InsuranceNewsNet Magazine | September 2024 by InsuranceNewsNet

National Life Group’s Mehran Assadi on Leading a 175-year-old ‘startup’ PAGE 12 Life insurance must zoom at the speed of Gen Z PAGE 28 The IUL conundrum: Big sales and big problems PAGE 8 Life settlements try to shake off STOLI PAGE 10

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CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S). American National and its agents do not guarantee the performance of any indexed strategies. This product is not sponsored, endorsed, sold, or promoted by BNP Paribas or any of its affiliates (collectively, “BNP Paribas”). Neither BNP Paribas nor any other party (including without limitation any calculation agents or data providers) makes any representation or warranty, express or implied, regarding the advisability of purchasing this product. BNPP Patriot Technology Index (the “Index”) is the exclusive property of BNP Paribas. BNP Paribas and the Index are service marks of BNP Paribas and have been licensed for use for certain purposes by American National Insurance Company. Neither BNP Paribas nor any other party has or will have any obligation or liability to owners of this product in connection with the administration or marketing of this product, and neither BNP Paribas nor any other party guarantees the accuracy and/or the completeness of the Index or any data included therein. An Indexed Universal Life Insurance policy is not a registered security or stock market investment and does not directly participate in any stock or equity investments or index. When you buy this policy, you are not buying an ownership interest in any stock or index. Form Series FPIA19; LIR19 (Forms may vary by state; Idaho forms ICC19 Form FPIA19, ICC19 Form LIR19). See the contract form for complete details. Neither American National Insurance Company nor its agents offer tax or legal advice. Clients should consult their tax and legal advisors. American National Insurance Company, Galveston, Texas. For Agent Use Only; Not for Distribution or Use with Consumers. Not FDIC/NCUA insured | Not a deposit | Not insured by any federal government agency | No bank/CU guarantee | May lose value AMERICAN NATIONAL INSURANCE COMPANY / 888-501-4043 / lad.americannational.com

IN THIS ISSUE

INTERVIEW

12 Leading a 175-year-old ‘startup’ National Life Group’s chairman, CEO and president Mehran Assadi made the journey from “geek” to the top of the company. Read more about why he believes his company is still in the early stages in this interview with Publisher Paul Feldman.

IN THE FIELD

22 All in the family

By Ayo Mseka Stacy Lang Kahan and her daughters are at the helm of a thirdgeneration, women-led financial services firm.

FEATURE

The IUL conundrum: Big sales and big problems

By John Hilton

Indexed universal life is a lot of things, depending on who you talk to.

LIFE

28 Life insurance must zoom at the speed of Gen Z

By Tim Heslin

Generation Z has become accustomed to being able to access anything with a few clicks. How can the industry respond to this need for speed?

ANNUITY

32 Annuities gain traction with middlemarket consumers

By Susan Rupe

Middle-market consumers have a need for guidance on how to generate guaranteed retirement income.

HEALTH/BENEFITS

36 Steps to achieve a sound voluntary benefits program

By John Thornton

Making sure your benefits program meets the needs of your employerclients’ workforce.

ADVISORNEWS

40 Why advisors should discuss funeral preplanning with clients By Damon Wenig

Addressing this issue can close a gap in end-of-life planning.

IN THE KNOW

42 The human side of retirement: Moving beyond the numbers By Susan Rupe

The industry must do a better job in preparing people for the nonfinancial aspects of retirement.

Leveraging LIAM

As September rolls in, we find ourselves at the threshold of Life Insurance Awareness Month, a time dedicated to reinforcing the critical role life insurance plays in the financial stability and wellbeing of families across the nation. This is an opportunity for insurance agents and financial advisors to deepen clients’ understanding of life insurance, and to highlight the innovative solutions that can help them achieve their financial goals.

In recent years, indexed universal life insurance and other indexed products have gained significant traction. Their success is a testament to their versatility and the unique benefits they offer. Because IUL policies combine the death benefit protection of traditional life insurance with the potential for cash value accumulation, linked to the performance of a chosen stock market index, this blend of security and growth potential has made IUL a popular choice for clients seeking both protection and investment opportunities.

The appeal of IUL and other indexed products lies in their strategic advantages. Unlike traditional whole life policies, which offer a fixed rate of return, IUL policies allow policyholders to benefit from market gains while providing a safety net against market losses through guaranteed minimum interest rates. This dual advantage enables clients to participate in market growth without exposing their cash value to the full brunt of market downturns.

For clients, this means more than just life insurance. It means a flexible, tax-advantaged vehicle that can be tailored to meet a variety of financial objectives. Whether the goal is to build a retirement

nest egg, fund a child’s education or create a legacy, IUL policies offer a powerful tool to address these needs.

One of the most compelling aspects of IUL is its potential for tax-deferred growth. The cash value within an IUL policy grows tax-deferred, allowing clients to accumulate wealth more efficiently. Additionally, the death benefit is generally paid out tax-free to beneficiaries, providing financial security when it’s needed most. This tax efficiency can make IUL an attractive alternative to other investment vehicles, especially in a high-tax environment.

As advisors, it’s crucial that we educate clients on the uses of life insurance beyond its traditional role. Life insurance can serve as a foundation for a comprehensive financial plan, offering liquidity, leverage and security. Here are a few ways to highlight the strategic benefits of life insurance during Life Insurance Awareness Month:

1. Retirement planning: IUL policies can supplement retirement income through tax-free loans or withdrawals against the cash value. This can be particularly valuable in managing tax liabilities and ensuring a steady income stream during retirement. As seniors surveyed said they expect to live longer, they’ll need comprehensive planning to ensure their retirement is adequately funded.

2. Wealth transfer: Life insurance can be a cornerstone of estate planning, helping clients transfer wealth to their heirs efficiently and with minimal tax implications. The death benefit can provide immediate liquidity to cover estate taxes and other expenses, preserving the estate’s value for future generations. Wealth transfer is often overlooked

in planning, and the surviving beneficiary — statistically often the wife — frequently has not been the primary contact with the advisor. Heading these issues off through a comprehensive plan can be a way to build trust and confidence with clients.

3. Business planning: For business owners, life insurance can be a critical component of succession planning. Key person insurance, buy-sell agreements funded by life insurance and executive bonus plans are all strategies that can protect the business and its stakeholders. Again, this is an important — and often emotional — exercise for business owners. Helping them plan with confidence is a great way to build a relationship and trust.

4. College funding: The cash value in an IUL policy can be used to fund a child’s education, providing a flexible, tax-advantaged source of funds that can grow over time.

As you engage with clients this September, remember the importance of regularly reviewing and updating their life insurance coverage. Life events such as marriage, the birth of a child, purchasing a home or starting a business can significantly impact their insurance needs. And as clients get older, help them prepare for out-of-sight changes — for example, the end of term life policies and possibly transitioning to whole life, or whatever might be best for them. A periodic review ensures that their coverage remains aligned with their evolving financial situation and goals. Recent studies have shown that clients trust advisors who are in regular or frequent communication more than those who communicate only infrequently.

Today, it’s essential to stay informed about the latest products and trends in the industry. The landscape of life insurance is continually evolving, with new products and features being introduced to meet the changing needs of consumers. Use this month to reinforce your commitment to your clients’ financial well-being, to highlight the innovative solutions available and to demonstrate the value of life insurance in building a secure financial future.

John Forcucci Editor-in-chief

Unlocking Financial Flexibility with Pacific Horizon IUL 2

Discover How Pacific Life’s Latest Innovation Empowers Financial Professionals and Elevates Client Solutions

In an era where financial security and flexibility are paramount, Pacific Life Insurance Company’s newly launched Pacific Horizon IUL 21 stands out as a versatile product designed to meet diverse client needs. This Indexed Universal Life (IUL) insurance product, backed by Pacific Life’s strong legacy and financial strength, offers death benefit protection and a unique blend of customization, flexibility, and innovation.

Unveiling Paciﬁc Horizon IUL 2

Pacific Horizon IUL 2 is designed to provide a lifetime of benefits, helping to address both immediate and longterm financial needs. According to John Church, AVP of Pacific Life’s Life Product Intelligence team, the product aims to consolidate several features into a single, adaptable product. “Pacific Horizon IUL 2 strives to address multiple needs with a one-product approach, offering the versatility and customization needed to help meet diverse financial goals,” Church explains.

A Versatile and Customizable Product

The standout feature of Pacific Horizon IUL 2 is its versatility. The product offers three distinct coverage design options to help cater to different client preferences:

• Enhanced Early Surrender Value: May be attractive for clients seeking higher early-year cash surrender values.

• Long-Term Performance: Designed for those focused on maximizing long-term growth and performance potential of their cash values.

• Balanced: A middle-ground option that oﬀers a blend of the potential for early-year cash surrender values and long-term performance.

These options help clients tailor their policies according to their specific financial objectives and life stages. “It’s about helping to meet the client’s needs as best as we possibly can,” Church emphasizes. “No one product fits all clients in every scenario, but Pacific Horizon IUL 2 offers significant customization.”

Enhanced Living Beneﬁt Options7

A key aspect of Pacific Horizon IUL 2 is its comprehensive suite of chronic illness riders2. The product offers three different types, which can help meet various client needs:

• Premier Living Benefits Rider 2: Offers the ability to accelerate benefits, without monthly rider charges.2,4

• Premier Chronic Illness Rider: Provides dollar-fordollar accelerated death beneﬁt payments in exchange for a monthly rider charge.2,5

• Premier LTC Rider: Designed for clients who prioritize long-term care beneﬁts, typically used with individually owned policies, for a monthly charge.2,6

This flexibility provides options so that clients can choose a rider based on their personal circumstances and financial planning goals. “We offer clients multiple ways to customize their protection to their needs,” notes Church. “Our product is one of the few in the industry that offers this level of choice.”

Client Proﬁle Example

Typically, a business or affluent individual aged 35 to 65 8

Needs long-term death benefit protection

Has supplemental income, business, or legacy planning needs

Enhanced Performance Potential

Another distinctive feature of Pacific Horizon IUL 2 is the Enhanced Performance Factor Rider.2,3 This optional rider allows a client to potentially increase the size of a policy’s index-based interest credits for a monthly rider charge, enhancing the growth potential of the policy’s cash value. “It’s a trade-off that many of our financial professionals and their clients find valuable, especially in positive market years,” explains Church.

Listening to Financial Professionals and Clients

Pacific Life’s approach to product development is deeply rooted in feedback from financial professionals and clients. Church highlights the importance of this feedback loop. “Our financial professionals asked for more flexibility and specific features based on their client interactions, and we responded by incorporating many of those elements into Pacific Horizon IUL 2,” he says. “It’s about aligning our products with real-world client needs.”

This commitment to listening and acting on feedback is evident in the enhancements included with Paciﬁc Horizon IUL 2. Compared to its predecessor, the new product includes an additional type of policy loan and chronic illness rider, an improved Enhanced Performance

Factor Rider, and the return of a 2-year indexed account based on the S&P 500® as requested by advisors. These enhancements are designed to offer more value and flexibility, helping to make it easier for financial professionals to meet their clients’ diverse financial goals.

Educational Eﬀorts and Support

Launching a versatile product like Pacific Horizon IUL 2 requires robust educational efforts to help ensure financial professionals fully understand its features and benefits. Church notes, “We did a bit more education upfront, but it wasn’t as much as launching three separate products.” He explains, “The incremental increase in effort provided significant value and flexibility.”

Competitive Positioning

In the competitive landscape of life insurance, Paciﬁc Life aims to position Paciﬁc Horizon IUL 2 in the top quartile for pricing and performance. The product’s versatility and comprehensive features can make it a strong contender in both wealth transfer and cash accumulation scenarios. “Our goal is to be highly competitive in both areas,” says Church. “The robustness and versatility of the product help it stand out in the industry.”

Pacific Life’s commitment to financial strength and stability further enhances its competitive positioning. As a mutual holding company, Pacific Life prioritizes the interests of its policyowners, helping to ensure long-term reliability and trust. The company’s strong financial

ratings and well-capitalized status underscore its ability to meet client needs both now and in the future.

A Call to Action for Financial Professionals

The launch of Pacific Horizon IUL 2 represents a significant milestone for Pacific Life, offering a versatile, customizable product designed to help meet a wide range of client needs. For financial professionals, this product provides an opportunity to engage with a company that listens, innovates, and acts on feedback to deliver superior value.

“We hope to add some fans and attract new producers who see what we’re offering with this product,” says Church. “We want to spark interest and encourage them to talk to Pacific Life about how Pacific Horizon IUL 2 can help benefit their clients.”

With its thoughtful design, enhanced features, and strong backing from Pacific Life, Pacific Horizon IUL 2 is poised to become a go-to product for financial professionals looking to offer their clients a life insurance policy tailored to help meet their needs. Learn more and connect with Pacific Life today by visiting LifeInsurance.PacificLife.com/Horizon2.

1 Paciﬁc Life Insurance Company’s Paciﬁc Horizon IUL 2 (form series P21IUL, S23HZN2-B, S23HZN2-E, or S23HZN2-L, varies based on coverage design option and state of policy issue). Indexed universal life insurance does not directly participate in any stock or equity investments.

2 Riders will likely incur additional charges and are subject to availability, restrictions, and limitations. Clients should be shown policy illustrations with and without riders to help show the rider’s impact on the policy’s values.

3 Enhanced Performance Factor Rider (form series R18EPF, S23EPF, varies based on state of policy issue).

4 Premier Living Benefits Rider 2 (form series R18ADB, S18ADB, varies based on state of policy issue). There is no up-front cost of monthly rider charge. The cost of exercising the rider is that the death benefit is reduced by an amount greater than the rider benefit payment itself to reflect the early payment of the death benefit.

5 Premier Chronic Illness Rider (form series R22CHR, S23CHR, varies based on state of policy issue). Rider benefit payments will reduce the death benefit, Cash Surrender Value, and any Policy Debt. Additionally, the rider’s benefit payments may adversely affect the benefits under other riders.

6 Premier LTC Rider is an Accelerated Death Benefit Rider for Long-Term Care (form series R15LTC, R15LTC SP, varies based on state of policy issue). Rider benefit payments will reduce the death benefit, Cash Surrender Value, and any Policy Debt. Additionally, the rider’s benefit payments may adversely affect the benefits under other riders.

7 Long-term care riders are designed to help cover the costs of long-term care. On the other hand, chronic illness riders are a life insurance component that enhances the flexibility of a life insurance policy to provide beneﬁts if the insured develops a chronic illness. Chronic illness riders do not qualify and do not intend to qualify as long-term care insurance and are not intended to replace the need for long-term care insurance.

8 Product is available for issue ages 0-90.

Paciﬁc Life is a product provider. It is not a ﬁduciary and therefore does not give advice or make recommendations regarding insurance or investment products.

The home office for Paciﬁc Life Insurance Company is located in Omaha, NE.

Paciﬁc Life Insurance Company is licensed to issue insurance products in all states except New York. Product/material availability and features may vary by state. The primary purpose of life insurance is to provide death beneﬁt protection in the event of the insured’s death. Life insurance is subject to underwriting and approval of the application and will incur monthly policy charges.

Insurance products and their guarantees, including optional beneﬁts and any crediting rates, are backed by the ﬁnancial strength and claims-paying ability of the issuing insurance company. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the broker/dealer, insurance agency, or their affiliates from which products are purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company.

This material reflects the Pacific Life Insurance Company policy features and benefits. All policy features and benefits may not be available through some broker/dealers.

24-387 This material is intended for ﬁnancial professional use only. Not for public distribution.

The ‘phantom debt’ haunting American consumers

Consumers have been using a short-term financing option called “buy now, pay later” to spread out payments on everything from electronics to clothing. But that type of “phantom debt” has the potential to rear its ugly head down the road, some economists warn.

Global spending on BNPL purchases rose from $33 billion in 2019 to $300 billion in 2023, according to a Global Data report. Data from Juniper Research predicts BNPL transaction value will reach $687 billion by 2028.

BNPL provides an alternative to other types of short-term financing, such as credit cards. It’s usually quick and easy to get approved, even for someone with a poor credit rating.

But for those who lack financial discipline, BNPL can get consumers into as much trouble as any other debt. Forty-three percent of those who owe money on a BNPL installment loan were behind on their payments, according to a survey conducted for Bloomberg News by Harris Poll. And 28% of respondents said they were delinquent on other debt because of their BNPL obligations.

CALIFORNIA INSURANCE COMMISSIONER TAKES ON CRISIS

Recent efforts to overhaul California’s crisis-ridden insurance system have been blasted by consumer groups, tepidly embraced by trade organizations and slapped by at least one insurer by asking for sky-high rate increases.

commitments from insurers to write policies in probable wildfire distressed areas.

Do not let politics mix with your investments.”

— Ryan Detrick, chief market strategist at the Carson Group

costs still rising — and with more than 20% of vehicles involved in collisions now considered total write-offs — insurers are still losing money, despite passing along huge price increases to their customers.

Burdened with the near-impossible task of increasing access and affordability of insurance for consumers while providing adequate rates and reasons to stay in business in the state for companies, Insurance Commissioner Ricardo Lara has forged ambitious proposals to solve the crisis and calm the market.

Lara released another proposal in his “Sustainable Insurance Strategy” series for the state’s troubled homeowners insurance market, which has seen a number of insurers stop writing policies and even abandon the state altogether. In what he said was part of the most significant insurance reform in 30 years, Lara floated plans to allow companies to use forward-looking catastrophe models for ratemaking — something that has never been allowed — in return for the

WHAT’S BEHIND RISING CAR INSURANCE COSTS?

Auto insurance prices have increased by 11.2% over the last year, and because insurers are still losing five cents for every dollar of premium collected, it is unlikely that auto insurance costs will stabilize anytime soon.

A new U.S. vehicle insurance study by J.D. Power finds that in addition to increased repair costs, a number of other issues are placing further financial burden on insurers, including:

» Soaring medical expenses.

» A rising number of accidents.

» An increasing number of collisiondamaged automobiles being declared a total loss.

Auto insurers are in a tough position right now, the report said. With repair

FORMER GEORGIA INSURANCE COMMISSIONER SENTENCED TO PRISON

Describing his actions as “stupid, stupid, stupid,” former Georgia Insurance Commissioner John Oxendine was sentenced to more than three years in prison in a federal case accusing him of taking part in a $3 million health care fraud scheme. As part of a deal with prosecutors, Oxendine pleaded guilty to one count of conspiracy to commit health care fraud.

His attorneys told the court he was a middleman in the scheme orchestrated by physician Jeffrey Gallups, who pleaded guilty to submitting fraudulent insurance claims. Gallups was sentenced in June 2022 to three years in prison, ordered to pay more than $700,000 in restitution and fined $25,000.

The scheme intended to net $3 million and resulted in a loss to insurance companies of $760,454. Prosecutors said Oxendine received about $40,000 in kickbacks by helping Gallups defraud health care insurance providers. They said the arrangement between 2015 and 2017 involved fraudulent insurance claims for medically unnecessary genetic and toxicology testing by Texas lab company NextHealth.

S&P 500® IQ Index Turns One

Discover the power of the S&P 500 IQ Index** and chart an intelligent path to the S&P 500 using FIAs.

Shortlisted for Best New Index in SPi’s “Awards for Excellence” 2024.

Rapidly responds to changes in the market using intraday technology.

Employs a simple, transparent design that consists entirely of the 500™ and cash.

O ers the potential for higher rates and caps and improved renewal rate stability.

Provided by S&P Dow Jones Indices, a name you can trust.

Access it only through Legacy Marketing Group® exclusive xed indexed annuities— your gateway to the S&P 500 IQ Index.

The “S&P 500®” and “S&P 500 IQ 0.5% Decrement Index” (“S&P 500 IQ Index” or the “Index”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and have been licensed for use by Americo Financial Life and Annuity Insurance Company. S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Americo’s Fixed Indexed Annuities are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® and S&P 500 IQ Index.

* Source: S&P Dow Jones Indices LLC, as of July 12, 2024. Index performance is based on excess returns in USD. The S&P 500 IQ 0.5% Decrement Index (USD) ER was launched July 12, 2023. Because this index applies a volatility control mechanism, the range of both positive and negative performance of the Index is limited.

** Also known as the S&P 500 IQ 0.5% Decrement Index.

Some

agents and financial planners swear by indexed universal life as a versatile product that addresses many issues. Others say it’s a devil in disguise.

BY JOHN HILTON

Indexed universal life is a lot of things, depending on who you are talking to.

To many consumers, IUL is a multipurpose product that helps them accomplish a lot of different financial goals. For some lawyers, it is a seemingly endless source of business as lawsuits proliferate.

Consumer advocates say IUL is confusing to almost all who buy it and a product rife with rampant fraud. Regulators find IUL a persistent headache.

One thing that nobody will argue is that IUL sells — and sells big. While other life insurance product lines lag with low-single-digit growth or negative sales numbers, IUL face amount increased 11% in the first quarter and the number of policies sold increased 13%, LIMRA reported.

The IUL big sales and big problems

“Many clients appreciate that an indexed universal life policy offers a zerofloor guarantee,” said Raza Begg, an executive director at Experior Financial Group in Cheektowaga, N.Y. “This guarantee means that the policy is guaranteed never to lose or incur losses based on market indices, providing a level of safety that attracts risk-averse investors.”

conundrum conundrum

The versatility attraction and the powerful sales ensure that IUL is not going away in the near term. But is change needed to help IUL evolve into a more responsible life insurance product? Many insurance people say yes and point to illustrations and consumer education as areas that are lacking.

IUL critics have “some valid points,” Begg concedes, noting that IUL is a fairly new product to many.

“Unfortunately, consumers usually do not understand an IUL,” he added. “The lack of exposure and the limited number of agents with access to this type of policy are the main reasons many have not heard of this tool.”

Begg

Popular product

Transamerica offered the first IUL product in 1997. Today, more than 40 companies are offering some type of IUL policy, with more companies with new IUL products and features hitting the market each year.

Like indexed annuity products, IUL traces its popularity to the safe, middle ground it stakes out between market growth and risk. IUL provides policyholders with permanent life insurance along with a cash value component and a death benefit.

The money in a policyholder’s cash value account can earn interest by tracking a stock market index selected by the insurer, such as the Standard & Poor’s 500. That

IUL is often part of complex premium financing deals with large amounts of money at stake. Several of these deals have gone bad and led to lawsuits.

In an Oklahoma case, Tom D. Le and Trang H. Nguyen purchased a $15 million indexed life policy for the premium payment of $2 million. The plan called for the first 10 years of policy premiums to be paid for through a drawdown on a bank loan.

Plaintiffs claimed they were told there would be no more premiums due under the policy after year 10. They would still make yearly interest payments only on the bank loan until year 15. The Nguyens would end up with a fully paid-up $15 million policy for only the payment of

Agents have to be educated better on the fact that if you’re going to recommend an IUL, it has to be a small slice of a much-larger, well-allocated asset portfolio. The IUL cannot be 100% of a client’s life savings.

interest rate can fluctuate, but losses are limited and gains often are capped.

Options allow the holder to buy or sell the underlying index at a specific time for a set price, which can rise or fall quickly. If an option is exercised at the right time, the yield can be significant. But if the option expires and the timing is never right, the entire investment in that option is lost.

“IUL is one of the few instruments that allows you to access up to 90% of your death benefits while still alive in case of a health issue,” Begg explained. “This access gives the policy owner more control over how their savings should be utilized, as a death benefit or a retirement vehicle.”

IUL is generally considered to be more volatile than fixed universal life policies but less risky than variable UL, since IUL does not invest in equity positions.

But management fees associated with the options budget make IUL a costlier option in many cases. And the options aspect is one of the reasons critics say IUL is too complex for average Americans.

Rising premiums an issue

Internal costs can cause an IUL account’s value to drop substantially. That puts a policy at risk of lapsing, and the policyholder is on the hook for higher premiums just to keep the policy intact. Sometimes significantly higher premiums.

the yearly interest on the bank loan, court documents say.

A PacLife illustration was used to show plaintiffs that the cash value of the policy would be $2.8 million in year 15, the lawsuit said, while the Arvest loan balance used to pay the premiums would be $2.25 million.

The Nguyens claimed they later learned that premium payments would be required for the life of the policy, or 84 years, court documents say. Their case was settled in June with no terms disclosed.

Speaking generally, Begg concedes that fees are high in the initial years of an IUL policy. But those expenses should be compared to a 401(k) plan, he added.

“You will know upfront what the total expense will be in an IUL, unlike in a 401(k) where there are no fixed expenses,” he said.

But seasoned financial advisors generally agree that IUL is a complicated product for the average American to fully grasp.

IUL can be “a very complicated product,” said Steve Azoury, owner of Azoury Financial in Troy, Mich. “Consumers may not understand the costs of the death benefit. They may also be unaware of the different crediting strategies on the potential gains. Finally, consumers could be confused by the potential of policy lapse if expectations are not met.”

Illustrations a lingering issue

Attorney Robert Rikard, half of the Rikard & Protopapas law firm in Columbia, S.C., has three IUL cases in South Carolina state court. He is hopeful that all will go to trial by the end of the year, providing some resolution for clients who regret signing up for a big-dollar IUL product.

Rikard, who has other IUL cases in other states, said the product is too often being sold as the basis for a retirement plan.

Most of the questionable IUL strategies involve policy loans and/or inflated illustrations, often both. Rikard has experts who testify to the recklessness of the plans.

“Experts that have worked for me who have either sold these products or looked at these products say it really is just a small sliver of the public that should be sold an IUL product,” he said. “Agents have to be educated better on the fact that if you’re going to recommend an IUL, it has to be a small slice of a much-larger, well-allocated asset portfolio. The IUL cannot be 100% of a client’s life savings.”

IUL sales are sealed with illustrations, and efforts continue to clean up the practice. The combination of agents who often don’t fully understand the product and an unrealistic illustration is frustrating regulators and consumer advocates alike.

Actuarial Guideline 49 was adopted in 2015 to address IUL products created after the original 1997 illustration model was adopted. Insurers quickly got around it by offering IUL products with multipliers and bonuses.

That led to AG 49-A in 2020 and eventually AG 49-B. Regulators referred to the latter update as “a quick fix” when it was adopted in 2023. Regulators have repeatedly shied away from an overall illustrations rule rewrite.

“These products are just incredibly complex,” Rikard said. “When you get into the weeds with these agents, they really don’t understand how these products work. They’re simply relying on the illustration to sell the product, and the illustration is the best-case scenario if every single thing in that illustration works correctly.”

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john. hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

Life settlements try to shake off STOLI

Those who work in the life settlement market say it’s a legitimate strategy for many people. However, a new round of stranger-originated life insurance lawsuits is a reminder of the ties between STOLI and life settlements.

BY JOHN HILTON

practice spread to other terminal diseases such as cancer. The IRS provides special tax treatment for these cases, resulting in tax-free proceeds for viatical settlements.

In time, the resale market evolved to include a broader group of older policyholders who did not have serious health issues but had other life circumstances in play. For example, they no longer needed the benefits associated with life insurancel but needed the money to pay for long-term care or living expenses. Thus, the mainstream life settlement market was born.

The NAIC began regulating these settlements in 1994 by requiring a two-year holding period for these policies in conjunction with the contestability period.

As AIDS became more treatable by the late 1990s, viatical settlements declined and life settlements began to look sketchier. Some investors, agents and lenders began looking for older candidates willing to take out a life insurance policy. A trust was often created to pay the premiums, and the policy would be transferred to an investor at the end of the two-year hold period.

“These were not mom-and-pop kitchen table investors,” Page said. “These are large institutional investors that have lawyers and can understand risk. It was just fueled by greed and lack of creativity and determination to find real life settlements.”

More lawsuits

Insurers suing to avoid paying out on STOLI policies is nothing new. But a recent flurry of lawsuits has the issue back in the news, with some defendants claiming a life settlement defense.

Ameritas Life Insurance Co. is being particularly aggressive about challenging potential STOLI policies. The insurer has several lawsuits ongoing — mostly sold by Union Central Life Insurance Co., a predecessor of Ameritas — and settled a case earlier this year with Wells Fargo.

In a California lawsuit, Ameritas argues that a life settlement investor buying an in-force term life policy cannot exchange the term life policy for a permanent life policy because the new investor owner has no insurable interest in the life of the insured.

Amir Moghadam bought the term policy 20 years ago from Union Central with a face amount of $3.7 million.

Moghadam’s policy provides a

conversion privilege, which allows the owner to convert the policy to “any permanent plan of insurance made available by the company for such purpose at the time of conversion.”

In February, Ameritas informed Moghadam that his premiums would increase from about $7,000 annually to over $73,000, court documents say. Wilmington Trust is a “securities intermediary” in the case, meaning it likely represents an investor.

“Moghadam … had no desire to pay more than ten times the premiums he was paying, so he sold his policy,” a Wilmington attorney wrote. “The policy would have been worth a fraction of what he sold it for but for the fact it permitted the owner to convert it from a term policy to a permanent policy.”

Life settlement investors prefer permanent policies because they get paid when the insured dies and permanent policies are usually cheaper than term policies to keep in force. If the court rules that term conversions cannot be exercised by life settlement investors, it is sure to have a negative impact on the industry.

Life settlements are generally distinguished from STOLI policies at the time of purchase.

For example, under California law, any party purchasing life insurance must have an “insurable interest” in the person being insured. If there is no insurable interest, the insurer has a basis for declaring the policy void.

In the California case, Moghadam named his wife as the beneficiary.

Regardless of whatever court precedent might be established by the lawsuit, the life settlement industry will continue to carve out its niche in the industry, Page said.

“The industry will continue,” he said. “It will never be on the scale it was with the STOLI phenomenon because of all this manufactured product. But I think there’s a place for legitimate life settlements and viaticals.”

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback. com. Follow him on Twitter @INNJohnH.

National Life Group’s chairman, CEO and president MEHRAN ASSADI made the journey from “geek” to the top of the company, creating what he calls a successful “175-year-old startup” along the way.

An interview with Paul Feldman, publisher

National Life Insurance Co. started 175 years ago. In 1996, it acquired Life Insurance Company of Southwest, which became part of National Life Group. Today, as the No. 1 provider of indexed universal life and the No. 1 provider of fixed index annuities within the employer-sponsored K12 space, Assadi has led the company to the highest pinnacle of success. “I found a company with a clean balance sheet and tremendous runway,” he said. “I really fell in love with the people of the company and their spirit.”

About 80% of National Life’s business “comes from the middle market,” says Assadi, who believes that financial literacy is crucial to serving that market.

“Our mandate is one of financial literacy versus pushing products. When you are helping someone to learn something as important as financial security, you are keeping a family together. You are helping a business to have a legacy. So, we need to explain what it is we do in most simple terms. That’s one of the reasons that I say that simple is hard.”

In this interview with InsuranceNewsNet Publisher Paul Feldman, Assadi describes how National Life Group is committed to serving the middle market, offering the right products for this moment in time and bringing new people into the business.

Paul Feldman: You’ve had an illustrious career in the insurance industry. How did you get into the industry, and how did you find yourself here?

Mehran Assadi: I started in the insurance industry as a software developer, and clearly, the question in your mind is: “How does a geek become a businessperson?” The story is straightforward. The concept of understanding your client and understanding what the software was going to be used for was very important to me. Therefore, I spent a lot of time with the businesspeople for whom I was designing technology platforms, to understand their business. In that way, I could build something that could be useful.

I ended up spending a lot of time with people within the investment part of the company I was with. I spent time with people in corporate finance, actuarial people, as well as distribution and

marketing people. I connected with and enjoyed working with people within marketing and distribution because it was all about business development and how you can leverage technology for the betterment of your business.

Eventually, people wanted me to participate in strategic planning initiatives, blueprinting business opportunities, and I ended up in business development and strategic planning within financial services. So here we are four decades later.

Feldman: Tell me more about that. That seems like a wild ride to get from programmer to CEO.

Assadi: The whole idea of business is not just about IQ. Business is about emotional and social intelligence, and it’s about

Assadi: When I joined National Life, I was supposed to be here for 90 days as an executive consultant working with the executive leadership of the organization — the chief financial officer, the president of the company — in order to work on a strategy around business and technology. And 90 days became 180 days because the project needed that kind of duration. After that, there was a change in leadership and I was asked to step in as an interim chief operating officer.

From there, I committed the biggest sin a consultant can commit: I fell in love with my client — the people in the company, the direction of the company — and found this company that was like a precious jewel that just needed some strategic direction in order to become what we have become. I found a company with a clean

relationships. I think a lot of learning happens when you are around the people who have tenure in the business. If you have a thirst for learning, then you’re going to be like a sponge; you’re going to start picking up things along the way that help you with the business. I believe in the value proposition of our business. I started in this business in the property/ casualty sector and gravitated toward protection and retirement. I enjoy the value that we deliver to our clients and appreciate what an honorable profession this business is.

Feldman: Indeed, it is an honorable profession. Tell me a little bit about your early days at National Life.

balance sheet and tremendous runway, and I was asked to stay. I fell in love with the people of the company and their spirit.

Feldman: Your company has grown so much over the years. What are some of the changes you made to National Life to make that happen?

Assadi: We are not normal. We are a 175-year-old startup. We think about ourselves as a startup.

Feldman: I think everybody should think of their business as a startup.

Assadi: My favorite day of the year is Jan. 2 — not Jan. 1.

National Life hosts a Do Good Festival each year, raising money for charities in the Montpelier, Vt., area.

Feldman: Why is that?

Assadi: Jan. 2 is an opportunity for rebirth, as far as your business is concerned. It’s an opportunity to capitalize on all the things that have worked for you as a business, as well as what you have learned in the prior year, and apply those learnings so you can become a better company worthy of the trust of your agents, advisors and your clients. We get to do that every year. Every year is a new beginning, a new opportunity to take your game, your business, to the next level.

In terms of the success that we have experienced, it’s very much tied to being a mission-driven and purposeful company. Our mandate is one of financial literacy versus pushing products. It all started with us envisioning our vision, mission and values. Our vision is to bring peace of mind to everyone we touch. That’s what insurance is all about.

Our mission is keeping our promises. Pretty straightforward. Our values are to do good, be good and make good on our intentions, our actions and the outcome. I encourage you to compare our vision, mission and values to other financial services companies. In this company, we believe that simple is hard.

Feldman: Simple is hard. I like that. That’s true in life and business.

Assadi: Our people can describe what doing good means to them and what being good is all about. To be worthy of staying in this business, you must be at

the top of your game. So as an individual, you must continually improve. As an organization, we must continue to improve in order to be worthy of the trust that our agents and clients put in us. We are much more about financial literacy power than about pushing products.

Feldman: One way that you’re bringing new people into the business is multilevel marketing. Tell us a little bit about that.

Assadi: First of all, in our business, we have multiple segments and multiple distribution. So, you’re correct. Part of that is multilevel. To that end, that’s one of the entry points into our business because when you take a look at the number of agents and producers in our industry, we are not necessarily growing by leaps and bounds. So that’s a good point of entry.

The other part is that this country is a melting pot. When you look at the distribution of National Life Group, our producers and our representatives reflect the diversity that exists in our country. It is a story of living the American Dream, from my point of view.

There is a sustainable and responsible way to do business. That’s the way we operate as an organization. It is about training your producers, encouraging them to put the priority on doing the right things for our clients. We encourage our producers to take ownership in the well-being of people they support, and continued education is very important. We have many highly skilled professionals — who

are what I refer to as boots on the ground — who provide training on Saturdays, Sundays, evenings in order to make sure that the skills of the people who are representing our organization are sharp. Continuing education is a priority in our company.

Feldman: I love the term “boots on the ground” because I say that all the time in my business. You must have the boots. And we don’t have enough boots. How do we get more boots on the ground?

Assadi: I think as an industry, we are misunderstood. Look, I started in this business as a software developer. You don’t want to go to a cocktail party and tell people you’re in life insurance. You want to tell them you’re a software developer, you’re working for a startup.

The reason behind that is because we are misunderstood as an industry. We need to tell our story, and that becomes a way of recruiting to this industry. Think about this for a second. Why did we go through the process of re-envisioning our vision, mission and values? Because we had to get our house in order. We had to make sure that our associates who’ve been part of the company for many years take ownership of this honorable profession that we are part of. It became part of the education and advocacy for the industry.

To get more people and attract more talent to this industry, we must tell our story in terms of our value proposition of protection and retirement. We must tell our story that there are more than 100 million people in this country who are underinsured or who don’t have any insurance. We must tell the story of financial literacy. Some people have a bad relationship with money. All of us have family members who can use that help, right?

When you help someone to learn something as important as financial security, you keep a family together. You help a business to have a legacy. So, we must explain what it is we do in the simplest terms. That’s one of the reasons that I say that simple is hard.

Feldman: National Life is a mutual company. Tell me about the differences between a mutual company and a stock company.

Mehran Assadi at the kickoff of one of National Life’s charitable events in its community.

And 10% Free Withdrawals FOR AGENT USE ONLY. NOT INTENDED FOR THE GENERAL PUBLIC.

The Evolve Income Value has no cash value and cannot be withdrawn as a lump sum and is not part of the death benefit. SILAC® is licensed as SILAC Life Insurance Company in the state of California, license #6244-8. Withdrawal charges, bonus recovery and market value adjustment may apply to withdrawals made during the withdrawal charge period. Interest credit amount is not indicative of future performance. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. See Certificate of Disclosure for more details. This is a product of the insurance industry and not guaranteed by a bank, nor insured by FDIC or NCUA/NCUSIF. Product availability may vary by state. In Idaho, policy form is ELCFIA-ID. Not a deposit. Not insured by a federal government agency. Restrictions apply. May only be offered by a

Assadi: So let me start by sharing with you that I refer to National Life as a progressive mutual. The follow-up question often is: What is a progressive mutual? So progressive mutual, the way I think about it, is a company that cares about performance — top line, bottom line and every measurement in between, just like a public company. At the same time, because insurance is a long-term business, we have the patience of a mutual company — we know this is a long-term business, and that is the way we think about the way we serve our clients and the way we make investment decisions. We are not on a short fuse. I don’t have limited partners that I have to pay; I don’t have shareholders that I need to please. The only people that I have to please are my clients.

Feldman: Tell me about the products you sell. Where are your big markets?

Assadi: I would describe us as a permanent insurance life insurance company. We have multiple products: whole life, UL, term and IUL. So that’s our life product portfolio. In annuities, we have fixed index annuities and fixed annuities as well. About 80% of our business comes from the middle market. Our definition of middle market is families with annual income anywhere from $70,000 to $175,000. And you may say that’s a pretty wide range, but if someone is earning $80,000 in a small town in the Midwest, for example, that’s different than a middle-class family living in Orange County, California, and making that same amount of money. So that’s why the range is so wide. It’s usually families of two professionals.

We are the No. 1 provider of indexed universal life. We have entered our third

year in that spot, which we’re very proud of. When it comes to the annuity business, we are the No. 1 provider of fixed index annuities within the employer-sponsored K12 space. We’ve been No. 1 for roughly two decades in that space. We serve Teachers of America, which is one of my favorite markets because I come from a family of educators.

Everybody talks about how we need to take care of the teachers and other underappreciated workers — but guess what? In this industry, we are able to say thank you to people by basically providing a 403(b) type of business, which is tax-sheltered annuities for teachers. We can help teachers retire with the dignity they deserve.

Feldman: Tell me about your IUL business, because National Life is a leader in that space. How did you become the leader?

Assadi: I think fixed index universal life is one of the most innovative products in the marketplace. From my point of view, it’s a product that gives people an opportunity not only for protection, but also an opportunity in terms of building cash value, especially with our living benefit writers.

Our perspective at National Life is that we offer a new kind of life insurance: life insurance that is not only about dying. Because often when you talk to people about life insurance, they immediately think about death benefit. And in our case, it is not only about death benefit. Sixty percent of us will have some sort of a short-term disability. In terms of living benefits, the riders on our life insurance products provide protection when it comes to those life events.

Alzheimer’s disease, for example, is a

major concern in today’s environment. Everybody knows somebody who’s dealing with that. I think that’s an innovative option that we have created as it relates to living benefits. We also have a fertility rider. About 2% of couples have fertility challenges. The question is: How do you support people creating families?

Feldman: That’s really interesting. I’ve never heard of a fertility benefit from a life insurance company.

Assadi: And terminal critical illness riders, from my point of view, really create a different opportunity for families and for business owners.

Feldman: Thinking about the fertility benefit, having children helps you live longer.

Assadi: Correct. No question about it. First, I’m very proud of my teammates. As a matter of fact, I was very excited about this innovation by my team. And when you’re talking to young people about life insurance, now you have a way to get their attention. Now you have a way of talking to them about a product that is not just about dying.

Now, I want to be very clear, the foundation of any life insurance is the death benefit. However, these are enhancements that we have made in designing these products. The mindset around this clearly is to market to millennials and Generation Z. By the way, Gen Zers are no longer 18-year-olds. They are aging and growing.

This age group has lived through COVID-19. So they are concerned with mortality. And I think based on their life journey, they have realized that it’s their responsibility to prepare for the unknown. From my point of view, indexed universal life is a creative design of a traditional product that is the right fit for this century.

Feldman: So how do we get more Gen Zers and millennials into this industry?

Assadi: It’s all about education. It’s all about what we do in this industry. When we started our journey of growth over the past dozen years, we started to recruit a lot of 21- and 22-year-olds and

Mehran Assadi is lit up with the spirit of the season as National Life hosts a holiday party.

we educated them in terms of the value proposition of this industry. We basically told them: “Look, we recruit from middle America to serve middle America with the premiums that we collect. We support the economy of the country because, in short, financial services companies are the No. 1 buyers of corporate and government bonds.”

When you are connecting the dots for people in terms of what this industry means to our clients, serving the communities that we all care about and being part of the solution, I think Gen Zers and millennials are quite attracted to this industry. We just need to tell our story differently.

Feldman: So what is that different story?

Assadi: Be part of something that’s bigger than you. If you want to serve, come and join us because this is a service industry. We take care of teachers, first responders, EMTs, police officers; we take care of business owners. And by the way, National Life is a major supporter of our community.

Last year in July, we had a flood in Vermont, where one of our two headquarters is located. For the past 10 years, we’ve been throwing a benefit concert in the backyard of our headquarters in Vermont. The first year, it was a couple of thousand people. Our highest number was 10,000 people. We raised money for local charities.

Last year because of the major flooding in Vermont, we really couldn’t host 10,000 people at a concert. And so, we went on a local CBS affiliate for three hours, and by the time it was all said and done, we raised $1.73 million to support the town that we are part of.

I cannot even say we are not your father’s or your mother’s insurance company, because we are a 175-year-old startup. Every time we see an opportunity and a challenge, we want to take it on. We want to bring the best version of ourselves, and we want to exceed expectations.

This is an exciting industry. You are hearing that from a guy who started as a software developer and fell in love with this industry that he knew nothing about. And I love it today as much as I did back then. If you’re a lifetime learner, this is a perfect industry for you.

Your Annual

“Awareness” Booster

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

Deliver value and peace of mind through digital transformation

By Kimberly Duke, CMO and SVP of Growth at LIDP

Page 18

The Power of a Fully Integrated Life Insurance Platform: Continental General and Sapiens

with Jennifer Smith, VP of Product Strategy, Sapiens and Kalin Kelly, CIO of Continental General Page 20

Deliver value and through digital

By Kimberly Duke, CMO and SVP of Growth at LIDP

AAs a child, I was under the impression that by 2024, we would have all the answers for curing nearly every terminal disease. We would live in a world where everything we needed was available at the snap of our fingers, we’d have flying cars, and we’d live vastly different lives because of a huge technology revolution. However, here we are — no flying cars and few cures for terminal disease. So, what does that have to do with life insurance? Not much, but despite not being able to jump into a hovering car at my door, there has been tremendous technological change over the last few decades. As leaders in the life insurance space, we have the power to harness this change to shape the future of the industry — and with imagination we can plan above and beyond our consumers’ needs.

Carriers must embrace modern technology and digitize their operations, keeping the end consumer in mind in the entire process. When selecting a modern core system, flexibility and scalability is key to allow for rapid change and future growth. This includes developing APIs that connect to all necessary data sources and enable real-time interactions, supporting the seamless real-time experience consumers have come to expect thanks to the genius machine of companies like Amazon and Zappos.

s a child, I was under the impression that by 2024, we would have all the answers for curing nearly every terminal disease. We would live in a world where everything we needed was available at the snap of our fingers, we’d have flying cars, and we’d live vastly different lives because of a huge technology revolution. However, here we are — no flying cars and few cures for terminal disease. So, what does that have to do with life insurance? Not much, but despite not being able to jump into a hovering car at my door, there has been tremendous technological change over the last few decades. As leaders in the life insurance space, we have the power to harness this change to shape the future of the industry — and with imagination we can plan above and beyond our consumers’ needs.

Our products and services are integral to carrier’s financial security. Carriers focused on developing an ecosystem that addresses the complete life cycle of buying, maintaining and claiming a policy, while providing easy-to-understand products will be clear winners in the future. Not only should it be easier to understand and buy life insurance, but there also needs to be touch points along the way, with a claims process that is simple and transparent. It’s no easy task to completely transform the cumbersome technology and processes of the past. To do so, carriers need modern technology at the core of their operations, an ecosystem of insuretechs, and a mindset of innovation where the consumer comes first.

While many carriers focus on new business and underwriting, it is equally important to address the claims process and the journey throughout the life of the policy. This involves creating additional touchpoints in the process ahead of a claim, while also simplifying the claims process itself. Implementing a digital transformation that facilitates the entire journey, provides powerful tools to streamline a carrier’s effort toward ensuring that consumers feel supported during a difficult time as well as throughout the life of the policy.

Another consumer-focused requirement that needs to be elevated: providing educational resources designed for consumers. Video (especially those designed with social media in mind), FAQs, and AI chatbots can help educate consumers about life insurance, and guide them

Kimberly Duke CMO & SVP of Growth

through the buying process, easing the trepidation many have when buying life insurance policies. These tools can also provide real-time assistance and seamlessly transition consumers to human advisors when needed.

To achieve this comprehensive transformation, carriers need to partner with vendors that have a mindset of innovation and are willing to support ongoing transformation efforts. It is crucial to recognize that transformation is a continuous process, versus a one-time, finite project. Change is constant, and carriers must be willing to adapt and evolve with the industry.

Let’s keep it simple

Creating an ecosystem that benefits consumers in the life insurance industry requires considering several key factors.

1. Consumers need and demand accessibility and ease of use: Choose an ecosystem designed to be easily accessible and user-friendly for consumers. This includes providing intuitive interfaces, simplified processes, and clear communication channels.

2. Transparency is crucial in building trust with consumers: Your selected ecosystem should provide transparent information about policies, coverage, premiums, and claims.

3. Consumers have different needs and preferences: Choose an ecosystem that supports personalized options that cater to individual circumstances, such as flexible coverage options, customizable policies, and personalized pricing based on risk profiles.

the life insurance journey, from policy application and underwriting to premium payments and claims processing.

6. Embracing innovation and leveraging technology is vital in creating a consumer-centric ecosystem: Embracing Insurtech solutions and partnerships will bring new capabilities and innovations to the ecosystem.This can include utilizing artificial intelligence, machine learning, and data analytics to improve risk assessment, automate processes, and provide personalized recommendations.

7. Creating an ecosystem that benefits consumers is an ongoing process: It requires a commitment to continuous improvement, listening to consumer feedback, and adapting to changing needs and industry trends. Regularly evaluating and updating the ecosystem ensures that it remains relevant and valuable to consumers.

By considering these key factors, life insurance carriers can create an ecosystem that prioritizes consumer needs, enhances their experience, and ultimately delivers value and peace of mind to policyholders.

To create an ecosystem where the consumer wins, it is crucial to address the complete life cycle of buying, maintaining, and claiming a life insurance policy. This requires a focus on easy-to-understand products, streamlined processes, and transparent claims procedures.

4. Life insurance is complex — many consumers do not understand the products and their benefits: The ecosystem should provide educational resources to help consumers make informed decisions. Additionally, offering support through AI chatbots, online advisors, or dedicated customer service representatives are powerful tactics to enhance the consumer experience.

5. Seamless integration ensures a smooth and consistent experience for consumers, reducing friction and enhancing convenience: The ecosystem must seamlessly integrate various stages of

While life insurance has typically been slow to adopt transformation, it seems the future is bright. The agile approach to transformation has served this industry well. As we continue to enhance the ecosystems built to meet consumers’ needs, I believe we will reach a day where we may not (yet) have flying cars, but an industry that has embraced technological change to better the lives of even more consumers. I encourage all of us to imagine a customer journey that inspires consumers rather than overwhelms — one that just might fly them right to your doorstep.

The Power of a Fully Integrated Life Insurance Platform: Continental General and Sapiens

Leveraging Modern Technology to Enhance Efficiency, Flexibility, and Customer Satisfaction in Life Insurance Administration

Continental General (CG), a brand which includes both a distinguished insurer and third-party administrator (TPA), has long been dedicated to providing top-notch insurance products and service. With a mission to assist customers in managing financial risks and challenges associated with aging, CG continuously seeks innovative solutions to enhance its offerings and streamline operations. In pursuit of these goals, CG has partnered with Sapiens, a leading global provider of software solutions for the insurance industry, to leverage a fully integrated life insurance platform and expand its TPA services. This collaboration promises to deliver modern, efficient, and flexible solutions to CG and its TPA clients.

The Need for Modernization

comprehensive suite enables CG to support any type of life, health, or annuity product with high configuration flexibility, crucial for niche products like long-term care.

Kalin Kelly, CIO of Continental General, emphasizes the importance of the platform’s flexibility and integration capabilities. “We needed a system that could handle the complexities of our products and integrate seamlessly with our existing processes. Sapiens stood out for its robust system and high integration capability, allowing us to customize where necessary and adopt best practices where possible,” he notes.

Continental General’s decision to transition to a new system was driven by the necessity to stay competitive and provide a diverse range of insurance products. Key system criteria were the ability to rapidly innovate, swiftly adjusting to customer, market, and regulatory needs, while supporting a robust portfolio of products, covering the full spectrum of life, annuity, long term care, and health. After extensive research and consultations, CG chose Sapiens for its comprehensive life platform, which initially focused on policy administration but later revealed its full capabilities.

VP of Product Strategy,

Jennifer Smith, VP of Product Strategy at Sapiens, highlights the dual role of Continental General as both an insurance provider and a TPA. “Continental General is unique in that it manufactures and administers its own products while offering third-party administrative services. This dual role provides deep insights into the needs of other insurance companies, enabling CG to deliver tailored and modern solutions effectively,” she explains.

Leveraging Sapiens’ Comprehensive Platform

Sapiens’ life platform offers a range of standalone business applications such as IllustrationPro, ApplicationPro, and UnderwritingPro. These applications provide state-of-the-art agent portals, integrated e-applications, point-of-sale capabilities, and processes. This

The Sapiens platform simplifies the IT landscape by reducing the number of disparate systems and complex integrations, which has been a significant challenge for many insurance companies. By offering a modular approach, Sapiens allows CG to eliminate technical debt and streamline processes from agent engagement to policy administration and claims. Moreover, the ability to integrate seamlessly with existing systems and other third-party applications means that CG can offer a more cohesive and efficient service. This integration capability is particularly important for CG as it expands its TPA services, enabling the company to bring on new clients quickly and effectively without compromising on service quality.

Enhancing Agent and Customer Engagement

One of the standout features of the Sapiens platform is its ability to enhance agent and customer engagement through digital tools. The platform’s agent portals and customer interfaces are designed with a human-centered approach, ensuring ease of use and accessibility. This modern design attracts agents and customers who are increasingly looking for seamless digital experiences.

“We take a human-centered design approach to our solutions, focusing on the needs and experiences of agents and customers. By providing a user-friendly interface and digital engagement tools, we ensure that agents prefer to work with us and customers enjoy a hassle-free experience,” says Jennifer Smith.

The importance of digital engagement cannot be overstated in today’s insurance market. Customers and agents alike expect a seamless, intuitive experience

Jennifer Smith

Sapiens

Kalin Kelly CIO of Continental General

when interacting with their insurance providers. The Sapiens platform delivers on this expectation by offering features such as real-time policy information, simple claims processing, and personalized customer service options, meeting the preference of the policyholders. This not only enhances customer satisfaction but also boosts agent productivity and loyalty.

Operational Efficiency and Total Cost of Ownership

The transition to the Sapiens platform is expected to significantly improve Continental General’s operational efficiency and reduce the total cost of ownership. The platform’s cloud-native architecture and scalability allow CG to quickly adapt to market changes and customer needs. This agility is crucial for launching new products and onboarding TPA clients seamlessly.

Kalin Kelly explains, “The cloud-hosted nature of the Sapiens platform enables us to scale rapidly and integrate new products efficiently. This reduces the IT lift and allows us to focus on what matters most — providing excellent service to our customers and partners.”

By moving to a cloud-based platform, Continental General can take advantage of the latest technological advancements without the need for significant capital investment in hardware and infrastructure. This not only lowers the total cost of ownership but also ensures that CG can remain agile and responsive to market demands. The scalability of the cloud platform means that CG can easily expand its services as its client base grows, without the need for costly and time-consuming system upgrades.

A Strong Partnership Focused on Innovation

The partnership between Continental General and Sapiens is built on a shared commitment to innovation and customer satisfaction. Both companies are dedicated to continuous improvement and staying ahead of industry trends. Sapiens invests heavily in research and development, ensuring that its platform evolves to meet the changing needs of the insurance industry.

Jennifer Smith says, “We invest about 14 to 15% of our annual revenues into our R&D group. This commitment to innovation allows us to stay ahead of industry trends and offer our customers cutting-edge solutions. Our partnerships with technology leaders like Microsoft further enhance our capabilities, enabling us to integrate advanced technologies like AI and predictive analytics.”

Innovation is key to staying competitive in the insurance industry. By continually investing in R&D, Sapiens ensures that its platform remains at the forefront of technological advancements. This forward-thinking approach not only benefits CG but also sets a benchmark for the industry, encouraging other companies to adopt similar innovative practices.

Meeting the Challenges of the Insurance Industry

The insurance industry faces several challenges, including an aging population, a significant protection gap, and the need for modern technology to attract and retain talent. Continental General and Sapiens are well-positioned to address these challenges through their innovative solutions and strong partnership.

Kalin Kelly reflects on the industry’s challenges, “The life insurance industry is constantly evolving, and we must adapt to meet the needs of our customers. By leveraging Sapiens’ platform, we can offer modern, flexible solutions that cater to the changing demographics and preferences of our market. This allows us to grow our business while ensuring that our customers are well protected.”

One of the significant challenges in the insurance industry is bridging the protection gap — the disparity between the amount of life insurance coverage people have and what they need. CG is committed to addressing this gap by offering a range of products that meet the diverse needs of its customers. The flexibility of the Sapiens platform allows CG to design and implement these products efficiently, ensuring that more people can access the protection they need.

The Future of Insurance: A New Standard for Excellence

The collaboration between Continental General and Sapiens exemplifies the power of a fully integrated life insurance platform. By transitioning to Sapiens’ modern, modular solution, CG is poised to offer innovative products, enhance operational efficiency, and provide exceptional service to its customers and partners. This partnership underscores the importance of leveraging advanced technology to stay competitive in the ever-changing insurance industry.

In summary, the partnership between Continental General and Sapiens is a strategic move that enhances CG’s ability to serve its customers better, streamline operations, and stay ahead of industry trends. The Sapiens platform provides the flexibility, scalability, and innovation required to meet the evolving needs of the insurance market. As CG continues to implement and leverage this powerful platform, it sets a new standard for excellence and efficiency in the insurance industry. •

Scan the QR code to experience Sapiens innovative, intelligent insurance software solutions.

Stacy Lang Kahan

and her daughters are building upon the tradition passed down by her father.

By Ayo Mseka

Stacy Lang Kahan and her daughters, Cara and Alana, are at the helm of 1706 Advisors, a third-generation, women-led financial services firm in Skokie, Ill. At 1706 Advisors, the three women blend their expertise and passion into running an organization that embodies the true meaning of a family-owned business while bringing together the resources offered by a large company.

Honoring Benjamin Franklin

Kahan founded 1706 Advisors in 1993 as Lang Financial Group, building upon the insurance tradition that was passed down by her father, Stanford Lang. Lang was a 45-year member of the Million Dollar Round Table before his death in 2021.

1706 Advisors specializes in insurance solutions, employee benefits and holistic planning. As the founder, Kahan describes herself as “the guiding force behind the firm, leveraging 40 years of expertise in the insurance and benefits industry.”

“We provide employee benefits and individual insurance programs, thereby driving cost and time efficiency for our clients,” she said.

But the company did not start out under the name of 1706 Advisors. That name change came just two years ago. Kahan explained the change was driven by the desire to create a more inclusive workplace. “We see ourselves growing with more people to tell our story and our message. The significance of ‘1706’ is that it’s the year that Benjamin Franklin, the father of American insurance, was born,” she said.

Several years ago, Kahan decided to make another change to the company. Human resource management, a discipline not typically offered by insurance companies, was added in addition to expanding into employee benefits.

“When we began,” Kahan explained, “the employee benefit model of a recurring income stream made it easier to

scale a business. We understood that the second most expensive personnel line item must be managed thoughtfully and strategically. We recognized a growing need among our clients for comprehensive support in these areas. By offering these services, we can provide a more holistic approach to financial well-being and business efficiency.”

The company’s holistic approach to those things means that it looks at the complete picture of its clients’ needs, explained Kahan. “We don’t focus on only one aspect of employee benefits or individual insurance programs. Instead, we consider the overall financial health of our clients and their businesses. This involves integrating various financial products and services to create a comprehensive plan promoting personal and business financial stability and growth,” she said.

And what is the most important lesson she learned while working with her dad? “Take care of people like you want to be taken care of,” she said. “I created a saying that I believe in: ‘Insurance is for people who love someone or something.’”

Kahan has continued this tradition of working with family members, with daughters Cara and Alana now working with her at 1706 Advisors. Cara is chief executive officer and Alana is president of the company.

“Working with my daughters at the same firm is fantastic,” Kahan said. “We certainly have had our issues, but watching them grow, strategically think and give the right advice is key to our mission and vision.”

Apart from the happiness that Kahan gets from working side by side with her daughters, what she likes the most about

Working with my daughters at the same firm is fantastic. We certainly have had our issues, but watching them grow, strategically think and give the right advice is key to our mission and vision.

With this approach, Kahan’s primary role involves leading the advisory team, overseeing client portfolios and driving business development. “With continuity ensured by the next generation,” she said, “1706 Advisors is a trusted partner for sustained, high-quality service.”

Her dad’s excitement was contagious Kahan was inspired to enter the financial services industry after watching her father come home each day excited about helping his clients. She said that during her years as a student at Wisconsin School of Business, “I fell in love with the risk and insurance classes, which gave me the background to enter the business. My personality profile fits perfectly to succeed in this business. Over the years, the industry’s dynamic nature, the opportunity to make a meaningful impact on clients’ lives and continuous learning have kept me engaged and motivated.”

her work is the opportunity to build long-term relationships with clients, solve complex financial challenges and see the positive impact of the firm’s advice on its clients’ lives.

“I am passionate about financial protection because I have seen firsthand the devastating impact that lack of protection can have on individuals and families. Ensuring financial security is crucial for peace of mind and long-term stability,” she said.

Success, one client at a time

This dedication to ensuring her clients’ financial security, combined with a laserlike focus on helping them solve complex financial challenges, has brought an important level of success to Kahan, who has been an MDRT member for more than 35 years. Under her leadership, 1706 Advisors has received many awards and accolades. Last year, for example, United Benefit Advisors honored the company as

the Fıeld A Visit With Agents of Change

Partner Firm of the Year, an award that recognizes excellence in employee benefits programs. She also received the 2023 Business Service Award from Business Intelligence Group.

So what does Kahan think are some of the factors that have contributed to her success?

“Some key reasons include a strong commitment to client service, continuous learning and adaptation, building a dedicated and skilled team, and maintaining high ethical standards. But what I learned is, growing my practice was done by serving one client at a time,” she said.

Advice to other financial professionals

With her achievements spanning several decades, Kahan offered some advice to financial professionals who are looking for ways to take their practices to the next level.

To new advisors, her advice is to focus on building trust with their clients and to always put clients’ needs first. For midlevel advisors who may not be doing as well professionally as they would like, she recommends that they reevaluate the strategies they are using, seek out mentors, try different marketing channels and stay resilient throughout whatever challenges they are going through.

“My advice is to believe in your abilities, seek out mentors, build a strong network and not be afraid to advocate for yourself and your career growth.”

And to female advisors who need some encouragement as they make their way to the top?

“My advice is to believe in your abilities, seek out mentors, build a strong network and not be afraid to advocate for yourself and your career growth,” she said. “We deserve a seat at the table, and that means knowing what table to sit at. Even when entering the room, I learned whether I had a chance to win. If not, it’s time to walk out and find another prospect who is interested. I have found that the professional service marketplace is open to those who assert themselves confidently and knowledgeably.”

When asked what advice she wished she had received when she first started in the business, Kahan said, “I wish I had received advice on thinking a bit bigger regarding client size,” she said. “If I had gone for the bigger fish constantly, I would have caught them. I would have focused on a specific silo instead of a more general client, stayed on course, and I believe I would have made more money. Honestly, I did well with my constant focus and vision of what I wanted to be and how I would get there.”

Taking time to relax

Kahan knows the importance of taking time away from serving her clients to

stop and “smell the roses.” She said that she spends “an enormous amount of time with my family and my grandson, walk and talk every morning with my husband and dogs, travel adventurously, and practice yoga and strength training.”

Because her company’s commitment to giving back to the community is an essential part of its ethos, Kahan said that 1706 Advisors supports various charitable organizations that align with its values.

“These include our personal churches and synagogues and children’s programs throughout the city, and occasionally we donate our time to a food kitchen,” she said.

Passing the torch

In a few years, Kahan will have even more time to relax, enjoy life and spend more time with family. She has recently taken some steps to start transitioning away from the business.

Two years ago, she decided to rebrand and step into an advisory role at the company, giving executive leadership positions to Cara and Alana.

“The rebranding and leadership transition were motivated by a strategic move to modernize our brand and ensure continuity in leadership,” Kahan said, in explaining her decision. “Stepping into an advisory role has allowed me to focus on strategic guidance while empowering my daughters to lead. It is a slow transition, with the focus on success, growth and big thinking.”

Two to five years from now, she said, she sees the company scaling through a sales team, implementing tight analytic controls to understand its key performance indicators and focusing on exceptional service. “As my role changes to spending time on our vision, messaging and high-level planning, we ensure a smooth transition and ongoing success for the firm,” she said.

Ayo Mseka has more than 30 years of experience reporting on the financial-services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@ INNfeedback.com.

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Early cancer screening benefits insurers, policyholders

Cancer is the leading cause of death for life insurance policyholders, with about 50% of death claims resulting from cancer. With that in mind, a health care company is teaming up with life insurers to help solve what it calls “a $201 billion problem in America” — late-stage cancer treatment.

Grail is a company on a mission to detect cancer early, when it can be cured. The company recently began trading on the Nasdaq Stock Market. Grail also is working with several major life insurers to offer its Galleri multicancer early detection test to their policyholders. Galleri is a first-of-its-kind test that uses a single blood draw to look for a signal shared by more than 50 types of cancer.

Grail has an exclusive distribution partnership with Munich Re to offer Galleri through its network of brokerage general agencies and independent marketing organizations.

Life insurers are offering the Galleri test to their policyholders outside a wellness platform. Nine insurers are currently offering it, and another six are expected to begin offering it before the end of the year.

$1.4T

US LIFE INSURANCE MARKET TO HIT $1.4T BY 2032

The U.S. life insurance market was valued at $765.38 billion in 2023 and is projected to reach $1.47 trillion by 2032, growing at a compound annual growth rate of 7.1% from 2024 to 2032. That’s according to a recent Allied Market Research report.

What’s behind this projected growth? The report cited innovation in the life insurance market, led by technological advances and consumer preferences. Insurers are now using technology to streamline underwriting processes digitally and offer personalized policy recommendations based on data analysis, aiming to improve efficiency and enhance the customer experience.

In addition, the growing focus on health and preventive care has resulted in the development of new types of life insurance

products, the report said. These innovative offerings provide financial security while encouraging policyholders to adopt healthier lifestyles , promoting overall well-being.

AIG DIRECT BECOMES COREBRIDGE DIRECT

Corebridge Financial took another step away from its AIG roots by rebranding its long-standing direct-to-consumer life insurance business from AIG Direct to Corebridge Direct.

In addition to the direct-to-consumer business, Corebridge Financial works with its distribution partner network of insurance agents and financial professionals to offer individuals a portfolio of life insurance products. Corebridge has approximately 4.2 million in-force policies in the U.S.

“We are proud to put the Corebridge name on this growing business, which is an important part of our broader life insurance strategy to help more people take action in protecting their family and their legacy,” said Tim Heslin, president of life insurance at Corebridge Financial.

NEW YORK REGULATORS SEEK CONTROL OF COLUMBIAN MUTUAL LIFE

New York State Department of Financial Services Superintendent Adrienne Harris has requested court permission to take control of Columbian Mutual Life. The state wants to place the company in rehabilitation, its parent company, Columbian Financial Group, announced. The company told its policyholders the move was prompted by the company’s financial condition.

Once the court signs an order placing Columbian Mutual in rehabilitation, the rehabilitator will review the company’s financial condition and, if possible, develop a plan to restore its financial health.

Columbian Mutual announced plans to lay off 26% of its workforce in New York, starting in early September, according to a notice filed with the state’s Department of Labor.

— Jamie Tucker, senior director for life insurance at Fitch

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The oldest of Gen Z turn 27 this year and are on the cusp of the average age when most Americans go through the major life changes that inspire them to seek coverage.

Life insurance must zoom at the speed of Gen Z

Generation Z has the greatest coverage gap. How can advisors help bridge this disconnect?

By Tim Heslin

Generation Z means business when it comes to financial planning.

Corebridge Financial research finds 73% of this age group reports they begin to “get serious” about their finances between the ages of 18 and 25.

At the same time, in its 2024 Insurance Barometer Study, LIMRA pegged Gen Z as having the highest life insurance need, with the largest gap between self-identified need and coverage owned.

How can insurance agents and financial professionals help bridge this disconnect? How can our industry help this financially precocious generation understand that life insurance is a critical component of serious financial planning?

The short answer is that we must move at the speed of Gen Z.

This generation has lived their entire lives in an internet-enabled world. Since they were kids, Gen Zers have been able to source product information on demand and purchase almost anything within minutes.

As a result, we must make the life insurance process simpler, quicker, more flexible and more contemporary. We also must tailor our approach to meet Gen Zers where they want to be met. Finally, our industry can help this generation take action to safeguard their future.

Gen Z entering their adult era

At first glance, with an age range starting at only 12, Gen Z might seem like an unusual cohort to be named a key generation for closing the life insurance coverage gap.

The oldest members, however, turn 27 this year and are on the cusp of the average age when most Americans go through the major life changes that inspire them to seek coverage. Over the next five years, increasing numbers of Gen Zers will get married, start families or purchase a home. As an example, one real estate company’s analysis of U.S. Census Bureau data finds 28% of 24-year-old zoomers were already homeowners in 2023, as were 30% of 26-year-old zoomers.

The magnitude of these life milestones appears to be having an impact across Gen Z, with LIMRA finding that nearly half (49%) of Americans between 18 and 26 say they either need to purchase new life insurance coverage or need to increase their existing coverage.

In other words, if it’s not already, life

insurance will soon become a pressing financial need for this age group. This demographic trend is one to get ahead of — instead of falling behind.

Make the case for buying life insurance young

Though Gen Z appears broadly aware of the importance of life insurance, they might remain undereducated on the benefits of securing coverage at an early age. In LIMRA’s polling, 37% of Gen Z respondents said they haven’t purchased life insurance because it is too expensive, and 30% said that they have other financial priorities. Perhaps most tellingly, 37% “just haven’t gotten around to it.”

Gen Z knows that life insurance is important; they just don’t consider it a current priority. And like many Americans, they considerably overestimate how much it will cost.

This is all vital information for agents and financial professionals.

Although a healthy 25-year-old with no dependents might not need life insurance right now, an agent can help them understand that they might need it soon, with protection playing an important part in a broader financial plan. Additionally, if they are able to buy life insurance when they are young and healthy, a Gen Zer can lock in lower rates that could ultimately

save thousands of dollars in premiums.

When talking to Gen Z clients and prospects, ask them questions that can help them identify whether they are in this favorable zone to purchase coverage, or whether they should perhaps revisit the conversation in a few years. Consider getting personal with your clients to get them thinking about why protection might need to be part of their financial plan. Ask them:

» Are there people in your life who rely on you financially?

» Do you have parents or older relatives who might need help financially as they age if you’re not there?

» Do you share household expenses with a romantic partner?

» When could you see yourself becoming a parent?

» Are you currently or do you plan to become a homeowner?

When speaking to Gen Z clients, you are talking to young adults who may be stepping into significant financial responsibilities, perhaps for the first time.

Keep in mind that Gen Zers might be hyperfocused on their monthly budgets and looking for ways to save money rather than spend money. After reminding them that life insurance can be less expensive than they might expect, try to make a more personal, emotional connection around the importance of coverage.

If they’re getting married, having children or buying a home — either now or plan to in a few years — then protection needs to be part of their financial plan, but you might have to explain why.

Hang out where Gen Z is already tuning in

To get Gen Z clients in the door for these real-world conversations, consider beginning outreach and engagement online. According to a 2023 survey conducted for Forbes, 79% of young people said they sought financial tips and guidance from social media, and 33% did the same with internet searches.

When it comes to social media, remember that Gen Z grew up in the age

of the influencer. They are interested in real-world examples of people using products and applying what they see online to their own life. Consider using social media or blog posts to reach Gen Z clients where they already are consuming financial information.

If you have a particularly enthusiastic Gen Z client, consider encouraging them to talk — or even post — about their experience working with you to get coverage. They can act as a sort of micro-influencer to help their friends see the value of life insurance and your expertise.

These techniques can be helpful across all age groups when you’re looking for prospects and interacting with clients. However, they are especially important when you want to connect with Gen Z.

many Zoomers, who are used to filling out forms online, handling this step at any hour in any location will be the preferred way to go. Others will want to sit with an agent and walk through the application while receiving professional guidance.

With increased digitalization and automation, agents and other financial professionals have the opportunity to highlight just how quick the process can be with these recent advances.

Agents can meet Gen Z’s need for speed by working with insurers that have developed end-to-end platforms that decrease the time to issue. In some instances, clients using these tools can find out the status of their application within minutes of completion.

Zoomers have spent their whole lives

Life comes at you fast ...

Generation Z’s concern about their financial situation has increased by 8 percentage points over the past two years. As the oldest members of Gen Z approach 30, marriage and children become realities — along with a great need for protection products such as life insurance.

Source: 2024 Insurance Barometer Study

Offer access to digital tools

Our industry has made significant advances over the last few years to make the process for getting life insurance much closer to the online experience Gen Z expects for their everyday shopping. Some life insurance digital platforms have enough flexibility built in so agents and financial professionals can work alongside their clients.

When speaking with Gen Z clients, reassuring them that they will have the ability to apply through an online portal can go a long way in helping them move from simply interested in life insurance to taking action with an application.

Another helpful step is highlighting that some digital platforms feature a self-completed health questionnaire. For

being able to make major decisions with just a few clicks. Now, as the oldest cohort of Gen Z becomes homeowners, enters committed relationships and thinks about building families, let’s use this Life Insurance Awareness Month to get them to start thinking about protection as an essential component of a financial plan.

Over the next decade, Gen Z will age from a tertiary target to the primary base of your life insurance business. Taking steps to reach them today can help future-proof your practice for tomorrow.

Tim Heslin is president of life insurance, Corebridge Financial. Contact him at tim.heslin@innfeedback.com.

ANNUITY WIRES

First-half annuity sales set yet another record

Annuity sellers continue to find an enthusiastic market for all products.

In the second quarter, total annuity sales increased 25% over Q2 2023 to $108.5 billion. It is the second-highest quarterly total ever recorded, just shy of the quarterly sales record set in fourth quarter 2023, LIMRA said in a news release.

Fixed indexed annuity sales led the way, totaling $29.7 billion, 17% higher than prior year. Year to date, FIA sales were $58.3 billion, up 20% year over year.

For the fifth consecutive quarter, registered index-linked annuities saw record quarterly sales. In the second quarter of 2024, RILA sales were $16.2 billion, 42% higher than the prior year. In the first half of 2024, RILA sales jumped 41% to $30.7 billion.

“This time last year, LIMRA reported a record-shattering second quarter and first half of the year. Those results wane in comparison to this year’s results,” said Bryan Hodgens, senior vice president and head of LIMRA research.

SEC REVAMPS TAILORED RILA DISCLOSURE RULES

New rules from the Securities and Exchange Commission might help registered index-linked annuities become even more popular. The SEC adopted tailored disclosure requirements and offering processes for RILAs and registered market value adjustment annuities.

RILAs must now use the same Form N-4 that variable annuities use, with

the intent of making the registration process more transparent, accessible and efficient. The annuity market was already experiencing record-high sales, but this new ruling could see that growth climb even higher in the months ahead.

Previously, RILAs and “other innovative, new insured retirement products” had to be registered with the SEC using forms that were tailored for equity offers.

This meant the forms required a lot of information that was irrelevant to prospective annuity buyers, and required insurers to prepare financial disclosures in accordance with generally accepted accounting principles, which they otherwise may not have had to.

QUOTABLE

The department continues to believe that this rule is essential to ensuring that retirement investors are protected.

MIDLAND NATIONAL AND THE INDEX STANDARD PARTNER ON DATA SOLUTIONS

Midland National Life Insurance Co. is partnering with The Index Standard to develop data and analytics solutions for index-linked products.

With the program, financial professionals will have access to an exclusive set of index-linked strategy model allocations for RetireVantage 10 Fixed Index Annuity and MNL IndexBuilder 10 FIA, two Midland National products.

THE MARKET

Apollo Global Management, parent of Athene Life & Annuity, wrote 10.3% of all annuity premium in 2023, more than $36 billion total, according to the National Association of Insurance Commissioners.

The NAIC’s Life/Fraternal Market Share report contains cumulative market share data for life insurance, annuity considerations, and an aggregate total of life insurance, annuity considerations and accident/health insurance.

The top 10 annuity sellers control 52.2% of the market, the report found. MassMutual and American International Group finished second and third, respectively, with the top three annuity sellers accounting for nearly a quarter of all sales.

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1 A.M. Best “B++” (Good) rating as of August 18, 2012. A.M. Best has 13 active-company insurance company ratings and reflect the current and independent opinion of a company’s ability to meet its obligations to policyholders, and are derived by evaluating a company’s balance sheet strength, operating performance and business profile. A “B++” rating is the fifth highest of the active-company ratings. The A.M. Best rating scale is A++ (Superior), A+ (Superior), A (Excellent), A- (Excellent), B++ (Good), B+ (Good), B (Fair), B- (Fair), C++ (Marginal), C+ (Marginal), C (Weak), C- (Weak) and D (Poor). A.M. Best’s ratings are not a warranty of an insurer’s current or future ability to meet obligations to policyholders, nor are they a recommendation of a specific policy, contract, rate or claim practice.

2 Fitch Ratings (Fitch) “A-“ (High) rating as of March 6, 2024. All Fitch credit ratings are subject to certain limitations and disclaimers. Please read these limitations and disclaimers by following this link: https://www.fitchratings.com/understandingcreditratings. In addition, the following https://www.fitchratings.com/rating-definitions-document details Fitch’s rating definitions for each rating scale and rating categories, including definitions relating to default.

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Annuities gain traction with middle-market consumers

Middle-income Americans recognize they need products to help them navigate longevity and market risks in retirement.

By Susan Rupe

Middle-income Americans will have a more difficult time managing their longevity risk in retirement now that fewer of them have defined benefit plans. Making matters more complicated is that many of these middle-market investors may have saved thousands of dollars throughout their careers in their employer-sponsored defined contribution plans but may not know how they can be certain their money lasts throughout the retirement.

LIMRA’s Retirement Investor Study, published earlier this year, examined middle-income investors’ views of their retirement risks and where annuities might ease those risks.

The research suggests middle-market Americans are aware of their longevity and volatility risks and are increasingly interested in creating a guaranteed income stream to cover basic living expenses. In general, less than half (47%) of today’s working adults (ages 50-75) believe they will be able to cover basic living expenses in retirement with guaranteed income sources. This represents an 11 percentage-point drop from 2017.

Researchers defined middle-market Americans as those with annual household incomes between $50,000 and $149,900. They found that interest in annuities — both retail and in-plan — is growing in this income bracket.

What’s driving that increased interest? LIMRA’s research found:

» Over the past few decades with the decline in pensions, the longevity risk has shifted from the employer to the worker. In 2023, just 15% of private-sector

workers had access to a pension — meaning far fewer have that as a source of guaranteed lifetime income in retirement than in the past.

» Less than half (45%) of middle-market Americans are confident they will not run out of money should they live beyond age 90.

» Equity market volatility has been elevated since the pandemic. Although the markets have grown overall, it has not been without frequent and significant swings. This is causing concern among consumers who have their retirement savings invested in the equities markets, which many do through their defined contribution plans.

» Eighty-eight percent of middle-market Americans say having guaranteed lifetime income gives people peace of mind in retirement.

» Half of middle-market consumers surveyed said they would be interested in converting a portion of their retirement savings into an annuity.

Keith Golembiewski, head of LIMRA annuity research, told InsuranceNewsNet three themes came out of the research.

“The first is loss of DB plans or pension plans,” he said. “If you look over the past decade, the longevity risk has shifted from

employers to employees. With only about 15% of private-sector workers having access to a pension in 2023, that means 85% no longer have that DB product.”

The second theme, he said, is market volatility, especially since the COVID-19 pandemic.

“We have equity market volatility, we have a lot of unknowns around consumer confidence, a lot of ups and downs around the job market, depending on what data you look at. And on top of that we have inflation. When you look at all those things, you see that volatility puts more pressure on middle-market Americans and is driving the interest toward some of the downside protection products out there.”

Golembiewski pointed to record-setting annuity sales over the past two years as proof that consumers “want to protect those assets they have been building.” LIMRA reported annuity sales in the first half of 2024 hit $215.2 billion, a 19% jump from prior-year results. That came on the heels of record-setting sales for the first half of 2023.

Longevity is the third theme emerging from the research, he said.

“It’s the unknown about how long you will live. The middle market is worried about running out of money, and I believe it really ties into longevity concerns.”

The research showed many middle-market consumers lack confidence in making sure their retirement savings last

throughout their lifetimes. Golembiewski said many in this income bracket “don’t understand or don’t have the toolkit to figure out what they have to do to keep from running out of money. How much can they spend to make sure they don’t outlive their assets? Guaranteed income definitely fits into that concern and can help provide the income and protection middle-market consumers are looking for.”

Advisors can take advantage of what Golembiewski called “the excitement around annuities” to serve middle-market consumers.

“Consumers are in the middle of a transition,” he said. “And this transition will be massive, especially when you think about our population reaching Peak 65. But it’s also a transition around asset accumulation. And there’s a major problem around people not knowing how much they can spend safely in retirement.”

Golembiewski said consumers need help from advisors in figuring out the best way to move from asset accumulation to decumulation.

Consumers are in the middle of a transition. And this transition will be massive, especially when you think about our population reaching Peak 65. But it’s also a transition around asset accumulation.

— Keith Golembiewski, head of LIMRA annuity research

“When we look at our data that says more than half of middle-market preretirees said they are interested in converting a portion of the assets they have been accumulating into an annuity, I think that shows a strong interest in people needing a professional to provide advice and guidance to them.”

Most Americans know they need to save for retirement, and many middle-market workers have been diligent about doing so. But Golembiewski said individuals in this sector realize “they can’t do it alone” in planning for how to protect those retirement savings.

“You see people become frugal and not

living their best lives because of all the unknowns about what to do with the assets they have been building. I think our research shows the need for predictability, for guarantees and for protection of those assets.”

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.

HEALTH/BENEFITSWIRES

How ACA, Medicaid impacted cancer costs

Low-income Americans ages 18 to 64 with cancer saved about $1,250 per year on treatment within seven years of the 2014 rollout of the Affordable Care Act, according to University of Houston research. Those patients were enrolled in Medicaid.

But adults under 65 with at least $51,000 in annual income — and private health insurance coverage — saw their costs increase by $3,100 per year during the same period. And that increase magnified the financial havoc cancer can cause.

Treatment costs for the more than 16 million Americans who were 18 to 64 and had cancer from 2011 to 2020 varied based on their income. For those eligible for Medicaid, spending fell by about 31% from an average of $4,000 annually in 2014 to $2,750 in 2020.

Cancer patients with at least $51,040 in annual income spent an average of $13,000 annually on health care costs before the ACA’s implementation. Their costs increased by 24%, an average of $3,120, by 2020.

1.6M CAN’T AFFORD COVERAGE WHERE MEDICAID WASN’T EXPANDED

Nearly 1 of every 5 uninsured working-age adults across the 10 states that have not expanded Medicaid under the Affordable Care Act are, according to a new analysis, stuck in a health care limbo known as a “coverage gap.” That means they earn too much money to receive Medicaid but not enough to qualify for financial help to purchase their own plan on the marketplace. That’s according to the Center on Budget and Policy Priorities.

The analysis also found that more than 60% of those who fall into this gap are people of color: Latino people account for 35%, Black residents account for 24%, and Asian people account for 2%.

The Affordable Care Act allowed states to expand Medicaid to cover people earning up to 138% of the federal poverty level. The costs of insuring more people would be paid for primarily with federal funds and a smaller state match. People who earned more than that could receive tax credits to subsidize health insurance costs. But in the states that didn’t expand, many people with low incomes were left without affordable options.

CMS PULLS PLUG ON UNAUTHORIZED SWITCHES

The Centers for Medicare & Medicaid Services implemented measures aimed at preventing unauthorized changes in consumers’ ACA marketplace enrollments by agents and brokers. CMS will enforce the following key updates:

1. Association requirement: Agents and brokers must be directly associated with a consumer’s enrollment to make any changes. This existing enrollment association must be verified and documented to ensure legitimacy and transparency.

2. Three-way call requirement: New agents and brokers must conduct a threeway call with the consumer and the Marketplace Call Center. Alternatively, they can direct consumers to make changes themselves via HealthCare.gov or through approved partners. This step is crucial in maintaining consumer control over their enrollment information and preventing unauthorized changes.

3. Ongoing monitoring: CMS will continuously monitor for any malicious activity by agents or brokers on the

QUOTABLE

When health care costs rise, it’s more difficult to afford basic necessities.

— Gretchen Jacobson, vice president of the Medicare program

marketplace. The agency is committed to taking additional appropriate actions against those found engaging in misconduct to maintain the highest standards of ethical behavior.

UNINSURED RATE AMONG BLACK AMERICANS CUT NEARLY IN HALF

The uninsured rate among Black Americans under age 65 lowered by nearly half between 2010 and 2022, dropping from 20.9% to 10.8%, the U.S. Department of Health and Human Services reported. This decline in the uninsured rate was driven by increases across all sources of coverage: employment-based, marketplace plans and Medicaid.

In addition, the coverage gap between Black and white Americans closed by nearly half during that time, HHS said. In 2010, the uninsured rate for Black Americans was nearly 8 percentage points higher than the rate for white Americans. By 2022, the gap was down to 4 percentage points.

One factor impacting the higher rates of coverage by Black Americans is enhanced tax credits for buying health insurance through the Affordable Care Act marketplaces. The American Rescue Plan and the Inflation Reduction Act significantly expanded and enhanced these tax credits. The result was a 95% increase in marketplace enrollment among Black Americans from 2020 to 2023, with 1.7 million Black Americans enrolled in marketplace coverage in 2023.

at the Commonwealth Fund

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Steps to achieve a sound voluntary benefits program

Factors to consider in determining whether a benefits program meets the needs of employees.

By John Thornton

For plan sponsors, offering voluntary benefits is no longer optional. Voluntary benefits are expected by employees across all generations, who weigh them heavily in their decision to join or stay with an organization.

According to the PwC 2023 Employee Financial Wellness Survey, 73% of financially stressed employees say they would be attracted to another employer that cares more about their financial well-being. This finding is consistent with the Marsh McLennan Agency’s “2024 Employee Health & Benefits Trend Report — The Evolving Workplace,” which reported employees say better benefits are the No. 2 reason for switching jobs, after better pay.

Although many employers, unions and associations do offer voluntary benefits, few have taken essential steps to ensure that their voluntary benefits program is sound and meets the needs of their employees or members. When developing a voluntary benefits program, it

is important to understand the overall marketplace, related challenges, how to determine the benefits to offer, how best to communicate and educate employees regarding these benefits, and how to leverage the experience of benefit advisors and carriers.

Today’s voluntary benefits market

There are several factors driving the voluntary benefits market.

» The correlation between voluntary benefits and attracting and retaining employees, with 46% of workers actively considering a job change in 2024 for better benefits (according to Gallagher’s 2024 Wellbeing and Voluntary Benefits Survey).

» The increasing focus on whole-person well-being and the heightened role of voluntary benefits in employees’ well-being.

» The high cost of living, inflation and economic uncertainty.

» Rising out-of-pocket costs and deductibles associated with health care services and prescription drugs.

» The benefits gap — employer-paid benefits do not meet all of an employee’s needs.

Communications, education and challenges

Each of these drivers has caused many plan sponsors to rethink their voluntary benefits programs. In doing so, they need to overcome certain challenges.

First are the costs and time investment employers incur to implement a voluntary program. Further, a company must develop a well-thought-out communication strategy for its voluntary benefits program (i.e., developing employee portal/website content, developing a mobile app and printing literature). This can be quite extensive given the wide range of voluntary benefits available. Language is also a consideration, with many organizations required to offer information in multiple languages due to their multicultural workforces.

Financial literacy also poses a challenge, requiring a concerted effort to educate employees on the role of each voluntary benefit and the coverage or services provided. This could entail hosting educational seminars or webinars and lining up product specialists to present the

benefits and answer questions. Education is an ongoing process that should be conducted year-round and not solely before or during benefit enrollment periods. When building a sound voluntary benefits program that incorporates effective communications and education, plan sponsors should proceed in a disciplined manner, following certain steps that involve their human resources team as well as their insurance broker and carrier.

Know what employees or members want

Developing a strong voluntary benefits program begins with a survey of employees or members to determine what they seek. The goal of the survey is to capture data on key criteria that will be instrumental in building the program. This includes:

» Individuals’ age, gender, marital and parental status, other dependents (e.g., aging parents), medical condition(s), and special needs

» Level of understanding regarding various benefits

» Preferences relating to benefit communications (i.e., formal in-person or phone calls, or informal via email or text messages, or video calls, etc.)

» Physical and mental health concerns

» Financial concerns

» Which voluntary benefits matter most to them

Once this data is collected and organized, it is advisable to enlist an experienced benefits advisor with deep knowledge of the voluntary benefits market and current trends, and relationships with high-quality carriers offering a suite of voluntary products at competitive prices. Keep in mind that it is best to offer a broad selection of voluntary benefits, which a Corestream survey found 7 out of 10 employees wanted. Additionally, make sure that there is full leadership buy-in for the enhanced voluntary benefits program, which can promote better employee engagement.

Partnering with an experienced benefits advisor

It is a good idea for an organization’s leaders to conduct their own research to learn more about what voluntary benefits are available, and what their features and related costs are. It is also wise to partner with an experienced benefits advisor and

has been rolled out — backed by effective communications, education and benefit technologies — benefits advisors along with carriers can provide support in how best to benchmark which benefits have been purchased by employees and their usage trends. This information can be helpful in consolidating benefits,

Nontraditional benefits more important to younger workers

% of workers who rated nontraditional benefits very/extremely important by generation

edge regarding these benefits and plan design trends, particularly within certain industries. Voluntary benefits advisors can help with a comparative analysis between products offered and make recommendations regarding carriers whose product portfolios align with an organization’s needs. They can assist in developing a program that best serves each employee demographic group.

Additionally, benefits advisors can provide guidance regarding digital benefit technologies such as mobile applications and employee/member portals that facilitate plan member communications, education and claims filing. It is recommended that plan sponsors consider using a single platform for the administration of their voluntary programs. The right platforms are driven by artificial intelligence and offer user-friendly features, automated billing and adaptable communications. After a voluntary benefits program

if necessary. Regular communications with employees or members to gauge whether they believe their voluntary benefits are meeting their needs, and that communications and education are adequate, are also valuable.

As the focus on voluntary benefits continues to grow, employers, unions and associations offering these programs must recognize their importance to their employees or members. It is not enough to offer a perfunctory voluntary program. Program sponsors must be thoughtful and strategic when assessing and developing their voluntary offerings. Experienced advisors and carriers can provide strategic guidance for the optimum program.

John Thornton is executive vice president, sales and marketing, with Amalgamated Life, White Plains, N.Y. Contact him at john. thornton@innfeedback.com.

Source: 2024 Employee Health & Benefits Trends: The evolving workforce

Advisor optimism around inflation is slipping

Half of registered investment advisors believe that stock market volatility will be higher over the next 12 months than it was in 2023, according to Security Benefit’s economic outlook index. What’s behind this slipping optimism?

Four in 10 advisors noted being extremely or very concerned about inflation and international conflicts negatively impacting the equity markets. Eighty percent of RIAs reported that their clients are concerned that the political environment over the next 12 months will impact their investments.

Additionally, 32% of advisors expect the political climate to have a negative impact on the investment climate, though, in contrast, 1 in 6 (15%) expect it to have a positive impact.

Surprising reasons Americans are pushing back on retirement

More Americans are postponing or giving up the dream of spending their post-working years on the golf course or the beach. More than half (51%) of pre-retirees over 50 and retired Americans are considering delaying or coming out of retirement, F&G’s Retirement Reconsidered survey revealed.

Half (49%) of pre-retirees over 50 who either are considering pushing or have pushed their retirement back are doing so because of inflation worries. Meanwhile, 44% of retirees and those who have considered rejoining the workforce cite inflation as a reason.

But financial concerns aren’t the only reason retirees are considering rejoining the workforce. A third of people (33%) who either are considering pushing or have pushed back their retirement say they are doing so because they love what they do for work. The same percentage enjoy the intellectual challenge and stimulation of working.

The latest trend: ‘Loud budgeting’ blows up

Leave it to Generation Z and TikTok to come up with one of the biggest financial trends, “loud budgeting.” Loud budgeting encourages people to be open and honest about their finances, said Shaping Wealth CEO Brian Portnoy.

Integrity Marketing Group expands into wealth management

Integrity Marketing Group has expanded into the wealth management realm with the launch of its wealth management division, Integrity Wealth. Craig Walling, a financial industry veteran with more than 30 years of experience, was named Integrity Wealth’s president.

With more than $46 billion in assets under management and advisement and an extensive network of wealth advisors across all 50 states, Integrity Wealth brings together Integrity’s wealth-focused partner firms to work more comprehensively with the company’s life and health divisions. The goal is to deliver holistic life, health and wealth solutions to millions of American consumers throughout their lifetime, said Bryan W. Adams, Integrity CEO.

Integrity Wealth “is the third leg of the stool, so to speak,” Adams said. Along with Integrity’s other two pillars of life and health, the firm now gives agents and advisors the ability to access more extensive products and planning solutions.

The apples don’t fall far 1 in 5 affluent investors use the same advisors as their parents.

Source: Cerulli Edge

Talking about money is often regarded as taboo, and loud budgeting sets that taboo on its ear, Portnoy said. He sees loud budgeting as “an exercise in bravery,” especially as finances are the top source of stress for Americans. He believes that the trend clarifies people’s thinking about their spending and the financial goals they want to achieve.

Loud budgeting is stating your financial goal publicly and then discussing how you designed a disciplined financial plan to reach that goal, he said.

Craig Walling was named Integrity Wealth’s president

Why advisors should discuss funeral preplanning with clients

Addressing this issue can close a gap in end-of-life planning. • Damon Wenig

In the realm of financial advising, discussions often revolve around retirement savings, investment strategies and estate planning. However, there’s one critical aspect of advising that frequently goes overlooked: funeral preplanning.

Addressing funeral arrangements with clients can play a pivotal role in ensuring peace of mind and financial security for their loved ones. By incorporating funeral preplanning into your advisory services, you not only help clients manage their end-of-life expenses more effectively but also provide them with a means to ease the emotional and financial burden on their families during a challenging time.

Understanding funeral preplanning and its importance

Funeral preplanning is the process of making one’s funeral arrangements in advance. This may involve selecting the type of services, choosing a funeral home and specifying other details related to the funeral and burial. However, the key aspect of funeral preplanning is setting aside funds to cover related expenses.

Who needs funeral preplanning?

Simply put, everyone. Regardless of age or health status, taking the time to make these arrangements can benefit anyone. Funeral planning ensures that one’s wishes are respected and relieves family members of the financial and emotional burden during an already difficult time.

By preplanning for their funeral, individuals can ensure that funds are available to cover these expenses. This foresight allows families to focus on mourning and celebrating the life of their loved one instead of worrying about how to pay for the funeral.

Why people preplan their funerals

1. Relieve family burden: Preplanning allows individuals to make critical decisions now, sparing their loved ones from having to make difficult choices during an already emotional time. By handling these arrangements in advance, clients can budget now and spend later, ensuring financial preparedness.

2. Peace of mind: Knowing that all funeral arrangements are taken care of provides peace of mind for both the individual and their family. Loved ones can focus on grieving and supporting each other, instead of worrying about funeral logistics and expenses.

3. Immediate access to funds: Preplanning ensures that liquid funds are available immediately at the time of death. This eliminates the financial stress and urgency that can arise when paying for funeral expenses out of pocket.

4. Medicaid asset exemption: When properly structured, certain funeral products are considered exempt assets for Medicaid purposes. This allows individuals looking to qualify for Medicaid benefits to protect a portion of their resources for funeral expenses.

5. Positive grieving experience: With all arrangements made in advance, loved ones can have a more positive grieving experience. They can honor the deceased’s wishes without the

added pressure of making quick decisions during a time of loss.

3 essential funeral planning products

Before advising clients on funeral preplanning, it’s crucial to understand the financial tools available. Three common products to ease this burden on clients and their loved ones are final expense insurance, funeral expense trusts and preneed insurance. Each serves a distinct purpose and offers unique benefits, and understanding their differences can help you advise each client on which product is most appropriate for them.

Final expense insurance

Final expense insurance is a whole life product designed to cover end-of-life costs such as funeral expenses, medical bills and legal fees. With face values typically ranging from $5,000 to $25,000, these policies are more affordable than other whole life insurance options. They usually require only a short health questionnaire, making them easier to qualify for than traditional life insurance. Premiums vary based on factors like policy size, age, health and payment frequency but remain fixed throughout the policyholder’s lifetime.

Upon the insured’s death, beneficiaries receive the payout directly. The payout can be used for any purpose, providing flexibility and peace of mind. However, final expense insurance is considered an asset, which may impact Medicaid eligibility.

Funeral expense trusts

A funeral expense trust is a guaranteed issue, whole life insurance policy where funds are assigned to a funeral trust managed by the insurance company. These funds, irrevocably assigned to the trust, are not countable assets for Medicaid eligibility. Funded by lumpsum or periodic payments, policy values typically range from $2,500 to $20,000. The insurance company maintains the trust at no cost to the policyholder and pays the funeral home upon the policyholder’s death, with any remaining funds reverting to the insured’s estate.

An FET offers control, allowing policyholders to choose a funeral home and services later, and protects funds from creditors, ensuring they are preserved solely for funeral expenses.

Preneed insurance

Preneed insurance is similar to an FET, but it names the selected funeral home as the beneficiary at the time of policy issuance, linking the policy to a specific provider ahead of death. Policyholders work directly with the funeral provider to plan the details of the funeral, including estimates of services and merchandise, though these prices may change. Preneed insurance offers peace of mind, knowing arrangements are made and paid for in advance.

Unlike FETs, preneed policies are tied to specific funeral services and products, with payouts going directly to the funeral home. These contracts often have higher insurability maximums — typically up to $35,000 — and, when properly structured, are exempt from Medicaid.

Choosing the right funeral product

Ultimately, the right option depends on your client’s specific needs and financial goals. Understanding the strengths and features of each product allows for the best customization, ensuring the right needs are met for each client’s unique situation. This knowledge will help you guide your clients to make informed decisions that align with their and their families’ needs, ensuring peace of mind during a challenging time.

The advisor’s vital role in discussing funeral planning

When considering funeral preplanning options for your clients, it’s crucial to

recognize why you, as their trusted advisor, are the right person to provide these products. Clients are seeking your guidance for their end-of-life planning needs. Your established, trusted relationship with clients allows you to offer comprehensive advice tailored to their specific needs, as well as the funeral provider of choice. In addition to safeguarding their financial interests, you also offer a level of objectivity regarding your recommendations.

When initiating conversations about funeral planning, approach the topic gently by emphasizing the importance of alleviating the burden on loved ones. Encourage open dialogue by discussing the peace of mind and flexibility that funeral preplanning offers. Highlight how prearranged funeral plans give clients control over their arrangements, ensuring that their wishes are honored.

Communicating the value of funeral preplanning involves breaking down its benefits into simple terms. Emphasize how it provides peace of mind, immediate liquidity of funds and Medicaid compliance for certain products. Illustrate how preplanning offers clients autonomy and freedom of choice and describe the simplicity of the application and claim processes that makes funds easily accessible. By presenting these points clearly, you can help clients appreciate the significance of preplanning and the positive impact it can have on them and their loved ones.

Funeral preplanning is a crucial step in ensuring your clients’ final wishes are honored while providing significant benefits to their loved ones. It relieves emotional and financial stress, guarantees the availability of funds and offers peace of mind. Encouraging clients to pre-plan their funerals is a compassionate and practical way to support them in preparing for the inevitable, ensuring that their families are cared for when they need it most.

Damon Wenig, MBA, CFSP, is a licensed funeral director and national FET and preneed director at Krause Financial, DePere, Wis. Contact him at damon. wenig@innfeedback.com.

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the Know In-depth discussions with industry experts

The human side of retirement: Moving beyond the numbers

The industry must do a better job of preparing consumers for the nonfinancial aspects of retirement.

By Susan Rupe

The financial services industry has made a major effort to help Americans plan for a financially secure retirement. But the industry must do more to help Americans plan for how they will live out their nonworking years, according to a former MetLife vice president and longtime industry observer.

Joe Jordan is an industry speaker and author of Living a Life of Significance. He has traveled the globe, delivering the message of purpose-driven financial planning. He told InsuranceNewsNet that although the industry has focused its efforts on getting Americans to save more for retirement, saving enough money is only part of a retirement plan.

centered planning. “It’s the idea of what are you going to do after you retire,” he said.

When pensions once ruled

During the decades when defined benefit pensions ruled the retirement landscape, “corporations told their people, ‘You work your butt off and then when you retire, it’s going to be beautiful,’” Jordan said.

“But it’s not beautiful,” he said. “People aren’t meant to not do anything in retirement. But that was always the fantasy in our business. We thought all we had to do was make someone financially secure and then we’re good.”

Jordan said some who study the behavior of older Americans began to realize that people lose a lot when they retire.

a change in them since they exited the workforce.

“Some of them are always aggravated, they’re always angry about something. It’s the stereotype of the old man yelling, ‘Get off my lawn,’” he said. “Some of them are angry about stuff that happened eight, nine years ago.”

Observing his peers adjust to life in retirement inspired Jordan to consider how the industry must not only make retirees financially secure but help them recognize “that they have to do something other than just be retired.”

“Everybody knows that people are living longer, and that people need to save more money to fund a longer retirement,” he said. “But what has been minimized in our business is the emotional aspect of retirement planning.”

Jordan promotes the concept of life-

“They lose their routine, they lose their identity, they lose relationships, they lose purpose, and they lose power.”

People change in retirement

Jordan is 72 years old and said most of his counterparts are retired and he sees

Jordan quoted a 2020 report by McKinsey & Co., “Predicting What Wealth Management Will Look Like in North America,” that said, “In the next 10 years, advisors will gradually shed their role as investment managers and become more like integrated life/wealth coaches.”

“I began to realize that we’ve put so much emphasis on being analytical and dealing with numbers,” he said. “To me, it’s not a story about numbers. It’s the number of stories.”

Jordan said that realization led him to

Jordan

believe that the industry “must become more human to counter what’s coming at us from a technological point of view.”

“Richard Thaler, winner of the Nobel Prize in economics, said people don’t use logic when they make financial decisions,” he said. “The industry must do more to bring the right brain, the emotional brain, into the loop because that’s where decisions are made.”

Beyond numbers to the human side

Retirement planning must “go beyond solving the numbers problem,” Jordan said, and look at what he called “the human side” of retirement.

He pointed to the Japanese island of Okinawa, famous for being one of the Blue Zones, places in which people live longer due to strong family ties, a healthy diet, regular exercise and a sense of purpose.

The Okinawans have a sense of purpose called ikigai. The concept of ikigai “is a great way for people to discern what they are going to do with their lives,” Jordan said.

“It’s asking the questions: What do you love? What are you good at? What can you be paid for? What does the world need? And then from there, you continue through these decision processes to determine your purpose.”

Most people want to live long and productive lives, Jordan said, but must determine what they will do throughout all the stages of their lives. This is where the industry can help give them direction.

“That’s the thing that I see we need to do: go beyond the numbers and be able to get people to think about what they’re

Retirees of modest means are often happier in retirement than those who squirreled away millions of dollars over their lifetimes.

going to do. What are they going to do with the money they saved? How are they going to think through their retirement? And when people can answer these questions, it will extend their lives.”

People don’t know what they want

The industry must focus less on asking people about their financial goals in retirement, Jordan said, as most people can’t answer the question.

“Too often we take a left-brain, analytical approach to planning,” he said. “We talk about numbers and we talk about product but we’re not really talking to people. We ask people what their financial goals are and, too often, they have no idea.”

Instead, Jordan said, advisors must ask clients, “What do you want to do in retirement? Do you really want to be rich? Or would you rather have a guarantee that you’ll never be poor? And that really stimulates people to think. It creates more of a connection.”

The industry has come a long way in creating products and services to help people save for retirement and create streams of income after their days of collecting a paycheck from their employer are over, Jordan said. But the industry must go a step beyond explaining these products to consumers.

“It’s the idea of presenting these products and explaining them but then also asking clients what they are going to do when they retire,” he said.

Retirees of modest means are often happier in retirement than those who squirreled away millions of dollars over their lifetimes, Jordan said.

“Some people who have all the money and all the other stuff are absolutely miserable in retirement,” he said. “The ones who are happy are the ones who are connecting with others. It’s other people who give our lives meaning and purpose by providing community connection — it’s as simple as that.”

The industry must move toward making more human connections, Jordan said. He reflected on his lengthy career in the business.

“When I started in the business, it was all about making package sales, then it moved toward planning,” he said. “I think the next phase will be creating relationships with people.”

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.

Applying customer centricity to help close the life insurance gap

Closing the life insurance need gap is a challenge as well as an opportunity.

By Lai-Sahn Hackett

The life insurance “need gap” — the difference between the amount of life insurance coverage people have and the amount they actually need — continues to be a challenge for our industry. The 2024 “Insurance Barometer Study,” a collaboration between LIMRA and Life Happens, shows that 42% of Americans say they need (or need more) life insurance coverage. This percentage represents an estimated 102 million adults.

The question remains: Why does the life insurance need gap persist, and what can we do about it?

This unmet need continues to hover at around 40% of Americans for several reasons.

» Underestimation of need and an overestimation of cost: Many individuals underestimate how much life insurance they need, a miscalculation that often stems from not fully appreciating the purpose and importance of life insurance. And as the cost of living increases, the amount of coverage needed also rises, yet many people do not adjust their policies to keep up with inflation and increased financial responsibilities. Similarly, many may assume that coverage they receive through their employer is sufficient, and misconceptions about the cost can deter people from getting adequate coverage.

» Impact of changing workforce dynamics on accessibility: As gig and freelance work becomes more prevalent, fewer people have access to employer-provided life insurance. Many gig workers do not purchase their own policies, perhaps due to lack of awareness of how to obtain them. This further exacerbates the gap.

» Shifting demographics: The demographic landscape is changing, with younger generations delaying life events (such as getting married and having

study, while Asian Americans are more concerned about having enough money for retirement, Hispanic and LGBTQ+ Americans are so focused on their immediate financial needs (e.g., paying monthly bills) that they find it challenging to effectively plan for the future.

Reasons for owning life insurance can vary by consumer segment. Recent research conducted by LIMRA’s Applied Research Solutions team found that compared to other segments, Black Americans often own life insurance to pay for burial and final expenses, while Asian Americans are more apt to own it for investment and tax purposes.

Hispanic Americans have unique barriers to life insurance ownership. Although this segment tends to be younger and less affluent, they also often speak a language other than English and have self-reported lower levels of financial knowledge that

social needs into account, and these needs typically vary by generation.

The better we know these consumers, the better we can anticipate and meet their needs.

To reduce the life insurance need gap, our industry should strive to become more customer centric and gain a deeper understanding of the diverse needs and preferences of various consumer segments. Although the life insurance need gap continues to be a challenge for our industry, it is also an opportunity.

Lai-Sahn Hackett is corporate vice president, Applied Research Solutions, LIMRA. Contact her at lai-sahn.hackett@ innfeedback.com.

We don’t need Life Insurance Awareness Month

Why this annual campaign is important and how you can use it to reach out to clients and prospects.

By Brian Steiner

What did you think when you read that headline?

Shock? Confusion?

A feeling that you were missing something?

That’s not surprising, because the truth is 102 million Americans know that they need life insurance — or more of it, according to the “2024 Insurance Barometer Study” that the nonprofit Life Happens conducts with LIMRA. This number doesn’t even count those who may need life insurance and don’t realize they do.

Another truth is: We do need September’s LIAM campaign. Here is why it’s important.

» Only 51% of Americans say they have life insurance. That’s a key reason Life Happens created LIAM 21 years ago: We need to continue raising awareness with consumers about the importance of life insurance, now and into the future. Additionally, the majority of Generation Z has come of age and that means we can start educating them about this important financial tool from the start of adulthood.

» It gives you an “excuse” to reach out to your clients and prospects.

“Hey, did you know that September is Life Insurance Awareness Month? I always make a point to reach out to all my clients to …” Well, you get the idea — fill in with your form of outreach and let’s get these life insurance conversations going. Whichever means your client or prospects prefer (and compliance is OK with) — email, phone call, text, social media — get that message out there.

» People are looking for your help. One of the top three reasons that peo ple don’t get life insurance, even though they know they need it, is because they say they “don’t know how much or what type to buy.” This is the excuse that al most one-third of millennials give for not having coverage. Again, this statistic from the “Barometer Study” underlines how important it is that financial and insurance professionals fill that gap with their knowledge and get their clients and prospects to take that next step and get coverage.

life insurance brings.

» The national spotlight is on life insurance in September. That’s the beauty of an awareness month: It’s about community. It’s the time when the whole industry is focused on spreading the message about the importance of life insurance and helping people get the coverage they need. Remember, a rising tide lifts all boats, so make sure you have your boat in the water in September.

So, how do you get started and join in on the high energy of September’s LIAM? Start here:

» Use lifehappens.org. This consumer-facing nonprofit site is a go-to for consumers to get unbiased information about life insurance. The No. 1 visited page — and for good reason — is the Life Insurance Needs Calculator, which you can find at www.lifehappens.org/ howmuch. This way, you can have your prospects and even underinsured clients go there and “do their own math.” It’s very powerful for them to come up with a number for the amount of coverage they need. It’s “their” number, then, not yours.

» Share Real Life Stories. The website also has a wealth of videos that show how a family or business benefited from life insurance during life’s most difficult times. From families with small children,

» Get social. I recommend that you follow Life Happens on social media, especially on Facebook and Instagram for consumer info. From there, you can easily share the educational posts — graphics and videos you see there with your followers. And people are eager for this kind of education on social media. In fact, the “Barometer” showed that 6 in 10 people say they use social media for financial education.

» Take your outreach up a notch. If you want to post content in your social media feeds, send LIAM emails and use videos natively. There is a wealth of LIAM content already created for you. The companies that support Life Happens are all in on their LIAM plans, so please reach out to your home office or company contact to find out what LIAM plans they have in place and how to access your LIAM content. Additionally, if you are a member of NAIFA, you automatically get a range of LIAM resources as a member benefit through the website. If you aren’t a member, what better time to join than now?

Be sure to take advantage of this great opportunity to help your prospects and clients get more coverage. I’d love to hear how you are taking advantage of LIAM. Feel free to reach out and let me know at bsteiner@lifehappens.org.

Brian Steiner is the executive director of Life Happens. Contact him at brian.steiner@ innfeedback.com.

Is retaining key talent keeping you up at night?

An exclusive benefit for a select group of key employees could discourage them from jumping ship.

By Ernest Guerriero

Your top salesperson, Carol, approaches you unexpectedly and says, “Boss, I’m leaving. You’ve been great, but I have been offered a better deal!”

Carol is worth more than $300,000 in revenue to your business. She is leaving to join your competitor, who offered a better overall compensation package. You treated Carol like family, her leaving never crossed your mind, you thought she would eventually take over the business. Your advisor told you about planning for Carol, but it was not a priority, she was happy … wrong! What could you have done differently to prevent this and retain Carol?

There are several ways to provide programs to retain employees, including employee recognition, employee performance rewards, flex time and employee engagement, to name a few. However, when it comes to an exclusive benefit for your key employee or employees, you

need a plan that ties them in to the organization. One such exclusive benefit for a select group of key employees is the phantom stock plan.

This plan can be for any organization — small, medium or large closely held businesses that are well established and financially sound. Most important, many owners of closely held businesses do not want to give up equity in their business; therefore, a phantom stock plan is an ideal solution.

With a phantom stock appreciation plan, key employees who are selected to participate are credited with a specific number of hypothetical shares by the business. Instead of transferring actual shares to the employee, the business creates an accounting entry in which the key employees are credited with a specified number of “shares” whose value may rise or fall over time, according to the formula selected to determine value. Upon a triggering event — such as the end of a specified time, a predetermined event, death or disability — the employee is entitled to receive the value based on the appreciation of the hypothetical shares they were credited with.

To peg the value of phantom shares, a business valuation should be performed.

This does not have to be a formal valuation meeting Internal Revenue Code valuation guidelines or performed by an independent appraiser. It should be one that is accepted and understood by Carol, and easily calculated by the business’s accountant or one an advisor can perform using a software program. There are many methods that can be used, such as discounted cash flow, capitalization of earnings, or earnings before income taxes, depreciation, and amortization. The point is there must be a beginning valuation and an ending valuation. This valuation ideally should be performed each year so Carol can see the increased value of the shares.

To provide liquidity upon the triggering events for the key employees, life insurance is usually used to support the appreciation of the hypothetical stock. Businesses that wish to prefund their phantom stock plans have several investment options (e.g., mutual funds, securities, and annuities) from which to choose. However, most investments and annuities generate taxable income each year, and there are no guarantees. Permanent life insurance, however, does not have this “tax drag,” making it a common funding vehicle for these types

of plans. The business can purchase corporate-owned life insurance on the life of the executive to “informally” fund the plan’s future payments (with the cash value) and to recover all the plan costs at the executive’s death (with the death benefit). A phantom stock plan informally funded with the proper amount of life insurance provides flexibility, while helping the business pay promised benefits and recover the cost of establishing the plan. This allows a business to recruit, retain, reward and retire key executives in a cost-efficient manner.

The advantages for the closely held business owner:

» Fortune 500 company benefits: Most publicly traded companies offer some sort of key executive compensation arrangement. The closely held business owner can offer the same package.

» Flexibility: The business owner can select the employees who will participate

— and the company can offer different participants different benefit levels.

» Control: The business owner can tie the benefit to corporate growth —without having to sacrifice equity in the company.

» Financial benefits: The life insurance policy increases tax deferred and is an asset in the corporation’s books.

» Forfeiture: If the employee does not live up to their end of the deal, by not performing or by leaving too early, the benefit is forfeited.

» Tax advantages: The business gets a tax deduction when it pays the benefit.

» Ease of implementation: A typical phantom stock plan requires only a board resolution and a phantom stock plan agreement.

The advantages for the key employee:

» Ownership: Psychologically, the employee owns a percentage of the company.

» The ability to share in the company’s success: The employee will receive a benefit that is tied to the performance of the company and be rewarded for increased growth.

» Tax advantages: No tax is due on the incentive until it is paid out.

Ernest J. Guerriero, CLU, ChFC, CEBS, CPCU, CPC, CMS, AIF, RICP, CPFA, is the past national president of the Society of Financial Service Professionals and currently a board trustee for the National Association of Insurance and Financial Advisors. Contact him at ernest.guerriero@innfeedback.com.

Shifts in the regulatory landscape impact financial professionals

These regulations mark a transformative period for the financial security industry.

By Alex Kim

While the upcoming election is important, it’s not the sole event we should be tracking. This year, various federal agencies have been busy cranking out regulations that impact our profession and the clients we serve. Financial security professionals are facing significant changes due to three major regulatory updates: the Department of Labor’s fiduciary rule, the Federal Trade Commission’s ban on noncompete agreements, and the DOL’s independent contractor rule.

The DOL fiduciary rule

In his State of the Union address in March, President Joe Biden promised to continue his crackdown on “junk fees.” Almost a month later, the DOL, through an unusually rapid and irregular regulatory process, released its final fiduciary rule. However, there is a disconnect here: Compensation, including commissions, is not the same as junk fees. The DOL’s fiduciary rule will greatly affect how financial security professionals are compensated. More importantly, it will limit clients’ access to retirement advice and products, ultimately jeopardizing their financial security.

If this sounds repetitive, it’s because the DOL has attempted to regulate producers and brokers before. A previous regulatory effort in 2016 was vacated in federal court for exceeding the DOL’s authority, but this has not stopped the DOL from trying again. The new fiduciary rule is already facing legal challenges, but producers, insurance carriers and intermediaries must start planning for compliance.

FTC ban on noncompete agreements

On April 23, the FTC announced its decision to ban existing and future noncompete

agreements between employers and employees, with certain exceptions. The ban takes effect on Sept. 4. By this date, employers must provide notice to all current and former employees that any existing noncompete agreements are no longer valid and enforceable.

The FTC ban against noncompete agreements could directly impact certain financial security professionals, depending on their employment with their insurance carrier. Within the industry, there are valid concerns that this ban will negatively affect nonqualified deferred compensation arrangements and forfeiture provisions.

The FTC clarified that nonsolicitation and nondisclosure agreements are distinct from noncompetes and remain valid methods to protect proprietary and sensitive information. However, if the provisions in a nonsolicitation or NDA are overly broad and effectively prevent a worker from working for another employer, they could be considered a de facto noncompete.

Existing noncompete agreements with senior executives — defined as those earning more than $151,164 and involved in policy decisions, namely CEOs and presidents — will remain enforceable. However, new noncompete agreements with senior executives would not be permissible. Additional exemptions apply to not-for-profits, certain franchises and business owners in the process of selling their business.

Covered workers include any employees, independent contractors, interns, volunteers and sole proprietors who work for the business currently or did so.

The DOL final rule on independent contractor classification

Earlier this year, the DOL released its final rule on determining worker classification and independent contractor status under the Fair Labor Standards Act. Under the FLSA, workers considered employees are entitled to wage, hour and overtime protections that ICs do not receive. The rule

went into effect on March 11. The final rule rescinds and replaces the 2021 standard implemented during the Trump administration, reverting to an earlier and more worker-friendly version.

It is important to note that this rule originated from concerns about the misclassification of certain workers as ICs.

The IC rule addresses a growing recognition that gig economy workers, such as those at Uber, Lyft and Instacart, should receive employee protections outlined in the FLSA, such as minimum wage and overtime pay.

Although these regulations do not directly target the financial security profession, interpreting them could impact it, given the absence of specific exemptions for financial security professionals. Unlike gig workers, financial security professionals, who often operate as ICs, prefer to maintain this status. However, a stricter interpretation of the classification criteria could lead to more financial security professionals being classified as employees rather than ICs. This would bring additional costs and regulatory burdens. Moreover, losing IC status would alter the dynamics of their interaction with clients.

The DOL fiduciary rule, the FTC’s ban on noncompete agreements, and the DOL’s independent contractor rule together mark a transformative period for financial security professionals.

Financial security professionals and their firms must stay informed and adaptable, prioritizing client needs amid these changes. By proactively addressing these shifts, they can navigate the evolving regulatory landscape and continue providing essential financial security and holistic retirement planning for Americans.

Alex Kim is vice president, public policy, with Finseca. He may be contacted at alex.kim@ innfeedback.com.

Life insurance: for anyone who lives

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