InsuranceNewsNet Magazine - October 2021 by InsuranceNewsNet

SPECIAL SECTION: HEALTH & BENEFITS THOUGHT LEADERSHIP • PAGE 26

How advisors can help clients make one of the most important decisions of their lives. PAGE 20

Jesse Slome: A Voice For The Senior Market PAGE 10

Avoiding Missteps In Advising Clients On DI Coverage & Claims PAGE 40

“We’re not

in Kansas anymore!” How one advisor raised $50M to reinvent the IMO in Detroit.

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IN THIS ISSUE

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OCTOBER 2021 » VOLUME 14, NUMBER 10

FEATURE

The Medicare Maze By Susan Rupe As more Americans hit Medicare eligibility age, they need help avoiding a costly mistake.

20 INFRONT

8 Social Security Getting Less Secure

By John Hilton Changes are on the way that could be the most significant overhaul of Social Security since 1983 legislation taxed some benefits and raised the age for full benefits.

IN THE FIELD 14 The Watchdog

By John Hilton Connecticut’s top insurance regulator has made a name for himself balancing industry needs with consumer protection.

online

www.insurancenewsnetmagazine.com

ANNUITY

36 Defusing The Annuity Tax Time Bomb By Jennifer Lang Using a provision of the Pension Protection Act to help clients pay for long-term care.

HEALTH/BENEFITS

40 Avoiding Missteps In Advising Clients On DI Coverage & Claims By Frank Darras Clients must understand what they are buying and how their policy features will allow prompt payment of their monthly disability benefits.

ADVISORNEWS

44 An Advisor’s Guide To Gender And Racial Equality Funds By Andre Skagerberg Financial planning clients are expressing interest in aligning their investments with their values.

INBALANCE

48 Weight Gain? It’s Not All Your Fault — Blame Evolution! By Susan Rupe Stress causes the brain to crave energy, setting the stage for overeating.

INTERVIEW

10 A Voice For The Senior Market

Jesse Slome took a successful career in marketing to become an advocate for the long-term care insurance industry. In this interview with Publisher Paul Feldman, Slome describes how he sees the industry addressing the growing health care crisis among older Americans.

BUSINESS

LIFE

30 Life Insurance Creates ‘Sticky’ Employment Relationships By H.L. Vogl Three ways to use life insurance to structure executive benefits.

50 7 Tips To Harness The Power Of Your Own Mastermind Group By Bill Cates Find ways to bring people into your life to brainstorm ideas and hold each other accountable.

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275 Grandview Ave., Suite 100, Camp Hill, PA 17011 717.441.9357 www.InsuranceNewsNet.com PUBLISHER MANAGING EDITOR SENIOR EDITOR VP SALES SENIOR MARKETING DIRECTOR

Paul Feldman Susan Rupe John Hilton Susan Chieca Melissa Mursch

CREATIVE DIRECTOR GRAPHIC DESIGNER DIGITAL CAMPAIGN MANAGER MANAGER/ACCOUNTANT MARKETING PROJECT MANAGER

Jacob Haas Shawn McMillion Megan Kofmehl Jen Wingard Kelly Cherrup

MEDIA OPERATIONS MANAGER NATIONAL ACCOUNT DIRECTOR NATIONAL ACCOUNT DIRECTOR NATIONAL ACCOUNT DIRECTOR DATABASE ADMINISTRATOR

Ashley McHugh Sarah Allewelt Brian Henderson Dominic Colardo Sapana Shah

Copyright 2021 InsuranceNewsNet.com. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@ insurancenewsnet.com, send your letter to 275 Grandview Ave., Suite 100, Camp Hill, PA 17011, fax 866.381.8630 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 125, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 717.441.9357, Ext. 125, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 275 Grandview Ave., Suite 100, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein. Address Corrections: Update your address at insurancenewsnetmagazine.com.

InsuranceNewsNet Magazine » October 2021

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WELCOME LETTER FROM THE EDITOR

Medicare At 55: Consumers Need Expert Advice

Naperville, Ill., resident Lillian Grace Avery signs Medicare forms at Edward Hospital on July 1, 1966, assisted by her husband, Robert, left, and hospital administrator Eugene Morris.

The Associated Press / HANDOUT

t has been part of the fabric of American life for 55 years, and it is more confusing than ever. I’m talking about Medicare, which has been part of the health care landscape in the U.S. since the first beneficiaries enrolled in coverage on July 1, 1966. More than 19 million people enrolled in Medicare that first year, and as the U.S. population continued to age, the number of Medicare beneficiaries more than tripled, to 62 million today. And the U.S. Census Bureau estimates that nearly 37 million baby boomers will turn 65 in the next decade. Added to the increased number of Medicare beneficiaries is the increased number of Medicare Supplement and Medicare Advantage plans from which to choose. Consumers face a confusing array of selections. Frequently, they choose a plan based on the cost of premium, or they opt in to a plan hawked by some aging celebrity on TV. And choosing the wrong plan can end up costing someone thousands of dollars in out-ofpocket expenses — especially difficult at a time when beneficiaries are likely to be living off their retirement funds. It may be attractive for someone to choose a plan endorsed by some over-thehill athlete, and it may be easy for someone to call a toll-free number printed on a postcard that arrives in the mail. But it’s no substitute for getting the straight scoop on Medicare choices from an advisor who knows the pros and cons of each product and takes the time to learn what each individual client needs. Our October issue traditionally has focused on some aspect of health insurance. This year, we decided to look into Medicare and what those who are in the know can tell our readers about serving this important market segment. We found some good news and some not-so-good news. The good news is that more features

are available in Medicare Advantage plans to help beneficiaries remain healthy and independent and have many of their needs addressed. These social determinants of health include anything from transportation to medical appointments to access to food. Jesse Slome, executive director of the American Association for Medicare Supplement Insurance, sees explosive growth in the med supp arena. “Think of a product for which you have 11,000 prospects daily, who basically have to make some sort of decision, and in a program that’s enormously confusing,” he said in this month’s interview with InsuranceNewsNet Publisher Paul Feldman. “It’s exploding, and the explosion is only going to get bigger. You’re seeing some seismic changes that impact both distribution and consumer.” But he also noted that advisors must compete with venture capitalists and direct writers. To do that, advisors must be strategic about how they market themselves and how they build their brand. The future of Medicare itself also is in question, with the latest Medicare

InsuranceNewsNet Magazine » October 2021

trustees report warning that beginning in 2026, the trust fund for Part A will have more money going out than coming in unless Congress takes action before then to prevent insolvency. Unless Congress intervenes, the fund would be able to pay only roughly 91% of claims under Part A, beginning that year. Some of the options that could help remedy the problem include having Medicare cut payments to providers or to Medicare Advantage plans or increasing cost-sharing for beneficiaries. Whatever the future of Medicare, the fact remains that the program has been crucial in helping older Americans maintain their health and independence since the first beneficiaries enrolled 55 years ago. And it’s a market that will continue to grow as it continues to need expert advice from people like you. Susan Rupe Managing Editor

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“We’re not

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How one advisor raised $50M to reinvent the IMO in Detroit In the heart of the Motor City — a town not known as a hotbed for insurance innovation — a young company called Signal Advisors is hard at work. Patrick Kelly, 31, now the co-founder and CEO of Signal Advisors, started his career as a financial advisor. In just a few short years, Signal Advisors has managed to raise tens of millions of dollars from some of the nation’s most successful entrepreneurs and investors. So what is the secret to Signal’s success? “We are building this company for advisors. It’s that simple,” says Kelly. “Step one, we listen to our advisors. Step two, we build the technology and services they are asking for. Step three, we repeat steps one and two!” Kelly says with a smile.

From Financial Advisor to Startup Founder

Signal was far from Kelly’s mind when, as an undergrad at Michigan State University, he took his first job at Northwestern Mutual. It wasn’t long before Kelly left the captive insurance world and became an independent advisor, partnering with his mother Janie Kelly to build Kelly Capital Partners. “The firm is actually stronger than ever today,” Kelly remarks proudly. Learning from his pain points as an insurance producer, Kelly went on to create a second company, RepPro, where he built the first electronic application submission tool for the ballooning fixed-indexed annuities market. He knew nothing about software

development, but he knew what advisors wanted and, more importantly, what they needed. RepPro soon received backing from Advisors Excel and Annexus Ventures. RepPro ultimately became part of the Annexus family and was merged with RetireUp, a maker of retirement planning software. “We poured our blood, sweat and tears into building RepPro. I must have personally met with thousands of advisors and maybe 100 IMO’s” Kelly recounts. “I’m proud of what we accomplished, but I certainly left that experience feeling like I had unfinished business as an entrepreneur.”

Raising $50M to Play the Long Game To Kelly, experiencing the industry’s challenges firsthand is what provided the insight to build Signal. “I had been a financial advisor for most of my career.

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I’d been captive, and then independent. We started with life insurance, then annuities, and then added managed money. We were evolving our practice over the years, and I realized that these IMOs needed to evolve too.” Having partnered with industry leaders in the IMO space at his startup, RepPro, Kelly had high standards for Signal Advisors. “We knew we needed significant resources to build something truly unique.” Raising money from venture capital investors is not a common path in the IMO world. Kelly believes that this capital will allow them to build a better platform for advisors because they can be long-term oriented, rather than always seeking short-term profits. One of their early investors is Dan Gilbert, through his fund Detroit Venture Partners, and Gilbert certainly knows something about playing the long game. Gilbert, founder of Quicken Loans (now Rocket Mortgage), started his mortgage company as a young man in Detroit over 35 years ago. In order to reinvent the IMO, Signal Advisors is changing the underlying business model, by eliminating the traditional “marketer” role, and replacing it with teams of experts, as well as leveraging practicing advisors as coaches. Kelly recalls from the first days at Signal Advisors, “When we started the company, we asked ourselves, ‘How do we invest less in marketers and more in our advisors?‘” Marketers can consume upwards of 25%-50% of an IMO’s operating budget, Kelly says. “If you really want to reinvent the IMO, you have to follow the money”.

“ How do we invest less in marketers and more in our advisors?” — Patrick Kelly

FI NAN C IAL ADV I SO R , C O - FO U N D ER & C EO, S I G NAL ADV I SO RS

Founding Team with a Fresh Perspective Signal’s founding team is made up of an unusual mix: Jacob Cohen, a venture-capital pro who ran Dan Gilbert’s venture-capital fund for 10 years, Kevin O’Hara, a successful CTO with 18 years’ experience, and Kelly, who brings the advisor’s perspective. “Our DNA is different,” says Kelly. Other firms may emphasize their marketing or wholesaling chops, but Signal brings to the table “skills and perspectives you don’t normally find at an IMO.”

Reinventing an Industry and a City Patrick with his mother, Janie Kelly

Kelly is having fun pushing the insurance industry forward. “‘We’re not in Kansas anymore’ I love to say,

although I know it’s cheesy,” Kelly jokes, quoting Dorothy entering the unfamiliar land of Oz. “There is a brave new world out there where IMO’s can leverage technology to serve advisors in entirely new ways,” explains Kelly. “Plus, we are headquartered in downtown Detroit, while many IMO’s and insurance companies are in Kansas, so it has a figurative and literal meaning for us!”

Signal’s headquarters, located in the heart of downtown Detroit.

But while Kelly loves to have fun, he is serious about the impact that Signal Advisors can have on his hometown of Detroit. “There are so many great stories about IMO’s who have positively impacted their communities. I hope we can have that kind of long-term impact in Detroit with Signal Advisors.” Kelly loves it when advisors fly to Detroit and get to see the city for the first time. The Signal Advisors offices are located in the heart of the city, with views of Comerica Park, Ford Field and Little Caesars Arena. “We can walk to baseball, hockey, football and basketball…not a bad location to build a company!”

Playing the Long Game Despite Signal’s recent traction, Kelly doesn’t claim to have all the answers. “We don’t pretend to be smarter than other IMO’s, but we have the benefit of a clean canvas, and the resources to invest for the long term.” “Building a great company is a 20+ year marathon. It’s certainly not a short sprint to quick profits. Our investors are as long-term-oriented as we are,” Kelly explains. “With this new capital, our advisors know we will always be able to continue to invest in innovation for many years to come.”

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“We’re not

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From Financial Advisor to Startup Founder

Raising $50M to Play the Long Game To Kelly, experiencing the industry’s challenges firsthand is what provided the insight to build Signal. “I had been a financial advisor for most of my career.

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“ How do we invest less in marketers and more in our advisors?” — Patrick Kelly

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Reinventing an Industry and a City Patrick with his mother, Janie Kelly

Kelly is having fun pushing the insurance industry forward. “‘We’re not in Kansas anymore’ I love to say,

Signal’s headquarters, located in the heart of downtown Detroit.

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INFRONT

Social Security Getting Less Secure The COVID-19 pandemic slammed Social Security revenues, putting the program in greater danger of not being able to pay out full benefits. By John Hilton

ocial Security has been called the original annuity for American retirees, with the first check going out to Ida May Fuller in 1940. In the decades since, the role of Social Security evolved greatly, and retirees continued to live longer and longer. More changes are on the way that could be the most significant overhaul of Social Security since 1983 legislation taxed some benefits and raised the age for full benefits. Annuities are already gaining more mainstream prominence with advisors as pensions wane. With Social Security on shaky ground, and annuity products evolving to address needs such as longterm care, the door could swing open even wider for guaranteed income options. “We see a role for annuities in filling the gap that Social Security can’t pro8

vide for and helping to mitigate risk and have that safe security that [retirees] want,” Jason Fichtner, former acting deputy commissioner of the Social Security Administration, told InsuranceNewsNet this summer.

Pandemic Fallout

Everyone knew Social Security would need to be fixed from Washington, D.C. But with the trust fund finances secure until the mid-2030s and the timing never right for a sensitive political issue, Congress contented itself with kicking the can down the road. Then COVID-19 happened. With fewer people working, and earning less, Social Security’s revenue is in decline. In fact, the program is sliding toward depletion of its trust funds in little more than a decade, the program’s trustees said in a stark report released in late August. Both of Social Security’s benefit programs, Old-Age Survivors Insurance (OASI) for older adults, and Disability Insurance for those unable to work, failed the trustees’ tests of short-range financial adequacy, the Washington Times reported.

InsuranceNewsNet Magazine » October 2021

The trustees said that while the trajectory has been grim for some time, the pandemic and the related economic downturn took a significant toll on Social Security. Trustees adjusted the deadline for when the trust funds will be depleted and the program will no longer be able to pay out full promised benefits. The new deadline is 2034, and payments will be reduced to 78% of what was promised, the trustees said. “The pandemic and precipitous recession have clearly had significant effects on the actuarial status of the OASI and DI trust funds, and the future course of the pandemic is still uncertain,” the trustees said. Medicare was similarly affected by the pandemic, said the trustees, as income plummeted and expenses surged, with payments for testing and treatment of an older population particularly ravaged by the disease.

‘More Than Offsetting’

But Medicare beneficiaries also put off procedures amid the pandemic, “more than offsetting” the new costs, the trustees said in a separate report on Medicare,

SOCIAL SECURITY GETTING LESS SECURE INFRONT the federal health program for those 65 and older. The trustees didn’t calculate the impact of higher death rates on Medicare but said otherwise, the pandemic is expected not to change the program’s outlook where it faces “a substantial financial shortfall.” The 2021 reports is the first to take full stock of the pandemic. COVID-19 deaths have cut into the projected growth of old-age beneficiaries of Social Security. People left the workforce, trustees reported, sapping the program of income. And a birth dearth has cut into the future workers the program had projected in previous reports. Funded by a payroll tax applied to wages earned, Social Security’s finances have been declining for years, with annual payroll tax income insufficient to cover the program’s benefit payments since 2010. The program has relied on interest paid into the trust funds over the past 25 years, when revenue was greater than payouts and the excess income was pumped into the trust funds, earning interest from intragovernmental loans. This year will be the first that the combined income from payroll taxes and interest won’t be enough to cover promised

told the Washington Times, “If we wanted to fix the system and we wanted to act immediately, we would have to cut benefits 21% next year.” The ratio of workers supporting retirees has flipped, another underlying issue. From 1974 to 2008, the ratio was 3.2 to 3.4 workers per beneficiary. That began to decline with the Great Recession, and is now down to 2.7 workers per beneficiary. By 2035, when baby boomers will mostly have retired, it will be 2.3 workers per beneficiary.

Medicare Part B depends on their income. In 2021, the monthly premium is $148.50 for single individuals with up to $88,000 in income and married couples with up to $176,000. Taxes also impact how much recipients benefit from Social Security, explained Alicia H. Munnell, director of the center, and Patrick Hubbard, a research associate, in the paper, “The Impact of Inflation on Social Security Benefits.”

Good News/Bad News

Retirees received good news in August when it was announced that the Social Security cost-ofliving adjustment (COLA) could Alicia Munnell Patrick Hubbard be as high as 6.2% in 2022, likely the highest in 40 years. But is that really good news? Under current law, individuals with less The Social Security Administration than $25,000 and married couples filing calculates the COLA each year by using jointly with less than $32,000 of “comthe Consumer Price Index for Urban bined income” do not have to pay taxes Wage Earners and Clerical Workers. The on their benefits. Above those thresholds, 2022 calculation will be based on data recipients must pay taxes on up to 85 perthrough the third quarter and is typically cent of their benefits. announced in October. The increase in It all adds up to mean retirees are getbenefits takes effect in January. ting less and less financial support from the same dollar of Social Security with each passing year. Rising Medicare premiums mean “Rising Medicare premiums mean that a larger and larger chunk of the Social that a larger and larger chunk of Security benefit goes to health insurthe Social Security benefit goes ance, so the net benefit available for nonto health insurance, so the net benefit health expenditures does not keep pace with inflation,” the researchers concludavailable for non-health expenditures does ed. “Second, a personal income tax with not keep pace with inflation.” unindexed thresholds for benefit taxation means that wage growth and inflabenefits, the trustees said. That imbalUnfortunately for retirees, a 6.2% tion will subject an increasing portion of ance will continue for the rest of the cen- COLA increase could turn out to be neg- Social Security benefits to taxation.” tury, with the two combined trust funds ligible, say researchers at the Center for InsuranceNewsNet Senior Editor John depleted in 2034. Retirement Research at Boston College. Under the law, Social Security then The bad news is that Medicare Part B Hilton has covered business and other beats in more than will have to cut its payments to meet in- premiums (for physician and outpatient 20 years of daily jourcome, and will pay out 78 cents on each services) are typically deducted from nalism. John may be dollar the program has promised to pay. Social Security benefits before recipi- reached at john.hilBy 2095, the end of ents see their checks. While benefits in- ton@innfeedback.com. Follow him on Twitter the 75-year actuari- crease each year, so do Medicare Part B @INNJohnH. al period the trustees premiums. studied, the program From 2000 to 2020, Medicare Part B will pay out 74 cents of premiums increased by a yearly average of Like this article or any other? each dollar promised. 5.9%. But the average annual increase to Take advantage of our award-winning Chuck Blahous, for- the Social Security COLA was 2.2% over journalism, licensure and reprint options. merly public trustee the same period. Find out more at innreprints.com. Chuck Blahous for Social Security, The amount someone pays for October 2021 » InsuranceNewsNet Magazine

INTERVIEW

For nearly a quarter century, Jesse Slome has promoted the industry that helps consumers with their medical and long-term care coverage needs. An interview with Jesse Slome by Paul Feldman, publisher.

esse Slome had a long career in marketing, public relations and advertising. One of his PR success stories was helping launch the Cabbage Patch Kids, those pudgy-faced dolls that sparked riots in the toy department as they became one of the most sought-after playthings of the 1980s. But he also created strategic campaigns for banks and insurance companies. Along the way, he entered the insurance industry. In 1998, he founded the American Association for Long-Term Care Insurance and still serves as the organization’s director. AALTCI is recognized as one of the nation’s leading advocates 10

InsuranceNewsNet Magazine » October 2021

for long-term care planning, and Slome oversees all its research and marketing initiatives. In 2001, he established the month of November as National Long-Term Care Awareness Month, and he received the industry’s Lifetime Achievement Award in 2010. He also serves as executive director of the American Association for Medicare Supplement Insurance. Slome has observed the senior care market for decades and sees opportunities for those who want to serve that market. In this interview with InsuranceNewsNet Publisher Paul Feldman, Slome gives his predictions on the future of this segment.

A VOICE FOR THE SENIOR MARKET — WITH JESSE SLOME INTERVIEW

PAUL FELDMAN: Tell us a little bit about what you do and how you got into the industry. JESSE SLOME: I’ve created many

award-winning and effective strategic campaigns for insurance companies. I really understand these products. Aetna brought me on board and made me their pension sales manager. I got even more engrossed and involved in the insurance industry for probably about a dozen years — running field operations, etc. In 1997, I was approached by a number of people who said, “There are these small little lines of business — in this particular case, long-term care insurance — that really need to be put on the map. Would you consider putting together a trade organization to promote it?” That’s what we did. I created the American Association for Long-Term Care Insurance several years later. Then at the behest of those who were in what was then a rather small industry called Medicare supplement, we started the American Association for Medicare Supplement Insurance. These organizations exist today for a couple of purposes. The first goes back to my personal core strength, which is marketing and public relations. We serve as advocates to inform the consumer. In doing that, we also support insurance agents and their companies. These two associations are really the key areas of focus for me.

FELDMAN: We have had a crazy couple of years — from financial to regulation. What are some of the key issues we’re seeing today in LTC? SLOME: Let me start with long-term

care. What you see today is a significant change which has been happening for a number of years in the traditional long-term care insurance industry. The products that we all were accustomed to selling in the late 1990s, early 2000s — now there are only a few insurers that still offer them. You have carriers such as Mutual of Omaha, New York Life, Northwestern Mutual, but the policy sales are less than 50,000 a year. The industry has undergone significant change, understandably and unpredictably. Here are things that people should

watch for in the coming year. Genworth historically and probably still is the largest traditional long-term care insurer in the marketplace. At one time, they had well over a million policyholders. They’ve obviously taken it on the chin quite significantly over the past few years. But they recently announced plans to reenter the marketplace. I’d be rolling my eyes, except for the following: Genworth has stated very clearly that for long-term care insurance to succeed, the product needs to be designed differently and priced differently. And that’s how they

and make the product more affordable. Because you don’t have this 20-year tail in which you have to predict everything that’s going to happen for the next 20 or 30 years, you can look at this product the same way that a car insurance company looks at car insurance or that a Medicare company looks at Medicare supplement insurance. Every other line of business has the ability to annually review the pricing. Being able to do that with longterm care insurance should enable a carrier to come out with lower prices for those at younger ages.

Genworth has stated very clearly that for long-term care insurance to succeed, the product needs to be designed differently and priced differently. And that’s how they are proceeding.” are proceeding. They said they will only file this product in states that are willing to accept that. They have the muscle and the clout to bring traditional long-term care insurance back into the marketplace. The question is, how will consumers react when that happens? On the other side of long-term care insurance, you have the linked benefit products that have taken off. There are now several hundred thousand of those policies written a year. Those products are likely to remain the dominant sellers in the years ahead. I think you will see more of the bigger companies coming into the market. I think you’ll see more features that will make these products more attractive to both producers and consumers.

FELDMAN: How are they pricing it, and what’s the difference? How can they make this work? Because the cost of care probably destroys more wealth in our society than anything else. SLOME: Here is the change. From what

I understand, Genworth will bring out a product that will be reviewed annually and will have the ability to be repriced annually. Here’s what it does. It allows you to go to younger people

The question will be, how will they communicate that to the buying public?

FELDMAN: What are some of the other trends that you see in the long-term care insurance market? SLOME: There are two or three other

things that I see that are important as it pertains to long-term care insurance, both currently and going forward. Right now, we are in the midst of what I’ll call a seismic change in the long-term care marketplace. Notice I didn’t say “insurance.” The state of Washington has initiated the first statewide program where potentially there will be universal long-term care coverage for their citizens. Starting in January 2022, all workers will pay a tax — it will amount to a little less than $600 a year if you earn $100,000 a year. You as a consumer have one chance to exempt yourself from the tax if you buy private long-term care insurance by Nov. 1. There has been a flood of consumers who have done that, and as of this interview, almost all of the carriers have ceased selling the product in that state. They’ve all been inundated. The things to watch will be: What’s the reaction in Washington state? How will consumers respond when these taxes

October 2021 » InsuranceNewsNet Magazine

INTERVIEW A VOICE FOR THE SENIOR MARKET — WITH JESSE SLOME start coming out of their paychecks? Will people be upset over it? How will the program take shape? There are anywhere from seven to 17 other states that have initiatives to address long-term care. I’ve been around long enough to know that with every politician, the easiest way to kick the can down the road is to put together an initiative or a committee, but they never really see the light of day. People in the long-term care insurance industry are all excited about this. California is studying this initiative. I don’t believe you’ll ever see another tax imposed in California. But Washington state is the one to watch in 2022. The other thing to watch is the federal government. I always say long-term care is the problem. Long-term care insurance is only a very small solution and only one part of the potential solution to the problem. There are a number of initiatives from the Biden administration and the infrastructure bill and all of these bills, where they’re throwing hundreds of billions of dollars against this problem. They’re addressing Medicare and Medicaid. Ultimately, that’s the thing to watch. Both in the short term and in the long term, I believe that while it’s nice to advocate for a private solution, for most people the public solution is going to address it. One more thing is what I call shortterm care. Those products probably have the best potential to address consumer needs. Agents have clients who are too old or too unhealthy to get traditional coverage or who can’t afford the traditional solutions. There are only one or two carriers offering these products. I keep hearing from time to time about others that are thinking about it. I’m not sure why others have not entered this marketplace. In my opinion, you will see some of those products that will supplement government programs and address the needs of people who want something but they just can’t afford anything more. For long-term care, I won’t say that the years ahead are going to be rosy. But I’m certainly not predicting doom and gloom.

FELDMAN: For most people, will short-term care be where it’s at? 12

How Washington State Is Addressing The LTC Crisis Starting on Jan. 1, 2022, all W-2 employees in Washington state will be assessed a 0.58% premium assessment based on their wages. The employer must collect this premium assessment through a payroll deduction and remit the proceeds into a state trust account that will be used in the future to pay for people who are in a health crisis and need long-term care. Self-employed and federal employees are exempt from the mandate. The state WA Cares Fund is a trust account created to hold the funds. When an individual meets the thresholds and eligibility, the fund will pay out a maximum of $36,500 over two years and will be adjusted through the years to the consumer price index. The plan will require an inability to perform three out of 10 activities of daily living to qualify for the benefit payout as compared with two out of six required by normal qualified long-term care plans under Internal Revenue Code Section 7702b. But if the employee leaves the state, they will not receive any long-term care benefits from the state nor will the taxes taken from their income be returned. The state has opened a window of time until Nov. 1, 2021, for anyone to opt out of the state-mandated system by securing a privately owned plan or a group plan through their employers. They have until December 2022 to provide proof of coverage. From “Washington State LTC Law Provides Opportunity For Agents” by Val Mikesell, InsuranceNewsNet.com, June 28, 2021

SLOME: The long-term care insurance

industry suffers from a lot of well-meaning effort. I’m a marketing person and, in hindsight, we created this situation. We — meaning the industry, the agents, the brokers, the whole environment of asking people, “Where’s your million dollars if you need care?” They say, “Look at someone like Christopher Reeve, and you could need a lifetime’s worth of care.” And indeed, you always could. But when you actually look at the data and how people are using these long-term care plans, most people use their coverage for a year, two years, three years. For so long, so many of these studies positioned this product as nursing home insurance. It started as nursing home insurance and then changed to include home care. Now the vast majority of claims are for home care. But the mindset is so stuck on those products, that it’s hard for producers to change. It’s hard for consumers to change. When year after year, companies come out with studies that tell people what

InsuranceNewsNet Magazine » October 2021

nursing homes cost, it’s understandable why consumers associate long-term care insurance with nursing home coverage. When carriers raise rates year after year, it’s understandable why consumers are upset.

FELDMAN: How does someone get started in the Medicare market? SLOME: Your best bet is to partner with

somebody who already is in the marketplace, who will guide you and say, “I will help you with X number of sales and work out some sort of financial arrangement.” It’s not that difficult, once you go through the training and the other things; you can really learn it. The FMOs do a really good job of training. I always tell agents and brokers, don’t expect that you’re going to wake up and start selling this product and make $100,000 in your first year. But if you really focus on it, you can do quite well. It’s an ideal business for people who are committed. It is interesting and amazing to me how

A VOICE FOR THE SENIOR MARKET — WITH JESSE SLOME INTERVIEW few women agents there are in this market, especially because there are more women than men in the 65-and-older demographic. I think for women, the nice thing about being in the Medicare business is that you have far more flexibility. Some people just work around the open enrollment season, some work yearround. I’d say to women, I believe it’s a really good opportunity for you.

FELDMAN: In the Medicare supplement market, what kind of things are happening and what kind of changes can we expect? SLOME: The changes in this market are

seismically different from those in the long-term care insurance market. The Medicare market is exploding. That’s not surprising, when you have 62 million people who are on Medicare and 11,000 new people joining every day. I mean, think of a product for which you have 11,000 prospects daily, who basically have to make some sort of decision, and in a program that’s enormously confusing. It’s exploding, and the explosion is only going to get bigger. You’re seeing some seismic changes that impact both distribution and consumer. From the distribution side, you’re seeing a couple of major companies that have capital behind them and that are aggregating the industry. They are buying every distributor — large and small — across the country. The question is, what will they do with them? In the short term, it makes a smart play and it could be business as usual. In Medicare, nobody is going to survive if it’s business as usual. Because at the same time, while you have that distributor channel, you have these other channels, which is what I’ll call the direct to consumer. You know, if I watch afternoon television, I can’t miss all the commercials with Joe Namath or Jimmie Walker pitching Medicare Advantage plans. You can’t avoid seeing these ads, which are directly soliciting consumers with business. And, to a degree, I won’t say they’re unregulated, but they’re questionable. People are saying, “Gee, you know, when they’re running an ad saying you could be entitled to free dental care or free something else, it sounds so good.” So who wouldn’t check it out?

They are generating such massive numbers, and converting them into sales, that it gives them an explosive competitive advantage against those distributors. The distributors are going to have to figure out what they are going to do to stay in business. So, like I said, the explosions are only going to get bigger. I’m not a gambler. And I’m not a predictor. But I think the logical thing that we will see is the lowering of the Medicare age. I think it depends on whether the Democrats hold Congress in 2022, but I think the chances are very likely. I just saw another proposal to open Medicare to everyone on a voluntary basis. I don’t think this one will take hold. None of this is new. When Sen. Ted Kennedy was alive, he proposed expanding Medicare down to those age 50. I don’t think Congress will open Medicare to everybody, but I do think they will approve dropping the eligibility age by five years. Just think how many millions of Americans are between the ages of 60 and 65. When that works, and you have much more electoral support, it makes sense that five, 10 years from now you’ll see it optional for everyone. Medicare will continue to explode. And there’s so much money in it. Today, there are venture capital companies that are looking at this market that will bring hundreds of millions of dollars into it. So Medicare is definitely the place to be.

FELDMAN: How do agents compete with these venture capitalists and direct writers that are well capitalized? SLOME: They compete in a couple of

ways. The American Association for Medicare Supplement Insurance has the only national directory where consumers can find local agents. Agents list themselves; they pay us a nominal fee. We don’t have a membership, but they pay a fee. Consumers definitely find Medicare extremely confusing, and a significant number of them make mistakes. Some mistakes are changeable, some mistakes are irreversible. We created the directory because we were being inundated by consumers saying, “I want to talk to somebody locally. I don’t want to call a call center.” Medicare is very local. The plans that you’re offered basically come down to

your locality, often to your ZIP code. How do brokers and agents compete? The first thing is they have to go up against those call centers. The agents’ competitive advantage will be saying to consumers, “Talk to all the call centers you want. But let me compare and tell you what’s going on locally.”

FELDMAN: What are some keys to being successful in these markets? SLOME: I think the key for an agent or

broker to be successful is they must do something they have not done in the past. You could say, “As long as I’m getting leads, as long as I’m making sales, I’m going to be successful and profitable today.” I don’t think that’s the case anymore because change is coming so rapidly. You must think like a businessperson in a couple of specific areas. One, you had better be focused on technology. Not just the technology that you’re getting today, but learning about where the people who are giving you that technology are taking it down the road in the next three, four years. Because change is happening so fast. It took Amazon 20 years to go from selling books to where they are today, doing more sales than Walmart. But it’s not going to take another 20 years for whatever the next change is. And it’s not going to take 20 years for the changes in insurance. You also must understand that it is all about marketing. The companies that are advertising on television, there will be only so many of them that survive. But clearly, they have mega-millions of dollars behind them, and the average agent does not. So, to be successful, the average agent will need to be strategic about how they market themselves, how they build their brand. They have to be really committed to doing that. Otherwise, you’ll wake up in three years and find you need to change what you’re doing. That’s what’s going to differentiate those who are going to be here in three years from those who will not.

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October 2021 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

THE

WATCHDOG In less than three years as Connecticut’s top insurance regulator, Andrew Mais is on the fast track to becoming a powerful voice for change in the industry. BY JOHN HILTON

InsuranceNewsNet Magazine » October 2021

ndrew Mais could not have known what he was getting into when he accepted Gov. Ned Lamont’s appointment as commissioner of the Connecticut Department of Insurance. Mais was just settling into a comfort zone balancing industry needs with consumer protection when COVID-19 appeared. The COVID-19 pandemic put many insurance commissioners on the spot over several insurer-consumer issues: whether auto insurers would grant premium refunds, whether business interruption policies were applicable and whether health insurers would extend benefits. Connecticut is home to insurance giants including Aetna, Cigna, The Hartford and Travelers. Mais made the rounds, seeking concessions and claims he was never turned down for any ask. He got health insurers to reopen insurance exchanges and offer a “premium payment holiday.” When restaurants closed to in-person dining and switched to deliveries, Mais convinced auto insurers to allow food delivery workers to be covered by regular insurance. “If your perception of the industry was of this conglomerate, this monolith that didn’t care about consumers, I do have to tell you it was heartwarming,” Mais said. Mais took over the office in February 2019, becoming the top watchdog for one of the nation’s most significant insurance hubs. Connecticut is home to more than 100 domestic insurers, or companies chartered, incorporated, organized or constituted under state laws. The state ranks No. 1 for insurance employment and payroll and has the highest concentration of actuaries in the U.S., according to the Insurance Information Institute. With so many influential companies, Connecticut can rightly be called “the insurance capital of the world,” said state Rep. Sean Scanlon. With that comes a lot of pressure on the insurance commissioner to provide leadership and innovation. “[Mais has] really been very effective in finding that sweet spot between being somebody who understands the importance of the industry but also understanding the importance of the consumer and protecting them when he or she can in

THE WATCHDOG — WITH ANDREW MAIS

that position,” said Scanlon, who previously chaired the Insurance and Real Estate Committee in the Connecticut General Assembly.

More Challenges

The pandemic was still in its early stages when George Floyd was killed by a Minneapolis police officer on May 25, 2020. Insurance regulators were handed an incendiary racial discrimination issue to address along with the unfolding COVID-19 crisis. On this issue, regulators and insurers jumped in on the same side. Minneapolis is another U.S. insurance hub of sorts

can recall feeling unwanted at his own bank as well as having unpleasant experiences with the police. “I think it’s hard to be a person of color in this society and experience discrimination,” he said. “Some people you are not going to change. But there are lots of good people out there that you can work with.” Insurance has a long history of discriminatory underwriting policies. Although several courts have ruled against race-based policies, a 2018 study by Consumer Reports and ProPublica found disparities in auto insurance prices between minority and white neighborhoods that could not be explained by risk alone. It’s the use of big-data, algorithmic-based underwriting models that disadvantages modern minority groups when it comes to accessing affordable health care and other insurance products, Mais said. Stamping out this socalled proxy discrimination is a significant goal for Mais and the committee. “The changes that technology allows for in terms of huge data scoping, data management, I don’t think that proxy discrimination has to be intentional,” Mais explained. “Because of that, I think we have to be particularly concerned to manage that.”

Consumer-Focused

Mais and Gov. Ned Lamont, left, have formed a close working relationship over the past two-and-a-half years.

— home to UnitedHealth and Thrivent Financial, among others — and the industry responded almost immediately with initiatives to promote equality and eliminate racial bias. Mais was named co-vice chairman of the Special Committee on Race and Insurance, set up by the National Association of Insurance Commissioners. As a Black man, Mais

Mais, who holds a Yale University degree in organizational behavior, spent h i s ea rly professiona l life focused on consumers, or at least on everyday Americans. He wrote a newspaper column, ran a nonprofit program and hosted a political affairs talk show on television. In 2006, he joined the New York State Insurance Department as its director of public affairs and research. The story of how he made a midlife jump into the insurance industry is no doubt familiar.

IN THE FIELD

“I don’t want to say I was bored, but I was looking for a new challenge,” Mais said, recalling a conversation with a friend who suggested an insurance position. “As far as I knew, insurance was pretty much ads on TV and boring conversation and not much else. [My friend] said, ‘You might be surprised.’ And he was absolutely right.” Mais spent nearly five years observing change in the relationship between financial services and their customers. There were both good and bad within that change. The 2008-09 financial crisis wiped out a lot of retirement accounts and left many consumers angry and scrambling to pick up the pieces. In 2010, the Affordable Care Act extended health care options to many Americans who had none. From his Albany office, Mais witnessed how New York regulators were in crisis mode. “You’d see things that you would not necessarily have seen perhaps in a smaller department, but you get an idea of the breadth of insurance,” Mais said. “I got progressively more fascinated.” Returning to the private sector, Mais spent nearly a decade as a member of the Insurance Industry Group at Deloitte. There, he was able to dive into a variety of insurance regulation, innovation and risk issues. The wide range of experiences on his resume helps Mais sort out what is important and what isn’t when it comes to insurance oversight. “It’s a great industry, an industry that I consider absolutely vital to trade, vital to any capitalist system,” he explained. “But I also think it’s vital to individuals, to families. It provides the protection that they need just to be able to go to work every day or to start a business.” Howard Mills hired Mais twice — once when he was New York insurance commissioner and later at Deloitte, where Mills remains. “He just took such interest in the industry and became exceedingly knowledgeable,” Mills said of Mais and the former job. “Andrew just became somebody that everyone at the department universally admired and respected as a key member of the team, and I’m very proud that I had some small part in bringing him into the insurance industry.”

October 2021 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change Mais chats with Red Cross volunteers following storm damage in Connecticut.

Making A Mark

It did not take long for Mais to make an impact as Connecticut’s top insurance watchdog. Soon after taking office, he partnered with legislators on a bill to offer a Spanish-language version of the state insurance producer licensing exam. It was an idea that made too much common sense not to do, Mais said. “It’s an entryway into the industry, both for individuals who want to become licensed in a language that they’re more familiar with but also the idea that you’ve got somebody who’s got more of a background in your own culture,” he explained. Likewise, Mais is proud of naming Lady Mendoza, the department’s first chief inclusion officer and first Latino director. He has also participated in efforts led by Connecticut Gov. Ned Lamont to address social inequities in Connecticut, including the Council on Women and Girls and cultural competency initiatives. While there have been bumps in the road and pushback, Mais is convinced the industry is sincere about diversity 16

and inclusion issues. After all, it has a powerful incentive to be. Periodic McKinsey studies continue to show the economy is shorting itself trillions in growth from a lack of diversity. This is true in the insurance industry, where communities of color lack coverage options. “It’s not going to be smooth. It’s not going to be easy,” Mais said. “There are going to be ongoing hard conversations, and there are going to be even harder actions that will have to be taken. We won’t all agree on how we get there. We know that.” The work on these timely issues is generating notice for Mais, whose deep, baritone voice stands out on regulator calls. His NAIC colleagues elected Mais as secretary-treasurer this year, which puts him on track to become NAIC president in 2024. But there are potential roadblocks in the way. Lamont is up for reelection in 2022 and appears to be in the race. But Connecticut is a tough state and, while popular, Lamont has both won and lost

InsuranceNewsNet Magazine » October 2021

races for governor (losing in 2010 to Gov. Dannel Malloy). Mais serves at the pleasure of the governor and said he would like to continue serving for another term. “We want to encourage innovation, encourage insurers and insurtechs to be able to make things go smoother, pay claims faster, and reach out to a broader segment of society,” he said. “We have to encourage innovation, and I think technology is going to be a big part of that. “On the other side, we have to make sure that it doesn’t result in unfair discrimination. So that’s something that will be a focus over the next few years as well.” 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.

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October 2021 » InsuranceNewsNet Magazine

NEWSWIRES

Workers Concerned About Finances, But 65% Bosses Don’t Get It

Nearly two-thirds of small-business owners are worried about the health of their businesses as they struggle to find and retain workers, according to a MetLife report. The concern is greater for businesses with 20 or more employees, as 75% of those owners say they are worried about the pandemic’s effect, according to a poll taken in the second quarter, before the effect of the delta variant escalated. While employers were most worried about the virus itself, 87% of employees said finances were their top concern. That concern has employees most worried about their continued financial well-being, with 61% saying that was their chief concern, followed by mental, social and physical health. About a quarter of the respondents said their well-being worsened in the past year. Although employers might not be in sync with employee concerns, they know well-being is a significant issue, with 68% of employers predicting that employee well-being will have the greatest impact on the workplace of the future.

401(K) BALANCES SEE RECORD GROWTH

A rising stock market, combined with a trend toward people putting more money away for retirement, led to record 401(k) balance growth in the second quarter, Fidelity Investments reported. The average 401(k) plan balance grew 24% to a record $129,300 in the second quarter from a year earlier. However, the median balance, a better measure of the typical plan size, was $29,000, up 22% from a year earlier. The stock market deserves much of the credit for plan growth, with 85% of the balances increased due to market performance. However, don’t discredit workers’ ability to sock away more of their pay. The average employee funneled 9.3% of their pay into their 401(k) in the second quarter, a record high, Fidelity said. Meanwhile, 18.2% of baby boomers with a 401(k) made a “catch-up” contribution in the second quarter, also a new high. DID YOU

KNOW

A PRODUCTIVITY BOOM COULD BE ON THE HORIZON

The U.S. is experiencing a surge in worker productivity that could rival that of the tech boom 20 years ago — maybe. Companies and customers are embracing new technologies, making it easier for Americans to produce more with fewer workers. The result is what economists say could turn into a boom with wide-ranging benefits for years to come. Conditions are ripe for productivity to remain high for years, according to analysts from Goldman Sachs and the McKinsey Global Institute. As policymakers run the economy hot, there’s heavy demand for products and services. At the same time, a worker shortage forces companies to innovate even more as they struggle to find enough employees to fill a record 10 million job openings. If a robot can do someone’s job, companies are trying it. Although many factors are fueling productivity, one of the most notable is the work-from-home trend. New research finds teleworking could add a 5% boost to productivity, mainly

QUOTABLE

Today, we see little evidence of wage increases that might threaten excessive inflation. — Federal Reserve Chairman Jerome Powell

because workers save time not commuting to the office and use that time to work.

FED: NO GOING BACK TO PREPANDEMIC ECONOMY

The U.S. economy has been permanently changed by the COVID-19 pandemic, and it is important that the Federal Reserve adapt to those changes. So said Fed chair Jerome Powell at a recent virtual town hall. Powell said that it is not yet clear whether the virus’s delta variant will have further impact on the economy, but the country has already seen significant changes since the pandemic began shutting most sectors of the economy down in March 2020. Those changes range from the increase in remote work to restaurants offering more takeout meals to real estate agents learning to show homes virtually, he noted. Many companies have already made large investments in technology to adapt to the challenges that the pandemic has presented. He added that employers’ heavy investment in new technology means there will be more jobs in the future associated with maintaining that technology, but there also will be potential job losses in industries focused on in-person contact. He said there are millions of people who have lost service-sector jobs, remain out of work and need to be supported.

Actor Steven Seagal agreed to pay more than $300,000 in fines for unlawfully touting a security by failingSource: to LIMRA disclose he had been paid for his endorsement. Source: National Association for Business Economics Source: Securities and Exchange Commission

InsuranceNewsNet Magazine » October 2021

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COVER STORY

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InsuranceNewsNet Magazine » October 2021

THE MEDICARE MAZE COVER STORY

classic episode of the TV comedy I Love Lucy depicted Lucy and her sidekick, Ethel, fumbling hilariously as they tried to wrap candies that continued to stream along a fast-moving conveyor belt. The

faster they wrapped the chocolates, the more confections came speeding toward them until the two women became overwhelmed and handled the situation as only Lucy and Ethel could. When Mark Squires thinks about the wave of consumers reaching Medicare age, he is reminded of the candy-wrapping scene. In his vision, the candies represent those Medicareeligible individuals — and they just keep coming. Squires Nearly 37 million baby boomers will turn 65 over the next decade, according to the U.S. Census Bureau, with 10,000 boomers hitting that landmark birthday every day from now until 2030. Boomers approaching their 65th birthday face a bewildering array of choices when selecting a Medicare plan. Should they buy a Medicare supplement? Or is that zero-premium Medicare Advantage plan that some celebrity is hawking on TV a better deal? Will their doctors and local hospital be covered under the plan they select? How much will they end up paying out of pocket? Not only are more people reaching Medicare age, but they also have more plans from which to choose, especially if they select Medicare Advantage. The number of Medicare Advantage plans available increased for 2021 to the highest it’s ever been, with more than 4,800 plans available nationwide. The majority of beneficiaries have at least one zero-premium plan available to them, and the average enrollee can select from among 33 plans in 2021.

In 2020, nearly four in 10 (39%) of all Medicare beneficiaries — 24.1 million people out of 62 million Medicare beneficiaries overall — were enrolled in Medicare Advantage plans; this rate has steadily increased over time since the early 2000s. Between 2019 and 2020, total Medicare Advantage enrollment grew by about 2.1 million beneficiaries, or 9% — nearly the same growth rate as the prior year. That’s according to Kaiser Family Foundation. The Congressional Budget Office projects that the share of all Medicare beneficiaries enrolled in Medicare Advantage plans will rise to about 51% by 2030. As more Americans reach Medicare age, more of them look to advisors such as Squires to help them make the best decision to cover their health care needs. Squires brands himself as The Medicare Whisperer, and Medicare makes up a big part of his practice. As president of Wise Choices Financial in Independence, Mo., Squires has become somewhat of a local celebrity, discussing Medicare on radio talk shows and in a series of YouTube videos. He has seen the Medicare market come a long way from the days when he sold Part D coverage from a table inside a local supermarket. “I distinctly remember my first day. I was sitting at a grocery store, and instead of putting me back by the pharmacy, they put me right in front of the front door. It was snowing and windy in Kansas City. Every time the doors opened, my sign blew over. And I spent most of my morning answering more questions about the pumpkin rolls on display behind me than I did about what I was selling,” he recalled. Eventually, he started advising people who were disabled, under 65 years old and on Medicare. And he discovered his passion for helping others. “It gave me an entirely new perspective — not on the business, but on life,” he said. “I was now in a position where I was helping people. I was changing lives. And that for me became part of the mission. That is what we do every day — we help people, we get paid to do it, and that’s great.” Squires continued to learn more about Medicare. Clients started calling him the Medicare Whisperer, and he trademarked the name. Although his practice

also encompasses life insurance and longterm care insurance, his Medicare business continues to grow to the point where it has increased about 130% over last year. The growth of Medicare Advantage and premium increases on Medicare supplement plans have been among the biggest changes Squires said he has seen during his time in the business. “Medicare Advantage was in its infancy back when I first started selling Part D plans,” he said. “But now the federal government has put more resources into swaying people toward the Medicare Advantage product.” “We’ve seen a lot of our older clients who are on Medicare supplements seeing their premiums rise on Part F plans, so that also has been significant.” But another change is the increase in competition for business. Carriers bombard consumers with direct mail, TV commercials and other advertising urging them to go to a call center and buy coverage. Advisors can cut through the clutter by offering consumers an opportunity to have their questions answered by an expert. And as in any other segment of insurance advice, tailoring a recommendation to the client’s individual needs is crucial. “When we’re meeting with a client for the first time, we have no preconceived notions about what we’re going to recommend,” Squires said. “We want to know as much as we can about the client, we want to know about their life, what makes them tick, what’s their lifestyle, what do they want to do in retirement? And then we answer their questions and look at what’s most appropriate for this person in their circumstances.”

MORE FOCUS ON SOCIAL DETERMINANTS

Ritter Insurance Marketing in Harrisburg, Pa., is a field marketing organization that has focused on the senior market since 2005. Among the biggest changes in recent years has been an expansion of benefits Ritter offered by Medicare Advantage plans, said Craig Ritter, the company’s CEO. “In the last three years, the Centers for Medicare and Medicaid Services has opened up these plans to include benefits

October 2021 » InsuranceNewsNet Magazine

COVER STORY THE MEDICARE MAZE that are more aligned with social determinants of health,” he said. “We’re talking about things like access to nutrition, access to transportation — things that go beyond paying for surgery or paying for an office visit or paying for preventive tests. It’s addressing issues where people say, ‘OK, I have this great benefit, but I can’t get to the doctor because I’m homebound and I have no one to drive me.’ “So CMS is really focused a lot more on providing more flexibility to managed care plans to be able to address these other needs.” Clients and advisors must look deeper into the benefits when selecting the right plan, Ritter said. “It’s a bit more multidimensional now,” he said. “Does the plan have a caregiver benefit? Does the plan cover enhanced dental? Does the plan provide for transportation? These are the considerations that agents need to make, and I think it’s one of the biggest changes agents need to deal with in recommending a good plan for their clients.”

good bipartisan support. Both Democrats and Republicans have agreed that their constituents really like this program, it serves the Medicare population very well and it’s cost-effective. So it really has flourished in the last 10 years and continues to improve year over year.” As for what 2021 is bringing to Medicare supplements, Ritter said, “We’ve seen increases in Medicare supplement premiums in the 4% to 6% range over the last three to five years. The products continue to be extremely competitive. Even with the growth in Medicare Advantage, there is still a large market for Medicare supplements.” Ritter said that although fewer carriers are entering the Medicare market, those that already are in it have expanded the number of plans available for 2022. For advisors who want to serve this market, “there’s as much of a need as ever,” Ritter said. “If you look at the dynamics of the market, you have a market that’s growing organically at a double-digit rate every year,”

If you look at the dynamics of the market, you have a market that’s growing organically at a doubledigit rate every year. And you have that dynamic in place for the next decade. So you have some really powerful tailwinds.” Two factors are driving these changes in Medicare Advantage plans, he said. One is a regulatory change that gave these plans more flexibility to offer innovative benefits. The other is increased federal funding that enables plans to offer more benefits. “We’ve seen very good support from CMS,” he said. “Medicare Advantage is probably one of the few things that has 22

he said. “And you have that dynamic in place for the next decade. So you have some really powerful tailwinds.” Democrats in Congress are pushing for two major changes to Medicare as part of a multitrillion-dollar spending plan: lowering the eligibility age to 60 and adding coverage for dental, vision and hearing care. “If Congress passes this bill, it will enhance some benefits and provide more

InsuranceNewsNet Magazine » October 2021

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 THE MEDICARE MAZE funding to Medicare in terms of dental, vision and hearing, which in turn would provide more funding for Medicare Advantage,” Ritter said. “And that alone would increase the number of beneficiaries.” Ritter also noted the growth of direct-to-consumer marketing by Medicare carriers and a greater use of call centers to enroll people in coverage. But he said advisors still have a role to play by providing a greater range of products and greater support to clients. “By providing that kind of support to their customer, and going above and beyond for your clients to make sure that they have the right plan, then you’re getting referrals,” he said. “Then you’re able to build a reputation within your market and be successful.” For advisors who may be late entering the Medicare market and concerned about whether they missed out on a major wave of potential clients hitting age 65, Ritter said it’s not too late. “You didn’t miss the train. And there’s plenty of room on the train.”

PREVENTING DAMAGE

Medicare Timeline

1965

Medicare has been part of the American health care landscape for more than a half-century, as the program was implemented on July 1, 1966. Here are some significant dates and milestones in the Medicare program. 1937

U.S. Surgeon General Thomas Parran proposed that national health insurance first cover Social Security beneficiaries.

1945

President Harry Truman publicly lent his support to national health insurance after the Social Security Board called for beneficiary health insurance.

of webinars and have a coordinated comWith all the decisions that a consumer munication campaign reaching out to faces in selecting a Medicare plan, it’s easy clients and prospects. to make a decision that ends up costing “Our business model is that we serve them a fortune or — even worse — puts lots of credit unions, banks, financial their health in jeopardy. That’s where planners and people like that. We’re kind Joanne Giardini-Russell comes in. of the arm that does their Medicare for Giardini-Russell is owner and self-pro- their clients because they don’t have claimed “Medicare nerd” of Giardini time to do it. And we get referrals from Medicare in Brighton, Mich. She and her that as well.” staff of fellow “nerds” There can be costly consequenchave a practice devoted es of choosing the wrong coverage. to helping consumers on That’s what Giardini-Russell and the Medicare journey. her team attempt to prevent. “When we did a sur“My daughter, Natalie, works vey, we found that our with me, and she said the most imGiardini-Russell clients told us the most portant thing a new agent in this confusing thing about market has to realize is the damage getting coverage was figuring out the you can do,” she said. “Your client can difference between Medicare Advantage end up on the hook for thousands of doland Medicare supplement,” she said. “So lars in out-of-pocket costs if they make I realized we had a lot of educating to do.” the wrong decision. It’s your job to see She and her team produced a series of that doesn’t happen.” YouTube videos discussing the various Among the changes she has seen in the Medicare options as well as the pros and marketplace, the biggest recent change cons of each. They also produce a series has been the way clients adapted to

Medicare and Medicaid were enacted as Title XVIII and Title XIX of the Social Security Act, providing hospital, posthospital extended care and home health coverage to almost all Americans aged 65 or older. At the time, seniors were the population group most likely to be living in poverty, and only about half had health insurance coverage. To implement the Health Insurance for the Aged (Medicare) Act, the Social Security Administration was reorganized and the Bureau of Health Insurance was established on July 30, 1965. This bureau was responsible for the development of health insurance policy.

1966

More than 19 million people enrolled in Medicare by July 1 — the first day the program was implemented.

1972

Medicare eligibility was extended to individuals under age 65 with long-term disabilities or end-stage renal disease.

InsuranceNewsNet Magazine » October 2021

1980

Coverage of Medicare home health services was broadened. Medicare supplemental insurance, also called “Medigap,” was brought under federal oversight.

1983

Medicare established a hospice benefit as an option for terminally ill beneficiaries to receive all-inclusive care to relieve pain and manage symptoms in a home setting rather than an institutional setting.

1987

The Omnibus Budget Reconciliation Act of 1987 strengthened the protections for nursing home residents.

1988

The Medicare Catastrophic Coverage Act included the most significant changes since enactment of the Medicare program. The law improved hospital and skilled nursing facility benefits, authorized Medicare to cover mammography, and included an outpatient prescription drug benefit and a cap on patient liability.

THE MEDICARE MAZE COVER STORY

I see this perfect storm in health care, where people are spending $3,000, $4,000, $5,000 a year on medications, but they are living on only $32,000. They can’t do it — something’s got to give.” COVID-19 restrictions. “Clients found they didn’t need to meet in a conference room. They told us their preferred way of communicating is through email. They like doing webinars. Let’s face it — people who are 65 years old have been on a computer for 25 years by now. So they are accustomed to doing things online.” Even with Medicare and related coverage, older Americans are still facing out-of-pocket costs for health care. Giardini-Russell predicted that Congress will add a dental benefit to Medicare. “In terms of Medicare, I think

everything will get more expensive,” she said. “Especially the cost of prescription drugs. I see this perfect storm in health care, where people are spending $3,000, $4,000, $5,000 a year on medications, but they are living on only $32,000. They can’t do it — something’s got to give. If we could come up with a maximum annual out of pocket for even $2,000 for prescriptions, that would be phenomenal.” Giardini-Russell said she wishes the financial planning community would begin discussing Medicare with their clients long before they blow out the candles on

1989

The act also expanded education and information to help beneficiaries make informed choices about their health care, expanded benefits for preventive care, and slowed the rate of growth in Medicare spending, extending the life of the Medicare Trust Fund by 10 years.

The Medicare drug benefit and other enhancements of Medicare coverage in the Medicare Catastrophic Coverage Act were repealed after higher-income seniors protested new premiums. A new Medicare fee schedule for physician and other professional services, a resource-based relative value scale, replaced charge-based payments.

1990

Additional federal standards for Medicare supplemental insurance were enacted.

1995

The Social Security Administration became independent of the Department of Health and Human Services.

1997

The Balanced Budget Act established an array of new Medicare managed care and other private health plan choices for beneficiaries, offered through a coordinated open enrollment process.

their 65th birthday cake. “You really should begin explaining this 15 years before they hit Medicare age,” she said. “Someone needs to talk with them about planning for their health care costs.” Medicare enrollment is stressful for clients, she observed. “Because it kind of coordinates with all those thoughts around retirement and your health, because you’re getting older and people do get sick and things happen. And you’re trying to make good decisions. It’s tough, and it’s stressful, but it’s important. So we break it down and help people learn it.” 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.

also changed what was formerly known as Medicare+Choice plans to Medicare Advantage.

The first annual Medicare & You handbook was mailed to all Medicare beneficiary households.

For the period prior to 2006, MMA created a temporary prescription discount card program. Beneficiaries with incomes less than 150% of the federal poverty level became eligible for subsidies under the new Part D prescription drug program. MMA also required beneficiaries with higher incomes to pay a greater share of the Part B premium beginning in 2007.

2001

2006

2003

2010

1999

The Health Care Financing Administration was renamed the Centers for Medicare & Medicaid Services. The Medicare Prescription Drug, Improvement and Modernization Act made the most significant changes to Medicare since the program began. MMA created a new optional outpatient prescription drug benefit, effective in 2006, provided through private health plans. The act

Medicare prescription drug coverage (Part D) began for 39 million Medicare beneficiaries. The Affordable Care Act provided for expanded Medicare drug and preventive services benefits.

2021

As of 2021, more than 26 million Americans — 42% of all Medicare beneficiaries — were enrolled in Medicare Advantage plans.

October 2021 » InsuranceNewsNet Magazine

Special Sponsored Section

INSIDE Why These Top Health Insurance Agents Are NOT Keeping Their Secrets North American Insurance Services • PAGE 27

The Health & Benefits Issue • Special Sponsored Section

Why These Top Health Insurance Agents Are NOT Keeping Their Secrets

orth American Insurance Services’ president, Andy Dastur, CLU, CFP, has spent decades working in insurance. When the call to have his own business became too loud to ignore, he partnered with Eugene Woznicki to help build an unconventional health insurance marketing organization. He explains their unique Andy Dastur culture in this Q&A. Q: Why do you call North American Insurance Services a “boutique” organization? A: Much of our industry is controlled by Wall Street or insurance companies, and we’re not. When they talk about long term, they mean next quarter’s earnings. When we talk about long term, we are talking about “I love the feeling multiple generations. Our agents are here because of family at NAIS they’re trying to build and the ability to something of value for sell all carriers with themselves and their famino limitations. The lies. We feel like a boutique company’s innovative organization because of our own independence thinking and team and because of the way concept are what we nurture agents’ entrekeep it a step ahead preneurial spirit while of the competition providing as many great and set it apart.” opportunities as possible – Mark K. for their long-term goals.

“Even though I run my own business and answer to myself, I have had the privilege and honor to be contracted under North American Insurance Services for the past four years. Their techniques for helping clients get coverage are like no other company I have seen. Andy’s amazing training and leadership took me from ground zero to a six-figure income in two years!” – Jacquie W.

Q: How do you provide these great opportunities? A: We have four words that drive who we are and frame decisions. The first two are “inspiring knowledge.” Not only do we want our agents “The growth I’ve seen to be the most educated, with this company has knowledgeable advisors in our industry, but also been phenomenal. we strive to consistently There are always new inspire them with new opportunities and solutions and ideas. All of training — there’s our senior sales leadership always something are our top producers. I’m a producer too, and I do exciting going on. this because I truly like to There are not a lot of help people. We have creplaces that are willing ated a culture of sharing to go out of their way best practices. Every one to continue to help of our top producers wants you grow and build.” to share what they are learning and how they got – Kevin R. to where they are. They’re the mentors, and they’re doing it because they get so much more in return. When anyone in our organization succeeds, we all celebrate. The other two words are “innovative solutions.” When we provide advice, we provide unique solutions on a customer-by-customer basis that they can’t find anywhere else. Our agents truly are advisors; they’re not just conducting “transactions.” While this may sound more challenging at first, it actually becomes second nature, and it’s one of the key things our top producers pass on to newer agents. Q: What does the future of North American Insurance Services look like? A: Our future is bright because we bring something unique: our culture of sharing best practices and of helping consumers by providing more than just transactions. Diversification of our offerings is one of our most highly valued priorities as a company. Our portfolio includes the best insurance carrier partners in the industry. See what inspiring knowledge and innovative solutions can look like for your business. Learn more at NAISinspires.com.

October 2021 » InsuranceNewsNet Magazine

LIFEWIRES

Life Insurance Sales Growth Hits 38-Year High Increased consumer demand continues to drive

36% of Americans said they planned to purchase life insurance this year. Source: LIMRA

record life insurance sales. The first half of 2021 had the highest life insurance policy sales growth since 1983, according to LIMRA. In the first six months of 2021, the total number of policies sold increased 8% compared with the prior year. The second quarter of 2021 saw a 34-year high in life insurance premium, with a 21% increase, the largest year-over-year increase since the third quarter of 1987. For the first half of 2021, total premium increased 18% compared with the first six months of 2020. Variable universal life new premium grew 69% compared with prior year results, representing the 15th consecutive quarter of premium increases. Whole life new premium sales jumped 25% in the second quarter while policy count increased 5% compared with the prior year. Whole life product sales experienced the largest growth in terms of absolute dollars and policies sold. Indexed UL new premium grew 20% in the second quarter, up 17% year-to-date.

COVID-19 DROVE LIFE SALES IN 2021

The COVID-19 pandemic was one of the biggest drivers — if not the biggest driver — of the insurance market in the last year and a half according to a recent survey taken on behalf of the Million Dollar Round Table. The survey revealed that 42% of Americans who acquired new insurance policies since March 2020 said the COVID-19 pandemic was a factor in their decision, higher than all other options. Among those, more than half (51%) said it was the primary factor in their decision. Another 41% said it was a major factor in their decision. Other reasons for acquiring new policies included wanting to provide for family (36%), a major life event (29%) and new personal concerns about potential future disability or long-term care needs (27%).

54% of Americans said that COVID-19 has made them more anxious about dying early. Source: MDRT

DID YOU

KNOW

QUOTABLE

The answer is always no if we don’t ask. We can’t help people we don’t meet. — Richard M. Demko II, director of insurance with Centric Wealth in Houston.

NEW CEOS NAMED AT 2 CARRIERS

New leaders will be at the helm of two life insurance carriers. Pacific Life announced that Darryl Button will become president and CEO of Pacific Life, succeeding chairman, president and CEO Jim Morris, on April 1, 2022. Morris is retiring. Button, currently the company’s chief financial officer, will be only the 15th chief executive in Pacific Life’s 154year history. Lincoln Financial announced that Ellen Cooper, currently executive vice president, chief investment officer, head of enterprise risk and the Annuity Solutions group, will succeed Dennis Glass as CEO in May 2022. Glass will become chairman of the board. Glass served as CEO for 15 years, while Cooper has been with the company since 2012.

INSURERS LOOK TO INCREASE STAFF

In the next 12 months, 56% of insurance companies plan to increase staff, and 37% plan to maintain their current staff size. Technology, claims and operations roles are expected to see the greatest growth. Those were among the results of a study conducted by The Jacobson Group, which found that industry employment continues to grow while recruiting has become more difficult. The study also revealed 7% of insurers plan to decrease staff in the next 12 months. This is down from 9% in January 2021 and 17% in July 2020. Seventy-eight percent of insurers anticipate revenue growth in the next year, which is 11 points higher than in the January 2021 study. Only 1% of insurers expect a decrease in revenue. For the first time in the study’s 12year history, all functional areas were considered moderately difficult or difficult to fill. Technology, analytics and actuarial roles are considered the most difficult, followed closely by executive positions.

45% of millennials said they are likely to buy life insurance because of COVID-19.

Source: The Wall Street Journal

InsuranceNewsNet Magazine » October 2021

Source: 2021 Barometer Survey

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LIFE

Life Insurance Creates ‘Sticky’ Employment Relationships Carrots are more effective than sticks when it comes to retaining selected employees who are motivated to contribute their best. By H.L. Vogl

s the economy emerges from the pandemic, attracting and retaining top talent has emerged as a high priority for businesses of all sizes and industries. Working at home and in hybrid models has loosened ties to the office and made employees more mobile, putting employers around the country in competition for top talent, wherever they live. And President Joe Biden issued an executive order asking the Federal Trade Commission (FTC) to develop regulations to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” 30

Carrots, Not Sticks

Regardless of whatever limitations the FTC may impose on noncompete agreements, carrots are more effective than sticks when it comes to retaining employees who are motivated to contribute their best. “Nonqualified” benefits for selected employees — with value that is conditional on extended years of service — are great ways to create “sticky” employment relationships in this highly mobile environment. Traditional nonqualified deferred compensation plans can be challenging to administer due to the complicated requirements of Tax Code Section 409A and the Employee Retirement Income Security Act (ERISA). They also often involve noncompete requirements that could ultimately be targeted by FTC regulations. As a result, a number of executive benefit designs using life insurance have emerged as popular, simpler alternatives.

InsuranceNewsNet Magazine » October 2021

Three Common Options For Structuring Executive Benefits

Low interest rates make “loan regime split dollar” particularly attractive today. Select key employees are given the opportunity to own a permanent life insurance policy insuring themselves, with the employer paying the premiums and booking them as loans to the employees. The employees only pay taxes on the small amount of imputed loan interest, rather than the full premiums paid. If covered employees leave the business prematurely, they will have to pay back the loan principal to the employer and cover any future premiums owed to the insurance company out-of-pocket. (They may prefer to surrender the policy for its cash value to cover their repayment obligation.) Employees who stay longterm and make continued contributions to the success of the business may be rewarded with a forgiven loan principal (in lump sum or gradually), at which time the forgiven amount is recognized as taxable

LIFE INSURANCE CREATES ‘STICKY’ EMPLOYMENT RELATIONSHIPS LIFE For employers more interested in taking an immediate deduction for premiums paid, a “Section 162 bonus” arrangement may be preferred. Here, the employee owns the policy and the employer pays the premiums, but those premium payments are immediately treated as compensation to the employee, not loans. Since the employee is recognizing the income, the employer takes a corresponding deduction. This is particularly attractive for “pass-through” entities with nonowner key employees, since the owner is typically in a higher tax bracket than the employee. Employers retain less control over Section 162 arrangements, but they can still maintain some “stickiness” with a Restricted Executive Bonus Arrangement. The REBA is an agreement to restrict the employee’s rights over the life insurance policy — particularly access to the cash value — for a period of time. A REBA may establish a vesting schedule, but employers need to watch out for terms that unintentionally bring the arrangement under requirements of ERISA or the split-dollar regulations. In all of these situations, competent legal and tax advisors should be consulted regarding the design and documentation of these benefits.

3 Ways To Structure Executive Benefits 1. Loan regime split dollar:

• An employer assists an employee in obtaining life insurance. • The employee owns the policy. • The employer arranges a loan agreement between the employee and the corporation. • The employee uses these borrowed funds to pay required premiums. • The employee then pledges the policy as collateral against the borrowed funds. • Any excess death benefit over the loaned amount is directed to the employee’s selected beneficiary.

2. Endorsement split dollar:

• The employer owns the policy. • The employer endorses a portion of the death proceeds to the employee’s beneficiary. • The employer is treated as giving “economic benefits” to the employee.

3. Bonus arrangements:

• Section 162 – The employee owns the policy and the employer pays the premiums. The premium payments are immediately treated as employee compensation, not loans. • Restricted Executive Bonus Arrangement – The employee has restricted rights over the life insurance policy for a period of time.

Life Insurance Enhances Value

income. The cash value of the policy can provide liquidity to cover taxes due, and what is left can be used to supplement retirement income, cover estate planning needs and more. Certain employers are not allowed to make loans to some employees or have more control over the life insurance policy. (Sarbanes-Oxley prohibits loans to specified executives of publicly traded companies, and some state nonprofit corporation laws prohibit loans to officers and directors.) In these cases, “endorsement split dollar” provides an alternative design. The employer owns and pays for the life insurance policy and “endorses” some of the death benefit to the employee. The employee pays tax only on the “economic benefit,” an amount roughly

equivalent to the term insurance cost of the endorsed amount. If the employee leaves prematurely, the business retains the policy or surrenders it for its cash value. Similar to loan regime split dollar, the business can decide to reward long-term employees by transferring ownership of the policy to them down the road. If the employee wants a legally enforceable right to loan forgiveness or policy ownership at some time in the future, that type of split-dollar arrangement is considered deferred compensation subject to Section 409A requirements. Typically, these arrangements will be designed to use the “short-term deferral exception” and provide income recognition within two and a half months after the year in which that right vests.

The protective value of life insurance is an integral part of all of these arrangements. Long-term care riders or hybrid policies may also be utilized to provide additional protection benefits. For key employees with life insurance underwriting challenges, a number of insurance carriers offer simplified or guaranteed issue for employer-owned or -sponsored policies that cover a minimum number of qualified employees. You can demonstrate your value as an insurance professional by bringing these ideas to your business owner clients. Working with an advanced insurance sales team enhances your ability to explain these options to your clients and coordinate with their tax and legal advisors to implement. H.L. Vogl, JD, CFP, is director, advanced sales, Crump Life Insurance Services. They may be contacted at hl.vogl@ innfeedback.com.

October 2021 » InsuranceNewsNet Magazine

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INTRODUCING JOHN HANCOCK’S ALL-NEW PROTECTION VUL

Meeting market demand

by offering customers potential value throughout the life of their policy As more life insurance customers seek a carefully balanced blend of security and opportunity, John Hancock is now offering its all-new Protection VUL, (a variable universal life insurance product). With an age-100 death benefit guarantee, a full range of investment options and attractive living benefits, Protection VUL can help your clients meet their long-term goals for financial security and growth. When Protection VUL customers pair their policy with the innovative John Hancock Vitality Program, they also gain access to tools, resources, incentives and rewards to help them live longer, healthier lives, including the chance to lower their guaranteed premium by up to 25% over the life of their policy.1 The new Protection VUL complements John Hancock’s portfolio of protectionfocused products, which continue to offer an attractive combination of strong guarantees, competitive premiums and cash value growth

potential. Now, Protection VUL stands out for those seeking even stronger guarantees and consumer value, giving

with equity-market growth potential. With optional riders for long-term care and critical illness, Protection

it traction against market leaders.

VUL also offers comprehensive living-benefit coverage for added financial protection against the unexpected. Additionally, customers who chose to engage in the Vitality program can improve their overall health and earn savings and other rewards — additional sources of potential value to be realized over an insured’s lifetime.

“Our ‘Protection’ portfolio reflects our mission to provide long-term value through a variety of options that help customers address their specific goals,” said Neal Kerins, Vice President, Product Development, John Hancock Insurance. “By providing access to the equity market and a competitive

guarantee to age 100, Protection VUL offers a blend of security and opportunity we believe will appeal to many of today’s consumers.” Protection VUL is an effective option for your insurance clients ages 35 and older who are looking for a balance of cost-effective, guaranteed death benefit protection

There are two versions of Vitality that your clients can choose from — Vitality PLUS (available for as little as $2/mo.) and Vitality GO (no additional cost) — each offering different levels of rewards and resources to match clients’ needs, goals and interests. When added to a Protection VUL policy, in addition to the opportunity to lower the guaranteed premium by as

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much as 25%1, participation in Vitality PLUS also offers: • Choice of discounted or complimentary wearable fitness device • Savings on eligible healthy foods at the grocery store • Exclusive discounts from Hotels.com • Discounts from popular retailers • And much more! “There has never been a more important time for customers to take

control of their financial and physical health,” added Mr. Kerins. “The new Protection VUL with John Hancock’s engaging Vitality program gives customers that exact opportunity. We fully expect to see thousands of Protection VUL customers take advantage of Vitality to realize significant premium savings and other rewards for their everyday

Learn more To speak with a John Hancock sales representative about selling Protection VUL or any of their other innovative products, call 888-266-7498 and select option 2.

healthy activities like regular exercise and restful sleep.”

1. Premium savings are in comparison to the same John Hancock life insurance policy without Vitality PLUS. The level of premium savings is cumulative over the life of the policy and will vary based upon underwriting status, issue age, policy type, the terms of the policy and the Vitality Status achieved. Premiums savings are only available with Vitality PLUS.

Variable universal life insurance has annual fees and expenses associated with it in addition to life insurance related charges (which differ with the product chosen), including surrender charges and investment management fees. Variable universal life insurance products are long-term contracts and are sold by prospectus. They are subject to market risk due to the underlying sub-accounts, and are unsuitable as a short term savings vehicle. The primary purpose of variable universal life insurance is to provide lifetime protection against economic loss due to the death of the insured person. Cash values are not guaranteed if the client is invested in the investment accounts. There are risks associated with each investment option, and the policy may lose value. Please contact 1-800-827-4546 to obtain product and fund prospectuses The prospectuses contain complete details on investment objectives, risks, fees, charges and expenses as well as other information about the investment company. Please read the prospectuses carefully containing this and other information on the product and the underlying portfolios and consider these factors carefully before investing. Insurance policies and/or associated riders and features may not be available in all states. Protection VUL is not available in New York. Some riders may have additional fees and expenses associated with them. Refer to the product prospectus for additional information. Vitality is the provider of the John Hancock Vitality Program in connection with policies issued by John Hancock. Vitality Rewards may vary based on the type of insurance policy purchased for the insured (Vitality Program Member) and the state where the insurance policy was issued. John Hancock Vitality Program rewards and discounts are only available to the person insured under the eligible life insurance policy. Rewards and discounts are subject to change and are not guaranteed to remain the same for the life of the policy. HealthyFood savings are based on qualifying purchases and may vary based on the terms of the John Hancock Vitality program. The HealthyFood program is currently not available in Guam. Protection VUL policies automatically include a no-lapse guarantee called Death Benefit Protection. This feature guarantees that the policy will not default, even if the cash surrender value falls to zero or below, provided that the Death Benefit Protection Value remains greater than zero and policy debt never exceeds the Policy Value. Once terminated, the Death Benefit Protection feature cannot be reinstated. See the product guide for additional details. Guaranteed product features are dependent upon minimum-premium requirements and the claims-paying ability of the issuer. Products or services offered under the Vitality Program are not insurance and are subject to change. There may be additional costs associated with these products or services and there are additional requirements associated with participation in the program. For more information, please contact the company at JohnHancockInsurance.com or via telephone at 888-333-2659. The life insurance policy describes coverage under the policy, exclusions and limitations, what must be done to keep the policy in force, and what would cause the policy to be discontinued. Please contact John Hancock for more information. Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA 02210 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595, and securities are offered through John Hancock Distributors LLC through other broker/dealers that have a selling agreement with John Hancock Distributors LLC, 197 Clarendon Street, Boston, MA 02117. Policy Form Series: 21PROVUL, ICC21 21PROVUL Rider Form Series: 20HER; ICC20 20HER, 18VCR; ICC18 18VCR MLINY060321715-1

ANNUITYWIRES

QUOTABLE

States Embracing New Annuity Sales Rules

Sixteen states had passed new annuity sales rules as this issue went to press, and 16 is an important number for an industry that needs that number to grow. Connecticut became the 16th state to pass regulations or legislation based on a model rule by the National Association for Insurance Commissioners. In February 2020, the NAIC adopted an update to the Suitability in Annuity Transactions rule that articulates a best-interest standard through the following four obligations: care, disclosure, conflict of interest and documentation. With the outbreak of COVID-19, states were slow to adopt the update in the months that followed. The NAIC began lobbying state officials last summer, and they completed a series of FAQs to help facilitate adoption. Industry trade groups hope to see about half the states adopt the new rules by the end of the year. Doing so will help establish momentum for a reasonable bestinterest standard annuity producers can live with over tough fiduciary rules.

BEST’S: LIFE/ANNUITY COMPANIES REDUCE LEVERAGE, IMPROVE LIQUIDITY

ANNUITIES MAKE IT EASIER FOR SENIORS TO SPEND, REPORT FINDS

Having the peace of mind that comes with guaranteed income is giving seniors a license to spend, a new study found. The study, by David Blanchett and Michael S. Finke, examined spending in retirement by comparing retirees with a lifelong income stream to those living off an investment portfolio. The findings suggest retirees with guaranteed income may spend twice as much as those tapping wealth from their retirement savings. “The size of the effect suggests that the explanation for under spending non-annuitized savings is likely both a behavioral and a rational response to longevity risk,” the authors wrote in an abstract. About 67% of private industry workers had access to retirement plans in 2020, according to the Bureau of Labor Statistics. But many new retirees struggled to convert that nest egg into a retirement spending plan. DID YOU

KNOW

The prolonged low interest rate environment is allowing publicly traded life/annuity insurers to strengthen their balance sheets by replacing higher-cost debt with often significantly lower-cost alternatives, AM Best reported.

Source: CNBC

The aggregate unadjusted total debt-to-capital ratio for the 16 publicly traded L/A insurers followed for the report declined since 2011, to 24.1% at year-end 2020. Total debt outstanding decreased by approximately $8 billion (or 8.1%) to $91.4 billion at year-end 2020. In 2020, the financial leverage of a significant portion of the publicly traded companies declined to its lowest unadjusted level of the past 10 years.

Older workers are undersaved and regret that they have not saved more or wish they had started saving earlier. — Frank O’Connor, vice president, Research and Outreach, Insured Retirement Institute

The overall decline in debt-to-capital ratios can be attributed to the industry’s record-high capitalization, the report noted. Given the current interest rate environment and some uncertain views of the U.S. economy, many of the larger companies continue to deleverage. In 2020, Prudential reduced its total debt obligations by $6.3 billion, the largest dollar decrease of all the companies.

PENNSYLVANIA AMENDS ANNUITY TERMS TO ENTICE TEACHERS

Pennsylvania education officials are amending retirement plan and annuity terms to help address a public teacher shortage in the state. A bill recently signed into law aims to attract teachers by extending the sunset on the pension code to allow retired teachers to return to teaching in subject shortage areas. They can do so without impairing their retirement status or retirement annuity from June 30, 2021, to no later than June 30, 2024. “The teacher shortage is a serious and well-known crisis throughout the state,” said Sen. Dale Fowler. “This legislation helps Sen. Dale Fowler districts that have a subject shortage by giving them the option to fill those positions with a retired teacher. It also ensures that retired teachers who want to come back and help aren’t punished for that decision.”

Sixty-one percent of retirees wish they had done better at planning for the financial aspects of their retirement. Source: Edward Jones

InsuranceNewsNet Magazine » October 2021

ANNUITY

Defusing The Annuity Tax Time Bomb How a provision of the Pension Protection Act can help your clients take income from their annuity tax-free to pay for longterm care. By Jennifer Lang

mericans are living longer than ever before — about 30 years longer, on average, than a century ago. This was the word from leading scholars who participated in the Century Summit, a four-day virtual conference convened in December 2020 by The Longevity Project and the Stanford Center on Longevity. But because people are living longer, they face the likelihood of dealing with more health issues later on in life. According to the Administration for Community Living, a part of the Department of Health and Human Services, about seven in 10 people (69%) turning 65 today will need, at some point, some type of long-term-care (LTC) services — either at home, in their community or in a facility. Typically, women need care longer (3.7 years, on average) than men do (2.2 years). Long-term care needs are unpredictable. Some diagnoses can require many years of care. A more detailed look at long-term care, published in 2015 by Health and Human Services and revised in 2016, looks at the risk of people developing a disability and needing help with “activities of daily living,” such as bathing, dressing and eating. The study estimates that about half (52%) of Americans turning 65 today will “develop a disability serious enough” to require long-term services and support — and about one in six (17%) will end up spending at least $100,000 out of pocket for such services. So what’s your client’s alternative to spending down their savings? Liquidating other investments is an option, but that 36

might put a surviving spouse at risk. It’s a safer bet to use life insurance and annuities with LTC provisions. Nearly three in four nonqualified annuity owners intend to use their annuity to cover the potential expense of a critical illness or nursing home care, according to a survey conducted for The Committee of Annuity Insurers. Congress realized that we have an extended health care crisis in the U.S. So in 2010, the Pension Protection Act (PPA) became law. However, one of the most important and powerful provisions of the PPA Act has been entirely overlooked by many over the years. In retirement, retirees depend on their assets to generate income. Reallocating an existing asset that they won’t need

InsuranceNewsNet Magazine » October 2021

to use for income can help protect them against an unexpected LTC event. An LTC annuity can help clients convert taxable assets to tax-free assets when they are used for qualifying LTC. Clients can use a single premium deferred annuity to help protect their retirement income stream if the need for care arises. A one-time premium can provide a tax-efficient way to help pay for LTC. And the issuing life insurance company may credit a higher interest rate to amounts withdrawn for qualifying LTC expenses. By choosing to pay with a single premium, clients are guaranteed that no more payments will ever be required. Also, there are no unexpected premium increases sometimes seen with traditional long-term-care insurance.

Ellen, 78, nonsmoker, in good health With a single premium of $125,000, Ellen is guaranteed $3,000 per month to help pay for qualifying LTC expenses she may incur. And by selecting the lifetime continuation of benefits option, Ellen can receive $3,000 per month for her entire lifetime.

$125,000

Initial premium

$3,000/month

Total initial LTC benefit balance

$3,000/month

Lifetime continuation

Source: Jennifer Lang Financial Services

DEFUSING THE ANNUITY TAX TIME BOMB ANNUITY This provision can work with any cash asset like a savings account, but it works exceptionally well with in-force annuities and here’s why. Interest in an annuity grows taxdeferred. Indeed, that’s one of the excellent features of the annuity. But when annuitants begin to take money from the annuity, the interest acts as ordinary income. This causes their total income to increase, potentially putting them in a higher tax bracket. This scenario is often referred to as a tax time bomb. The PPA allows retirees to take the income from their assets tax-free. Reallocating existing assets such as cash, savings, certificates of deposit or other annuities into an LTC annuity can help maximize those assets if they’re needed to pay for qualifying LTC expenses. And any funds not used for LTC can pass on to heirs. Annuity-based products feature two accounts: the accumulated cash value and the long-term care accumulated cash value. Money is credited interest each month

in both accounts, with a higher rate applied to the long-term-care accumulated value (LTCAV), allowing higher growth to provide more assets to help pay qualifying LTC costs. Withdrawals are allowed from the LTCAV to help cover qualifying LTC expenses, subject to the monthly LTC limit. Clients can exchange an existing nonqualified annuity for one that is eligible for the PPA advantages via either full or partial 1035 exchange. Here’s an example: Ellen is 78 years old, a nonsmoker and in good health. With a single premium of $125,000, Ellen is guaranteed $3,000 per month to help pay for qualifying LTC expenses she may incur. And by selecting a lifetime continuation of benefits option, Ellen can receive $3,000 per month for her entire lifetime. Underwriting for LTC annuities is slightly more flexible when compared with traditional LTC insurance. The application consists of several health questions and a brief telephone interview. No medical exams are necessary.

Benefit Triggers

Benefit payments are triggered in one of two ways: If the annuitant cannot perform at least two of six activities of daily living, which include bathing, maintaining continence, dressing, eating or feeding, toileting (including getting on and off a toilet) and transferring (such as from a bed to a chair), or the annuitant requires care as a result of a severe cognitive impairment (such as Alzheimer’s disease).

LTC Withdrawals

Actual LTC expenses will be paid from the LTCAV, up to the stated monthly LTC benefit limit. The client will receive the lesser of the monthly LTC limit or the actual charge for care. Jennifer Lang is a financial services professional with Jennifer Lang Financial Services, specializing in annuities and long-term care solutions, with offices in Houston and Atlanta. She may be contacted at jennifer.lang@innfeedback.com.

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For more information on the IncomeShield fixed index annuity, visit american-equity.com/incomeshield-annuity *For IncomeShield 10 product, each year after the 1st contract year, clients become vested in a percentage of the bonus, until 100% vested at the end of the 10th contract year. Vested amounts of the bonus are the amounts not forfeited as a result of an early withdrawal or surrender. Bonus, surrender charges, and vesting schedules may vary by state. See brochure and disclosure for details. **Available for issue ages 50+. Contract owner may be subject to a 10% federal penalty if distributions are taken before age 59 1/2. American Equity Investment Life Insurance Company® does not offer legal, investment, or tax advice. Each client has specific needs which should be discussed with a qualified legal or tax advisor. Annuity and Riders issued under form series ICC17 BASE-IDX, ICC17 IDX-10-7, ICC17 BASE-IDX-B, ICC17 IDX-11-10, ICC16 R-MVA, INVESTMENT LIFE INSURANCE COMPANY ICC20 R-LIBR-FCP, ICC20 R-LIBR-FSP, ICC20 R-LIBR-W-FCP, ICC20 R-LIBR-W-FSP and state variations thereof. Availability may vary by product and state 6000 Westown Pkwy, West Des Moines, IA 50266 Guarantees are based on the financial strength and claims paying ability of American Equity. TM

AMERICAN EQUITY

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www.american-equity.com ● Call us at 888-221-1234 October 2021 » InsuranceNewsNet Magazine 37

HEALTH/BENEFITSWIRES

Delta Started It. Will Others Follow? Delta Air Lines became the first major employer in the U.S. to impose a monthly surcharge for employees who have not been vaccinated against COVID-19. Delta CEO Ed Bastian said that as of Nov. 1, the company will charge all unvaccinated employees an additional $200 per month, noting every Delta employee hospitalized with COVID-19 has cost the airline an average of $50,000 per stay and that “all Delta employees who have been hospitalized with COVID-19 were not fully vaccinated.” With 68,000 employees, Delta self-insures, setting aside employee premiums and company contributions in a separate fund to pay for health care. Employers that self-insure are not subject to state regulations regarding health insurance. According to Kaiser Family Foundation, 67% of those who have employer-sponsored health insurance plans are covered by self-insured plans.

PERCENTAGE OF UNINSURED REMAINED STEADY

Despite the economic ravages of the COVID-19 pandemic, the percentage of adults in the U.S. without health insurance held steady at approximately 11%, according to a study by The Urban Institute. Researchers found that between March 2019 and April 2021, the percentage of U.S. adults reporting they had employer-sponsored coverage declined from 65% to 62.3%, a decrease of approximately 5.5 million adults. The share of adults reporting public coverage increased from 13.6% to 17.5%, an increase of approximately 7.9 million adults. Medicaid and the health insurance marketplaces provided many people with a safety net that allowed them to maintain coverage, researchers said.

DID YOU

KNOW

HEALTH INSURERS SHOW DECLINE IN PROFITS IN 2Q

Five of America’s largest health insurers reported more than $11 billion in profits in the second quarter — a decline from the same period last year. UnitedHealth Group reported $4.37 billion in profit and increased its earnings outlook after beating expectations for profit and revenue. Anthem reported $1.8 billion in profit and said COVID-19 variants and slowing vaccination rates added uncertainty to the second half of the year, but still raised its earnings forecast. Humana, which provides coverage to a large share of seniors, had the most dramatic drop in earnings compared to the same period the year before — with a 68.7% drop to $588 million. CVS Health reported $2.78 billion in profits and said starting next summer it would raise wages to $15 an hour — at a cost of $600 million over three years. Cigna reported $1.47 billion in profit, but its stocks fell after the company reported costs for providing medical services were starting to increase.

QUOTABLE One college kid popped off and said, ‘This guy used to play in the major leagues?’ — Corey Koskie, former Minnesota Twins third baseman, who now sells health insurance

UNITED HEALTHCARE REACHES $15.6M SETTLEMENT OVER MENTAL HEALTH

United Behavioral Health, United Healthcare and Oxford Health have agreed to pay a total of $15.6 million to settle allegations that they violated the federal mental health parity law. An investigation by the U.S. Department of Labor’s Employee Benefits Security Administration found that, dating back to at least 2013, United reduced reimbursement rates for out-of-network mental health services, thereby overcharging participants for those services, and flagged participants undergoing mental health treatments for a utilization review, resulting in many denials of payment for those services. The companies, which administer employer-sponsored health plans, are accused of systematically reimbursing out-of-network mental health services more restrictively than they reimburse out-of-network medical or surgical services. Under the Mental Health Parity and Addiction Equity Act, mental health treatments must be covered on the same terms as me d ic a l and surgical benefits.

About 1.6 million more Americans had some form of health insurance coverage in 2020 than in 2019.

InsuranceNewsNet Magazine » October 2021

Source: Centers for Disease Control and Prevention

Working to make retirement clearer for everyone. Starting with you. Let’s face it. Retirement can be confusing for just about everyone. At Jackson ®, we’re here to help clear things up. Our range of annuity products help remove the uncertainty that complicates your clients’ plans. And, our award-winning customer call center, * fee transparency, and user-friendly website make navigating everything easier for you. Together, we can help make retirement clearer for everyone. Annuities are long-term, tax-deferred vehicles designed for retirement. Variable annuities involve risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met. * SQM (Service Quality Measurement Group) Contact Center Awards Program for 2020.

Before investing, investors should carefully consider the investment objectives, risks, charges, and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact your Jackson representative or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money. Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These products have limitations and restrictions. Contact Jackson for more information. Jackson® is the marketing name for Jackson National Life Insurance Company® and Jackson National Life Insurance Company of New York®. CMC25777CCCAD 04/21

Not FDIC/NCUA insured • May lose value • Not bank/CU guaranteed Not a deposit • Not insured by any federal agency October 2021 » InsuranceNewsNet Magazine

HEALTH/BENEFITS

Avoiding Missteps In Advising Clients On DI Coverage & Claims Keeping clients fully informed will help agents avoid mistakes when selling and assisting in filing claims and ensure the client has security and peace of mind. By Frank Darras

lients trust their agents with their long-term health in finding the right insurance products. Consider how special the agent-client relationship is, particularly when it comes to individually purchased disability insurance. People can go anywhere and choose any agent — but once they select you, their life and their family’s financial stability are in many ways in your hands. I have seen some agents make missteps along the way when advising consumers on the right coverage to buy as well as when the client is making an insurance claim. By the time these clients reach me to help resolve their questions and concerns, they are entirely turned off by the claims process and unhappy with their agents and may already have made fatal claim errors. Consumers must understand what they are buying and how their policy features will allow prompt payment of their monthly disability benefits. Keeping clients fully informed will help agents avoid mistakes when selling and assisting in filing claims and ensure the client has security and peace of mind.

Individual Disability Policy Highlights

Let’s review some of the best features of individual disability policies. » Individual disability coverage can provide monthly tax-free disability benefits so long as the insured pays the premiums. » Coverage is portable and not dependent on your employer. Private disability coverage travels with you when you 40

change jobs or companies. » Individual disability insurance can also offer occupation-specific coverage if you are unable to perform the important duties of your occupation, even if you can do some other occupation for which you are trained, educated or suited. » Today, most individual policies offer benefits to normal retirement age, and some can last for a policyholder’s entire life. » All companies offer cost-of-living adjustments to keep pace with rising inflation, which is a huge concern today. They also offer future increase options, so more monthly disability benefits can be added if you earn more money after the policy is issued, even with declining health. » Individual disability policies can also provide residual disability benefits if the insured can perform some occupational duties but suffers a 20% loss of earnings or more.

Differences From Group EmployerSponsored Disability

Employer-sponsored group plans are in stark contrast with some of the features above. Below are some key ways in which they differ. » Taxability of the benefits is based on who pays the premiums. If the employee pays the premiums using after-tax income, the benefits should flow tax-free. However, if the employer pays the premiums, benefits are taxable. If the premium costs are split, so is the tax liability. » Coverage ends when a client changes employers, or when the employer no longer offers the coverage as a group benefit or on a voluntary basis. » If the employee is unable to perform the important duties of your occupation, benefit payments may not begin if they are deemed able to perform any occupation they are adequately trained, educated or suited to do. » Most group policies contain self-report, musculoskeletal and mental/ner-

InsuranceNewsNet Magazine » October 2021

vous caps on monthly benefits as short as 12 months. Further, where most group plans require a 180-day period before benefit payments begin, individual policies can be as short as 30, 60 or 90 days before benefits begin accruing.

Considering Mental Wellness

Mental health and wellness have become more prominent issues in recent years. The National Alliance on Mental Illness reported that one in five U.S. adults — 51.5 million people — experience mental illness each year. The numbers are expected to rise, and there are several factors you need to be aware of when advising potential clients. Some individual and group disability plans offer mental health benefits to age 67 and others for as short as 12 months, so be careful what you are selling. Also, some group policies say that if your mental condition contributes to your disability, benefits may stop at 12, 18 or 24 months. So if your client has back surgery and they are depressed because they still have a limited range of motion, the claim would be capped at 12, 18 or 24 months. Depression in itself is a recognized mental disability and, in this case, it is occurring after the fact and may impair the claimant’s ability to work. Be sure to explain how your plan acknowledges and covers mental disabilities that are “caused by” or “due to” or a policy that has “contributed to” language. Furthermore, some experts believe the mental health impact of the COVID-19 outbreak will have a ripple effect throughout society for several years to come. Mental health issues are complex, and insurance companies often make the insured jump through various hoops with frequent delays and multiple denials, hoping your client will just give up. Despite the efficacy of the vaccine rollout, COVID-19 still impacts

AVOIDING MISSTEPS IN ADVISING CLIENTS HEALTH/BENEFITS

The Impact Of COVID-19 On DI Claims

TOP PRODUCERS GIVE AWAY THEIR

Milliman conducted a survey of 13 disability insurance carriers to determine the impact of COVID-19 on DI claims. Some highlights of the survey include: • Six companies agreed that new claims from COVID-19 will increase significantly, three companies disagreed and four were unsure. • All 13 companies agreed that high unemployment and other economic issues due to COVID-19 will reduce recovery rates among open DI claims. • Eight companies agreed that recovery rates on open individual disability insurance claims will decrease as a result of COVID-19. Several companies attributed lower recovery rates to claimants’ inability to schedule the medical procedures they need or from fear of returning to work during the pandemic. The volume of new DI claims will increase significantly over the next 12 months

5 4

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» Solutions customized for each client

0 Moderately agree

Moderately disagree

professionals and individuals every day — physically and mentally. Explain how your plan specifically addresses COVID19-related mental health claims to limit surprises from the outset.

A Day In Court

At North American Insurance Services, our culture is one of sharing. That’s why every one of our top producers is also on our sales leadership team — to teach YOU everything they know. » Practical training straight from today’s top producers

Strongly agree

SECRETS

Perhaps the biggest advantage to individual insurance policies is that the coverage provides terrific consumer rights and remedies. These include your client’s right under the Seventh Amendment — the right of trial by jury — and other consumer remedies if the carrier wrongfully denies or unreasonably delays paying. Remind clients of these safeguards and protections offered by individual policies over employer-sponsored ones. Employer-sponsored group policies are governed by the Employee Retirement Income Security Act (ERISA). If someone has insurance through their employer, then ERISA will generally prevent their right to a jury trial should a claim be denied. Individual policies afford the client their rights under the Seventh Amendment of the U.S. Constitution. A claimant may file a lawsuit and present evidence in front of

Strongly disagree

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» The support you need to truly help people

a jury of their peers. Witnesses — medical, occupational, vocational or financial — may come to court to testify about your client’s work ethic, medical condition and how hard they tried to recover. The state of our world and public safety since 2020 has firmly positioned health care on center stage. With so many risk factors at play, there has been a renewed focus on insurance and the relationship between an agent and their clients. The trust and confidence, along with any piece of mind, any client has in an insurance agent is sacred, and we must help them by keeping them informed about the true benefits of their disability plans from the outset. If you can demonstrate where and how your guidance helped them avoid mistakes on their insurance claims, let them know. They will appreciate a humblebrag that ends with: “… and your payment is on the way.” Frank Darras is founder of DarrasLaw in Ontario, Calif. He may be contacted at frank.darras@ innfeedback.com.

October 2021 » InsuranceNewsNet Magazine

» Inspiring knowledge for ultimate business growth “The growth I’ve seen with this company has been phenomenal. There’s always new opportunities and training — there’s always something exciting going on. There are not a lot of places that are willing to go out of their way to continue to help you grow and build.“ – Kevin R.

See how a partnership with North American Insurance Services can better serve your business and your clients’ futures at

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Financial facts and figures powered by AdvisorNews.com

42% Cried Over Americans Money During Shifting To The Pandemic Financial Money woes stemming from the COVID-19 pandemic drove many Americans to tears. Stress over finances made 42% of Americans cry during the past year and a half, according to a LendingTree survey. What made people weep? Job loss or financial loss was the top reason, cited by 42%. Not being able to afford family wants or needs was the second most cited reason at 33%, while debt was a close third at 31%. Not all the crying came from sadness, however. More than one-quarter (26%) said they cried happy tears when receiving stimulus money. In addition, the survey found that nearly one in 10 Americans cried tears of joy over being able to pause a student loan payment (9%) and find a new job (8%).

Workers Worry Over Their Retirement Money

Although Americans may be known globally as ravenous consumers, they are more likely to call themselves savers, a title they earned over the pandemic, according to some reports. The Federal Reserve confirmed in its latest report that Americans have been saving buckets of cash since the start of the pandemic, often related to federal stimulus 42

InsuranceNewsNet Magazine » October 2021

Americans love a good comeback story, and it appears they are looking forward to bouncing back from the pandemic’s economic effects. More than half (58%) of U.S. adults said they are in financial recovery mode, and among them almost nine out of 10 (89%) express confidence that they will ultimately achieve a full financial comeback.

According to the Northwestern Mutual 2021 Planning and Progress Study, which showed optimism for a financial recovery after an uncertain year:

The retirement years are often called the golden years, but many workers fear they won’t have enough gold to sustain them through that period. Three-quarters (76%) of Those with American workers have financial concerns over >$100K have more retirement. savings regret. The workers’ concerns are: running out of Those with money (40%), loss of income (18%) and being incomes >$100K unable to afford medical expenses (18%), regret not enjoytotaling 76%, according to the ninth annual ing life enough. American Century survey of retirement plan participants, compiled by Mathew Greenwald SOURCE: American Century and Associates. They admitted not saving more money earlier in their career, with 60% saying they saved less than they should have in the first five years they worked. And although only about a third expressed regret about not saving more for retirement, it was still by far the top regret, said American Century senior retirement strategist Glenn Dial.

How Spenders Turned Into Savers

Recovery Mode

F 34% say they’re in “late-stage recovery,” meaning while losses were suffered, these individuals have mostly or fully recovered to pre-pandemic levels and have confidence they’ll be able to achieve longterm financial security. F 47% say they’re in “mid-stage recovery.” They suffered losses and have begun to make up ground but have not yet reached pre-pandemic levels, yet they remain optimistic about achieving longterm financial security. F 18% say they’re in “early-stage recovery.” They suffered losses, are still in decline, and are unclear how they’ll achieve long-term financial security.

infusions. From the end of the Great Recession to February 2020, the personal saving rate averaged 7.25% until the beginning of the pandemic. The rate has shot up to 17.9% since then.

The Fed noted that families might be saving as a precaution in uncertain times, but much of the saving has to do with the inability to spend during the lockdowns. In fact, the rate has been dropping since March, when the savings rate spiked to 26.9% and has since dropped to 9.4%, which still exceeds the pre-pandemic average.

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* Policy must be in effect for at least 12 months at the time of credit application. Insurance policy must be issued by one of the following approved insurance providers to be eligible for IBLOC collateral: Guardian, MassMutual, Northwestern Mutual, NY Life, MetLife, John Hancock, Penn Mutual, Ohio National, Brighthouse Financial, Lafayette and Ameritas. Other restrictions may apply. Investors Bank name and weave logo are registered trademarks. ©2021 INVESTORS BANK. ALL RIGHTS RESERVED.

May 2020 » InsuranceNewsNet Magazine

An Advisor’s Guide To Gender And Racial Equality Funds Here’s the inside scoop on funds that are of interest to clients who want their advisor to create an environmental, social and governance investment portfolio. • Anders Skagerberg

re your clients interested in aligning their investments and values in support of gender or racial equality? Several funds launched recently that claim to promote diversity, but which of them are a good fit for your clients? Financial planning clients are expressing interest in aligning their investments with their values. Racial and gender equality issues are at the forefront of this movement. For advisors who are crafting an environmental, social and governance investment portfolio for their clients, it is essential to have the inside scoop on which funds are of interest to clients. We have counted seven funds that target gender and racial diversity, managing nearly $1.4 billion in assets. Some of these funds can be an excellent way to align your client’s investments and values. 44

Investing In Women’s Leadership

The COVID-19 pandemic had a greater impact on women than it did on men. Many women had to take on more child care responsibilities, reduce their work hours or drop out of the workforce entirely. So investing in companies that integrate women well might be a top priority for your female clients when developing an investment portfolio. Three exchange-traded funds — SHE, WOMN and FDWM — and three mutual funds — Pax Ellevate Global Women’s Leadership Fund (PXWIX), Fidelity Women’s Leadership Fund (FWOMX) and Glenmede Women in Leadership Fund (GWILX) — invest in women’s leadership. However, two of these funds — GWILX and FDWM — are tiny, with less than $30 million in assets. These funds typically select stocks based on the proportion of women in top management and director ranks. Pax Ellevate’s manager, Pax World Funds, also has engaged with companies on gender diversity issues.

InsuranceNewsNet Magazine » October 2021

Investing In Racial Justice

In the aftermath of George Floyd’s death, racial justice investing also has gained significant ground. If your clients are interested in ESG investing, racial justice investing may be at the top of their list. Launched in 2018, the Impact Shares NAACP Minority Empowerment ETF (NACP) is the only racial justice ETF.

Pax Ellevate Global Women’s Leadership Fund

Pax Ellevate is the largest and oldest gender equality mutual fund in the U.S. Launched in 1993 by ESG boutique Pax World, the fund invests in companies that advance women through gender-diverse boards and senior leadership teams. The fund was developed in partnership with Sallie Krawcheck. She is a Wall Street veteran who now runs Ellevest, a robo-advisor focusing on women’s investment needs. Pax World selects stocks from MSCI World, a global stock index. To be included, companies must have an above-average number of women in top management roles and on the board of directors. Pax

AN ADVISOR’S GUIDE TO GENDER AND RACIAL EQUALITY FUNDS

resolutions that came before it. However, large asset managers, including State Street, are increasingly supporting ESG shareholder resolutions.

The stocks in the fund are selected using the NAACP‘s scoring criteria. These criteria include board diversity, anti-discrimination policies, community engagement and diversity programs. The fund maximizes exposure to the highest-scoring companies while mimicking the risk-return characteristics of the broad market. The fund owns around 190 stocks and has about 34% of its assets in technology companies. Its top investments are Apple, Microsoft and NVIDIA. In addition to NACP, there are other ways to give clients exposure to racial justice investments. For example, clients could lend to community development financial institutions. CDFIs lend to underserved communities, including people of color.

Fidelity Women’s Leadership Fund

Impact Shares YWCA Women’s Empowerment ETF

Assets Expense ($m) Ratio

Fund Name

Ticker

Pax Ellevate Global Women’s Leadership Fund

PXWIX

909.1

0.53%

Fidelity® Women’s Leadership Fund

FWOMX

128.7

0.90%

Glenmede Women in Leadership Fund

GWILX

27.3

0.85%

SPDR SSGA Gender Diversity Index ETF

SHE

267.5

0.20%

Impact Shares NAACP Minority Empowerment ETF

NACP

32.4

0.49%

Impact Shares YWCA Women’s Empowerment ETF

WOMN

30.3

0.75%

Fidelity Women’s Leadership ETF

FDWM

2.0

0.59%

Total World also screens out oil and gas, weapons and tobacco companies. The fund holds more than 400 global stocks — including Microsoft, Amazon and Estee Lauder — as its top holdings. Two-thirds of the portfolio is allocated to U.S. stocks. The rest is in international — primarily European — stocks. The fund manager, Pax World, has always focused on socially responsible investing. Pax World files pro-diversity shareholder resolutions, including gender-pay equity at Oracle and Mastercard. The fund’s performance has been in line with the MSCI World index, which tracks global stocks.

SPDR SSGA Gender Diversity Index ETF

Launched in 2016, SHE invests in largecap U.S. companies with a high percentage of women who are executives or directors. State Street famously advertised this fund by commissioning the Fearless Girl statue in Manhattan’s Financial District The fund picks stocks from the top 1,000 U.S. companies and weighs them based on market cap. Companies in the top 10% on gender equality metrics in each sector are included. Each stock is capped at 5% of the fund. SHE has 165 holdings, with around 27% of the fund invested in tech. The top three holdings are Visa, PayPal and Walt Disney. SHE is relatively inexpensive, with only a 0.20% expense ratio. The caveat is that the fund’s manager, State Street, has not consistently voted in favor of pro-gender equality shareholder resolutions. For example, Morningstar pointed out that between 2016 and 2018, State Street voted in favor of only 19% of the gender-equality

1397.3

ETF.com, Morningstar, Data as of 7/28/2021

Started by Fidelity in 2019, Fidelity Women’s Leadership Fund is an actively managed mutual fund that invests in large-cap and mid-cap U.S. stocks. The fund is managed by a woman, Nicole A. Connolly. She previously invested in natural resources, utilities, technology and emerging markets. To be included in the fund, companies must have: » Women in the key leadership roles, or; » At least one-third of the board positions held by women, or; » Policies (such as parental leave) aimed at attracting, retaining, and promoting women (such as parental leave). The fund has around 140 holdings, including Microsoft, Disney, Accenture, Anthem and Nasdaq. Although the fund has beaten its benchmark, the Russell 3000, since inception, it costs more than other gender equality funds.

NACP — The NAACP Minority Empowerment ETF

NACP is the first and only ETF to promote racial equality. It’s a small fund investing in large-cap and mid-cap U.S. stocks. It is also the first fund launched by Impact Shares, a provider of socially conscious ETFs.

Launched in 2018, WOMN tracks an index of large-cap and mid-cap U.S. stocks that score high on gender diversity. To come up with the scores, the WOMN’s index gives each company a rating for gender balance in leadership and workforce, equal compensation and work-life balance, and policies promoting gender equality. The algorithm then selects about 200 stocks with the highest scores while maintaining a marketlike risk and return. Companies involved in ethical controversies and industries such as weapons, gambling and tobacco are excluded. WOMN is a small fund with just over $30 million in assets under management. The current movement for investors to align their money with their values is well underway and is likely to accelerate as time goes on. This is an excellent opportunity for financial advisors to differentiate themselves and to add additional value. Clients want a unique financial plan that can deliver on their goals while aligning their values, beliefs and investments. Armed with the right knowledge, financial advisors can deliver just that. Anders Skagerberg, CFP, has worked as a financial advisor for high-net-worth families and a director of financial planning operations for Facet Wealth. Currently, he is a tax expert and a financial writer. He may be contacted at anders.skagerberg@innfeedback.com.

October 2021 » InsuranceNewsNet Magazine

INBALANCEWIRES

QUOTABLE

Stress: Are You Teflon Or Velcro?

Why are some people more resilient in the face of stress or trauma than others? It depends on your response, said Dr. Samantha Boardman, author of Everyday Vitality: Turning Stress Into Strength. Boardman said some people are like Teflon — stress doesn’t stick to them. Others are more like Velcro — stress attaches to them and builds up over time. Stressful moments — everyday annoyances – can raise blood pressure and lead to unhealthy ways of coping, such as overeating or lashing out at others. Boardman recommended dealing with stress by using three C’s: Connecting with others, Contributing to something beyond yourself, and feeling Challenged in some way. She said these activities create an uplift and “build an armor around you so when these little stressors happen, they’re much less likely to get under your skin.”

DID YOU

KNOW

— Dr. Janis Whitlock, psychologist

include plenty of berries, root vegetables and wild game. Researchers say the benefits of the Nordic diet are similar to those of the Mediterranean diet: reduced inflammation, lowers cholesterol and improves blood pressure levels.

MORE EXERCISE + LESS TV = BETTER SLEEP

TRY TAI CHI

There’s a reason why tai chi has been popular for centuries. The traditional Chinese wellness practice carries a number of health benefits, including helping you maintain a healthy weight and blood pressure, improving heart health and immune function, and lowering the risk for falls. Researchers found those who practiced tai chi three times a week for 12 weeks reduced waist circumference, body weight and high-density lipoprotein cholesterol. Tai chi also helped with pain management for those who suffered from fibromyalgia, musculoskeletal pain and post-traumatic stress disorder. And tai chi improves balance and muscle strength. Those who practiced tai chi for 25 minutes a day over six weeks reported increased mobility, balance and leg strength.

Over the pandemic, we did see increases of body image anxiety.

WHAT IS THE NORDIC DIET?

The Nordic diet is the latest eating trend to generate buzz. But what is it, and should you adopt it? The Nordic diet was developed in 2004 and focuses on seasonal, local, organic and sustainably sourced whole foods that are traditionally eaten in the Nordic region — Denmark, Finland, Norway, Iceland and Sweden. If you want to eat the way they do in the Nordic countries, plan to consume whole grains (e.g., barley, rye and oats), fruits, vegetables, legumes (such as beans and peas), fatty fish (salmon and herring), lowfat dairy and canola oil. The menu will

Being physically active and spending fewer hours watching TV could substantially lower your risk of developing obstructive sleep apnea, according to the European Respiratory Journal. Data showed those who exercised daily were 54% less likely to develop the sleep condition. Sitting and watching TV especially raised the risk of developing sleep apnea, with those who spent more than four hours daily in front of the screen increasing their risk of developing the sleep disorder by 78%. One of the main reasons why TV viewing was problematic, researchers said, was that watching your favorite shows usually is associated with unhealthy behaviors such as excessive snacking.

Compared with non-coffee drinkers, drinking up to three cups of coffee daily was associated with 21% lower risk of stroke. Source: UK BioBank

InsuranceNewsNet Magazine » October 2021

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INBALANCE

Weight Gain? It’s Not All Your Fault — Blame Evolution! A neurologist explains why the hardwiring of the human brain is at the root of the extra pounds many of us gained over the past year and a half. By Susan Rupe

here’s a joke that says the virus is called COVID-19 because 19 is the number of pounds we will gain during the pandemic. But pandemic weight gain is no joke for those of us who spent the past year and a half overeating, staying on the couch and staying out of the gym. The average American gained two pounds a month during the COVID-19 lockdown, according to a study published in The Journal of the American 48

Medical Association. You can blame the weight gain on a lack of exercise, or you can blame it on a lack of willpower. But a neurologist blames it on brain chemistry that evolved in humans over thousands of years. Dr. Steven Goldstein is the founder of the Houston Healthcare Initiative. He talked with InsuranceNewsNet about the stress and anxiety behind the weight gain and how to shed the pounds. The main reasons for the weight gain were stress and anxiety surrounding social isolation, he said. “People weren’t doing very much activity, so their whole lifestyle changed, but their eating habits didn’t. And on top of that, you have anxiety and stress that release hormones such as adrenaline and epinephrine into the body, and the sympathetic nervous

InsuranceNewsNet Magazine » October 2021

system gets stimulated. This is what happens during chronic stress.” In addition, he said, stress is tied to the “fight or flight” response that has been hardwired into the human brain. “From an evolutionary point of view, the adrenaline release was there when there was an acute stressor, like a predator that’s about to eat you,” Goldstein said. “You would naturally want to run away or figure some way to get the predator to go someplace else. If you were successful, you were able to outrun the predator and get away. That was great — the stress was over. Or if the predator caught you, the stress also was over because you weren’t around anymore. So that system works. But chronically, it leads to all sorts of hormonal changes in the body.”

WEIGHT GAIN? IT’S NOT ALL YOUR FAULT — BLAME EVOLUTION! INBALANCE Stress turns off the parasympathetic nervous system while stimulating the sympathetic nervous system, Goldstein said. The result is that digestion is slowed down. “People think they can control their behavior and then can do what they want. They’re so wrong,” he said. “The unconscious brain has a lot to say about what goes on in the body.” One example, he said, is the vagus nerve, which is responsible for the regulation of internal organ functions such as digestion, heart rate and respiratory rate. “But when you are stressed, the vagus nerve is shut down and digestion slows down,” he said. “There are hormones such as leptin that are released during digestion. Leptin stimulates the vagus nerve to tell your brain you’ve had enough to eat, so you get a feeling that you know you’re full, you don’t want to eat anymore.” But if leptin is not released, your brain doesn’t get the message that the stomach has enough food, Goldstein said. “So you’re still hungry and you keep eating.” Willpower is not the key to avoiding weight gain, Goldstein said. Getting stress and anxiety under control is. “You can say, ‘Well, I have willpower. I’m hungry, but I’m not going to eat.’ We know how long that lasts. You might be able to do that for a little while, but you can’t do that for very long. So then you start eating.” Stress causes the brain to crave energy,

Goldstein said, setting the stage for overeating. “Heightened states of stress and anxiety require more calories to keep the brain on high alert,” he said. “We eat sugar to get a boost of energy. Sugar gets converted to energy faster but does not last long, requiring more sugar. It is a

— for example, you are having financial concerns — you can work through some solutions instead of merely worrying about the problem. “You have to attack the problem and figure a way out,” he said. “For example, if you are having financial problems, you can make a budget and stick with it, or you can find ways of earning additional money. If you just worry, it’s not going to get you anywhere, and it only will increase your stress.” But if there’s a situation that you can’t fix, Goldstein advised thinking through some possible scenarios or eventually telling yourself that there’s nothing you can do about it and moving on. For example, if you live in a hurricane-prone area, there’s nothing you can do to keep a hurricane from striking your community. But you can prepare — perhaps buying a generator or devising an evacuation plan. Goldstein had some advice for those who want to tap into their bodies’ evolutionary mechanisms in order to SOURCE: Northwestern Medicine lose some pandemic weight. “The main thing is to get control of your stress and anxiety,” he said. “You can practice tai cycle that is unhealthy short term but chi, yoga or meditation — some of the really bad long term.” Eastern ways of trying to relax. And Stress not only makes the brain crave then you can tell yourself that it’s not unhealthy foods, but it also decreases your fault, it’s not because you don’t have feel-good hormones such as dopamine willpower. This is a hormonal problem and serotonin, Goldstein said. The results — it’s not that you’re a bad person. are lethargy and increased anxiety levels.

----- Shed Those ----Pandemic Pounds -------------------

» Control what you can to get back to a healthy lifestyle.

» Track your food intake either in a food journal or an app.

» Wear a fitness tracker to track the calories you’re burning daily.

Control Your Stress, Conquer Your World

So how do you control your stress? The first step, Goldstein said, is to understand the problem that is making you feel anxious. If it’s a problem that you can solve

Stress causes the brain to crave energy, setting the stage for overeating. Heightened states of stress and anxiety require more calories to keep the brain on high alert.

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.

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October 2021 » InsuranceNewsNet Magazine

BUSINESS

7 Tips To Harness The Power Of Your Own Mastermind Group Nothing worth doing can be done alone. Find a group to help you on the journey. By Bill Cates

f there is one book responsible for creating more millionaires than any other, my guess it would have to be Think and Grow Rich by Napoleon Hill. One of the many concepts Hill covers is the power of the mastermind. Hill wrote, “When two people get together to brainstorm solutions to problems, it creates a third mind.” This third mind can create ideas that wouldn’t happen for an individual on their own. Many people call this a “study group.” Regardless of what you call it, do you have one? And it is bringing you the results you set out to achieve?

other industries, we all get fresh ideas that don’t just reinforce the “industry speak.” 2. How many should you have in your group? I have found five or six to be ideal. (I know others like slightly smaller or slightly larger groups.) We almost never meet unless everyone can attend (because we value everyone’s unique perspective)

since we want to have plenty of energy and creativity and still be able to “go deep” with each person’s situation. 3. Do you have to meet in person? There is no question that in-person meetings are the best. As you might imagine, you can see visual clues that might cause you to go deeper with parts of your discussion. I suppose that Napoleon Hill would argue that an “energy” is also created that won’t be happening if you aren’t meeting in person. Prior to the pandemic, one of my groups conducted quarterly in-person meetings (traveling from different parts of the country) with monthly check-in phone meeting in between. Of course, the more members you have in your group, the harder it will be to coordinate meetings — especially with in-person meetings.

Harness Its Power

I’ve been using the power of the mastermind for more than 20 years. I currently belong to three mastermind groups. Each one has a different dynamic based on the members and overall purpose of the group. If I weren’t getting value from these groups and the relationships, I would have stopped long ago. 1. Who should be in your group? Your group can be made up of people just like you, in your same line of work, or it can be made up of folks from other industries. One of my groups contains two people who have businesses similar to mine and two others in businesses that are indirectly related. By having people from 50

Napoleon Hill defined a mastermind group as “the coordination of knowledge and effort of two or more people, who work toward a definite purpose, in the spirit of harmony.”

InsuranceNewsNet Magazine » October 2021

4. What do you talk about? Most of our meetings consist of the following items: • Sharing recent wins and challenges and what we learned from them. • Sharing our revenue actual numbers and compare them to our goals. • Brainstorming solutions to problems. • Setting goals for the year (or quarter, etc.). • Setting specific actions to be accomplished bet ween meetings. 5. What else do you discuss? From time to time, we have brought in “guest experts” or created a special theme for the meeting that dominates a good portion of the meeting.

7 TIPS TO HARNESS THE POWER OF YOUR OWN MASTERMIND GROUP BUSINESS

No two minds ever come together without, thereby creating a third, invisible, intangible force, which may be likened to a third mind. Bringing in a guest or creating a theme can bring out ideas and perspectives we might not normally tap into. Sometimes we have given one of the members time to expand on one aspect of their business that is truly working for them. 6. How long are your meetings? When my local group met in person, it met for about seven hours per day — not counting 30 minutes of “warm up” time over a continental breakfast. The meeting host covers this light breakfast and a more filling lunch. We spread the meetings around and figure that if we didn’t have to drive 60-90 minutes to the meeting, we can spring for the meals.

With five people, seven hours is usually plenty of time. Each person ends up getting about 50-60 minutes of time devoted to their issues at hand. Members are expected to bring issues or questions to have the mastermind address. If the member does not bring enough fodder for conversation, we ask them questions to make sure they are handling things that we know to be important to them. For my two groups where we travel (on a long drive or by airplane), we devote about 24 hours to the meeting — meaning we travel in the morning of the first day and travel home the afternoon or evening of the second day. We have working lunches and a working dinner. No, we

don’t read bedtime stories to each other. 7. Do you give referrals or do any business together? Sometimes. We definitely have referred business to each other over the years. And we have even hired each other a few times for the other’s expertise. Usually, we just help each other out, but when the “project” becomes more involved, we’ll pay the other person a fair price for their help. Just about nothing in our business or personal life that’s worth accomplishing can be done alone. Asking for help is a sign of strength. Find ways to bring people into your life to continue your education, brainstorm ideas and hold each other accountable. Bill Cates, CSP, CPAE, is president, Referral Coach International, and the author of Get More Referrals Now, Beyond Referrals and Radical Relevance. He is the founder of The Cates Academy for Relationship Marketing. He may be contacted at bill.cates@innfeedback.com.

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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

Financial Wellness: The Next Level Of Planning And Benefits Advisors and employers play a role in helping clients face a more confident financial future. By Deb Dupont

n the wake of the COVID-19 crisis, Americans face unprecedented financial, social and physical challenges. The notion of financial wellness — at its very core, freedom from immediate financial stress and the ability to prepare for future financial needs — is changing (and being challenged) in ways it never has before. The retirement industry is also evolving with new ways advisors support their clients in both retail and institutional markets. LL Global instituted an industry task force to define and explore the many aspects of financial wellness for all our stakeholders — from individual consumers and clients to employers and their workers to the advisors and service providers who seek to fulfill the needs of all.

tive security/preparedness and support for future goals. Financial wellness, so defined, is also fundamental to the role advisors play in helping their clients with financial planning as well as the role benefits advisors and financial wellness programs have in helping workers with their own current and future financial needs and goals. According to the Secure Retirement Institute study “Advisor Views on Financial Wellness,” financial wellness differs from traditional financial planning efforts by:

» Also relating to health and medical comfort (and absence of problems). » Having an educational component. » Addressing emotion. » Including investments, retirement and more. » Taking a holistic approach to finances.

Based on 1,147 retirement benefits decision-makers in employers with 10 or more employees. Source: “More Than a Paycheck: Retirement Plan Sponsors and Financial Wellness Offerings,” SRI, 2020.

The core definition for financial wellness, developed by the task force, is “being confident in your financial situation, able to withstand unexpected expenses, and enjoying a financially secure future.” The group adopted this holistic view to include an emotional component, objec52

In many ways, these are themes that can be most efficiently addressed (and in scale) via workplace-enabled programs; according to other SRI research, nine in 10 advisors to defined contribution plans include some degree of financial wellness support in their offerings.

InsuranceNewsNet Magazine » October 2021

On the retail side, recent LIMRA research suggests there is a small but growing number of financial professionals who are familiar with financial wellness programs and that awareness is highest among group benefits brokers who work with larger employers. This tracks with the inclusion of formal wellness programs in the workplace itself. In 2018, 21% of employers with 10–19 employees currently offered a wellness program, compared with 50% of those with 1,000 or more employees. Another 23% of small employers planned to add a program within a year or so, leaving more than half with no plans or thoughts of including financial wellness in their benefits offerings. Not all wellness programs are alike, and I would venture to say that not all wellness programs are specifically defined as such. Taking a holistic approach that includes both education and products that help individuals address a host of financial needs — beyond retirement saving and health insurance — is perhaps the most basic common denominator. This creates great opportunity for advisors to assess needs and craft programs with both retail and institutional clients. The elements of financial wellness, leveraging both workplace benefits and individual financial needs, are well suited for advisors to deliver retirement planning, retirement education, estate planning, insurance planning, budgeting, rainy-day saving, debt management, etc. Getting on the financial wellness bandwagon offers advisors an opportunity to deepen relationships and add new dimensions to the value they bring to clients. Deb Dupont is assistant vice president, institutional retirement research, Secure Retirement Institute. She may be contacted at deb.dupont@innfeedback.com.

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INSIGHTS

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

Women-Only Study Groups Offer Support And Solidarity Women-led networking groups and support systems provide a unique and powerful environment that fosters development and builds confidence. By Kathleen Benjamin

olidarity and networking with like-minded professionals can help any individual overcome challenges and achieve sought-after success. For women in a male-dominated field such as financial services, women-only small groups can provide camaraderie, encouragement and accountability — all integral pieces of long-term professional and personal growth. Several years ago, four women and I created an all-woman study group designed to help members overcome hurdles. This group is responsible for immeasurable individual achievements and some of my most meaningful relationships. A career in financial services can be rewarding, but it requires dedication and fearlessness. A formal study group is a great way to surround yourself with impactful individuals and align every group member for greater success, which you can pass on to clients.

Curate Your Network And Support System

To start, find like-minded professional women from shared professional or local associations to make up your group. Expect to take some time to identify the special mix of members and personalities needed to create a nurturing environment for professional and personal growth. The women in my group met through our involvement in MDRT, but it took years of planning before we formalized our study group. Consider members’ personalities and how they’ll blend to impact the group’s overall dynamic. It’s important for each person to get to know the other women on personal and professional levels to develop trust and confidence. An ideal dynamic 54

will help members feel comfortable sharing their flaws, concerns and challenges, and feel confident providing guidance and comfort to others.

Expand Beyond Geographic Boundaries

Membership in industry-specific support groups likely will extend across geographic lines. This can be challenging to overcome, but technology and commitment can ease the burden and ultimately align the right people to achieve success. Each group should have an optimal meeting schedule and method to help keep its members engaged and motivated. The women in my study group live across the U.S., but we’re all at similar points in our careers. We make up for this distance through monthly video conferences, phone calls and (pre-pandemic) semiannual in-person meetings. These meetings allow for holistic personal and professional updates to the support system. We report our progress and collectively discuss plans to further our successes and confront our challenges. Before the pandemic, my group would regroup after the MDRT Annual Meeting, held in June. We debriefed on our personal goals, key conference takeaways and next steps for our practices. In early December, we met in person again to reflect on our progress and to finalize individual and group plans for the coming year. These meetings helped me apply new business strategies and grow my practice.

Develop A Group Objective

It’s important to have a group structure to follow, and group objectives should evolve with each member’s needs. For example, advisors may want to concentrate on certain insurance products, practice management issues or business development strategies in addition to general mentoring and group support. Collaborate to identify a calendar that breaks annual objectives down into measurable monthly goals. The subjects your group studies will

InsuranceNewsNet Magazine » October 2021

change over time, and it’s best to embrace that change. Together, we explore areas such as journaling or healthy eating to round out our nonprofessional skills and become better leaders and advisors for our clients through greater work-life balance.

Identify A Common Starting Point

It’s helpful to identify a common journey or cause for group members to embark on together. We each completed The One Page Business Plan by Jim Horan as a first step in our collective goal of professional development. From there, we employed a business coach for two years to join us for monthly coaching calls and guide us through individual goals and challenges. Our coach led us through the process together without being a formal leader, which gave us breathing room to grow. We stayed on the same page because we started from the same place and leveraged the same plan. This approach provided much-needed stability to our group. We experienced firsthand that the best thing you can do to help a business grow is work on it, rather than in it. Monthly calls and the support of our sisterhood helped keep us all focused on our goals and objectives for our individual businesses. In the years my study group has been together, we’ve reached countless personal and professional milestones. Women-led networking groups and support systems provide a unique and powerful environment that fosters development and builds confidence. If you’ve considered joining or starting a group in the past, reach out to a few like-minded women to start the process. Kathleen Benjamin, CFP, CPA, joined Brotman Financial Group as a principal in 2015. Kathleen is a 17-year MDRT member with five Top of the Table qualifications. She may be contacted at kathleen.benjamin@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.

College Funding Advice Opens The Door To A New Market How advisors can add value to clients by helping them solve the nation’s top financial challenge. By Brock Jolly

he statistics don’t lie. Nearly 90% of the people who enter the financial services industry fail out within the first few years. Why? My observation is that it’s almost always because they aren’t seeing enough quality prospects. Industry icon Tom Hegna frequently says, “There’s riches in niches.” What if you had a niche that provided you a turnkey way to get in front of motivated prospects on a regular and consistent basis? Wouldn’t you love a way to add tremendous value for your clients by helping them solve the top financial challenge in our country today? One of the greatest threats to American financial well-being has been intensifying for decades. This risk is so closely attached to the American dream that it deserves our attention. The threat? Student loan debt. There are currently 43.2 million student borrowers who hold an average debt of $39,551 — a total of $1.73 trillion — and EducationData.org reports that debt is growing at 23.6% annually, six times the rate of the U.S. economy! As financial advisors, one of the most valuable solutions we can provide for families is helping them save and pay for college. According to Gallup, 73% of parents of children younger than 18 say that paying for college is their top concern, making it the No. 1 financial fear of most American families. Although it would be ideal to start saving for college from the time a child is born, that’s just not realistic. Good financial planning balances wealth management and risk management. Too often, we allow our clients to do a great job of saving for retirement and, in doing so, allow them to sacrifice their children’s college savings.

This ultimately may jeopardize retirement savings if it means that the parents are taking on the student loan debt. If the students take on the debt, the downward spiral of debt also can be exacerbated. Let’s say, for example, that a student decides to attend an out-of-state public school rather than the in-state option. According to The College Board, the price differential is $16,460 ($43,280 versus $26,820) per year. If the student graduates in four years (the average is closer to six), and if the cost of attendance doesn’t increase (it usually does, by about 5% per year), that’s $65,840 borrowed. Regardless of who pays the bill, if the loan has an interest rate of 4% and is repaid over 10 years, that’s $667 per month — a significant amount for a recent college graduate or a parent who hopes to retire soon. The demand for a college education is higher than ever. Students who attend college hope to earn a degree that will dramatically increase their lifetime earning power. And the colleges feast on this demand. Over the past 20 years, as the cost of borrowing — student loan interest rates — has decreased, the price of college has slowly increased. In fact, since 2000, college tuition and fees have increased by nearly 170% — almost three times the rate of the Consumer Price Index. Because families have not saved enough, they turn to student loans to make up the difference. In 2002, I set out to solve this problem and developed my niche in the college funding space. Our team’s goal is to help eradicate student loan debt and its impact on so many American families. We do this by helping parents develop comprehensive financial planning strategies for saving and paying for college. Unfortunately, for so many financial advisors, when asked about the best way to pay for college, the solution is product-centric: a Section 529 plan. Although Section 529 plans are a tremendous financial instrument — and one we use frequently with our clients — they are surely not the only solution, and there

are advantages and disadvantages to these complicated instruments. For nearly 20 years, our team of advisors has worked with families to help solve this complex challenge. Knowing that saving for college funding is the top financial fear facing Americans and that advisors are challenged to find great clients who are motivated to work with them, we have found that college funding is a great door opener for a more comprehensive planning discussion. Although many advisors focus on retirement planning or insurance strategies, college funding is a pillar of financial planning that often is overlooked. By understanding the multifaceted process of saving and paying for college how financial aid works; and methods for appealing for aid, qualifying for scholarships, navigating the student loan process and creating strategies to address these concerns, an advisor can add tremendous value and minimize the amount of student loans a family must assume. While working with business owners or near-retirees may be ideal, in my experience, families of college-bound children are motivated, have lots of questions and make excellent clients for life. And once you’ve solved this top challenge, it opens the door to add value in many other areas of financial concern. Brock Jolly, CFP, CLU, ChFC, CLTC, CASL, CFBS, RICP, CEPA, is a financial advisor with Veritas Financial and the founder of The College Funding Coach. He currently serves as NAIFA’s national treasurer. He may be contacted at brock. jolly@innfeedback.com.

October 2021 » InsuranceNewsNet Magazine

INSIGHTS

With nearly 100 years of experience, The American College is passionate about helping students expand their knowledge and opportunities as financial professionals.

The Perils Of Parent PLUS Loans Federal PLUS loans may be an attractive option for parents who want to finance their child’s education, but it might be too easy to borrow too much. By Ross Riskin

hen evaluating college borrowing options, federal PLUS loans are a favorite option for parents — yet there are systemic issues surrounding these loans that might not be well understood by many. Here are four main issues important for both advisors and prospective borrowers to be aware of when determining whether a federal PLUS loan is the best financing option for their situation.

Financial Aid Award Letter Confusion

Current or prospective students and parents who fill out the Federal Application for Student Aid, known as the FAFSA, become eligible for a parent PLUS loan. Subsequently, a financial aid award letter details what aid the student is eligible to receive. However, these letters lack uniformity in presenting the difference between gift aid, which does not need to be repaid (e.g., grants, scholarships), and self-help aid, which does need to be repaid (e.g. federal Stafford loans for undergraduate students). Some schools have omitted the word “loan” from PLUS award letters, which can mislead families into believing the assistance need not be repaid. To avoid confusion, families should carefully review award letters with their advisor to determine the appropriate aid.

Lack Of Cost Transparency

The interest rate for PLUS loans disbursed between July 1, 2021, and June 3, 2022, is 6.28% (calculated by adding 4.6% to the most recent 10-year Treasury note auction, which was May 2021). These loans carry fixed interest rates, yet they change each year a parent borrows — an important consideration relative to the borrowing timeline. By May 1, students typically have 56

decided which school they will attend, and families have likely determined how much they need to borrow to meet the funding gap — all before federal loan interest rates are determined for the upcoming academic year! Beyond this, origination fees imposed on the loans are the main transparency concern. For PLUS loans disbursed between Oct. 1, 2021, and Sept. 30, 2022, an origination fee of 4.228% is imposed — extremely high, considering most private education loans impose no such fees, and the average origination fee on a mortgage is around 1%. These fees increase the cost of the PLUS loan while making it more difficult to compare against a private alternative. Private lenders are required to display APR figures whereas the U.S. Department of Education is not. This means a private loan, sporting a higher stated interest rate, could be more cost effective than a PLUS loan carrying a lower stated interest rate. Families evaluating federal and private financing options should consider working with an advisor to run simulations with varying repayment terms to determine APRs for the PLUS loan, allowing for a true “apples to apples” comparison.

Too Easy To Borrow Too Much

A parent’s eligibility to borrow PLUS loans simply requires not having an adverse credit history. What’s not directly considered is a borrower’s credit score, assessment of income, or other traditional measures used to determine creditworthiness or ability to repay. Further, there are no annual or cumulative borrowing limits imposed on PLUS loans (instead, limits are tied to each school’s cost of attendance less the amount of a student’s financial assistance). Therefore, it’s possible for less-qualified borrowers to access other types of debt and borrow at levels greater than they can reasonably expect to repay. Advisors working with less-affluent families should perform an assessment of their ability to repay this debt instead of defaulting to borrowing the maximum amount to fill the gap. Advisors should encourage more affluent families to

InsuranceNewsNet Magazine » October 2021

consider private loans, especially for borrowers with strong credit profiles who intend to repay the debt over a shorter period post-graduation.

Limited Repayment Options

For some parent borrowers, PLUS loans are the best option due to the current interest rate environment, ease of borrowing and flexibility with the amount. Still, parents should be aware of the repayment plans that are — and are not — available to them. Most student loan borrowers opt for the standard 10-year repayment plan, but growing in popularity are income-driven repayment plans such as IBR, PAYE, and REPAYE. Conversely, the only incomedriven repayment plan available for parent PLUS loan borrowers is an IncomeContingent Repayment (ICR). This is not as favorable as the IDR plans available to student borrowers because ICRs boast higher monthly payments and longer repayment terms. Additionally, a parent borrower can only enroll in an ICR if their PLUS loan(s) has/have been consolidated with others into a direct consolidation loan. While it’s possible for parent borrowers to participate in other IDR plans through the double consolidation strategy, it becomes more complicated and is not a viable strategy for borrowers with a single PLUS loan, or those who have already consolidated loans into a direct consolidation loan. At the end of the day, PLUS loans can be a great financing option for some borrowers and sub-optimal for others. Millions of parents favor these loans, and advisors should be cognizant of the associated planning opportunities — and pitfalls — so they can help borrowers achieve their higher education goals in the most financially efficient manner. Ross Riskin is an associate professor of taxation and the director of the CFP and ChFC Education Programs at The American College of Financial Services. He may be contacted at ross.riskin@innfeedback.com.

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InsuranceNewsNet Magazine - October 2021

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