’s been difficult for carriers, for clients, for their advisors, and it’s been difficult, frankly, for the regulators. Because of the lapse rate, and because interest rate assumptions were not well understood at the very beginning, traditional long-term care insurance has been a money loser for many of the carriers that entered that market. They’ve had to raise rates, which is really difficult for clients and creates problems for the advisors serving those clients. Advisors have to go back and tell their clients about the rate increase. The regulators have to approve the rate increase, so the regulators are in a tough spot. They need to support fairness and also the solvency of the insurers that wrote these health-based long-term care products. And they also have to be an advocate for the consumer. So there are some difficult choices for everybody. We believe that the best way to serve this market is with products that are guaranteed, where you know what you must do to have that coverage enforced
CRAFTING FINANCIAL SUCCESS WITH TIME-TESTED TOOLS — WITH SCOTT DAVISON INTERVIEW and that you have to pay those premiums. Those premiums won’t change, and you’ll have the coverage that you expected when it gets to the time when you need care, or you die and your beneficiaries receive the death benefit. I also think a big opportunity in the asset-based space versus the traditional health care long-term care products is that health care products generally are use it or lose it. So, if you don’t need long-term care, you pay premiums and you get nothing back. And again, on the asset-based side, you will receive a benefit regardless. If you are fortunate enough to live to 100 and not need long-term care, we know that eventually mortality is going to catch up with all of us and you will get that benefit. You won’t have to worry that you spent thousands and thousands of dollars for no benefit. You’re not guessing whether you’re going to need long-term care or not. Most of us will need it at some point, and that’s why we like the guaranteed benefit part of our product design. Feldman: What do you see as the biggest challenges or opportunities in the marketplace today with life and, especially right now, annuities? Davison: We think there are huge opportunities in the market today. We are seeing record levels of sales growth. Our life premiums this year are up 36% for new business. We’re excited about that. We see more opportunity than barriers. The challenge is always making sure that consumers can hear the message. We’re figuring out new ways to support our distribution partners so that they can be more effective and can spend more of their time finding new clients and advising the ones that they have. At OneAmerica, we believe strongly that a trusted relationship with a human advisor will be absolutely the key to success as far out into the future as we can see. We think technology can aid in that process, can make us more efficient, but there has to be that trusted relationship. That’s what advisors bring to the table first and foremost. The challenge is, with all the new technologies coming out — artificial intelligence and all the things that you hear about — how do we best combine the human factor and use technology to make
that process as efficient and as satisfying for the end client as it can be? And, of course, we want it to be as easy for the advisor as we can possibly make it. I think our industry has a long way to go, frankly. We are complicated as an industry. We must be able to do things
and I think that will bring opportunity for sales growth. The last part of that is determining how we can use AI and predictive analytics to be able to prospect so that we can feed prospects to our distribution partners and help them be more efficient.
The challenge is, with all the new technologies coming out — artificial intelligence and all the things that you hear about — how do we best combine the human factor and use technology to make that process as efficient and as satisfying for the end client as it can be? more quickly. The technology tools that are coming out are exciting, but they’re also super challenging to integrate with systems that have be en around for decades. Getting that mix of human beings and technology right — that, I think, is the biggest challenge we have today. Feldman: What is OneAmerica doing to enable improvement on the technological side? Davison: The first thing we’re trying to do is make sure that our distribution partners have the data they need to be able to build and grow their practice, and the data that they need to be able to serve their clients better. They need to have at their fingertips what the requirements are. This speeds up the process so we have fewer policies that don’t pay and more policies that get through the process quickly and get into the client’s hands as fast as possible. Some of the innovations in underwriting will aid that process and speed it up significantly for most people. It’s also critical to have tools that are intuitive and easy for the advisor. We must have the appropriate level of self-service tools for the clients so that they can directly access information from us — without our getting in the way of the relationship — and then call their advisor when it’s appropriate. There’s a lot of work to do there, but I think there’s an incredible opportunity,
Feldman: The Department of Labor released a newly proposed fiduciary rule. Do you have any comment on that? Davison: One thing I would encourage advisors to do is what I’ve done: Join both the National Association of Insurance and Financial Advisors and Finseca, because they are the voice of advisors. The people in Washington certainly want to hear from CEOs at carriers — like me — but more important, they want to hear from a small-business owner, like an advisor, like a head of a financial planning practice in their home district. Getting engaged with NAIFA, Finseca and organizations such as those is important to making sure that we can preserve the system of regulation that we have today. Feldman: With all that’s happening in regulation today, let’s talk about how your products are evolving. Davison: There’s always an evolution, and we’re always looking to keep our products fresh. We’ve tended to stay with products that stand the test of time and address client needs — and our whole life is a great example. Most of our product updates are not radical departures, because we know what a typical American family needs to build a secure financial plan. We tend to stick with products that have a long track record of being great for clients.
February 2024 » InsuranceNewsNet Magazine
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COVER STORY
Helping
high net worth clients sleep at night Serve HNW clients by addressing their unique concerns. BY S U S A N R U P E
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InsuranceNewsNet Magazine » February 2024
HELPING HIGH NET WORTH CLIENTS SLEEP AT NIGHT COVER STORY
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oney won’t solve all your problems, the saying goes. But the advisor who can help high-net-worth clients address their unique concerns will become valued — and will attract even more wealthy clients. It’s more than selling a life insurance policy or devising a retirement plan. Advisors who specialize in the HNW market said their ability to be a trusted partner on their clients’ financial journeys and to be part of their clients’ professional team help them ease some of the concerns that often come with having wealth or financial success. What is a high net worth individual and how many of them are there? Although there is no official or legal definition of high net worth, financial professionals use the term to describe anyone who owns liquid assets valued at $1 million or more. The 2023 Credit Suisse Global Wealth Report estimates that nearly 24.5 million Americans are in the high net worth bracket. Advisors who have found success serving the high-net-worth market shared some of their secrets to gaining the trust of their wealthy clients and presenting solutions that help them sleep at night.
Get in on the ground floor
Everyone wants to work with a client who is wealthy, but not everyone wants to work with that same client before they make their first million, said Ted Shanahan . Shanahan is a partner with Blueprint Financial Group, headquartered in Reston, Va., and part of Northwestern Mutual Private Client Group. Wealthy clients come from one of three groups, Shanahan said. They either come from inherited wealth, Shanahan worked in a publicly traded company and became wealthy through their stock options, or concentrated their efforts on building a business and then monetized that business in the future. It’s the latter group that Shanahan focuses his practice on. “My world has always been the world of those people who have started their business and then the business itself created the high-net-worth environment,” he said.
“I work with owners of closely held businesses primarily because I have a closely held business. I can relate to them, and they can relate to me. “I also understand their journey. Their journey often means making decisions because closely held business owners own that business for their personal plan. So, in essence, we sit at the intersection of the business owner’s business plan and their personal plan. That’s because ultimately their business plan will be the funding mechanism for their personal plan. Through monetizing the enterprise value of their business, this can create an environment to provide for their family through multiple generations.”
in place “so that when the business owner does monetize their business, their money doesn’t all go to their estate where it may be taken away in estate taxes.” Shanahan said he begins working with high-net-worth clients “before they are who they want to be.” “We help them become the person they want to be,” he said. “When people come to us and they tell us who they want to be, it’s not who they are today. They say, ‘I want to be a successful businessman. I want to be a great parent, educate my children, have a house and a vacation home, and make an impact in my community. I want to do all these things, but I’m not quite there yet.’
We sit at the intersection of the business owner’s business plan and their personal plan. That’s because ultimately, their business plan will be the funding mechanism for their personal plan. Shanahan said the most satisfying aspect of his practice is working with clients while they begin to grow the business that eventually leads to their becoming wealthy. “In the beginning, we work with that business owner to put in place employee benefits, health insurance and a 401(k) plan,” he said. “As their business plan becomes more sophisticated, they need to create buy-sell agreements so if their partner passes away, they can pay the estate or the spouse of that partner for their interest in that business.” Shanahan said he aims to be a trusted advisor to the owner of a business in the startup phase, protecting their interests and providing a strategy to attract and retain employees. “Then as they build that business, we can help them strategize ways to make sure their enterprise value is protected,” he said. As the clients continue their journey, Shanahan introduces them to attorneys and accountants who can help put trusts
“What we do is sign them up to become that person that they want to be someday but are not right now. But we don’t help them make it easy. Building wealth is hard. We want to walk that path with them.” Getting a wealthy client to agree to do business with you is difficult, Shanahan said. He takes a different approach to seeking clients. “After someone sells their business, after they have a few million dollars, everyone is out there trying to get them as a client. We’d rather get someone as a client before they’re there and help them grow to become who they are. We do a lot of it through business planning, and often the first products we put in place are employee benefits.” Shanahan said the best way to obtain high net worth clients is to begin working with them before they become wealthy. “Before all the sharks go after them, I would go after clients and help them with the vision of what they want in the future. Be relevant to them early on. Because once they have that high net worth, they might not have had all the necessary planning done along the way. If you can enter into
February 2024 » InsuranceNewsNet Magazine
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COVER STORY HELPING HIGH NET WORTH CLIENTS SLEEP AT NIGHT
Why investors switched advisors
28%
Previous advisor’s inability to support client’s changing financial circumstances
27%
Desire for access to different products and services
22%
Improved digital capabilities PwC HNW Investor Survey 2022
a relationship with them when you can be most relevant to them, you’ll go where the competition isn’t. Start with helping them grow, and I can tell you that’s a journey that will be fun.”
A niche within a niche
High net worth individuals and families may have wealth as a common element. But there are different niches within the high-net-worth market, and an advisor who serves one of these niches can find rewards there. Kristin Carleton is CEO of Special Abilities Network in Henrico, Va., where she provides financial advice to families of individuals who have special needs. She serves Carleton many high-net-worth clients and said that even though a family may have wealth, they are not immune from financial issues stemming from a loved one’s need for care. Carleton has a son with a disability, and she noticed a number of advisors offering concierge family office services in several different niches, but no one was offering such services to special-needs families. “Special needs families have larger needs than most families,” she said. “As I looked more into this, I found that the
Life insurance is a great tool in special needs planning because it allows you to secure exactly the amount of funding you want. reason no one was offering this type of service to special needs families is that their needs are so complex. You really need a depth of understanding of everything from government benefits to private insurance to traditional financial planning. “You have to understand you’re planning for three aspects of life: You’re planning to save for the family’s retirement, you’re planning for when the parents are retired and unable to care for themselves and the family member, and then you’re planning for what happens after
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the parents die and their family member outlives them.” Carleton said her approach to serving high net worth special-needs families consists of three parts. The first part is funding. “It’s determining how much services will cost, how much you need, and where you will get the instruments and tools you need to provide that funding, protect it and be tax-efficient with it,” she said. Many high net worth families want to be sure they have a guaranteed amount of funds set aside for the family member who has a disability, and they want those funds to be separate from their estate, she said. “So, I help them set that up and put protections in place for it.” The second part is devising a legal strategy. “The legal strategy is even more complex for high-net-worth families,” Carleton said. “One of the things that people often say to me is, ‘We have enough money; we don’t need government benefits.’ And my response always is, ‘The last thing you want is to not have access to a solution or a service that your child wants or needs.’ “A lot of services available in the disability world only take Medicaid as payment.
InsuranceNewsNet Magazine » February 2024
So, you always want your family member to have access to Medicaid.” Carleton said her clients rely on her to set up protections so that family members have access to what they need and that the best interests of the family member with a disability are at the forefront. The third part is family support, making sure all family members are planned for and supported. Carleton said many of her clients have family members with disabilities that have gone undiagnosed because so much attention is paid to the outwardly disabled family member.
HELPING HIGH NET WORTH CLIENTS SLEEP AT NIGHT COVER STORY Life insurance has a role to play in all special-needs planning, she said. “Life insurance is a great tool in special needs planning because it allows you to secure exactly the amount of funding you want,” she said. “And the death benefit comes tax free most of the time. It allows you to separate that money from your estate and allows you total control over the money. You know how much you’ll be able to leave for your family member.” Some wealthy clients might think that because they are leaving their family member a house, their needs will be covered, Carleton said, but that is not the case. “A lot of people say to me, ‘I’m not worried about paying for their care after I’m gone because I will leave them my house.’ And I say, ‘Have they ever lived alone before? Can they get themselves dressed? Do they know how to pay bills? Can they get their own breakfast, or can they shop for groceries?’ If they can’t do these things on their own, then they need supports and services, and that’s where life insurance can come in to pay for them.” Carleton said there are two things her clients need most from her. “One is peace of mind that when they’re no longer here, their loved one will be OK. And two is help in cutting through the chaos of their life today. If we can do both of those things, we’ve been incredibly successful.” Advisors who want to serve a niche within the high-net-worth space should “find out what’s keeping them up at night and solve that problem,” she said. “If you can solve that problem, you will gain a loyal client for life.”
Life insurance plays a role
Life insurance and annuities have a role to play in helping high net worth clients protect their wealth. Clients in the upper income brackets have an even greater need for such coverage than the average consumer, said Ted Bernstein. Bernstein is the owner of Life Cycle Financial Planners in Boca Raton, Fla. High net worth individuals “often have a lot of worth and not enough income,” Bernstein said, and that can especially be true in retirement. Clients who became wealthy by accumulating assets during their working
years may find themselves in retirement with a large retirement portfolio but a need to create an income stream. This is where annuities come in, Bernstein said. “They might have millions of dollars in their retirement plans, and I encourage them to look at the value of an annuity in creating income,” he said. Annuities can take some of the worry out of a wealthy client’s assets, Bernstein said. He used an example of a client who has a multimillion-dollar real estate portfolio, but that real estate is not producing sufficient income for them.
insurance an attractive way to solve their concerns, Bernstein said. “Let’s look at two types of clients. At one extreme is someone who has 100% liquidity. At the other extreme is someone whose wealth is all held in real estate or privately held business. The client with the real estate may find they have more of a classic need for the life insurance death benefit. But the client whose assets are mostly all in bonds, stocks and other liquid things may think there’s absolutely no need for life insurance. You can present it as: Do you want to spend $200,000 a
The level of net worth has skyrocketed in the past 10 years. Does a person with $50 million in net worth need the death benefit? Do they need life insurance? The way I look at it is they’re buying liquidity. “With annuities creating income, the client doesn’t have to worry about their leverage position. They don’t have to worry about their assets performing. They don’t have to wonder what they’re going to do when they’re in their mid-80s or early 90s. Do they really want to be managing assets then? “Life insurance is at the heart of the matter” in serving high net worth clients, Bernstein said. “I think there’s a broader need for life insurance in the high net worth and ultra-high net worth markets,” he said. “The level of net worth has skyrocketed in the past 10 years. Does a person with $50 million in net worth need the death benefit? Do they need life insurance? The way I look at it is they’re buying liquidity. That clientele has a desire to preserve the assets they want to pass on to the next generation without dilution. They want that $50 million to end up in the hands of their children or in the hands of their trust withBernstein out seeing millions of dollars go toward taxes.” High net worth clients have a desire to preserve as much of their wealth in the most efficient way, which makes life
year for $10 million in coverage or do you want to give millions to the government on your death?” Life insurance “is the great equalizer” in serving high net worth clients, he said. “It’s buying liquidity,” he said. “And liquidity is so often in short supply, and it’s needed at the worst time. Life insurance is the great thing that prevents a small business from having to be sold under duress. Real estate, the summer homes, all the assets that are passing from one generation to the next, are fraught with nothing but problems. Families fight because they can’t split a house in half. Life insurance solves all those things.” 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.
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February 2024 » InsuranceNewsNet Magazine
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the Fıeld A Visit With Agents of Change
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InsuranceNewsNet Magazine » February 2024
THE MAN WITH THE $50B PLAN — WITH EUGENE MITCHELL IN THE FIELD
EUGENE MITCHELL ate wealth and improve their economic tunity out there in telling people about discusses his efforts to expand life insurance ownership to create generational wealth in the Black community.
By Susan Rupe
I
n 1957, Cirilo McSween became New York Life’s first Black insurance agent, earning his way into the Million Dollar Round Table his first year in the business and blazing a trail for numerous Black agents to follow. More than a half-century later, Eugene Mitchell, corporate vice president and African American market manager at New York Life, developed and initiated the $50 Billion Community Empowerment Plan. The $50 Billion Plan is an initiative to accumulate $50 billion of in-force life insurance in the African American community. By the middle of 2017, six years after announcing the initiative, Mitchell and his team crossed that $50 billion mark. The vision behind the plan was that 200,000 families with $250,000 of life insurance will create $50 billion of protection and tax-free future income. Today, Mitchell is president and CEO of E. Mitchell Enterprises, a financial consulting and services firm. He also is the author of Closing the Racial Wealth Gap: 7 Untold Rules for Black Prosperity and Legacy. Mitchell first became aware of the need for creating wealth in the Black community when he was a young man with a newly earned associate degree and working at a correctional facility in Florida while figuring out what to do with the rest of his life. “As I looked out at this majority Black and Brown inmate population, I started asking myself why it is this way here in America,” he said. “People usually say it’s because of crime or drugs or non-nuclear households. But I thought those were symptoms of a deeper-rooted problem, which is about economics. Had these gentlemen been set up with a college savings plan, their path in life would have been different. I totally believe that if they had been given the down payment for a home or startup capital for a business, they would not be in prison.” Mitchell said that his work in the corrections system led him to his life’s
purpose: to help Black Americans cre-
he said. “There’s a whole missed oppor-
status. He earned a bachelor’s degree in finance from Florida International University and went on to earn an MBA from New York University. After graduating from NYU, Mitchell was an intern at a technology company in California, right before the tech bubble burst in 2001. With a career in tech looking less attractive, Mitchell returned to New York, where a friend suggested he look into New York Life’s leadership development program.
the potential of using life insurance as a tool to create wealth, to protect income, to provide living benefits and to create a legacy for the future.” Mitchell eventually left New York Life to write his book and create his own consulting business. He continues to speak and write about the impact that life insurance has on the Black community and why the industry must better serve that market. There are two challenges in serving this market: Reaching more Black consumers, and recruiting and retaining more Black advisors. Attracting more Black advisors into the industry would go a long way in spreading the life insurance message to Black consumers, Mitchell said. “My focus is on what we can do to recruit, train, develop and retain more Black agents in this business, because they’re on the ground and they will spread that message,” he said. “But I ask, how many
Marketing to Black Americans
New York Life’s cultural marketing group has spent the past 25 years targeting consumers in the country’s Chinese, Vietnamese, Korean, Hispanic and Indian markets. But Mitchell said that when he began his career at New York Life, there was little to no outreach to Black Americans. He set out to change that.
There’s a whole missed opportunity out there in telling people about the potential of using life insurance as a tool to create wealth, to protect income, to provide living benefits and to create a legacy for the future... “There’s a belief that Black people don’t want to buy life insurance, or they buy only small policies to cover their burial expenses,” he said. “Their policies often lapse, and the agents who sell them often don’t make it. So, carriers determine they don’t see the value or purpose in creating resources for agents to serve the Black community.” Mitchell began to write a business plan for serving the African American market and eventually created an African American market within New York Life’s cultural marketing group. In the 17 years since that market was created, the Black agent force in that market has grown from 500 to 1,500.
Changing the conversation
One reason behind creating the $50 Billion Plan in 2011, Mitchell said, was “to change the conversation about life insurance.” “So many Black Americans think of life insurance only as a way to pay for burial,”
Black agents have a $1 million policy on themselves? If not, why not? Most of us have never inherited anything, so it’s still just a concept for many Black agents. It’s about getting them to be the messengers in this.”
Playing catch-up
Mitchell said the Black community has some catching up to do with other ethnic groups in the U.S. in terms of buying large amounts of life insurance coverage. “During my time working in the cultural markets group, I saw other families – Asian, Spanish, Jewish – who understood the power and the potential of life insurance and took out sizable policies to pass something to their children,” he said. During his time working with New York Life’s African American market, Mitchell said, he spent much of his time trying to understand the agents who worked in that market, as well as working in marketing and advertising to the market.
February 2024 » InsuranceNewsNet Magazine
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the Fıeld A Visit With Agents of Change “I went to the advertising department, I went to underwriting, I went to legal, I went to marketing, I looked at all the messaging,” he said. “Then I looked at the distribution side and agent recruitment. Initially, I was trying to understand the company’s positioning and messaging. Then as I started working with agents, we talked about community engagement.”
Mitchell helped agents conduct workshops in Black churches and do outreach among Black labor unions and other organizations and institutions in the Black community. He also spearheaded efforts to recruit students from historically Black colleges and universities into the industry. “We had, and still have, the belief that if every Black family in America who could
I wholeheartedly believe that if we, the more than 46 million Black people in America, were to make better choices regarding where we spend our $1.2 trillion of annual earned income, so many things that currently seem impossible would become possible. We could: » Eradicate poverty in our communities. » Reduce our national unemployment rate. » Decrease crime and eradicate our school-to-prison pipeline. » Mend broken families. » Lower the incidence of divorce and domestic violence. » Further academic or vocational pursuits and enhance existing public education. » Increase overall home ownership. » Reduce health care disparities among minorities and socioeconomically disenfranchised communities. » Teach our children necessary money-management skills. » Foster new businesses and entrepreneurialism. » Build endowments to support and strengthen our organizations and institutions. » Galvanize and leverage social and political influence around issues impacting the Black community.
afford it had a life insurance policy, we could close the racial wealth gap in one generation,” he said. “We could create generational wealth and eradicate GoFundMe as a way of paying to bury folks. We were getting the message in front of pastors, in front of educators, in front of everyone who needed to hear the message.”
The story continues
With the $50 Billion Plan hitting its goal, the story continues, as about $1 billion in death claims have been paid out since 2011. Mitchell shared several examples of how Black families and individuals benefited from the coverage they put in place.
» A nurse from Philadelphia originally
wanted to buy $100,000 in coverage but eventually bought a $1 million policy. When she died four years later, the death benefit was split between her mother and her daughter. The daughter is using those funds to attend medical school.
» The widow of a tech company owner received a $1 million death benefit that will enable her to keep her late husband’s company going after his death.
» Three members of one family died from
COVID-19, and their death benefits paid off the mortgage on their home as well as supported the children left behind.
» Living benefits enabled a cancer patient
to pay for treatment and living expenses since she was unable to work because of her illness. Mitchell said his goal is to see $1 trillion of coverage in force in the Black community in the next 10 years. “We’re trying to spread this on a larger scale across the industry now and inviting other companies to join with us, helping people set up secure futures,” he said.
Eugene Mitchell, Closing the Racial Wealth Gap: 7 Untold Rules for Black Prosperity and Legacy. 2019
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InsuranceNewsNet Magazine » February 2024
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.
Grow your client base with
women business owners using these insights
W
omen are a formidable force in the American economy, owning more than 12 million businesses nationwide that generate upwards of $2 trillion in sales. This creates a vast opportunity for financial professionals. Yet a recent survey revealed a notable service gap. The Allianz 2023 Women-Owned Business Study1 found that nearly 25% of women entrepreneurs are not partnering with a financial professional. But this doesn’t mean you should rush into serving this market. Here’s why: Before specializing in the women business owner niche, financial professionals must have knowledge of and experience with the unique challenges this demographic faces. In fact, 92% of women business owners surveyed stressed the importance of their financial professional understanding the specific issues they’re concerned about. This overwhelming consensus among survey respondents underscores notable potential for financial professionals who are attuned to the needs, motivations and concerns of women business owners. Armed with this information, financial professionals can more effectively engage with women who are actively leading and reshaping the economic landscape. These women-owned businesses surveyed are concentrated in dynamic sectors including retail, technology, construction and professional services, and 65% are valued at $2 million or more. The businesses vary in size, from teams of five up to 499 employees. The diversity in size and scope translates into substantial economic contributions, with 74% of those surveyed generating $1 million or more in annual revenue. Many financial professionals may be interested in working with women, but it’s critical to recognize that “women” as a category is too broad to be deemed a
niche. That’s why exploring a narrower market like women business owners could be a smart decision. But keep in mind that their needs and challenges can be as diverse as the industries they represent. To serve these prospective clients, financial professionals must demonstrate a nuanced understanding of the market to appropriately recommend solutions that could provide the most benefit. Women business owners are more than just the impressive revenue figures their businesses represent; they are job creators, drivers of innovation and community pillars. Their multi-dimensional influence on the nation’s economic prosperity makes them ideal clients. To genuinely connect with them and add value, it’s important to offer more than generic services. Your knowledge and strategies must be tailored to the intricacies of their business models and specific challenges. One solution may be fixed index universal life (FIUL) insurance, which allows you to customize strategies to help meet a variety of business needs. For example, the survey revealed that the economy and key employees are major concerns for women-owned businesses — with 79% having key employees who are critical to the business’s success and/or to retain throughout an ownership transition. In this situation, an FIUL insurance policy can provide several different forms of compensation and benefits, such as bonus plans and split-dollar arrangements, that an employer may offer to help recruit, retain and motivate key employees. Additionally, the survey revealed that women-owned small businesses (revenue under $2 million) are less likely to have retention benefits or a buy-sell agreement in place. While a financial professional might suggest an FIUL in these situations to help with business succession planning, if small-business
owners aren’t working with a financial professional, then that’s a problem. It’s important to note that in past surveys, women placed a high value on interpersonal skills and were just as concerned with the service experience they received as with the financial solutions presented. Women also perceive the industry as more maleoriented, and as a result, they may not feel their needs are adequately understood or addressed. That’s why it can’t be emphasized enough that familiarizing yourself with the target market and scrapping the “business as usual” mentality, where every client is treated the same, is key to growing your client base. Tailoring your approach may not only benefit your business, but it can also support the continued growth and success of women-led businesses. It’s clear that there’s a wealth of potential for those who specialize in serving women entrepreneurs, a market characterized by its rapid expansion and evolving needs. Women business owners who work with financial professionals who provide holistic, tailored financial guidance will be empowered to make informed decisions as they navigate the complexities of business ownership and help secure their financial futures. Exploring this niche market can open doors to new possibilities. For further insights and a detailed look at valuable information to help grow your client base with women business owners, scan the QR code or visit WomenBizOpp.com.
1 The Allianz 2023 Women-Owned Small Business study was conducted by Allianz as an online survey in April 2023 with 211 respondents who are small- to medium-size business owners with at least five employees and at least $500,000 in revenue that fiscal year.
Product and feature availability may vary by state and broker/dealer. Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. 800.950.1962. www.allianzlife.com This content does not apply in the state of New York. For financial professional use only – not for use with the public.
M-8098 (1/2024)
LIFEWIRES
Individual life premium rises 4% in 3Q A strong economy and falling inflation sparked demand for life insurance in mid-
2023, and that showed up in LIMRA’s third-quarter individual life premium surveys and estimates. Total individual life insurance new annualized IUL leads 3Q in no. premium increased 4% to $3.7 billion year over of policies sold year, according to LIMRA’s U.S. Retail Individual • IUL — Up 23% Life Insurance Sales surveys and estimates. Total • FUL — Up 1% new premium year to date was $11.5 billion, level • FUL — Up 7% with the same period in 2022. The total number of • Term — Up 5% policies sold in the third quarter increased 4% over • Whole life — Flat the results in third quarter 2022, with 6 in 10 carriers Source: LIMRA reporting gains. For the first nine months of the year, policy count improved 4% year over year. Third quarter 2023 indexed universal life premium was $871 million, level with results from prior year; however, policy count jumped 17% year over year. Year-to-date new premium fell 7% to $2.6 billion, compared with the first nine months of 2022. IUL premium represented 23% of total U.S. premium sold in the first nine months of 2023. Term life saw its third consecutive quarter of growth in premium and policy sales. Term insurance premium increased 5% in the third quarter to $731 million. Policy count also grew, up 5% for the quarter. With strong results expected in the fourth quarter, LIMRA is forecasting term premium to grow as much as 6% in 2023.
QUOTABLE Buying life insurance is a complex process. So, help them understand what they need and how to fill that need. — John Carroll, senior vice president and head of life and annuities for LIMRA
In addition, life insurers’ portfolios remain well positioned for near-term economic or market adversity. Among key regulatory developments, the National Association of Insurance Commissioners is seeking to update and revise the regulation of life insurer investments to better match life insurers’ shift in portfolio asset mix toward more private and structured investments.
LIFE INSURANCE SALES PROJECTED TO RISE IN 2024 AND 2025
LIMRA is looking at this year and next with rose-colored glasses as the organization predicts U.S. retail life insurance premium to grow as much as 5% in 2024 and 2025. Stabilizing economic and regulatory conditions are two main reasons for this optimistic view. Following pandemic-driven declines in 2020, life insurance premium jumped 18% in 2021. LIMRA attributed this rise to increased consumer demand and the regulatory effects of IRS Section 7702 changes and the Washington Cares Act. Life insurance premium growth was just 1% year over year in 2022 and fell 3% in the first half of 2023. Sales trends have improved thus far in the second half of 2023. Economic conditions have played a pivotal role in life insurance sales historically. Premium grew approximately 3% annually during the most recent expansion prior to the pandemic. LIMRA expects similar growth rates over the next few years. DID YOU
KNOW
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NEW YORK LIFE EXPLORES GENERATIVE AI LIFE INSURANCE OUTLOOK FOR 2024 IS STABLE
Rising interest rates and strong capital levels led Moody’s Investor Service to maintain a stable outlook for the U.S. life insurance sector for 2024. Insurers’ solid capital positions will help them weather negative surprises in the capital markets and economy, and the rise in interest rates over the past year will help support profitability through higher investment income, Moody’s said. What’s driving these predictions? Moody’s said higher interest rates support portfolio yields and robust sales pipeline in interest-sensitive products.
The venerable New York Life is one of the largest life insurers in the world ... it didn’t get that way by ignoring trends such as artificial intelligence. At a recent meeting of the National Association of Insurance Commissioners, New York Life senior vice president Alex Cook described his company’s exploration of generative AI. He described the technology as “a game changer in the ability to really start to work much more constructively with unstructured data, not just structured data.” For now, New York Life is using AI in ways most insurers are — for marketing efforts, to help make call center representatives and agents more productive, as well as in underwriting and predictive modeling.
50% of advisors surveyed said there are insurance products they will stop or reduce recommending if the Department of Labor’s latest fiduciary rule proposal is enacted.
InsuranceNewsNet Magazine » February 2024
Source: National Association of Insurance and Financial Advisors
LIFE
What obesity management drugs mean for obtaining life insurance These medications have been game-changers for those struggling with weight issues, but advisors must ask the right questions when users apply for coverage. By Emily Bancroft
N
ew injectable medications used for weight reduction have recently been in the headlines. While a lot of the media coverage focuses on celebrities and reality stars using these medications to drop pesky pounds, the real news is that these medications are being used to treat chronic obesity in a new and successful way. As financial professionals, we see many of these medications are used on- and off-label. It’s essential that you understand the indications and learn about your client’s health journey before pursuing coverage.
Chronic obesity
Let’s start by discussing obesity. Many Americans are overweight (with a body mass index between 25 and 29.9) or
obese (with a BMI of 30 or higher). The American Society for Metabolic and Bariatric Surgery further explains obesity as a chronic disease. “Obesity is no longer considered a cosmetic issue that is caused by overeating and a lack of self-control. The World Health Organization, along with national and international medical and scientific societies, now recognizes obesity as a chronic progressive disease resulting from multiple environmental and genetic factors. The disease of obesity is extremely costly not only in terms of economics but also in terms of individual and societal health, longevity, and psychological well-being. Due to its progressive nature, obesity requires life-long treatment and control.” The shift of seeing obesity as a chronic disease and no longer a disease of character has changed the narrative about and approach to how the medical community and society view its treatment. In the past, obese individuals were advised to eat less and move more. Other options, such as bariatric surgery and medications, were considered when diet and exercise didn’t work. Bariatric
procedures such as gastric bypass, sleeve gastrectomy, duodenal switch and lap band have been used in the obese to surgically reduce overall excess weight by anywhere from 30% to 70%. These surgeries are invasive and life-changing (some can’t be undone), and many individuals are uncomfortable with this type of decision. These surgeries typically take months of preoperative workups and clearances and depend on the individual to make lifelong behavioral changes, which can prove challenging. Over the years, multitudes of prescription medications and over-the-counter supplements have caused severe side effects such as heart valve damage, pulmonary hypertension, heart failure and even death. The obese population needed better treatment modalities.
Medication advancements
Medications such as Ozempic (semaglutide) and Mounjaro (tirzepatide) were being used for the treatment of Type 2 diabetes, but an interesting side effect — weight loss — was noted. For our discussion, we will stick to these two
February 2024 » InsuranceNewsNet Magazine
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LIFE WHAT OBESITY MANAGEMENT DRUGS MEAN FOR OBTAINING LIFE INSURANCE medications even though there are others. The U.S. Food and Drug Administration has approved variations of these medications for the treatment of obesity, and those branded names are:
GLP-1 prescription volume in the United States by drug, 2017–2022
•W egovy, which is semaglutide, and the diabetic medication is Ozempic, a glucagon-like peptide-1 (GLP-1) agonist. •Z epbound, which is tirzepatide, and the diabetic medication is Mounjaro, a gastric inhibitory polypeptide (GIP). The mechanisms that made these medications effective for weight loss were called GIP and GLP-1 agonists; the various medications have one or a combination of these agonists named above. As Harvard Medical School explains the mechanism of GLP-1 agonists such as Wegovy, “GLP-1 is a hormone naturally released in the gastrointestinal tract in response to nutrient intake. It has multiple effects, including increasing insulin release from the pancreas, slowing down stomach emptying and targeting receptors in the brain that cause appetite reduction. This results in a sensation of satiety, or fullness, lasting much longer than possible with natural GLP-1 hormone levels.” Zepbound works a little differently, as it combines GIP and GLP-1 agonists. The New England Journal of Medicine explained how Zepbound works. “Glucosedependent insulinotropic polypeptide, another nutrient-stimulated hormone, regulates energy balance through cell-surface receptor signaling in the brain and adipose tissue. A molecule that combines both GIP and GLP receptor agonism theoretically may lead to greater efficacy in weight reduction.” Various studies were completed before Wegovy and Zepbound were FDAapproved for treating obesity, showing that patients could expect to lose between
Source: Trilliant Health 2023
15% (with Wegovy) and 36.2% (with Zepbound) of excess weight. People taking these medications should eat healthily and increase their physical activity for optimal results.
Side effects
Ozempic has a long track record with people who have diabetes. Mounjaro is newer and has been FDA-approved for use by diabetics only since 2022. The FDA-approved versions of these medications (Wegovy and Zepbound) have a far shorter history. Harvard Medical School notes the side effects of Wegovy. “The most common side effects of Wegovy are nausea, diarrhea, vomiting and constipation. The medication also comes with a warning for the risk of a specific tumor of the thyroid, and thus, it is not recommended for those with a personal or family history of medullary thyroid cancer or multiple endocrine neoplasia type 2 (a genetic condition associated with endocrine tumors). It should be noted that tumors were only observed in animal studies and not seen in the human trials.”
The medications are considered therapeutic in the obese (BMI of 30 and up) or in the overweight (BMI between 27 and 29.9) with a weight-related condition such as diabetes, sleep apnea, cardiovascular disease, etc.
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InsuranceNewsNet Magazine » February 2024
Eli Lilly and Company, the manufacturer of Zepbound, reported the associated side effects. “The most commonly reported adverse events (observed in less than 5% of clinical trial participants) were nausea, diarrhea, vomiting, constipation, abdominal pain, dyspepsia, injection-site reactions, fatigue, hypersensitivity reactions, eructation, hair loss, and gastroesophageal reflux disease… The label for Zepbound includes a boxed warning regarding thyroid C-cell tumors. Zepbound is contraindicated in patients with a personal or family history of medullary thyroid carcinoma, [and] in patients with multiple endocrine neoplasia syndrome type 2 ... .” Although the most-mentioned side effects are gastrointestinal discomfort of different varieties, special attention should be paid to the other rare concerns that have been listed. As with any new medications, patients should do their homework before beginning use.
Controversy of shortages and barriers to use
The FDA approved Wegovy for obesity treatment on June 4, 2021, and the FDA approved Zepbound for obesity treatment on Nov. 8, 2023. Before those approvals, individuals seeking these medications were taking them off-label and tapping into the diabetic supply of Ozempic and Mounjaro. There have been shortages in the Ozempic and Mounjaro markets and the Wegvoy supply lines. These are expected to improve as production ramps up for the FDA-approved obesity medications.
WHAT OBESITY MANAGEMENT DRUGS MEAN Another controversy surrounding these medications is their usage in people who are not obese. The medications are considered therapeutic in the obese (BMI of 30 and up) or in the overweight (BMI between 27 and 29.9) with a weight-related condition such as diabetes, sleep apnea, cardiovascular disease, etc. The safety of these medications has not been studied in people with lower BMI ranges. Cost is another factor for many. Some health insurers are slowly beginning to cover the cost of the medications for treating obesity, where it has been indicated, but not all insurers have agreed to do so. The American Medical Association urges insurers to change their minds. “As a new generation of weight-loss medications has created additional options to treat obesity insurance coverage barriers limit the broad accessibility of these medications. In response, physicians and medical students voted to adopt a policy for the American Medical Association supporting health insurance coverage parity for evidence-based treatment of obesity, including FDA-approved medications without exclusions or additional carve-outs.” The medications cost $1,000 a month or more without insurance, making the disparity of patients who have access to these medications quite vast.
Alcohol consumption
Some Wegovy users have found less urge to consume alcohol as well. This isn’t fully understood, but studies are underway to understand this better. As reported by NPR. “Studies in animals, as well as a few in people, offer tantalizing clues to how this mechanism works for both food and alcohol. Imagine for a second taking a bite of a chewy chocolate cookie. It’s buttery and very sweet. “That first bite triggers the release of dopamine inside the part of your brain that controls your motivation,” says neuroscientist Alexandra G. DiFeliceantonio, an assistant professor at Virginia Tech. “But studies have found that in animals and people, GLP-1 drugs reduce the release of dopamine in this region when you eat something sweet and fatty or when you consume alcohol.” The medical world anxiously awaits the outcome of the research in this vein.
LIFE
Cardiovascular disease
Another potential benefit of semaglutide has been published recently. Cleveland Clinic stated, “Findings from a multi-center, international clinical trial reported by a Cleveland Clinic physician show that semaglutide reduced cardiovascular events by 20% in adults with overweight or obesity and established cardiovascular disease who don’t have diabetes.” This study illuminates another positive impact of using semaglutide and is promising for the medical field.
PERFORMANCE YOU CAN COUNT ON Building upon its remarkable success since launching in 2020, Sentinel Security Life Insurance Company and Atlantic Coast Life Insurance Company’s Accumulation Protector PlusSM (APP) Annuity continues to transform expectations with its recent enhancements, that bring clients more performance-based features, reliability, and growth potential.
APP Annuity Offers the Total-Package
10
Chronic disease management
A central argument for the continued use of these new medications is that people regain most of the weight lost after they discontinue the medication. The medication should be prescribed with the understanding that this is a medication for chronic disease. Just as it isn’t recommended to stop taking hypertensive or thyroid medications once control is attained, these medications shouldn’t be discontinued once the desired weight loss is achieved. These medications should be viewed as maintenance medications. Field underwriting is always critical to meeting client expectations. When gathering information on clients’ medical history, please be sure to ask:
YEAR GUARANTEES ON MULTIPLE STRATEGIES1
10% 10% PREMIUM BONUS2
CAP RATE3
Scan to access exclusive APP Annuity marketing materials and discover its leading features!
• Current height and weight. • Has there been any weight loss in the past 12 months? If so, how much? How did they lose this weight (e.g., diet, exercise, medications)?
FOR AGENT USE ONLY. NOT FOR DISTRIBUTION TO CONSUMERS. ALL PRODUCT RECOMMENDATIONS MUST BE PRIOTITIZED BY THE CONSUMER’S BEST INTEREST. COMMISSION RATES LISTED ARE PROPOSED RATES ONLY AND MAY CHANGE AT ANYTIME WITHOUT NOTICE. Interest Rates as of 9/25/23. Atlantic Coast Life Insurance Company and Sentinel Security Life Insurance Company are
• When asking what medications a client takes, please determine the medical diagnosis for the medication(s) being taken, as there can be multiple indications on- and off-label.
members of the A-CAP Family. Guarantees rely on the financial strength and claims-paying ability of Sentinel Security Life Insurance Company and Atlantic Coast Life Insurance Company independently. Neither Company offers legal or tax advice. Rates are subject to change. Products, Riders and features are not available in all states and are subject to change without notice. See annuity contract, agent field guide, rate sheet, and statement of understanding for all terms and conditions. Fixed Index Single Premium Deferred Annuity Contract with Premium Bonus; ICC19-SSLACCFIAPOL; ICC19-ACLACCFIAPOL; or state variation thereof. Jurisdiction and product limitations or restrictions may apply. Informational purposes only. This communication does not constitute a company warranty. A.M. Best B++ (Good) with Stable Outlook as of August 2023. All product recommendations must be prioritized by the consumer’s best interest. 1 The Participation Rates for the CS Momentum Index One-year point-to-point and Two-year point-to-point crediting strategies are guaranteed for 10 years from the annuity issue date, provided that Sentinel Security Life Insurance Company continues to have access to the CS Momentum Index. The Participation Rates for the CS ESG Macro 5
The underwriting decision will be determined after reviewing the weight lost within the past 12 months in addition to any other underwriting information developed upon review.
Index One-year point-to-point and Two-year point-to-point crediting strategies are guaranteed for 10 years from the annuity issue date, provided that Sentinel Security Life Insurance Company continues to have access to the CS ESG Macro 5 Index. The Participation Rates for the CS Momentum Index One-year point-to-point and Two-year point-to-point crediting strategies are guaranteed for 10 years from the annuity issue date, provided that Atlantic Coast Life Insurance Company continues to have access to the CS Momentum Index. The Participation Rates for the CS ESG Macro 5 Index One-year point-to-point and Two-year point-to-point crediting strategies are guaranteed for 10 years from the annuity issue date, provided that Atlantic Coast Life Insurance Company continues to have access to the CS ESG Macro 5 Index. 2 Funds can be accessed subject to a vesting schedule. 3 With the selection of the S&P 500® 1 Year Point-to-Point crediting strategy. The “S&P 500®” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by
Emily Bancroft, MS, ALMI, AIRC, ACS, ALU, is a certified professional underwriter — senior underwriter at Crump Life Insurance Services. Contact her at emily.bancroft@innfeedback.com.
Sentinel Security Life Insurance Company. Standard & Poor’s® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Sentinel Security Life Insurance Company. Accumulation Protector PlusSM Annuity is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P®, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500®. The “S&P 500®” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Atlantic Coast Life Insurance Company. Standard & Poor’s® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Atlantic Coast Life Insurance Company. Accumulation Protector PlusSM Annuity is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P®, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500®.
February 2024 » InsuranceNewsNet Magazine
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SSLAPP069, ACLAPP067
ANNUITYWIRES
Economic conditions boost annuity outlook
Annuities are generally good products in all situations. Take registered indexed-linked annuities. RILAs are a tax-deferred long-term savings option that limits exposure to downside risk and Source: LIMRA provides the opportunity for growth, usually through a market index. RILAs continue to sell in a strong market that retains volatility. Interest rates are expected to fall in early 2024, dampening demand for risk-free solutions such as fixed-rate deferred and fixed indexed annuities. This shift in interest rates will benefit RILA sales, said Todd Giesing, assistant vice president, LIMRA Annuity Research. Overall strong sales of annuities are projected for 2024 and beyond, LIMRA said. LIMRA is forecasting annuity sales to total between $311 billion and $331 billion in 2024. Much of the variance depends on how interest rates play out. In mid-December, the Federal Reserve signaled that it expects to make three rate cuts in 2024. The forecast for the 10-year Treasury rate is to remain around 4% through 2026. As interest rates recover in 2025, sales of indexed annuities and income annuities are expected to return to or exceed the levels set in 2023, with total sales growing as much as 10% and ranging from $342 billion to $362 billion.
EBIX AGREES TO SELL LIFE AND ANNUITY ASSETS
Ebix Inc. has reached a “stalking horse” agreement to sell its North American life and annuity assets to Zinnia for $400 million, part of a bankruptcy reorganization plan, the company announced recently. Ebix, a leading international supplier of on-demand software and e-commerce services to insurance and financial services, is filing for Chapter 11 protection of its U.S.-based operations, the company announced. An Eldridge Industries company, Zinnia is a leading life insurance and annuity technology and service company based in Topeka, Kansas. The life and annuity assets being sold accounted for 14.5% of Ebix’s worldwide GAAP revenues for the first three quarters of 2023, Ebix said. DID YOU
KNOW
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TRADE GROUPS: NASAA RULE CHANGES COULD IMPACT ANNUITIES
Industry trade groups are calling for the North American Securities Administrators Association to withdraw proposed changes to its business rules, calling those changes “confusing” and “unnecessary.” NASAA’s amendments intend to protect investors by implementing stricter ethical codes for financial advisors and similar professionals or firms. The coalition issued a joint letter expressing concern that the proposed changes could make it more difficult for advisors to operate and block clients from products and services.
QUOTABLE There are few retirement security products that protect consumers from their own longevity risk and provide lifetime income, except annuities. — NAIC officers
The groups are concerned the proposed changes could contradict or overlap standards already in place, such as those enforced by the National Association of Insurance Commissioners, which require annuity sellers to put the client’s best interest ahead of their own.
FEDERAL JUDGE ALLOWS ANNUITY FRAUD CHARGES TO CONTINUE
A federal judge refused to toss out annuity fraud charges filed by the Securities and Exchange Commission against a Massachusetts financial advisor. U.S. District Judge Denise J. Casper denied a motion to dismiss that was filed by Jeffrey Cutter, who is also an insurance agent. Cutter argued that the Investment Advisers Act of 1940 did not apply to the allegations made by the SEC. On March 17, the SEC filed charges against Cutter and his advisory firm, Cutter Financial Group, for “recommending that their advisory clients invest in insurance products that paid Cutter a substantial up-front commission without adequately disclosing Cutter’s and CFG’s financial incentive to sell the products.” The case is being closely watched by industry trade associations that adamantly oppose further federal encroachment on state-regulated insurance.
Ninety-two percent of advisors say the Department of Labor fiduciary rule will increase the cost of providing disclosures.
InsuranceNewsNet Magazine » February 2024
Source: NAIFA
AIG posted a strong third quarter based in part on strong annuity sales
Commentary: The Senate shouldn’t have to investigate insurance companies
1
Your # Source for INSURANCE NEWS Annuities: Maximizing retirement income in 2023 and beyond
Judge green lights lawsuit accusing State Farm of fraud in accident claims
DOL fiduciary rule comments number 14,000+ as opposing views harden
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ANNUITY
Removing roadblocks to choosing annuities How advisors can help clients overcome the hurdles that prevent them from considering lifetime income strategies. By Susan Rupe
S
even in 10 Americans told a TIAA survey that receiving a guaranteed monthly paycheck during retirement is important. But only 13% of those responding to the survey said they actually purchased an annuity. So what hurdles must advisors help consumers overcome in order to make the annuity decision? During a recent National Association for Fixed Annuities webinar, Patti Hausherr, vice president sales strategy leader with Athene, examined some of the reasons why consumers don’t buy annuities and how advisors can guide them. Hausherr listed several reasons why Americans don’t buy annuities: • A belief annuities are overpriced. • Risk aversion around inflation. • Concern about leaving a legacy. • A belief that there is a better way to insure against longevity. In addition, four uncertainties play into the reluctance to purchase annuities. Hausherr described them as:
1. Longevity uncertainty.
How long will I live? “Some theorists have suggested that this is the central question driving annuity purchasing decisions,” she said. “If a consumer believes that they will have a longer than average life expectancy, then figuring out how to have guaranteed income in retirement is viewed as an important problem.” Hausherr said that the way advisors ask clients about longevity has much to do with the way clients answer. “If I were to ask you how long you think you’ll live, the chances are good that it will be longer than if I asked you when you think you are going to die,” she said, 28
The four uncertainties around the
ANNUITY DECISION
pointing to a study that showed about a 10-year difference between the age that people think they will live to and the age that people think they will be when they die. “If you’re looking for a longer life expectancy answer, ask your clients what age they think they will live to.” Many investors also experience extreme aversion to a negative return on their investment, Hausherr said. “So even if consumers do things like think about their life expectancy, and even if they make a very accurate assessment, they may be deterred from purchasing an annuity by a tendency toward what we call extreme risk aversion,” she said. “This concept of loss aversion to the prospect of potential losses has a much greater impact on decision making than equivalent gains. The thought of losing $100 is much worse than the thought of forgoing a gain of $100. So for many consumers, the decision to purchase an annuity may boil down to the question of whether one will really live long enough to recoup their initial deposit, and consumers may view annuities as risky gambles.” Because of loss aversion, a potential loss if they die earlier than expected may have a greater impact on consumers’ annuity purchase decision than the possible gains if they live longer than expected, she said. To overcome the longevity uncertainty bias, Hausherr recommended advisors avoid any mention of death and describe buying annuities as buying peace of mind
InsuranceNewsNet Magazine » February 2024
instead of buying an income stream. She also recommended framing annuities as purchasing enhanced financial security instead of making an investment. Use words such as “enhanced financial security,” “protected lifetime income” and “security.” “Talk about potential benefits of any strategy you want to put forth. That will resonate with clients more than talking about features,” she said. “Connect the potential benefit to the client’s personal goal.”
2. Spending uncertainty.
People don’t know how much money they will need to cover the length of time they will live. “People are not comfortable predicting what their future expenses will be,” Hausherr said. “Being able to accurately figure their income needs is challenging.” She said two biases amplify spending uncertainty: the tendency to sharply discount the value of future consumption, and the propensity of seeing a lump sum as being more adequate than an equivalent and annuitized stream of income. “We want to talk to clients about the benefits they will experience later in terms of their goals,” she said. “And also remember that you need your clients to see you as not only the one who’s going to help them accumulate their assets but also the one to help them distribute them.” Consumers are likely to save more for retirement when they can visualize their future, Hausherr said. “Asking open-ended questions and talking about their future can help clients get there.
REMOVING ROADBLOCKS TO CHOOSING ANNUITIES ANNUITY Resurfacing their personal goals and making them the starting point of every conversation can be critical.” Hausherr suggested advisors help clients overcome spending uncertainty by leading them to estimate their expenses in retirement, adjusting those expenses to inflation and connecting the future benefit to life in retirement.
3. Investment outcome uncertainty.
Clients are unsure how they would benefit from an annuity as opposed to another retirement product. “Behavioral research finds that people tend to be overly positive about outcomes, especially when it comes to themselves. Client optimism is good but so is security,” Hausherr said. “Clients want and need both.” In addition, she said, many consumers express excessive optimism toward their ability to manage their own finances. This optimism is exacerbated when recent market performance has been good. To help clients overcome investment outcome uncertainty, Hausherr
recommended advisors educate them about long-term market ups and downs, sequence of return risk, and managing the risks of inflation, longevity and market volatility in retirement. She also recommended advisors present annuities as a strategy instead of a solution, suggesting using the following language with clients: “I’d like to show you a strategy that can provide you with protected lifetime income to help cover basic, needed expenses in retirement. Allocating a portion of your assets to generate reliable income can contribute to your personal goal of having security in retirement.”
4. Decision uncertainty.
Clients are unsure whether they understand annuities enough to make the right decision. “Many view annuities as complex financial instruments,” Hausherr said. “Choice overload also impacts the ability to make a decision.” Decision uncertainty is amplified by financial illiteracy, she said. In addition, choice overload leads to inactivity.
To help clients overcome decision uncertainty, Hausherr said advisors should be more perceptive of their clients’ understanding of financial instruments and educate them accordingly. In addition, advisors should use simple language in discussing annuities and ask clients more questions with the aim of narrowing down the options to consider. She also suggested advisors ask thought-provoking questions, understand and clarify clients’ personal retirement goals, and connect the potential benefits of a strategy to achieving those goals. “Remember, less is more, and we want to ask good, open-ended questions and listen with discipline,” she said. 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.
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February 2024 » InsuranceNewsNet Magazine
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HEALTH/BENEFITSWIRES
Fully paid health insurance tops workers’ wish lists What’s the job benefit American workers
want most? Forget a 401(k) match or free lunch in the office cafeteria. What employees place at the top of their wish lists is fully paid health insurance from their employers. Just over half (51%) of workers said they most want fully paid health In 2023, the average insurance premiums from their ememployee healthcare ployers, according to a CNBC-Survey cost rose 5.2% to Monkey Workforce Survey. This topped $15,797 per employee. a 401(k) plan match (37%), reimburseSource: Mercer ment for health facilities or gyms (27%) and free food on-site (26%). But even though workers want this benefit, few companies offer this job perk, and the number has been declining in recent years. However, employers have attempted to absorb more health care costs by limiting deductibles and outof-pocket charges. Currently, employers subsidize about 81% of health care plan costs, on average, while employees pay the remainder, according to Aon. care costs. About 4 in 10 insured adults worry about affording their monthly health insurance premium, and 48% worry about affording their deductible before health insurance kicks in.
INSURERS PRESSED TO COVER BIOMARKER TESTING HEALTH CARE COSTS BURDEN US FAMILIES
Health care affordability remains a top concern for U.S. families, according to KFF, with about half of adults saying it is difficult to afford health care costs. In addition, KFF found 1 in 4 adults reporting they or a family member in their household had problems paying for health care in the past 12 months. These difficulties in paying for care have led some to put off obtaining needed care, KFF found. One in 4 adults said they skipped or postponed getting care in the past 12 months because they couldn’t afford it. Even those who have health insurance are not immune to the burden of health DID YOU
KNOW
?
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The Alzheimer’s Association recently joined a national coalition of 50 health organizations, including the American Cancer Society’s Cancer Action Network, the ALS Association and the Arthritis Foundation, pushing to expand insurance coverage for comprehensive biomarker testing.
Biomarkers, short for biological markers, can show whether a disease is present or if a person is at risk for developing a
41% of Americans have medical debt.
InsuranceNewsNet Magazine » February 2024
Source: KFF
QUOTABLE Medicare beneficiaries need to be protected from unscrupulous actors. — Jessica Brooks-Woods, CEO, National Association of Benefits and Insurance Professionals
disease. Continued progress in biomarker testing regarding blood-based amyloids — the type of protein that can clump together and cause plaques in the brain, leading to dementia — is likely to lead to new diagnostic tools coming to market within the next couple of years, the Alzheimer’s Association says. Nationally, 12 states — Arizona, California, Georgia, Illinois, Kentucky, Louisiana, Maryland, Minnesota, New Mexico, Oklahoma, Rhode Island and Texas — have already enacted legislation requiring coverage in both public and private insurance plans, according to the Alzheimer’s Association. Similar legislation is awaiting the governor’s signature in New York.
CIGNA, HUMANA PUT THE BRAKES ON POSSIBLE MERGER
Cigna and Humana halted a potential merger, with Cigna reportedly focusing instead on returning cash to investors through a $10 billion buyback. Reuters reported the pair couldn’t agree on a merger price and haven’t given up on the idea of resuming talks in the future. But the news service noted that Cigna announced plans to boost its share-buyback authority to $11.3 billion, with the aim of purchasing at least $5 billion by the first half of next year. A big impediment to any potential tieup between Cigna and Humana would likely come from the Federal Trade Commission, which has taken a far more active role in challenging megamergers under the leadership of Lina Khan.
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That’s another great reason to smile!
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February 2024 » InsuranceNewsNet Magazine
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HEALTH/BENEFITS
Tech-savvy younger clients can find HSAs a strategic tool Brokers can reach younger generations by pointing out the secure and easy-to-access online features that today’s health savings accounts offer.
online assistance that enables quick resolution of queries or concerns and further enhances the user experience.
By Steve Rosenthal
Brokers should emphasize the comprehensive coverage of telehealth services under HSAs, showcasing how these accounts not only support but encourage the use of virtual consultations for a range of medical needs, from routine checkups to specialist visits. Highlighting the flexibility and ease of using HSA funds for telehealth consultations can also be a pivotal selling point.
I
n today’s fast-paced digital landscape, health care preferences are rapidly evolving among younger generations. As Generation Z and millennials prioritize accessibility, convenience and cost-efficiency, there is a greater demand for telehealth and the ability to research and shop for health care options online. Brokers, aiming to cater to this tech-savvy demographic, can leverage health savings accounts as a strategic tool. Today, many HSA providers offer secure online portals, easy access to telehealth services, and various investment opportunities. Highlighting the following benefits can help brokers effectively position HSAs for modern generations.
2. Telehealth integration and coverage
1. Online accessibility and user experience
To cater to younger generations who demand user-friendly and accessible platforms, brokers must advocate for HSA providers offering intuitive and feature-rich mobile apps and web portals. These platforms not only allow easy access to HSA balances but also provide comprehensive tools for expense tracking, documentation uploads and real-time transaction history. Brokers have a unique opportunity to bridge the gap between traditional health care approaches and the digitally native preferences of younger demographics. Showcasing features such as the categorization of health care expenses and integrations with budgeting apps can make HSA management more engaging and aligned with digital lifestyles. In addition, brokers can emphasize the accessibility of customer support. Ensure that the HSA provider offers responsive and reliable 32
Brokers can collaborate with HSA providers that have partnerships with telehealth platforms, underscoring the seamless integration of these services. Illustrating the simplicity of accessing telehealth services through the HSA platform can significantly resonate with tech-savvy younger individuals.
3. Cost-efficiency and highdeductible health plans
Young adults, often saddled with student loans and various financial obligations, appreciate the ability to set aside pretax money in an HSA to cover qualified medical expenses. This aligns with their desire
Key selling points on health savings accounts + A health savings account (HSA) is a tax-advantaged way to save money. + HSA contributions reduce taxable income, investment growth in the account is tax-free, and qualified withdrawals are tax-free.
+ Money left over at the end of the year in an HSA is not forfeited like money left over in a flexible spending account (FSA).
+ To be eligible to contribute to an HSA, you must be enrolled in a
high-deductible health plan: one with a deductible of at least $1,600 for an individual or $3,200 for a family as of 2024.
+ For 2024, you can contribute up to $4,150 for individual coverage and up to $8,300 for family coverage.
Emphasize savings potential by using pre-tax dollars and illustrate real-life scenarios in which using HSA funds for telehealth visits not only saves money but also provides convenience. This is especially attractive to individuals who have busy schedules or live in remote areas.
InsuranceNewsNet Magazine » February 2024
for financial control and responsibility. Brokers should also elaborate on the cost-saving potential of HSAs paired with high-deductible health plans. Explain how these plans typically offer lower monthly premiums compared with traditional health insurance.
YOUNGER CLIENTS AND HSAs HEALTH/BENEFITS Moreover, emphasize the financial benefits of HSAs covering out-of-pocket expenses until the deductible is met. Provide examples and scenarios that illustrate how using HSA funds can lead to significant savings over time. Presenting calculations and comparisons between different health care plans, with and without HSAs, can illustrate the financial advantages clearly.
up for an HSA due to user-friendly interfaces and minimal paperwork. Providing detailed information on contributions, withdrawals and eligible expenses will help individuals manage their health care finances efficiently within the HSA platform. By highlighting these benefits, brokers can effectively position HSAs as smart and powerful health care solutions in the digital age.
4. Investment potential and longterm savings
Financial health for the future
By educating younger individuals on the various investment opportunities within HSAs, such as mutual funds or exchangetraded funds, and emphasizing the potential for accruing tax-free earnings on contributions, brokers can highlight how HSAs facilitate long-term savings. In the long term, this strategic planning enables individuals to save for future medical procedures and health care expenses during retirement. The portability of HSA funds is also important to highlight, as these savings accounts remain with individuals even if they change jobs or transition to different health plans.
5. Security and compliance assurance
Data protection and privacy are top of mind for Gen Z and millennials. Educating younger individuals about the robust security protocols implemented by reputable HSA providers — such as end-to-end encryption, secure cloud-based storage and multifactor authentication — will give them greater peace of mind as they manage their HSAs through an online portal or mobile app. Collaborating with HSA providers that undergo regular audits and certifications to maintain compliance standards will also instill trust and confidence with the younger demographic. In addition to adhering to industry standards, brokers will be able to meet the expectations of a generation that values transparency and security.
6. Streamlined enrollment and management processes
Simple HSA enrollment and management processes are crucial to engage with younger generations. Brokers should highlight the ease and convenience of signing
Overall, HSAs can equip younger generations with accessible, secure and tech-integrated health care options. HSAs not only provide immediate cost savings but also serve as a vehicle for future financial health. As brokers advocate for HSAs, they’re essentially handing over the reins of health management to a generation comfortable with navigating the digital world. Beyond the apparent advantages of these accounts lies a deeper significance — they’re a stepping-stone toward financial literacy and responsible health care decision-making. They empower the younger cohort to approach their health care needs with a strategic mindset, laying the groundwork for a future where proactive health management is the norm. By explaining the multifaceted advantages of HSAs, brokers are doing more than marketing a product; they’re shaping a cultural shift — one where financial prudence and health consciousness walk hand in hand. This approach isn’t just about selling a service; it’s about equipping the younger demographic with the tools they need to take charge of their health destinies in a world defined by rapid technological advancements. In embracing HSAs, brokers are not only meeting the needs of the tech-savvy, financially aware younger generation but also future-proofing health care solutions. They’re sowing the seeds for a brighter, more empowered future where individuals have both the knowledge and resources to make informed decisions about their health and financial well-being. Steve Rosenthal is CEO of Triton Benefits and HR Solutions. Contact him at steve.rosenthal@innfeedback.com.
February 2024 » InsuranceNewsNet Magazine
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This is fine.
Financial facts and figures powered by AdvisorNews.com
Millennials comfortable with market volatility
Two words that strike fear into the hearts of most investors — market volatility. But there’s one age group that is comfortable with it. A Hearts & Wallets study showed millennials were skittish about the market until about three years ago. Now they have developed more of a risk tolerance and are comfortable investing in the market. Level up! In 2011, only 16% of millennials were comfortable with market volatility, 5 percentage points Feeling more lower than Generation X and baby boomers at experienced with investing is at its that time. Today, 46% of millennials are com-
Americans underestimate LTC’s risk to retirement
As generative AI changes the face of the workplace, financial advisors are adopting the revolutionary technology rapidly. Eight out of 10 advisors surveyed by the Million Dollar Round Table said they use it for at least one professional purpose. When it comes to how these programs are used in their practices, most American financial advisors and insurance agents (72.6%) have at least some
believe inflation is the biggest threat to their retirement savings,
advisors who leverage generative AI for at least one professional purpose, employee onboarding (46.5%), processing employee and/or client data (41.4%), and client communications (40.4%) were the most popular uses. Advisors who are using generative AI in their practices are still relatively new to the tools. Advisors (50.2%) who are
highest level since 2011. Source: Hearts & Wallets
fortable “accepting volatility in the hope of getting a higher return,” 22 percentage points
higher than boomers this year. In 2023, Gen Z’s comfort in accepting volatility in the hope of getting a higher return declined markedly, dropping from 43% in 2022 to 28%.
knowledge of how they can leverage AI in their practices. Among the 82.5% of
What do Americans believe is the biggest threat to a secure retirement? Although most say they fear inflation or the economy, advisors believe consumers should be more focused on how the need for long-term care could impact their retirement savings. A Lincoln Financial survey showed that 59% of consumers said they
while 51% worry about the economy’s effect on their retirement. But 50% of the financial advisors surveyed said that consumers aren’t concerned enough about the potential of LTC needs wrecking their retirement. According to the Lincoln Financial research, Americans overwhelmingly agree (96%) that it is important to plan for LTC; however, only 19% of them have started planning for it.
‘Emerging adults’ want to retire early
Emerging adults — those aged 18-34 — want to retire at 61. That’s three years earlier than the target retirement age of adults 25-64 years old. But despite having ambitious retirement goals, this next generation of investors hasn’t started planning for retirement just yet. Edward Jones and Morning Consult 34
Advisors quick to adopt generative AI
InsuranceNewsNet Magazine » February 2024
actively using generative AI have been using it for fewer than three months.
On the other hand, even advisors who are not making use of generative AI in their day-to-day businesses are interested in learning more about it.
studied this age group — dubbed GenNext — to help advisors understand how to prepare young adults for their post-employment years. Instead of focusing on retirement, advisors report that
Cutting back
36% of Americans said they reduced their spending in the past year. Source: Allianz Life
GenNext clients are prioritizing other aspects of their lives — including planning for a family
(30%), being responsible with everyday expenses (28%) and investing (23%). Despite a wide array of financial priorities, advisors in Edward Jones’ latest survey reported their emerging adult clients as thriving (42%).
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ADVISORNEWS
Your client is the executor. Now what? Six ways advisors can help clients through the financial and emotional aspects of settling an estate. • Danielle Miura
I
f you have a client who is the executor of an estate, how can you help them in their role? Before discussing how you can help an executor, it’s essential to understand that the role of an executor comes from loss. You are not only your client’s technician when it comes to helping them with the financial aspects of the estate but also their grief facilitator. Here are six ways advisors can help clients who are serving as executors.
Let them know they have a choice
It is an honor to be selected as an executor. It signifies that the person who requested your client to fulfill their final
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wishes had faith in your client to complete their legacy. However, sometimes grief is too much to handle, making even simple tasks challenging. If your client doesn’t feel up to being an executor, let them know there are always other options. The executor can always find another person, whether that means they resign as the executor, assign multiple executors or hire professionals to assist. If your client is unsure about being an executor, here are some questions to ask them: 1. Are there potential conflicts or disagreements among beneficiaries and heirs that may make your job harder? 2. Do you have the time and availability to fulfill the responsibilities of distributing and closing the estate?
InsuranceNewsNet Magazine » February 2024
3. Do you have a professional (attorney, financial advisor, tax) and personal (friends, family members) support network? 4. Are you aware of the tax and legal implications of being an executor? The process of changing executors is common and relatively simple to complete. However, the executor must make a clear decision and notify the proper authority. They can face legal implications if they are unsure, if they draw out the decision and if they don’t fulfill their responsibilities.
Providing emotional support
Has your client decided to be the executor? Great! However, just because they chose to be an executor doesn’t mean everything is smooth sailing from there. Deciding to become an executor means
YOUR CLIENT IS THE EXECUTOR. NOW WHAT? ADVISORNEWS
their journey has only just begun. Most financial professionals aren’t trained in performing therapy. However, we can offer a safe space to share stories. Use open-ended questions that invite their story, and then follow their lead, allowing clients to open or close the door as they please. If your client decides to close the door, at least you have differentiated yourself by raising the topic most people would ignore. Invite your client to address their fears. For example, ask, “What keeps you up at night?” or “What worries you about the estate process?” Naming and writing down the fear can help clients feel less threatened and think more clearly. Then brainstorm ideas to create a safety plan. Developing a safe space so clients can share stories and address fears will build a trusting relationship so clients feel safe to come to you when their executor journey creates roadblocks.
safe deposit boxes, jewelry and credit card bills might be harder to find. Before your client runs around trying to marshal all the assets, help them brainstorm what assets their loved one had. Create a spreadsheet with the assets, title on the property, the value at date of death, the value of the deceased person’s share, and whether the item is liquid or illiquid. Once the estate is sorted, you can help your client:
Help them find professional support
• File final and trust tax returns.
An executor’s role is to carry out the terms of the will. However, in an ideal scenario, an executor is more of a delegator, directing tasks to professionals to complete the detailed work. Closing an estate may require an executor to hire several different kinds of professionals: • An estate attorney to guide them through the process and protect them from potential legal implications. • A tax professional to file a final tax return and trust tax return. • A real estate professional and estate liquidator to appraise and sell assets. If you don’t have a list of professionals, contact your network for referrals so your client can find the most relatable options. Putting in the legwork to support your client can pass the load to trusted professionals and decrease the load of your client’s role as executor.
Sorting through the estate
The first step in any estate process is to take inventory of all the assets. Some assets, such as a personal residence, might be easy to realize, while hidden accounts,
• Determine how much liquid cash is available to hire professionals and pay expenses. • Consolidate accounts as needed.
access to documents in a timely manner. Being an executor can come with complicated family relationships and a surplus of money they didn’t expect. If your client hasn’t already, now is the time to consider updating their estate plan, determine how to use their inheritance and renew their goals.
Advising beneficiaries
Now that you have helped the executor divide the assets among the beneficiaries, it Working together with the attorney and the accountant can help the executor meet these deadlines and have access to documents in a timely manner.
• Evaluate which assets need to be appraised. • Determine the potential estate or inheritance tax.
• Review the deceased insurance policies. • Analyze an “in case I die” file. Sorting through the estate can be complicated; significant errors can be made without proper due diligence. Helping your client will ensure that assets get consolidated and distributed correctly.
Advocating for your client
When an estate process is overwhelming, executors often forget about themselves. As advisors, it is our job to help clients prepare for obstacles outside their view. Here are some things to look out for. Depending on the state’s executor rules, the executor can typically take 1%3% of the estate value or an hourly wage for their work. When the executor’s duties are complete, the executor will receive a 1099-MISC to report their income. Calculating how this amount may affect their taxes or government benefits (e.g., Social Security) in the year they receive the money is essential. Closing an estate requires keeping detailed records, filing forms and meeting deadlines. Working together with the attorney and the accountant can help the executor meet these deadlines and have
can be a good opportunity for you to build a relationship and advise the beneficiaries on their options. It is important for beneficiaries to understand how their inheritances will affect their future financial plans, estate plans, investment profiles and income tax liabilities. If a beneficiary may act as an executor for your client in the future, it is a good idea to establish a relationship before your client dies. Here are some tips to get the conversation started: • Take them out to eat, or invite them into the office. • Be genuine, not salesy. • Build a personal connection by developing common ground. • Send them a toolkit with financial tips and information about your organization. Being an executor is emotionally and technically tasking work. By offering a helping hand, you’re making an executor’s workload much lighter. Danielle Miura, CFP, EA, is founder of Spark Financials in Ripon, Calif. Contact her at danielle.miura@ innfeedback.com.
February 2024 » InsuranceNewsNet Magazine
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BUSINESS
Thrive and grow: 4 ways to protect and grow your business Finding additional ways to serve and educate clients will keep them from looking elsewhere for help. By Todd Villeneuve
A
solid book of business is an advisor’s lifeline. But while most advisors understand the work it takes to build their client list, they spend less time and energy on protecting and nurturing their book of business for organic growth. That can be a costly mistake, considering that the typical insurance agent loses 16% of their clients every year. And with the average cost of acquiring a new client higher than in any other industry, agents who actively work to retain clients will give themselves a considerable advantage over those who do not. There is no single rule for reducing client churn, but there are some best practices that can help improve client satisfaction and make it harder for clients
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to look elsewhere for the services they need. Here are four steps to keep the fox out of the henhouse and protect your book of business.
1. Find additional opportunities to serve clients.
A client list is more than a record of people you do business with. It is a list of people whose trust you have gained and who reliably open the mail you send or answer the phone when you call. Repaying that trust by expanding offerings to better serve client needs allows you to increase revenue
from your book of business and deliver efficiencies and peace of mind for clients. Health insurance is a great place to start as you look to expand, and Medicare in particular offers significant opportunities. Considering that more than 10,000 people in the U.S. turn 65 every day and the entire baby boom generation will be age 65 or older by 2030, it’s clear there is a demographic trend that creates business opportunities in this category. In addition, you may already have many clients who are reaching Medicare eligibility, and nearly all of those people will need to
If you’re not sure what your clients want or need, a simple 30-second questionnaire can help you better understand what you can and should offer.
InsuranceNewsNet Magazine » February 2024
THRIVE AND GROW: 4 WAYS TO PROTECT AND GROW YOUR BUSINESS BUSINESS make Medicare decisions. Putting yourself in a position to help those clients as they age will increase your value to them and eliminate reasons they might have to look elsewhere for services. Beyond Medicare, look for opportunities to tailor offerings based on the needs of your specific client base. For example, individuals and families may be interested in long-term care insurance, while business clients may want products that help them attract and retain employees. If you’re not sure what your clients want or need, a simple 30-second questionnaire can help you better understand what you can and should offer. If you find that you lack expertise in a specific area or aren’t sure your agency is bringing in enough business to hire additional agents, you can partner with another local agent who specializes in that area or reach out to a local or national insurance marketing organization to borrow the talent until you increase your experience in each product category.
retirement trends might shape their planning. Keep an eye on emerging trends, both good and bad, and keep education going back and forth with clients.
3. Make yourself easy to work with.
The easiest way to alienate clients is to be difficult to work with, and clients don’t wait long to leave if they feel they are not being treated well. In fact, an estimated 61% of clients will jump to a competitor
in an industry that is often slow to embrace new technology. If you don’t feel equipped to make these changes, you can look for outside help to enhance your ability to serve clients.
4. Be present in the community.
Being visible and available to your clients is key to protecting and growing your book of business. Active communication helps with this, but it’s also beneficial to be present in the community you serve. Whether that means volunteering, supporting local sports or arts activities, placing ads in local media outlets, or another activity that better suits your particular client base, find ways to get your name out there without giving the impression that you’re always trying to sell something. Become an advocate for your client base. For younger populations, that might mean hosting yoga or fitness sessions at a local brewery or restaurant. If you serve mostly older clients, on the other hand, you could sponInvesting in new technology sor pickleball or bingo events at will satisfy consumer demand 2. Enhance client a senior center or 55-plus apartwhile also making it easier education. ment complex. Your clients don’t want to spend Marketing can be challengfor your clients to get the a lot of time thinking about ing if you don’t have the backsupport they need... insurance — that’s why they ground or resources to create hire you — but that doesn’t ads or other collateral, so you mean they don’t want to be informed. after just one negative experience, and 76% may benefit from working with an However, statistics show that only 44% of will leave after two bad experiences. IMO that can provide design resources clients have been in touch with their agent Make sure your service model is atten- and expertise. in the past year. This is a golden oppor- tive and responsive to inquiries, and that Building a solid book of business tunity, because communicating with and you’re consistently looking for ways to is only part of the battle for advisors. educating clients is easy, and it’s a perfect remove roadblocks that may keep clients Protecting against churn — whether way to build relationships. from finding the information they want due to the competitive landscape or Start by establishing a variety of com- or adopting new coverage. This starts changing consumer attitudes — is key munication channels with clients. That with providing training to fine-tune your to building and maintaining a successful could include an occasional lunch-and- team’s customer service skills. In addition, agency. By taking a few proactive steps, learn session or a simple, topic-driven building an office culture that emphasizes independent agents can build and mainemail newsletter that allows clients to customer care will keep the client’s needs tain a thriving business. easily scan headlines and click through top of mind for all employees. when they find something they want to It’s also important to consider cli- Todd Villeneuve is managlearn about. ents who aren’t looking for the person- ing partner of IFC National Marketing. Contact him at These efforts do not need to focus al touch. With digital-first solutions todd.villeneuve@innfeedstrictly on insurance, either. Consider increasingly in demand, investing in back.com. hosting educational seminars with other new technology will satisfy consumer professionals you work with or insure. demand while also making it easier for Like this article or any other? For example, you could partner with your clients to get the support they need Take advantage of our award-winning journalism, licensure and reprint options. a local financial advisor for a seminar — even when your staff is not available. Find out more at innreprints.com. on 529 plans for young families or how This can be an important differentiator February 2024 » InsuranceNewsNet Magazine
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the Know In-depth discussions with industry experts
Grit: Embracing the daily grind in pursuit of your goals It’s not the great days that make us great; what makes us great is doing what we are supposed to do on the bad days when we want to give up. By Joseph Templin
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n spring 1996, I was a young seconddegree black belt and college intern for Northwestern Mutual. I was training hard and learning in the classroom and the office about the world of finance and how to build an insurance business. I also was preparing for a regional martial arts tournament, a competition where the best first through third degrees for 200 miles around came to test themselves and show their skills. Even with a full-time graduate class load and building an insurance business, I was up and training every morning by 5 a.m., plus spending four evenings a week redlining myself to improve as a martial artist. This was similar to the way I pushed myself as a nascent professional, studying and practicing my language daily and getting in the ring with clients to constantly challenge myself and grow. I had a clear path to my goals. Six weeks before the tournament, I was sparring with the reigning champion, my friend who would not be defending his title, having been promoted to 4th Dan after winning the previous two years. He was the most naturally talented martial artist I had ever met. We were working on side kick drills when there was a wardrobe malfunction. His side kick that could shatter concrete hit the side of my knee and bent it 90 degrees in a direction that 40
knees don’t go. It took five massive men to hold me down as they realigned my leg into the proper angle. I would not be fighting in the tournament. I was told I’d probably never fight again. Maybe you’ve had a loss like this within your business, where everything you slaved for over months and years was taken away in an instant. It could have happened with a keystroke at the home office eliminating your position or because of an unscrupulous employee or a frivolous lawsuit. Maybe it was from a divorce or the randomness of the universe taking away someone precious to you. Suddenly, you are lost. You no longer have your purpose; your identity is shattered and you have no hope. Your goal is seemingly gone. We have all experienced trauma to some extent. Insurance and financial professionals exist in a realm where we constantly lose deals and have setbacks while exposing ourselves emotionally and financially. When the losses hit us, when we are broken or fail, do we lie down and give up? I didn’t stay down with my knee injury, even if I couldn’t stand up. When a divorce later knocked me down, I got back up. With every failure in the business, I fought back, just like you have, because the key to success in sports or business
InsuranceNewsNet Magazine » February 2024
is “fighting spirit” or, as the psychological literature calls it, “grit.” Dr. Angela Duckworth is the leading researcher into the science of grit, and her book Grit: The Power of Passion and Perseverance should be near the top of your 2024 reading list for the insights it provides into the psychology of success. The fundamentals of overcoming setbacks along the road to excellence are the same in becoming a martial arts champion as they are for making Million Dollar Round Table for the first time or reaching $100 million of assets under management or being a great parent. They include the ability to lose, learn, adjust, and attempt again and again until the goal is achieved. The goal is the most important thing. For me, the goal was twofold: making MDRT and becoming a martial arts champion. I tracked my production and activity toward the goal daily, trained every single morning (both in martial arts and in my sales language) , and visualized success in the ring and in the office. There were milestones along the way (such as conducting 25 fact finders a month or fighting nonstop for 45 minutes once a week) and the daily efforts (200 pushups and situps and forms each morning, making two new appointments and receiving five or more referrals regularly). If you are doing the daily things regularly (especially when you don’t feel like picking up the phone or asking for
GRIT: EMBRACING THE DAILY GRIND IN PURSUIT OF YOUR GOALS IN THE KNOW
introductions or going to the gym), you will hit most of the interim milestones and consistently move in the direction of your goal. You must embrace the daily grind to develop the grit to hit your goal. It’s not the great days that make us great. What makes us great is doing what we are supposed to do on the bad days when we want to give up. Read that again. Duckworth points out that the two factors that contribute to grit are passion and perseverance. Passion is that overarching purpose: the love of what you do that gets you out of bed as excited as a kid going to an amusement park. The overarching purpose is not your goal, but it is something bigger. It’s not only obtaining $100 million of assets under management but also helping others in financial services. It’s not only winning a title but also becoming the absolute best you can be in your sport. Passion makes you crack open the book, not because your manager told you to earn a designation but because you are fascinated by special needs planning or charitable lead annuity trusts, and you need to know more. You feel the need to be better at what you do so you can help more people. This is why your friends who are engineers spend their free time building things or playing with machinery, because the greatest professionals in any space have an all-consuming desire to master that thing. It is more than talent, more than curiosity: it is a love of the subject or of that particular game. Your production goal must be subservient to that bigger passion, that raison d’etre of solving problems or helping people. As Friedrich Nietzsche observed: a person with a strong enough why can overcome any how. Know your why because that is critical to understanding and harnessing the passion of grit. If you are truly passionate about helping others reach their goals, you will have the emotional fuel to do the hard work day in and day out over the weeks and months to hit your goal and live your purpose. And that consistent effort is the differentiating factor, the persistence. Anyone can be Superman or Wonder Woman for a day, anyone can write a $50,000 premium case or stumble across a multimillion-dollar rollover. The superpower is to do it every day.
To be excellent, you must be consistent. To write a $250,000 premium case, you need to be lucky. To write a $100,000 case every week, you need to be focused. Doing all the little things that aren’t sexy — such as prospecting and phoning — are part of the grind. Persistence is doing the same thing over and over, like an athlete repeating their drills or the musician playing scales; these are the things they do that eventually get them to playing sold-out
down by life (underwriting, bad luck, bad timing, etc.). A bad meeting or a bad day or even a bad month is not enough to make champions quit. Just because you had a bad January and are behind for the year so far doesn’t mean you are done anymore than losing the first round of a fight means the fight is over. Show up and fight. What does your activity plan for this year call for you to do to hit your goal? Do
Larry Bird making 1,000 free throws a day would never make a highlight reel but made him into a Hall of Famer. This is like the advisor in your office who gets a new appointment scheduled every single day and inevitably leads your office in production at the end of the year.
stadiums. Michael Jordan won six titles by focusing on his fundamentals. I do my basic forms every morning. That’s the same thing I did when I rebuilt my knee to start competing after that injury. There is a well-known adage among champions in all fields: Boring is beautiful. The difference between a professional and an all-star is the ability to repeatedly do the boring basics over and over again until they are perfect and can be done subconsciously. Larry Bird making a 1,000 free throws a day would never make a highlight reel but made him into a Hall of Famer. This is like the advisor in your office who gets a new appointment scheduled every single day and inevitably leads your office in production at the end of the year. Every day, they show up and grind out what they have to do to achieve greatness in daily little inevitable steps. If Larry Bird lost a game, the next morning he’d make 1,000 free throws. If Larry the Legend scored 40 points in a blowout win, the next morning he’d sink 1,000 free throws. Persistent. I once lost a six-figure premium case in underwriting but still got my new appointment and five introductions for the day. Then I trained the next morning and got my new appointment and introductions, just like on the days I won a six-figure premium case. Persistent. Grit is not sexy, but the results are, because champions keep doing what they need to do even when they get knocked
what you are supposed to do today. It is that simple. Then do it again. And again. Do it 90 days in a row, and you’ll be on pace for the year again. It may not be easy, but it is just that simple. If you don’t feel like doing it (whatever “it” is), go back to that vision that gave rise to the goal. Is it still important to you to build that AUM or qualify for MDRT or be a champion or stay sober? Then persist and do what you need to do today. I’m sorry, but there is no magic word or gee-whiz-bang concept to suddenly make you the biggest producer in your office and let you achieve all your dreams. Economics and psychology show there is only your passion and work. Do the work you need to do today, and have the persistence to do it tomorrow and the day after that, because the work is the way you pursue your passion. That is the essence of grit and becoming a champion. A year after that injury, 11 months after I was able to start training again and doing the basics over and over and over, I pushed through the pain of rehabilitation and repetition because of the vision and passion. I fought and held up the trophy as champion — not because I was great, but because I had grit. Joseph Templin is the author of the professional development book Every Day Excellence. Contact him at joe.templin@innfeedback.com
February 2024 » InsuranceNewsNet Magazine
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INSIGHTS
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.
Interest rates, rising demand driving annuity sales growth More consumers are seeking protection and guaranteed income. By Keith Golembiewski
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IMRA recently published its U.S. Individual Annuity Sales Forecast for 2024 through 2026. Over the past two years, significant annuity sales growth has been driven by interest rates, rising demand for protection and guaranteed income, and strong economic conditions. In 2022, annuity sales totaled a record high of $313 billion. At the end of 2023, LIMRA is projecting sales will exceed $350 billion, largely based on strong fixed annuity sales. The two years of record annuity sales were fueled by the enormous growth across products such as fixed-rate deferred, fixed indexed and income annuities, and registered index-linked annuities. As we look toward the future, we believe the sales momentum experienced in 2022 and 2023 will continue for the industry through 2025.
Products that are expected to decline in 2024
Lower interest rates early in 2024 will dampen demand for fixed annuity products in the first half of the year, but as rates rebound in late 2024 and through 2025, LIMRA is forecasting fixed annuity sales will recover. » Fixed-rate deferred annuities will face growing competition from alternative products such as bank certificates of deposit as short-duration rates improve. While FRD sales will be considerably lower (down as much as 30%) than the record-high sales set in 2023, FRD sales will likely exceed $100 billion in 2024 and 2025. » Fixed indexed annuities will be hampered by the pullback in interest rates, and as crediting rates decline, the demand for protection-based solutions will slow in 2024 and 2025. Despite the Individual annuity sales, 2018–2022 and projected sales 2023 (dollars in billions)
What’s ahead in 2024 and 2025
While interest rates are expected to peak in 2023, the forecast for the 10-year Treasury rate is that it will remain around 4% through 2025. This slight decline will dampen annuity sales in 2024, particularly for income annuity products and fixed-rate deferred products. Countering this are the turnaround in the equity markets and the expectation that annuity sales will rebound in 2025. Overall, LIMRA is forecasting annuity sales will total between $311 billion and $331 billion in 2024. Much of the variance depends on how interest rates play out. As interest rates recover in 2025, sales of indexed annuities and income annuities are expected to return to or exceed the levels set in 2023, with total sales growing as much as 10% and ranging from $342 billion to $362 billion.
Products expected to see growth in 2024
With the steady growth in the equity markets and minimal volatility, variable annuity products are expected to grow in 2024 and 2025. » Registered index-linked annuities will have a strong year as steady equity market growth and lower interest rates make the value proposition of RILAs particularly attractive. In 2024 and 2025, LIMRA is forecasting RILA products will expand on the five consecutive years of record sales. RILA sales are likely to be as high as $52 billion in 2024 and $57 billion in 2025. » Traditional variable annuity sales should benefit from a growing equity market over the next two years, but regulatory headwinds may counter the sales growth potential. LIMRA predicts traditional VA sales will grow as much as 10% to $60 billion in 2024 and increase as much as 8% to $65 billion in 2025.
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InsuranceNewsNet Magazine » February 2024
Source: “A Future View of Annuity Sales — Entering a New Era: Individual Annuity Market Forecast: 2024–2026,” LIMRA, 2023
expected nominal decline of FIA sales in 2024, sales of this product will remain historically strong and are forecast to reach nearly $100 billion in 2025. » Income annuity sales, although dampened in 2024 by declining interest rates, will continue being pushed to record sales due to growing demand for income. LIMRA is predicting income annuity sales to top $15 billion in 2024 and set a record — above $18 billion — in 2025. While economic conditions, advances in technology, and shifts in the regulatory environment could change the sales outcomes LIMRA is forecasting, our research shows that investors’ growing need and desire for protection and guaranteed income will cement $300 billion a year as the new normal for U.S. annuity sales. The future is bright for the annuity market. Keith Golembiewski is LIMRA assistant vice president, annuity research. Contact him at keith.golembiewski@innfeedback.com.
INSIGHTS
Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.
Start the life insurance conversation during Insure Your Love Month Consumers are confused about life insurance, even though they realize they need coverage. Here’s how advisors can steer them in the right direction.
Study, is that they perceive it as being too expensive. The second leading reason is that they have other financial priorities.
By Barbara Pietrangelo
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here are interest rates headed? Is the Nasdaq up or down? Do I have the right mix of equities and bonds in my retirement portfolio? Clients have so many things to consider these days, it’s easy for them to lose sight of just how important risk-protection products are in a comprehensive financial plan. Yet the consequences of overlooking this base of a solid financial pyramid are all too real. We all have seen unfortunate and sometimes tragic situations involving families who lacked life insurance, longterm care coverage or disability-income insurance and suffered a catastrophic loss. Deep down, they know. Around 30% of adults ages 18 to 75 who lack life insurance say they need it, representing about 74 million people. More than 1 in 10 of those who own life insurance say they need more. That’s another 27 million people. These numbers come from the annual Insurance Barometer Study conducted by LIMRA and Life Happens, and they represent a profound life insurance “need gap.” The survey shows that many people have the right instincts. It’s our job as financial professionals looking out for their best interests to encourage them to act on those instincts and to fill the gap.
Confronting objections
People know they need it, so why don’t they have it? The No. 1 reason they give for not having any coverage or not having enough coverage, according to the Barometer
As advisors, we talk with our clients all the time to help them create and prioritize their financial goals. There is no one better to convince them that their instincts are right — life insurance is important. Rather than being an expense they can’t afford or that will force them to scale back other priorities, life insurance is the foundation that allows them to achieve their goals. Besides, their cost objections may be overblown or completely unfounded. Surveys show that most people significantly overestimate the cost of coverage. The third leading reason people give for not having life insurance or not having enough is that they don’t know what they need or they don’t understand the product. This is where we can really make a difference. Our clients work with us because they trust us and know we are working in their best interests. We are uniquely empowered to show them how life insurance fits into their financial plan. But we don’t have to do it alone.
Overcoming inertia
Life insurance may not be as sexy as some of the other products and services we provide. Maybe it’s not as exciting as creating a plan to put their children through college. Asking clients to consider how their loved ones would fare if the client were no longer around is not the same optimistic conversation as talking to them about setting up an individual retirement account to enjoy
a happy retirement. In fact, 17% of people who report that they need life insurance but don’t have it say one reason is that they don’t like thinking about death. Fortunately, there are ways to get past these obstacles. Each February, Life Happens sponsors Insure Your Love Month to reframe the conversation about life insurance in a more positive light. The overriding theme of the month is that buying life insurance is ultimately an act of love. Life Happens found, for example, that 59% of people would feel more secure in their relationships if getting life insurance were something they discussed with their partner. And 40% of men and 33% of women say that purchasing a life insurance policy is a financial way to demonstrate your love. Framing the purchase of life insurance as a loving act can get many people past their objections or reluctance. Many companies have excellent materials about how their products can help people protect themselves and their families. Life Happens also offers a wide range of resources — from messaging to graphics to social media posts — you can share with clients and in your community. Some of these are specific to Insure Your Love Month, while others are suitable year-round. However we spread the word, it’s worthwhile. We are the best resource our clients have to ensure they don’t become one of the tragic stories. Starting the life insurance conversation can only benefit the families we serve and help close the need gap. Barbara Pietrangelo, CFP, CLU, ChFC, has been a NAIFA member since 1992. She was the 2023 president of Life Happens and serves on NAIFA’s board of trustees. Contact her at barbara. pietrangelo@innfeedback.com.
February 2024 » InsuranceNewsNet Magazine
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INSIGHTS
Finseca is the home of the top financial security professionals. This member-driven community serves as a credible source for the profession and provides exclusive access to the brightest minds in it.
Navigating state-level priorities in Regulations and legislation impacting financial security are moving into the state arena in the coming year. By Melissa Bova
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t is no secret that when the Department of Labor released its offensively framed and substantively very bad fiduciary rule at the end of last year, 2024 would start with a bang — and not in a good way. But it is not only federal activity you should watch as we barrel into the new year. State legislators and regulators have plenty of items on their plates as they work to address long-term care, taxes and standards of conduct. Here is an overview of what we are watching this year.
Standards of conduct
Standards of conduct are not only being discussed at the federal level. In 2020, the National Association of Insurance Commissioners adopted the Annuity Suitability & Best Interest Standard (Regulation No. 275). Since NAIC displayed that leadership, 40 states have adopted the standard, with five working through adoption and the last few planning to begin the legislative or regulatory process in 2024. Adopting this model has shown and will continue to show what can be done when regulators and the industry work together to protect consumers while ensuring continued access to advice. Although New York Regulation 187 (Suitability & Best Interest in Life Insurance & Annuity Transactions) is different from the NAIC model regulation, Finseca will continue to address some of our key concerns with this. Meanwhile, California is expected to adopt its version of the best interest standard for annuities in its 2024 legislative session. 44
NAIC activity — artificial intelligence and privacy
The NAIC ended 2023 with the unanimous adoption of a Model Bulletin, “Use of Algorithms, Predictive Models, and Artificial Intelligence Systems by Insurers,” and will begin working through another draft of the Insurance Consumer Privacy Protection Model Law (No. 674). The NAIC will announce letter chairs in the coming weeks, which will determine other priorities going into 2024. However, AI and privacy activity aren’t limited to the NAIC, and several states will move forward with legislation or regulations in both spaces in 2024.
National Council of Insurance Legislators
NCOIL will continue to review and develop model legislation that will further consumer access to advice and preserve state jurisdiction over insurance. We expect NCOIL to continue to lead and educate policymakers on key initiatives throughout the year.
Long-term care
Washington was the first state in the nation to adopt a state-funded longterm care program, and adjustments and tweaks to that program are expected to be made throughout the year. Issues such as portability, attestation of coverage and expanding coverage beyond the $36,500 benefit remain unsolved. California’s Long Term Care Insurance Task Force is being closely watched to see whether there will be any legislative reactions following its report on the actuarial analysis of potential solutions for long-term care. Keep an eye on states such as Minnesota, which just released its long-term care report that takes a different approach from what we have seen in Washington and California. Massachusetts is expected to put out a request for proposals on the same issue this year.
InsuranceNewsNet Magazine » February 2024
Whether they lean red or blue politically, states will continue to discuss long-term care. Finseca has put together a long-term care task force focused on ensuring the products the profession already offers are part of the solution, whether states are considering tax incentives or state-funded programs.
Recruitment, retention and diversity
As the average age of people in the financial services profession increases, Finseca will continue to advocate for initiatives that will encourage a more diverse group of individuals to join the profession and increase the retention rate of those who are in their first five years as an advisor. We face a $7 trillion gap between what people have saved for retirement and what they will ultimately require, and also a $12 trillion life insurance coverage gap. One of the key ways to address these gaps is to have more people serving the individuals who need financial protection the most. Eliminating pre-licensing hours, allowing producer exams to be conducted in more than one language, continuing online proctoring of exams and encouraging mentorship programs are some of the initiatives Finseca will work on with legislators and regulators throughout the year to address our recruitment, retention, and diversity needs.
Elections
You have already seen it in the news, but this is a major election year, and elections will be in the back of legislators’ and regulators’ minds as they consider various pieces of legislation and regulations. This will spur some more controversial actions that could hinder election votes, but those items that may not see movement in 2024 will likely come back to the forefront in 2025. Finseca will work with our joint trade associations (American Council of Life Insurers, Insured Retirement Institute, National Association of Insurance and Financial Advisors, National Association for Fixed Annuities, and more) to have a united voice regarding joint legislative priorities toward financial security for all. Melissa Bova is vice president for state affairs at Finseca. She may be contacted at melissa.bova@innfeedback.com.
The Million Dollar Round Table is the premier association of the world’s most successful life insurance and financial services professionals.
INSIGHTS
Connecting with the HNW market: Start with research
will boost your credibility and showcase your dedication to their needs by being able to answer questions immediately.
Identifying an area of need
Through your research, you’ll likely find a gap in what high net worth clients would like to see from their advisor compared to what they receive. Discovering what differentiates you from other financial advisors will help you position yourself as an advisor who can provide solutions and help clients reach their goals.
Forging the connections
Discovering what differentiates you from other financial advisors will help you position yourself as an advisor who can provide solutions and help clients reach their goals.
Identifying your high net worth prospects’ needs can help you provide the correct solutions for them while building long-term relationships. By Karl Hartey
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inancial advisors looking to expand their clientele in the high net worth market can feel intimidated without referrals or a clear starting point. The best way to break into the market is to start with research. By identifying your prospects and their business’s needs, you can correctly provide solutions for your ideal client base and start to build long-term relationships.
Catering to the market
The first steps in entering a new market are discovering and understanding what types of individuals you would serve. Start by researching previous consumer studies in your region to learn your prospects’ insurance-buying habits and the services they pay for. Knowing what products and services they’re interested in will provide insight into what they may expect from you and what they might need help with. For example, let’s say you’ve discovered your target audience prefers having personal insurance coverage instead of dealing with employer-provided coverage. In this case, research more personal coverage options and take note of the ones with the most flexibility for future clients. You
Stepping into the high net worth market will require you to network with as many of your target prospects as possible. Host bimonthly or quarterly webinars to discuss identified service gaps or current trends in the market. Sharing your expertise online will help more prospects learn from and trust your advice. When you’re able to share your wealth of knowledge about their specific needs, you can easily reach your audience, and you’ll eventually be seen as the go-to advisor for that market. Getting referred to high net worth clients when you don’t have any yet is difficult — if you’re accustomed to working with teachers, they will likely refer you to more teachers. When you know the expectations and the needs of your target market, it’ll help you find exactly who you’re trying to reach. The steps before you enter a market are just as important as the steps you take once you find new clients. Ensure you’re conducting adequate research, and then leverage the information you discovered to distinguish yourself from the competition. Knowing what the average high net worth client wants and providing them with it will help you naturally grow your clientele. Karl Hartey is the founder and CEO of Hartey Wealth Management in Chester, England. Karl is a 28-year MDRT member with more than 30 years of experience in financial services. Contact him at karl. hartey@innfeedback.com.
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February 2024 » InsuranceNewsNet Magazine
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