Most of the 2017 Tax Cuts and Jobs Act is set to expire at the end of 2025. In particular, the estate tax exemption will return to pre-2017 levels. Will Congress act first? PAGE 16
Three mistakes annuity owners should avoid PAGE 30
Riding the ‘long tail’ of opportunity with AmeriLife’s Brian Peterson
PAGE 6
What’s next for retirement income security? PAGE 40 PLUS People to Watch in 2025 Special Section PAGE 12
Navigating Tax Risks Amid Rising National Debt
With national debt at 130% of GDP and tax rates hitting 37%, financial professionals face unprecedented challenges in retirement planning.
The Challenge: Your clients face pressing issues — longevity, liquidity, inflation, market volatility, mortality, and rising taxes (LLIMMT) — that threaten their financial security.
Simplicity’s Solution: Embrace innovative strategies like tax diversification & Index Universal Life Insurance (IUL) for cash accumulation and tax-free income.
Streamline Your Process: Simplicity’s powerful platforms make it easy to educate clients and simplify the sales cycle, empowering you to deliver tailored solutions.
Get Inspired: Dive into our featured article on Page 2 to explore how to tackle tax challenges and secure your clients’ financial futures.
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1) Not available on the Life with Cash Refund or Life with Installment Refund income options. Form Series SPIA22 (Forms may vary by state). The contract and riders may not be available in all states. See Policy for details and limitations. Neither American National nor its agents give tax or legal advice. Clients should contact their attorney or tax advisor on their specific situation. American National Insurance Company, Galveston, Texas. For Agent Use Only; Not for Distribution or Use with Consumers.
6 Riding the ‘long tail’ of opportunity Brian Peterson talks about his path from teacher and coach to president of AmeriLife Group’s Accumulation and Retirement Income Distribution division.
IN THE FIELD
20 A place to belong
By Susan Rupe
Thomas “T” Priester wants to build a pipeline to attract more Black agents into the profession and support them.
FEATURE 2025: Taxing decisions due
By John Hilton
Congress has work to do in 2025, as the Tax Cuts and Jobs Act sunsets at the end of the year.
26 The role of life insurance in estate planning and wealth transfer
By Steve Lockshin
Few other financial instruments can match life insurance’s flexibility in estate planning.
ANNUITY
30 Three mistakes annuity owners should avoid By JB Beckett
Clients may be confused about some of the details of annuities.
INSURANCE & FINANCIAL MEDIA NE TWORK
HEALTH/BENEFITS
34 Help workers understand and use their benefits
By Susan Rupe
Workers often don’t understand or use their workplace benefits, despite having a greater array of options available to them.
ADVISORNEWS
38 Why your clients might face higher taxes in retirement By Joe Schmitz Jr.
The idea that retirees will automatically fall into lower tax brackets is increasingly becoming a myth.
THE KNOW
40 What’s next for retirement income security?
By Doug Bailey
Insurers argue that the fiduciary rule will limit choices for retirees.
Mitigate Tax Risks and Streamline the Sales Process
In today’s financial landscape, optimizing income strategies for tax-deferred accounts is more crucial than ever. With rising national debt and escalating tax rates, financial professionals must leverage efficient tax mitigants to help clients navigate retirement planning. The challenges are real, but with the right tools and strategies, you can simplify the sales cycle and mitigate tax risk effectively. Here’s how.
Identifying the Problem
When it comes to life insurance, financial professionals sometimes make a critical error: they dive straight into solutions without addressing the underlying problems. Financial planning considerations often include:
• Longevity: Increasing life expectancy raises the risk of outliving assets.
• Liquidity: Limited access to funds can create stress during unexpected financial needs.
• Inflation: Rising costs can erode purchasing power, jeopardizing your clients’ lifestyles.
• Market Volatility: Sudden downturns can significantly impact portfolios at critical times.
• Mortality: The loss of a partner or spouse can significantly impact financial stability.
• Taxes: Rising tax rates can diminish income and assets, complicating estate planning.
Viewed through this lens, tax mitigation is a natural extension of the financial planning and sales process. Coupled with a staggering national debt of $34.5 trillion — 130% of GDP, tax mitigation is “MUST” conversation for every advisor with their clients. With the current highest marginal tax rate at 37%, the upward pressure on tax rates means that the stakes for retirement planning are higher than ever.
The Solution: Diversification
Tax diversification is a vital strategy for managing tax risks and extending the longevity of your clients’ assets
in retirement. These four steps will help you guide your clients toward effective tax diversification:
1. Identify Taxable Income Sources: Help clients understand where their retirement income will come from.
2. Determine Retirement Tax Bracket: Assess which tax bracket clients are likely to fall into based on their income.
3. Explore Tax-Diversification Strategies: Align these strategies with their long-term financial goals.
4. Consult a Qualified Financial Professional: Work collaboratively to identify strategies for reducing tax liabilities.
While tax rates may fluctuate, proactively navigating complex regulations can help clients preserve their wealth and ensure they have the necessary income for a fulfilling retirement.
Leveraging Index Universal Life Insurance (IUL)
One increasingly popular tax-diversification strategy is Index Universal Life Insurance (IUL). This permanent life insurance product allows for strong cash accumulation and offers tax-free income. Under current tax code section 7702, income from an IUL isn’t counted as taxable income because it’s considered a loan against the policy’s cash value. Here’s how it works:
• Premium Allocation: Clients pay premiums that fund both the life insurance policy and its cash value.
• Index Investment: The cash value is tied to returns in a chosen index, enabling clients to benefit from market gains without risking losses during downturns.
• Tax-Deferred Earnings: Taxes on earnings are deferred until borrowed from the policy.
• Tax-Free Withdrawals: Clients can withdraw funds tax-free until the basis is depleted and take loans against taxable earnings without tax implications.
For an IUL to effectively mitigate tax risk, it’s crucial that the policy remains in good standing.
Simplifying the Sales Cycle
The life insurance landscape can be complex and intimidating for clients. However, you can eliminate confusion and educate clients about the importance of a holistic financial plan through innovative software platforms. Simplicity’s proprietary software is designed to seamlessly integrate life insurance into broader financial strategies.
Simplicity Resources
Simplicity provides enhanced tools that streamline the sales process for financial professionals. This multi-module tool includes solutions for wealth transfer, income protection, and tax-free retirement planning, allowing you to address client concerns with clarity and efficiency.
Tax-Free Retirement Insider Program
Simplicity’s Tax-Free Retirement Insider program is a comprehensive prospecting platform that equips advisors with essential skills to communicate potential challenges to clients and offer optimal solutions. This program emphasizes:
• Education: Providing valuable insights into financial planning.
• Lead Generation: Helping advisors attract new clients.
• Sales Presentations: Transforming the traditional illustration experience into interactive presentations.
With this software, you can demonstrate projected outcomes in real-time, comparing multiple products while presenting data in an easily digestible format.
LifeLink: A Game-Changer for Advisors
Simplicity LifeLink™ revolutionizes the quoting process. Within minutes, advisors can run and compare quotes from various providers. The robust Product Center offers research and tools that empower agents to confidently recommend solutions backed by the Simplicity Score. This intuitive online portal captures every phase of the sales process in one easy-toaccess location, streamlining operations and improving client interactions.
Protection, Accumulation, and Technology
The future of financial advising lies in a seamless integration of protection, accumulation, and technology. As the financial landscape continues to evolve, adopting innovative tools can differentiate you in a competitive market.
By embracing tax-diversification strategies and leveraging advanced technology platforms, you can deliver tailored solutions that meet your clients’ unique needs. The combination of insurance and technology will not only simplify the sales cycle but also enhance the overall client experience.
The challenges of financial planning, especially concerning tax risks and longevity in retirement, require a proactive and informed approach. By implementing tax-diversification strategies and utilizing cutting-edge software platforms, you can simplify the sales process and provide substantial value to your clients.
Don’t wait for the perfect moment to take action. Discover how our software platforms and resources can revolutionize your approach and boost your bottom line. Together, we can help your clients build a more secure financial future — one that withstands the challenges of taxes, market fluctuations, and unexpected life events.
Your journey toward enhanced client engagement and long-term success starts now! •
What will 2025 hold for the insurance industry?
With 2024 having been buffeted by inflation, catastrophic weather, market volatility, the advent of artificial intelligence and the lackluster performance of insurtech startups, where is the industry headed in 2025?
Here are some of the key themes and changes we expect to see in 2025:
1. Increased focus on personalization with AI and data analytics
Insurers are attempting to leverage AI and data analytics to provide more personalized coverage options based on realtime customer data, behaviors and preferences. Advanced algorithms can tailor policies and pricing models to individual needs, making insurance products more relevant. However, according to Forrester, adopting and implementing real-time AI capabilities and applications lag other items such as improving data and analytics technology usage.
2. Regulatory shifts in climaterelated insurance practices
Climate-related events and risks are receiving increased regulatory attention. Insurers are being urged to reassess underwriting practices to factor in environmental impact and sustainability efforts. At the same time, some carriers are pulling out of hard-hit markets. For agents, this means staying informed about how these regulations might affect pricing, availability of coverage and client eligibility. Advising clients on sustainable practices or risk mitigation may become a critical value-add service, especially for businesses in high-risk zones.
3. Expansion of embedded insurance models
Embedded insurance — where insurance is offered as a part of other purchases, such as with cars, travel or electronics — is expected to grow. This trend enables seamless insurance purchasing for clients but may reduce traditional touchpoints for agents. According to Forrester, 32% of global business and technology
professionals at insurance firms plan to invest more in embedded finance capabilities in 2025.
4. The path of LTC insurance
While the history of ill-conceived products has diminished the public trust in long-term care insurance, the need for such coverage is growing rapidly as baby boomers hit retirement age at a historic rate and care costs continue to rise. While states such as Washington have attempted to create a public model for coverage with its WA Cares program, a sound path for dealing with this enormous need is unclear and may eventually come down to public-private partnerships.
5. Broadening of insurtech partnerships and integrations
As insurtech companies continue to innovate, traditional insurers are forming partnerships to enhance digital offerings, improve customer experience and streamline claims processing. As Angus McDonald, Cover Genius CEO, put it, the American insurtech landscape has entered a “second wave” that’s all about collaboration and partnerships with traditional insurers and big-name corporations.
6. The annuity market will continue to thrive
According to Deloitte, total U.S. annuity sales increased 23% year over year to $385 billion in 2023, led by a 36% jump in fixed annuities, to $286.2 billion. In the first half of 2024, total U.S. annuity sales rose 19% to $215.2 billion, year over year, with registered index-linked annuities and fixed-income annuities setting new records. While the Federal Reserve has begun cutting interest rates, buyers are still looking to lock into higher guarantees.
7. Can life insurance sales remain at record levels?
New annualized life insurance premiums have set a sales record in each of the past three years, while in the first quarter of 2024, both total new premiums and total number of policies sold fell a bit year over year. Deloitte points out that neither
the pandemic-fueled interest that boosted mortality product sales nor the higher interest rates that drove interest in savings products are likely sustainable growth drivers. New approaches both with products and in reaching younger and underserved markets will be needed to keep the numbers up.
8. Increased integration of wellness and preventive health incentives in policies
Life and health insurers are focusing more on wellness programs, incentivizing clients for healthier lifestyles with lower premiums or added benefits. Wearables and health apps are frequently incorporated to monitor activities and health metrics. John Hancock, for example, pioneered a new approach in life insurance, shifting its emphasis to longevity and well-being. For agents, this trend presents an opportunity to highlight these added benefits to clients, promoting policies that align with a proactive approach to health and wellness.
Subscription-based insurance, where clients pay monthly or annually and adjust their coverage as needed, is becoming more common. This model aligns well with evolving customer expectations for flexibility and control over coverage.
10. Rising importance of cyber insurance
With cyberattacks growing in frequency and sophistication, demand for cyber insurance is escalating, especially among small and medium businesses. Many policies are becoming more complex, covering specific threats and offering post-breach support services. Agents can capitalize on this demand by educating clients on the importance of cyber coverage, particularly in industries targeted for data breaches and ransomware attacks.
John Forcucci Editor-in-chief
Hiking the ‘tax max’ could solve the Social Security problem
It often seems that the solution to the Social Security funding problem is Washington, D.C.’s unicorn. In other words, it doesn’t exist.
A panel of experts assembled by the American Academy of Actuaries disagreed. The answers are actually quite numerous and obvious, the experts said. And Congress will eventually adopt one or, more likely, a combination of them.
“Fear not about Social Security going away. That’s not going to happen,” said Stephen Goss, chief actuary at the Social Security Administration. “The challenge is for Congress to come up with ways to either bring down the scheduled benefits, raise the tax revenue coming in or some combination of the two, which they have always done in the entire history of this program.”
Joel Eskovitz is a senior director of Social Security and savings at the AARP Public Policy Institute. Raising the revenue is the most immediate need, he explained. Changes to benefits, like raising the retirement age, will take decades to kick in and change the actuarial assumptions. Lowering the earnings minimum for the Social Security tax is usually the most popular solution to the revenue problem, Eskovitz said.
FLORIDA INSURANCE MARKET OK DESPITE DOUBLE HURRICANES
Florida is recovering from a double whammy of hurricanes this fall, but its property insurance market is getting healthier by the day, officials say. Property insurers had been fleeing the state in recent years due to the increased frequency and intensity of hurricanes and tropical storms.
Mark Friedlander, director of corporate communications at the Insurance Information Institute, said the property insurance market is ready to serve Florida residents cleaning up from the twin hurricanes Helene and Milton Officials say they represent one of the most devastating series of hurricanes to ever hit the U.S. East Coast.
Florida’s strengthening market is reinforced in recent rate filings, increased participation in the Citizens Property Insurance Corp. Depopulation Program, reduced reinsurance costs and more
carriers announcing their commitment to Florida’s insurance market, the insurance office said.
SKYROCKETING HOME INSURANCE RATES DETER HOME BUYERS
Despite falling interest rates, potential homebuyers are meeting a new, formidable obstacle: the rising cost of home insurance. The rising expense is adding another layer of complexity to the home-buying process, frustrating both buyers and lenders, and stifling what could have been a more active real estate market, experts say.
Homeowners and potential buyers are now facing insurance premiums that are rising at an unprecedented rate. These soaring costs, driven by the increased frequency of natural disasters and inflationary pressures, have caused many buyers to either pause their search or face hurdles in securing financing.
QUOTABLE
The
end of financial repression, of zero interest rates and zero inflation, that era is over.”
“The [price of home] insurance is catching people off guard if they can even find it because depending on where they live, carriers are just making it a lot more challenging to find insurance,” said Travis Hodges, managing director at insurance broker VIU by HUB. Hodges said insurers are also demanding closer inspection of properties in some areas before signing off on the sale, slowing the closings and increasing costs.
MORE CONSUMERS UNDERWATER WITH CAR LOANS
More Americans with car loans owe more money than their vehicles are worth, Edmunds.com reported. The average amount owed on these upside-down loans climbed to an all-time high of $6,458 during the third quarter. That compares with $6,255 in the prior quarter and $5,808 a year earlier.
More than 1 in 5 consumers with negative equity owe more than $10,000 on their auto loans, Edmunds said, while 7.5% have negative equity of more than $15,000. What’s behind this trend? Edmunds said it’s largely a result of consumers who purchased new vehicles in 2021 and 2022 amid a lack of inventory due to the COVID-19 pandemic and parts shortages. Many then paid full price or more, with their vehicles depreciating faster than expected as the auto industry and inventories normalized.
65% of middle-class Americans said they are struggling financially and don’t expect their situation to ever improve.
— Morgan Stanley CEO Ted Pick
Riding the ‘long tail’ of opportunity
An interview with publisher Paul Feldman
BRIAN PETERSON talks about his path from teacher and coach to president of AmeriLife Group’s Accumulation and Retirement Income Distribution division, and what the future looks like for one of the industry’s largest marketing and distribution businesses.
When Brian received some questionable financial advice during his early days as a teacher and coach, it drove him to rethink his career. “I was not happy. I mean, after the advisor left abruptly — I asked him to leave — I told my wife, ‘Listen, if he can do this and make money in this profession with the advice he’s giving, what if I were to do it and do it the right way?’” About a year and a half later, he left teaching to become a financial advisor. That path led to Petersen’s becoming senior vice president of Allianz Life, then president and CEO of TruChoice Financial, and, finally, to his current position at AmeriLife. He calls his career change “the best business decision I’ve ever made.”
revenues that are on track to hit the $15 billion to $16 billion range this year, with about $11 billion of that in annuity sales.
Feldman: You are a dynamic personality that I have enjoyed knowing in the industry. For those not familiar with you, tell us about yourself and how you got into the industry?
Brian Peterson: I studied to be a teacher and coach in college. A couple years after I began teaching, one of my colleagues came up to me and said, “Hey Brian, I’m starting this new side job, doing it on the weekends. I’m making some good money, and I’d love it if maybe I could bring my sales manager and meet with you and your wife about your finances.” And I told him, “Well, we can certainly do that, but I’m two years out of college, I have a mortgage, I have an auto loan, I have student debt and I have credit card debt. I don’t have a lot of cash, so I’m not sure what you’re going to do for me.”
But he said, “That’s perfect. That’s what we want.” The advice and the recommendations they came back with a week or so after we met were so out of the realm of anything that I felt was — I guess I’d use the word — truthful. I was not happy. I mean, after they left abruptly — I asked them to leave — I told my wife, “Listen, if he can do this and make
“After the advisor left abruptly — I asked him to leave — I told my wife, ‘Listen, if he can do this and make money in this profession with the advice he’s giving, what if I were to do it and do it the right way? ’”
Today, with AmeriLife looking to continue its expansion, Peterson says providing agents and advisors with a holistic approach to solving all their clients’ needs is uppermost on his list of goals. And artificial intelligence will revolutionize the speed and accuracy of support, helping advisors deliver the best holistic results for their clients.
In this interview with InsuranceNewsNet Publisher Paul Feldman, Peterson describes how AmeriLife Group has achieved
money in this profession with the advice he’s giving, what if I were to do it and do it the right way?”
About a year and a half after that, I left teaching to become a financial advisor. I started with Prudential. I was a financial services associate. The first part was, like, three months of training down in Dallas as well as getting all my licenses. After that, I was a financial advisor for Prudential for several years and later got a call to interview at this company called
Life USA, which was in the process at the time of being purchased by Allianz Life. I didn’t want to leave what I was doing. I was making good money, and I loved my job, I loved the flexibility. I got my golf handicap down to a five. It was great. Things were good, but we were about ready to have our first child and so I ended up taking the new job. I’ll tell you what — that was the best business decision professionally that I’ve ever made in my life, being at Allianz Life for 22 years. It was just remarkable, and I haven’t looked back since.
still going to do some of that, but we also must grow organically. My job is basically to build out the infrastructure of our organizations, as well as the agent advisor experience.
We must find ways to continue to move down the path of meeting the agent and the advisor where they want to be met, helping them get to their next level, wherever that might be. What do they want to be? Where do they want to go? We can’t stay stagnant. We must grow with them. And that can be anything from helping them build their skillset to
In about 2006, I ended up getting into the IMO space. Allianz Life asked me to take over all the IMOs that they owned, which was about 13 at that time. Right now, it’s a little bit of deja vu because we have about 14 IMOs that I’m responsible for. So, 22 years at Allianz Life and at the end of November, I’ll be two years here at AmeriLife.
Feldman: As the president of retirement wealth at the company, what’s your goal? What would you like to accomplish?
Peterson: Obviously, No. 1 is that we want to continue to grow and build and do that organically. Over the last four or five years, AmeriLife has been growing through mergers and acquisitions. That will still be the goal at AmeriLife. We’re
leads, seminars, TV, radio. It’s across the board because every advisor, every agent, will be different.
Feldman: AmeriLife is one of the largest distribution companies in the life and annuity market, and Medicare and senior benefit space. Tell me about the company.
Peterson: AmeriLife started in 1971 just outside Tampa, Fla. It started as a life and health insurance agency. They were building retail life and insurance agencies here in Florida, then expanded to Georgia and North Carolina. Today there are more than 50 different retail agencies across about 12 states. In about 1983, AmeriLife went into the annuity brokerage space, and that’s where we are today. The big change for AmeriLife came in
about 2017, when Scott Perry took over, and that’s when the M&A and the growth really happened — not only in organic growth and building from within the accumulation retirement income division. I’m responsible for about 14 affiliates. The majority of what we do is annuities. We’ll touch about $11 billion in annuities this year. AmeriLife as a whole will be about $15 billion or $16 billion. There are other places within the organization — whether it’s through the registered investment advisory channel, the broker-dealer channel, health, life — that are doing another $4 billion or $5 billion in premium.
Feldman: What does next year look like, not only for AmeriLife, but also for the industry? We’ve seen high interest rates over the last few years, which have been great for annuity sales. What happens when that gets kicked back a little bit? Do you think the enthusiasm will continue?
Peterson: I do. We have about 10,000 people a day turning 65 in this country. That’s obviously the No. 1 factor. If you go back a few years ago in the interest rate environment, the 10-year Treasury was probably at 1.5%, 1.25% — maybe it came down to less than 1% for a short time. Even if it comes down from the 4.25% it’s at right now into the 3.5% range, we still have amazing consumer value in our products. When you combine that with where the product is today versus maybe where it was five years ago — even today you have about $6 trillion of assets sitting in money market CDs and savings accounts. Consumers will need to put their money to work somewhere else if that rate goes down into the 3%-3.5% range. Where will they put their money? I think they will put it in fixed indexed annuities. We still have a long tail of positive opportunity remaining.
Feldman: AmeriLife designs and develops very innovative products. Where do you see the future of these products? How are they evolving?
Peterson: Look at 2022 and SECURE 2.0. You have a situation where the opportunity to bring annuities into the 401(k) market opened up. Consumers are finding and hearing the word “annuity,” and
Peterson speaking with 2023 Employee of the Year Lanell Lightfoot, TruChoice Financial executive administrative assistant.
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they’re learning about annuities much earlier than they ever did. You have 20-year-olds looking at their 401(k), and they might have an opportunity to see some sort of an annuity in there. I think there are folks who are looking at that and thinking, “Wow, they’re kind of coming into our space.” But I see it as education. I see it as making our products more mainstream.
As far as product development in our business, we will continue to grow and make our products more mainstream. We’ll continue to innovate for consumer
needs. The products of 10 years ago are so much different than they are today, and I think innovation will continue to happen. The best thing we can do is continue to talk about annuities and get them out there in more ways. We’re at the forefront of that because we’re working with a lot of carriers. We have actuaries on staff here at AmeriLife as well. We’re on the distribution side, and we’re also on the retail agency side.
Feldman: Let’s talk about the retail advisor. What are some things that you
recommend or are seeing right now in the advisory space for annuities?
Peterson: I’m a huge believer in holistic planning. I think that’s where the future is. When you sit down with a client, you are not just trying to solve one situation or one problem for that client. You’re trying to solve all of their situations and all of their problems — whatever’s on their mind, you have the ability to solve that. And that’s where I believe the market is going. That’s where it should go. We shouldn’t have somebody go into a client’s house and look at only one product. I think they should have multiple products to offer. We will continue to help the agent and expand their portfolio so they can help more clients.
Feldman: How are you helping agents expand their business?
Peterson: It is really around marketing and education. We have a large marketing team that helps agents and advisors with prospecting and lead generation. How do you go through a portfolio and look at analyzing a portfolio? What software do you want to use with your clients? How do you set up a seminar? How do you get in front of more clients? We’re doing all those kinds of things to help our agents and advisors expand their opportunity, their ability, their skills and their knowledge.
Feldman: What are your thoughts on registered index-linked annuities and their place in the market? Will they continue to grow?
Peterson: Today at AmeriLife, we’ll probably do, from a wholesale perspective, about $100 million in RILAs through our system. I think RILAs are a great product. I think they fit a need for some clients, and I think they’ll fit a need for more clients down the road.
I look at fixed indexed annuities and RILAs working with and against each other, depending on the market. And what I mean by the market is not just the stock market but the interest rate environment. When the interest rates do go back down, I think RILAs will look even better than they do today against what a fixed indexed annuity
Peterson credits a chance meeting with a financial advisor as the start of a long, winding path to his current position at AmeriLife.
might look like. RILAs will continue to be a big part of the business model, and we see a bright future for them.
Feldman: AmeriLife is bringing new people into the industry. It’s critical for this industry to grow because a lot of our industry is aging out. How do we bring more agents into the business?
Peterson: That gets into the side of that retail agency model that AmeriLife has, and they are bringing new folks into this business every single day. It is an expensive model though. The training and education and skillset growth within the industry had kind of gone away for a while. It was just about trying to get more sales. If you look at a lot of the large
We’re looking for partners. We’re looking for people who want to be part of our growth initiatives and our vision and our strategy for the next five years. We’re not looking for folks who are ready to turn in their keys and go retire in the Florida Keys tomorrow.
We’re looking for folks who want to partner. No. 2 is we’re spending a lot of time, effort, resources, money on building that infrastructure, that technology stack, that platform that our distribution partners can tie into — resources that maybe they couldn’t get on their own. I think if you ask a lot of the different organizations out there that look like AmeriLife, we’re all taking the approach of trying to build that tech stack, build that foundation, build that infrastructure.
I’m a huge believer in holistic planning. I think that’s where the future is. When you sit down with a client, you are not just trying to solve one situation or one problem for that client. You’re trying to solve all of their situations and all of their problems...
IMOs today, they have a big part of their business in practice management, education, knowledge — all the things that you would look at and you would say those are things that some of the organizations used to do in the ’80s. They’re doing it now.
I see most of the new folks who are coming into our business coming in underneath an experienced advisor or an experienced agent, who’s been in the business for 20 years, and they become a junior for a while. Then maybe they take over that business or go out on their own. But our models are set up to continue to train and educate those folks who are just getting into this business. So, I think we’ve grown leaps and bounds in the last 10, 12 years in the IMO space.
Feldman: Tell us about your infrastructure. What makes AmeriLife different?
Peterson: A couple of things. No. 1 is probably the way we go to the market.
Feldman: What are you doing that’s exciting on the tech side?
Peterson: AI is obviously a big conversation that’s out there. And I think some people are scared, some people are excited. I think it will revolutionize the speed and accuracy that we can bring to the market. As long as you control it within your controlled environment, it shouldn’t be as scary as people think. I look at it as helping support our field support operations people, our licensing folks, our marketers.
We have well over 50 carriers and probably 300 different products. And to have knowledge of all of those is impossible. But if we put that into our controlled system and environment and use AI to ask a simple question — such as which carriers and products offer increasing income — and I have the answer in three seconds, I am faster, I’m better, I’m stronger than I was yesterday.
Redhawk Wealth Advisors: Leading the Way in Balancing Market Growth and Risk Mitigation
Proprietary process captures market growth while mitigating against financial downturns
In today’s unpredictable financial landscape, the age-old dynamic of fear and greed plays an even more prominent role in shaping investor behavior. For financial advisors, the challenge lies in creating strategies that leverage market opportunities while minimizing clients’ risk from catastrophic losses. As Dan Hunt, CEO of Redhawk Wealth Advisors, aptly puts it, “Everyone wants to avoid missing the next boat as long as it’s not the Titanic.” This careful balancing act between managing risk and pursuing growth has never been more important as we navigate a market defined by historic highs and lingering uncertainty.
In a recent interview, Hunt discussed the strategies that Redhawk Wealth Advisors uses to help clients achieve long-term financial stability, focusing on growth while mitigating risks. The key to success, he explains, lies in a combination of active management, transparency, and a process-driven approach that prioritizes both opportunity and defense during market drawdowns.
3. Risk Off (Maintaining): When the market experiences significant turbulence, Risk-Guard™ focuses on maintaining capital by moving into Treasuries and money market funds, while waiting for the market to stabilize.
This active management process allows Redhawk to create value by adjusting portfolios based on real-time market conditions, helping clients avoid the pitfalls of market timing. “The goal of Risk-Guard™ isn’t to time the market perfectly,” Hunt emphasizes. “It’s to avoid the kind of severe losses that can cripple long-term financial goals, like the 35% drop we saw in 2020 during the COVID-19 pandemic.”
Predicting vs. Preparing: Building Client Trust
The Art of Balancing Growth and Risk
To provide clients with both growth potential and a strong defense, Redhawk Wealth Advisors employs a proprietary process called Risk-Guard™, a multi-phase algorithmic strategy designed to dynamically manage investment portfolios. As Hunt explains, “Risk-Guard™ tells us when it’s time to be fully invested in the market and when we need to take a more defensive position.” This approach helps ensure that clients can capitalize on market growth while minimizing exposure to downturns.
Risk-Guard™ operates in three distinct phases:
1. Risk On (Offense): When the market is calm, the portfolio is fully invested in equities based on the client’s risk objectives. This phase focuses on maximizing growth by allocating assets to high-performing sectors such as largecap growth, technology, or small-cap companies.
2. Risk Watch (Defense): During periods of volatility and uncertainty, the system reduces equity exposure and shifts to more defensive assets like utilities, healthcare, precious metals, and short-term Treasuries. In this phase, portfolios may reduce equity exposure by up to 85% to mitigate market drawdowns.
One of the greatest challenges for financial advisors is helping clients feel confident about their investments without over-promising outcomes. Given the inherent unpredictability of the markets, Hunt advocates for transparency and simplicity in communication. “An effective way to build trust is by having a process that is easy to understand and that clients can explain back to you,” he advises. “If clients
“People often don’t realize how much risk they’re taking until the market turns. Our job is to make sure they have a realistic understanding of their ability and willingness to stomach large swings in portfolio value.”
Dan Hunt
see that you’re following the same approach for your own family, it reinforces confidence.”
This philosophy extends to helping clients understand their risk tolerance. Redhawk uses technology to provide clients with a clear picture of their risk exposure, aiming to align portfolios with both their financial goals and emotional comfort levels. “People often don’t realize how much risk they’re taking until the market turns,” says Hunt. “Our job is to make sure they have a realistic understanding of their ability and willingness to stomach large swings in portfolio value.”
By focusing on risk management rather than chasing returns, Hunt believes advisors can avoid the common mistake of over-promising and under-delivering. The RiskGuard™ process is designed to limit portfolios from extreme volatility without constantly shifting in response to minor market fluctuations. This approach, Hunt says, “gives clients the peace of mind that they’re avoiding major downturns without sacrificing long-term growth potential.”
Capturing the Next Big Growth Opportunity
As the global economy evolves, Hunt sees significant opportunities in the rise of artificial intelligence (AI) and other technological advancements. “The trends in AI are mind-boggling,” he says. “The market is experiencing a boom fueled by breakthroughs in computational power, and companies like Nvidia are leading the charge.”
According to Hunt, AI will continue to drive unprecedented market growth over the next few decades, creating new opportunities for investors. However, he cautions that the real value lies not just in tech giants like Nvidia, but in identifying downstream companies that will benefit from these technological advancements. “Just like the industrial revolution transformed standards of living, the AI revolution will bring a wave of change that offers endless opportunities for investors,” he explains.
For financial advisors, the key to success in this environment is maintaining a long-term perspective while ensuring that clients are positioned to capitalize on these opportunities. Redhawk’s strategy combines tactical asset allocation with the flexibility to adjust portfolios as new trends emerge, ensuring that clients can benefit from market growth without taking unnecessary risks.
Managing Emotional Investing: The Fear and Greed Dynamic
One of the most challenging aspects of financial advising is managing the emotional side of investing. Fear and greed can drive irrational decisions that undermine long-term success. “The biggest mistake clients make when driven by greed is focusing too much on the now,” Hunt explains. “They hear about friends getting great returns and want to chase those gains, but that’s when mistakes happen.”
To combat this, Hunt emphasizes the importance of sticking to a disciplined, process-driven approach like RiskGuard™. “No one gets a short-cut investment pitch with us,” he says. “We follow our process to a “T” every time, ensuring that clients are making decisions based on their longterm goals rather than short-term emotions.”
Preparing for the Future
Looking ahead, Hunt is optimistic about the convergence of traditional financial planning and emerging technologies. Redhawk is excited about its integrated financial planning system, which allows clients to view all their managed investments, insurance products, and held-away accounts in one place. This level of transparency and participation helps clients feel more involved in their financial planning, further building trust and confidence in their advisor’s recommendations.
As the market continues to evolve, Hunt believes that the future is bright for investors who stay disciplined, stick to a risk-managed strategy, and capitalize on emerging opportunities. “If you can manage risk effectively and keep your eye on the long-term, the possibilities are endless,” he says.
For financial advisors, the key takeaway is clear: success in today’s market requires a combination of offense and defense. By leveraging processes like Risk-Guard™ and staying focused on clients’ long-term goals, advisors can help clients navigate the complexities of the market with confidence and peace of mind.
Find out more
Redhawk Wealth Advisors is committed to helping clients navigate the complexities of the market with confidence. Their proprietary Risk-Guard™ process is designed to balance growth and risk, ensuring clients achieve their financial goals. To learn more, visit www.RedhawkFreedom.com to download a free digital copy of Freedom to Soar and discover how Redhawk’s passion for client success can guide you toward a prosperous financial future.
Looking Forward to a Bright 2025
Increased customer awareness and digital transformation drive a positive outlook for the term life insurance industry.
Term life insurance industry in the short term
In many ways, the future of the term life insurance industry looks bright. According to the LIMRA and Life Happens study, the percentage of Americans with life insurance coverage has hovered around 50% for the last three years.¹ And that’s not even close to the numbers from a dozen years ago, when 63% of Americans owned life insurance.²
A record high 37% of consumers have indicated their intention to buy life insurance within a year.³ But there are barriers that stop them from making the final decision. We sat with Farron Blanc, Legal & General America (LGA) Vice President, Brokerage Distribution & Strategy to discuss those barriers and how to successfully overcome them in order to keep growing the industry.
Affordability and cost uncertainty
If you asked everyday Americans who do not have term life insurance how much it costs, nearly three-quarters
of them would overestimate it. How much does it cost, how much coverage do I need, how long should my terms be — these are extremely common concerns without a one-size-fits-all answer. While term life insurance is affordable and flexible, needs may change over time.
In order to adjust to changing needs, our offerings need to be flexible. “Our Term-2-Term exchange program enables advisors to see if their clients’ life situations have changed after the first 48 months, potentially better served with different coverage durations,” explains Blanc. “Without any additional underwriting, or even a medical exam, we can adjust coverage to better suit the needs of your clients,” continues Blanc.
Whether individuals have changing health, new financial dependents, improved financial situations or a career change, convertible life insurance offers flexibility in coverage and premium costs, and might better meet the needs of clients who first signed up for term life insurance coverage.
Insurability concerns
Other barriers to term life insurance are “existing conditions” and other health factors people assume will make them uninsurable. Diabetes, heart conditions, cancer history and mental health issues are common health-related factors that contribute to an applicant’s impaired risk. Sometimes smoking,
If
you asked everyday Americans who do not have term life insurance how much it costs, nearly three-quarters of them would overestimate it.
alcohol consumption, substance abuse and other lifestyle choices can contribute to impaired risk, as well as occupational risks.
“We believe in providing affordable coverage for all Americans,” states Blanc. “Through digitization and updating our underwriting process, we have freed up more human hours, which we focus on table-rated applicants,” notes Blanc. “By dedicating more of our time and energy to clients who really need the coverage, we’re going to continue serving more and more impaired risk clients.”
Cumbersome process
Historically, life insurance carriers have fallen behind most other industries in terms of adopting digital solutions to streamline everyday and repetitive tasks. Whether it’s the familiarity with paper applications, or the peace of mind that comes with a tangible piece of paper, certain markets have been slow to adopt accelerated processes.
Because of the way applications are written and beneficiaries assigned for trust-owned life insurance, or businessowned policies, term life insurance issued for employees, owners or key members of an organization are still throttled by paper applications and full underwriting.
“With renewed focus on protection and all the enhancements to our digital platform,” says Blanc, “we’ve been able to dramatically improve our business and trust-owned life insurance value proposition.” Now, financial security and tax-advantaged benefits are available more quickly and easily to businesses than ever before — and it’s only getting better.
A record high 30% of consumers have indicated their intention to buy life insurance within a year. But there are barriers that stop them from making the final decision.
Focused on the future
The life insurance industry is poised for a bright future, with more Americans expecting to invest in coverage in the coming year and years. Innovation, increased customer awareness and advancements in digital solutions are positioning term life insurance carriers to grow and evolve. With a renewed focus on customer-centric approaches and digital transformation, LGA is wellequipped to provide robust financial protection and peace of mind for generations to come.
¹2022-2024 Insurance Barometer Study, LIMRA and Life Happens, ² 2023 Insurance Barometer Study, LIMRA and Life Happens, ³ 2024 Insurance Barometer Study, LIMRA and Life Happens Legal & General America life insurance and retirement products are underwritten and issued by Banner Life Insurance Company, Urbana, MD, and William Penn Life Insurance Company of New York, Valley Stream, NY. Banner products are distributed in 49 states and in DC. William Penn products are available exclusively in New York; Banner Life is not authorized as an insurer and does not do business in New York. The Legal & General America companies are part of the worldwide Legal & General Group. CN10302024-2
Most of the 2017 Tax Cuts and Jobs Act is set to expire at the end of 2025. In particular, the estate tax exemption will return to pre-2017 levels. Will Congress act first?
BY JOHN HILTON
John Resnick had a very busy fall, meeting with high net worth clients concerned about what 2025 will mean for the tax code — specifically, the expiring estate tax provisions. As this issue went to press, Resnick worked to close an estate tax plan for a $700 million estate. Just another day at the office.
Based in Naples Fla., The Resnick Group focuses on estate planning, life insurance guidance and business succession.
Clients are very attuned to the sunset of the Tax Cuts and Jobs Act at the end of 2025, Resnick said. If the estate tax exemption reverts to the pre-TCJA amount, it will represent the biggest estate tax increase in 85 years, he added.
“Although the change won’t affect most Americans, the hardest hit will be thousands of people who own privately held family-owned companies, whose net worth is mostly tied to their business,” Resnick said. “In more than 25 years of helping family firms, I can never
adjusted annually for inflation and is $13.61 million for a single person in 2024. Unless Congress acts to extend the current language, the estate tax will revert to 2017 levels, or about $7 million.
It is just one of many taxes up for debate regardless of who occupies the White House or controls Congress. Taxes are set to be the dominant issue of 2025, and advisors and agents have a lot riding on what decisions are made.
Life insurance strategy
Even at the higher $13.61 million estate tax threshold, it isn’t hard for successful business owners to hit that figure, Resnick said. If it reverts to $7 million, it will have a significant impact on estate planning, he added.
“Many of these families will be heavily impacted because they typically don’t keep a lot of cash sitting in bank accounts,” Resnick explained. “What’s worse, estate taxes are due in cash nine months after death, so trying to pay the tax can be devastating to some.”
can be 50% to 80% lower than the cost of the estate paying the tax using its own resources,” Resnick said. “All this is accomplished 100% tax free. Life insurance in an ILIT can truly be one of the most powerful strategies available in the estate tax code.”
One of the “Big Four” global accounting firms, KPMG, is hearing from clients with an “extremely high” level of concern, said Tracey Spivey, partner, and leader of the Private Enterprise tax sector at the firm.
There are other strategies to mitigate the potential estate tax bill, Spivey noted.
“A lot of our clients are assessing, if they haven’t already done so, whether or not it makes sense for them to be proactively making gifts to utilize these elevated exemption amounts,” he said. “The IRS has come back and said that there isn’t going to be this recapture concept in play for those that do, and so many, many of our clients are looking at whether or not they should go ahead and make sizable taxable gifts … before the end of 2025.”
A married couple with four children can give away $36,000 to each child, for example, reducing their taxable estate by $144,000 every year.
“A lot of our clients are assessing, if they haven’t already done so, whether or not it makes sense for them to be proactively making gifts to utilize these elevated exemption amounts.”
— TRACEY SPIVEY
recall a single business owner at that level who considered themselves wealthy. Most are plowing everything they make back into the business, and usually pay themselves last.”
The estate tax has long been a target of conservative lawmakers, who call it the “death tax.” After gaining full control of the White House and both chambers of Congress in 2016, Republicans teed up the estate tax for a major overhaul.
The TCJA more than doubled the maximum that families can give their beneficiaries without incurring federal gift or estate taxes. This applies to gifts made either while alive or as part of an estate.
The gift and estate tax exemption is
Life insurance is a popular strategy to help high net worth clients avoid leaving their heirs with painful estate tax bills.
An irrevocable life insurance trust is created outside the client’s taxable estate, and the trust’s income is used to purchase life insurance on the client, Resnick said. When they die, the life insurance proceeds are paid 100% tax-free to the trust that is the named beneficiary. The trust can purchase assets from or loan money to the estate, which often doesn’t have the cash to pay estate taxes.
The tax cuts
The Tax Cuts and Jobs Act was the most significant tax reform since the Tax Reform Act of 1986, which lowered the top tax rate for ordinary income from 50% to 28% and raised the bottom tax rate from 11% to 15%.
But unlike the 1986 tax bill, the TCJA changes were given a short lifespan.
Congress chose to make the individual provisions temporary to limit the 10-year revenue cost of the TCJA to the amount authorized in the Congressional Budget Resolution ($1.5 trillion), the Tax Policy Center explained, and to comply with Senate budget rules under the process used to pass the tax act and bypass the Senate filibuster, which required no increase in the federal budget deficit after the 10th year.
“If the life insurance is designed correctly, the cost to pay for the death benefit
“This was set up this way … to keep the score down,” said Nick Sutter, associate with the law firm Steptoe. “This means how much each of these provisions cost the federal government in revenue that they would not otherwise have.”
Resnick
Spivey
Sutter
Source: Steptoe International Law Firm
The Congressional Budget Office estimates that extending the tax cuts could cost the federal government around $4 trillion over 10 years.
Nevertheless, the TCJA touched on nearly every aspect of taxpaying life — from individual taxes to corporate taxes to the child tax credit. And, of course, estate taxes. So, nobody expects the TCJA to simply expire without plenty of debate.
“There’s likely to be significant legislation starting at the beginning of next year looking to fix some of these, to extend them, to not extend them,” Sutter said during a recent webinar for the National Association of Insurance and Financial Advisors. “The scope of what any tax legislation looks like will be heavily dependent on who controls the White House, who controls Congress, and what those numbers look like.”
To add to the tax confusion, the TCJA made some tax cuts permanent. In particular, the law reduced the corporate tax rate from 35% to 21% and repealed the corporate alternative minimum tax. These provisions do not expire.
Political differences
The hotly contested presidential election between Kamala Harris and Donald Trump took place after this issue went to press. But the winner will provide the tax policy template for 2025 negotiations, likely to take months.
On the estate tax issue, Harris has endorsed President Biden’s budget proposals, which would allow the estate tax exemption to expire and return to $7 million.
Trump wants to keep most of the TCJA in place, including the higher estate tax exemption. The Tax Policy Center estimates that just over 7,000 returns will pay estate taxes in 2024, while about 19,000 returns will pay estate taxes when thresholds drop after 2025.
Here are some other important likely starting points for congressional tax writers as they ponder a TCJA follow-up, courtesy of the Tax Policy Center:
1. Individual income taxes
The Biden-Harris administration has called for raising the top individual income tax rate from 37% to 39.6%. Harris has not offered detailed plans for the rest of the TCJA, though she has pledged not to raise taxes on those earning less than $400,000.
Trump supports extending provisions of the TCJA. Keeping these provisions and restoring certain business tax breaks would provide a tax cut at each income level, on average, but provide greater benefits to those above $450,000 in annual income.
In September, Trump announced he would eliminate the TCJA’s $10,000 cap on the state and local tax deduction, which was enacted as part of the 2017 law to offset the total cost.
2. Corporate taxes
The Harris campaign proposed raising the corporate tax rate to 28% and the corporate alternative minimum tax rate to 21%. Harris has also proposed raising the excise tax on stock repurchases from 1% to 4%. Some congressional Democrats are leery of these rate changes.
2033, according to a 2024 report by the trustees. When that happens, each beneficiary will see their benefit cut immediately by 21%.
Lawmakers have known for decades that Social Security’s finances are unsustainable. The program will be an estimated $23 trillion short over the next 75 years, a gap between projected inflows and benefit payments that continues to grow. Yet, the last major adjustment to the Social Security program came in 1983 when Congress addressed both short-term financing needs and long-term challenges.
Congress will eventually act to fix Social Security, said Stephen Goss, chief actuary at the Social Security Administration.
he said, while earnings by the lower 94% grew by 17%.
“That really is the primary reason why we’re falling short now relative to what we were expecting back in 1983,” Goss said.
Hike the ‘tax max’
Joel Eskovitz, senior director of Social Security and savings at the AARP Public Policy Institute, said raising the revenue is the most immediate need. Changes to benefits, like raising the retirement age, will take decades to kick in and change the actuarial assumptions.
Raising the earnings minimum for the Social Security tax, or the “tax max,” is usually the most popular solution to the revenue problem, Eskovitz said.
Trump proposed reducing the statutory corporate income tax rate from 21% to 15%, but his views on changes to the corporate alternative minimum tax rate were unknown as of press deadline.
3. Capital gains
Harris supports raising the tax rate on longterm capital gains to 33% (a 28% rate plus a net investment income tax rate of 5%). Harris also has indicated she supports a new
“Fear not about Social Security going away. That’s not going to happen,” said Goss during a recent conference. “The challenge is for Congress to come up with ways to either bring down the scheduled benefits, raise the tax revenue coming in, or some combination of the two, which they have always done in the entire history of this program.”
Social Security is funded through a payroll tax of 6.2% paid by both employers and employees (for a combined 12.4%) up to a
Fear not about Social Security going away. That’s not going to happen. The challenge is for Congress to come up with ways to either bring down the scheduled benefits, raise the tax revenue coming in, or some combination of the two, which they have always done in the entire history of this program.
— STEPHEN GOSS
tax on unrealized capital gains tax on the wealthy with a net worth of $100 million.
Trump has not indicated any specific plans for capital gains taxes.
Social Security fix needed
While maybe not a front-burner issue in the election, or in Congress, the looming Social Security crisis is definitely hanging out in the background.
Unless Congress acts, Social Security’s primary trust fund will be depleted in
certain level, known as the taxable maximum. Self-employed workers pay the full 12.4% tax. The SSA adjusts this limit annually to keep pace with the average wage index. In 2024, earnings up to $168,600 are subject to the Social Security tax.
Between 1983 and 2000, earnings for the wealthiest Americans “grew a lot faster than earnings levels for lower earners,” Goss noted. The top 6%, the ones with earnings above the taxable maximum, grew by 62% over that 17-year period,
“Six percent of people earn above the cap, and so obviously people always love a solution where they don’t have to pay more,” he said.
Beyond that, “there’s an inherent fairness issue there,” Eskovitz said. Many people are shocked to find out that while they pay into the Social Security system from every paycheck, not everyone does.
“There are people who’ve stopped paying in, if you’re a millionaire, in the first quarter,” he said. “There are always those stories about people who stopped paying in after the first week of the year.”
Among the presidential candidates, Harris supports applying the Social Security tax to higher incomes. Trump has not endorsed specifics regarding Social Security but pledged to not cut benefits.
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 X @INNJohnH.
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Goss
Eskovitz
THOMAS “T” PRIESTER
discovered he belongs in the industry and created a space for others to belong as well.
By Susan Rupe
If serving in the Marine Corps taught Thomas ‘T’ Priester anything, it was this: After surviving bootcamp, he could handle whatever came his way — including rejection. It was the perfect mindset as he settled into a sales career in civilian life, eventually entering the insurance business.
Priester is president and founder of KORE Financial, a full-service insurance brokerage in Atlanta.
“Graduating from bootcamp was probably the most difficult thing I’ve ever done in my life,” he said. “So, when you are able to accomplish something that difficult, it puts things in perspective. If I can get through that, I can definitely handle some prospects telling me no. I’ve never had a problem dealing with rejection.”
Priester started working in commission sales after his time in the Marines was over, and he said he always knew “sales is a numbers game.
“I want to get the nos out of the way so I can get to the yeses. That’s always how I approached it. And when I walk away, I’ll ask them if there’s one thing I taught them that they didn’t know before I walked in. Interestingly enough, sometimes that would open the conversation back up again.”
Priester wanted an opportunity to do something bigger in sales, so he asked a friend for advice. When the friend suggested he look at an insurance career, he said the only thing he knew about insurance was that he was required to have coverage on his car.
“But my friend said there is a whole world outside of auto and home insurance,” Priester said. “He introduced me to someone he knew, who was a veteran in the industry, and I jumped right in.”
Starting in the senior market
Priester began his insurance career selling Medicare supplements. But he said, “I couldn’t find my footing in that market — I wasn’t connecting with that market.”
But then he found the life insurance side of the business and discovered that to be challenging as well.
“The first agency I worked for was in Baltimore,” he said. “They sent me to this low-income community. I’m new to the business and on my first day, every appointment that I had didn’t show. The next day, I went to another low-income area outside of Baltimore.
“At that time, Baltimore was a highcrime city. So here I am, talking to families about life insurance, and a woman said to me, ‘We don’t need life insurance. The state buries us.’ What I learned was that there were so many deaths in Baltimore at that time that
opportunity to go back and meet with them again to discuss life insurance.”
Some of his older clients were retiring and realized that the life insurance they had through their employer would not be there for them anymore. Others had funds sitting in a retirement account and turned to him to help them roll over those funds into an annuity. His senior clients referred him to their friends, and his business continued to grow.
“Sometimes agents overlook certain areas or certain clients because they think there’s no money there. And people don’t always tell you what they have upfront; they want you to build that trust before they let you completely in. So, I
“Most
Black households aren’t talking to their kids about becoming insurance agents when they grow up
.
We’re trying to create a pipeline where we can take a kid from high school or college, get them interested in the industry and create a pathway to success for them.”
bodies weren’t being claimed. So they would cremate the bodies and wait for someone to claim them. The state will find the body, they take them, nobody claims them, they cremate them, they put them in a box, they attach a name to it if they can. And that was the way that they handled burial in that community.”
Priester said he decided “I’m not going to spend my life working in these dangerous areas, talking to people who don’t want to buy this product.”
He relocated to Atlanta in 2006. “At that time, the Medicare prescription drug plan became mandatory, so now all the seniors were scrambling to get drug coverage,” he recalled. “And then Medicare Advantage zero-premium plans started to spread like wildfire. Even though I had said I would never work in the senior market again, this was something I couldn’t ignore.”
Medicare Advantage and other senior market products helped Priester open a conversation about other financial products. His practice began to take off.
“Here is where I started seeing success. After I would enroll someone in a Medicare product, there was an
always tell agents, take your time, treat someone like that’s the only appointment you have that day.”
Out on his own
Priester was a manager at a large captive agency in the Atlanta area, but he grew disenchanted with their approach to recruiting agents. He became independent in 2011 and founded KORE Financial in 2014.
Growth was slow for the first year or two, and he said that was by design.
“I never really focused on building big,” he said. “I just wanted to have some agents who I could help get into the industry and find success.”
In 2019, his agency switched to a telesales model, which he said drove efficiency and growth. When COVID-19 forced agents to meet with clients remotely, business took off.
“Even before COVID-19, it didn’t make much sense for us to drive all over the metro area to meet with people who often weren’t there for the appointment,” he said. “And during the pandemic, agents and prospects didn’t want to meet in person. We noticed that by working in the
the Fıeld A Visit With Agents of Change
office, talking with clients and prospects online all day long, we increased our sales and cut our expenses.”
The ability to work remotely helped boost agent recruitment as well, he said, and his brokerage eventually grew to 85 agents.
Priester may have started his career working with older clients, but today his brokerage’s client niche is made up of younger adults.
“We found we work really well with couples in their 30s and early 40s,” he said. “So we really doubled down and focused on that age group. It’s a great market for us because they want to protect their income. They’re buying homes, so they want to protect their homes. They want to plan for retirement, so we help them with annuities and indexed universal life. So this market is where we found our home.”
Teaching via YouTube
Priester uses YouTube, TikTok and Instagram to educate consumers on all things life insurance. He also does a podcast every Monday night. Creating engaging social media content on a consistent basis is time-consuming, but Priester said it is worth the effort.
“I’m doing videos, I’m editing, I’m networking and talking with clients,” he said. “You have to put in the time and be consistent.”
He also is a frequent guest on podcasts, where he educates consumers in the Black community about the importance of life insurance beyond paying for a funeral.
A safe space for Black agents
In his work with agents, Priester found that many Black agents weren’t getting the information they needed from their independent marketing organization. Many of them didn’t have strong relationships with other professionals in the industry and needed opportunities to network and learn.
He discussed this situation with another Atlanta-area agent he knew, Che Norman, and they decided to create what he called “a safe space for Black agents.”
The Society of Black Agents was born four years ago.
“We wanted to create a group of peers, where you can connect with people who understand you — not just from an industry perspective but from a racial perspective,” he said. “It’s a place where you can have conversations with people who have had different experiences — everyone from a guy who’s third generation in the business to the woman who is just getting in the industry.”
Priester said “a lot of organic relationships” soon developed among SOBA’s members.
“We found people saying to each other, ‘Let’s meet for lunch,’ or ‘Let’s connect on
social media,’” he said. “We started seeing it grow to where we created this community where agents felt comfortable simply talking to each other.”
Priester said he found many industry organizations to be “focused on the agent/ carrier relationship.” SOBA focused on peer-to-peer relationships, he said.
“Once we had these agents feeling comfortable with each other, we wanted to make sure they’re successful, because we started seeing a lot of them were really open about their lack of success in the industry.”
But although SOBA began offering training and mentoring to its members, Priester said there was a larger audience that needed education about insurance and financial products.
“We decided to equip our members to go out and better serve and educate our communities,” he said.
SOBA also is addressing the issue of recruiting more young Black adults to enter the profession.
“One thing Black-owned agencies struggle with is not having a succession plan,” Priester said. “And most Black households aren’t talking to their kids about becoming insurance agents when they grow up. We’re trying to create a pipeline where we can take a kid from high school or college, get them interested in the industry and create a pathway to success for them.
“We’re working with schools to help students get their prelicensing and continuing education credits. We’ll work with established agencies that are willing to give internships or paid opportunities, so these new agents can come into the industry right away and start making money right away.”
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 srupe@insurancenewsnet.com.
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Priester guest hosting on the “You Should Get a License” podcast.
MassMutual to shut down insurtech subsidiary
MassMutual announced it will fold its insurtech subsidiary, Haven Technologies, at the end of 2024 — the latest in a series of cuts to the insurance giant’s tech-focused spinoffs.
Haven Technologies and roughly half of its 123 employees will be absorbed into the larger corporation beginning in 2025, MassMutual confirmed. The remaining 63 workers will either lose their jobs or get the option to stay on with MassMutual, according to a notice filed earlier this month with the New York Department of Labor.
“Over time, it has become clear that the market for and economic structure of this stand-alone software as a service business isn’t viable,” a MassMutual spokesperson said.
While MassMutual’s bread-and-butter life insurance and annuities business has grown steadily in recent years, the Massachusetts-based insurer has now closed three subsidiaries in less than 12 months, highlighting the difficulties major insurance companies have faced in expanding to different business areas.
HISPANIC AMERICANS REPORT THE GREATEST NEED FOR COVERAGE
Only 43% of Hispanics report having life insurance coverage, the lowest ownership among any racial or ethnic group over the past decade, according to the 2024 Insurance Barometer Study by LIMRA and Life Happens.
Despite this coverage gap, most Hispanics (53%) say that they need, or they need more, life insurance protection, which is 11 points higher than the general population. Without proper life insurance coverage, many of these individuals would experience financial hardship if a loved one were to pass away unexpectedly. In fact, 46% of Hispanic families said that they would face financial hardship within six months should the primary wage earner die unexpectedly.
LIMRA said effectively engaging this market represents a big opportunity for the industry. Over the past decade, the Hispanic American market has grown by 23%, to 62 million, representing nearly 1 in 5 Americans. This market is projected to continue to grow substantially, reaching almost 82 million by 2040.
CONSUMERS FIND LIFE INSURANCE POLICIES TOO COMPLEX
Despite efforts to improve customer communications, life insurers are seen as unnecessarily complicating explanations of their policies , according to the J.D. Power 2024 U.S. Individual Life Insurance Study. Younger generations of consumers — particularly Generation Z — represent the age groups most likely to agree that life insurance is too complicated to understand.
QUOTABLE
There is no other industry that stands to benefit more from people living longer.
—
Less than one-third (just 29%) of life insurance customers say they “strongly agree” their insurer makes complex policies simpler, while 61% say their agent or advisor explains things in terms they can understand. Among members of Gen Z, that number falls to 57%. Overall, 64% of life insurance customers say they fully understand their policies.
When asked what insurers could do to make life insurance statements easier to understand, most customers say “reduce complexity/make statements easier to read.” Younger Gen Z and millennial customers are looking for a guide or diagram on how to read the statement or links to educational videos and materi als that explain how to read it, according to the study.
PRENEED INSURANCE ON THE RISE
Demand for preneed insurance — also known as prefunded funeral arrangements — rose in 2023, according to the Life Insurers Council. Among the 16 survey participants, the total number of cases grew to over 517,000, representing $2.9 billion in sales.
Preneed insurance allows individuals to contract with a specific provider for funeral and burial expenses in advance. Generally, these are smaller than other life insurance policies. In 2023, the average face amount was $5,352 for single premium policies, $6,356 for multi-pay policies and $4,803 for preneed annuities.
Single premium policies continue to dominate the market. In 2023, of the preneed policies sold, 57% were single premium, 40% were multi-pay and 3% were annuities.
Brooks Tingle, John Hancock CEO
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The role of life insurance in estate planning and wealth transfer
Life insurance offers flexibility in estate planning that few other financial instruments can match.
By Steve Lockshin
Life insurance has long played a crucial role in estate planning and wealth transfer. Its evolution has addressed two primary challenges: creating an estate when liquidity is insufficient to support the needs of an insured’s survivors and preserving an estate in the face of illiquidity, which may occur in large estates or business succession scenarios.
Life insurance traditionally was viewed mainly as a tool for providing death benefits. Today, it has expanded far beyond this original purpose. It is now often leveraged for its tax advantages, even when there isn’t a significant need for insurance coverage. This expanded role underscores the importance of understanding various strategies and considerations involved in using life insurance. For insurance agents and financial advisors, this represents an opportunity to offer more comprehensive planning strategies and solidify client relationships.
Simple needs, simple solutions
In the fundamental case of creating an estate, life insurance remains a staple of
financial planning. This need should be calculated based on cash flow requirements and the liquidity necessary to meet survivors’ needs. Providing this essential service goes beyond typical investment management and is crucial to holistic estate and financial planning.
Estate planning decisions significantly impact life insurance benefits. Initiating these conversations ensures that insurance policy decisions align seamlessly with an individual’s overall financial picture.
Life insurance offers flexibility in estate planning that few other financial instruments can match. Policies can be adjusted over time to reflect changing circumstances such as increases in estate value, changes in tax laws or shifts in family dynamics. This adaptability allows for ongoing optimization of the estate plan. A holistic view of the client’s financial situation is crucial when selecting life insurance products. Factors to consider include the duration of coverage needed, the client’s saving and investment discipline, and their ability to fund a policy long-term.
Immediate liquidity
A crucial aspect of estate planning is ensuring sufficient liquidity to meet various financial obligations that arise upon the death of an individual. These
obligations can include estate taxes, outstanding debts, business continuation needs and providing for surviving family members. A life insurance policy held outside the estate with a death benefit sufficient to cover these obligations allows beneficiaries to inherit assets without the need to sell them hastily.
Life insurance provides an immediate source of cash upon the death of the insured. This is particularly valuable in estates that are asset rich but cash poor.
Adequate planning can provide for immediate loved ones and reduce family friction in the event of an unexpected death. Without a clear estate plan, disagreements over asset distributions can cause unnecessary stress. Estate planning also facilitates a smooth wealth transition to future generations, exploring options to minimize tax burdens and ensuring assets are passed according to the client’s wishes. These discussions can deepen client relationships by demonstrating the advisor’s genuine interest in their long-term well-being and legacy.
Irrevocable life insurance trusts
ILITs are effective estate planning tools that hold life insurance policies outside the beneficiary’s taxable estate, preserving the death benefit’s full value for beneficiaries by avoiding the 40% federal tax on estates that exceed the exemption limit.
At the end of 2025, the historically high estate tax exemption of $13.61 million (plus next year’s increase) per person and $27.22 million per married couple (plus two times next year’s increase) will return to an estimated $6 million-$8 million per person or $12 million-$16 million per couple (adjusting for inflation). This suddenly makes the estate tax an important consideration for many more households.
Furthermore, ILITs allow trustees or settlors to control the distribution of assets to beneficiaries, such as specifying staged distributions at certain ages
to encourage financial responsibility. Modern trust features, such as trust protector provisions, offer flexibility to adapt to changing circumstances. ILITs also provide asset protection from creditors, shielding the death benefit even if the beneficiary faces legal action.
ILITs become particularly crucial in scenarios involving the simultaneous or near-simultaneous death of two individuals, such as spouses or partners, due to an accident or natural disaster. In cases where two people die at the same time or in close succession, determining the order of death can be challenging and complicate the distribution of assets. An ILIT can help bypass a complex probate process by having a clear distribution plan in place, regardless of the order of death.
In the case of a sudden, unexpected common death, beneficiaries might be unprepared to manage a large influx of wealth. The ILIT can provide structured distributions and professional management, protecting beneficiaries from poor financial decisions or outside influences.
By using ILITs in estate planning, clients can maximize the benefits of their life insurance policies while minimizing estate taxes. Clients can not only protect assets for their beneficiaries but also structure asset distribution in a way that protects their heirs from the hazards of sudden wealth.
Business succession planning
Life insurance can also be a tool to fund buy-sell agreements for business succession planning. These agreements stipulate what happens to a business owner’s share of the company upon their death, disability or retirement. Life insurance can provide the necessary liquidity for surviving partners or the company itself to purchase the deceased owner’s share from their estate.
The buy-sell agreement’s structure has tax implications that should be carefully evaluated based on the business entity type and number of owners. One-way buy-sell plans can facilitate tax-efficient transfers from one generation to the next.
By using life insurance to fund these agreements, business owners can ensure that funds are immediately available to execute the buyout, preventing potential
conflicts or financial strain on the business or surviving owners.
For family-owned businesses, life insurance can be an effective tool for estate equalization. One child may be active in the family business while others are not, and the business owner might want to leave the business to the active child but still treat all children equally in their estate plan. Life insurance can provide liquid assets to nonactive children, equalizing the inheritance without forcing the sale or division of the business.
Retirement income strategies
Life insurance can also supplement retirement income, offering benefits similar to a Roth IRA without the same contribution and income limits: albeit with some costs associated with the insurance premium. Properly structured cash value policies can provide tax-free income and serve as a permission slip for clients to spend down their other assets.
For ultrahigh-net-worth clients who are facing estate tax liabilities and who have not been able to successfully transfer assets out of their estate, life insurance owned by an ILIT can provide liquidity to pay estate taxes, avoiding the need for fire sales of illiquid assets. Certain trust structures can offer flexibility for indirect access to policy cash values.
Building a legacy with life insurance
Life insurance is no longer only about providing a payout after a loss. It can be a powerful tool for crafting and protecting a client’s legacy. Agents and advisors can build customized plans addressing each client’s unique goals and values, thereby establishing themselves as trusted partners in the client’s financial journey.
Embracing this forward-thinking approach allows advisors to navigate the complexities of estate planning effectively. By leveraging their knowledge and fostering open communication, advisors can empower clients to build a secure and lasting legacy for future generations.
Steve Lockshin is a founder of AdvicePeriod and Vanilla, an estate planning software firm. Contact him at steve.lockshin@ innfeedback.com.
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ANNUITY WIRES
Annuity sales show no signs of slowing down in Q3
Annuity sales have to peak at some point, right? No doubt true, but that peak did not come in the third quarter.
Total annuity sales increased 29% year over year to $114.6 billion in Q3, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey. It was the 16th consecutive quarter of growth for the U.S. market and just shy of the quarterly record set in the fourth quarter 2023.
In the first nine months of 2024, total annuity sales increased 23% to $331.2 billion. Annuity sales previously set a record for the first six months of the year, LIMRA said.
Fixed-rate deferred annuities led the way with $40.7 billion in the third quarter, an 18% increase from third-quarter 2023 results. For the sixth consecutive quarter, registered index-linked annuity sales set a new quarterly record, totaling $17.3 billion in the third quarter of 2024, growing 37% from the prior year.
Fixed indexed annuity sales were $34.9 billion in the third quarter, up 54% from the prior year’s results.
J.D. POWER: AMERICANS ARE BUYING ANNUITIES, BUT MIGHT NOT UNDERSTAND THEM
Annuity companies could do much better job connecting with consumers to help them understand the products they sell.
The majority (59%) of current annuity customers struggle with their financial health, and many do not fully understand the products, concluded the J.D. Power 2024 U.S. Individual Annuity Study.
The study measures the experiences of customers of the biggest annuity companies across eight core dimensions (in order of importance): trust, value for price, ability to get service, ease of doing business, people, product offerings, digital channels and problem resolution, explained Breanne Armstrong, director of
insurance intelligence at J.D. Power.
Some of these eight dimensions might come into conflict as a producer is trying to close a sale. For instance, filling out the application for the customer “seems really helpful,” she said, “but then ultimately they end up not understanding the product as much because they lost that initial education component.
“So, it’s a little easier to do business, and you might rate the people a little higher, but then ultimately it results in less understanding down the road and lower satisfaction.”
AMERICANS SET TO HIT ‘PEAK 65’ IN NEED OF GUARANTEED INCOME
The U.S. population reaches Peak 65 this year, meaning that 30+ million Americans will reach age 65 between now and 2030.
The majority of this age group will
QUOTABLE
Favorable economic conditions and growing need for guaranteed retirement income continue to propel strong annuity sales.
— Bryan Hodgens, senior vice president and head of LIMRA research
have no protected income in retirement, said Robert Powell, editor and publisher of TheStreet’s Retirement Daily. He was part of a panel at the recent Alliance for Lifetime Income Summit.
The public/private safety nets designed for retirement in the last century no longer work for the demographics of this century, said Nick Lane, president of Equitable.
“I think one of the questions for the new generations is how do I create my own defined benefit plan, my own pension plan? Because if I do that, if I had secure income, that changes my outlook on what I can spend and also eliminates that tail risk,” he said.
This generation of retirees will be the first to be reliant on defined contribution plans, which panelists said creates an excellent environment for annuities.
NAIC REGULATOR GROUP ADDS ANNUITY ILLUSTRATIONS TO 2025 PRIORITIES
The Life Actuarial Task Force renamed the Indexed Universal Life Illustration Subgroup for its 2025 priority list.
It will be known as the Life and Annuity Illustration Subgroup and will “consider any guidance, actions, or recommendations that may be necessary to regulate annuity illustration practices.”
Broadening the illustrations subgroup will help it to “assist LATF in addressing questions or concerns that may arise regarding annuity illustrations,” a regulator explained.
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Three mistakes annuity owners should avoid
Annuities are gaining in popularity, but clients may be confused about some of the details.
By JB Beckett
Annuities are becoming one of the most common financial products used when planning for retirement.
Buyer demand, fueled by higher interest rates, market volatility from the COVID-19 pandemic and subsequent inflation have all contributed to recent record-breaking sales.
In 2023, total annuity sales hit $385 billion, 23% higher than the record set in 2022, according to LIMRA. The trend continued in 2024, with annuity sales reaching a record-breaking $113.5 billion in the first quarter. Despite their growing popularity, these products can be one of the most misunderstood financial products available to consumers today. This lack of knowledge can lead buyers to make mistakes.
Mistake No. 1: Buying the wrong annuity
One of the first mistakes consumers can make when purchasing an annuity is purchasing one that doesn’t fit with their overall retirement plan. Annuities are insurance contracts issued and guaranteed by an insurance company. There are four main types, and each comes with different features.
Single premium immediate annuities are annuities that immediately provide a guaranteed income stream. SPIAs are purchased from an insurance company. The insurer then guarantees that it will pay the annuity owner a fixed sum of money for a specific period of time.
Fixed annuities or multiyear guaranteed annuities are purchased by a consumer for a specific period of time, usually between one and 10 years. When these are purchased, the insurance company
Choosing the right annuity: Other important considerations
Limited access to funds. There may be limitations on access to the cash value of the annuity. Fees and penalties may apply for early annuitization, or liquidation.
Taxation. The taxable portion of an annuity payment is generally taxed as income, not capital gains.
Inflation. Many annuities offer options to ensure payments keep pace with rising costs.
Source: Life Happens
guarantees the principal and also guarantees a set interest rate for the duration of the contract.
Variable annuities work a little bit differently. Once they are purchased, the insurance company buys mutual funds chosen by the consumer from those offered by the insurance company. This means the value of the product can go up and down with the stock market. Most variable annuities provide a guaranteed death benefit that will be paid out to a beneficiary when the investor dies. Most of them also offer an income rider, which provides the purchaser with a guaranteed amount of income once activated for an annual fee.
Fixed indexed annuities, or indexed annuities, are purchased from an insurance company, and in exchange, the insurance company guarantees the principal never
decreases in value regardless of what the stock market does. The principal is then linked to, but not directly invested in, a stock market index such as the S&P 500.
Not understanding how annuities work and the various available types could lead consumers to make a purchase that doesn’t fit into their plan. For example, most people who buy SPIAs purchase them because they want to guarantee that they’ll never run out of money. Alternatively, a younger investor in their 30s or 40s may choose to buy a variable annuity because they can afford to take on that risk.
Mistake No. 2: Failing to review the annuity
Life changes over time, and the annuity someone may have bought may no longer serve their needs for a multitude of
reasons. For example, a client may have purchased a variable annuity that has a lot of growth potential. This might make sense if they’re decades away from retirement, but as they get closer to retirement, their risk tolerance will likely be a lot lower. In this case, it might make sense to exchange their variable annuity for a fixed annuity. Variable annuities also have annual fees and expenses that they may no longer want to pay.
An evolving market and changing interest rates are another reason to regularly review your client’s annuity. Annuities sold 10 or 15 years ago may look very different from what’s on the market today. There may be new features that are better suited to clients’ needs.
If a client purchased a time-sensitive annuity such as a MYGA, it’s important to pay attention to current interest rates. It’s possible that the renewal rate the client is offered when the term ends might not match other rates that are available in the wider market. If this is the case, renewing the contract may not be the best choice.
Mistake No. 3: Not understanding the surrender period
The surrender period is the time the owner must wait before they can withdraw funds from an annuity without being penalized. These periods are designed to discourage an annuity owner from taking the money out early or canceling contracts. If money is taken out
during this time, they will be charged a surrender fee, which is a percentage of the withdrawal amount. Surrender periods and fees can vary depending on the terms of the annuity, so make sure your clients understand the terms before they make the purchase.
Annuities can be complicated due to their various features and benefits. If your client is considering purchasing an annuity or has questions about their current annuity, you can help them determine what type of annuity to purchase, evaluate whether their existing annuity aligns with their retirement plans and goals, and make sure they understand the terms of their annuity to avoid any penalties.
Jason “JB” Beckett has been an advisor for 24 years and is the founder and president of Beckett Financial Group, with offices in West Columbia and Greenville, S.C. Contact him at JB.beckett@innfeedback.com.
HEALTH/BENEFITSWIRES
Blue Cross antitrust case reaches tentative $2.8B settlement
After 12 years of legal wrangling, a huge class action against Blue Cross Blue Shield has ended with a tentative agreement that is being called the largest health care antitrust case of its kind. Blue Cross agreed to pay roughly $2.8 billion to settle accusations brought by health care providers that the giant insurer and its affiliates divided insurance markets into exclusive areas where they did not compete with one another, increasing costs and suppressing reimbursements.
QUOTABLE
A person’s health directly impacts their wealth — and this connection becomes even more acute as people age.
— Susan Silberman, senior director of research and evaluation at the National Council on Aging
“In total, 38 separate Blue Plans operate under Blue Cross Blue Shield trademarks and trade names, providing health insurance to approximately 100 million subscribers,” reads the complaint. “Plaintiffs contend that the 38 Blue Plans are independent health insurance companies that, but for any agreement to the contrary, could and would compete with one another.”
Instead, according to the complaint originally filed in 2012, the plans worked together through Blue Cross Blue Shield to divide insurance markets, set prices and discourage competition. The plaintiffs contended such actions violated federal antitrust acts as well as various related state laws. As a result, the class action suit alleged, hospital systems, physicians and other health providers were underpaid for reimbursements.
Blue Cross Blue Shield denied the allegations but, in a statement, said it agreed to the settlement and promised to make operational changes to put years of litigation behind it. The settlement covers U.S. health care service providers, including hospitals and some doctors, with Blue plans patients between July 2008 and October 2024.
UNINSURED RATES DROPPED SIGNIFICANTLY WITH ACA
New census data confirm that uninsured rates nationwide have been dropping significantly.
From 2013 to 2019, the uninsured rate for working-age adults (18-64) dropped across all 50 states and the District of Columbia, according to new data. Nationally, the uninsured rate fell by 7.6 percentage points, from 20.5% to 12.9%. This reduction was especially notable in states that expanded Medicaid under the Affordable Care Act. Of the 11 states that experienced the largest decreases in
uninsured rates (10 percentage points or more), all were Medicaid expansion states. Private insurance coverage also increased across most of the country. Between 2013 and 2019, 44 states and D.C. saw rises in private coverage, with Florida showing the most significant gain, up from 60.1% to 69.9%. No state reported a decline in private insurance coverage during this period.
WHITE HOUSE RULE WOULD EXPAND ACCESS TO COST-FREE BIRTH CONTROL
The Biden administration proposed making over-the-counter contraception available at no cost and with fewer administrative hurdles. The proposed rule would require insurance plans to cover OTC contraceptives at no cost and without a prescription for individuals with commercial insurance plans.
Karen Lynch stepped down as CEO of CVS Health.
If finalized, the rule would require plans to make all available OTC contraceptive products available through in-network pharmacies.
Under the ACA, most private insurance plans must cover birth control without cost sharing. Currently, patients can get coverage without cost sharing for overthe-counter contraceptives, including oral contraceptives, spermicide and condoms with a prescription (such as female condoms) or through their provider in a health facility or for long-acting services like an IUD.
LIFE SPANS ARE GROWING BUT HEALTH SPANS ARE NOT
We’ve all heard the term “life span,” but what does “health span” mean? Health span refers to the number of years of good health someone has in their lifetime. And that health span is shrinking even as life spans increase, the Centers for Disease Control and Prevention reports.
Older Americans are spending more years in poor health. Today, the average person spends about 10 years with chronic ailments such as diabetes, cancer, arthritis, cardiovascular disease, dementia, cataracts or osteoporosis — roughly double the length of time as in the 1960s, Dartmouth College researchers said.
The main reason for the longer span of time in poor health is that medicine is doing a better job of keeping people alive longer but not necessarily treating their chronic ailments, the researchers said.
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Help workers understand and use their benefits
Research shows that employers are offering a greater array of benefits, but workers often don’t understand or use them.
By Susan Rupe
Adisconnect exists between what workplace benefits employers offer their workers and how workers understand and use these benefits.
Todd Katz, MetLife’s head of U.S. group benefits, told InsuranceNewsNet that benefits brokers must communicate those benefits to workers in a way they understand, and then determine how many workers are actually using their benefits.
Workers’ share of health care costs continues to increase, Katz said, and that puts more pressure on employers to offer a broad array of wellness and voluntary benefit options.
“But what some of our research has told us is that employees aren’t particularly satisfied with their benefits, nor do they fully understand their benefits, nor are they using them in the way that their em ployer would expect them to do,” he said. “So, you sort of have this dichotomy of employers going out of their way to make it better, and employees really not seeing that benefit.”
Katz said several issues contribute to employees not understanding their benefits. One issue is time. “Everybody’s busy. All the data out there says people aren’t spending a great deal of time thinking through what their benefits are,” he said.
Another issue is the tools that help workers through the benefits selection, support and enrollment process.
“Employers put these tools out there and they get very low usage,” Katz said. “I’d also argue that they’re not easy to connect into the enrollment experience. Then when people use their benefits throughout the year, they’re not experiencing them in a way that creates endearment. I think there’s an opportunity to do better.”
Employees need tools to help them make the benefit decisions that are best for their unique needs, Katz said.
“I think employees have had enough of reading long booklets, whether they’re printed or online,” he said. “Everyone has their own medical situation; they have their own financial situation. I think the tools out there have been a bit too generic. Employees look at them and ask themselves, ‘Is this really helping me?’”
MetLife developed its own tool, Upwise, which is used by more than 1 million workers to help determine the voluntary and wellness workplace benefits that are right for them.
First, employees start by taking a short and secure survey to pinpoint their specific needs and tailor guidance and recommendations specific to them. Second, upon completion of the survey, employees receive a personalized recommendation covering all of their available employer-sponsored benefits, factoring
Source: MetLife and Harvard Business Review
in their health, financial situation, future plans and preferences.
And third, once employees receive their recommendations, Upwise then helps educate employees about their benefits, where to access them and how to set up real-time notifications to take advantage of their benefits.
“It’s designed to create personalized benefit recommendations using your own data,” Katz said. “You give us permission to look at your medical data and your financial data, and then we give you insights on all your benefit plans, not just the ones we offer. We give you robust recommendations and the pros and cons of those recommendations.”
A diverse workplace needs diverse benefits
As workplaces become more diverse, employers are challenged to create an array of voluntary benefit offerings that are attractive to and work for a greater range of employees. Katz said some of the voluntary benefits that are trending include:
» Mental health benefits, including access to apps such as Calm or online mental health tools.
» Maternity benefits such as breast milk storage.
» Identity theft protection and cyber theft protection.
» Legal services.
MetLife research has found that as each generation experiences various life stages and moments, they also prioritize certain benefits accordingly.
» Employees who are expanding their family (e.g., having or adopting a child) are more likely to prioritize legal services, with millennials most likely to experience this (30% of millennials vs. 22% overall).
» Employees experiencing unplanned financial stress are more likely to prioritize pet insurance and emergency fund support, with Generation Z and Generation X most likely to experience this (50% of Gen Z and 43% of Gen X, vs. 39% overall).
» Employees facing ongoing mental health challenges are more likely to prioritize employee assistance programs, with Gen Z employees most likely to experience this (51% of Gen Z vs. 38% overall).
» Workers are also looking for support in choosing the right benefits — 75% would like custom decision-making support based on their mental, physical and financial needs.
Benefits brokers spend a lot of time enrolling workers in coverage, but Katz said that enrollment “is just the starting line.”
“You need to see whether people are using their benefits and seeing value in them,” he said. “That means looking at
Source: MetLife
how those programs are running, so brokers can see what can be tweaked in the future. You have this broad set of needs in the workforce. Figure out what those needs are and work with your clients to develop benefit offerings that meet workers’ needs.”
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.
Source: MetLife
‘Sandwich generation’ women squeezedfinancially
Nearly two-thirds of women (64%) in the sandwich generation — those who are caring for both children and parents or relatives — reported that caregiving duties have negatively impacted their ability to save for their financial goals . This is according to research from Edward Jones in partnership with NEXT360 and Morning Consult.
In addition, more than half (57%) of women have had to take on fewer professional responsibilities due to caregiving, resulting in a loss of potential income. Findings from the survey also showed that the caregiving burden can impact women’s personal health and sense of purpose.
In the study, almost half (46%) of women in the sandwich generation reported that they are the sole caregiver for their children, while 54% said the same for parents or relatives. Additionally, more than half (56%) said that they feel like they do not have enough savings to support those for whom they are primary caregivers. Therefore, over the next five years, women in the sandwich generation noted they will remain focused on saving and prioritizing long-term expenses such as caregiving (75%), child education (72%) and health care (81%).
Women in the sandwich generation cited the many demands they juggle daily as the reason for not stepping into the “investment manager” role, with nearly two-thirds saying that if they had more time (65%) with fewer caregiving responsibilities and the help of a financial advisor (51%), they’d be more confident in planning for their financial future.
Gen Z focused on planning, not debt
Gen Z takes a forward-looking approach to money, wanting help with saving and planning — even though managers and human resource leaders think this age group is more worried about debt. That’s among the results of a study from The Standard, which explores frontline people managers’ views of Gen Z and benefits and compares these findings with previously reported data on Gen Z and HR decision-makers.
How much is enough?
Gen X women believe they will need $2M to retire comfortably.
Source: Northwestern Mutual
Trust is key when seeking advice
Equitable released a new study on what consumers are looking for in an advisor in light of the “great wealth transfer.” No surprise — trust was the top factor consumers named in choosing an advisor, cited by 55% of those surveyed.
By 2030, more than $30 trillion in assets are expected to change hands as part of this transfer of wealth to surviving spouses and the next generation. Equitable’s study said that advisors who want to guide the recipients of that transfer must consider three factors:
1. Much of the wealth that women inherit will likely be in the form of a benefit following the death of a spouse.
2. Nine in 10 millennials who expect to inherit wealth said they trust the advice and decisions of financial professionals.
3. Eight in 10 survey respondents plan to use a financial professional to manage their new wealth.
The study’s key finding: Managers, like HR leaders, don’t realize how much Gen Z focuses on their financial future. An impressive 79% of Gen Zers report saving is their No. 1 goal . But only 55% of managers and 57% of HR leaders say Gen Z feels this way. Instead, many supervisors and HR decision-makers believe paying off debt is one of Gen Z’s top objectives. Half of managers and 59% of HR leaders state this is the case. The reality? Only 37% of Gen Zers say lowering debt is an important goal.
Why your clients might face higher taxes in retirement
How you can keep taxes from taking a bite out of your client’s retirement portfolio. • Joe Schmitz Jr.
We must stay ahead of the curve if we want to best serve our clients. One critical issue that demands our attention is the likelihood that our clients might face higher taxes in retirement.
For decades, conventional wisdom has suggested that retirees fall into lower tax brackets. Today, shifting financial landscapes and policy changes indicate that this is no longer a fact we can count on.
Changes to Social Security taxes
Do you remember when Social Security benefits were not taxable? Before the 1980s, retirees enjoyed their Social Security benefits tax-free.
As you know, tax laws are different today, and Social Security is taxable for most beneficiaries. To determine how much a client’s Social Security is taxed, we look at their provisional income. We calculate this by adding half of their Social Security benefits plus all their other taxable income, including dividends, interest, capital gains and withdrawals from tax-deferred accounts.
Depending on your client’s provisional income, up to 85% of their Social Security benefits may be subject to taxes. We know that currently, a base income of $32,000 or less for married couples filing jointly results in no taxation. However, $32,000 to $44,000 means 50% of the benefits may incur taxes. More than $44,000 pushes up to 85% of your clients’ benefits into the taxable column.
Given that these thresholds have not been indexed for inflation, an increasing number of retirees are finding themselves liable for Social Security taxes. This especially applies to those among your clients who have been diligent savers.
What clients must know
• Withdrawals from traditional IRA and 401(k) accounts are taxable.
• You won’t pay higher taxes on your other income, just on the retirement account withdrawals. That’s the way marginal tax brackets work.
• Withdrawals from Roth IRAs and Roth 401(k)s are generally not taxable.
• If you’re withdrawing money from a traditional account, keep an eye on your tax bracket. You may be able to limit your withdrawals to avoid exceeding your bracket’s maximum.
Source: Investopedia
This system has effectively created a “tax torpedo,” where additional income, such as required minimum distributions, significantly increases the tax burden on Social Security benefits, leading to tax rates that exceed 40%.
Medicare and its impact on retirement planning
Medicare Part B and Part D premiums are also influenced by your clients’ income levels. Your higher-income retirees are subject to the income-related monthly adjustment amount, meaning they’ll face increased premiums based on their modified adjusted gross income.
A higher MAGI often pushes retirees into higher IRMAA brackets, drastically increasing health care costs. This is typically worse for clients with substantial tax-deferred saving, as these withdrawals count toward their MAGI. It seems particularly unfair, but your clients who have been diligent savers will face higher Medicare costs even though they
receive the same benefits as people who saved less.
The risk here is twofold. First, elevated income increases Medicare premiums, and second, it reduces your clients’ net Social Security benefits. This is because these premiums are often deducted directly from Social Security checks.
Tax-deferred investments and required minimum distributions
Tax-deferred investments such as individual retirement accounts and 401(k)s are popular retirement savings vehicles due to their tax advantages during your client’s accumulation phase. However, these benefits come with a deferred tax liability. Once retirees reach age 73 (if born before 1960, 75 if born in 1960 or after), they must start taking the required minimum distributions. This can push them into higher tax brackets and expose more of their Social Security benefits to taxation.
RMDs represent a significant source of taxable income in retirement. The
mandatory nature of these distributions can lead to substantial, often unexpected, tax bills. For example, large distributions may push retirees into higher tax brackets, triggering increased tax rates on ordinary income and Social Security benefits.
Your clients who fail to take their RMDs will face substantial penalties. Therefore, it is vital to have a thorough understanding of how these withdrawals fit into the broader tax picture.
Strategies to help avoid the tax torpedo
The tax torpedo effect occurs when RMDs and other income significantly increase provisional income, resulting in higher overall tax rates. Careful planning around provisional income is essential to mitigate this effect.
One effective strategy is to convert tax-deferred accounts to Roth IRAs. This can be particularly beneficial when your clients are in lower tax brackets, such as the period before they begin claiming Social Security benefits or are forced to take RMDs. A strategic Roth IRA conversion can help distribute the tax hit over several years.
Unlike traditional IRAs, Roth IRAs do not require RMDs during the account holder’s lifetime. This can be a powerful tool for long-term tax planning, reducing taxable income in retirement and preserving wealth for future generations.
Encourage your clients to diversify their investments across different types of accounts — taxable, tax-deferred and tax-exempt. This diversification offers flexibility in managing tax liability throughout retirement. For example, your clients can implement a tax-efficient withdrawal strategy that significantly impacts the tax efficiency of their retirement portfolios. With a thoughtful sequence of withdrawals — initially tapping taxable accounts, followed by tax-deferred accounts and finally, tax-exempt accounts, you can enable them to manage taxable income levels effectively.
If your clients are charitably inclined, qualified charitable distributions allow them to donate up to $105,000 directly from their IRAs to qualifying charities when they reach age 70½. These distributions are excluded from taxable income. This effectively reduces the amount
subject to RMDs and diminishes a client’s overall tax burden.
Cash-value life insurance policies can serve as another instrument to reduce taxable income. Because withdrawals and policy loans from these accounts are generally tax-free, they offer your clients another stream of income that won’t add to their provisional income.
Another strategy involves using health savings accounts. HSAs offer triple tax advantages: Contributions are tax-deductible, growth is tax-free and withdrawals for qualified medical expenses are also tax-free. Encouraging clients to use HSAs can provide another source of tax-free income in retirement.
Finally, encouraging clients to delay claiming Social Security benefits until age 70 can increase their monthly benefit amounts and potentially reduce taxable income during the early years. This can provide a higher guaranteed income later in life, potentially with a lower tax impact.
Advanced modeling tools and software can help you demonstrate all this data and project future RMDs, tax liabilities and the overall financial landscape of retirement. These projections can help you guide your clients through the complex decisions on when and how to convert traditional IRAs to Roth IRAs, the timing of Social Security benefits, and other tax-efficient strategies.
The idea that retirees will automatically fall into lower tax brackets is increasingly becoming a myth. As lifelong savers approach retirement, the interplay of tax-deferred investments, Social Security taxes, and Medicare premiums can result in an unexpectedly high tax burden.
As financial advisors, you are responsible for guiding clients toward proactive planning and effective strategies to mitigate these tax risks. By understanding the nuances of provisional income, leveraging Roth conversions, adopting charitable distributions, and implementing tax-efficient withdrawal strategies, you can help your clients achieve a financially secure and tax-efficient retirement.
Joe Schmitz Jr. is founder and CEO of Peak Retirement Planning.
Contact him at joe.schmitz@ innfeedback.com.
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What’s next for retirement income security?
Insurers argue that the fiduciary rule limits choices for retirees and might make it more difficult to sell annuities and other retirement planning insurance products.
By Doug Bailey
When President Gerald Ford signed the Employee Retirement Income Security Act of 1974, it marked a revolutionary overhaul of employer-sponsored retirement plans. Before ERISA, employers and unions decided how employee benefit plans were designed and run. There were no minimum standards, leading to serious abuses and corruption. ERISA federalized private pension plans and made worker security a top congressional priority.
But rather than bringing an end to the issue, ERISA, which turned 50 in 2024, was really the beginning of an evolutionary era of worker retirement plans. Consider: Employee retirement plans then existed in a defined benefit world, which guaranteed employees a specific payout in retirement. Now it is a defined contribution world, where employees can choose retirement investment options. There were no 401(k) plans, profit-sharing plans or individual retirement accounts; there were no health and welfare benefits plans, like COBRA and the Affordable Care Act, all of which popped up after ERISA was made law.
In 2006, the Pension Protection Act brought automatic enrollment provisions, allowing employers to automatically enroll employees into retirement plans. The PPA also established guidelines for default investment options like target-date funds, which became a popular choice for employers to meet their fiduciary responsibilities.
In addition, fee disclosure rules and other transparency provisions, as well as cybersecurity regulations, have all been added to the original ERISA, making it one of the most dense, involved and complex pieces of legislation ever enacted. An ERISA “outline” book published by the American Society of Enrolled Actuaries is nine volumes totaling nearly 10,000 pages.
All ‘very hazy’
“Even by the mid-80s, people still were struggling with figuring out what ERISA meant and how it worked and what the issues were,” said Jay Kirschbaum, director of benefits compliance at World Insurance, Iselin, N.J. “It was all very hazy in a lot of ways.”
And that was before the huge expansion of add-on regulations.
Kirschbaum’s specialty is health and welfare plan compliance, which did not exist until the late 1990s.
“The passage of COBRA accelerated the need for more knowledge and information about health and welfare plans,” he said.
“But compliance issues with health and welfare plans weren’t even on anybody’s radar, primarily because back then, most
“And no matter what they say about other laws that regulate investments, they are not subject to the Department of Labor rules and are not as strong, and in some cases, particularly in the insurance sphere, not quite a joke, but they’re not very demanding.”
— Norman Stein, senior policy counsel and acting legal director for the Pension Rights Center
medical plans were fully insured medical plans, and they were regulated by the states. And, so, there wasn’t a lot of ERISA application generally.”
But things change. One of the most recent and significant changes still up for debate was the U.S. Department of Labor’s fiduciary rule, which expanded the definition of who is considered a fiduciary under ERISA. The original rule was narrow, only applying to those directly managing a plan’s assets. A new fiduciary rule, published in 2016, extended fiduciary duty to advisors selling financial products with retirement plan dollars. A judge tossed out the rule in 2018. Another version of the fiduciary rule, known as the Retirement Security Rule, was introduced this year and is the subject of several lawsuits.
A line of challenges
The Federation of Americans for Consumer Choice v. Department of Labor case was the first case challenging the DOL’s 2024 fiduciary rule. It was followed by American Council of Life Insurers v. Department of Labor, filed by nine insurance trade associations. The plaintiffs in both cases filed in federal district courts in the Fifth Circuit and contended that the 2024 fiduciary rule exceeded the DOL’s authority and flew in the face of a Fifth Circuit ruling in Chamber of Commerce v. Department of Labor, which rejected an earlier version of the fiduciary rule finalized in 2016.
“There’s huge pressure on the DOL and the IRS to create these prohibited transaction exemptions,” he said. “But you know, they’re also trying to staff up, because there’s this huge new regulatory regime and they need people to do this. And so, it’s just kind of a nightmare.”
In addition to the legal challenges against the 2024 fiduciary rule, officials say there are also partisan splits over the rule that are reminiscent of the fight over ERISA that erupted in the 1970s before Ford signed the bill.
“The other people in favor of the rule are people who are already fiduciaries,
“I’m a historian, and what I did was go back and look at all of the legislative rigmarole that happened getting ERISA passed and how that provision for investment advice definition got into the statute,” said Prof. Wooten. “And so, I think based on what we know, the DOL wins.”
— James Wooten, law professor at University at Buffalo School of Law
annuities, things that are not fixed-index annuities, or variable annuities, are very useful products and benefit a lot of people,” Stein said. “The more complicated instruments, to be honest, are hard to understand, and I wonder sometimes if the people selling them really understand them.”
Stein and other pension advocates say the filing of the lawsuits in the Fifth Circuit was a “tell” due to that court’s overwhelmingly pro-business decisions.
“The Fifth Circuit, when it suggested the Department of Labor basically had no business interpreting provisions of the Internal Revenue Code, was just so dead wrong,” said Stein. “It’s laughable. I mean, it’s stuff a fourth-grader who took an introductory law class would get right.”
Stein and others believe the DOL will eventually prevail in the challenges to its fiduciary rules.
“I’m a historian, and what I did was go back and look at all of the legislative rigmarole that happened getting ERISA passed and how that provision for investment advice definition got into the statute,” said Prof. Wooten. “And so, I think based on what we know, the DOL wins.”
“It’s complicated because this fiduciary definition is all tied in with the prohibited transaction rules in ERISA, and the implementation of the prohibited transaction rules created a huge brouhaha,” said James Wooten, law professor at University at Buffalo School of Law and author of The Employee Retirement Income Security Act of 1974: A Political History. “It is really a nightmare for the Department of Labor and the IRS to deal with.”
Wooten said transaction rules that allowed the DOL to create administrative exemptions would now seem to fall within the scope of the prohibited transactions exemptions.
who take their fiduciary status very seriously and are operating at a competitive disadvantage because they have to put their clients’ interests first,” said Norman Stein, senior policy counsel and acting legal director for the Pension Rights Center, a Washington nonprofit organization that protects and promotes retirement security. “And no matter what they say about other laws that regulate investments, they are not subject to the Department of Labor rules and are not as strong, and in some cases, particularly in the insurance sphere, not quite a joke, but they’re not very demanding.”
Insurers speak out
Insurers, as well as brokerages and financial advisors, say the new DOL rule would increase costs and might make it more difficult to sell annuities and other retirement planning insurance products. Insurers also argue that the fiduciary rule limits choices for retirees.
“I personally think that straight-life
Meanwhile, experts predict there will be more efforts to expand ERISA in the coming years, perhaps to make it applicable to government retirement plans; traditional, Roth and SEP IRAs; and benefits that are now offered solely for complying with workers’ compensation, unemployment or disability laws.
“If I were emperor, I would expand a lot of what ERISA does to all those other things,” said Kirschbaum. “I would give more leeway to employers and give them an opportunity to have more flexibility in their plan designs.”
Kirschbaum, however, does not expect to see that happen.
“That’s not the way the world is going,” he said. “It’s going the opposite way, where we’re going to mandate and tell you exactly what you can and cannot do.”
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.
The transformational potential of AI for advisors
Artificial intelligence offers significant potential for financial advisors to streamline operations and improve customer outcomes.
By Kartik Sakthivel
The age of artificial intelli gence is here, and it will undeniably transform our society and our industry.
Digital transformations in the insurance industry have been commonplace for about a de cade, with AI driving its latest iteration. However, legacy systems, highly bespoke homegrown systems and highly custom ized off-the-shelf software continue to pose challenges. AI can enhance operational efficiency and drive substantial value across various facets of the industry.
ensure their enterprise AI strategies place emphasis on explainable AI and focus on AI governance.
Companies can maximize value from AI investments as business drivers by redirecting IT investments to fund AI initiatives, centralizing AI investments, and developing benchmarks for AI funding. Companies should prioritize educating financial professionals about tools that incorporate AI, especially generative AI.
To be successful, it is vital for leaders to be cognizant of the fact that jobs and professions will change in the next two to three years, but not necessarily be eliminated. Executives need to start thinking about skilling and reskilling employees, including training employees on how to use GenAI.
Just as vital, executives should lean on their chief information officers and cross-functional teams to maintain “humans in the center.” Enforcing the need for human judgment in the center of all use case implementations ensures that AI systems are implemented responsibly and ethically.
Carriers will need to have a documented AI strategy that takes a decided risk-based approach to strike an effective
That’s one of the reasons we established the LIMRA and LOMA AI Governance Group — a cross-company industry-level consortia of over 90 business and technology executives, representing over 50 companies — in January.
In addition to surfacing insightful reports on the current state of AI in our industry, this group is actively developing tools, frameworks, scorecards and best practices for AI so that all firms can benefit from this technology.
We recently surveyed group members on several AI-focused topics. It’s clear the implementation of AI and GenAI is a focus across our industry today. As companies begin GenAI implementations, they’re recognizing both cost reductions and productivity gains, and seeing few inaccuracies with their implementations — suggesting these innovations are opportunities for growth.
In the survey, 89% of executives believe that AI will have a moderate to significant impact on our industry over the next three years, and 70% believe that AI will have moderate to significant impact on their firms.
an example, financial advisors spend a considerable amount of time managing administrative tasks. AI can provide operational efficiency by automating these routine and repetitive tasks. This will allow advisors to focus on higher-value tasks such as managing risks (also enabled by AI), customer outreach and engagement.
With client expectations changing and a new purchasing demographic (Generation Z), AI offers significant potential to financial advisors to streamline operations and improve customer outcomes via intelligent prospecting, personalization, ongoing engagement and customer service. AI will enable financial advisors to remain competitive and elevate their practices. AI will also allow advisors to personalize financial advice, which can be individualized to customers’ financial goals, life stages and risk appetites. As AI continues to evolve, financial advisors who embrace these tools will be better positioned to stay competitive and grow their practices.
Kartik Sakthivel is LIMRA and LOMA chief information officer. Contact him at kartik.sakthivel@ innfeedback.com.
Advocating for an important tool for clients with disabilities
NAIFA supports expanded provisions of the ABLE Act.
By Rick Cordaro
Disabilities impact people’s lives in many ways, from imposing physical challenges to taking emotional tolls. Having a disability in the U.S. is also costly. A family with a working-age person who has a disability needs an average of 28% more income to achieve the same standard of living as friends and neighbors in similar socioeconomic situations, according to research by the National Disability Institute and others.
As nearly 22 million working-age Americans are living with disabilities, it is important for financial professionals to understand this significant financial burden and the role ABLE accounts can have in mitigating the problem.
This month is the 10th anniversary of the passage of the Achieving a Better Life Experience Act of 2014, which allows individuals with disabilities and their families to save and invest in tax-free savings accounts without losing eligibility for federal support programs such as Medicaid and Supplemental Security Income. Under the legislation, states may create tax-advantaged 529A ABLE account programs eligible people with disabilities can use to pay qualified expenses. These accounts are like 529 educational savings accounts.
To qualify as a beneficiary of an ABLE account, an individual must:
» Have an ongoing disability with onset before their 26th birthday (in 2026, the age limitation for the onset of disability increases to 46).
» Be receiving SSI or meet the Social Security Administration’s functional limitations criteria with certification by a medical doctor.
The District of Columbia and 46 states administer ABLE programs, but access is not limited to those jurisdictions.
Some programs welcome out-of-state enrollees. Despite their widespread availability, ABLE accounts are definitely an underused resource.
About 8 million Americans qualify for the accounts, yet fewer than 200,000 people are taking advantage of them. And although ABLE accounts contain over $1.25 billion in savings, the average balance is less than $10,000. A survey by the Financial Health Network found that 93% of disabled Americans have no knowledge of the program.
How do ABLE accounts work?
Anyone can contribute to an ABLE account — including the beneficiary, family, friends, employers and special needs trusts — up to an annual limit of $18,000 in 2024. Employed individuals with disabilities who do not participate in employer-sponsored retirement plans during the year may contribute an additional amount up to the federal poverty level for an individual or their total compensation, whichever is lower.
Investments in these accounts grow tax-free and can be withdrawn to pay a variety of qualified disability expenses, including transportation, employment training, education, housing, health care, assistive technology and services, basic living expenses, and more. As long as the account balance remains under $100,000, it does not affect the beneficiary’s eligibility for SSI. Account balances up to plan limits in the $235,000-to-$600,000 range do not affect eligibility for Social Security and Disability Insurance, Department of Housing and Urban Development housing assistance programs, the Supplemental Nutrition and Assistance Program, the Free Application for Federal Student Aid, or Medicare parts A, B, C or D.
The Tax Cuts and Jobs Act
Tax reform legislation passed in 2017 expanded ABLE accounts and made them more flexible in several important ways.
The legislation created the expanded contribution limit for working beneficiaries, permits beneficiaries to claim the federal “saver’s credit” on their income taxes, and allows penalty-free rollovers from 529 education savings plans into ABLE accounts. As has been widely reported, many provisions of the TCJA are set to expire at the end of next year, and these include the ABLE program measures. Sens. Bob Casey, D-Pa., and Eric Schmitt, R-Mo., introduced the Ensuring Nationwide Access to a Better Life Experience Act to make the TCJA’s ABLE account provisions permanent. At the time of writing, the ENABLE Act has passed the Senate unanimously, and a companion bill in the House introduced by Reps. Lloyd Smucker, R-Pa., and Don Beyer, D-Va., enjoys strong, bipartisan support. NAIFA’s advocacy team has encouraged members of Congress to support the legislation and expects that the expanded provisions of the ABLE Act will become permanent either this year or next. Americans with disabilities make up a significant and growing portion of the population who may face significant economic burdens. Financial professionals with a solid understanding of the ABLE Act can help some clients make important strides toward achieving and maintaining financial security. The pool of eligible ABLE account beneficiaries will expand significantly in 2026, when the age limitation for the onset of disability goes up to 46, making it even more likely the accounts will be relevant. Just as anyone whose clients have school-aged children should know about 529 plans, those working with disabled people and their families or their employers should understand the significance of ABLE plans.
Rick Cordaro, DIA, DIF, LUTCF, is a board member of the International DI Society and former trustee for NAIFA-Iowa. Contact him at rick.cordaro@ innfeedback.com.
Attracting and empowering the next wave of financial security professionals
The aging advisor workforce is a critical issue for the industry.
By Maggie Seidel
The financial security profession is grappling with a critical issue: the aging advisor workforce. With only 9% of advisors under the age of 30, the need for fresh talent and focused succession planning has never been more urgent. As a large portion of managing partners approach retirement in the next decade, the industry must confront the challenge of attracting, developing and retaining the next generation of professionals to ensure its continued growth and stability.
One of the first areas requiring attention is recruitment. Financial advising has been perceived as a commission-based sales profession, which doesn’t always resonate with younger generations. Many young professionals shy away from careers they associate with sales and commissions, yet these same individuals often thrive in environments such as social media, where influencers rely heavily on engagement metrics akin to sales performance. Bridging this gap — helping younger professionals see the entrepreneurial and income-generating opportunities in financial advising — is critical to bringing fresh talent into the industry. Equally important is changing the face of the profession. Although progress has been made in promoting diversity, there is still much work to be done. The financial security profession has long been dominated by middle-aged white men, but the conversation around diversity, equity and inclusion is growing.
Ten years ago, industry events such as Finseca’s LAMP (Leaders and Managers Program) would have seen only 30 to 40
women on stage. This year, there were more than 300 women participating. While that’s still far from ideal, it’s clear that intentional efforts to recruit more women, people of color and underrepresented groups are paying off. However, diversity in recruitment shouldn’t be limited to gender and race. It’s also about appealing to a broader range of individuals, regardless of background, and showing them the potential of a career in the financial security profession.
Building teams and fostering culture
Beyond recruitment, leadership development and succession planning are critical issues that the industry must address. For years, the focus has been on advisor retention. Retention is important, but it has come at the expense of developing the next generation of leaders. Succession planning isn’t only about replacing high-performing individuals; it’s about building teams and fostering a culture where leadership is shared and a company’s success doesn’t rely on just one person. Firms that prioritize team development will be better positioned to weather future changes and ensure long-term stability.
Another challenge is the demographic gap between who the industry serves and who it could serve. Financial advising historically has catered primarily to high net worth individuals. Although that market remains important, there’s a huge opportunity to expand the reach of financial services to a broader audience. The COVID-19 pandemic underscored the significant need for financial security across a wider swath of the population. Many people who had never sought financial planning before suddenly found themselves in need of guidance on everything from emergency savings to
retirement planning. This shift presents an opportunity for advisors to reach new clients and secure the financial futures of more individuals and families.
The financial security profession is facing challenges in recruitment, diversity and leadership development, but it also has a tremendous opportunity for growth. By focusing on bringing in diverse talent, educating future professionals and fostering strong teams, we can ensure a bright future for the industry and, more importantly, for the clients we serve. As we continue to adapt to the changing landscape, the key will be intentionality — whether it’s in recruiting new advisors, building diverse leadership or expanding our reach to underserved markets. With the right strategies in place, the financial security profession can continue to thrive for generations to come.
Maggie Seidel is the executive vice president of external affairs and chief of staff at Finseca. Contact her at maggie.seidel@ innfeedback.com.
P/C coverages that retirement advisors should know
Adding value to the client relationship while expanding the advisor’s network of professionals.
By Ernest Guerriero
Retirement plan professionals have knowledge in the areas of investments, financial literacy and retirement readiness. Many of us are either bound to act in the client’s best interest or hold ourselves out in a fiduciary capacity. The overriding goal is to protect the client as best as possible.
Establishing a qualified retirement plan exposes the plan sponsor, who is usually the employer, as well as the advisor, to liability. This column focuses on the employer. While the employer may attempt to mitigate liability, they cannot eliminate it.
This leads us to the three methods of risk management that are not related to an Employee Retirement Income Security Act of 1974 plan. First, we can avoid the exposure; however, the decision has been made to establish the plan, and therefore avoidance is not an option.
Second, we can self-insure the risk. Certainly, this may work, considering business owners tend to take on an elevated level of risk. In 2023, ERISA fiduciary breach settlements ranged from $200,000 to $60 million, according to Goodwin Law. Of course, these will vary by size of the plan and the nature of the breach, but does the employer want to chance this, considering the litigious environment? It takes only one disgruntled employee.
Third, we can put the exposure on a third party, an insurance company, by insuring it. Through a more detailed risk management assessment, we may want to have a combination of self-insurance and third-party insurance.
Although the retirement plan professional may not be licensed to sell property/ casualty coverages, I believe the professional should at least be aware of these coverages and recommend the client review
these topics with their property and casualty professional. Many retirement plan professionals are accustomed to doing this with professionals in other fields.
Those of us who are not licensed in the tax or legal fields may not provide tax or legal advice; therefore, we collaborate closely with the client’s other trusted professionals when considering and establishing a plan. The P/C professional is no different and should be engaged when it comes to these topics.
This is not an exhaustive list of P/C coverages but is limited as it relates to an ERISA plan. In general, there are three P/C coverages to become familiar with.
The ERISA fidelity bond is a requirement, with limited exceptions. Every person who handles plan funds must be adequately bonded. The bond will cover the plan, not the individuals, against loss by reason of acts of fraud. This obligation to purchase the bond is outlined in ERISA and the Department of Labor regulations. Fraud or dishonesty includes risks of loss that might arise through dishonest or fraudulent acts such as larceny, theft, embezzlement, forgery and misappropriation, among others. The protection of the plan is paramount and covers the plan even if the person committing the act obtains no personal gain from committing the act or the act is not subject to punishment as a crime or misdemeanor.
The fidelity bond is inexpensive as compared to the assets and number of plan officials handling plan assets. However, it is frequently overlooked. Line 9d on Form 5500 will state whether the plan has a bond. Failing to acquire the bond on the Form 5500 can trigger a plan audit, and the plan fiduciaries can be held personally liable for losses that should have been covered by the bond.
The next coverage that is gaining attention is cyber liability. The more we automate our business, the further connected we are, distancing ourselves from the act by a click of the button. Both cyber claims
and frequency have increased. According to “The State Of Active Insurance: 2024 Cyber Claims Report” from The Coalition, the average cost of a data breach in the U.S. was $4.35 million in 2022.
Considering the type of data that is being transmitted when an employer establishes a plan, coupled with the fact that each employee is providing personal data to enroll, a breach could be costly. Some areas that are covered by a cyber policy include and may not be limited to data breach response, business interruption, data recovery, extortion, legal fees and settlements, network security and privacy liability, digital asset destruction, system failure, and social engineering and cybercrime.
The next coverage is employment practice liability insurance. EPLI is broad coverage that covers a range of claims made by employees against the employer. The area that interests the retirement plan advisor under EPLI is claims related to the improper management of employee benefits. There are other coverages under EPLI, such as coverage for breach of employment contract, failure to promote, deprivation of career opportunity, retaliation, wrongful discipline and discrimination, to name a few.
It has been my experience that mentioning these coverages adds value to the overall process of establishing a retirement plan and shows professionalism by identifying potential risks and collaborating with other allied professionals.
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. He is the head of business sponsored retirement plans at the Business Resource Center of Guardian Life. Contact him at ernest.guerriero@innfeedback.com.
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