InsuranceNewsNet Magazine | April 2024

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The imperative of financial literacy

In an era marked by economic complexity and a rapidly evolving financial landscape, the need for financial literacy has never been more important. Financial advisors stand at the forefront of advocating for a comprehensive understanding of financial concepts among individuals. This is not merely a matter of prudent financial management; it is a crucial life skill that can significantly impact an individual’s future well-being and security.

Financial literacy extends beyond the basic knowledge of managing a budget or saving for a rainy day. It encompasses a good grasp of various financial products and their long-term implications, such as retirement savings — including the high cost of medical care in retirement — and the value of annuities, life insurance and long-term care insurance, among others. Each of these components plays a vital role in shaping a secure financial future, and understanding their value is paramount.

Retirement savings: The foundation of financial security

The cornerstone of financial planning is undoubtedly retirement savings. In an age when traditional pension plans are becoming increasingly rare, the onus of securing a comfortable retirement rests on the individual. Financial literacy empowers individuals to make informed decisions about their retirement savings, such as the type of retirement accounts to use (401(k), IRA, Roth, etc.), the amount to save and the investment strategies to employ. Understanding something as simple as the power of compounding interest and the importance of starting early can make the difference between a retirement of comfort and one of financial strain.

The high cost of medical care in retirement: Anticipating the inevitable

One of the most underestimated aspects of retirement planning is the high cost of

medical care. As life expectancies increase, so does the likelihood of requiring significant medical attention in later years. According to Fidelity Investments’ 2022 Retiree Healthcare Cost Estimate, the average American couple grossly underestimates their expected cost of health care in retirement to be $41,000. Actually, the average 65-year-old couple retiring this year can expect to spend an average of $315,000 on health care expenses throughout retirement. And there are other studies that place that number even higher. Financial literacy helps individuals grasp the potential costs involved and the importance of planning for these expenses.

Annuities: Navigating the complexities of guaranteed income

Annuities are often-misunderstood financial products, yet they can be a valuable tool in ensuring a steady income stream in retirement. As pensions have become nearly a thing of the past, financial literacy is crucial in understanding the different types of annuities, their fees and the payout options that can fill the need for predictable income in retirement. This knowledge enables individuals to make informed decisions about whether an annuity fits their retirement strategy and how to choose the right product to meet their needs.

Long-term care insurance: Preparing for the unexpected

The prospect of needing long-term care becomes a reality that many individuals face as they age. According to a 2023 Morningstar article, 70% of people who turn 65 will develop a severe long-term care need in their lifetime; 48% of people who turn 65 will need some type of paid long-term care services in their lifetime. Long-term care insurance can provide financial protection against the exorbitant costs associated with extended care. However, understanding the intricacies

of these policies, such as coverage limits, eligibility requirements, and premium costs, is essential. Financial literacy — in combination with professional financial advice — empowers individuals individuals to assess their risk and make informed decisions about purchasing long-term care insurance.

Life insurance: Understanding its strategic uses

A financial advisor can educate clients on the more strategic uses of life insurance. For example, an advisor might recommend using life insurance for more than just a death benefit. For instance, they might suggest using permanent life insurance as a tax-advantaged savings vehicle, leveraging its cash value for retirement income. Additionally, they could advise on using life insurance for estate planning purposes, such as funding a trust to manage wealth transfer or equalize inheritances among heirs. The acceptance of these possibilities truly depends on the financial literacy of the client.

The role of financial advisors:

Promoting financial literacy

A financial advisor’s role extends beyond providing investment advice or retirement planning. Advisors are educators and advocates for financial literacy. By imparting knowledge and fostering understanding, they empower clients to make informed decisions that align with their long-term financial goals. With the high demands on assets as we live longer and require more expensive care, financial literacy is not a luxury; it is a necessity. The combination of financial literacy along with the counsel of a financial advisor can provide not only financial well-being, but also peace of mind.

John Forcucci Editor-in-chief

INTERVIEW

6 The need for speed Instant underwriting is revolutionizing the industry, and Esfand Dinshaw, Sammons chairman and CEO, sees AI as the key to increased insurance sales. Read more about Dinshaw’s journey and his vision for his company in this interview with publisher Paul Feldman.

FEATURE

10 Everyone needs financial literacy education

By Susan Rupe

Advisors use a number of platforms to bring financial literacy education to diverse audiences.

IN THE FIELD

14 It started with a book

By Susan Rupe Mike Paffhausen’s

service to his community includes ensuring access to financial literacy education.

LIFE

20 The real cost of volatility-controlled indices in IUL policies

By Nick Pratt

IUL products are becoming increasingly difficult to compare.

ANNUITY

24 Will lower interest rates cut into fixed-rate deferred annuity sales?

By Rayne Morgan

Can the sales boom last in the face of inflation and changing interest rates?

Grace Apea

Senate panel debates retirement crisis

There’s not much agreement on anything in Washington these days, but a Senate committee agreed on one thing — that retirement security is a major crisis facing Americans, many of whom are unprepared financially.

But the senators disagreed on virtually every detail about the causes and potential solutions. So did their respective guests during the Health, Education, Labor and Pensions Committee hearing, which asked the question: “What Can We Do to Expand Defined Benefit Pension Plans for Workers?”

Committee Chairman Sen. Bernie Sanders, I-Vt., released a new 21-page report on the state of retirement. Key findings from the report include nearly half of Americans 55 and older have no retirement savings, and 52% of Americans 65 and older are living on less than $30,000 annually.

Sanders said he believes every corporation in the U.S. should be required to provide a retirement plan for its workers and if corporations choose not to offer retirement plan, they must give workers the option of contributing to a federal pension plan. Meanwhile, Sen. Bill Cassidy, R-La., joined conservatives in promoting defined contribution plans giving participants control of and options for their retirement plans. Cassidy called the pension system endorsed by Sanders “outdated and a little disconnected.”

SOARING INSURANCE RATES FORCE TOUGH DECISIONS

Ah, the good old days, when insurance bills were an expense most people “never really thought about.” Now insurance has become “a hefty bill they must strategize to pay.” That’s according to Matt Hagen, director of P&C Operations at Assurance IQ, whose research found that soaring insurance rates force Americans to either use tax refunds to pay for premiums, shop around and switch providers, or go without coverage

In the face of rising premium rates, more Americans are also shopping around to find better prices and switching to a different insurance provider.

According to J.D. Power’s Quarterly Shopping List Report for Q4 2023, overall shopping rates for auto and home insurance stood at 14.9% and 2%, respectively.

DID YOU KNOW ?

SPEAKERS DEBATE WHETHER DOL RULE HURTS OR HELPS

A House committee revived debate over the Department of Labor fiduciary rule, leading to extended discussion over what the proposal does and doesn’t do, and whether the DOL has the appropriate rulemaking authority.

The House Health, Employment, Labor and Pensions Subcommittee welcomed four witnesses to discuss the fiduciary rule. Iowa Insurance Commissioner Doug Ommen endorsed the best-interest model regulation passed by the National Association of Insurance Commissioners. He insisted that state regulators have a handle on any problems with agents and advisors giving bad financial advice. Forty-two states passed best-interest rules based on the NAIC model.

Ommen’s comments drew later ire from Rep. Joe Courtney, D-Conn., who sought to establish the right by the DOL to regulate retirement plans under the Employee Retirement Income Security Act of 1974. “This is well within the scope of ERISA in terms of the DOL’s authority,” he said.

The U.S. national debt is rising by about $1T every 100 days

Source: U.S. Department of the Treasury

QUOTABLE

The advantage of the defined contribution system, why many have flocked to it, is that workers own their own retirement system.

— Sen. Bill Cassidy, R-La.

PANEL RECOMMENDS STEPS TO KEEP SOCIAL SECURITY SOLVENT

Social Security faces possible insolvency, and the Committee for Economic Development, the public policy center of The Conference Board, has sounded the alarm. The committee issued a new solutions brief, “Saving Social Security,” which offers a series of steps to shore up the Social Security program, which is the largest component of the total federal budget and is the largest driver of long-term debt.

The committee made several recommendations for a framework of comprehensive Social Security reform, including establishing a bipartisan congressional commission, adjusting Social Security benefits and increasing revenue.

In addition, the committee proposed increasing the minimum benefit to protect low-wage workers and those with intermittent careers. Provisions could be included to ensure minimum benefits for the lowest-income earners or those with incomplete work histories. One example would be to set a minimum level of benefits for workers meeting certain work requirements. Setting a minimum benefit at 125% of the federal poverty level for retirees with 30 years of work history would expand the total 75-year shortfall by 5%.

Sammons Chairman and CEO

ESFAND DINSHAW

sees “instant” underwriting decisions as the key to increasing life insurance sales — and AI as the key to achieving that immediacy.

An interview with PaulPublisherFeldman,

Born in Pakistan, Esfand Dinshaw had a talent and interest in math that set him on a journey that landed him studying actuarial science in Des Moines, Iowa. Four decades later, that journey has taken Dinshaw to the top position at Sammons, where he sees math — and artificial intelligence — as the keys to providing instant underwriting decisions that can pave the way for more consumers to purchase life insurance. “If we can change underwriting from a six-week process that is medically based and turn it into something that is relatively instant, that is going to be the biggest change for the life insurance industry probably since its inception,” he said.

Dinshaw is also bullish on registered index-linked annuities — a relatively new area for Sammons. While Sammons has been selling annuities for about the past 25 years, and selling life insurance for the past 150 years, “our target today is to invest capital about 50/50 in both life insurance and annuities,” he said.

In this interview with publisher Paul Feldman, Dinshaw said, “The insurance business is a calling. You’re doing so much for your clients, giving them financial security — and peace of mind.”

Paul Feldman: How did you get your start in the industry?

Esfand Dinshaw: I grew up in Pakistan, wanted to be an actuary and ended up at Drake University, which is a small college in Des Moines, Iowa, that has an undergraduate degree in actuarial science. My background is as an actuary.

I worked at three different publicly traded companies before joining Sammons in 1999. I had the opportunity to join a great leader, John Newsom, in building an annuity business here and replaced him when he retired. Then when Mike Masterson, who ran Sammons Financial Group, retired, I stepped into those shoes. What I will tell you is that for somebody who grew up in a developing nation, America is the only country where you can have an opportunity like this and be allowed to succeed and do what you love to do. I’m a big fan of the American culture and how we encourage and build businesses here.

Feldman: It’s fortuitous or lucky that you ended up in college in Des Moines, because West Des Moines is now the annuity capital of the United States.

Dinshaw: It is, and a large amount of credit goes to John Newsom, who started Sammons. He was involved in two other annuity operations. One was a company called American Life and Casualty that was ultimately acquired by Conseco, now known as CNO. The other one was USG Life Insurance, which was acquired by ING and is Voya now. He was involved in three of them, and a number of people who came out of the businesses he built have gone on to do different things and build annuity operations.

Feldman: How has your experience of being born and raised in a different country impacted the way you do business here and the way you look at the industry?

Dinshaw: Certainly the way I look at the industry here is probably different because we are all bound by our experiences, and we have different views based on those experiences. The one thing that is consistent here is a belief in financial security. Americans need financial security, and insurance companies and financial services firms provide that. At Sammons, our mission is to provide financial security products, services and solutions to all Americans, and that is a piece that is not available in Third World countries.

The second piece, I’ll just add to that, is how the demographics in the United States support this. There are more people who are getting wealthier. There is more wealth in individual hands than they can use for retirement security. And the population approaching retirement is also increasing. Both of those factors point toward this being a great industry to be in.

Feldman: You’ve been in the insurance industry for four decades. What are some of the changes you’ve seen in the industry during that time?

Dinshaw: Four decades is a long time, and you can see how life in America has changed in four decades. The biggest diference is technology. Technology changes

how the consumer is buying the product, how they’re educating themselves about it, and how they’re communicating with insurance companies and their advisors and agents. That is dramatically different than it used to be.

Funny story: I remember when the fax machine came out in the 1980s — that’s the four decades in the business — and always wondered who would use a fax machine. And today, faxes are old, right? We don’t use fax machines; we send images online and we communicate very effectively. Technology has changed, and it’s going to change with AI. That’s the new change for this year, and we can certainly talk about how we think that can change the industry. So one difference is technology.

The other one, and I was very fortunate to be part of this, was the evolution of index annuities. I remember going back into the mid-1990s and working on annuities that were — today we would call them plain fixed annuities — and that changed into index annuities. And that is a big part of the market today, whcih has happened over the past 25 years. So I’ve had a chance to kind of watch that business grow. I’ve been here at Sammons Financial Group for over two decades, and that has become a big part of providing financial security for Americans.

Feldman: Sammons is reporting that you have nearly twice as many life insurance policies as you do annuity contracts. We’re wondering what’s behind that and where you see your future growth coming from.

Dinshaw: I believe the number you’re looking at is in-force policies. We’ve sold life insurance for a long period of time. We have two insurance companies, Midland National Life Insurance and North American Company for Life and Health. Both of them have been in operation since the turn of the last century, so you have companies with about 100 years of experience in selling life insurance. You can say that there is a big in-force block that sits on the books. Annuities are relatively new. The organization started selling those in late 1999, so I know that’s 25 years. I will say that our target today is to invest capital about 50/50 in both life insurance and annuities.

Feldman: Sammons branched out into the registered investment advisory space in 2021, and you continue to make inroads there. What are your goals and the company’s goals as far as moving into the advisory space?

Dinshaw: Think of our mission, going back to financial services, which is financial security products, and then delivering them into the consumer. You can be involved in manufacturing them or in delivering them, and we are doing both of those. We do sell our products through registered investment advisors, and we have now taken two steps there.

One is Beacon, an asset manager that provides financial security asset management on these registered investment advisory platforms. We purchased that.

The second one was the partnership we have with North Rock, which is directly selling through registered investment advisors into the space. We continue to believe that we will have a presence in a range of products that are structured around financial security, as well as all distributions that fall into third-party distribution. We have partnerships with different distributions. We may end up owning some of it at some point, but they’re all third parties in the sense they’re not captive. They’re writing for other carriers as well.

Feldman: Let’s talk about some products. I want to talk about the LiveWell Dynamic RILA. It has been in the marketplace for about a year and a half now. How has it been received?

Dinshaw: RILAs, as you know, started a handful of years ago. RILAs are now about a $45 billion market. We entered the space with the LiveWell product. We are enhancing that product, and we will have another

product in that space coming out as well. We really are bullish on the registered index in the RILA product market. We want a bigger share of that market than what we have today, and so we remain bullish on it. LiveWell is sold through registered reps. We’re very excited about that, and it is a core competency for us because it is in the index annuity space.

Feldman: One of the things that has been in the news and really impacted all of our readers and the people we do business with are interest rates, which have been going up. We were wondering how that has affected your product mix and your sales strategies.

Dinshaw: I’ve been part of the annuity business going back to 1990, and I’ve seen all kinds of interest rates and equity markets rates go up. They come down. A few years ago, we were talking about interest rates being very low, and spread compression and the value to the consumer was low at that time. Then this year the interest rates have spiked up, equity markets have gone down and the yield curve has inverted. A lot of these value propositions are seen in a different light.

For example, hearing again about laddered certificates of deposit, which I used to hear a lot about it back in the ’90s, and they disappeared for the past 20 years or so. So those are back as well.

Our strategy is to have a range of products in the marketplace. If you think about financial security, we have traditional fixed annuities, multiyear guaranteed annuities, index annuities, life insurance products, ROP products, and we also have noninsurance products as well. So irrespective of what interest rates do and what equity markets do, we will have a product out there for the consumer to buy and plan their own financial security.

Feldman: How do you think AI and technology will play a role in life insurance in the future?

Dinshaw: It’s early in the AI evolution to know exactly how AI will change our lives. But if you have been on ChatGPT and see what that can do for you, you will get a flavor of how this technology is going to change the way we operate. We have a task force and they’re looking at all kinds of use cases, but it will improve the communication between an agent and a client and us. It will allow for easy recovery of data, easier analysis of data — of any kind that you can think of. And all of this is data-driven.

You can apply it to review contracts; you can apply it in IT programming as the first cut. You can apply it in terms of sales where somebody asks a question, and the machine has a ready answer for you. It will dramatically change how we operate. It won’t replace the trust of an advisor or agent that still is needed by the end client, but it will dramatically improve the effectiveness of the sale and the advice that is provided.

Feldman: Do you think AI might make it a little easier for consumers to buy life insurance? Because we’ve all heard of the coverage gap. People say they’re interested in buying it, but they don’t get around to doing it because they think it’s going to be too difficult, they don’t want to go through medical underwriting or they think life insurance is going to be too expensive. There are all kinds of barriers in people’s minds. Do you think AI might help break down some of those barriers?

Dinshaw: It will improve communication. The biggest barrier that can be changed in the life insurance space is underwriting and the concept of instant underwriting. The technologies are there. There are some regulatory challenges. How do you widely accept AI and look at the results that are coming from it? If we can change underwriting from a six-week process that is medically based and turn it into something that is relatively instant, that will be the biggest change for the life insurance industry probably since its inception.

Esfand Dinshaw cut the ribbon on Sammons Financial Group’s new corporate headquarters in 2021.

Feldman: Let’s talk about your distribution force and how you recruit producers. Are you having any difficulties finding talent?

Dinshaw: We are not a captive shop, and we do not build our own distribution. We are going out into independent distribution and connecting with them. What we have seen is an increase in agents and advisors who are working with us. We also see many younger advisors in this business, which is great. It is great to see younger people entering this space.

The recruiting and training of advisors is left in the hands of the third-party distributors, the independent marketing organizations, the broker-dealers and the registered investment advisors. They’re the ones who are going out and recruiting people and training them, and we are interacting with them as a manufacturer and they’re the distributor.

Feldman: I think it’s encouraging that you see more younger people in the business. Why do you think that is?

Dinshaw: At the end of the day, the younger people will go where there is opportunity. And there is opportunity, and the mission is great: You’re going to go and earn somebody’s trust and provide financial security for them. It’s a great calling, and it attracts a number of people.

Feldman: And we know that you have an employee stock ownership plan, and that business model is unique in this industry. Can you tell us some more about that?

Dinshaw: We are owned by an employee stock ownership plan, or ESOP. To my knowledge, we’re the only financial services firm that is owned by an ESOP. The history goes back to Charles Sammons, who in the mid-1930s started an insurance business and then went on to buy a whole range of different businesses outside the financial services space. When he died in 1988 and his second wife died in 2009, they gifted all their stock to the ESOP plan. So all the company stock sits today in this ESOP plan and the employees of all controlled businesses in the United States will participate in the ESOP.

So the biggest benefit of this is that it

puts a significant amount of retirement dollars in the hands of our employees and unites all the employees toward one singular goal, which is growing the organization and growing the company. And if you think about a company like Sammons Financial Group, which is 2,000 employees, you need that North Star to guide everybody and say, “If we succeed, you succeed.”

We have had tremendous success over the past number of decades, and this concept of behaving like an owner rather than an employee is a message we deliver on a regular basis to our employees.

Feldman: Let’s switch gears. Let’s talk about something else that’s been in the news: the Department of Labor fiduciary rule. I know it’s something that’s on the minds of the leadership of Sammons. Can you give us your thoughts on the new rule proposal?

Dinshaw: We have a team looking at it. There are some areas that are ambiguous. What we do know is that it is highly intrusive and is increasing costs. And our concern is that it’ll make the sale even harder to do, and it will move advisors away from this business or increase the cost so much that they cannot get to the everyday person who needs financial advice.

Let me just add that since 2016, when the Department of Labor first put out a fiduciary rule that was ultimately defeated, there has been big change in the industry. We now have a Securities and Exchange Commission rule that regulates suitability at the point of sale. The National Association of Insurance Commissioners model annuity suitability regulation is in almost all states. About 44 or 45 states have adopted that. We already have a standard at the point of sale, and this is just one

other layer on top of that, which increases the cost. We think it is very similar to the regulation that was passed in 2016 that was ultimately defeated by the courts. So we’ll see how all of this plays out.

Feldman: Where do you see Sammons Financial Group going in the future?

Dinshaw: We are going to continue to grow in the space of financial security, and you can look at that in a number of different ways. You can look at it as security against premature death. You can look at it as security against living too long. You can look at it as security against not having enough assets at retirement. But you can put all those pieces together and we will continue to offer products and services solutions in that space.

Feldman: I like to ask people how they got started in the business, because almost everyone in this business has a really interesting story.

Dinshaw: I grew up in Pakistan, and you might ask, how did I hear of actuarial science? There are a number of different professions you can enter if you’re good at math. That’s where I was in high school, and this was one of those opportunities. I was really intrigued and fascinated by it. Ultimately, I was admitted to Drake University in Des Moines, Iowa. I didn’t know where Des Moines, Iowa, was, except for looking at it on a map. So that’s how I ended up in Des Moines. And I have lived here for most of the past 40 years, and I have called it home, and have loved it and really enjoyed it. The insurance business is a calling, at the end of the day. You’re doing so much for your clients, giving them financial security — and peace of mind.

Esfand Dinshaw with the Sammon Financial Group 2023 summer interns.

Advisors get creative in providing the financial literacy message to diverse audiences.

BY SUSAN RUPE

Lena Nebel and the rest of the team at BFG Financial Group saw a need to teach young people about financial literacy concepts. So they created a university to do just that.

BFG University provides free online access to 16 personal finance lessons covering everything from how to start saving money to understanding employee benefits to beginning the investment journey. In addition, BFG University offers an eight-course curriculum in retirement readiness called “Don’t Retire… Graduate!: Freshman Year” for a fee.

Nebel is president and chief operating officer at BFG Financial Group, located in

She added that BFG University was born from the firm’s marketing department. “They saw there is this need among individuals who are underserved in the financial community,” she said. “With our CEO writing this book about retirement being like graduation, we started brainstorming how to present this information in a university-like program.”

Nebel and the other members of the BFG team travel to area high schools regularly to talk to students about careers in finance, how to invest and how to pick stocks. Nebel often works with investment clubs in local high schools.

BFG University and related financial literacy programs are among the ways financial professionals give of their time and expertise to help members of their communities improve their financial knowledge.

Timonium, Md. She said the company’s interest in providing financial literacy education stems from the company CEO Eric Brotman’s desire to teach others to free themselves from debt and have a secure retirement. Brotman is the author of three books, including Don’t Retire… Graduate!: Building a Path to Financial Freedom and Retirement at Any Age; Retire Wealthy: The Tools You Need to Help Build Lasting Wealth – On Your Own or With Your Financial Advisor ; and Debt-Free for Life: The Tools You Need to Free Yourself from Debt

“BFG University starts with students in their freshman year of high school and going into their senior year, starting with the basic financial topics and then getting into the more advanced topics,” Nebel said.

The need for financial literacy education continues to grow. Consider these statistics from zippia.com:

• 73% of teens want a more personal finance education .

• Americans lose an average of $1,819 annually due to financial illiteracy.

• 77% of Americans are financially anxious .

• Only 25% of American teens have confidence in their personal finance knowledge.

“We do go into schools and talk about financial topics as much as we can,

because unfortunately a lot of young people, even when they get into college, aren’t aware of some of these things,” Nebel said.

BFG also created a program called Financial Planning for All.

“It allows any individual, regardless of their assets, to work with a Certified Financial Planner,” Nebel said. “Many of our peers in this industry require clients to have a minimum amount of assets before they will work with them. We partner with a lot of firms and form strategic alliances. We call it ‘collaboration over competition,’ where we can meet with clients and help them because there are a lot of people who need planning advice, but they may not have any money.”

Nebel said she started an investment club at York College of Pennsylvania when she was a student there. She loves to work with Junior Achievement and high school students to teach young people about the stock market.

“There are high schools in our area that have an investment club, where they begin picking stocks on Sept. 1 and the students’ portfolio runs until the end of the school year. And I work with Junior Achievement on their stock market challenge. I’m a trader for the day, so I run back and forth to the tables where the kids are placing orders. It’s a lot of fun.”

Nebel said she believes financial literacy education should begin as early as possible. “I think the more we can talk about these issues and emphasize the importance of starting early, the better.”

Not just for kids

Financial literacy education isn’t just for students. Adults need help in understanding an array of financial topics. Protection Point Advisors in Roseville, Calif., uses everything from webinars to a network of professionals to provide financial education for clients and nonclients alike.

“We bring content to the people,” said John Heck, financial advisor with Protection Point.

“We have something called 3-D Asset Care, which is a series of monthly webinars on topics that are important for our clients,” he said. The topics are not confined to financial planning matters. For example, 3-D Asset Care conducted

Nebel

Heck

In addition to online financial training, BFG University team members travel to area high schools regularly to talk to students about careers in finance, how to invest and how to pick stocks.

a webinar on “Reverse Mortgages: The Good, the Bad and the Ugly.”

“To my knowledge, there’s no one in my firm who even holds a mortgage broker license, so it wasn’t about generating business,” he said. “It’s more because clients are asking about reverse mortgages as property values go up and there’s a lot of equity stored in people’s houses.”

Heck said his firm also offers financial literacy education to its clients as well as clients’ children and grandchildren.

“We have a financial education system that’s accessible through our website,” he said. “It has hundreds of modules in 17 or 18 different categories — everything from budgeting and spending to buying a car or a house, debt management, taxes, workplace transition. We make all that available to our clients when they come on board with us, but we also encourage them to give their children and grandchildren access to that information.”

Heck described his firm’s financial education system as “real-world topics, things that will benefit people, especially people who are just starting out, because these are things that aren’t taught in school anymore.”

The founders of Protection Point Advisors created the National Referral Network, in which they teach professionals such as accountants, insurance agents, mortgage brokers and real estate professionals how to educate and deliver value to their clients. Heck said that his company produces a weekly podcast with different professionals within the network to discuss various financial education

issues. He also writes articles regularly for LinkedIn and industry publications.

When it comes to educating people about financial issues, Heck said most of those he works with want guidance more than anything else.

“They want guidance as to what they can do to empower themselves, to know more about the direction in which they want to go, because a lot of people know where they want to go but they usually don’t know how to get there. So what they are largely looking for is, ‘OK, John, this is where we’re at and how do we get from Point A to Point B?’”

Heck said his company was inspired to take on financial literacy education after its founders acknowledged that people often are uncomfortable discussing financial topics.

“We asked ourselves, ‘How can we do this differently? How can we do it better?’ That’s where all this came from — from a place of asking ourselves how we can add more value to the client relationships we have.”

Repairing the disconnect

Vanderhall is a financial planner with The Brands + Bands Strategy Group in Charlotte, N.C. She is also a speaker, educator and writer.

“I create content and educate people on different topics that are within the personal finance space,” she said.

Vanderhall’s content appears on several platforms, including YouTube, Facebook, Instagram, LinkedIn and X.

“People like to digest content in different ways,” she said. “And I find that I can talk about the same thing on all those platforms. But people can get a different perspective, depending on the channel.”

Vanderhall’s content covers topics around budgeting, investing and saving. “I want to give people information that will be relevant to what they are trying to do to reach their financial goals,” she said.

What consumers most need in terms of financial education, she said, is cutting through the clutter of advice that’s out there.

“They need someone to give them guidance and confirmation on how to reach their goals from where they are right now,” she said. “Do they need to make any changes to what they’re currently doing? What is that change? Will it be easy to do? People need someone to give them a concise plan and be their ally and help them make that goal a reality.”

Vanderhall’s YouTube channel is called “NV Knows” (@NVKnows). She discusses financial topics that are in the news or that she knows people are talking about.

For example, a recent video focuses on money trends, including “girl math,” “loud budgeting,” “YOLO spending” and “doom spending.”

“If I see a financial topic that people are talking about — for example, inflation — I give a spin to it. This connects back to what I notice people are talking about, and I use it as market research.”

When Nadia Vanderhall first started working in marketing for financial services companies, she noticed a disconnect between the information consumers needed to make financial decisions and the information that was out there. So she set out to fix it.

One of Vanderhall’s motives in using social media channels to teach financial literacy is a desire to show consumers that they don’t have to be wealthy to access financial advice.

“When people hear the words ‘financial planning,’ they automatically feel that it’s for the affluent,” she said. “But I believe planning and education are not necessarily for the affluent but for people who need to be able to afford their lives.”

Vanderhall

The National Referral Network teaches professionals such as accountants, insurance agents, mortgage brokers and real estate professionals how to educate and deliver value to their clients.

Connecting all the dots

Students need financial literacy education. The financial services industry needs new blood. Kimberley Brown is connecting the dots to fulfill both sets of needs.

Brown is CEO of Financial Mastery and Education as well as executive director of the Coalition for Equity in Wholesaling and is based in the Atlanta area. She previously held executive positions for several financial services companies.

As part of her work with the coalition, she works with institutions of higher

learning that target Black, Hispanic and Native American students to educate those students about careers in the industry. But she also sees a need for young people to learn more about their own finances.

“I talk to them about understanding budgeting. I discuss how you can’t save and plan for retirement when you’re carrying so much student debt.”

Brown said she believes financial literacy education changes students’ lives and then has wider implications.

“I want to change that student’s life because they’re going to be educated on financial topics that perhaps they’ve never heard before,” she said. “I’m going to help

students or early-career entrants understand how to save and plan for retirement. I’m going to help them understand that retirement is not about a pension — it’s about your 401(k) or any other type of retirement plan you participate in.”

Brown said that after she helps a young person understand financial concepts such as retirement planning, “I expect they will take that same information and have a conversation in their household, in their church community and then begin the transformation of their community.”

The coalition is expected to work with 20,000 students this year. Brown said the coalition operates what she calls “virtual handshake career fairs” online in which coalition members discuss careers in the wholesaling sector. But there’s a financial literacy component as well.

“We talk about LinkedIn and resume writing,” she said. “We have an internship experience where I also do presentations about saving and retirement and the financial implications of staying in college an extra year versus graduating in four years.”

There are many opportunities for students to learn about careers. And there are programs to teach students about financial literacy. But Brown said there is a need to incorporate both into a single program.

“We need to get back to the basics and explain why these things are important. We need to explain to students that the decisions they make today will impact them 30 years later.”

– KIMBERLEY BROWN

“Nobody is connecting all the dots. Nobody is explaining why you need to budget in the swipe-debit card era we live in. We need to get back to the basics and explain why these things are important. We need to explain to students that the decisions they make today will impact them 30 years later. But you have to make those conversations meaningful in order for them to be transformative.”

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.

Brown

Vanderhall’s YouTube channel “NV Knows” (@NVKnows) features financial topics that are in the news or that she knows people are talking about.

Mike Paffhausen’s

devotion to serving his community extends to ensuring students have access to financial literacy education.

By Susan Rupe

Mike Paffhausen read many books as he studied for his civil engineering degree at Carroll College in Helena, Mont. But it was a book he read after graduating that helped him find his way financially and ended up leading him to discover his life’s purpose.

Paffhausen is the owner of the Mike Paffhausen State Farm Agency in Butte, Montana. Although he grew up in what he described as “the State Farm family,” civil engineering was his first career.

His father had a 40-year career with State Farm, and Paffhausen said he had always hoped to follow in his father’s footsteps.

“It was a world I was very familiar with as I grew up, and it was such a family-oriented environment,” he said. “I remember going into my dad’s office after school and doing my homework in the conference room until it was time for us to go home for the day. And his front-office administrator, Diana, would sneak me candy. My dad had all these bronze statues of elk in his office, and now I have them in mine. And I remember our family being able to go on trips as part of State Farm reward travels, so we had the opportunity to go to some wonderful places.”

Paffhausen job-shadowed a State Farm agent in Bozeman, Mont., while he was a high school student, and he was determined to represent the company at some point in his adult life. But he also wanted to attend Carroll College, and that came with a rather steep price tag.

“My dad told me I wasn’t going to an expensive college to study business or finance,” he said. “He told me if I was going to attend Carroll, I needed to study something that led to a specific trade or job after graduation.”

Paffhausen started out as a pre-med student at Carroll, but the idea of attending eight years of college and medical school soon had him looking at another major. He had strong math skills, so his

academic advisors steered him to civil engineering. After graduating and passing his Fundamentals of Engineering exam, he went on to become a licensed professional engineer, with an emphasis in water resource environmental engineering. But a career at State Farm continued to loom in his mind, and he described the book that solidified his desire to help others in their own financial journey.

As Paffhausen was about to graduate from Carroll, he and each of his fellow seniors received from the college a gift bag that contained a book called Life After Graduation: Your Path to Success. Paffhausen keeps a copy of the book in his office today, and he said reading the book ignited his personal passion for financial literacy.

“There were a lot of things in the book about how to dress properly in the workplace and how to chart your career goals,”

many others, he decided to focus on “how I can best serve the world through a career of helping people.”

“State Farm kept coming to the forefront,” he said. He had an opportunity to take over a State Farm agency, began his training in the summer of 2014 and officially opened the door to his agency on March 1, 2015.

“It was challenging to get started but in the long run, it turned out to be something more fulfilling and definitely worth it,” he said.

His engineering background serves him well in his current career, he said.

“Being very systematic, being a good communicator, knowing how to write well, all the critical thinking skills that come with being an engineer, as well as all the problem-solving skills — those translate well to our business because our

There was a huge section about personal finances in the book. I was flabbergasted because I went through a K-12 education and then earned a college degree and never had anyone in all that time talk to me about all these extremely important skills.

he said. “But there was a huge section about personal finances in the book. And as I read it, I was flabbergasted because I went through a K-12 education and then earned a college degree and never had anyone in all that time talk to me about all these extremely important skills.”

Paffhausen said he read the book during his first week as an engineer and filled the last page with a checklist of all the things he needed to do next. A few years later, he learned that Carroll College would no longer issue copies of the book to its new graduates due to budget reasons. So he held a private fundraising event at a coffee shop with some alumni donors he knew, where they raised enough money to continue providing the book for years to come.

A focus on helping people

As he learned more about the importance of managing personal finances, Paffhausen realized that his heart wasn’t in civil engineering. Drawing from what he called his “eye-opening experience” in reading the book about life after graduation, and then

business has a lot of repetition in it. So it’s important that we have systems and processes in place that turn out results.”

In his practice, Paffhausen said he aims to “help businesses and individuals get through their worst days.”

“If there’s a bad day to come, we’ll help you, your family or your business to get through it.”

Helping others access financial literacy education

Paffhausen never forgot the book that changed his life, and he wants to make sure others have access to financial literacy education.

He currently co-teaches a firsttime homebuyers’ class through the Headwaters RC&D program, a nonprofit focused on improving the economic and social well-being of the Southwest Montana region through conservation, development and proper use of natural and human resources. He also teaches the insurance portion of driver’s education classes and conducts financial literacy courses at his church.

the Fıeld A Visit With Agents of Change

Paffhausen’s volunteer work with his professional association, the National Association of Insurance and Financial Advisors, also ties in with his passion for financial literacy education. When he served as 2022 state president of NAIFAMontana, he led a NAIFA-MT effort to require Montana high school students to complete a personal finance course prior to graduation. NAIFA-MT’s advocacy work resulted in new graduation rules and a bill that made financial literacy education part of the law in 2023. Paffhausen’s work on behalf of his association and his profession resulted in his being named one of NAIFA’s 4 Under 40 award recipients for 2023.

“2022 was going to be my year as NAIFA-Montana president, so in the middle of 2021 as the president-elect, I approached our association’s state board and asked for their blessing and permission for me to work on what I called a ‘special project’ for my year as president, which would be to start rattling some cages and start figuring out why we don’t require kids to learn about money before they graduate from school. The board enthusiastically gave me permission, put their trust in me and turned me loose.”

Working with NAIFA-MT’s lobbyist, Paffhausen and his fellow association members “started diving down the rabbit hole.”

“We believed there is no better group than our association to lead the charge on creating a financially literate society,” he said. “When we talk about issues in the U.S., what’s apparent in our society is a lack of financial literacy. It affects people from all walks of life.”

A successful lobbying effort

One of Paffhausen’s clients told him about Next Gen Personal Finance, an organization whose mission is to ensure that by 2030, every U.S. high school student will graduate having taken a one-semester course in personal finance. Paffhausen connected with the organization’s co-founder, Tim Ranzetta, who introduced him to a researcher at Montana State University who has studied the outcomes of students who receive financial literacy education in school. Armed with this information, Paffhausen, the NAIFA-MT lobbyist and the researcher went before Superintendent of Public Instruction Elsie

Arntzen and then the Montana Board of Public Education in 2022 to present the case for adding financial literacy education to Montana’s graduation requirements. In January 2023, the board voted to modify Montana’s graduation criteria to include the requirement that every student take a half-credit of financial literacy education in order to graduate from high school.

From there, Paffhausen went to the Montana House of Representatives in support of the Montana Financial Literacy Bill. Although the bill, which eventually passed into law, didn’t require the half-credit of financial literacy education, it did codify financial literacy into a list of eight current written goals. Paffhausen and others helped write the language to add a ninth goal in the statute — the goal that the current education system must focus on creating financially literate students. Montana’s high school class of 2026 will be the first group of students required to take a half-credit of financial literacy education.

“We were just kind of the catalyst that got it started, but many people contributed to achieving the goal,” he said.

Paffhausen’s other activities center on his love of Montana. He is involved with the Rocky Mountain Elk Foundation and is a member of the Upper Clark Fork River Restoration Advisory Council, which is an appointment by the governor. The council helps administer and direct a $60 million environmental restoration fund that is spent in the Butte area.

Paffhausen and his family have deep roots in Montana and a deep love of their community.

“Having been born and raised here in Montana, I never would leave and never could leave,” he said. “I had numerous opportunities to leave the state after college, and my wife and I had opportunities to move overseas. And every single time, we thought, that would be great, but it would mean we can’t live in Montana anymore. It’s a special place in the world.”

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.

Life insurance products contain charges, such as Cost of Insurance Charge, Cash Extra Charge, and Additional Agreements Charge (which we refer to as mortality charges), and Premium Charge, Monthly Policy Charge, Policy Issue Charge, Transaction Charge, Index Segment Charge, and Surrender Charge (which we refer to as expense charges). These charges may increase over time, and the policies may contain restrictions, such as surrender periods.

Policy loans and withdrawals may create an adverse tax result in the event of lapse or policy surrender, and will reduce both the surrender value and death benefit. Withdrawals may be subject to taxation with the first 15 years of the contract. Clients should consult their tax advisor when considering taking a policy loan or withdrawal.

This material may contain a general analysis of federal tax issues. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances.

These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person's individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its subsidiaries, have a financial interest in the sale of their products.

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

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.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its subsidiaries. Minnesota Life Insurance Company and Securian Life Insurance Company are subsidiaries of Securian Financial Group, Inc .

For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

Insurers say mortality has improved — but has it?

Several life insurers cited mortality improvements in the fourth quarter as helping to improve life insurance earnings at the end of 2023.

Thomas Kalmbach, Globe Life executive vice president and chief financial officer, was among the insurance company execs who reported mortality rates in the second half of 2023 dropped close to pre-pandemic levels

Excess mortality is an ongoing problem for life insurers, dating to the COVID-19 pandemic. Statistics show the mortality gap increased the number of U.S. deaths by 34.8% in 2021, resulting in 892,491 excess deaths that year. When controlling for population size, the annual number of excess deaths was up 84.9% between 2019 and 2021. In other words, the number of excess deaths each year almost doubled, according to the California Center for Population Research at UCLA.

But the Society of Actuaries tells a different story. While life insurers might be seeing some improved mortality numbers, the SOA told InsuranceNewsNet that nothing has changed in its data: “The long-term projections have not changed due to experience from Oct. 1 to now. For reference, mortality from Oct. 1 through Dec. 31 was slightly higher on a seasonally adjusted basis than the rest of 2023.”

LIFE INSURANCE NEW PREMIUM SETS RECORD FOR 3RD STRAIGHT YEAR

Life insurance new premium rose to $15.6 billion in 2023, LIMRA reported, setting a record for the third straight year. Better still, the year ended on a high note, with all lines recording “positive growth” in the fourth quarter.

In the fourth quarter, total life insurance premium rose 4% to $4.2 billion, compared with the prior year’s results. The number of policies sold increased 2%, largely due to strong term life sales. The positive news continues as LIMRA is forecasting total individual life insurance premium to increase by as much as 5% in 2024 and 2025.

Term life insurance experienced the largest growth in premium and policy count in the fourth quarter. Term new

premium jumped 8% in the fourth quarter to $756 million. Policy count grew 6% for the quarter. This is the fourth consecutive quarter of growth in both premium and policy sales.

AIG PREPARES TO SAY GOODBYE TO LIFE SEGMENT

AIG continues to shed assets in a streamlining led by CEO Peter Zaffino. One of those exiting business segments, life and retirement, remains a big moneymaker.

The venerable insurer is down to a 52% ownership stake in Corebridge Financial, its separate life and retirement division. The separation of Corebridge is expected to be completed by the end of the year.

As Zaffino put it, “2023 was an extraordinary year for AIG.” The insurer shed several businesses and launched

QUOTABLE

LIMRA is forecasting increasing whole life sales in 2024 and 2025, growing as much as 5% annually.

— Karen Terry, assistant vice president and head of LIMRA Insurance Product Research

its new independent managing general agent, Private Client Select Insurance Services, finalizing an agreement with funds managed by private equity firm Stone Point Capital.

RECORD-BREAKING $250M POLICY SOLD

It took 10 years to break the record for the most valuable life insurance policy ever sold. HSBC Life announced it sold a policy worth $250 million to an individual client in Hong Kong.

Edward Moncreiffe, CEO, HSBC Life, Hong Kong and Macau, said, “Asia is home to the fastest growing ultra-highnet-worth population in the world, and as such we are seeing a substantial increase in demand for insurance solutions to address business succession, estate management and legacy planning needs.”

In the past 12 months, HSBC Life has issued 10 other life insurance policies valued at $50 million or higher to individual customers. The previous Guinness World Record, for a $201 million life insurance policy, was certified in California in 2014. 65%

Credit:

Put your client’s retirement income dollars on the right path

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• Offers 7.2% guaranteed increase to Lifetime Income Amount for the first 10 rider years if no withdrawals in years 1 – 10.

• Provides a secure, guaranteed retirement income stream for life.

• Helps clients grow their retirement savings with a competitive fixed interest rate.

• Protects the value of a fixed annuity during market turmoil.

• Allows clients the ability to maintain the flexibility and control of their deferred annuity contract even after they start receiving income.

The Lifetime Income Rider provides guaranteed income for life and is an optional benefit available on all of Kansas City Life’s fixed annuity portfolio.

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about a career with Kansas City Life Insurance Company, call Dwane Turnage, Vice President, Marketing, 855-277-2090, or visit

.

The real cost of volatilitycontrolled indices in IUL policies

This analysis will help you understand and assess indexed universal life products that are becoming increasingly difficult to compare.

By Nick Pratt

Over the past 25 years, indexed universal life policies have become arguably the most complex life insurance products on the market — both for better and for worse.

One feature of today’s IULs is the volatility-controlled index. These index strategies are referred to by several different names in our industry: VCIs, proprietary indices and engineered indices, to name just a few. Broadly speaking, these indices are created for a specific result (often for certain performance or volatility levels), which differentiates them from a standard market index.

VCIs are custom-built indices designed to provide lower volatility compared with a more traditional index such as the S&P 500. They have become popular because

the carrier can provide uncapped returns with appealing participation rates while still maintaining a 0% floor, due to the lower cost of options purchased to hedge these indices compared with the S&P 500.

analyzed the performance of the dozen we see most frequently. We compared the underlying index performance since each VCI was first launched to the S&P 500 during the same time.

Although index allocation is only one part of choosing a product, this analysis will help you understand and assess IUL products that are becoming increasingly difficult to compare.

In practice, however, VCIs are based on backcasted data and have a short realworld track record. Although index allocation is only one part of choosing a product, this analysis will help you understand and assess IUL products that are becoming increasingly difficult to compare.

Comparing VCIs with the S&P 500

Of the nearly three dozen VCIs available on IULs currently on the market, we

Below is the chart comparing the performance data of all 12 VCIs to the S&P 500.

All 12 VCIs generated less than 40% of the S&P 500 return, and eight of them produced less than 10% of the index return! VCIs clearly have not been able to live up to their hypothetical backcasts.

To begin, we will highlight the Credit Suisse Balanced Trend 5% Index (Balanced Trend Index) due to its age

IUL Backcasting Without VCI — Rolling Periods

relative to other popular VCIs and its performance’s proximity to the average of the group. The Credit Suisse Balanced Trend 5% Index went live on Nov. 20, 2017. Due to their reliance on low volatility, VCI-linked index strategies are often uncapped and feature high participation rates or other crediting bonuses to offset their lower expected returns. For that reason, one would reasonably expect to see worse raw index performance than the S&P 500 but close enough that these bonuses make up the difference.

With the current bonuses on the actively placed IUL featuring the Balanced Trend Index, it only needs to average approximately 40% of the S&P 500’s growth to produce a similar return to investors. This is uncapped growth, 0% floor, 210% participation rate and 0.4% fixed bonus, according to data obtained from National Life Group life insurance illustration software.

In backcasted data, the balanced trend index produced 6% annual returns compared with 7.6% for the S&P 500, or 78% of the S&P 500’s return from Sept. 30, 2002, to Nov. 20, 2017 — well over the 40% needed to justify using the VCI. However, since the Balanced Trend Index went live, its growth was only 9.1% of the S&P 500’s, as shown above.

In other words, while backcasted data suggested that an IUL based on the Balanced Trend Index would outperform one backed by the S&P 500, real-world data has suggested the opposite. This result of poor performance compared with the S&P 500 is consistent across all 12 VCIs analyzed.

IUL backcasting without VCIs: Are VCIs really less risky?

Another misconception about VCIbacked IULs is that they are less risky than

an S&P 500-linked IUL.

For example, the Balanced Trend Index generated a 0.8% return in its 2008 backcasted performance when the S&P 500 lost 38.5%. But its performance in 2022, when the S&P 500 lost 19.4%, demonstrates why backcasted performance cannot be relied on — the Balanced Trend Index lost 11.1% that year.

While the S&P 500 without a floor and ceiling is volatile, the collared returns received on an IUL policy dramatically reduce that volatility. This can be shown using Schechter’s backtesting calculator, which applies actual S&P 500 performance to IUL crediting methodologies.

The chart below shows rolling average returns in five-year increments between five and 30 years, based on the 103-year history of the S&P 500. This assumes a cap rate of 10.0%, a floor rate of 0.0% and a participation rate of 100%.

While the S&P 500 is quite volatile, an IUL backed by the S&P 500 is much less risky.

What product is right for your client?

Some clients are too risk-averse for an IUL linked to the S&P 500. Given the poor performance of VCIs so far, we would still recommend avoiding these products.

For clients with a low risk profile, we believe whole life or current assumption universal life, which generate consistent returns, are a better fit than an IUL linked to a VCI.

Nick Pratt is senior case design and product analyst at Schechter. Contact him at nick.pratt@ innfeedback.com.

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ANNUITY WIRES

California the 45th state to pass best-interest annuity rules

California officials gave industry trade groups a big win recently by passing a best-interest annuity sales bill.

California became the 45th state to pass the best-interest model, based on a framework put forth by the National Association of Insurance Commissioners.

Consumer groups had pressured Gov. Gavin Newsom to veto the bill and align with the Biden administration on a tougher fiduciary standard. The Department of Labor is expected to publish its fourth attempt at a fiduciary rule this spring.

QUOTABLE

If interest rates fall, ‘you’ll see a pivot into some of the other annuity products that are designed for a little bit more growth.’

— Bryan Hodgens, LIMRA head of research

Approved its own rule prior to the NAIC best-interest model.

Has yet to enact an annuity sales rule.

Enacted an annuity sales rule based on the NAIC model.

Based on a model passed in 2020 by the NAIC, the best-interest rules are favored and pushed by industry lobbyists who say it will cause the least disruption to business models.

With the addition of California, the fifth-largest economy in the world, more than 90% of the United States is now covered by the NAIC best-interest standard, the Insured Retirement Institute noted.

ZINNIA WINS BID TO TAKE OVER EBIX’S LIFE AND ANNUITY ASSETS

Zinnia was recently named the courtappointed buyer of the North American life and annuity assets of Ebix Inc. for $400 million.

A leading international supplier of on-demand software and e-commerce services to insurance and financial services, Ebix filed for Chapter 11 protection of its U.S.-based operations.

The assets will further position Zinnia as “a partner of choice in the life and annuity industry — expanding offerings with insurance focused CRM and agency management, market-leading research, quoting, illustration and order entry tools, as well as a comprehensive

DID YOU KNOW

underwriting platform,” the company said in a news release.

Upon closing, Zinnia will expand its offerings with the addition of SmartOffice, Vital Sales Suite, Winflex, AnnuityNet, LifeSpeed and TPP (The Policy Processor) as well as products and services provided by the consulting organization, the release said.

DPL, ORION TEAM UP TO PROVIDE FEE-BASED ANNUITY ACCESS

DPL Financial Partners and Orion Advisor Solutions are partnering to provide fee-based financial advisors on the Orion platform with direct access to DPL’s commission-free annuity marketplace.

“We’re excited to provide thousands of advisors with access to insurance products through Orion’s expanded

partnership with DPL . In an increasingly competitive advisory environment, advisors have told us that bringing their clients’ insurance under the fiduciary umbrella will help to differentiate their firm and offering,” said Brian McLaughlin, president of Orion Advisor Technology.

Orion advisors will also have direct, integrated access to DPL’s proprietary tools for discovering and comparing annuities by type, benefits and costs, the firms said in a news release.

MILLIMAN FINDS LAPSE RATES TRENDING HIGHER

A new survey by Milliman Inc. finds that annuity lapse rates are trending higher in the face of rising interest rates.

Milliman surveyed 13 fixed indexed annuity and multiyear guaranteed annuity writers and asked them to weigh in on their actual lapse experience and expected lapse assumptions, dynamic lapse adjustments to base lapse rates, and other topics.

“Our survey revealed high lapsation rates in general in 2023, with participants adjusting their dynamic lapse formulas to address experience over the past year,” said Nathan Wilbanks, director of marketing and sales with Milliman’s Life and Annuity Predictive Analytics team.

Just over half (52%) of women said that they are confident about their current retirement plans.

Power up your clients’ financial future with Allianz Accumulation Advantage+™ Annuity – the newest innovation in the bonus accumulation marketplace

Over the past decade, the fixed index annuity (FIA) industry has seen a significant shift from income- to accumulation-focused solutions. Recent sales and market reports from Wink1 show that nearly 70% of consumers now prioritize accumulation over income-focused solutions. At the same time, bonus accumulation FIAs have surged in popularity. Heidi Vanderkloot , SVP and Head of FMO Distribution for Allianz Life Insurance Company of North America (Allianz), discussed with INN how Allianz is adapting to meet evolving consumer demand.

Another big differentiator for Allianz is our Index Lock feature, which can help guarantee an indexed interest credit by letting clients lock in a positive index value once each crediting period.

And let’s not forget about rates. Our standard rates are already competitive, but we offer clients the opportunity to purchase even higher, enhanced rates for a charge — for even more accumulation opportunity.

What motivated the development of Allianz Accumulation Advantage+TM Annuity, and what makes it competitive in the current market?

Vanderkloot: Allianz has been a leader in income-focused FIAs since we launched Allianz 222® Annuity in 2013. But as consumer preferences have shifted, we’ve shifted our aspirations to be a leader in both the income and accumulation spaces. With competitive rate offerings, diverse product structures, and innovative features, Allianz Accumulation Advantage+™ — our new bonus accumulation FIA, which we launched in March — is our answer to this growing demand for accumulation-focused FIAs.

How does Allianz Accumulation Advantage+™ stand out in the bonus accumulation FIA marketplace, and why do these differentiators matter to financial professionals and clients?

Vanderkloot: Allianz Accumulation Advantage+™ has lots of additional advantages that offer clients a combination of flexibility, control, and enhanced growth opportunities with one product. For starters, it goes beyond traditional FIA features by offering a competitive bonus on all premiums.2

If you look at accumulation opportunity, we’ve included both volatility- and nonvolatility-controlled index options to help clients diversify depending on the economic environment. We’ve also added a new Performance Trigger crediting method that gives clients a predetermined credit if the change in index value is 0% or better.

We’ve also added another advantage when it comes to flexible access to penalty-free withdrawals. In addition to 10% annual free withdrawals, 3 clients can now carry over any unused free withdrawal percentage to the following year, up to 20%.

Combined, all of these differentiators set Allianz apart in the bonus accumulation marketplace.

Who is the ideal client for Allianz Accumulation Advantage+™?

Vanderkloot: We designed this product for someone who wants to grow their retirement savings while minimizing risk. Individuals who are getting close to retirement often want to lessen market exposure while still having the opportunity for growth. Those who have recently faced financial setbacks may find the bonus appealing, because for some clients it may help offset losses. The current favorable interest rate environment also presents a compelling value proposition for clients who want to capitalize on stronger growth potential.

How does the new accumulation-focused FIA suite from Allianz integrate with its existing portfolio?

Vanderkloot: Our new suite of accumulation-focused FIAs fits perfectly within our broader offerings.

Allianz has been a dominant player for decades in the income FIA space, and we are committed to continuing this industry leadership; now, we’re bullish on bringing our indexing experience and innovative features into the accumulation space.

The first product in our accumulation FIA suite, Allianz Accumulation Advantage® Annuity, brought us into the accumulation space with competitive rates, multiple index allocation options to diversify with, and innovative features like Index Lock. More recently, we launched additional innovations with an enhanced first-year fixed interest rate. And for those with a shorter time horizon, Allianz Accumulation Advantage 7™ Annuity offers cutting-edge solutions, such as equityonly allocation options and increasing participation rates combined with our Index Lock feature; additionally, it allows issue ages up to age 85.

We’re all-in on accumulation FIAs, not only because they complement our product portfolio, but also because it’s where the market’s going. Our aspiration is to be the leading provider of index solutions across multiple product platforms to meet the evolving needs of financial professionals and their clients — and our suite of accumulation FIAs are a key part of achieving that goal.

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Will lower interest rates cut into fixed-rate deferred annuity sales?

Fixed-rate deferred annuity sales are skyrocketing, but can the boom last?

By Rayne Morgan

Although annuity sales are still seeing record highs, investor interest may eventually shift away from fixed-rate deferred annuities and toward other annuity products that have more growth potential if the Federal Reserve cuts interest rates as expected, according to industry experts such as LIMRA.

Fixed-rate deferred annuity product sales are strongly leading the pack, and experts expect that trend will likely continue for some time. However, Bryan Hodges, LIMRA head of research, said a drop in interest rates also means interest rates on products like fixed-rate deferred annuities. This may make them “a little bit less attractive” to investors, he said.

“I think what you’ll see is still a strong fixed-rate deferred annuity year of sales, but you’ll see a pivot into some of the other annuity products that are designed for a little bit more growth,” Hodges said. “They have a little bit more market

participation, opportunities for more growth on the upside, and you may see a shift there as a result.”

Record-high annuity sales

According to LIMRA’s data, annuity sales have skyrocketed over the past two years. FRD annuity sales in particular have tripled during that time, reaching their highest figure ever.

Preliminary results of LIMRA’s 2023 U.S. Individual Annuity Sales Survey indicate total sales reached $385 billion. This amount is more than 20% higher than the $313 billion in sales in 2022, which was already a record high at the time.

Of that amount, $286.2 billion was from fixed annuity products, which is 36% higher than 2022’s sales figures.

On the other hand, variable annuity products hit an all-time record low of

$51.4 billion, marking a 17% decrease year over year. However, these figures were the exception rather than the norm.

“These past two years, we have seen a tremendous run-up in annuity business,” Hodges said. “You’ve seen record sales numbers achieved in multiple products, but one in particular is driving a lot of the overall sales, and that has been the fixedrate deferred annuities.”

Unprecedented FRD annuity growth

FRD annuity sales accounted for around $165 billion of the $385 billion total in 2023, according to LIMRA’s preliminary records.

Hodges said this marks “unprecedented growth” in FRD annuities, a product whose sales figures don’t usually exceed $50 billion.

“You’ve seen record sales numbers achieved in multiple products, but one in particular is driving a lot of the overall sales, and that has been the fixed-rate deferred annuities.”

Fixed-rate deferred annuity sales trend

Sales in billions

“So, you go from $35 billion to $50 billion year after year, kind of that range for a decade,” he said. “We have a record year in 2022 of $113 billion, only to have interest rates continue to stay high in 2023, and fixed-rate deferred annuities continue to drive even higher with $165 billion in sales in 2023. That is a sort of unprecedented growth during that time.”

Interest rates, inflation, market drove activity

High interest rates, volatile markets, inflation and recession fears have been the primary drivers for unusually high annuity sales.

“Equity markets, in general, were having a lot of volatility over the past several years,” Hodges said. “Now, overlap that with interest rates. Interest rates started to really take off in 2022, and we hadn’t seen rates this high in over 15 years.”

At the same time, research from the Insured Retirement Institute found that more investors sought to prioritize asset protection over maximizing growth, finding a possible solution in annuity products.

LIMRA’s data seems to support those findings. Hodges stated that market conditions led investors to seek products that could provide some measure of protection.

“You have consumers who are looking at it and saying, ‘I sort of want protection. I want to take a look at where I can invest some of my money into products that are not going to be affected by this volatility, and I can take advantage of these really

rising interest rates,’” he said. “And so, we saw this big surge in fixed-rate deferred annuities as a result.”

Future trends: Shifting interest, sustained growth

While shifting economic conditions will likely shift consumer interest in annuities in the months ahead, sales are still expected to continue trending upward for the next few years.

LIMRA has forecast that “with fixedrate deferred annuities in particular [or] any of the annuity products that are really tied to those interest rates directly,” sales might decrease — but only slightly.

“I still think, overall, annuity sales will continue to be strong in the years to come because of the demographics, the need for guaranteed income and so forth,” Hodges said.

Demographics in particular have played a major role in annuity sales. LIMRA research found the average age of an FRD annuity buyer is 62, and annuity products are particularly popular among American seniors.

“You can just overlay the aging population,” Hodges said. “With people living longer, retiring sometimes earlier than the traditional age of 65, this all matches up to say that it will play out with annuities. I think these sales numbers will be sustained in the years to come.”

The role of financial professionals

Hodges suggested that financial advisors, and especially those who offer retirement

planning or similar services to seniors, should keep an eye on changing trends as economic conditions begin to stabilize.

For the time being, many consumers are still looking to “de-risk some of their portfolio, particularly as they’re heading into retirement,” he noted.

“As people are approaching retirement, advisors are often looking to help them secure a portion of their assets with a little bit more conservative investment in their portfolio,” Hodges said. “When they have an opportunity to lock in at these high interest rates, it’s obviously advantageous for them to do that.”

At the same time, he noted that the number of Americans heading into retirement with pension plans has been declining over the years.

“Research shows that many of this next wave of retirees, over the next 10 years or so, are coming into retirement without a pension plan,” Hodges said. “There’s an opportunity for advisors to be positioning annuities as a pension replacement, as a guaranteed income source.”

Overall, he suggested “economic conditions out there today are very favorable” not only for FRD annuities, but for other annuity product lines as well.

Rayne Morgan is a content marketing manager with PolicyAdvisor.com and a freelance journalist and copywriter. You can reach her at rayne.morgan@ innfeedback.com.

Source: U.S. Individual Annuity Sales Survey, LIMRA

Seniors must save even more for health expenses

Medicare beneficiaries need to save even more for their health expenses as a new research report from the Employee Benefit Research Institute finds that the amount of money Medicare beneficiaries could need for health expenses increased again in 2023. In fact, some couples with high prescription drug costs could need as much as $413,000 in savings.

To have a 90% chance of meeting their health care spending needs in retirement, a man will need to have saved $184,000 and a woman will need to have saved $217,000. Couples enrolled in a Medigap plan with average premiums, meanwhile, will need to have saved $351,000 to have a 90% chance of covering their medical expenditures in retirement.

Representing an extreme case, a couple with particularly high prescription drug expenditures will need to have saved $413,000 to have a 90% chance of having enough money to cover their health care costs in retirement.

Among the drivers of the higher savings target, EBRI said, are higher Medicare Part G premiums and longer life expectancies.

NABIP ANNOUNCES CONSUMER BILL OF RIGHTS

Saying that it wants to “put the health back in our health care system,” the National Association of Benefits and Insurance Professionals announced its Healthcare Consumer Bill of Rights. In presenting the bill of rights, NABIP leaders said the association wants to be proactive and not reactive when it comes to American consumers’ health care

NABIP, in its bill of rights, said it is the association’s belief that “every individual deserves the right to obtain health care that is comprehensive, equitable and compassionate.”

Among those rights are the right to

access affordable health care, the right to quality care, and the right to privacy and confidentiality.

CMS SAYS AI CAN’T BE USED TO DENY CARE

The Centers for Medicare and Medicaid Services sent a memo to all Medicare Advantage carriers recently, clarifying that MA insurers are not allowed to use algorithms or artificial intelligencepowered tools as a basis for denying care or coverage

Sorry, no dice.

Algorithms and AI tools can be used only to support coverage decisions, and insurers must ensure that the tools they are using comply with the CMS coverage decision requirements, the agency said.

92.7% of Americans said they will have health insurance this year.

QUOTABLE

We are ushering in an era from where we are relevant to where we are essential.

— Jessica Brooks-Woods, NABIP CEO

CMS issued the guidance as a follow-up to its April 2023 final rule that included requirements and clarifications relating to Medicare Advantage coverage criteria for basic benefits, use of prior authorization, and the annual review of usage management tools. Since the rule was issued, CMS has received questions about how the agency expects Medicare Advantage plans to comply with it, a CMS spokesperson told InsuranceNewsNet.

SMALL BUSINESSES SQUEEZED BY HEALTH INSURANCE COSTS

Many employers are concerned about the rising costs of health benefits, with most businesses that do not offer health insurance saying it is too expensive for them to cover, an eHealth survey revealed.

Most employers surveyed said they recognized the value of providing health insurance, but the cost of coverage is crucial to whether they provide it or continue to do so. For most small businesses (82%), coverage costs $200 or more per employee each month, and 29% spend at least $500 per month per employee.

More than one-third of respondents said they could not cover health benefits because the cost was too high . A third of respondents said they could spend up to $100 per month on each employee — less than half what the typical small business actually spends on these benefits per employee per month. And 17% could manage to spend $100 to $200 per employee per month.

LTC planning’s power lies in relationships, not revenue

Shifting toward early longterm care planning strengthens client relationships, reflecting evolving perspectives on care and financial well-being.

By John McWilliams

Long-term care planning is having a moment right now.

There was a time when conversations with clients about their long-term care needs were like pulling teeth. No one wants to confront the point in their lives at which they will no longer be able to do the things they associate with independent life as an adult. Long-term care was a talk to have with people in their 60s.

Now, I have those talks with folks in their 40s and 50s. What happened?

There is a big shift in the way people think about long-term care, and I don’t think enough financial advisors and insurance professionals understand how

addressing that shift can strengthen next-generation client relationships.

Long-term for longer

For starters, the “long-term” in LTC is a lot longer than what we might have imagined 10 or even five years ago. We aren’t talking about 24-36 months directly before a period of palliative care. There is an entire continuum of assisted living facilities, home health services and other means by which older adults can maintain their physical, mental and social health as they age. Pair this with earlier diagnoses for medical conditions and retirees have a lot more runway to plan their lives. These facilities do not come cheaply. Costs will differ depending on where you live, but a private nursing home can cost as much as $300 per day, and we have seen annual costs stay consistent with health care increases, between 4% and 5% over time. Even in-home care can come with opportunity costs for the caregiver. Looking after your spouse can mean

cutting into your prime earning years as you head toward your own retirement.

But these are costs that more of us seem to be willing to take on than in prior years. A lot of folks have had the experience of directly handling long-term care responsibilities for a spouse, a parent or even a sibling. It’s only natural to wonder if you made the right call or wonder how you would like to live your own life. My mother looked after my father for close to 15 years as he adjusted to the long-term care realities of Parkinson’s disease. She told me that she wants to try assisted living when the time comes. She wants the quality of life those kinds of facilities can offer her. But I also think she just doesn’t want to be a burden to us.

“I don’t want to be a burden” spurs a lot of these early conversations about long-term care planning. Parents want to live in dignity, but they also don’t want their adult children to worry or uproot their own lives to take care of them. They discover that Medicare won’t cover

long-term nursing home stays, and they are unlikely to spend down to levels of financial eligibility for Medicaid.

Quality of care

While long-term health care costs are on the rise, the wealthier clients of financial advisors have done the math. They may feel that they can take the hit with the resources they have accumulated over their lifetimes. With these clients, the conversation is less about the affordability of long-term care and more about the quality. Maybe those clients can pay for health care, but I’m sure they would rather more

a golden opportunity to shore up client relationships during one of their greatest tests in the years to come. The generational wealth transfer will move trillions of dollars between baby boomers and their heirs, but the same tide is likely to sweep away much of advisors’ books of business. Cerulli Associates found that only onefifth of affluent investors are likely to use the same advisor as their parents.

There are a lot of ways advisors can retain households of clients across generations, but there are few that take as much coordination between parents and children as long-term care planning. It takes a

“I don’t want to be a burden” spurs a lot of early conversations about long-term care planning. Parents want to live in dignity, but they also don’t want their adult children to worry or uproot their own lives to take care of them.

of their money went toward the lifestyles they want to experience or the legacies they’ll leave to their families and causes.

The concierge service that comes with many LTC policies cannot be overlooked as an advantage to people who are ready to plan their futures. The health care industry is a frustrating, complicated mess at the best of times, and that goes double for long-term care services. A financial advisor or an insurance professional alone may not have all the answers a client needs. Researching your options, learning the difference between a long-term care facility and a memory care facility — it’s aggravating even for the people planning for their needs long before they become urgent. Good policies come with specialists who spend their workdays up to their eyeballs in this stuff. They do the legwork so the client doesn’t have to. The value of someone in your financial life who can cut through health care confusion and deliver clear answers cannot be overstated.

LTC as a relationship builder

In short, these conversations around a client’s long-term care options represent

lot of coordination between advisors and insurance professionals, too. But when advisors become an indispensable part of a client’s long-term care plan, especially one that balances cost-effectiveness with a high quality of life, they position themselves as integral to the family’s financial health across generations.

Here’s the thing, though: None of this works if we think about long-term care insurance as a product to be sold, or even as a way for policyholders to shore up their portfolio performance. We really, truly, must show commitment to the client’s overall well-being. When we do, the children and grandchildren of our clients will appreciate the part we can play by imparting some grace to the clients’ lives in a time of high emotional stakes.

John McWilliams is president at Advisor Insurance Solutions, the insurance group of Apollon Wealth Management. Contact him at john.mcwilliams@ innfeedback.com.

Investors of color make their mark in the market

Investors of color are entering the market at a faster pace than white investors, according to a recent FINRA study. The FINRA Investor Education Foundation “Investors of Color in the United States” report also found that new investors, particularly Black/African American and Hispanic/Latino investors, tend to be much younger than white investors.

New investors of color also exhibit many of the same behaviors that previous research has shown for younger investors. These include reliance on social media for investment information and trading risky investments like cryptocurrencies and so-called meme stocks.

Non-white investors, particularly Black/African American and Hispanic/Latino investors, are more likely than white investors to be motivated by reasons beyond long-term profit, including short-term gains, a desire to learn more about investing, entertainment and excitement, and because their peers are doing it.

In addition, Black/African American investors report higher risk tolerance levels than all other groups.

Women assume more financial responsibility

Women are assuming more financial responsibility, with 49% considering themselves to be the chief financial officers of their households, up from 41% in 2021, according to an Allianz Life study.

This assumption of more responsibility could be driven by their increasing economic power. More than 2 in 5 women (43%) said that they are the primary breadwinner in their family, up from 34% in 2021.

More than half (51%) said that they are more financially savvy than their spouse or partner, up from 46% in 2021.

Black Americans more optimistic about their future

Black Americans are the most positive about both current economic conditions and the year ahead, particularly in terms of their own financial situation, according to a LIMRA survey. Saving more in 2024 is a top-three financial goal for half of Black consumers. Having enough savings for emergencies and unexpected expenses is the most common reason many Black Americans want to save more in 2024, noted by 57% of those planning to do so.

Around 72% of rookie advisors fail

“The Cerulli Report — U.S. Advisor Metrics 2023” noted noted that over the next decade, 109,093 advisors plan to retire, comprising 37.5% of industry head count and 41.5% of total assets. Meanwhile, the rookie-failure rate hovers around 72%. As the industry grapples with a low success rate for new advisors who are entering the industry, firms must grow their talent pipeline and better communicate the role and training timeline of a financial advisor, the study said.

According to the report, only a small portion of rookies (13%) join the financial advice industry as the first job in their career; however, 40% of rookie advisors work in the financial-services industry before becoming advisors. For these reasons, the report noted, professional networking and referrals could be as critical for firms building a pool of potential advisor candidates as it is for those who are looking to become financial advisors — nearly one-third (32%) of rookie advisors were referred by a personal contact.

Pensionless

77% of Americans say the unavailability of pensions is making it harder to achieve the American dream.

Despite this optimism, the study suggests Black Americans are less likely to be prepared to achieve financial security in retirement. LIMRA research shows fewer than 4 in 10 Black Americans believe they have saved/are saving enough for retirement and fewer than 3 in 10 say they have done enough planning for retirement.

Feel like your messages to agents and advisors are vanishing into the inbox black hole?

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Make sure your message gets the attention it deserves by leveraging this overlooked strategy:

Four important considerations to effectively advise women on wealth

Women are controlling more money but experiencing more challenges. What you need to know to help them make effective financial decisions.

• Grace Apea

The U.S. is poised for a massive transfer of wealth. Not only will older generations retire from the workforce, leaving thousands of job posts open for young professionals to fill, but they’ll also pass down their assets to their Generation X and millennial beneficiaries. Cerulli research suggests that, through 2045, as much as $84.4 trillion will switch hands — the greatest transfer of wealth in American history — and most of it will go to women.

Although this represents a significant opportunity for women to build and maintain their financial security and sustainability, it also provides financial advisors a chance to effectively support a larger, historically underrepresented client pool. To resonate with this potential client base, advisors must focus on

education, organizational practice evaluation — in relation to both human capital and technology — and empathy.

Education is the first step

Before jumping into prospective client meetings, it’s important for advisors to understand the economic and historical implications of this wealth transfer. No two clients are ever alike, and that’s especially evident when considering gender.

Women tend to outlive their male counterparts by nearly six years, a margin

that’s continuing to grow, and they’re still impacted by the wage gap. In 2022, for every dollar earned by men, women earned 82 cents. At the same time, the COVID-19 pandemic forced nearly 12 million women out of the workforce in addition to 10 million men. Moreover, the pandemic increased the amount of caregiving required at home, with school and day care closures and the need to care for sick family members. Much of this was shouldered by women.

Regardless of their gender, each client

Women in the United States are well positioned to capture a significant share of money in motion.

5 years

Additional years of life expectancy for women in the United States compared with men.

30% Increase over the past 5 years in married women making financial household decisions.

70%

Share of women who change advisors within 1 year of their partner dying.

Source: McKinsey

has their own unique circumstances. When determining the best wealth growth strategy, advisors must consider and understand the many invisible factors at play that influence how clients should invest their money, especially factors that the clients themselves may not mention or consider relevant but are.

Organization practices will become increasingly critical

To succeed in meeting the challenges presented by the massive intergenerational wealth transfer and the changing investor demographics, advisors must consider whether their practice has the right resources, in both the people space and the technology space.

when assets available to female investors will hit an all-time high, McKinsey reports.

To prepare for the upcoming wealth transfer, advisor practices must consider how they can fill the pending talent gaps. How can they improve the talent pipeline? Are there any parts of the compensation package that may deter women advisors? What role does technology play in helping to close the gap and enable women to thrive as clients and advisors?

The right technology

If advisors have not already done so, this is the right time to reevaluate the technology they use to manage client funds and interact with customers. Today, women

Source: McKinsey

Additional expertise may be required to serve the changing demographic’s needs. And this need will be highlighted by the profession’s coming wave of retirement, which will create talent gaps in many firms.

Cerulli research suggests that 109,000 U.S. financial advisors will retire over the next decade, representing 38% of all advisors in America and 42% of total assets under management. To make matters worse, there aren’t enough young advisors entering the profession to fill all the vacant roles.

The number of female financial advisors has remained constant over the past decade, and, according to Zippia, only 26%-28% of U.S. advisors are women. Job satisfaction among women advisors is also low, and Carson Group’s State of Women in Wealth Management reports many female advisors are thinking of leaving the business. All this at a time

account for 46.8% of the workforce, according to the U.S. Department of Labor, with McKinsey reporting women hold 28% of C-suite positions. At the same time, they’re still balancing at-home responsibilities. Forty-five percent of women in opposite-sex marriages earn the same or more than their spouses, but Pew Research found they still take on the most housework. Their busy lives leave little room for on-the-phone conversations with financial advisors or in-person meetings. This highlights the increased need for easy-to-use portals, dashboards and interfaces like they see used in other sectors.

Likewise, the technology serving financial advisors must have similar ease of use. Not only does the functionality and accessibility of technology tools make it easier for financial advisors to do their jobs, but these tools also free up time to work on business development and interact with clients. Having the right tools

means that advisors have the resources at their fingertips to effectively support all their customers, not just women.

Empathy is essential

An advisor’s greatest strength is not product knowledge or sales skills — it’s empathy. And this will be in high demand during the coming generational transfer. The reality is that many clients who receive a sudden inheritance of wealth will be overwhelmed. The reason they will receive these assets is because a loved one has died or has fallen mortally ill. Thinking about how to handle this money likely won’t be their top priority.

As advisors begin discussions, approaching clients with empathy is critical. Simply providing a space for them to talk and express their worries or fears can go a long way in establishing a trusting, understanding and respectful business relationship. It is also a time when advisors can provide truly valuable help by recommending other professionals or services that can handle some of the myriad tasks that must be dealt with in this difficult time (legal, real estate, etc.).

Once the investment and financial security talks begin, advisors should maintain open lines of communication and be honest throughout the process. Breaking items down into easily digestible bits of information and steps can help clients smoothly navigate this new territory while also dealing with their own grief.

Over the next few decades, a significant amount of wealth will change hands, impacting individuals, families and the economy. This presents both an opportunity and a responsibility for financial advisors to step up to the plate and help the beneficiaries through this process, establishing a foundation for sustainable asset growth and setting them up for success. Through education, evaluation and empathy, advisors can play a pivotal role in empowering women’s financial security and ensuring that they and their families are taken care of.

Grace Apea is assistant vice president, product development, with Equisoft. Contact her at grace.apea@ innfeedback.com.

By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will possess — a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States.

the Know In-depth discussions with industry experts

IDigital transformation: How tech is shaping the life insurance landscape

Underwriting is experiencing a transformation while digital point-of-sale platforms are streamlining the purchasing process like never before.

n exploring the current landscape of life insurance technology, my focus is squarely on the present, sidestepping both a reevaluation of the past year and speculative forecasts.

Two domains are witnessing remarkable growth right now. First, the realm of underwriting is experiencing a significant transformation. Second, digital point-of-sale platforms are revolutionizing the way agents and consumers interact, streamlining the purchasing process like never before. Here, the integration of artificial intelligence and big data stands out as a pivotal force, driving efficiency and precision to new heights.

Artificial intelligence and machine learning are at the forefront of the technological revolution in life insurance. These technologies are used to streamline the underwriting process, making it faster and more accurate. AI algorithms can analyze vast amounts of data, including medical records and lifestyle information, to assess risk and determine premiums in a fraction of the time it would take a human underwriter. Moreover, AI and machine learning are instrumental in detecting fraud, predicting future trends and developing customized insurance products based on individual risk profiles.

I met with Andy Kramer, vice president of underwriting risk and innovation at the M Financial Group. Both Kramer and I participate in developing industry data standards through ACORD’s Electronic Health Records Working Group. I asked Kramer specifically what he sees as the latest trends in life underwriting technology.

By Ken Leibow Kramer

“The most material trend in life underwriting that I see is the increasing hit rates of electronic medical records,” he said. “As of Jan. 30, our producers’ average hit rate is 70%, and our fulfillment rate is 48%. This fulfillment rate has doubled in the past year. Many of the decision engines are developing the capabilities to ingest electronic medical records, which should significantly increase the ability to automate underwriting decisions. This won’t happen overnight, but over the coming years we as an industry will evolve from one predicated on reviewing PDF images and manual decisions to one relying primarily on data to make automated underwriting decisions, only reviewing the images as an exception.

engines are developing the ability to ingest structured data from electronic medical records, possibly as soon as late 2024. As AI and natural language processing continue to evolve, the unstructured data will be pulled in shortly thereafter.

“Where I would like to see the industry evolve is to use the rule engines and capabilities developed for their accelerated underwriting to perform screening on their informal applications. Our producers’ primary service to their customers is to identify the best product at the best price to address their needs, and because of that, they need to display offers from multiple carriers. Many carriers have complained that their informal approval rates are lower than desired, and carriers allocate their most experienced [expensive] underwriters to these processes. This seems like a logical place to invest in the next generation of automation.

“I understand that many of the rule

“I believe that with a complete part 2 and Rx, a high-confidence informal offer can be made on many cases, subject to very specific medical records. Add electronic medical records, and a more accurate offer should be enabled. This could

reduce the number of medical records needed and the number of cases referred to those expensive underwriters.”

Predictive analytics saves companies millions

Predictive analytics uses historical data to make predictions about future events, helping life insurance companies identify trends, assess risks and make informed decisions. This technology can forecast life expectancy with greater accuracy, tailor policies to individual needs and identify potential market opportunities. Predictive analytics also plays a crucial role in fraud detection and prevention, saving companies millions of dollars annually.

Developed based on the Fair Credit Reporting Act framework, LexisNexis Risk Classifier aggregates long-standing data sources — including motor vehicle

A seamless experience

Life insurance distributors are leveraging technology to enhance agent recruitment, offering tools to help generate leads and streamline the application process. This technological evolution provides agents with a seamless experience from quoting to applying for life insurance, marking a significant shift from the past.

Brokerage general agents’ websites equipped with disjointed tools and fragmented data are starting to evolve. Comprehensive dashboards have emerged in their place. These dashboards offer a holistic view of crucial elements such as lead tracking, the status of pending cases, commission statements, marketing materials, product details, field underwriting guidance, sales tools, quoting functionalities, and electronic application processes. This low-code,

have developed digital platforms specifically for agents, securing BGA contracts from leading life insurance carriers across both tier 1 and tier 2 levels. Initially, many of these insurtech ventures embarked on a direct-to-consumer model. However, the realization that the absence of a professional insurance advisor diminished success rates prompted a strategic pivot toward developing agent-centric dashboards.

New insurtech firms enter the market

Today, new insurtech firms are entering the market with platforms designed expressly for life insurance agents. Some examples of these insurtech companies are Plum Life, Covr Financial Technologies and PolicyGenius Pro to name a few. This shift underscores the

Using predictive analytics, “underwriters can make a more accurate risk assessment and eliminate the need for an applicant to undergo traditional underwriting requirements such as medical testing.”

records, public records and credit attributes — to provide added insights to assist underwriters in making confident and swifter decisions based on mortality risk.

In addition to providing a single score in real time, the predictive model provides the critical context and reason codes behind the score. Underwriters can make a more accurate risk assessment and eliminate the need for an applicant to undergo traditional underwriting requirements such as medical testing. This helps lessen applicant frustration and decreases the dropout rate.

According to Due.com, up to 20% of applicants are known to disengage from the process when underwriters request additional requirements and expand decision timelines. LexisNexis Risk Solutions has announced the availability of LexisNexis Risk Classifier for the supplemental group life insurance market as well.

self-service experience simplifies the process for agents to conduct business efficiently.

Furthermore, the integration extends to the agent’s website, enabling consumer quoting and, in some instances, allowing consumers to directly apply for insurance through a consumer-facing eApp. This not only facilitates the application process but also aids in lead generation by capturing potential clients’ information and immediately notifying the agent. All these interactions are meticulously tracked on the agent’s dashboard, ensuring a cohesive and manageable workflow.

This trend is gaining momentum, with BGAs creating these dashboards on their websites and providing agents with comprehensive tools backed by full-service BGA support. Meanwhile, insurtech companies are carving out a significant niche in this space. They

industry’s recognition of the value and necessity of professional guidance in the insurance process, marrying technological innovation with the expertise of insurance professionals to better serve the evolving needs of consumers.

These platforms aim to give agents and their clients the ability to quote, compare and apply for life insurance and long-term care insurance through multiple top carriers. BackNine’s Quote & Apply, for example, has an eApp that only takes five minutes to complete and allows clients to pull electronic medical records as well as schedule their own exam. It is able to give clients a synopsis of multiple products while redesigning illustrations in seconds, enhancing the sales process greatly, and then proceeds into an application without any

Embracing community as a cornerstone of your financial services journey

Finding your community will help you grow as you serve your clients.

By Claudia Cypher Kane

Although the financial services sector is vast, the financial planning profession is equally expansive and diverse. The profession attracts individuals from all backgrounds and walks of life who want to participate in a wonderful career while engaging in rewarding work that serves clients well. But whether someone is entering the profession as a recently graduated college student, is a career-changer or has been in the profession for many years — support, guidance and encouragement from others in the profession can have a lasting, transformative impact on one’s career trajectory.

As a financial planner who has been in the profession for more than three decades, I know first-hand what it’s like to discover your place in this growing,

evolving profession. And as a woman, I had my fair share of trials and tribulations early on, and having a community of peers to lean on became increasingly more important. This sense of community was crucial to my finding and achieving success as a financial planner.

Here are seven ways community has been truly transformative in my life and career.

1 Learning: Being part of a community has provided me with a wealth of knowledge that I have used to improve my skills and expertise. Those I have met and engaged with over the years are smart and willing to share, whether through online forums, in-person meetings or various mentorship programs.

2

Encouragement: Like all professionals, I have faced challenges and setbacks, but having a supportive community of peers who have offered me advice, encouragement and a sympathetic ear has made all the difference in the world.

3

Reflection: The opportunity to engage with others has helped me gain insights into my strengths, weaknesses and areas for improvement. My journey of personal growth and advancement as a financial planner is directly attributable to the community I have surrounded myself with.

4

Sharing: Resources and information are plentiful in financial services, which can be cumbersome to navigate. Finding the right information that is relevant and impactful is easier when you have a community of peers eager to share articles, resources and tools that have been impactful for them — and they know it will be equally impactful for you.

5

Well-being: Being new to the profession or trying to find your place in it can be accompanied by feelings of isolation and uncertainty. The personal interactions I have enjoyed within my community have provided a sense of connection and togetherness over the years that has helped

me realize that I wasn’t in this alone.

6 Perspective: We all can be fixated on certain beliefs and ways of doing things — whether for our clients or businesses. Connecting with my peers, especially those from diverse backgrounds, has exposed me to diverse perspectives, viewpoints and new ways of tackling my work and business objectives.

7 Leadership: While being part of a community has provided me ample opportunities to better myself and my work, it is even more rewarding to use my voice and experience to help others. Because of my community participation, I have facilitated discussions, counseled others and grown as a leader.

These are just a handful of ways I have directly benefited from engaging with my professional community over the years, and the impact has truly been profound. But if you have yet to get engaged and are looking to get started, there are some things you can do to get the ball rolling.

First, focus on your personal and professional interests. Suppose you are passionate about investments, insurance, retirement planning, advocacy or pro

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redirecting or delays. BackNine provides all agents with their own custom Quote & Apply website that can also be embedded into an agent’s existing site as a white label widget.

A new realm

Integrating underwriting automation with digital point-of-sale platforms ushers the life insurance industry into a new realm of competition, where the speed of processing directly correlates with higher placement ratios. In this innovative landscape, the efficiency of the process itself becomes a standout feature of the product offering.

Consider, for example, a simplifiedissue term product. During the online application, if we can pose critical medical

bono financial planning. In that case, chances are established groups exist that are focused on creating community engagement on those topics. Suppose you are passionate about the issues of a specific demographic group, such as women,

Focus on your interests

Join associations and organizations

Attend events and network

African Americans, Asian American/ Pacific Islanders or Latinos. In that case, there are established communities where you can connect and network.

While looking to engage with a community focused on investment planning, I discovered the FPA Investment Planning Knowledge Circle, where I could find a

questions, access and analyze data such as prescription histories, perform checks with the Medical Information Bureau and review motor vehicle records, all feeding into a decision engine, the result could be an instant issue or an expedited underwriting process. This capability significantly increases the likelihood of applications being approved as submitted, thereby boosting business throughput.

Millennials currently represent the largest demographic target for life insurance. This age group shows a readiness to pay higher premiums for policies that offer instant issue or accelerated underwriting processes. A critical challenge in this fast-paced environment involves managing the “yellows” or gray areas that necessitate an underwriter’s review. To address this, carriers are collaborating with third-party vendors to develop

sense of community. I raised my hand to be one of the community hosts, where I helped lead discussions. This led to my exploring other leadership opportunities in FPA, where I now serve as the volunteer national president.

Second, consider joining professional associations and organizations focusing on your area of interest. The networking, conferences, online learning and virtual forums alone provide terrific value if you want to connect with peers and learn the latest on issues of relevance to you.

Finally, attend events where you can network with other professionals and feel that sense of isolation disappear. There are likely some terrific local events available to you, especially through your local FPA chapter, but don’t overlook the impact of traveling to events outside your local area where you can meet peers from all over the country. It’s critical to grow your network and resources beyond your backyard and meet people of diverse backgrounds and business models.

Claudia Cypher Kane, CFP, CIMA, CPWA, ADPA, CDFA, is

the 2024 president of the Financial Planning Association and is based in Roseville, Calif. Contact her at claudia. kane@innfeedback.com.

streamlined processes. These processes are designed to salvage cases that are ejected from the rapid track, smoothly transitioning them into alternative products without losing momentum.

At the heart of this evolution are insurtech companies, which are skillfully combining AI-driven underwriting with digital sales platforms. This synergy not only enhances the customer experience but also ensures that more applications are efficiently processed and placed, marking a significant leap forward in how life insurance products are marketed, sold and underwritten.

Ken Leibow is founder and CEO of InsurTech Express. You can reach him at ken.leibow@ innfeedback.com.

Intermediaries forecast growth in sales and recruitment

A study shows BGAs and IMOs have high expectations of sales growth while meeting the challenges of agent recruitment.

By Laura Murach

Arecent LIMRA and NAILBA study of more than 60 brokerage general agencies and independent marketing organizations in the U.S. shows these firms have high expectations of seeing year-over-year sales growth. More than 6 in 10 (68%) intermediaries are expecting an average of 19% growth in 2023 over 2022.

Among the ways the intermediaries will do this is through growing their network of producers (which is their No. 1 business priority), increasing sales of their current product offerings, and improving the producer/advisor sales support and service-related issues. Sixty-five percent of intermediaries ex-

producers or plan to add one within the next year.

This is important because other LIMRA consumer research shows 33% of people consider “personal characteristics” an important attribute when choosing to work with a financial professional. Fifty-four per cent of those surveyed said a financial professional’s gender is important.

When asked what’s behind their gender preference, consumers — particularly those who prefer a female financial professional — often describe soft skills (60%) that they associate with women.

Generation Z women (35%) and members of the LGBTQ+ community (27%) are more likely than others to prefer to work with a female financial professional. As Gen Z consumers age and look for financial advice, having female financial professionals will be critical to sales growth.

Do you recruit independent producers/advisors to work with your organization?

coming from recruiting a mix of experienced and inexperienced professionals. This tracks with the research, which shows that 42% of producers are older than age 55. There is also an effort to support financial professionals once hired. Seventy-eight percent of intermediaries offer tailored training based on the experience level of recruited producers.

There is also a focus on recruiting and training female producers/advisors. Almost 4 in 10 firms either currently have or plan to add specific programs devoted to recruiting female producers within the next year. In addition, almost half of the intermediaries (46%) said they either had programs to support female

Looking ahead over the next three years, the IMOs and BGAs see the fastest growing products as life insurance (cited by 45%), followed by annuities (26%) and long-term care insurance (17%). Forty-two percent of intermediaries have experienced an increase in life insurance production over the past two years.

When it comes to services to be offered, the intermediaries see the highest growth potential in estate and trust services (26%), retirement-income planning (22%) and insurance planning (18%). Sixty percent of intermediaries, up from 31% in 2022, expect revenues from financial planning/wealth management products and services to increase 10% or more over the next three years.

As the U.S. demographic continues to evolve and change, it is important for the industry to keep pace. In a relatively short time, BGAs and IMOs have become the largest life insurance producer channel in the U.S. As such, their growth and productivity have become critically important in helping Americans get the financial guidance they need to protect the ones they love. Continuing to recruit new and experienced financial professionals and providing innovative services will help the industry meet the changing needs of consumers.

Laura Murach is research director, distribution research, with LIMRA. Contact her at laura. murach@innfeedback.com.

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.

Who will speak for our clients on Capitol Hill?

No one can tell the story of what consumers need better than financial professionals can.

By Josh O’Gara

Idon’t have to tell financial professionals that our industry is among the most highly regulated in the country. Policymakers — from regulators to lawmakers, on the federal level and in the states — have their fingerprints all over the ways we run our businesses and serve our clients.

Politicians are inevitably involved in our business, so it is imperative that we be politically involved. Our grassroots activism is essential. No one knows more about how we serve consumers and our communities than we do, yet politicians are making decisions every day that impact that service. It is incumbent upon us to ensure they understand what we do and how those decisions impact the families and businesses that are their constituents and our clients.

Right now, the U.S. Department of Labor is on the verge of implementing a rule that would radically change the way many professionals deliver insurance and financial services. The fiduciary-only proposal would limit the ability of consumers to choose how and from whom they receive financial guidance. It would result in many middle- and lower-income retirement savers not receiving any services whatsoever.

It’s not as though consumer protections do not exist. The Securities and Exchange Commission’s Regulation Best Interest is a robust rule that requires financial professionals to work in their clients’ best interests. Similarly, the National Association of Insurance Commissioners has created a model regulation for annuity transactions, which incorporated input from NAIFA. The model regulation has been adopted by 43 states at the time of writing, with several more likely to put it into place soon. The NAIC model also provides strong consumer protections.

Political advocacy by members of NAIFA-Massachusetts was instrumental in getting the model adopted in my home state. The same scenario has played out across the country where politically involved financial professionals have exerted their influence as citizens and made a real difference. NAIFA is now putting that same influence to work on the federal level to oppose the DOL proposal.

An election year inevitably brings tax law discussions. Candidates will present a variety of plans, some of which will lay the groundwork for future legislation. We would be naïve to think they won’t look at our industry. Of the top 10 federal tax expenditures, seven impact insurance and financial services. These include things like defined contribution and defined benefit plans, capital gains and dividends, and employer contributions to health and longterm care insurance. These expenditures include more than $4.5 trillion from the income and retirement bucket and more than $1.8 trillion from the insurance industry.

For politicians looking to fund the government, these are enticing pools of potential revenue. If we don’t convince them that promoting our clients’ financial security is critical for the American people and our economy, no one will. Electionyear politics shine a spotlight on our need to advocate for our businesses and clients.

Being a trusted resource

Fortunately, advocating for our clients is not a difficult thing to do. Our elected officials want to hear from us. Most of them, from both parties, understand that they cannot be experts on every aspect of the insurance and financial services industry. They welcome insights from those

of us who are on the front lines working directly with Americans who are also voters and political constituents. Our stories and expertise make a real impact, if we are willing to share them.

This May 20-21, I will be joining hundreds of my colleagues in Washington, D.C., for NAIFA’s annual Congressional Conference. We will take our advocacy message directly to our lawmakers in meetings on Capitol Hill as part of the biggest association fly-in in the insurance and financial services industry. We will tell them about our clients and the real-world effects of congressional decisions.

I admit, the first time I met with my members of Congress, I was nervous and a little unsure of myself. That’s why an event like the Congressional Conference is so amazing, because it includes grassroots veterans as well as first-timers. We’re all in it together. It’s a great way to make a difference and learn from colleagues who understand the ins and outs of our political system.

Once I got involved, I found grassroots advocacy both addictive and contagious. I have stayed engaged and continue to make a difference. I’ve encouraged and inspired colleagues to do the same. And that’s exactly what we need. The stakes are much too high for financial professionals to remain on the advocacy sidelines.

Josh O’Gara, CLU, ChFC, CFP, is a financial professional in Needham, Massachusetts. He is the president of NAIFAMassachusetts and serves as NAIFA’s National Grassroots Committee Chair. Contact him at josh.o’gara@innfeedback.com.

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the

Saying goodbye to GoFundMe

Every crowdfunding campaign to pay for a funeral means that someone was unprepared.

By Marc Cadin

For more than 20 years, I’ve been blessed to work with some of the finest financial security professionals in the business. These experiences have also afforded me a chance to reflect on what it really means to help others. And that’s why I was stunned by some recent figures from GoFundMe.

GoFundMe has raised $30 billion since its inception in 2010. And just recently, it was revealed that more than 125,000 memorial fundraisers are created on its site — totaling more than $330 million raised every year. Although I can certainly see why people are willing to help, because of my experience with so many amazing financial security professionals, I see every GoFundMe campaign as a flashing neon billboard proclaiming that someone, somewhere, was tragically unprepared. And it’s simply not the way America should work. It is not how we should live our lives or how we should take care of those we love.

Don’t get me wrong: The incredible

generosity and compassion that is shown in the responses to these appeals is awesome. It is truly heartwarming to see people’s innate goodness in action. But what about those doing the asking — is relying on the kindness of strangers really the best way for anyone to deal with emergencies?

We’ve made incredible strides with respect to social safety nets in America. In 1965, at the signing ceremony for Medicare, former President Harry Truman said, “Not one of these, our citizens, should ever be abandoned to the indignity of charity. Charity is indignity when you have to have it. But we don’t want these people to have anything to do with charity and we don’t want them to have any idea of hopeless despair.”

As a nation, we’ve come up with any number of remedies to very tragic situations. And while I commend the innovations around crowdfunding, I believe that when it comes to people’s financial security, it’s time for Americans to rally around people like you, financial security professionals, going forward.

The simple and amazingly effective antidote to GoFundMe is planning. Strategic, careful planning with folks from this profession can make all the difference regardless of what tomorrow may bring.

As Ernst and Young’s research

shows, life insurance — especially permanent policies, investments and deferred income annuities — outperforms investment-only or investment-plus-other-products approaches, in every combination. Individuals and families who have life insurance, investments and guaranteed streams of lifetime income through things like annuities are in a significantly better position to absorb the challenges that life throws their way.

The reality is that financial security for Americans — no matter where they live or how much their family earns or what degrees they have or don’t have — is very much within reach. There’s no mysterious magic formula. The process is simple and straightforward: It is you.

Again, while I am deeply grateful for the generous nature inherent in the American people who give through GoFundMe, I think we need to have an honest conversation about our GoFundMe problem.

There is a better way. When your clients work with you, a trusted financial security professional, they will never have to crowdsource their future again.

Marc Cadin is CEO of Finseca. Contact him at marc.cadin@ innfeedback.com.

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.

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