InsuranceNewsNet Magazine - October 2020 by InsuranceNewsNet

HEALTH & BENEFITS Thought Leadership Special Section • P. 29

VISION

OR REVISION?

Regulations, taxes and health insurance are all on the line in this election. • PAGE 20

+ PLUS

Myths Keeping Black 5 Americans From Buying Life Insurance • PAGE 34

urvival Comes With S A Massive Price Tag PAGE 42

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IN THIS ISSUE

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OCTOBER 2020 » VOLUME 13, NUMBER 10

ANNUITY

FEATURE

2020 Vision – Or Revision

online

www.insurancenewsnetmagazine.com

38 A ssumptions Vs. Reality: Considering Income Riders

By John Hilton and Susan Rupe

What’s on the line as the presidential election looms on the horizon.

By Cary Carney By attempting to standardize all income riders and pick one date to turn on those riders, we may not be finding the best options for the client’s true needs.

HEALTH/BENEFITS

42 Survival Comes With A Massive Price Tag

INFRONT

6 Industry Groups Grapple With Diversity Deficit By John Hilton and Susan Rupe Minorities have long been underrepresented in the financial services industry, and 2020 seems to be the year that industry groups are making a push to change that.

INTERVIEW

8 How To Get Everything You Can Out Of Everything You Have Curtis Cloke believes every successful advisor needs a full box of tools to help clients achieve financial success. In this interview with Publisher Paul Feldman, Cloke reveals how he took to YouTube in his quest to share those tools with other advisors.

PAGE 29 • In this year’s Health & Benefits Thought Leadership Series, learn how to navigate open enrollment, new regulations and the tricky health and benefits space.

IN THE FIELD

12 P utting His Money Where His Hope Is

By Susan Rupe Kenneth Royster brought his two daughters into his successful practice. Now he wants to reach out to help the next generation of Black and Hispanic advisors find their own success.

LIFE

34 5 Myths Keeping Black Americans From Buying Life Insurance By John Hilton Many of the barriers to life insurance ownership in Black communities can be traced to several misbeliefs about the process.

By Pam Jenkins Critical illness insurance can help pay the bills when a client suffers a lifethreatening event.

ADVISORNEWS

46 More Than Money: What Clients Want To Discuss By Susan Rupe The advisor of the future must be willing to discuss topics that are not purely financial.

INBALANCE

50 When The Eyes Have Had It

By Susan Rupe Our eyes are paying the price for the increased time we are spending in front of our screens.

BUSINESS

52 Where Technology Can (And Can’t) Support A WFH Environment By Seth Preus A look at the advantages and limitations of technology as they relate to productivity and communication.

INSURANCENEWSNET.COM, INC.

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InsuranceNewsNet Magazine » October 2020

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WELCOME LETTER FROM THE EDITOR

The Smoke In Our Eyes

s my neighbor yelled at me on our front stoop, he stopped for a moment while he clearly had a revelation. “Are you a LIBERAL!?!” he bellowed. “Yeah, you’re a liberal. You all just want to control everybody.” I didn’t know what to say to that. My downstairs neighbor, Ross, had lost his temper because I’d left him a carefully worded note asking whether he could somehow reduce the amount of cigarette smoke coming out of his apartment. Ross had stopped me as I was coming back into the building after tossing trash into the dumpster. Ross said he had been living in the apartment for more than 10 years and nobody had ever complained. I explained that on this beautiful spring day, my apartment smelled of the cigarette smoke that was coming up the vent and through the windows. When he pivoted to the liberal accusation, I knew we couldn’t possibly talk about anything at that moment. I said that politics had no part of what we were talking about and walked back inside. Of course, I was stewing about the confrontation later, but I had made a commitment to myself that I would not inflame arguments. This was in 2014 and I had quite enough of the anger machine that American discourse had become. Maybe I was in training for the years to come.

The Fortified Party Lines

Although we have a two-party tradition, it is really two power centers fighting over the people in the middle. In the latest Gallup poll available, 26% of Americans identified as Republicans, 31% as Democrats and 41% as independents. That survey was in mid-August, but those numbers have never strayed enormously since Gallup started the survey in 2004. Sometimesthe percentages remain about the same, with a larger middle between them. In other political systems, there are parties with which to build coalitions. The U.S. Congress has smaller groups along particular alignments. But those groups are not aligning very well with each other. 4

Instead, the party that tugs the middle a little in its direction wins — and these days that is done by appealing to our basic emotions. The fear button is a reliable one, perhaps too reliable. Americans seem to be afraid that at any moment, hordes of Antifa or fascists will come burn down or shoot up their cities. You might even be one of the people nodding yes as you read that. It is true that we have deep social unrest right now. But instead of tending to the problems that led to our situation, we are all arguing about whether to call the unrest protests or riots. The middle class is fracturing for many reasons — most of which are not one party’s fault. For example, a century of automation has pushed people out of well-paying industrial jobs, and we have not retooled and reskilled. We used to be able to do the big things that improved individuals and propelled the national good. At the end of World War II, we had more than 16 million veterans trying to start or restart their lives. It would have been easy to have just said those veterans and their families were on their own. But the U.S. government helped by providing the GI bill, home loans and health care, just to name just a few benefits. The GI bill helped about 10 million people by 1956. My father was one of them after the Korean War. He was the son of Italian immigrants and worked in a store before joining the Marines. When he returned, he went to college and became an accountant. He could not have dreamed a future like that was possible for him. A college education is once again a distant dream for many Americans. We all want the finest doctors, scientists and other professionals in the world, but require them to assume up to hundreds of thousands of dollars in debt to become qualified. I hear from many insurance agents and financial advisors who say that clients with high incomes are struggling because of student loan debt along with the cost of child care and college. Our health care system is

InsuranceNewsNet Magazine » October 2020

another victim of political manipulation. We aren’t talking about how to fix our system — we are taking sides. All our language suggests there is a war going on out there in America. If there is, what are we fighting about? It does not seem to be for the nation’s well-being. The United States does not succeed when one side “owns” the other. This country is successful when it sees itself as one indivisible nation with shared problems, not separate red and blue confederacies.

The War At Home

Later in the day of the confrontation with Ross, while at a bakery I bought two plump muffins for Ross and his wife. I knocked on my neighbor’s door, and when Ross swung it open, I said, “Hey! I was at the bakery and thought you folks would like some MUFFINS!” and raised the bag. Ross looked at the bag, then me, the bag, then me, and then dropped his head as he said, “I’m trying to quit smoking.” I realized the agitation Ross had been facing, and told him I knew it was tough because I had also quit. I added that I was able to be successful by getting out and walking and running instead of smoking. After talking about that a little, he took the bag and went inside. I hadn’t seen Ross in a few weeks and hoped things were OK, but I was content with the thought that I’d done the best I could. During another beautiful day, I saw Ross bound out of the building. He spotted me and said, “I am going for a walk.” It was the first time I had ever seen him smile. Steven A. Morelli Editor-in-Chief

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INFRONT

Industry Groups Grapple With Diversity Deficit In the wake of George Floyd’s death and widespread protest, industry groups are looking at how to increase diversity in advisors and clients. By John Hilton and Susan Rupe

he life insurance and financial services industries have long known they have a diversity deficit, but George Floyd’s excruciating death in May spurred the industries into action. Some organizations such as the National Association of Insurance and Financial Advisors already had initiatives in the works that they accelerated, and others pulled together new initiatives to tackle some old problems. And sometimes the renewed perspective heightened tension on some initiatives, such as the National Association of Insurance Commissioners’ working group producing a Principles for Artificial Intelligence document. The principles included the phrase “AI users should proactively avoid proxy discrimination against protected classes.” For some, that went too far. Support grew to amend the language to allow for different variables to be considered. Iowa Insurance Commissioner Doug Ommen used the example of hypertension. While there is a proven link between hypertension and race, science also shows us other links, for example, between hypertension and smoking. Birny Birnbaum, executive director of the Center for Economic Justice, scoffed at that notion. Variables can be used to predict a particular relevant outcome, he noted, they just can’t be used to discriminate against a protected class. Regulators adopted a final version of the AI principles with compromise language. As efforts get underway across the industry to confront racism and promote equality, the NAIC experience is a reminder of 6

how difficult it can be to reach a consensus when solutions conflict with other industry values. But regulators say they are committed to addressing racial inequities in insurance with more than talk. “We need people to be intentional about diversifying our departments, diversifying the industry, diversifying your company,” Ricardo Lara, California insurance commissioner, said on a recent podcast. “And, yes, you’re going to get pushback. But stay the course.” The NAIC formed a Special Committee on Race and Insurance, which held its first meeting in September. The committee started with four general areas of interest: » The current level of diversity and inclusion within the insurance industry, the insurance regulatory community and the NAIC. » Access by people of color and historically underrepresented groups to insurance products and coverages. » The existence of current practices or barriers in the insurance sector that potentially disadvantage people of color and/or historically underrepresented groups in the areas of (a) life insurance and annuities, (b) health insurance, and (c) property and casualty insurance. » Steps insurance regulators and/or the insurance industry can take to (a) increase diversity and inclusion within the insurance industry, state insurance departments and the NAIC; and (b) address practices that potentially disadvantage people of color and/or historically underrepresented groups.

‘It Is So Important’

Lara joined a trio of minority insurance regulators for an NAIC podcast to discuss the state of race and insurance. The three insurance commissioners all noted changes they had made in their states to better serve minority populations. Connecticut Commissioner Andrew Mais, for example, took office in March 2019 and found that all of the

InsuranceNewsNet Magazine » October 2020

department’s examinations were in English only. “The exam is available in Spanish now because it is so important,” said Mais, who is Black. “If your community is not represented, it will be ignored. And that’s why I think it is so important Commissioner Mais to the industry and to us as regulators that we all have a seat at the table.” In California, Lara oversaw a 2019 investigation into auto insurance discount practices. “We found evidence of really disturbing inequities,” he said. “So many insurance companies were effectively using group discounts to cherry-pick members, giving some higher income occupations essentially a fast pass, while people from certain racial and ethnic groups and lower income motorists were left in the slow lane, essentially.” The California Department of Insurance proposed regulations to tighten up oversight of auto discounting practices. While the publicity is great news for the industry, action is most important, reminded Sonja Larkin-Thorne, a consumer advocate and retired insurance executive. “When I started in this industry in 1974 in California, there really was a push by many companies to include diversity as part of their corporate culture,” LarkinThorne said. “I have seen the decline in that push and in that commitment over the past 40 years.” It’s not the products, said LarkinThorne, who is African American, it’s the access to the products that is limited for people of color. “There are too many barriers that exist today that didn’t exist when I started in this business 40 years ago,” she said. “We used to be a hands-on business where underwriters and agents knew each other, knew their communities, understood

INDUSTRY GROUPS GRAPPLE WITH DIVERSITY DEFICIT INFRONT their consumers. That’s moved away now to just a paperless society where we look at what a statistical touchpoint tells us.”

Push To Diversify

Minorities have long been underrepresented in the financial services industry, and 2020 seems to be the year that industry groups are making a push toward attaining more diversity. The goals are twofold: to attract and retain more Black professionals, and to serve a community that needs help in building wealth.

“If your community is not represented, it will be ignored.” Andrew Mais, Connecticut Insurance Commissioner In August, The American College launched “Four Steps Forward,” a program aimed at helping the Black community attain upward mobility and wealth building. The program’s four goals are: 1. Assist 1 million Black women in completing a financial literacy and well-being program by 2025. 2. Work with other organizations and professionals to create lasting change in how Black communities view and create wealth. Establish a platform that includes financial and investment tools in partnership with individuals who understand policy impact. 3. Build a pipeline of Black leadership in the industry by identifying next-generation Black leaders at financial services firms and develop their leadership, interpersonal and relationship skills. Give them access to pathways that can guide them from middle management into positions of corporate power and influence. 4. Recruit more Blacks into financial services, develop a study-group blueprint

that equips Black professionals with the knowledge to get these groups off the ground, and rally financial services firms and trade organizations to identify top advisors to serve as mentors and coaches for these professional study groups. The College is not the only industry organization examining the issue of diversity. Because of COVID-19 restrictions, The National Association of Insurance and Financial Advisors was unable to hold its annual Congressional Conference in person this year. Instead, NAIFA turned the session into an online event called “Impact Week.” One day of that week was devoted to a Diversity Symposium, in which industry leaders discussed their experiences and challenges relating to being a minority in a mostly white and male industry. In addition, NAIFA in August released a position paper, “Diversity And Inclusion: Serving The AfricanAmerican Community.” The paper reported that although about 13% of the U.S. population is Black, only about 5% of the advisor population is. Education is usually a first step in understanding how to recruit and retain minority agents and advisors, as well as how to teach all agents to successfully sell to diverse markets, the NAIFA report said. The National African American Insurance Association conducted a series of online discussions over the summer, covering such topics as “The Legacy And Future Of The Black Agent” and “Racial Bias: Check Yourself Before You Wreck Yourself.” InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH. 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 Twitter @INNsusan.

How To Be An Ally EXAMINE YOUR OWN BIASES: Before I could become an empathetic change agent, I needed to examine my own heart. SEEK OUT MARGINALIZED VOICES AND PERSPECTIVES: How many marginalized people do you follow on Twitter or Instagram? How many minority authors do you read? To grow my capacity as an advocate and ally, I had to deepen my understanding of the plights of minorities. BECOME INTOLERANT OF INTOLERANCE: Next, plant the flag that racism, discrimination and intolerance won’t be tolerated anymore. Make this declaration in your heart and decide to engage in your spheres of influence when you have the opportunity to do so. Speak up and speak out. MAKE INCLUSION PART OF YOUR DAILY LIFE: If you are in any position of authority, be it at work or for an organization or club, you have an opportunity to be more inclusive of people from other backgrounds and communities. But a mistake that’s easy to make is thinking that simply not discriminating is enough. CONNECT WITH AND SUPPORT MARGINALIZED MOVEMENTS: If you come from a place of privilege, use that privilege to help minority groups. Attend a Pride march. Join a minority chamber of commerce. Go to a Black church. Find the right outlets within your community and connect! When people ask what you’re doing there, say, “I’m here to support you.” Then ask them how you can do that. Become an engaged ally who's willing to learn from minority leaders what makes an actual difference, because it might not be what you think. — Brian Haney, The Haney Group, Silver Spring, Md. From NAIFA report “Diversity And Inclusion: Serving The AfricanAmerican Community”

October 2020 » InsuranceNewsNet Magazine

INTERVIEW

HOW TO GET YOU CAN

YOU HAVE Curtis Cloke says advisors must

have a wide mastery of skills and a full box of tools to serve clients today. 8

InsuranceNewsNet Magazine Â» October 2020

HOW TO GET EVERYTHING YOU CAN OUT OF EVERYTHING YOU HAVE INTERVIEW

urtis Cloke has not only been a successful advisor for about 30 years, but he has been delighted to give away all his secrets to anyone who wants to be a better professional. That drive has taken him on the speaking circuit and inspired him to record videos to promote the concepts that made him a go-to professional for clients and other advisors. Being out front has also put him in the lead for important shifts in our business. For example, as he grew his practice beyond his home state of Iowa to cover the nation, he and his colleagues figured out how to go virtual long before the COVID-19 lockdown forced everyone to work with clients remotely. Cloke started in the business at a young age, when an advisor noticed that he was an industrious, financially disciplined man who would himself make a good advisor. In the mid-1980s, he started working for Prudential Financial and then struck out on his own. Since then, he grew a national practice and amassed many licenses and credentials. He is an unusual cross between advisor and actuary — he’s a sales guy who loves math. And he loves showing the proof behind the promise. He does that as a speaker and adjunct professor at The American College of Financial Services. His constant drive to improve positioned his agency to be ready when the COVID-19 lockdowns started clanging across the country. His agency has been able to thrive as a result. In this interview with Publisher Paul Feldman, Cloke reveals how other advisors and agencies can do well in this crisis as well as be ahead of the next one.

home office. And a little less than 50% are here in the tri-state area of Iowa, Missouri and Illinois. Consequently, we had to learn how to go virtual a long time ago. We were very lucky that we were so well prepared for what was going to happen.

FELDMAN: In expanding your company and territory, you were actually ahead of the game for the COVID-19 shutdown. Would you tell us about your company and how you were ready?

FELDMAN: How did you change your operation to work with those new prospects?

CLOKE: We have a multistate financial firm that’s represented on the East Coast, West Coast and here in the Midwest. Our office started here in the Midwest, and we have an office in Oregon. And we have an office over in Princeton, N.J. We represent clients in all 50 states. Today, a little more than 50% of our clients are outside of the region of the original

FELDMAN: So, what does that look like? How were and are you prospecting, and how do you close virtually? CLOKE: Quite a few years ago, when I started public speaking and then started working as an adjunct professor for The American College, I was invited to be on lots of different podcasts, in a lot of different studios around the country. I originally did 28 video sessions in the studio of The American College, and I’ve been back three times since then to update the materials. I’ve also spoken on thousands of platforms over the 15 years I’ve been speaking. And as a result, that’s just gotten me a lot of footage on the internet. I’ve spoken in a lot of internet studios that are TV programs for retirement planning. Just internet based. Most of all, the content that we’ve developed over the 15 years, including our work for my course called Thrive University, is on the ‘net. It was all designed for advisors, but we didn’t realize that consumers would locate those and watch them. And most of the clients or direct consumers that watch them are what we’d call high net worth, including doctors and lawyers. These are people who really don’t trust traditional planning, and they want to go out of the box. So they start digging around, and they find us.

CLOKE: We started out with GoToMeeting, which we used until two years ago. Then we started to see some of the Zoom calls and some of the unique features for video recording and a variety of things. So, we flipped to Zoom and we did the corporate account, which means that our whole staff is tied to each other all day, every day. Then rather than get up and go from one office to the next while we were work-

ing in the same office, we simply would Zoom each other. And it was very efficient. Or we could bring in another person without having them leave their desk for questions with the client we were speaking with. Zoom is on my phone. It’s also on my office computer and my home computer. We’ve been doing this for two years, and it was natural for us to be able to send everybody home. We were able to operate exactly as we had been, but remotely, although we’d never really tested it that way. But it worked beautifully. FELDMAN: You’re also getting a lot of value from the videos that you put on the internet. As the advisors’ teacher, you’re going to have more credibility. What about a person who is just starting to create some videos? What kind of topics should they be looking at? CLOKE: I think there are really three lowhanging-fruit topics that we all need to be talking about right now for clients. In our case, we’ve got investments, or allocations, in many products. Obviously, all of these particular items have compliance associated with them. So, if I could just put a little disclaimer in here that says we must be sure that anything and everything we do meets all compliance regulations, and whoever it is that oversees that says, “Make sure you don’t go out and just do all that on your own.” We certainly do not. But once you know and have confidence that you’re compliant, then the first item is going to be taxes. We have all kinds of unique tax changes that happened in December of last year that would’ve been applicable with or without COVID-19. A lot of folks don’t know about those changes. Now we have specific laws that are changed for 2020 only. For example, we have clients with IRAs and they’re automating their RMDs on a particular day and a month. They don’t have to take them this year if that will cause them additional tax for cash they do not need. We must tell every client with qualified assets that in 2020 they don’t have to take an RMD, and if they already have in fact taken their RMD, there’s a provision to put it back. There are also loan provisions, and excess provisions to our qualified accounts that allow us the ability to spread taxes over a three-year time frame if we need to

October 2020 » InsuranceNewsNet Magazine

INTERVIEW ‘HOW TO GET EVERYTHING YOU CAN OUT OF EVERYTHING YOU HAVE because of COVID-19. There’s a lot of low-hanging fruit with taxes. The third thing about taxes is, you don’t think with those trillions of dollars to bail our economy out that we aren’t going to have some tax changes? Of course we are. We’re going to have tax changes regardless of who the president is. We do have an election this year. So, I think that one of the things that we ought to be discussing in these three-, five-, six-minute vignettes is those tax law changes. These are the things to talk about. One of the things that create a lot of interest are some of our higher net worth clients realizing that they might want to take advantage of these years where they don’t have to take RMDs out and maybe it brings them down into a different tax bracket, and they want to use that bracket capacity to Roth convert. And second is, once they hit 70 years of age, they can distribute their qualified dollars to the charitable annual giving that they’re doing as a direct transfer to the charity from the IRA. And it’s twofold. No. 1, it meets the RMD requirements in the years that it’s required to be taken. And then it reduces those dollars in the qualified account over time, lowering RMDs each year thereafter. So, even if we’re doing a lot of Roth conversions, we’re always leaving some qualified assets in there for the direct charitable giving that we still want to use tax efficiently. Now that law could change. It’s been on the books awhile, and still there’s a whole bunch to talk about with regard to tax. FELDMAN: What are some other subjects? CLOKE: The second item that we discuss in our vignettes is the market. And again, keeping in sync with the compliance issues, I think that there’s a whole lot that could be happening. I always like to say that the earthquake occurred earlier this year and the tsunami has not yet shown up, in terms of the economic outcome. Even before COVID-19, we had a year and a half of the longest run of the bull market that we’ve ever had, and we’re certainly due for a correction. We’ve been warning clients about it for a couple of years. And then we saw this 10

30%, 35% decline, and then an immediate recovery, and everybody’s kind of shaking their head and going, “Wow, how can that be?” And with all the news, is that real? Well, probably not. I don’t want to get to the place where I’m giving advice in your magazine. But I will say that we need to be talking about the “what is.” We need to be seeking out all of our clients who have money in securities.

a much younger age than you think. And those are all topics for vignettes that you can discuss. Then finally, what about those clients who are retiring in 2020 and in ’21? There are specific things they need to be doing with their portfolio in regard to risk tolerance. That’s very low-hanging fruit. So, there’s a whole bunch here that we can talk about and create these very small vi-

“I’ve spoken on thousands of platforms over the 15 years I’ve been speaking. And as a result, that’s just gotten me a lot of footage on the internet.”

And we need to be retesting, reasking the allocations risk tolerance question: “Before we go into this phase, are we allocated appropriately? Would you change your mind based on your age from the last time we did it?” There’s a whole bunch that we could do around asset allocation and market volatility that may or may not occur in the future. That’s an easy low-hanging fruit. And then the third one is we’ve helped advisors understand for a long time that we shouldn’t be talking to our clients a month before they retire, six months before they retire, even a year before they retire. We have an entire process that gets people in that conversation 10 years before they retire. And if they’re really astute clients, we can get them as early as 15 years before retirement. But you can start talking about retirement to clients at

InsuranceNewsNet Magazine » October 2020

gnettes on topics. Post them on social media, get some attention, obviously, if you’ve got a website, a Facebook page. We have a Facebook page. I’m not real active on it. We have a marketing person on our team who tries to manage that to some degree. But you can do a whole bunch with these short video vignettes and some social media presence. And then you reutilize that. So, if you’re on LinkedIn, you repost something you put on your Facebook page to LinkedIn. Maybe repost it in a tweet. And maybe it’s getting a little coaching from folks who are really experts on how they do social media, and the space to those to help with websites. But if you’ve been one of those who stuck their head in the sand and haven’t addressed this, now’s the time to put a little revenue toward that and spend a little effort on that, and it will pay big dividends.

HOW TO GET EVERYTHING YOU CAN OUT OF EVERYTHING YOU HAVE INTERVIEW FELDMAN: I don’t know why more people aren’t getting their securities license at this point. Besides being able to provide full service to clients, getting the other licenses also makes sense from a compliance standpoint. But that does not mean that commission-based products don’t have their place, right? CLOKE: Yes, and obviously there are a few advisors out there who like to promote themselves as the fee-only folks. But you know, we’re also dealing with insurance products, and we’re dealing with it in the retirement world. What we realized is there are some commission products out there that generate a greater value to the client versus a netted fee, a netted commission product. I’ll give you a real example of this. I do retirement planning for a highly noted colleague of ours --- if I gave you his name you would know him very well. And this particular individual had a sum of money and wanted us to buy zero-commission income for them. It just so happens our firm has both the zero-commission income annuity products and the street commission income annuity products. And the reason for that is this: We never know which one gives the best fiduciary option for our clients. In this particular example that I’m giving you, we went out and we priced the income that we could get based on a start date for a joint lifetime with cash refund. That was for street comp that was probably 3.5%. That is 3.5% a life for service and no ongoing revenue. Then we went out and we got the no-commission product with the same deposit. What we found, surprisingly, is that we had to add $34,000 to the initial deposit to get the exact same income as the 3.5% commission street product. At first, I couldn’t believe it. It was the first time I’d experienced that, which is what made me convinced I needed to test both every time. What I found out is that for street products, the carriers are broad. There are many of them and they’re competing. This netted commission, the no-fee products, exist with very few companies, and there’s almost no competition. And those companies know why most advisors are using that, because they are

promoting themselves as fee-only advisors. If the thing I have to do to be labeled as a fee-only advisor is to charge them $34,000 more for the deposit, versus $34,000 less, how do you think my client

about the five tools that he always uses to fix every repair. Now that’s silly. Mechanics don’t do that. You wouldn’t do that. Why? He’s got a thousand tools in that box. He never

“What we realized is there are some commission products out there that generate a greater value to the client versus a netted fee, a netted commission product.” might feel about that decision? Sometimes the netted commission wins, and I’m going to charge a fee for the advice. And sometimes the commission wins, and I never know. So, how can I be fiduciarily upright and do the best thing for my client if I’m just picking one side of the fence or the other? That’s the reason we built the software to compare. Because there seems to be such a fight out there about the way you’re paid. Is it fees or commissions? Is it insurance or is it traditional investment? We need to embrace all of them without bias. And we need to understand how to put them together and do the analytics to verify what’s absolutely the best for the client from a mathematical perspective. And you can’t do that without dynamic tax calculations, dynamic inflation and understanding the effective fee drag. You can test all those things, in any way together, and you can have a finite answer that if you assume this, this is the best; if you assume that, that is the best. And when you contrast the two, tell me what you like. That’s what we do in analytics. Once we do that, we find if we ignore one or the other, we miss the more efficient one more than 70% of the time. Imagine for a minute that you bought a Cadillac from the Cadillac dealership, and they promised they had the best mechanics in the region. So, two years later, you’ve got a squeaky right front wheel, and you drive it to the Cadillac dealership. The mechanic takes it back to the bay and immediately grabs five tools out of his workbench, and then he runs into the vestibule where you’re drinking coffee and eating a doughnut, and he starts bragging

knows what tools he’s going to use until he puts the car on the hoist and takes the tire off. Imagine for a minute that he goes to the vestibule, not with these five tools, but he calls the owner of the car back to his bay, and he says, “I’ve figured out what the problem is.” He says, “You see that? That a bearing right there on the shaft. We have to take that bearing off and we have to press it back on. We can’t just hammer it off. We’ll damage the shaft and then there’ll be a bigger cost to repair than just fixing the bearing, but we have a problem.” He says, “You see that toolbox up there? You know, it’s wall to wall. I have over a thousand tools in there and I’m really proud of that toolbox. But guess what, there’s one tool I do not like. I hate it. You know what it is? It’s a bearing puller. I hate bearing pullers.” How the heck is he going to fix your car if the one tool he needs on that day, which is rarely used, he doesn’t like? He can’t not like it. He’s got to have the tool in his box. So, we cannot eliminate tools in our war chest. We need to know what they do and how to bring them together, and we need to know how to do analytics. That is what’s going to be required in the new advisor world with all of these regulations and compliance.

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October 2020 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change Kenneth Royster, president and CEO of First Genesis of Virginia, with his team (from left), Kenyatta Royster, marketing support specialist; Holly Allen, office manager; and Danica Royster, wealth consultant.

Putting His Money

Where His Hope Is Kenneth Royster wants to get the next generation of Black and Hispanic advisors into the business. • BY S U S A N RU PE •

InsuranceNewsNet Magazine » October 2020

PUTTING HIS MONEY WHERE HIS HOPE IS IN THE FIELD

enneth Royster recalled the day when, a few years into his financial career, he handled his largest case to that point — $2 million that a client gave him to invest. He and the client, who are both Black, went to the client’s bank to move the money from the client’s bank account to the investment firm. But the bank branch manager, a white man, questioned the transaction. “He started to query me about where I came from and he wanted to understand who I was because they normally don’t see African Americans doing a $2 million transaction,” Royster said. So, Royster turned the tables on the banker. “I asked him, ‘Well, tell me how you got the job here at the bank?’ And he told me he was working at Radio Shack. But he’s a really good golfer. And he was playing golf with one of the senior vice presidents at this particular bank. And so the guy liked him and offered him a position as branch manager.” That story affirmed Royster’s belief that there is a disparity in opportunities between Black and white people. “Here is a white guy who’s already in a senior position, and he has the power and authority to give a job to whoever he chooses,” Royster said. “So, what are the chances that he would have been playing golf with a Black guy that day? Probably 1,000 to one. That doesn’t mean the guy is racist. It simply means there’s a difference in culture.” Royster said that incidents such as this one inspired him to “reset the deck” for the next generation of Black advisors. He is owner, president and CEO of First Genesis of Virginia, an advisory firm based in Norfolk. He also is president and CEO of, and a wealth consultant with, Heritage Financial Partners, a management company with the following mission: 1. Increase the level of generational wealth transfer in minority communities. 2. Increase the number of financial professionals focused on serving and educating Black and Hispanic investors. 3. Increase the number of financial services firms owned by Black and Hispanic

financial professionals that survive and continue to serve their communities beyond the life of the founder. “The reality is that most advisors — whether they are in financial services or in the insurance business — they work for major firms, but they don’t own their own business,” he said. “I know of only a handful of African American advisors who own really good businesses, but it’s not widespread. And they don’t have a ‘firm’ mentality, where they have multiple locations in different cities. They’re generally a committee-of-one top producer with maybe five or six subproducers underneath the main person.” Royster said that Heritage is “trying to change that dynamic.” “We’re bringing people into the industry and teaching them first how to be a good advisor,” he said. “Then, second, how to transition from advisor to business owner, and then how to transition from business owner to CEO. Now you run an organization. Instead of everything being predicated on every sale you make, now you build other people. And that builds the organization. And that’s how you build a real brand.”

‘The Opportunity Of A Lifetime’

Royster said that kind of information hasn’t come to the Black community, so he and his business partner, Vicki Brackens, are drawing upon their decades of experience in the industry to invest in the next generation of Black advisors. Royster and Brackens have spent the past three years developing Heritage Financial Partners, and the company opened for business Feb. 23, one day before the stock market took a historic dive as COVID-19 threatened the nation. “This is the opportunity of a lifetime,” he said of Heritage. “When you have 75% of the profession dominated by white males with an average age of 60 years old, in 20 years they all will have aged out of the business. Some of them own tremendous books of business, and they need someone to buy those books, that business, from them. And so many of them don’t have a succession plan in place. That’s why I am now looking to develop young African American advisors into the field. They need mentorship and leadership, and that’s our focus at Heritage.”

October 2020 » InsuranceNewsNet Magazine

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the Fıeld

A Visit With Agents of Change

Kenneth Royster spends a great deal of his time talking to various industry groups about the need to attract more Blacks and Hispanics into the profession.

Brackens has known Royster for many years, and she described him as “all about the execution.” “He can’t talk about an issue without doing something about it,” she said. “He addresses issues not in a philosophical manner, but in an action manner. He discusses issues, but he executes strategies, and that is the foundation of what we are doing together.” Although the industry has stepped up its efforts to recruit Black advisors, Royster said he sees a disconnect. “The disconnect is that you have white advisors hiring and training African Americans, but these white advisors have no clue of the marketplace that African Americans actually come from,” he said. “The African American advisor, on the other side, tries to assimilate. But the situation really doesn’t fit them, and they end up failing. It’s because there is a real 14

difference in this country. You don’t have to like it. But the reality is that racism is real, and culturalism is real. And people gravitate to people who have like minds and do things together.” Royster said Heritage is focusing its efforts in seven East Coast metropolitan areas that have a high percentage of Black population and a high percentage of Black wealth. Those areas are New York, Syracuse, Washington, Charlotte, Atlanta, Richmond and the Tidewater area of Virginia. “These are areas with high concentrations of affluent African Americans who have a need for professional advice, as well as high concentrations of highly educated African Americans who can move into this field and get licensed,” he said. The initial goal for Heritage is to provide support for seven to 10 Black advisors in each of the seven metro areas over

InsuranceNewsNet Magazine » October 2020

the next 10 years, Royster said. In order to do that, he is asking other advisors he knows to accompany him on visits to historically Black colleges and universities as well as other East Coast universities that have a high percentage of Black students, and to conduct workshops to introduce students to the industry. Heritage wants to give aspiring Black advisors a boost by paying for them to take the SIE exam, a new, introductorylevel FINRA exam for prospective industry professionals. Its purpose is to assess a candidate’s basic knowledge of securities industry topics fundamental to working in the industry. Royster also wants to attract Black advisors who already have their own practice into the Heritage fold. Heritage is supported in its efforts by its broker-dealer LPL Financial, as well as by Stratos Wealth Partners, which offers financial advisor services in 49 states, Royster said. He hopes that eventually Heritage will become the McDonald’s of the financial services industry. “What we want to do down the road is get advisors who may have already branded themselves in different markets. They won’t have to rebrand. They only have to say they’re part of the Heritage family,” Royster said. “Now that gives scale and scope. You’re supported by the largest independent broker-dealer in the country. But you still have your independence.”

‘I Want To Be That Guy’

Royster was living in Washington in 1984 and looking for a career to transition into civilian life after having served as a noncommissioned officer in the U.S. Army. “I thought I was a leader,” he said. “So I thought, ‘I’ll go out and find a management trainee job where I can grow myself into it.’ I was offered three jobs on the same day. They were all sales jobs disguised as marketing representative jobs.” One of the jobs was with Encyclopedia Britannica, one job was selling vacuum cleaners and the third was with PennCorp Financial, a consortium of insurance companies owned by American Can. “I was fortunate that the interviewing manager was an African American man, 33 years old, one of the sharpest men I ever met in my life,” Royster said. “And he was honest with me about what the

TELLUS BROKERAGE TELLUS BROKERAGE CONNECTIONS CONNECTIONS

PUTTING HIS MONEY WHERE HIS HOPE IS IN THE FIELD

BUILDING BUILDING THE THE FUTURE FUTURE OFOF BROKERAGE, BROKERAGE, ONE AGENCY ONE AGENCY AT A TIME AT A TIME

insurance business was like and how dif- representative and wealth consultant, ficult it is to get started. But he said, ‘If you while Kenyatta is the firm’s marketing have the talent and persistence, you can support specialist. push through all of that and you can find “My daughters have been around the yourself doing really well in this business.’ financial services industry their whole I looked at him and said, ‘I want to be that lives,” he said. “From the time they were guy.’ And I started out selling insurance young, I would take them to conferences door to door.” with me, and they would help work the Within 12 months, Royster was one of booth in the expo hall. I told them that the company’s top producers. Soon after- the financial services field gives you the ward, the company offered him an oppor- opportunity to make money, to help peotunity to relocate to the Norfolk/Virginia ple and to have control over your destiny.” Beach area to support another agent. But Royster said he tries to give his daughwhen Royster arrived in his new location, ters the freedom to criticize him if they he discovered the agent had quit that disagree with how the business is run. Yet same week to work for another insurance he also wants them to understand that company. as their father, he wants to give them his “So, you can imagine what that was like best counsel as he leads the firm. for me, 25 years old, just moved to some First Genesis serves a white-collar clisee 10%+ BGAs see 10%+ in growth their in their place where I didn’t knowBGAs anybody. But entele that’s about 90% Black, Roystergrowth said. I had good management and good men- year “We servewhen a lot of business owners, first fullyfirst engaged year when fully engaged tors, and they said, ‘Listen, this is a great and we have had a strong presence in the with Tellus with Tellus opportunity to make a name for yourself. clergy market for a number of years. We Now all the client company accounts that have a niche market with pharmacists are down there, they’re all yours.’ Because and dentists. Because we have so many that agent wasn’t independent. He worked universities in this area, we have a lot of for the company, same as I did. He didn’t clients who are deans of schools and deexpert, dedicated Utilize expert,staff dedicated staff own the book of business.”Utilize partment heads at universities. We also After a few years, Royster was offered a no have college basketball coaches and referwith membership withfees no membership fees job with MetLife. He became a financial ees as clients.” planning director for MetLife in Atlanta, Royster said his clients are looking for growing his office from $75,000 in fees to education as well as for financial services. $500,000 in fees in five years. “We want people to know what it is that He retired from MetLife in 2016 (“I owe they’re doing with their money,” he said. Gain Gaincarriers direct access to carriers that company a debt of gratitude”) and direct “I don’t want clients access to say, ‘I just turn my to and and online resources started First Genesis of Virginia. “I’m ful-online money over to himresources and he handles it.’ I ly independent now. But from 1996 up to want them to know how money works.” now, I’ve always run my own shop. Paid At 59 years old, Royster is beginning to my rent and my expenses, same as any think about the future of his practice as other business owner.” he advises his fellow professionals about Royster said his experience in running transitioning their practice when they apExploit new technology Exploit newand technology and his own shop gave him knowledge that he proach retirement age. competitive compensation competitive compensation wants to transfer to those who affiliate “It’s all about investing in the junior with Heritage. associate,” he said. “The transition can“Just like in every industry, there will be not be just about you. It must be about some who want to be the CEO and oth- their development and their taking over ers who will say, ‘You know what? I’m just for you and their being not you but better really good at being a sales rep. That’s all than you.” I want to do. But I want to be well supported and well developed.’ And we will Susan Rupe is manoffer help and support no matter what aging editor for InsuranceNewsNet. they want to do.” She formerly served as communications www.marketing.tellusbrokerage.com www.marketing.tellusbrokerage.com

GROW

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agents’ Royster didn’t have to go far to find help surance Pat Wedeking 206.200.1996 Pat Wedeking at 206.200.1996 association and was an at award-winning for his practice at First Genesis. His two newspaper reporter and editor. Contact daughters, Kenyatta and Danica, work her at Susan.Rupe@innfeedback.com. with him. Danica is a financial services Follow her on Twitter @INNsusan.

October 2020 » InsuranceNewsNet Magazine

NEWSWIRES

QUOTABLE

Fed Wants Inflation To Go Higher

Inflation used to be a bad word, but now the Federal Reserve thinks it could be a good thing — in moderation. In a historic shift, Chairman Jerome Powell said the Fed will allow inflation to run slightly higher for periods of time, a new practice known as “average inflation targeting.” This is a change from the previous practice of using preemptive rate hikes to control price pressures. Inflation persistently has run a bit below the 2% target for most of the period since the Great Recession, and has fallen closer to 1% during the pandemic. That 2% target is the rate the Fed believes is consistent with a growing economy. It also provides policymakers with enough policy room for times of economic stress. But along with higher inflation, the Fed’s action will mean continued low interest rates. Dallas Fed President Robert Kaplan said that if the Fed maintains annual inflation rates between 2.25% and 2.5%, the Fed may not increase interest rates so frequently. At the start of the pandemic, interest rates were between 0% and 0.25%. Low interest rates may be good news for borrowers, but not so much for investors or the life insurance industry. “The Fed policy makes it crystal clear that we should expect low interest rates for years,” Larry Luxenberg, principal at Lexington Avenue Capital Management, told Market Watch.

AMERICANS SHORE UP FINANCES IN COVID-19’S WAKE

It’s a puzzle: nearly 13 million lost jobs and countless businesses closing, yet Americans’ personal finances remain strong and are getting stronger. A poll from The Associated PressNORC Center for Public Affairs Research found that 45% of Americans say they’re setting aside more money than usual. Twenty-six percent are paying down debt faster than they were before the pandemic. In total, Less Spending, about half of Americans More Saving say they’ve Of those who spent less money during the pandemic: either saved 58% are putting more money more or paid into savings down debt 32% are paying down debt ahead of schedule since the outbreak began. About two-thirds of poll respondents said they are spending less than usual during the pandemic. Since February, there has been a $1.3 trillion jump in money kept in checking accounts — a 56% increase tracked by the Federal Reserve. Yet the financial picture is far from rosy. SOURCE: AP/NORC poll

tracking this in 2008) in January. When it comes to the economy, consumers are similarly split along political lines. Sixty-eight percent of consumers who identify as liberal said they are highly concerned about the economy, while just 44% of conservatives show this level of concern.

IS THE RECESSION OVER?

Downturn Dampens Consumer Spending

half of economists surveyed said the U.S. KNOW About GDP won’t return to pre-pandemic levels until 2022 or later.

— Ed Yardeni of Yardeni Research

The recession ended in July, according to the Chicago Fed National Activity Index, whose three-month average rebounded sharply in July. But the Chicago Fed is cautious about issuing an all-clear signal on the end of the recession, as U.S. economic activity has been especially volatile in the wake of the COVID-19 pandemic. 1 IN 4 The July surge for this broad VIEWS measure of U.S. economic activECONOMY ity marks the highest reading, by 4 in 10 consumers report the FAVORABLY economic downturn has impacted far, in the index’s 50-year-plus their discretionary spending and Consumers history based on the threetheir ability to save for retirement. continue to be month average. Meanwhile, the SOURCE: LIMRA divided about Philadelphia Fed’s ADS Index how they view the economy and COVID- has signaled for several months that the 19, based on their political ideology, nation’s economy is on the bounce back. LIMRA said. The most recent LIMRA Several predictions on third-quarter Consumer Sentiment Survey showed 78% gross domestic product indicate an upof those who identify as liberals report beat outlook. The Atlanta Fed’s GDPNow a high level of concern about COVID-19, model estimates that Q3 output will whereas only 44% of consumers who surge nearly 26%. But even if these optiidentify as conservatives report this mistic estimates are correct, one quarter level of concern. of strong GDP growth will still leave the Overall, just 25% of Americans had a fa- economy with only a partial recovery afvorable view of the economy in July. This ter the record 32.9% GDP drop in Q2. is up 4 percentage points from March but down 31 percentage points from the all-time high of 56% (since LIMRA began About a quarter of Americans said they’ve been unable to pay at least one bill because of the pandemic, and 17% said they have been unable to pay multiple bills. Overall, about half of those surveyed said they have experienced some type of household income loss.

DID YOU

All in all, we’re still seeing that economies are recovering pretty well from what was basically a lockdown recession.

Source: LIMRA

Source: National Association for Business Economics

InsuranceNewsNet Magazine » October 2020

6 Ways Brokers International Champions Independence 1. By Flexing Our Original Agency Builder Status When did you get your first chance at independence?

Ever since Roger McCarty followed his dream in 1983,

Was it when you left for

we’ve been building and

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celebrating independent

or bought a house?

agencies. We honestly never

For Roger McCarty, it was when he quit his insurance job and started his own agency in 1983. He was frustrated with how difficult it was to write a different product and get additional support, and had a vision of how to make it better. He thought financial professionals should

grow tired of helping others succeed. It’s our purpose, our mission, and our talent. That’s why we’re the Original Agency Builder. While others may buy agencies, we prefer to build successful partnerships and help our network of affiliated agencies thrive.

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we are ready to help build and

At its core, Brokers International is about celebrating and supporting independence. We empower financial professionals and agencies to succeed by learning about their unique goals and providing tools to accomplish them. Our mission is always to support our partners. Here are six ways we champion independence today.

support them. Whether you’re considering starting an agency, looking to expand your growing agency, or ready to focus your agency’s expertise and streamline your process, we’re ready to work with you. 2. By Giving You Unparalleled Access to Products Accessing a wide range of annuity and life insurance

InsuranceNewsNet Magazine » October 2020

products can be difficult, depending on who you’re contracted with. You may only have access to a couple carriers, so you can only offer a narrow range of products. When you want to be able to choose the right product for your client, you have to have choices. That means recommending products from several different carriers. We have one of the industry’s broadest range of product options, with more than 50 carrier contracts, so you and your clients have the freedom to choose. 3. By Offering Broker-Dealer and RIA Partnerships In 2006, Roger McCarty dreamed of more than just building insurance agencies: he wanted to accommodate advisors, too. He started Brokers Financial, a full-service brokerdealer and SEC-Registered Investment Adviser (RIA). As the regulatory environment tightened, and financial professionals were faced with more and more clients who needed to expand their portfolios beyond traditional insurance products, McCarty saw an opportunity to help

them offer securities to their clients. With Brokers Financial as your partner, you can run your business, your way. Experience tailored business solutions, above-par service, and the freedom of low fees, so you can invest more in your success. 4. By Setting You Up With Business Builder: Our Central, Online Hub Technological advances are another way we help you succeed. Our digital platform, Business Builder, gives you access to a central hub where all your business data and resources are located. This digital tool provides you with in-depth access into every part of your business, including sales tools, marketing programs, and commissions, so you can spend less time chasing information and more time building your business.

of experienced associates can handle your applications and policies, so you don’t have to do it on your own. Our goal is to set you up for success and help you with anything you need.

effort on your part. You want to reach more people and meet with more prospects, especially in unprecedented times like these. That’s where our marketing programs can help.

But our support isn’t basic. We know that complex situations and questions require complex answers, and sometimes you may not know the answer right away. We have the expertise to help you find the right solution. Whether it’s an advanced markets question, Social Security issue, or something entirely different, we have qualified professionals ready to help you come up with a plan.

Our marketing programs help you engage and attract clients, and give you 21st century solutions to help drive your business forward, including virtual seminars, CPA partnerships, leads programs, ad campaigns, and social media help, just to name a few. In our digital and socially-distanced world, we have the marketing you need to keep prospects and clients coming in through the (virtual) door.

Last, but definitely not least, we provide you with compliance support. You may not know what’s compliant and what’s not, and that’s okay. There are a lot of rules to follow out there! We can

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October 2020 » InsuranceNewsNet Magazine

COVER STORY

VISIO INSIDE THIS SPECIAL FEATURE Plan Now While Taxes Are Low If Joe Biden and a Democratic majority are elected, taxes are likely to increase. If Donald Trump is reelected, chances are good this will still be a low tax year, historically speaking. PAGE 23

InsuranceNewsNet Magazine Â» October 2020

Health Care Fight Is Still About ACA President Donald Trump wants to kill it. Joe Biden wants to save it. PAGE 26

OR RE Regulations, t

are all on the l

2020 VISION — OR REVISION?

EVISION? axes and health insurance

ine in this election. BY JOHN HILTON

COVER STORY

ill it be another THWACK! of the tennis ball back to the fiduciary side of the court after the election? That is one of the critical questions to be answered in November in one of the most consequential elections of our time. Agents and advisors can expect that the fiduciary standard is likely to loom larger if Joe Biden wins, especially if he is accompanied by a Democratic majority in the Senate and House. President Donald Trump’s push to remove or simplify regulation led to a harmonization of standards across the product-selling spectrum, much to the dismay of many fee-only fiduciary advisors. Another key change advisors can expect is some serious restructuring of taxes. If Democrats regain control of the presidency and both houses of Congress, they are likely to go after Trump’s 2018 tax changes, along with other moves that might be necessitated by the national debt and policy preferences. The economy is concern No. 1 for 79% of people polled in an August Pew Research Center survey. Health care, which was No. 2 at 68%, is likely to be another top target for Democrats if they capture the presidency and Congress. Regulation. A Biden administration approach to regulation would likely cause a sea change that would take time to have real-world impact. A Biden Department of Labor is expected to pursue a true fiduciary standard for retirement account advice. In the interim, the Trump DOL is racing the clock to pass rules reinforcing the right to sell products into retirement accounts on a commission basis. If that rule is finalized and Trump loses the election, the Biden DOL would have to undergo a lengthy rulemaking process to repeal it and issue new rules. But the Democratic Party platform insists the Biden-Harris team is committed to doing just that. “If I were a betting man, I would say that we do have a fiduciary standard for taxable accounts within five years,” said Chip Roame, managing partner of Tiburon Strategic Advisors. “That would mean either in the next administration or in the first year of the one after that.” Taxes. Biden will most certainly raise a variety of taxes as soon as possible. The former vice president has pledged to limit tax hikes to those Americans earning more than $400,000, a vital constituency for financial services. This issue alone will keep advisors very busy. A Biden administration will “use taxes as a tool to address extreme concentrations of income and wealth inequality,” wrote a campaign task force. “A guiding principle across our tax agenda is that the wealthiest Americans can shoulder more of the tax burden.” Health care. Of course, Biden had a front-row seat working with President Barack Obama, House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., to pass the Affordable Care Act in 2010. The vice president has October 2020 » InsuranceNewsNet Magazine

COVER STORY 2020 VISION — OR REVISION?

“We have removed the gigantic, regulatory burden Americans have been forced to carry for decades, freeing our citizens to reach their highest potential.” said he prefers shoring up and saving the ACA over more liberal alternatives. The Biden plan contains a number of measures, such as a public option and tackling “surprise billing” and high prescription drug prices. While not ideal for health

insurers and agents, a Biden presidency would appear to forestall the “Medicare for All” momentum. Kaiser Family Foundation polling shows increasing public support for Obamacare. The foundation’s polling found that, in July 2014, 55% of voters opposed the law, while 36% favored it. By July 2020, that had flipped, with 51% favoring the law and 38% opposing it. Appointments. In many partisan quarters, the biggest power of the presidency comes via appointments. For financial services, who chairs the Securities and Exchange Commission is a big deal. Chair Jay Clayton’s term ends next year, and there’s been rumors that he wants to move on. In the bigger picture, the next president is likely to appoint one or two justices to the Supreme Court. The Trump circle made judicial appointments a central theme of his administration, giving

Off-Key Harmony?

This is where regulation of financial services stands after a major push from the Trump administration, with lobbying from industry groups, to establish a consistent, best-interest standard across regulatory bodies. If challenger Joe Biden is elected, he is expected to support a widespread fiduciary standard. State Insurance Regulations The National Association of Insurance Commissioners produced a model law supporting a best interest standard that contains four obligations: care, disclosure, conflict of interest and documentation. But the standard was not stringent enough for some states, leading New York and Massachusetts to adopt rules that track closer to a fiduciary standard. DOL Investment Advice Standard The Department of Labor rule carves out a prohibited transaction exemption allowing product sellers to be compensated for a sale involving ERISA-qualified money, as long as the sellers meet three criteria: a best interest standard, a reasonable compensation standard and no misleading statements. The rule revision under the Trump administration is less onerous on product sellers, particularly independent marketing organizations. A final rule is expected to be published by Dec. 31. SEC Regulation Best Interest The Securities and Exchange Commission rule requires broker-dealers to recommend financial products that are in their customers’ best interests and to clearly identify any potential conflicts of interest and financial incentives that benefit the broker. This is not the fiduciary standard that consumer advocates and many Democrats wanted. Enacted by President Trump’s appointed chairman and took effect June 30. 22

InsuranceNewsNet Magazine » October 2020

“Washington’s lack of regulations over a 20-to-30-year period led to the 2008-09 financial crisis. We knew our regulatory system was outdated.” conservatives an ideological edge in the courts. The Left will be looking for Biden to appoint a liberal justice if and when that opportunity should present itself.

A Second Term?

Despite Biden holding a consistently strong lead in the polls, analysts in the financial services world see a close election. In fact, Roame is predicting a Trump victory, adding that he has no strong conviction in that outcome. “This is the reason I’m guessing right now that Trump wins — because I think there’s a lot of Trump supporters who just don’t admit it,” Roame explained. “I think they’re out there, and they’re going to come out for the election.” In its assessment for clients, LPL Financial chief market strategist Ryan Detrick calls the election a toss-up. The margin of victory in the popular vote has been under 5% in four of the past five elections, he noted, and in two of those elections the outcome in the Electoral College differed from the popular vote. “A 5% difference is small enough that an election can easily swing one way or the other based on what happens in the months and weeks before the election,” Detrick wrote. “And there are scenarios in which even a 5% difference in the popular vote could mean a different outcome in the Electoral College.” I n s u r a n c e N ews N e t Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john. hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

2020 VISION — OR REVISION?

COVER STORY

Plan Now While Taxes Are Low If Joe Biden and a Democratic majority are elected, taxes are likely to increase. If Donald Trump is reelected, chances are good this will still be a low tax year, historically speaking. By John Hilton

undits say the differences between President Donald Trump and Democratic challenger Joe Biden are as significant as any election in recent memory. That includes tax policy. With Biden holding a steady and substantial polling lead, smart advisors are preparing financial plans so their clients can pay the expected increased tax burden in the most efficient manner possible. And those who are not already prepared better get going, said Robert Keebler, a partner with Keebler & Associates, a tax advisory and CPA firm in Green Bay, Wisc. Waiting until the election is decided is not smart, he said, as any decent accountant and firm will be booked solid through the end of the year. Smart planning will likely mean huge savings for clients, Keebler noted. For example, Biden wants to restore the 39.6% top tax rate for capital gains. That is a big jump from the 20% top rate set in the Tax Cuts and Jobs Act of 2017. Teaming up with Sen. Bernie Sanders, I-Vt., Biden’s task force left no doubt who they see footing the bill for increases in government revenue. A Biden administration will “use taxes as a tool to address extreme concentrations of income and wealth inequality,” the task force wrote. “A guiding principle across our tax agenda is that the wealthiest Americans can shoulder more of the tax burden, including in particular by making investors pay the same tax rates as workers and bringing an end to expensive and unproductive tax loopholes.”

A Taxing Plan

Democratic challenger Joe Biden has made it clear that raising taxes would be a big part of his presidency. The former vice president is targeting the wealthy and corporations with a series of tax increases, although Biden insists only those making more than $400,000 will pay more. President Donald Trump, on the other hand, has few public tax proposals because he achieved much of his taxing vision with the 2017 Tax Cuts and Jobs Act, which lowered rates across the board. Still, the president has vowed to cut taxes further if he wins a second term. Tax

Biden

Trump

Capital gains tax

Wants to restore the 39.6% top tax rate for gains exceeding $1 million.

Has spoken of reducing the top tax rate from 25% to 20% during a second term.

Personal income taxes

Would raise the top rate to 39.6% on those earning more than $400,000. Proposed subjecting incomes above $400,000 to the 12.4% Social Security tax.

Has spoken vaguely of additional middle-class tax cuts if he wins a second term. Signed an executive order to suspend the 6.2% payroll tax for employees for the rest of the year; the tax pays the employees’ share of Social Security. Vowed to make permanent if he wins the election.

Estate tax

The estate tax exemption swelled to $11.58 million in the 2017 tax reform bill; Biden proposes returning it to its 2017 level of $5.49 million, adjusted for inflation.

Backed the estate-tax exemption increase to $11.58 million in the 2017 tax bill. The estate tax is set to sunset in 2025, at which time it could revert to the pre-2018 exemption level of $5 million for an individual taxpayer.

“Step up” basis

Proposed eliminating the step up basis, which allows an heir to pay little or no capital gains taxes upon selling an inherited asset because it “steps up” to market value at death.

Expected to continue support for retaining the step-up basis for capital gains. Defenders argue that it creates liquidity concerns.

Pease limitation

For anyone earning more than $400,000, Biden would impose a 28% cap on the value of itemized deductions. This reinstates the “Pease limitation,” done away with in the 2017 tax bill.

Repealed the Pease limitation in signing the 2017 tax-cut legislation. Is campaigning against higher taxes.

Corporate tax

Biden would raise the corporate tax rate from 21% to 28% and add a 15% minimum “book tax” on income, net of expenses, for corporations with income of $100 million or more.

Has proposed slashing the corporate tax rate again, from 21% to 20%.

October 2020 » InsuranceNewsNet Magazine

COVER STORY 2020 VISION — OR REVISION? Trump, on the other hand, is calling for further and immediate cuts to the capital gains tax. While a favorite target of Republicans, support for such a measure was questionable as of press deadline. But it could be on the table if the incumbent wins a second term.

The Checklist

Keebler addressed several tax planning areas that are likely to change if Biden wins the election. Some additional areas to keep an eye on include: Roth conversions. “Roth conversions should be red hot up toward the end of the year regardless of who wins the election, but more so if vice president Biden were to win,” Keebler said.

to the tax as it stands, with the employee paying 6.2%. Among the many other potential changes and strategies, Keebler points to a big one in the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March: Charitable contributions of cash up to 100% of adjusted gross income are allowed for 2020. Estate planning. It is “imperative” to have estate planning done by Dec. 31, Keebler said. The Democratic platform calls for returning the estate tax to the “historical norm.” The 2017 tax bill doubled the amount that individuals can pass on before the 40% estate and gift tax kicks in. In 2020, that number is $11.58 million.

Roth conversions should be red hot up toward the end of the year regardless of who wins the election. The reasoning is simple: Converting money from a traditional IRA to a Roth IRA will be cheaper to do this year. Doing so will lock in today’s tax rates of 10%, 12%, 22%, or 24% on taxable incomes up to $326,600 for joint filers. With the taxes out of the way, the converted funds will resume growing tax free inside a Roth. Income harvesting. This is a similar strategy, Keebler said. By claiming as much income as will fit into a specific tax bracket, high-income clients can save plenty. “Gain harvesting can be really important this year, because one of the vice president’s policies is to take the capital gain rate to 39.6% for those Americans earning more than a million dollars, so you would push that way up,” Keebler said. There are a number of different harvesting strategies to maximize the tax benefits, he added. Personal income tax. The Biden plan includes many changes to the income tax code. In particular, Biden wants to raise the top individual income tax rate to 39.6% from 37% and apply it to taxpayers with taxable income over $400,000, according to the Tax Policy Center. In addition, Biden supports increasing the earnings that are subjected to the Social Security payroll tax to more than $400,000, according to the Tax Policy Center. Wages up to $137,700 are subject 24

Biden would likely favor elimination of the step-up in basis, a provision in the tax code that allows an individual to hold on to an asset for years while it appreciates, then bequeath it to an heir at death. The heir is subject to little or no capital gains taxes upon selling the asset because it steps up to market value at death. While it is unclear if the top 39.6% tax rate would apply, Keebler nevertheless calls elimination of the step-up “a fundamental shift to the taxation of wealthy families.” There are many other possible tax changes on the table in a hypothetical Biden administration, Keebler said. Corporate tax rates are likely to change, as are gifting rules and exemptions, among others. The important thing is to have clients prepared to pivot. “What we’re doing is putting together action plans on a client-by-client basis and getting the clients to agree to those, so when the day comes where we have to implement,” he said, “there is no thinking required.” I n s u r a n c e N ews N e t Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john. hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

InsuranceNewsNet Magazine » October 2020

Insurance products issued by MINNESOTA LIFE INSURANCE COMPANY. Insurance policy guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company. Please keep in mind that the primary reason to purchase a life insurance product is the death benefit. Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. Agreements may be subject to additional costs and restrictions. Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements. SecureCare may not be available in all states. Product features, including limitations and exclusions, may vary by state. SecureCare Universal Life Insurance includes the Acceleration for Long-Term Care Agreement. The Acceleration for Long-Term Care Agreement is a tax qualified long-term care agreement that covers care such as nursing care, home- and communitybased care, and informal care as defined in the agreement. This agreement provides for the payment of a monthly benefit for qualified long-term care services. This agreement is intended to provide federally tax qualified long-term care insurance benefits under Section 7702B of the Internal Revenue Code, as amended. However, due to uncertainty in the tax law, benefits paid under this agreement may be taxable. Please ensure that your clients consult a tax advisor regarding long-term care benefit payments, or when taking a loan or withdrawal from a life insurance contract. The death proceeds will be reduced by a long-term care or terminal illness benefit payment under this policy. This policy has exclusions, limitations and reduction of benefits, under which the policy may be continued in force or discontinued. For costs and complete details of the coverage, call or write your producer or Minnesota Life Insurance Company. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of their products. The purpose of this material is the solicitation of insurance. An insurance agent or company may contact you. Policy form numbers: ICC17-20103, 17-20103 and any state variations; ICC17-20111, 17-20111 and any state variations. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates. Minnesota Life Insurance Company and Securian Life Insurance Company are affiliates of Securian Financial Group, Inc. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

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COVER STORY 2020 VISION — OR REVISION?

Health Care Fight Is Still About ACA President Donald Trump wants to kill it. Joe Biden wants to save it.

W By Susan Rupe

hen former Vice President Joe Biden became the Democratic presidential nominee, it essentially took “Medicare for All” off the table, even though a majority of Democrats say they want it. Medicare for All, a government-run single-payer health plan, was supported by many Democratic presidential candidates during the primaries as well as a number of Democrats in Congress. Public support is about 3-1 in favor of Medicare for All, according to a HillHarrisX survey. About two-thirds (67%) of registered voters in the July 26-27 survey said they would support providing Medicare to every American, while 33% said they oppose it. Nearly nine in 10 Democrats (87%) said they favor Medicare for All, while only 46% of Republicans said they want it. When the same survey was taken in October 2018, 70% of voters supported the idea, while an April 2020 survey found that 69% approved of providing Medicare to every American. But Biden does support adding a government-run public option, a Medicare-like public insurance option in the health insurance marketplace. The public option would give consumers the choice to purchase health insurance through a program that would compete with private insurance. The industry opposes the public option, contending that it would be less expensive than private insurance and would eventually drive private companies out of business.

InsuranceNewsNet Magazine » October 2020

Where They Stand On Health Care Reform It is important to note that legislation is required for the major health care reforms proposed by Biden and Trump. The makeup of Congress will impact how much of the president’s agenda is actually enacted into law. Position

Biden

Trump

Preserve and Protect the ACA

Defend the ACA from congressional and legal challenges

Supports a lawsuit in the Supreme Court to repeal the ACA

Promote NonACA-Compliant Plans

Likely to oppose

Encourages short-term, limited duration health plans and Association Health Plans

Changes to the ACA Marketplace

Eliminate 400% income cap on tax credit eligibility; lower maximum income cost contribution; base subsidies on highervalue plans

Reduce enrollment support for consumers; restrict silver-loading; end auto-reenrollment

Changes to the Medicare Program

Extend Medicare eligibility Expand the use of private to Americans aged 60–64 insurers in Medicare Advantage; move away from fee-for-service; implement new consumer transparency measures

Changes to Surprise Billing

Curtail surprise billing

Offer a Medicare-like Implement a public insurance option in New Federal Public Option the Marketplace Health Care Plan

Curtail surprise billing Likely to oppose

Source: Manatt Insights

2020 VISION — OR REVISION?

Initial Priorities

Biden also wants to expand on and strengthen the Affordable Care Act that became law while he was vice president to President Barack Obama. Meanwhile, incumbent President Donald Trump wants to move forward on his goal of dismantling Obama’s health care law. But any moves to change the current health care system will take a back seat to getting the nation up and running after the COVID-19 pandemic crippled the U.S. economy, according to Michael Kolber, partner with Manatt Health.

lawsuit to strike down the ACA. At issue is whether the law’s individual mandate to have health insurance is constitutional. The administration contends that the law cannot survive without an individual mandate for health insurance. The financial penalty for not having insurance was repealed as part of the GOP tax law in 2017. “I think that, depending on how this court case goes, you’ll see the Trump administration continue to challenge the ACA and push for more free market positions,” said Diane Boyle, senior vice

Support For Medicare for All Is 3:1 Would you support or oppose providing Medicare to every American?

SUPPORT

33% 67%

OPPOSE Source: Hill/HarrisX survey July 2020

“If Joe Biden takes office in January, his No. 1 priority is going to be COVID-19. It won’t be making structural changes to the health insurance market,” Kolber told InsuranceNewsNet. A Trump presidency also will face challenges relating to moving the nation back to normal in the COVID-19 world, Kolber said, and Trump is expected to forge ahead with repealing the ACA. The Supreme Court is scheduled to hear arguments on Nov. 10 in a Trump administration-backed

COVER STORY

said she doesn’t believe the money is there. “So far, we’ve spent more than $2 trillion on providing recovery and relief from COVID-19, and we’re looking at spending another $1 trillion-3 trillion. So that’s as much as $5 trillion, and it will have to come from somewhere, no matter what administration is in place.” Boyle said that if Congress wants to fund a health care system, it will have to change the tax code in order to raise the money. “So I think that if you are looking at expanding health care, it’s going to be dependent more on the results of

But More Democrats Than Republicans Want It 87% Democrats 69% Independents 46% Republicans

president of government relations for the National Association of Insurance and Financial Advisors. “Things like, will you be able to get health care across state lines, or will you give the states more flexibility with their Medicaid programs? I think those would be the types of issues that we’d see in a Trump second term.” With the billions of federal dollars already spent on pandemic relief and recovery, can the U.S. afford either a public option or a single-payer system? Boyle

the congressional elections than the administration, because even if you have a Democrat-controlled Senate and House, you still have a number of fiscal hawks in Congress. They’re going to say, ‘How do we pay for that?’ And we’re not done paying for COVID-19. We’re not in recovery mode yet; we’re still in relief mode.”

Changes To Medicare

In addition to his push for a public option, Biden favors lowering the eligibility

October 2020 » InsuranceNewsNet Magazine

the ACA and then possible try to expand on it with the public option that he is interested in establishing.” Buckner said she believes the chances of a public option being passed by Congress in the next two years under a Biden presidency “is not very high.” “I think it’s going to be very tight in Congress, and I don’t think we will see a 60-vote majority in the Senate,” Buckner said. “It’s also projected to be very close in the House, possibly ending up with 224 Democrats, 197 Republicans and 24 toss-ups. So any effort to pass a public option will take bipartisan effort. I think the chances of this happening in the next two years is very low. There may be some attempts to open up the market, possibly for specific age groups, but I think it would take beyond the four years of a President Biden to get there.”

“We’re going to produce phenomenal health care. And we already have the concept of the plan. And it’ll be much better health care.”

age for Medicare to age 60. Whether this makes it through Congress depends on the federal budget, according to Marcy Buckner, senior vice president of government affairs with the National Association of Health Underwriters. “Can we afford to expand Medicare? Will Medicare be financially solvent? Some are even saying that the Medicare age should be raised in order for it to be solvent.” Buckner said that the fiscal issues raised by implementing Medicare for All would be there “in a micro level” by lowering the Medicare eligibility age. “In addition, there may be issues with access to care because some physicians who treat those in the 60-64 age range may not want to take Medicare reimbursement. So there may be limitations on choice for physicians and availability of care. All of these are concerns.”

“So I think we will see Trump, if he is reelected, taking even more regulatory steps to try to take away some of the pieces of the ACA. And if Biden is elected president, I also think he will use the federal agencies and the regulatory process to try to patch up some of the pieces of

Regulatory And Executive Action

Many of the changes that Trump made to health care during his first term came about through regulatory action rather than legislative action. If Trump is reelected, we can expect to see more of those regulatory actions, Buckner said. “In many cases, taking action on the regulatory side is easier than getting something through Congress,” she said. 28

InsuranceNewsNet Magazine » October 2020

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 Twitter @INNsusan.

“When I say I’ll take care of your health care coverage the same way I take care of my family, there is nothing I take more seriously.”

REUTERS/Alan Freed

REUTERS/Jonathan Ernst

COVER STORY 2020 VISION — OR REVISION?

Special Sponsored Section

In this year’s Health & Benefits Thought Leadership Series, learn how to navigate open enrollment, new regulations and the tricky health and benefits space.

INSIDE Are you offering voluntary benefits to your customers? Now’s the perfect time. Washington National • PAGE 30

A Winning Combo: Seasoned Agents Partnering with Amada Senior Care Amada Senior Care • PAGE 31 October 2020 » InsuranceNewsNet Magazine

Are you offering voluntary benefits to your customers? Now’s the perfect time. Eight in 10 employers say they care about their employees life family.1 Yet in today’s world, it’s become

a huge challenge to support that family, to ease the stress on their workforce while also managing the bottom line. Fostering engagement, productivity and loyalty helps—as does offering the right benefits.

For many employers, supplemental insurance benefits are something they may not have thought of. Unlike like core benefits, supplemental insurance pays cash benefits directly to employees, not to doctors or hospitals—and is in addition to any core benefits that employees may receive. This means employees can use the money in any way—whether it’s covering medical bills or household bills. At a time when around 50% of Americans are worried about affording food and expect to miss bill payments,2 cash benefits can mean putting food on the table and keeping the lights on. » And 78% of employees are more likely to stay with their employer because of their benefits program. 3

If you are a broker, what does this mean for you? Well, it’s a perfect time to introduce your customers to these supplemental benefits that can be offered to their employees at no cost to them. And, it can generally be enrolled at any time. This means employers can meet the needs and concerns of their employees in real time. Many employees may have previously discounted voluntary benefits because they didn’t understand the value, or because they didn’t realize the gaps left by the core benefits they receive. Supplemental insurance allows employers to quickly fill these needs—and in light of recent events, right when they’re needed most. While brokers want to be successful in this area, they report not having enough time to sell voluntary, or even research carriers and their offerings, let alone managing administrative and billing issues.4 The good news? Building a partnership with a voluntary benefit enrollment firm addresses these needs and makes adding to what they offer to employers easy. Brokers may be leery of traditional enrollment firms, fearing they may lose control or commissions, or who have limits on the size of the enrollments they’ll take on. And those same enrollment companies generally have limits on the group size or working conditions.

InsuranceNewsNet Magazine » October 2020

That’s where a non-traditional enrollment service like WN2 Enrollment Solutions can help. As a partner whose goal is to improve the client experience and allow brokers to expand their business, managing enrollments for voluntary benefits to employees is our area of expertise. If variables like size, location or working conditions have made it difficult to work with an employer group, a non-traditional firm provides much more flexibility. On top of that, we can help alleviate some of the burden in feeling the need to be a “voluntary benefits product expert.” And technology? That is ever-changing, ever-advancing and can be hard to keep up with. The WN2 Enrollment Solutions experts offer a benefits platform that makes benefits administration easy while providing online enrollment when needed. Plus, custom websites can be created to offer a single access point for enrollment, plan documents, forms, etc.

Heeding the call Even in the midst of enrollment season, it’s not too late to get support for your enrollments, especially when you have a resource that can support an enrollment in any location, for any size, and in any working conditions. 41% of employees feeling their employer is not currently offering benefits or programs that help support or improve their well-being, and 77% say such benefits or programs would ease their stress and improve their well-being.5 Help your employer clients heed this call to foster engagement and loyalty from their workforce that will last far into the future. Quickbooks, Small business employers say they care about employees like family, https://quickbooks.intuit.com/payroll/hiring-management/#work-familysurvey, November 2019; 2Investopedia, Americans Expect COVID-19 to Greatly Impact Their Finances, https://www.investopedia.com/how-do-americansexpect-covid-19-to-impact-their-finances-4801944, April 6, 2020; 3Willis Towers Watson, Employees are more likely to stay with their employers when offered a group benefit marketplace, https://www.willistowerswatson.com/en-US/ insights/2018/08/employee-and-employer-satisfaction-with-group-benefitmarketplaces-survey-results, August 2018; 4Eastbridge Consulting Group, Brokers and Voluntary Benefits—The Competition Intensifies. 2018: 5Yahoo! Finance, More Than Half of Employees Cite Financial Health as Biggest Concern Amidst the COVID-19 Pandemic, https://finance.yahoo.com/news/more-half-employees-citefinancial-120000175.html, April 28, 2020. 1

WN2 Enrollment Solutions is a division of Washington National Insurance Company, home office: Carmel, Indiana. Policies and benefits are subject to state availability.

The Life Insurance Issue • Special Sponsored Section

A Winning Combo: Seasoned Agents Partnering with Amada Senior Care

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“That kind of marketing packs more of a punch when it comes from a full-service agency like Amada, a company on the front lines providing care,” said Baran. “If they believe in your total solution, would-be policy buyers are more likely to believe in it too.” “My partnership with Amada provided new opportunities with the family members of policyholders I’ve served in the past,” said Baran. “It gave me third-party validation, increased communication and trust with my existing book of business, and helped provide my policyholders and prospects peace of mind.” Initially, Baran was uncertain whether Amada was the kind of company she could trust to coordinate the best possible care experience for her policyholders. Would Amada really address their care needs long term? A senior care company had never before approached her and offered this kind of total care solution. Baran did some research and was impressed by what she found. She discovered that Amada has been exceeding client expectations for decades. They have thousands of testimonials and reviews from satisfied clients to prove it, and their business has grown significantly because of that. “Eight years ago, we started franchising our concept,” Jefferson said. “Now we have just over 130 locations all over the country. Each of our locations is certified through an organization called the Home Care Standards Bureau, and HCSB has a random auditing process that ensures our high standards of quality care are Always Here. Always Caring. consistent everywhere.” If you’re interested in learning more about how Amada can help you and your policyholders, visit ................................. AmadaClaims.com for your Agent Name Here free copy of the Claims Made Easy Consumer Kit.

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October 2020 » InsuranceNewsNet Magazine

.......................

and allowed them to understand the significance of adding LTCi to their own retirement plans.” Families often question the legitimacy of long-term care insurance, but watching a loved one claim on a policy when it is most needed really dispels all doubt. Nothing proves the value of a policy better than observing seamless and stress-free care coordination while avoiding the financial impact of skyrocketing care costs. “Amada Senior Care takes a unique approach to longterm care insurance claims because we initiate and manage the claim for the policyholder. We also work in concert with the carriers to ensure we are efficient and timely with submitting required documentation for reimbursement,” said Amada Senior Care Founder and CEO Tafa Jefferson. “That provides peace of mind and unburdens the policyholder and their family members during their time of need.” “As a health care provider, we have co-branded marketing materials agents can share with prospective clients that touch on the value of long-term care insurance, and how to file a claim when they’re ready,” Jefferson said.

Universal Life Sales Take A 2Q Dive

LIFEWIRES

$300M

$200M

2Q Life Sales Down Life insurance sales dropped in every category in

$100M $0

the second quarter, according to Wink’s Sales & 1Q20 2Q20 Market Report. Fixed universal life saw the biggest percentage drop over the same period in 2019, with second-quarter sales of $147.5 million, down 39.6% when compared with the previous quarter, and down 52.4% as compared to the same period last year. “The decline in fixed interest rates, which has plagued the life insurance industry for more than a decade, continues to drive traditional UL sales downward,” said Sheryl J. Moore, CEO of Wink Inc. Nonvariable universal life sales for the second quarter were $642 million, down 16.6% when compared with the previous quarter and down 27.5% as compared with second quarter 2019. Indexed life sales were $494.9 million, down 6% when compared with the previous quarter, and down 14.3% as compared with the same period last year. Whole life second-quarter sales were $930 million, down 10.4% when compared with the previous quarter and down more than 21% as compared with the same period last year.

ADVISORS MISS THE FACE-TO-FACE

Not being able to meet in person with their clients during the pandemic ranks as the biggest impact for nine in 10 advisors, according to a recent study. Market factors, including low interest rates and increased market volatility, have also been disruptive to advisors’ practices. The study, COVID-19 Social Distance and Distribution: Advisor Survey Summary of Results, was conducted by LIMRA, the Insured Retirement Institute, Oliver Wyman, and the National Association of Insurance and Financial Advisors. As the pandemic spread and social distancing measures were implemented, seven in 10 advisors increased their communications with their clients. They said their clients’ top two concerns were stock market volatility (74%) and low interest rates (45%). Other things on clients’ minds include job and income security, current and future income Most advisors are selling to existing clients

24%

17% 5%

54%

DID YOU

KNOW

All sales have been to existing clients Higher proportion of sales to existing clients compared to business as usual Higher proportion of sales to new clients compared to business as usual All sales have been to new clients

stability, and life insurance coverage issues — including whether their policies will cover COVID-19.

QUOTABLE It is not surprising that social distancing measures have impeded advisors’ ability to gain new clients. — Scott Campion, partner, Oliver Wyman.

millions of dollars in bribes to the North Carolina Insurance Commissioner. On March 5, following an approximately three-week trial, a federal jury convicted Lindberg and Gray of conspiracy to commit honest services wire fraud and bribery concerning programs receiving federal funds.

TRANSAMERICA OFFERS FUNERAL PLANNING BENEFIT

INSURANCE MAGNATE SENTENCED TO 87 MONTHS IN PRISON

A bribery scheme involving independent expenditure accounts and improper campaign contributions landed insurance magnate and billionaire Greg Lindberg an 87-month prison sentence. Lindberg, 50, of Durham, N.C., the founder and chairman of Eli Global and the owner of Global Bankers Insurance Group, was sentenced to 87 months in prison and three years of supervised release. Lindberg has told media outlets that he will appeal. Lindberg’s consultant, John D. Gray, 70, of Chapel Hill, N.C., was ordered to serve 30 months in prison, followed by two years of supervised release. Lindberg and Gray were charged with offering

Although about 13% of the U.S. population is Black, only about 5% of the advisor population is. Source:The National Association of Insurance and Financial Advisors Source: Wall Street Journal

InsuranceNewsNet Magazine » October 2020

Transamerica is offering a service to help families through one of their most difficult times. The carrier is now offering a new funeral concierge benefit at no direct cost for qualifying life insurance policyholders. The Concierge Planning Rider provides grieving beneficiaries with resources to help plan the insured person’s funeral. This new benefit provides access to a third-party service provider, Everest Funeral Package. Services include 24/7 access to a consultant who assists with planning the funeral and negotiating funeral expenses, as well as online tools for creating a will and other estate planning documents and an online secure location for storage of these documents. The rider is available at no direct cost to policyholders for qualifying Financial Foundation IUL.

Together with You We’re in it for the long term. At our core, OneAmerica® values relationships. As a mutual organization, we are committed to helping others prepare for the future. With asset-based long-term care protection, you can provide peace of mind by protecting your clients from the impact of a long-term care event.

Call 1-866-986-9439 or visit AssetBasedLTC.com to learn how you can offer your clients protection during retirement.

C-34281 08/26/20

October 2020 » InsuranceNewsNet Magazine

LIFE

5 Myths Keeping Black Americans From Buying Life Insurance Nearly 80% of Black Americans said having life insurance is a goal for them, a 2019 New York Life study found, versus 63% of all adults. But the Black community faces many barriers to life insurance ownership. By John Hilton

ome recent studies show that Black households are more receptive than other races are to purchasing life insurance — the key is reaching that market. Nearly 80% of Black Americans said having life insurance is a goal for them, a 2019 New York Life study found, versus 63% of all adults. More than 90% of Black Americans said they believe life insurance helps future generations succeed. Many of the barriers to life insurance ownership in Black communities can be traced to several myths about the process. Five myths, in particular, keep Black Americans from buying life insurance, said Delvin Joyce, a financial planner with Prudential. “Not only is there a racial wealth gap, there's also a knowledge gap in certain areas and where we see that knowledge gap is in life insurance,” said Joyce during a re34

cent webinar sponsored by Life Happens, a nonprofit group supporting the life insurance industry.

Myth #1: Final Expenses Only

Many Black Americans come from communities that have come to view life insurance as a way to cover final expenses. That narrow view grew out of a proud desire to cover all debts, Joyce said, even in death. It is common in Black communities for church members to “pass the hat” to help families cover final expenses, Joyce noted. A stigma developed around that well-meaning tradition. “I think what happened is this culture developed where people did not want to be that member,” Joyce said. Along the way, the life insurance industry missed an opportunity to educate and inform. “We didn't as an industry talk to people about the miracle that life insurance truly is and all the other uses of life insurance,” Joyce said. “When you go out there talking to the general public about life insurance, don't be an order taker. I'm saying to them, ‘You know, we only have enough to bury you, and your family will be buried after you're gone.’”

InsuranceNewsNet Magazine » October 2020

Myth #2: No Handouts

Kristen Hall Eskew grew up hearing about her father's struggles for success. Growing up in rural Kentucky, he went to a segregated high school, was part of the first Black class in college, and then went into the military. Today, her father is 72 and a private practice dentist, said Hall Eskew, director of talent acquisition at Consolidated Planning in Charlotte, N.C. “Using life insurance as a way of wealth building, that meant nothing to him,” she said. “Legacy for him meant making sure he could provide me and my sisters with the same grit, perseverance and education that he has to build our own." That type of attitude can be hard to change. It is important not to even try, Joyce said. “What I would say is, empathize; but then show them ways that you can utilize life insurance and put some guardrails around that life insurance to make sure that your kids are still growing up with that same hard work, determination and grit,” he said.

Myth #3: I Have Life Insurance

This myth extends beyond the Black community: I have life insurance through my job. But it can be very prevalent in the Black community, where gains have

5 MYTHS KEEPING BLACK AMERICANS FROM BUYING LIFE trailed and having lifelong job success leads to a personal attachment to the benefits that came with it. “The mentality is ‘I've worked. I've done everything right. I'm going to utilize these benefits. That's enough for me,’” Joyce said. The conversation should start with, “How do we supplement what you already have to make sure that your family is completely covered?” Joyce added. “The second thing that I would say is, have a conversation and appeal to reason about what that life insurance coverage at work truly means.” Often it is some multiple of a person's salary, and that might not be enough to provide for surviving family members in an emergency situation.

mindset of, ‘Life insurance is just for the people that I leave behind. Who cares? I’m dead,’ talk to them about some of the benefits to them while they’re alive,” Joyce said. “And I think that would help to really shift the tone of the conversation.”

Myth #5: $5 Million Is Too Much

Many Black Americans watch television shows like “Unsolved Mysteries” and “Dateline,” Joyce said, which highlight stories of murders being committed for the life insurance proceeds. It creates a lot of reluctance and inaccurate perceptions around buying life insurance. People think a million-dollar policy must cost a thousand dollars a month, Joyce added.

Why Do They Buy?

83% want their life insurance proceeds to 68% pay for a child’s college education. to leave 37% iantend legacy. use life insurance to 28% transfer wealth. iew it as a key way to take care v of their families.

As with many clients, it can be difficult to get Black Americans to personalize the benefits of life insurance. “There's only a benefit if I die, and I'm dead. So why do I care?” said Joyce, recounting a typical conversation. “I have, unfortunately, heard that many, many times." Education is key to countering this myth as well. Hall Eskew conceded that she did not know much about life insurance prior to joining the industry. Now she has a term life insurance policy with a benefit rider. “If you have someone who has the

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“When I tell them it’s $65 a month, they let their guard down,” he said. “The first thing that I try to accomplish when working with a couple, especially from a life insurance needs standpoint, is we’re going to figure out what the need is. Before we talk about term, before we talk about whole life and all these things.” I n s u r a n c e N ews N e t Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

October 2020 » InsuranceNewsNet Magazine

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SOURCE: New York Life’s Life Insurance Gap study 2019

Myth #4: It's Only For My Beneficiary

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2Q Sales Plummet

ANNUITYWIRES

$20B $15B $10B

Few Bright Spots In 2Q Sales Tally

$5B $0

2Q18

2Q19

2Q20

SOURCE: Wink’s Sales & Market Report

There were a lot of gloomy faces among annuity sellers during the second quarter, as distribution was hit by twin killers: the COVID-19 pandemic and low interest rates. Annuity sales were down sharply in all but two product categories during the quarter, according to the Wink’s Sales & Market Report. Overall sales for all deferred annuities in the second quarter were down 12.8% when compared to the previous quarter and 21.2% when compared to the same period last year. The lone bright spots came via multiyear guaranteed annuity sales of $12.5 billion, up 25.6% compared to the previous quarter, and down just 0.3% when compared to the same period last year; and structured, or registered index-linked, annuity sales of $4.5 billion, up 9.3% over the 2019 second quarter. In other product lines, variable annuities were down 24.7% compared to the previous quarter and 25.6% year over year. Indexed annuity sales were down 21.8% compared to the first quarter, and down 34.8% year over year. “Everyone saw these sales declines coming from a mile away,” said Sheryl J. Moore, CEO of Wink Inc. “As everyone continues adjusting to COVID-19friendly selling, and the 10-year Treasury remains minuscule, sales are going to continue to be challenged.”

REGULATORS WORK ON ILLUSTRATIONS

State insurance regulators spent months and many calls trying to better regulate proprietary index components — only to realize they need more time. The Annuity Disclosure Working Group was given a time extension recently to continue its work to increase the time indexes must be in existence to be used in annuity illustrations from 10 to 15 years. Regulators are concerned that consumers are being misled by unrealistic indexed annuity illustrations. The group has a couple of more issues to iron out, said Mike Yanacheak, Iowa actuarial administrator. The working group needs to decide whether it wants to “make a recommendation to the A Committee related to whether there is a need for product approval standards for proprietary indices and whether there needs to be standards surrounding the relationship between the hedging provider and the index provider,” he said. DID YOU

KNOW

JACKSON NATIONAL GETS A NEW HOME

British insurer Prudential Plc. will spin off its American businesses, which include Jackson National Life Insurance Co., to focus on operations in Asia and Africa. Prudential Plc. will “pursue a full separation of Jackson by way of a minority Initial Public Offering (IPO) followed by full divestment over time,” Jackson said in a news release. The U.S. listing is planned for the first half of 2021, and Jackson does not currently expect to remit any regular dividends to Prudential Plc in 2020 or 2021. Accord ing to the Secure Ret i rement Institute U.S. annuity sales rankings, Jackson was the top seller of total annuities in 2019. Jackson retook the lead position after losing it to AIG in 2018.

QUOTABLE We’re adding wholesalers. We’re expanding into new firms as well as new channels. — Myles Lambert, chief distribution and marketing officer for Brighthouse Financial

Nevertheless, in the first half of 2020, Jackson’s profit fell by 19%.

CONSUMERS FLOCKING TO SAFETY

Consumers are again seeking safety as they did early in the Great Recession, but they are running toward different products during this economic downturn — a trend that is likely to continue long term. Todd Giesing, senior director, annuity research, Secure Retirement Institute, and Teddy Panaitisor, senior research analyst, SRI, explained the trends recently during LIMRA’s Life & Retirement Virtual Conference. The researchers see a softening annuity market for the rest of this year and next, with slow growth in 2022. “We expect sales to be down in the 8% to 15% range for 2020 compared to 2019,” Giesing said. “What’s interesting is this puts us in the same impact as we saw from the financial crisis in 2008. In 2009, where I believe sales were down 10 or 11%. “There are many factors going on but it’s basically a difficult pricing environment for indexed annuities, which is making alternative solutions such as fixed rate deferred and registered indexed linked annuities more popular.”

68% of registered investment advisors would consider recommending an annuity in cases where clients asked about annuities. Source: RetireOne and Jackson National Life Insurance Company

InsuranceNewsNet Magazine » October 2020

ANNUITY

Assumptions Vs. Reality: Considering Income Riders Behavior statistics show consumers buying annuities at a younger age and turning on income riders earlier. By Cary Carney

hen it comes to comparing guaranteed lifetime income benefit riders on fixed indexed annuities, how do you do it? There are so many income riders in the market today. How do you choose the best one for your client? Ultimately, we want to find the option that provides the highest amount of income for our client for when they need it — although there are other crucial aspects to consider. Three additional determinants should include level of complexity, cost and timing. Level of complexity is an important factor when comparing FIA income riders. An average consumer may not understand what a step-up is. Try explaining phantom benefits to your parents or grandparents. Income riders may include intricacies such as payout factors, guaranteed roll-ups for income, step-up provisions and expenses. Is the cost of the income rider applied to accumulation value or income? Are they using accumulation versus a roll-up to factor the income payout? All of these are vital factors and questions to 38

consider when looking for “the best” income product for your client. There are competitive and simple FIA income riders on the market that exclude many of the confusing factors by design. Often in life when we discover something that is simple yet truly awesome, we question the reality of it because it sounds too good to be true. When you discover FIA income rider options like this, be sure to take a closer look, as you may have found a real treasure. Cost is always an important factor. If you want everything locked down and guaranteed for when the client turns the income on, the client will pay significantly more in rider charges over the course of the product life cycle. Instead, they could consider a nonguaranteed roll-up rider that uses the value from their accumulation to calculate their guaranteed income stream. If the payout factors that are applied to most income riders are strong, a small increase in accumulation value —say 2% to 2.5% per year — can make up for some of the highest roll-ups out there and save the client significant expense charges for the rider. When comparing income benefits, many of us may follow a simple rule of thumb by illustrating an issue age of 65, with income starting in 10 years. I have been guilty of this myself. However, this may unintentionally backfire on us. We need to focus on when clients actually exercise income riders, along with

InsuranceNewsNet Magazine » October 2020

the cost to the consumer of these riders, and weigh that information against the actual guaranteed payout for the client. To get from the starting point to the finish line, we should start by looking at what actual consumer behavior statistics tell us regarding the timing of income commencement. After analyzing information from 36 participating annuity companies that spans beyond the past two years, the Wink’s Sales & Market Report, Q1 2020, shows us that consumer behavior is much different from how we typically compare the competitiveness of income riders. With express permission from Sheryl Moore at Wink, we share the following data from the Annuity GLWB Elections segment of their cited report that the average age of a consumer who purchases an FIA including a lifetime income rider is roughly 62 and income commencement is exercised in 3.2 years. Sixty-five percent of consumers start taking income within the first four years. Less than 4% turn on income in the 10th year or later. According to these consumer behavior statistics, we can clearly see that our old rule-of-thumb assumptions (using age 65 with income starting in 10 years) are quite off base. What we should look at when running general competitive comparisons is how the income payouts look when exercising through Year Four. However, when following this approach,

ASSUMPTIONS VS. REALITY: CONSIDERING INCOME RIDERS ANNUITY

When Do Clients Really Annuitize? Competitive Comparison Factors

General Assumptions

Consumer Behavior Reality

Plan Issue Age Income Rider Commencement

65 Year 10

Average: 61.7 Average Year: 3.2

SOURCE: Wink

we may still find ourselves missing out on plans that have exceptional income opportunities. By attempting to standardize all income riders and pick a date in time to turn on the rider, we may not be finding the best options for the client’s true needs. Throw the old rule of thumb out the window. Be creative with your planning to find the best alternative for your client. For example, there are products designed to be extremely simple and cost effective to generate a guaranteed income stream for your client, but it may not be as

easy as lining them up against every other rider and choosing an income start date. Some income riders may have a threeyear waiting period. Look closer at those products, as they may allow up to 10% surrender-free withdrawals each year. Use the withdrawal benefit to provide income for the first three years and then, in the fourth year, turn on the income rider for the guaranteed payout. If the payout factors are superior to others, you can generate income immediately for the client that could exceed income provided by single premium immediate annu-

ities or other products with guaranteed income and may even come at a lower cost to the client. Compound that with the client’s ability to stay flexible and not give up control of their assets; it could be a major win-win. Cary Carney is vice president of sales at Guaranty Income Life Insurance. He may be contacted at cary.carney@innfeedback.com.

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HEALTH/BENEFITSWIRES Why are employees stressed?

Gen Z Seeking Mental Health Help Younger workers’ mental health has taken a hit

X Experiencing financial problems: 81% X Fears of job security, workload and other issues: 77% X Getting coronavirus or having a loved one get it: 60% X Having to socially distance from loved ones: 47% X The upcoming U.S. presidential election: 44% X Social justice issues: 41% X Not having access to health care because of COVID-19: 35%

QUOTABLE

SOURCE: MetLife

from COVID-19, with Generation Z employees three times more likely than all other employees to have sought professional help for stress, burnout or other mental health reasons since the beginning of the pandemic. MetLife’s 18th annual Employee Benefits Trends Survey found a significant portion of workers seeking help with their mental health. Virtual fatigue, which results from work and personal lives being reduced to screento-screen interactions each day, has been a big contributor to mental health concerns, the study found. Nearly four in 10 workers said reduced in-person interaction with friends, family and coworkers has negatively affected their mental health, and 56% of millennials said they feel this way. Additionally, 34% of employees said not being able to connect with coworkers in person as much as they used to is a top source of stress and anxiety. This has disproportionally impacted Gen Z, with almost half (47%) saying they feel the same way.

STUDY SHOWS GAPS IN CHRONIC CARE

More than one in three Americans have a chronic, complex health condition. But even though they see their doctor frequently and take multiple medications, their health outcomes are not improving. That was one finding in the 2020 Chronic Care Action Index, which asked consumers and health care providers what factors would improve their health. Surprisingly, more face time with their doctors was not named as a factor. Those with chronic conditions reported they already have a number of interactions with health care professionals. What they said they need most is increased lifestyle guidance to help them manage their conditions. When asked which topics they discussed with their doctor, 53% said that additional steps they could take to improve their health (such as changing

6 IN 10

4 IN 10

Adults in the US have a chronic disease.

Adults in the US have two or more.

SOURCE: Centers for Disease Control and Prevention

DID YOU

KNOW

diet, exercise and sleep habits) were not made clear to them. Fewer than one in three health care professionals (30%) said they believe patients accurately follow the guidance they were given during their appointment a majority of the time.

MORE PEOPLE CHOOSE ‘HOSPITAL AT HOME’

C OV I D -19 h a s forced hospitals to prioritize caring for those sick with the virus, while people who need other types of medical care are shying away from hospitals right now. It’s the perfect time to receive medical treatment at home. “Hospital at home” programs are gaining in popularity during the pandemic. Communication technology, portable medical equipment, and teams of doctors, nurses, X-ray technicians and paramedics all make it possible for patients to get in the safety of their home the kind of care they would get in a hospital. An added bonus is reducing the strains on medical centers and reducing patients’ fears. Medicare and private health insurers are boosting the hospital-at-home movement, although it still represents only a small percentage of the 35 million

The pandemic is helping reinforce for many Americans the importance of maintaining a healthy routine and getting regular preventive care. — Dr. Andrea Klemes, MDVIP chief medical officer

hospitalizations each year. When the pandemic struck, the Centers for Medicare & Medicaid Services temporarily let hospitals bill for care outside their walls, including in patients’ homes. Many private insurers also are covering in-home hospital care during the pandemic. Hospital groups and others want Congress to make those changes permanent, at the same rates as in-hospital care.

AETNA HIT WITH $500K FINE

Aetna has been fined $500,000 by California’s Department of Managed Health Care for denying emergency room claims in violation of state regulations. California law requires health plans to cover emergency services. The only exceptions are if the health plan can prove that the emergency procedure never took place or if the insured did not require emergency care services and “reasonably should have known” that their condition did not warrant an emergency room visit. However, after reviewing Aetna’s emergency care services claim denials, the department concluded that 93% of the denied claims it sampled should not have been denied under California law.

As many as 12 million Americans may have lost their health insurance since February.

InsuranceNewsNet Magazine » October 2020

Source: Economic Policy Institute

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October 2020 » InsuranceNewsNet Magazine

HEALTH/BENEFITS

Survival Comes With A Massive Price Tag As more people survive cancer, heart attacks and stroke, they find the price of survival is high. Critical illness insurance can help pay the bills. By Pam Jenkins

uick quiz: Which insurance coverage is among the fastest-growing workplace benefits? If you said critical illness insurance, give yourself a gold star. According to LIMRA, critical illness sales were up 14% last year — double the already healthy 7% jump in overall workplace benefits sales, which rose to nearly $7.7 billion in new premium in 2019.

Meeting A Critical Need

The reason for critical illness insurance’s continued growth is painfully clear. Cardiovascular disease — heart attacks, strokes and the like — has been the leading killer of people in the U.S. for decades. 42

And cancer will claim more than 600,000 lives this year. They’re the top two causes of adult death in this country. Health experts don’t see a change in these trends anytime soon. The American Heart Association predicts 40% of the U.S. population will suffer from some form of cardiovascular disease by 2030 — that’s more than 100 million people. And the American Cancer Society expects more than 1.8 million new cancer cases will be diagnosed this year. On the positive side, advances in medical treatment, technology and early detection mean many more people are surviving cancer and heart attacks. Decades ago, a heart attack killed up to half its victims within a few days. Now, more than 90% of people who suffer a heart attack survive, Harvard Medical School reports. Cancer survival rates have also increased substantially in the past several decades. But living through a heart attack, a stroke or cancer comes with a big price tag. The National Institutes of Health estimates that the cost of cancer care

InsuranceNewsNet Magazine » October 2020

in the U.S. will reach $157 billion in 2020. Meanwhile, the American Heart Association projects that the cost for cardiovascular disease treatment will more than double from $318 billion this year to $749 billion by 2035. The indirect costs of cardiovascular disease — lost time at work, paying for additional services at home, transportation, child care and other expenses — will leap more than 55% to $368 billion during that time. No matter how robust your clients’ major medical insurance plans are, they won’t cover all these expenses. High deductibles, copayments and indirect expenses not covered by insurance can leave survivors with overwhelming bills. In fact, a recent study published in the American Journal of Medicine showed 42% of new cancer patients lose all of their life savings — an average of about $92,000 — in two years because of the cost of treatment. Nearly two-thirds of cancer patients are in debt because of their treatment, and 55% of them owe at least $10,000, researchers found after tracking 9.5 million cancer patients from 2000 to 2012.

New Critical Illness Plans Meet Evolving Needs

You can help your clients make the valuable financial protection of critical illness insurance available to their employees without investing more precious dollars in their benefits plan. Critical illness insurance is usually offered as a voluntary benefit on a group or individual platform, so employees can select the coverage and level of protection that meets their needs — and pay for it themselves. The option of attained-age pricing also can make this coverage more affordable, especially with a younger employee population. Critical illness insurance is usually not available — or it’s too expensive — for individuals to buy on their own. The ability to get this coverage affordably and conveniently at work is a perk that will help employees appreciate the value of their benefits package. In addition, they don’t have to worry about qualifying for coverage if it’s offered on a guaranteed-issue basis. The benefits industry is responding by introducing new versions of critical illness insurance that add even more value. Here are some of the enhancements to

SURVIVAL COMES WITH A MASSIVE PRICE TAG HEALTH/BENEFITS look for in the critical illness product you bring to your clients:

Projected Costs Of Cardiovascular Disease Will More Than Double Through 2035

• Expanded coverage for broader protection. One way the newer versions of critical illness plans are increasing their value is by expanding the conditions they cover. Some plans cover 50 or more different serious conditions such as heart attack, stroke, cancer, organ failure or coronary artery bypass graft surgery. Additional conditions covered for children include Down syndrome, cystic fibrosis, cerebral palsy, spina bifida and cleft lip or palate, often at no additional cost. In addition, some plans pay benefits for multiple different critical illnesses as well as reoccurrence of the same illness. Look for those that cover a reoccurrence of invasive cancer, including breast cancer. • Customization to meet individual needs. A one-size-fits-all benefits package is unlikely to meet the needs of a diverse employee population, and neither

Current

2035

High Blood Pressure

$68B

$154B

Congenital Heart Disease

$89B

$215B

Congestive Heart Failure

$18B

$45B

Stroke

$37B

$94B

AFib

$24B

$55B

Other

$83B

$187B

TOTAL

$318B

$749B

SOURCE: American Heart Association

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HEALTH/BENEFITS SURVIVAL COMES WITH A MASSIVE PRICE TAG

15%–20% of people who seek treatment for COVID-19 may need a hospital stay. The cost runs more than $73,000 for those without health insurance and nearly $40,000 for those with private insurance using in-network providers. will a single-option critical illness plan. The newer critical illness plans provide many options so your clients and their employees can tailor coverage to their unique needs. Your clients should expect a choice of several different plan designs with different features. For example, a plan that includes more cancer coverage provides a combined benefit to employees. If your clients already offer a cancer plan, they may prefer a critical illness design with less emphasis on cancer benefits. Employees should be able to choose from different levels of coverage to meet their financial situations. They also may want to further personalize their coverage with riders that pay additional benefits for infectious diseases, cancer, first diagnosis, heart procedures or progressive diseases such as Alzheimer’s disease. • Infectious disease coverage. The news tells us every day that COVID-19 is still spreading rapidly. And even though the vast majority of patients survive, treatment can be costly. FAIR Health, an independent nonprofit that collects health insurance claims data, estimates 15%–20% of people who seek treatment for COVID-19 may need a hospital stay. The cost runs more than $73,000 for those without health insurance and nearly $40,000 for those with private insurance using in-network providers. One way the benefits industry is responding is by adding infectious disease coverage to critical illness insurance plans. The coverage may be offered as a rider that provides a lump-sum benefit that employees can use to help pay health care expenses, nonmedical costs or even day-to-day bills. The benefits typically are payable for hospital stays of a set number of days, such as seven or 14. Covered conditions can include COVID-19 as well as a wide range of other infectious diseases such as those 44

caused by antibiotic-resistant bacteria, Legionnaires’ disease, meningitis, Lyme disease, sepsis and more. • New wellness benefits. Your clients and their employees also may not realize they can get value from their critical illness protection even if they’re never diagnosed with an illness. The well-being assistance benefit on some plans pays a benefit for one of many different health screening tests, such as a colonoscopy or a mammogram. Some newer plans include coverage for the BRCA genetic test that identifies breast cancer risk. Critical illness insurance can help your clients’ employees survive a serious illness both physically and financially.

Educate your clients on the importance of critical illness insurance as an affordable option that can help employees better protect themselves and their families from the unexpected — and keep racking up those gold stars. Pam Jenkins is assistant vice president of product development at Colonial Life & Accident. Pam may be contacted at pam.jenkins@innfeedback.com.

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The High Cost Of Survival

Source: National Cancer Institute

InsuranceNewsNet Magazine » October 2020

s? Tire d of stock... How ab out Financial facts and figures powered by AdvisorNews.com

Wall Street Gone Mad (Or Glad)

Got Trout?

Stock market indexes are rocketing ever upward, speeding away from the economic debris down below in the land where historically high unemployment, retail apocalypse and exploding national debt live. We have long said that the stock market is not the economy, but really the indexes are not the stock market either. The top 10 companies in the S&P 500 make up 29% of the value, leaving the other 490 in the remaining two-thirds. But perhaps not for long. The companies within that top 10 are domi10 S&P 500 nated by tech, which has shed all earthly bonds Heavyweights in value. Zoom, for example, lived up to its 6.4% Apple name by zooming 41% in price after its secondquarter earnings report on Sept. 1, which was the best 5.8% Microsoft September start for the stock indexes in decades, fol4.9% Amazon lowing the best August in more than 30 years.

2.3% Facebook 1.7% Alphabet A 1.6% Alphabet C 1.4% Johnson & Johnson 1.4% Berkshire Hathaway 1.2% Procter & Gamble 1.2% Visa

Those massive tech companies are poised to get bigger. The stock splits in Apple and Tesla, for

example, have likely set them up for price acceleration. And where is just about every consumer dollar going? Amazon. So, that company has nowhere to go but up and out and, well, everywhere. It all leaves us with this nagging sense of déjà vu from all the other times when Americans threw all their available dollars at a particular portion of the stock market, closed their eyes and hoped it all worked out in the end. And, hey, sometimes it did.

Advisors Win With Tech

If you needed another reason to get comfortable with technology, here it is: more money. Financial advisors who manage more than $500 million in assets are taking advantage of the digital tools and solutions made available to them by their firm

at higher rates than their peers, according to research from the Money Management Institute and Aon. These advisors also have a more positive perception of their firm as a digital leader and are regularly advocating the firm’s digital offerings to their clients, according to the report. “Advisors have been evolving toward more holistic wealth planning by incorporating digital tools to quickly and efficiently address broader financial planning needs. There has been an accelerated rate of adoption in the COVID-19 era,” said Craig Pfeiffer, CEO of MMI. The most effective advisors over 55 years old were the most comfortable and confident using tech. Younger advisors, under 45, were interested in using

Do you happen to have one of these tucked away in a drawer somewhere? Maybe it surfaced during quarantine cleaning? No, you do not. There is only one. And a few wealthy people or syndicates really, really wanted it. Like a record-setting $3.93 million worth of want.

That is how much this Mike Trout 2009 Bowman Chrome Draft Prospects Superfractor card fetched at an auction on Aug. 22. It is all about rarity — only one was made. It was a card whose time had come because it is not only rare, but it also came up for sale during a red-hot sports collectibles market. Nobody’s watching sports, so they’re buying them. So, if you were hanging your head in shame because all you have is a lousy 1909 T206 Honus Wagner card, well, this might be the time to put that bad boy on the block.

tools that help them understand their clients’ values and take a more holistic approach to the financial planning experience. Younger advisors managing large books are far more likely than their less-successful peers to adopt more advanced goals-based financial planning tools, enabling better conversations, according to the study.

Advisor usage of and satisfaction with critical tools is limited

Source: MMI and Aon, Advisory Solutions: Expectations and Experiences

October 2020 » InsuranceNewsNet Magazine

identified which important topics people are not discussing with their financial onal. Most have discussed financial matters, g plans for retirement and how to manage ney. Some also report discussing job ns and housing expenses for younger family s. Fewer people have discussed their own heir family’s health, or identity protection m prevention (Figure 1), yet they identify these First, we identified which important topics people are topics. and are not discussing with their financial -mind

Next, we sought to identify topics of current concern for clients. From a list of 25 topics, survey respondents chose the five that best represent what is most on their mind. The results are divided into three overarching themes—health and security; wealth and lifestyle; and family and loved ones—with a focus on variances between age groups.

What Topics Are More Than Money: What Top-of-mind? Clients Want To Discuss Health and

What Topics Are Being Discussed?

Next, we sought to identify topics of current concern for clients. From a list of 25 topics, survey respondents professional. Most have discussed financial matters, chose the five that best represent what is most Clients want to feel comfortable talking with their advi- found. Clients who said they are satisfied with their advisor reincluding plans for and how to manage on their The results are divided into three sors on topics thatretirement aren’t necessarily about dollars and lationships said mind. they still want to discuss their financial plans RE 1 their cents. • Susan Rupe also report discussing job for retirement how they manage theirand money. But they also and money. Some overarching themes—health security; wealth Among health-andand security-related topics, “personal want to discuss topics such as their careers, their future goals h topics have you talked about? transitions and housing expenses forbeyounger family lifestyle; family loved ones—with a focus health”and was mostand frequently across he advisor of the future must willing and able tophysical and aspirations, their potential long-term careselected expenses, and on discusspeople topics that arediscussed not purely financial, accord- even their family members’ said Kevin Hogan, CEO members. Fewer have their own variances betweenfinances,” age groups. with older respondents (ages 61-75) ing to a new study by AIG Life and Retirement andageofgroups, AIG Life and Retirement. My current health, theirthe family’s health, or identity protection Massachusetts Institute of Technology AgeLab. especially “Clientslikely are expressing interest in discussing topics interest beyond to choose it (Figure 2). Also, housing situation The study, “The1),Future of identify Client-Advisor and scam prevention (Figure yet they these traditional conversation boundaries in favor of wider-ranging, expenses, and identity protection Relationships,” found that as clients’ needs evolve, the model ofin care-related deeper conversation,” Hogan said. “Although financial planning,and Health and d prevention and asatop-of-mind topics. financial professional also must evolve. portfolio performance and financial expertise remain important

Security Topics

entity protection scam prevention tends to increase with age, while Clients want to broaden the scope of their conversations with drivers of satisfaction, advisors are now being asked to consider b transition, new their advisors to have highly satisfying relationships, the studythoughts broader topics andhousing act as a resource In this role, athe about tend toconnector. decrease. Note: eer or retirement financial advisor uses their broader network to help clients find FIGURE 1 survey was fielded March coincided Among healthand security-related topics, “personal the right expertise andin services to 2020, address which their needs.” tial expenses for Which topics have you talked about? The nonfinancial topics that clients want to discuss include family members health” was most frequently selected across with thephysical initial COVID-19 outbreak in the United identity theft, fraud prevention, their physical health and their age groups, (ages 61-75) amily members’ housing situation, thewith studyolder found. The chief topic across the age States, which may have lent respondents extraordinary urgency My current finances groupsespecially polled (30-45 yearstoold, 46-60 years old and 61-75 years likely choose it (Figure 2). Also, interest housing situation to health-related topics.health, not their financial standing, old) was their own physical My future goals care-related andand identity protection and Hoganinsaid. The threats expenses, of identity theft fraud prevention Fraud prevention and and aspirations identity protection are also top of mind; 97% who already have discussed scam prevention tends to increase withthis age,with while tential expenses FIGURE 2: Job transition, new thoughts about housing tend to decrease. Note: the for my own care career or retirement

Security Topics

Top-of-mind security survey was health fielded and in March 2020, topics which coincided by age with the initial COVID-19 outbreak in the United

How I currently Potential expenses for nage myyounger money family members

States, which may have lent extraordinary urgency Topic Age

My family members’ family member’s finances physical health

to health-related topics.

My future goals

My financial plan and aspirations for retirement

My physical health

Potential expenses y physical healthfor my own care

FIGURE 2:

Have discussed

My physical health 10 20 30 40 50 60 70 80 90 100 Percent of all respondents

Have not discussed

Have discussed

for my own care

46–60 20% Age 33% 61–75

Fraud prevention My physical health and identity protection

30–45 8%47% 30–45 46–6015%52% 46–60 61–75 64% 28% 61–75

Potential expenses

30–45 23% 46–60 20% 46–60 33% 61–75 8% 4% 61–75

Topic

My financial plan for retirement

47% 52% 64%

Top-of-mind health and security topics 9% 30–45 by age Potential expenses

How I currently manage my money 0 10 20 30 40 50 60 70 80 90 100 Percent of all respondents A family member’s physical health

ave not discussed

30–45 46–60 61–75

Source: AIG and MIT Age Lab

InsuranceNewsNet Magazine » October 2020

Currentfor housing my own care situation

Fraud prevention and identity protection

30–45

30–45 46–60 61–75

8% 15% 28%

high-satisfaction client relationships (Figure 3). ot surprisingly, two of the topics that come up in gh-satisfaction relationships are purely financial in ture: “my financial plan for retirement” and “how urrently manage my money.” Aside from these o purely financial topics, discussions about four their advisor want to continue converditional topics appear to correlate positivelythe with sation, and 80% who have yet to discuss ent satisfaction:

this topic are eager to do so.

said he have was discussed surprised at the 85% of highlyHogan satisfied clients amount of importance clients placed future goals and aspirations on the topics of identity theft and fraud

77% have discussed jobespecially transitions, prevention, among older clients. this older age group was new careers, orHowever, retirement

also the least likely to have already had a related conversation with their advisor, with only 30% of them saying they had discussed the subject. “This represents a clear opportunity,” he said.

FIGURE 3:

Topics discussed with highly satisfied clients Job transition, new career or retirement My family members’ finances My future goals and aspirations Potential expenses for my own care How I currently manage my money

satisfaction and discussions (or lack thereof) of other identified potentially sensitive top-of-mind topics of conversation, such as the physical health of the client MORE THAN MONEY: WHAT CLIENTS WANT TO DISCUSS or a family member.

Key Take-Away: Having discussions about a more money set “isofbroadening the client/advisor expertise, product fit and knowing the holistic topics that move beyond purely financial relationship andtopresenting an opporalone. Clients want you to know can be important clients and may strengthennumbers the tunity for a more transparent, holistic them before being given permission to bond. Even for topics that did not produce significant approach to financial and future plan- serve them.” effects on client satisfaction, having a conversation ning,” Hogan said. “While no one expects Coughlin said the research makes it about themadvisors did not appear erode client financial to be antoexpert on allsatisfaction; clear that all clients are changing and that therefore, broadening the conversation carriesthere more is a “new generation gap out there topics, they have the opportunity to help their clients identify of concern that is all about expectations.” positive potential thanareas negative risks to and relationships, thencan connect into broader Younger consumers, he said, have aland have them an important role innetworks deepening client of expertise.” ways had a wealth of information and relationships over time. The study also looked into the ways advice — from teachers to SAT prep tuand frequency in which clients commu- tors to career coaches to having access to nicate with their advisor. One takeaway an online world that provides them with opinion and direction on nearly every aspect of their lives. Source: AIG and “They are now expecting that the proMIT Age Lab fessionals they work with to ensure their financial security know them much like a friend and, like a friend, to have their back guiding them throughout their life course, not just at periodic financial decision points,” he said.

The Human Factor

My financial plan for retirement 0%

20%

But not every topic is up for discussion with advisors, the study said. Half of clients ages 46-75 said they do not want to discuss a family member’s health with their advisor. 9

Deepening The Relationship

Discussing those nontraditional topics leads to deepening the advisor-client relationship, the study showed. The study revealed that clients who reported the highest levels of satisfaction with their advisor had discussed nontraditional topics with them. More than eight in 10 highly satisfied clients said they discussed future goals and aspirations — 77% discussed job transitions, new careers or retirement; 72% discussed their own care; and 62% discussed their family members’ finances. The data also showed how crucial an advisor’s ability to personally connect is to client satisfaction; one of the top reasons for ending an advisor relationship is attributed to a lack of personal connection, with 25% saying it was the cause of terminating their relationship. Clients’ interest in talking to their advisors on topics not directly involving

40%

60%

80%

100%

was that 40% of younger clients — those ages 30-45 — said they communicate with their advisor once a month. In addition, more than one-third of those in that age group said they view their ideal advisor as a life coach or even as their friend. A financial advisor’s professional network and personality were also key drivers of client satisfaction for respondents ages 30-45.

‘You Get Me’

The MIT AgeLab has spent the past several years conducting research to understand what characteristics clients believe are the most important factors for an advisor to have. Not surprisingly, clients expect their advisors to have professional knowledge and expertise. But clients want something more, said Joe Coughlin, director of the MIT AgeLab. “The characteristic that makes a real difference in attracting and retaining clients is demonstrating that ‘you get me,’” he said. The AIG study “provides more evidence that this element of a financial professional’s engagement with a client, truly knowing them, provides a differentiated value that goes well beyond

The MIT AgeLab has been conducting research on robo advice for several years, Coughlin said. The results of the AIG/MIT study showed that “human advice and client relationships are not going away.” “The fact is, algorithms make terrible conversations,” Coughlin said. “Robots are not good at understanding what keeps a client up at night, nor can they engage in a conversation reassuring a client that things will be OK or why a change of plans might be necessary.” Clients of all ages still want to talk to a human, Coughlin said. He added that the study shows that algorithms will not replace humans, but “they will help financial professionals spend less time working on calculations and more time having conversations with their clients.” 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 Twitter @INNsusan.

October 2020 » InsuranceNewsNet Magazine

INBALANCEWIRES

The average American consumes 17 teaspoons of sugar a day.

Diabetes: Too Much Sugar To Blame? Half of all adults in the U.S. have diabetes or prediabetes, according to the American Source: American Heart Association

Diabetes Association. Type 2 diabetes is the most common form of the disease. So, what causes this? Is eating too much sugar to blame? First, let’s look at how blood sugar levels can end up too high. During digestion, carbohydrates are broken down into glucose and released into your bloodstream. Glucose is a good news/bad news thing. Your body needs glucose as a source of energy, but too much glucose in the blood can be toxic. The pancreas produces insulin, which allows the glucose to enter the cells in the body. Diabetes impairs the cells’ ability to use insulin, and the glucose stays in the bloodstream instead. Sugar is one culprit in developing Type 2 diabetes, but consuming too many processed carbohydrates contributes to the disease as well. Other factors are excess weight, a sedentary lifestyle and certain medications. So how do you counteract the effects of sugar and carbs in the diet? Think plantbased and fiber, nutritionists say. A 2019 study published in JAMA Internal Medicine found that people who followed a predominantly plant-based diet with a mix of fruits, vegetables, whole grains, nuts and legumes had a lower risk of developing Type 2 diabetes. In addition, increasing your fiber intake will go a long way toward combating the onset of diabetes. The U.S. Department of Agriculture recommends 25 grams a day for women and 38 grams a day for men, up to the age of 50.

LONG NAPS COULD HARM YOUR HEART

Power n ap ping is said to increase brain function and lower blood pressure. But too much of a good thing could be bad for your heart, researchers said. Naps that last more than 60 minutes could increase a person’s risk of heart disease and early death, according to a study presented at the European Society of Cardiology’s annual meeting. The researchers found people who took naps were 30% more likely to experience early death than those who didn’t nap at all. They concluded that naps of any duration increased a person’s risk of death by 19%, and said it could be because those who napped used the daytime snooze as a replacement for a full night of sleep. Those whose naps extended past the 60-minute mark were also more likely to develop inflammation, high blood pressure and diabetes, the researchers found. DID YOU

KNOW

GET RID OF HICCUPS

Is there anything more annoying than hiccups? There are plenty of myths about what causes hiccups and how to get rid of them. So what really works? Here is what some medical experts had to say. Dr. Celine Thum of Paradocs Medical Services recommends taking 20 tiny sips of water in a row, as quickly as possible. This slows down the nerve impulses in the diaphragm and forces the body to calm down. Holding your breath may work the same way, by working on those same nerve impulses and stopping the hiccup reflex. Having someone surprise you can force you to take a deep breath and stop the hiccups in their tracks. Some other ways to get rid of those pesky hiccups include using ice. Gargle with ice water or swallow crushed ice. This stimulates the vagus nerve

QUOTABLE Research shows that probiotics improve gut health, and good gut health is linked to improved immunity. — Amanda A. Kostro Miller, registered dietitian

and stops hiccups. Or you can try preventing hiccups in the first place. Eat more slowly, and avoid carbonated drinks and spicy foods, and you may find hiccups are a thing of the past.

DON’T IGNORE COLON CANCER’S WARNING SIGNS

The recent death of actor Chadwick Boseman from colon cancer has raised awareness of one of the most lethal forms of cancer. More adults in their 20s and 30s are being diagnosed with colon cancer, according to the Journal of the National Cancer Institute. Colorectal cancer is the third most common cancer diagnosed in the U.S. and the third leading cause of cancer deaths in Americans, according to the Centers for Disease Control and Prevention. In 2020, an estimated 104,610 The most comnew cases of colon cancer mon symptom and 43,340 cases of rectal to look out for is cancer are expected to be bleeding in the rectal area. That diagnosed, and an estimated bleeding can lead to 53,200 deaths from colorectal anemia, so if you’re cancer are expected to occur. anemic, colon canSOURCE: National Colorectal Cancer Roundtable cer could be the cause. Abdominal pain and unexplained weight loss also could point to colon cancer. The American Cancer Society recommends starting screening when you turn 45 if you’re at average risk for developing colon cancer. Earlier screening is recommended if you have a family history of the disease or other risk factors.

Enlisting the help of a partner helped people lose more weight than those who tried weight loss on their own. Source: European Society of Cardiology

InsuranceNewsNet Magazine » October 2020

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INBALANCE

When The Eyes Have Had It Take a break from screen time and stay hydrated. By Susan Rupe

o many aspects of our lives have moved to the virtual world over the past few months, and our eyes are paying the price for the increased time we are spending in front of our screens. Dr. Daniel Laroche, ophthalmologist and president of Advanced Eyecare of New York, told InsuranceNewsNet that spending more time in front of computers, smartphones and TV screens is damaging to our eyes as well as to our overall health. “Since we’ve been in this COVID-19 environment, people are spending more time online, doing more videoconferences, working virtually. This can cause eyestrain,” he said. “Eyestrain can cause headaches, and it can lead to nearsightedness in children.” Laroche urged screen-users to adopt the “20-20-20 rule.” “After looking at the screen for 20 minutes, look at something that’s 20 feet or more away for 20 seconds,” he said. “That allows your eyes to relax and 50

reduces the strain on your eyes.” How do you figure out what’s 20 feet away? Laroche suggested looking out a window and across the street, or looking across the hallway into the next room. It’s not enough just to move your eyes, Laroche said. You must also move your legs. “You have to take more of a break from your screen,” he said. “Every one to two hours, get up, walk around, stretch your legs and get the circulation going. That increased blood flow also helps reduce eyestrain.” Children also are spending more time in front of screens as more education moves online. Increased screen time in children not only leads to greater risk of nearsightedness – or myopia – but it also can lead to a higher risk of retinal detachment when they reach adulthood, Laroche said. He advised parents to make sure their children observe the 20-20-20 rule as well. “In addition, get your children to spend 30 to 60 minutes a day doing an activity outdoors. Get them in a different environment, out in the fresh air, and get their circulation going as well.” Screen time also can lead to decreased ability to focus, Laroche said. “That’s

InsuranceNewsNet Magazine » October 2020

another reason why you want to take a break and look away from the screen – so you don’t lose your ability to focus.” While you look at your screen, your eyes don’t blink as much as they normally do. That leads to dryness, and older people are particularly susceptible to dry eyes, Laroche said. Staying hydrated can combat those dry eyes, he said. He recommended combining screen breaks with hydration breaks. “While you’re taking a break from the screen, drink some water, or drink green tea or vegetable juice. Green tea and vegetable juice have antioxidants that also can reduce dryness in your eyes and boost your overall eye health.” Eyedrops also may be needed to soothe dry eyes, he said. The right kind of eyewear can combat the ravages of screen time, Laroche said. “When people approach age 40, their eyes don’t focus as well as they used to. We find people that age often have to wear reading glasses. But reading glasses are not the same as computer glasses. You need to have the proper spectacle correction. If you are using the computer a lot, you need to make sure your glasses can be focused on the right distance.

WHEN THE EYES HAVE HAD IT INBALANCE

Top 5 Ways To Protect Your Vision As You Age You may still need reading glasses as you age, but these measures can help prevent sight-threatening eye disease

Eat a healthy diet, including leafy greens such as spinach or kale, and maintain a healthy weight

Wear sunglasses that block out 99% to 100% of UVA and UVB rays

Make sure you have the proper prescription for the work you are doing.” With more people working and learning from home, the boundary line between work time and personal time continues to blur. Laroche said it is important to set a cutoff time for using screens each evening – important not just for eye health but for overall well-being. “We shouldn’t have any screen time at night because when you’re looking at that blue light at night – doing screen time – that makes your body think it’s daylight. It messes with your body’s circadian rhythm and alters your sleep patterns. As a result, you won’t get a good night’s sleep and you will be groggy the next day. “For some people, they will set their screen time between 9 a.m. and 6 p.m., or others will say no screen time from 6 p.m. to 6 a.m. You need to find the schedule that works for you and stick to it. You need to set a cutoff time and stick with that time.” Laroche said lack of sleep also affects the eyes, so sticking with a regular bedtime can boost eye health. “You may think you are being more productive by working until 1:00 in the

Quit smoking or don’t start

Get regular eye exams

Know your family’s eye health history

SOURCE: American Academy of Ophthalmology

morning, but your productivity will suffer the next day and your eyes will be even more strained.” Stress also affects eyesight, Laroche said. “Stress increases blood pressure and cortisol levels in the body, and that definitely is not good for your eyes. Make sure you get a good night’s sleep. Take a break from whatever is causing you stress. Maybe it’s turning off the bad news on TV. Try to find something that is pleasurable to you. Exercise for 30 to 60 minutes a day, preferably outdoors.” Mindfulness also has a role to play in eye health. “Meditation can reduce stress levels,” he said. “It’s a simple thing to go into a quiet room somewhere, close your eyes and take 16 deep breaths. Do this two or three times a day. It can give your eyes a break from the screen and lower your eye pressure by about 20%. It also can lower your blood pressure by 20 points and lower your heart rate.” The cold-weather months bring their own challenges to eye health. “When the weather gets cold outside – especially if the air is dry – it can lead to dry eye, especially in older people,” Laroche said. “The thing to do

is put warm compresses over the eye. It increases the blood flow to the eyelid glands and allows them to produce the secretions that protect the eye. When you have cold, dry air and there is wind, it also can cause reflex tearing in the eye. Gel drops can prevent that.” Laroche urged people to continue to wear UV eye protection in the winter months. “Sunlight protection is important to help protect eyes from UV light that can attack the macula and cause cataracts.” The main causes of blindness, Laroche said, are diabetic retinopathy, macular degeneration and glaucoma. Obesity increases the risks of developing these conditions, he added, so maintaining a healthy weight and eating a diet rich in dark green leafy vegetables can help protect you from losing your vision in the future. Susan Rupe is managing editor for Insurance NewsNet. 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 Twitter @INNsusan.

October 2020 » InsuranceNewsNet Magazine

BUSINESS

Where Technology Can (and can,t) Support A WFH Environment As companies consider how working from home will continue post-pandemic, there are areas in which technology can fill the gaps — and others in which it cannot. By Seth Preus

he introduction of working from home for insurance advisors presents an incredible opportunity for companies. Properly using the technology they already have, in conjunction with effective productivity tools, will enable them to move from observation-based to data-driven management. The fact that so much work has continued relatively unabated is a true testament to the amazing age in which we currently live. Not only has technology sustained productivity outside the office, but in many cases it has improved it. It’s safe to say that most companies are considering not whether WFH (working from home) will continue post-pandemic, but rather how it will continue. While there are certainly areas in which technology can 52

fill the gaps created by a distributed work environment, there are others in which it cannot. Let’s examine the advantages and limitations of technology as they relate specifically to productivity and communication.

Productivity

Web-based customer relationship management systems, telephony systems and sales productivity tools can enable sales and service teams to become even more productive than they were in the office. But this has nothing to do with the supposed benefits of a WFH environment. Most companies already had CRM and telephony software; they just hadn’t been using it. However, since the pandemic forced managers to move from subjective observation-based management to objective, data-driven management, many companies are realizing that they do not possess adequate productivity tools to properly track, analyze and incentivize performance.

Where Technology Helps

Define work. Quite simply, what should an employee be doing every day?

InsuranceNewsNet Magazine » October 2020

Technology does not operate on impressions or superficial observations; it needs facts. WFH requires managers to define objective measures of work (key performance indicators) that can be tracked, measured and evaluated. This deliberate process elevates facts over face time and information over intuition. While much of the data for these KPIs can be collected by the same CRM and telephony systems already in place, it is essential to have robust productivity tools to set goals, tracks performance against those goals and display actionable data that will influence behavior. Visibility. WFH hindered the ability of people to see the work of others and have their work be seen. However, once work has been defined and has been captured by a CRM or telephone system, a productivity tool can display the data and restore that visibility. But once again, casual and superficial observations of work are replaced with meaningful KPIs that not only reflect real work but also influence behavior, which leads us to ... Motivation. Data drives decisions, and decisions lead to actions. Productivity tools that display real-time KPI data are far more likely to motivate actions. People

WHERE TECHNOLOGY CAN SUPPORT A WFH ENVIRONMENT BUSINESS aren’t motivated by data that they can’t see. Flow. There are some tasks that require “flow,” that uninterrupted state of being in the zone. By blocking time on a calendar and switching phones to “unavailable,” workers can get more done while free from the constant interruptions at the office.

Where Technology Doesn’t Help

Creativity. For complex problems that require a creative solution from a diverse group of individuals, there is no technology that can replace a face-to-face meeting. Virtual meetings result in awkward verbal exchanges, digital distortions and uncertain conversation flows that hamper a team’s ability to really brainstorm innovative ideas and capitalize upon the combined intellectual capacity of the team. Introverts. It’s difficult enough in person for an introvert to insert their ideas into a conversation dominated by constantly talking extroverts. The added disconnect created by a virtual environment may remove them (and therefore their contribution) entirely from the team. Subjective deliverables. Technology deals in objective facts. Many types of creative work do not necessarily lend themselves to objective numerical measurement. Increased communication is more effective, whether in a WFH environment or a traditional office setting, than trying to force a technological solution. Communication. Taking office workers out of the office created an instant communication paradigm shift. While existing technologies (phones, internet, video conferencing, email, etc.) ensured that communication could continue relatively uninterrupted, the challenge is in understanding when you should use them.

Where Technology Helps

Virtual collaboration. Video conferencing applications can make many meetings far more productive than they would be in a typical conference room. The ability to share screens, have access to any document or website, record the meetings and instantly share files is far more efficient than having people sitting in a room and taking notes. Intentionality. WFH has forced companies to be more intentional about how

Working From Home: The Good And The Not-So-Good §

A Taste Of Autonomy. The ability to be self-directed about how you do your work. Liberation from “over-the-shoulder” management.

Greater Productivity. Working from home makes it easier to get into a state of flow.

Better Work Environment. Freedom from daily commute; ability to control your schedule and your quality of life during the workday.

Poor Visibility. “Work blindness” causes anxiety for managers who want to know their employees are working, as well as for the employees who want their manager, and the rest of their team, to know that they are contributing.

Creativity Killer. Some tasks are better completed by groups working together in person.

Human Element. By removing the ability to read nonverbal communication, we create opportunities for misunderstanding.

It Might Be “Classist.” Some people may have an adequate WFH setup, while others may be working from their bedroom floor.

and when they communicate with one another. When properly executed, the byproduct of this additional structure is that communication becomes more regular, more targeted and better documented. “Fly-by” meetings that exclude key participants become rarer, since most communication is planned instead of spontaneous.

Where Technology Doesn’t

Culture. A company’s culture is shaped by in-person events and interactions that are difficult to replicate through technology. Happy hours, lunches and impromptu discussions are part of the social lubrication that enables people to work together. Scheduling “no business” conference calls to encourage purely social interactions can help. Applications such as Houseparty or Google Hangouts offer ways of creating after-hours social events that employees can drop in or out of at will. Channel overload. As companies have embraced new communication channels, they rarely eliminate the old ones. Workers can now communicate through calls, video conferences, Slack, RocketChat, text,

Messenger, email, Teams and internal systems. In many instances, employees must interact with a dizzying array of video conferencing apps, including Zoom, Teams, Skype, Webex, BlueJeans, GoToMeeting and countless others. This can lead to channel overload and completely undermine the intentionality of communication that I previously described, because it distributes communication across so many channels that it becomes unmanageable. Strength is often born of struggle. The pandemic has certainly been a struggle, but companies that learn how to overcome this struggle will emerge stronger as a result. The incredible adoption of many technology tools in such a short period of time is testament to the power of those technologies. Best practices of these technologies will certainly evolve over time. Seth Preus is a senior advisor at insurance software provider Mivation. Seth may be contacted at seth.preus@innfeedback.com.

October 2020 » InsuranceNewsNet Magazine

INSIGHTS

The Million Dollar Round Table is the premier association of the world’s most successful life insurance and financial services professionals.

Lessons In Adapting To Change Successful companies are the ones that focus not on what clients need, but on what clients need next. By Corry Collins

lthough I have been in practice now for 35 years, my objective from the beginning was to make sure I did not repeat one year’s experience 35 times. My business has completely changed over time — from what I sell to how I sell and from what I say to how I say it. Personal life experiences as well as larger industry and global changes, such as the evolution of technology, influence me, my family and my clients. Staying in tune with changes and actively servicing clients helps set the stage for necessary adaptations to thrive in the industry.

Technology Is No Longer A Choice

If the rate of change outside your business is greater than that inside your business, you are out of business. When I started in the profession, I was given an office and worked with someone to type letters. No one had computers in their office or on their desk — let alone in their pocket. Operating without email, we had six telephone lines that everyone had to share. If all six lights were on, you waited and grabbed a line when one of the lights went out. When meeting clients in person, we carried a rate book so that we could calculate their premium. Today, I have a 65-inch smart monitor hanging on the wall for presentations, files are 100% electronic and I can access my customer relationship management system anywhere in the world. Since consumers can easily leverage robo-advisors or find advice-free online sales of mutual funds, technology is no longer a choice. In fact, most millennials do their own research online for significant purchases — they are the biggest group who buys cars online. Technology will not replace advisors; however, advisors who use technology will win over those who don’t. 54

Stay Ahead Of The Curve

Another key lesson is that successful companies are the ones that focus not what clients need, but on what clients need next. For example, I was in an advisory meeting with one of our mutual fund companies, and they discussed how to sell to millennials. The following question was posed: “Why don’t you build a mutual fund designed specifically for millennials and populate it with companies they already know and buy from?” A week later, it was announced that they were creating such a fund. If a fund company can create a product almost instantly, advisors need to be adaptable too. The bottom line is that you need to stay ahead of the curve to be a leader, no matter what you are selling.

Prompting Continuous Communications

To succeed in this business, you must be able to build and foster relationships. You want clients to stay loyal to you over the years even if there are gaps in communication. In some cases, policy owners may feel that meetings are unnecessary even with term renewals. One simple way to reconnect and offer additional services is by sending an email with a foolproof formula. I have had great success using the following email template, which shows that I understand my client has been busy and can get a larger conversation started. Subject: Reconnecting Email: Michael, it’s been quite a while since we talked about your insurance coverage. I’m sure you are very busy, and I know the coverage is important to you. If it might help, I can send you a summary of your coverage to refresh you with the amounts. If anything else is on your mind, just let me know. Regardless, it would be great to confirm things are well.

InsuranceNewsNet Magazine » October 2020

A short, nine-word text is another method to prompt a response from a client or current prospect. Consider the following example, which is personal, inquisitive and easy to answer:

Overall, the goal is to receive a response and start, or restart, a line of communication. The response itself may vary, but the conversation will create necessary activity. Both of these methods have been tested with impressive results.

Intentional Evolution

Despite external factors such as increased technology or economic uncertainty, client service must always remain at the forefront. As you learn to adapt to change and

Technology will not replace advisors; however, advisors who use technology will win over those who don’t. push your practice forward in a positive direction, take the necessary time to listen to individual clients. I have found that I can often tell what a client is thinking by listening to the questions they ask. If you learn to listen so you can understand instead of listening so that you can reply, you’ll find great success in intentionally evolving relationships and your business. Corry Collins, CLU, ChFC, is a 19-year MDRT member who specializes in disability and life insurance for his target market of physicians. He is the author of Life Support and 101 Thoughts, Quotes and Questions. He may be contacted at corry. collins@innfeedback.com.

INSIGHTS

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every congressional district in the United States.

Be Better Than Yourself! How to enrich your own life with positive expectation. By D. Scott Brennan

s this your first job right out of college? Welcome to the big leagues of selling. You can have a great career selling life insurance if you want it badly enough. It is not what you might earn that is so important; it’s what you become. William Faulkner said it best when he wrote, “Be better than yourself.” One of the reasons the card game bridge still fascinates people is because, in order to be good, you have to be willing to be bad when you start out. There is a good chance you may feel as though you are overworked and underpaid — this is a good sign. Years from now, you will look back knowing you learned things in selling you would not have discovered anywhere else. You may hear the word “no” a lot. You will have a lot of lousy rainy Monday mornings, and a few people will forget to show up for their appointments. This is all part of the process of building a career. Make a commitment to hang in there for at last three years and put this in writing. You will be a better person three years from now if you want it badly enough. Selling life insurance is a hard-won dignity. It always has been and probably always will be. In life, what is rewarding usually starts with being difficult. Winston Churchill was right when he said, “Success is moving from failure to failure without the loss of enthusiasm.” Imagine what you want to look like three, 10 and 25 years from now. Then draw an imaginary line forward from today. What do you ardently desire? Do you want to live in a beautiful home? Take exciting trips with your family? Paint a picture in your mind of what you truly desire.

Taking Your First Steps

Start with written goals and carry them with you. Be tougher on yourself than a demanding boss would be. This is the difference between someone who has a

job and someone who builds a career. What are you willing to do or give up to obtain what you never had? Find someone to emulate. Everyone needs someone to admire. The paint store in our hometown sells 42 shades of white paint. Who wants to be part of a herd? Expand your thinking with the dogged determination that you do not need to be all things to all people — just a few important things to the right people.

who take the long view and are willing to sacrifice something today for a larger reward. Always look for what is right about any given situation you find yourself in. This is called having positive expectations, and it is the mindset of a winner.

Achieving Success

»B e on the lookout for small victories.

Now you are in the big leagues of selling because your contract has no stated limit on what can be earned. In this life, you do not get three wishes; you get an abundance of them. How’s that for good news? One snowy afternoon in South Bend, Ind., right after he was hired as the University of Notre Dame’s new head football coach, Lou Holtz told a packed room of players: “I know you did not select me to be your football coach. That is not important. What is important is that I selected you.” His words were so simple, they were brilliant. Three years later, the team he selected earned the 1988 National Championship. A career in the life insurance profession has selected you, and inspiration never goes out of style. It is not what society owes you; it is what you owe society. Call on people now. Leadership begins with you — so get out of your own way. What will you need on this new and demanding journey? Remember, well done is better than well said. Have a bias for action. A busy agent is a happy agent, and activity breeds activity. Find people who are doing well. The numbers are on your side. For every 10 new people you may call, three will see you and one will buy. What do you do on days when you don’t sell anything? Kindly forgive yourself. Remember that this is not a job — it is a career. Your attitude will probably end up being the average of that of the five people you spend the most time with. So avoid complainers, and associate with people

Building Good Habits

Have faith and turn the following thoughts into daily habits: »F ocus on progress, not perfection.

»G o to bed early and get up early. »D o not accept any space between what you say and what you do. »B e where your feet are (especially with family members). »B e upbeat. Abundance is a state of mind. It is impossible to be thankful and depressed at the same time. »D o great things, think great thoughts and delegate the rest. » I t is not always what happens to you; it is how you handle it. How’s your attitude? »P lay detective. Good things always happen when you call on people you are just a little afraid of. »D rink the first, sip the second and skip the third. »T reat life as a generosity contest. »G o ahead. Be better than yourself. That noise you hear is me cheering for you. D. Scott Brennan is a career MassMutual agent in South Bend, Ind. He is a past president of the Million Dollar Round Table and is the 2016 recipient of the John Newton Russell Memorial Award. He may be contacted at scott.brennan@innfeedback.com.

October 2020 » InsuranceNewsNet Magazine

More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.

INSIGHTS

Wholesaling: Finding The Opportunity In The Disruption The pandemic has accelerated the rate at which wholesalers have adopted technology to communicate with advisors. By Laura A. Murach

holesaling is a critical part of the distribution chain, and many forces that will impact its future are converging. Wholesaling models must adapt to the changing environment in order to remain relevant and valuable. Advisors will continue to value external wholesalers for their product expertise

to be able to communicate virtually when needed. Seven in 10 external wholesalers said they expected there would be more frequent videoconferencing in the next 3-5 years. When asked about their most valued relationships, both advisors and wholesalers who were using videoconferencing indicated they would be using it more in the future. Videoconferencing has transformed how we communicate, and face-to-face communication no longer implies being in the same location. The question is, will we keep what we’ve learned and experienced or go back to business as it was?

How USExternal Wholesalers Communicated With Advisors, Pre-2020 In Person Voice/Phone Email SMS/Text Videoconferencing Social Networking

56% 21% 16% 4% Source: 2020 New 2% Expectations: The LIMRA-EY 1% Future of Wholesaling Study

and sales and marketing support but, going forward, they expect more value-added services. Wholesalers and advisors strongly agree that wholesalers need to bring more to the table. The global pandemic, rapidly evolving technology and disruptors yet to be envisioned will reshape how advisors and wholesalers meet at that proverbial table.

Redefining Face-To-Face

Face-to-face communication is foundational to wholesaling relationships. Prior to the global pandemic, this meant sitting down in person. Technology changed the way advisors and wholesalers communicated but we never anticipated it to accelerate so quickly. Pre-COVID-19, seven in 10 advisors said they expected wholesalers 56

Technology Is Changing Expectations

Technologies, a significant investment for insurance carriers, promise to build efficiencies, which ultimately increase productivity. Delivering technology that advisors will value is critical to the carrier achieving a return on their investment. Pre-pandemic, more than half of advisors said that the way they work with wholesalers would change because of technology; 50% of external wholesalers agreed. Carriers also should consider their wholesalers’ perspectives and what their wholesalers will value. It’s important to note wholesalers and advisors don’t necessarily agree on which technology advancements are most valued by advisors. For example, 55% of external wholesalers

InsuranceNewsNet Magazine » October 2020

say simplification of the ticketing and submissions process is the top technological advancement to bring value to advisors, but only 23% of advisors agree. The current environment, however, has accelerated submission of business, with many companies now offering e-app, accelerated underwriting, e-signatures, e-delivery and even e-claim. The ability to do business through a virtual environment has created not only new expectations but also opportunities. Technology that simplifies the process of doing business has transitioned from a competitive advantage to table stakes. The challenge for carriers is to retain the fundamental attributes that remain most valuable to advisors and wholesalers while simultaneously adapting to address technology advancements. Carriers who cultivate solutions and nurture new opportunities will foster future success. Technology is the thread providing business continuity throughout this unprecedented reality. This industry remains a relationship business, and the global pandemic redefined not only how business is processed but also how everyone relates to and interacts with each other. Carriers who had invested in technology and laid the groundwork were able to pivot quickly, and the change thought likely to occur in 3-5 years is actually in place now. The ability to adapt, create, innovate and thrive using new delivery systems, greater efficiencies and focused resourcefulness will be the keys to success. In the end, some adaptations may be only temporary, but some may be the beginnings of something new and possibly even better. Laura A. Murach, ACS, ALMI, LLIF, is associate research director, distribution research, LIMRA. Laura may be contacted at laura.murach@innfeedback.com.

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