InsuranceNewsNet Magazine - December 2020 by InsuranceNewsNet

2020 MOVERS & SHAKERS

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After

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December 2020

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IN THIS ISSUE 20 After The Fever

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DECEMBER 2020 » VOLUME 13, NUMBER 12

HEALTH/BENEFITS

FEATURE

50 Disability Insurance Underwriting Fatigue — It’s A Real Thing

By John Hilton and Susan Rupe The industry is convalescing and healing at the end of a year when COVID-19 dominated almost everything.

By Lynne Christofferson Get your ducks in a row to help your case move smoothly through underwriting.

ADVISORNEWS

54 Take Steps To Bridge The Women’s Longevity Gap

INFRONT

6 Even More Secure?

By John Hilton SECURE 2.0 seeks to build on the changes in the SECURE Act to expand savings options for retirees, but will it pass?

By Ron Mastrogiovanni Longer life expectancy and a greater need for long-term care are among the issues advisors must address in helping women plan for retirement.

IN THE FIELD 14 A Perfect Match

By Susan Rupe A military spouse turned advisor is helping other military families plan for their financial futures.

LIFE

40 Why Agents Should Be Careful With Aid Planning

INBALANCE

58 3 Ways To Break Up The Day

By Allison Anne Hoyt Where does cash value life insurance figure in when families apply for college financial aid?

INTERVIEW 8 The Hero Of Zero

By Susan Rupe Stretches, breathing techniques and yoga poses can get you away from the computer screen.

ANNUITY

BUSINESS

46 F IAs: The Right Strategies At The Right Time

There’s a tax train coming, and it’s heading straight for your clients’ retirement funds. David McKnight, author of The Power Of Zero tells Publisher Paul Feldman how advisors can keep their clients’ retirement from getting derailed.

By Doug Wolff Current market conditions make many clients uneasy about their retirement. Fixed indexed annuities can be part of a plan to ease their minds.

60 The 3-Part Day, Or How To Avoid Becoming A Workaholic By Mike Walters The pandemic is pushing advisors to think more urgently about the value of their practices in preparation for an accelerated exit.

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InsuranceNewsNet Magazine » December 2020

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WELCOME LETTER FROM THE EDITOR

Time For Heroes

he class had already gathered when the teacher, Ransom Stoddard, entered the room jammed with Latino kids, immigrants, and white and Black farmhands. He asked Nora Ericson, an immigrant, to review what they had previously learned. “The United States is a republic,” she said. “And a republic is a state in which the people are the boss. That means us. And if the big shots in Washington don’t do like we want, we don’t vote for them, by golly, no more.” Then Stoddard moved onto Pompey, a Black ranch hand, to recall the Declaration of Independence, but Pompey could not recall the “all men are created equal” part, so Stoddard reminded him. “I know that, Mr. Ranse, I just plum forgot it.” “That’s all right, Pompey,” Stoddard answered. “A lot of people forget that part of it.” That was a golden nugget inside a jewel of a movie, The Man Who Shot Liberty Valance. I remember absorbing that scene as a kid, even though I was more interested in the battle between Stoddard, played by Jimmy Stewart, and Tom Doniphon, played by John Wayne, over the affections of Hallie, played by Vera Miles. An undercurrent of menace flowed through the movie because of the villain, Liberty Valance, so chillingly played by Lee Marvin. The film is a microcosm of America with all its glories and faults — class, race, gender roles, all of it plays a part. The United States has always had these tensions pulling at the nation. We have risen to our greatest heights because of our diversity, but conflicts arising from that mix bring us down again. We are faced with that challenge pretty much anytime a crisis strikes. The coronavirus outbreak was one of those events that once again exposed the economic inequality that undergirds America. Women were saddled with child care, along with attempting to work in remote or otherwise difficult circumstances with kids. People of color were disproportionately affected by shutdowns and health issues. The country split into two: the haves, who are doing well with a robust equity market and more often the opportunity to continue working 4

remotely, and the have-nots, who have lost work, health benefits and financial assistance when federal and state programs lapsed.

The Plan

The insurance and financial industries have stepped up with impressive statements and have initiated ambitious plans. A particularly ambitious one came from the American Council of Life Insurers, which is primarily a government affairs organization. The ACLI’s plan, The Economic Empowerment and Racial Equity Initiative, focuses on four key areas: » Expanding access to affordable financial security in underserved markets. The life insurance industry is committed to building a more culturally diverse advisor community through recruitment, education and training. » Advancing diversity and inclusion within companies and on corporate boards. Each member of ACLI’s Board of Directors has signed the Pledge for CEO Action for Diversity and Inclusion as part of their commitment to bring meaningful change in the business community. » Economic empowerment through financial education. ACLI will form impactful financial education partnerships, like with the American College of Financial Services’ “Four Steps Forward” initiative, aimed at achieving economic empowerment through financial education. The partnerships will be focused on moving more households out of poverty. » Expanding investments in underserved communities. ACLI will advocate for tax incentives and other state and federal measures that promote investments in underserved communities. These goals are significant, and if the industry gets behind them and makes them reality, it could change America for the better. How often are we given that opportunity? This commitment and others from industry groups and individuals form the silver lining to the dark storm cloud that has been all of 2020. Whatever a person’s political affiliation or ideology, the essential problem of economic inequality is undeniable, and it’s holding back America. It is up to all of us to turn these words

InsuranceNewsNet Magazine » December 2020

into action. Not one of these efforts will solve our problems, but all of us pushing in the same direction will get us out of this bloody, muddy rut.

The Real Hero?

National politics have disintegrated our personal relationships, which have been further split by pandemic restrictions. Every conversation seems to turn into a trigger test — our ears are attuned to certain phrases that indicate whether a person is on our side or the other side. I have been to town meetings where municipal issues turned into arguments that looked like Fox News and MSNBC yelling at each other. Friends and family relationships have been irreparably damaged by these divisions. American public life has been a horror show, but it is not like the zombies turn back into the people we know and love at the end. If we act like we just want the other side to die, then we will all gradually get our wish. So, if these issues have always been with us, how have we dealt with them before in our history? It has been the hard work that made things better. Whether it is fighting the good fights, like the Civil War, or building for the greater good, like the national highway project, these are efforts that require us all to give up something of ourselves for everyone else. At the end of The Man Who Shot Liberty Valance, we learn that it was not Ransom Stoddard who did the necessary deed. It was his nemesis, Tom Doniphon, who shot from the shadows and spirited away, also allowing his love to slip away with Stoddard, the presumptive town hero. Doniphon did it because it was the right thing to do. Stoddard did turn out to be a hero, helping turn their territory into a state and becoming its senator, along with serving in many other roles, all with Hallie by his side. She was by Stoddard’s side as they rode a train out of town and reflected on what made all the progress possible. It was one man’s noble sacrifice, made for love. Steven A. Morelli Editor-in-Chief

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INFRONT

Even More SECURE? SECURE 2.0 seeks to build on the changes in the SECURE Act to expand savings options for retirees, but will it pass? By John Hilton

he surprising SECURE Act success in the waning days of 2019 gave supporters in financial services the confidence to lobby for a repeat. And that explains how SECURE 2.0 came to be introduced by House Ways and Means Committee Chairman Richard Neal, D-Mass., and Committee Ranking Member Kevin Brady, R-Texas, in late October. The bill would build on the changes in the SECURE Act to boost retirement savings options. However, the political considerations have changed greatly from last December to this one. Multiple industry sources say they do not expect SECURE (Setting Every Community Up for Retirement Enhancement) to get signed into law this time. For starters, this was an election year — and a pretty big one. As this issue went to press, the presidential election between challenger and Democratic nominee Joe Biden and President Donald Trump was still unsettled. The good news, if only for the long-term prospects, is that SECURE legislation is 6

one of the few issues of agreement between Democrats and Republicans. “Ensuring Americans have the resources they need for a prosperous retirement is a bipartisan priority — and I’m glad that Chairman Neal and I were able to come together again to build on our work from the SECURE Act,” Brady said. “Our legislation will make it easier for folks to save, protect Americans’ retirement accounts, and give workers more peace of mind as they plan for the future.”

» Offer low- and moderate-income work-

Part II Details

» Create a new incentive for small busi-

Officially known as Securing a Strong Retirement Act of 2020, the latest bill includes the following:

» Allow people who have saved too little to set more aside for their retirement.

InsuranceNewsNet Magazine » December 2020

ers a tax credit for contributions to a 401(k) or similar plan.

» Help people with student loans save by letting employers make retirement plan contributions equal to what an employee pays on their loans.

» Further support the use of annuities

that provide guaranteed lifetime income in retirement. nesses to offer a retirement plan.

Industry trade associations have intensely lobbied for these and other changes. As products and regulations evolve, the line between traditional

“Our legislation will make it easier for folks to save, protect Americans’ retirement accounts, and give workers more peace of mind as they plan for the future.” Committee Ranking Member Kevin Brady, R-Texas

EVEN MORE SECURE? fee-only advisor and commission-based agent is getting blurry. As it relates to annuities, industry leaders say the time has come to remove the barriers to products that can help consumers save more efficiently for retirement. Likewise, there are many arcane rules and tax laws that form a barrier to Americans saving more, say groups such as the Insured Retirement Institute. The COVID-19 pandemic put retirement

the House and Senate and was signed by Trump a day later on Dec. 19 as part of a massive spending bill. While the SECURE Act includes a wide range of things, by far the biggest news for the insurance industry is that it opened the door for annuities to be sold into retirement plans. While companies already can offer annuities in their 401(k) lineups, just 9% do, according to the Plan Sponsor Council of

“The SECURE Act was the first step toward reversing the looming retirement crisis ... Now, the COVID-19 pandemic and its associated economic harm have added to retirement anxiety for millions of Americans.” Wayne Chopus, president of IRI

savers even further behind, said Wayne Chopus, president of IRI. “The SECURE Act was the first step toward reversing the looming retirement crisis where too few workers are saving adequately,” he wrote in an October column. “Now, the COVID-19 pandemic and its associated economic harm have added to retirement anxiety for millions of Americans.”

Surprise Passage

The initial SECURE Act started off strong, cruising through the House by a 417-3 vote on May 23, 2019, then hit a wall. For months and months, the legislation languished in the Senate while other priorities headlined upper chamber business. Just when it seemed the legislation was left for dead, it suddenly reemerged during frenetic December horse-trading. An amended version quickly passed and

America. The SECURE Act aims to boost that figure, and improve retirement readiness, by eliminating companies’ fear of legal liability if the annuity provider fails or otherwise fails to deliver. The act creates a safe harbor that employers can use when choosing a group annuity to include as an investment within a defined-contribution plan, with new provider-selection rules. For instance, the legislation will protect employers from liability if they select an annuity provider that, among other requirements, for the preceding seven years has:

» Been licensed by the state insurance commissioner to offer guaranteed retirement income contracts.

» Filed audited financial statements in accordance with state laws.

“The automatic retirement plan proposal would create 22 million [new retirement accounts].” Kathleen Coulombe, vice president for retirement security and principal deputy of federal relations for ACLI

INFRONT

» Maintained reserves that satisfy all the

statutory requirements of all states where the annuity provider does business.

Rule-Writing Phase

Nearly a year after the SECURE Act was signed into law, the industry has yet to see much impact from it. That can be explained simply: The wheels of government move slowly. Once a law is passed, the bureaucracy still has work to do writing the rules. That is taking place at present. Specifically, two rules are going through the public notice process:

» The SECURE Act requirement that plan

sponsors provide a statement, at least once during a 12-month period, that sets forth the “lifetime income stream equivalent” of the participant’s account balance.

» Another SECURE Act provision allows

for “multiple-employer plans,” meaning small businesses can join together to offer their employees retirement plans. This rule is further along and near final publication at press time. With the bureaucracy moving ahead, industry representatives say they expect to see more actual movement to expand usage of retirement savings products in 2021. The MEP provision alone is expected to create 700,000 new retirement accounts, bill supporters say. In the next round of legislative action, groups such as American Council of Life Insurers want to see a bill requiring employers to offer 401(k) retirement accounts. “The automatic retirement plan proposal would create 22 million [new retirement accounts],” said Kathleen Coulombe, vice president for retirement security and principal deputy of federal relations for ACLI, during the group’s October conference. “So talk about moving the needle, it really could have a big impact on savings.” 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.

December 2020 » InsuranceNewsNet Magazine

INTERVIEW

THE

HERO OF

ZERO DAVID MCKNIGHT SHOWS HOW TO TURN ANXIETY ABOUT THE NATIONAL DEBT INTO A WINNING SALES STRATEGY.

InsuranceNewsNet Magazine Â» December 2020

THE HERO OF ZERO INTERVIEW

avid McKnight’s warning on pending tax increases becomes more undeniable as each passing year throws trillions of dollars on the national debt. The debt clock ticked past $27 trillion this year, with another couple of trillion expected to be added to the pile if another stimulus measure is passed. It is a staggering bill that American taxpayers will be left to cover. At some point, tax rates must increase. Some experts say rates will have to double even to start making a dent in that mountain. With low interest rates expected to stick around for the foreseeable future, retirees will be struggling with little gain and substantial loss in taxes. McKnight’s mission is to save retirees from taxmageddon, a future that he described in his book The Power of Zero: How To Get To The 0% Tax Bracket And Transform Your Retirement and his movie by the same name. He has built a large following of advisors as he has gone on the road preaching his strategy. Lately, he has been based in the tax haven of Puerto Rico, where he has perfected a remote teaching and coaching model in which he can repurpose recorded material to reach thousands more people without the rigors and sacrifice of the road warrior life. His message has only grown more urgent in recent years as he urges advisors to help their clients take advantage of the golden opportunity of historically low rates following the tax cuts of 2017. In this interview with Publisher Paul Feldman, McKnight reveals how advisors can use the tax message as their rallying cry and their killer sales proposition. He also shares tips on how advisors can improve their remote selling game.

FELDMAN: Your book has a really great title, The Power of Zero: How To Get To The 0% Tax Bracket And Transform Your Retirement. Can you tell us how that works? McKNIGHT: You begin with this prem-

ise that a lot of experts believe: Given our fiscal condition in our country, tax rates will be dramatically higher than they are today. It’s the 10,000 baby boomers per

day marching out of the workforce onto the rolls of Social Security and Medicare. Throw in on top of that everything, all the bailouts for COVID-19, I think we’re going to be at $4 trillion by the end of the year. Debt is growing out of control. The cost of renting the money we’ve already spent is only going to grow and compound. A lot of experts are looking at these numbers and saying, “Hey, look, tax rates have to rise dramatically or we go broke as a country.” Yet, when I asked rooms full of people in my speaking engagements all across the country “How many of you think tax rates are going up?,” they raise their hands. “How many of you have the lion’s share of your retirement savings in 401(k)s and IRAs?” Most of the hands in the room go up.

like some experts predict, two times zero is still zero.

FELDMAN: What are your strategies for advisors to take advantage of this? McKNIGHT: I advocate an approach that

calls for multiple streams of tax-free income, none of which show up on the IRS’ radar, but all of which contribute to you being in the 0% tax bracket. So, for example, a typical recommendation might include a Roth 401(k), a Roth IRA, a Roth conversion. Through the Roth conversion, if you can get the balance in your IRA low enough, that will produce an RMD at age 72 that is equal to or less than your standard deduction. And if you can keep your provisional income thresholds low enough, and provisional income, that’s

The premise of the 0% tax bracket is you can reposition your retirement savings into tax-free accounts so you can be in the 0% tax bracket in retirement. What that tells me is that there’s a disconnect between what people think about the future of tax rates and what they’re actually doing about it. The whole goal of the book is, No. 1, to educate people that tax rates are going up. No. 2, to teach them how to shield their hardearned retirement savings from the impact of higher taxes. The premise of the 0% tax bracket is you can reposition your retirement savings into tax-free accounts so you can be in the 0% tax bracket in retirement. You can fund all of your most wild and lavish retirement dreams but still be in the 0% tax bracket. We think the 0% tax bracket is powerful, because if tax rates double

the income the IRS tracks to determine if they’re going to tax your Social Security. If you can keep those thresholds low enough, then your Social Security can also be tax-free. Oh, by the way, I call Chapter 5 of my book “The Life Insurance Retirement Plan.” It is a way, when structured properly, to mimic all of the taxfree benefits of the Roth IRA, without any of the limitations of the Roth IRA. That’s an additional stream of tax-free income that can be leveraged. Really what we’re advocating here is five or six different streams of tax-free income, none of which show up on the IRS’ radar but all of which contributes to your client being in the 0% tax bracket.

December 2020 » InsuranceNewsNet Magazine

INTERVIEW THE HERO OF ZERO

FELDMAN: Is now a good time for doing Roths and converting to Roths? McKNIGHT: It’s a historically good time.

With the Tax Cuts and Jobs Act of 2017, that inaugurated an eight-year period of historically low tax rates. So how is this story going to end for most Americans? Well, so long as they take advantage of the now six years of remaining historically low taxes, and get those tax-deferred assets, systematically repositioned to tax-free, then they get to determine how much of their hard-earned money they get to spend.

FELDMAN: How do advisors spread this gospel? What are ways to do that today in a world where people aren’t going to seminars and aren’t responding to direct mail like they once did? McKNIGHT: First, you have to be educat-

ed on the fiscal issues facing our nation. And once you are convinced of that, you have to find a way to successfully convey that to your clients. They are not going to be anxious or motivated to preemptively pay taxes on all of these retirement accounts if they are not absolutely convinced that tax rates starting in 2026 are going to be dramatically higher and go up from there. There are many ways I think you can do that. We have a movie that we made called The Power of Zero: The Tax Train Is Coming, in which we interviewed all of the experts across the nation. We interviewed former Secretary of State George Shultz, Dr. Larry Kotlikoff of Boston University, Ed Slott, former Comptroller General David Walker, Larry Kotlikoff, Tom Hegna, a lot of the experts in academia. They’re all looking at the same data, and they’re all singing the same song. They’re saying tax rates, even 10 years from now, must go up dramatically or we go broke as a country. So, whether it’s my book The Power of Zero or any of my podcasts, I think there are a lot of resources out there that can be leveraged to communicate this idea to America that tax rates will be dramatically higher in the future than they are today.

FELDMAN: As far as marketing goes, specifically, what are some good strategies that you see working today? McKNIGHT: A lot of people

are obviously doing webinars. But you must have a coherent and cogent message. And I think that that message really must revolve around our country’s fiscal condition. They see that we just borrowed $2 trillion to build half of a bridge across the COVID-19 abyss. And then, we’re going to have to borrow another $2 trillion before the end of the year. They know that tax rates have to go up. This is a real hot button. This is a real trigger for people. No. 2, lay out a strategy that shows them how they can scratch that itch, how they can fix the problem.

FELDMAN: I’ve spoken to a lot of financial advisors and agents. They’re redefining how they do business. Where they used to run an hour one way for a client meeting, they can now do it over Zoom. Do you think clients have adjusted to Zoom? McKNIGHT: We give people the option

of coming into an office or talking over Zoom. What we’re finding is that the appointment ratio is going up; more people are willing to talk to you over Zoom. We’re getting more spouses to appear on these calls than would otherwise come into the office. Because it turns out that the spouse just didn’t want to take the time to leave the office or leave home to go into the office. But they could do everything via Zoom. We have some advisors who do Zoom meetings all day every day. They don’t meet with anybody in an office space. It’s really completely transformed the way a lot of our advisors have done business. And it may be the new reality. We’ll see.

InsuranceNewsNet Magazine » December 2020

FELDMAN: What did you find through your trial and error, what are some of the successful methods of prospecting? McKNIGHT: One of the things that we’ve

done that has been really interesting is my book The Power of Zero. I wrote it in 2015. I self-published it, threw it out on Amazon, and here we are five years later. It sold 250,000 copies and really exceeded all my wildest expectations. But over that five-year period, I’ve noticed that there’s this organic way of generating leads. People will wander onto Amazon, look for a retirement book, find my book, read through it, go to my website, learn more about me, listen to some of my podcasts and say, “Gosh, maybe I need to work with David McKnight.” They’ll call or they’ll email David McKnight, and they’ll say, “Hey, look, I’d love to work with you.” I say, “I’m happy to hand you off to an advisor in your neck of the woods. Are you OK with that?” And 90% of the time, they’re absolutely OK with it. Over the

THE HERO OF ZERO INTERVIEW past six months we have reengineered that whole organic process so that it happens in an automated way. We can drive people to watch a webinar that I’ve created that really is just a shorter version of what I gave to MDRT in 2014. We drive them into a webinar, and then at the end of the webinar, we give them the opportunity to get a free copy of my book. And then they fall into an automated funnel that feeds them Power of Zero content, whether it’s my movie or podcasts or what have you. We nurture them along a six-week automated nurturing campaign that at any point in that campaign, they can raise their hand and say, “Dave, I need help with this, I can’t do this on my own.” At which point, I can hand them off to an advisor. We find that these are the most golden leads that we have ever experienced. Because they made up their own mind after having gone through this journey to meet with us.

FELDMAN: Where do you see advisors most needing to improve today? McKNIGHT: As excited as we are to forge

this new frontier with online webinars, a lot of us don’t know how to sell online. We’re very good in person, but we have yet to understand how all of our touchyfeely, warm fuzzies can be conveyed over a Zoom meeting. And frankly, I think that’s going to come about organically as we have more and more experience meeting with people over Zoom meetings. This is something that every advisor will struggle with, making that transition from being able to close a sale in person to being able to close a sale online. It’s just not the same. We have advisors that do it very, very well. But we have advisors who are excellent in person but don’t have the ability to marshal that same effectiveness over the internet.

FELDMAN: Do you recommend advisors use video or a combination of video and PowerPoint slides for meetings? McKNIGHT: When we did our live

meetings, we were very big on using whiteboards. We would put three buckets up on the board — your tax, your

tax-deferred or your tax-free. We would situate the clients’ assets within those buckets so they could see what weight they had in tax-deferred investments versus tax-free. We found that was very effective in person, but it’s also very effective over a Zoom meeting. There are many free resources out there that people can use. There’s one called sketchbook.com, where you can download software that allows you to use a whiteboard that you can share over a Zoom meeting. It allows you to put the buckets up there. It allows you to draw on the buckets so that you can convey the sense of money flowing from tax-deferred to tax-free, and paying taxes along the way. So, that is a resource that all of our advisors use. And it’s part of every single meeting that they hold with these clients and prospects because it helps them visualize where their money sits and the type of tax liability they could be facing moving forward. People love the whiteboard. People are very visual. And it’s not enough to just talk to people; you have to show them pictures. And the technology that can be leveraged these days absolutely allows us to show that. I’ve developed PowerPoints over the years. It’s basically the PowerPoint version of the presentation that I give in my live presentations. I’m going through the PowerPoint, but then the little video of me, the little video box, I’m in the lower left-hand corner so people can see me. I’m not a huge fan of where you have this nameless, faceless voice narrating in the background. I think people want to be able to see who’s talking to them. So, have that video image of you in the lower left-hand corner as you’re going through the PowerPoint. I think that if you have an engaging style, and you’ve got a great script and a great presentation, it can be very, very effective.

FELDMAN: What do you see as the biggest opportunities in this market? McKNIGHT: It’s twofold. I think that

No. 1, obviously, we have this window of opportunity within which to take advantage of historically low taxes. When that window slams shut, it’s slammed shut forever. We will never, in our lifetime,

December 2020 » InsuranceNewsNet Magazine

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INTERVIEW THE HERO OF ZERO

FELDMAN: With direct mail, have you seen response rates double or increase now that there’s so much less competition in the mailbox? McKNIGHT: It’s hard to get a

This is something that every advisor will struggle with, making that transition from being able to close a sale in person to being able to close a sale online. It’s just not the same. experience tax rates as low as we will over the course of the next six years. The other window is to really get your virtual game on. You have the ability to create some of these evergreen webinars that can play perpetually. You can set them up on a Facebook campaign that drives people into that virtual classroom where that webinar is given. You don’t even have to be present. That webinar can be showing 24/7 and can drive people into a funnel that nurtures them all along the way, so that they only end up speaking to you when they’re good and ready to speak to you. All you have to do is sit back and watch the leads roll in if you have created the right type of a system. If you can set up an automated campaign that runs on autopilot, you can dramatically increase the efficiency of your practice by creating leads without having to put forth all of the traditional effort that you historically had to put into it. 12

FELDMAN: You have mentioned Facebook for generating leads. Does that work for you? And what other platforms should people be looking at? McKNIGHT: Believe it or not, we’ve also

had a lot of success with direct mail. A lot of people think direct mail has gone the way of the dodo bird. We love it because, particularly during COVID-19, a lot of businesses were not sending out mail. So people would open up their mailbox, they’d see our mailer, and that was it. We’ve used mailers to drive people to a virtual classroom with great success. Mailers are great because you can really target surgically the financial profile that you’re looking to get in front of. Facebook is OK, but you can’t target Facebook after Cambridge Analytics. They cracked down a couple years ago, and you lost the ability to really laser-focus their target on who they’re exposing your ads to.

InsuranceNewsNet Magazine » December 2020

measuring stick on it. We have a lot of campaigns. And our campaigns are designed to be successful over a long period of time because we might have a mailer that drives someone into our cylinder or our funnel. Our funnel is a six-to-eightweek process, where we are feeding them content over the course of that six to eight weeks, knowing that we have early adapters, middle adapters and late adapters. So, it’s really hard to tell how successful those mailing campaigns have been, because we have people that are raising their hand at every single point in that process.

FELDMAN: What are you seeing from the people who are most successful and the least successful? What are they doing differently?

McKNIGHT: The most successful ones have systems where they do the same thing just about every time, and they shepherd people through a sales process that’s very predictable, that proceeds along at a certain clip. And they know exactly what they’re going to say at each point in that sales presentation or during that process, that consultative process. The ones who aren’t as successful are going into it blindly. And they’re saying, “I’m not sure what I’m going to say to this person, but I’m just going to start the Zoom meeting and hope all goes well.” So, I think it’s very similar to the successful people who conduct their meetings in person versus those who aren’t successful. You must have a system, you must have a sales process, and it must be repeatable. And the people have the sense that you know what you’re doing, and that they’re being shepherded through a process that you’ve been down before.

THE MILLIONAIRE MINDSET INTERVIEW

Inside the greatest hive mind in the history of insurance

ine months ago, most insurance and financial professionals, like the rest of the world, panicked. No face-to-face meetings. No personal contact. Little production. The future of the industry — a people industry — looked grim for producers. Many scoured the net, turning to whomever they could for advice, tips and tricks. But their results would be hit or miss. There is one group that, although facing the same restrictions, experienced a far smoother transition with little to no drop in production. Take one look at the traffic spikes on the Million Dollar Round Table (MDRT) Resource Zone — home of volumes of videos, articles and presentations seemingly instantly prepared for this scenario — and you will understand why. Rather than panic, members of this group sought refuge and found clarity, focus and solutions from each other. It’s no surprise. The ability to freely share and exchange information, ideas and strategies with fellow high producers has been

successful producers things like how to work with clients virtually, how to hold more effective Zoom meetings and how to counsel people through Zoom. And the advice spans the world.” While the sky is the limit, once producers are accepted into MDRT, the organization does have minimum production requirements — requirements that typically increase every year. But that doesn’t mean they’re not looking for more members. “We’re always looking to grow our organization. Our goal is to elevate the capabilities of every producer in the field. The more successful members we have, the more ideas they can share with each other and the more successful everyone becomes,” Scritchfield noted. “And over the coming year or two, we’re drastically ramping up the already vast digitalization of our organization.” To help those aspiring to meet MDRT’s production requirements, the organization has created the MDRT Academy, a user-friendly digital platform that curates applicable resources, exclusive content and know-how. It has also rolled out a new Mentoring Program, complete with online matching, so agents and

“We’re always looking to grow our organization. Our goal is to elevate the capabilities of every producer in the field. The more successful members we have, the more ideas they can share with each other and the more successful everyone becomes.” — Randy Scritchfield, MDRT first vice president at the core of MDRT since its inception in 1927, when 32 agents with a drive to learn from each other met at the Peabody Hotel in Memphis, Tennessee. Since then, the level of success producers experience after joining MDRT and the size of its membership base have both taken off. Today the organization boasts more than 65,000 members across the globe. And with the advancements in technology, from email to streaming video feeds, it is quite possibly the most sought-after hive mind in the insurance world. Ask MDRT what their secret sauce is, and they’ll admit that it is the producers within the organization and their camaraderie and willingness to help each other succeed that make it all possible. Randy Scritchfield, MDRT’s first vice president and a 36-year member, said, “One of the great things about MDRT is that our members across the globe are constantly and very actively exchanging ideas and information with each other. What MDRT does as an organization is facilitate a central meeting point, either online or [through] in-person groups, and curate that information and organize it to be easily distributed to members seeking it through our website, apps and other means. “And lately, over the past nine months, the biggest conversations and ideas shared are ways to serve clients in this virtual world we are in,” Scritchfield continued. “Producers are learning from other

advisors — even those just getting started in the business — can get on the fast track to joining MDRT’s network. One of the biggest keys to helping agents understand their evolving client base is providing them with up-to-date research tools and reports that dive into the minds of their prospects and clients. In MDRT’s latest Annual Trends Report, for example, you’ll discover how people today perceive the role technology should and should not play when it comes to insurance and financial planning.

Easily digestible and full of insights, questions to ask on appointments, and tips to help agents write more now, this powerful report is currently available to any producer by visiting mdrtreport.com.

December 2020 » InsuranceNewsNet Magazine

717.441.9357

www.InsuranceNewsNetMagazine.com

the Fıeld

A Visit With Agents of Change

A PERFECT

MATCH

A firm that needed a special type of financial planner found just the right person when they hired this military spouse turned advisor.

By Susan Rupe

he partners at Redeployment Wealth Strategies were on a group planning call with fellow members of the XY Planning Network when they realized they were at a point where they needed to bring an additional member into their team. But they didn’t want to bring in just anyone. The Virginia Beach firm was founded by two Navy retirees who serve a clientele made up entirely of military and veteran families. They needed someone 14

who had lived the military life and knew the unique financial challenges faced by military families. The XY network is an organization of fee-only financial advisors who are focused on working with Generation X and Generation Y clients. Someone in the network said they had an intern at their firm who would be the perfect fit for Redeployment Wealth — Izumi “Izzy” Carnes, a U.S. Marine Corps wife who had experience working with service members and their families.

InsuranceNewsNet Magazine » December 2020

“She fell into our lap, and she was the perfect match for our firm,” said Sean Gillespie, Redeployment Wealth Strategies co-founder. Carnes started working at the firm in May. At age 42, Carnes is starting her career in what she calls her dream job. She is studying for her Certified Financial Planner designation at the same time she is working toward her degree in personal finance from Kansas State University. The Financial Planning Association awarded her a 2020 Diversity Scholarship to attend the organization’s digital annual conference. Carnes is working 20 hours a week at Redeployment Wealth, doing paraplanning and administrative work — “backoffice, operational stuff while I study toward my CFP and my degree from Kansas State.” She is working and studying remotely from her home in New Bern, N.C. “She is an exceptionally quick study,” Gillespie said. “She has the right skills in place to serve our clients, because we built the firm to serve members of the military. She has high emotional intelligence, and she has the right character.” Gillespie said he wants Carnes to prioritize her education while she learns the back-office part of the business and eventually begins working with clients. “At some point, we’ll see whether we are able to give her more hours. But even now, we can see that she is exceeding our wildest expectations.”

Homesickness Leads To Purpose

Carnes was born on the Japanese island of Okinawa and was studying to be a language teacher when she met and married her husband, Samuel, a U.S. Marine stationed there. In 2005, he transferred to the Marine Corps Air Station Cherry Point in North Carolina and brought Carnes and her son, Nathan, with him. Her first months in the United States were lonely. She experienced some racial hostility when she and her husband were seen together outside the military base. Her husband was at work all day, and her son was in school. And it took two months for their furniture to arrive from Okinawa. “I started to go crazy. I was so homesick. I didn’t know anybody, and I didn’t have any friends,” she said. But things started to turn around for her

A PERFECT MATCH IN THE FIELD

Photo credit: Dagmar Jones

when she saw an ad in a local newspaper. “It said that the NavyMarine Corps Relief Society was looking for volunteers. I went there, and they welcomed me with open arms. I finally felt like I belonged.” The society provides financial, educational and other assistance to members of the Navy, their family members and their survivors who are in need. After volunteering for more than 2,300 hours with the society, Carnes was encouraged to take advantage of a military spouse scholarship to obtain a credit financial counselor’s certificate. She completed the required training and became a paid financial counselor for the society.

Izzy; her son, Nathan; schnauzer Mina; and husband, Samuel, live in New Bern, N.C., which features a bear sculpture as a landmark.

Serving Those Who Serve

Differences In Financial Systems

She said that experiencing the difference between the Japanese and the American financial systems sparked her interest in finance. Carnes said that when she lived in Japan, using credit cards and taking out loans for anything other than a mortgage were not common practices. “You pay for something in cash and if you don’t have the cash to buy it, you save for it,” she said. She was proud of the fact that she never had used credit — until she and her husband went to a bank in North Carolina to take out a car loan. The loan officer told her she had no credit history, so she could not obtain a loan. “I learned you have to build your credit in order to be a trustworthy client in the consumer world here,” she said. But although she loved her work with the society, she believed there was more she could do to help people with their finances. “In the society, we help service members and their families with basic financial education and assistance in the form of interest-free loans and grants,” she said. “But I wanted to learn more beyond that,

Carnes said that even though she initially was scared about making her career switch, “I am so passionate about what I am doing. My husband has my back, I have a great support system and my employer believes my education comes first.” She described her employers at Redeployment Wealth as “great mentors and teachers.” “They are taking the time to teach me,” she said. “They also teach military veterans who are thinking about transitioning into the financial world, talking to them about what they need to do to pass their exams.”

especially after hearing my mentors at the society talk about studying for the CFP exam.” Carnes had an opportunity to do a virtual internship with BalancePoint Financial Services in California. The firm’s owner knew she was working on her bachelor’s degree while working full time for the society, “but he still gave me a chance to intern virtually,” she said. “After I did that, it validated my decision to change my career. It was amazing what the firm does with comprehensive planning to help people achieve their goals.” “Everybody around me thought I was crazy leaving my full-time job, especially now in the pandemic. But I finally found what I want to do.”

Carnes said she is inspired to help military members and veterans because she understands the unique financial needs of military families. “Some people think the military gets paid a lot of money, but that’s not the case,” she said. “And it’s especially hard for military spouses, because every time we move to a new assignment, unless we have a virtual job, we end up unemployed, and when we try to find a job, we have to compete with the locals.” Many service members join the military right out of high school, Carnes said, and haven’t yet learned financial skills. “So you have someone who — maybe finances were not talked about in their home or in their culture — and now they are away from home and getting a paycheck and they don’t know how to handle that money. They need to know how to budget, how to save.” Carnes has observed several trends among the military families she has worked with. “A lot of people want advice on retiring early,” she said. “And that’s not just the military — civilians also want to know about the FIRE [financial independence,

December 2020 » InsuranceNewsNet Magazine

the Fıeld

A Visit With Agents of Change

Izzy Carnes was honored for her 2,300 hours of volunteering with the Navy-Marine Corps Relief Society, where she helped members of the military and their families with financial issues.

retire early] movement. Some of our younger clients want to make sure they are saving and investing for retirement the right way. They want another set of eyes to check and make sure they are doing it right. We have service members who have started a family and don’t know what they should save for or how they should go about saving. We have a lot of clients who are retired military or they are getting close to retirement, and they want to know whether they are on track for a comfortable retirement.” In addition, clients need help navigating the military and federal retirement systems, which she said can be complicated. Carnes said that after she obtains her CFP designation and her bachelor’s degree, she wants to specialize even more. “I want to learn more about taxes. I think there’s a need in this industry for a planner who is fluent in tax language.” Although Carnes didn’t become a language teacher, she still loves languages. She is studying Spanish and taking classes in American Sign Language. She also loves to knit and crochet and has made 16

numerous baby blankets for service members who completed the society’s Budgeting For Baby course. She also wants to use her experience as a military spouse to advocate for others who are trying to maintain careers and families while being married to a service member. “I have to say to employers out there, don’t pass over a military spouse’s application. Even though they might be with you for only a few years, military spouses are some of the strongest people out there. They are adaptable and resilient, and they can solve any problem you throw at them.” Susan Rupe is managing editor for Insurance NewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

InsuranceNewsNet Magazine » December 2020

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

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NEWSWIRES

Average Credit Score At All-Time High

FICO Scores Moving Up

Average FICO score in 2020 – 711 Average FICO score in 2019 - 706 SOURCE: Fair Isaac Corp.

One unexpected side effect of the COVID-19 pandemic? The average consumer credit score has gone up – for those who are able to save, that is. The Fair Isaac Corp. markets the algorithm used by the three major credit bureaus to determine the FICO credit score. Fair Isaac reported that the average credit score now clocks in at 711, five points higher than a year ago. The FICO score ranges from 300 to 850, and several factors go into determining it. One of the most important factors is a borrower’s credit utilization ratio. What does that have to do with COVID-19? For many families, the pandemic helped them boost their credit scores in several ways. Some used their stimulus checks to pay off debt. Others took advantage of low interest rates to refinance their mortgages and lower their monthly payments. And many saved money by not dining out or traveling. grounds through Sept. 30. Economists said the main reason withdrawal rates are lower than expected is that low-income workers, the most likely to tap a 401(k), are least likely to have one. Overall, about one-third of private-sector workers — mostly in the fast-food, retail and gig-economy segments — don’t have access to a workplace retirement-savings plan.

MOST AMERICANS LEFT THEIR 401(K)S ALONE

HOUSEHOLD SPENDING CREEPING UPWARD

In March, Congress gave Americans the option to raid their 401(k) accounts if they needed to access funds during the pandemic. But despite COVID-19’s financial toll, few American households withdrew money from their 401(k)s to help make ends meet. That was the word from Fidelity Investments, the nation’s largest 401(k) provider. Fidelity saw 4.6% of eligible people take some money out through Sept. 30 due to COVID-19. An additional 1% have taken a hardship distribution that allows withdrawals for reasons including buying a home, preventing foreclosure or paying medical bills. That is compared with about 2% a year who typically take a hardship distribution. Vanguard reported 4.5% of eligible people in retirement plans it administers took money out due to the crisis and 1.5% did so on hardship DID YOU

KNOW

U.S. households increased their spending for the fifth consecutive month in September, helping pull the economy out of the hole the pandemic created in March. What are they buying? Autos, clothing and footwear spending was up in September, continuing a trend of spending due to pent-up demand from pandemic-related economic disruptions. Spending on services was up 1.1% from August to September, with households spending more on health care, fitness and entertainment. Despite the recent rise in household spending, JPMorgan

QUOTABLE We really are still very much in the disaster relief stage. — Nobel Prize-winning economist Paul Krugman

Chase showed consumers are spending overall at lower levels than during the same period in 2019, led by lower spending on services such as travel, entertainment and restaurants. A track of credit card and debit card transactions showed that spending was down 5.2% more in the week ending Oct. 25 than it was during the corresponding week in 2019.

WEALTH TRANSFER? WHAT WEALTH TRANSFER?

Much h a s b e en s a id and written about the expected $68 trillion wealth transfer as baby boomers leave their wealth to the next generation. But the COVID-19 financial crisis could evaporate some of that wealth, accord i ng to the Center for the New Middle Class. This year’s spike in unemployment hit boomers especially hard, and fewer of them have retirement accounts, the center said. Even wealthy boomers with prime credit ratings could feel the pinch, with 38% of those saying they have retirement accounts, down 45% from last year. Adding to the financial pain is that boomer business owners who might have considered selling before the pandemic may find that it’s now too late to sell at the price they hoped. So they either need to switch course or otherwise change their business model to keep the doors open.

The U.S trade deficit fell in September after hitting a 14-year high in August. Source: LIMRA Source: U.S. Department of Commerce Source: National Association for Business Economics

InsuranceNewsNet Magazine » December 2020

COVER STORY

After THE

Fever

the The life and health industries got pastcri emergency phase, but conditions are still tical

OVID-19 would claim many victims over 2020; one of them was the life insurance industry. And the patient is still convalescing. The industry is healing the same way it does most things — slowly. After reacting to the direct effects of the pandemic, carriers and distributors are dealing with the chronic condition of low interest rates. The life insurance market itself is reviving as the entire product chain learns to onboard tech in a hurry, elevating those savvy enough to take up those tools and leaving behind those who do not. Annuities are particularly vulnerable to the scourge of low interest rates. Simple products are not doing well. Consumers are loath to take on immediate annuities at historically low rates. The

winners are the ones promising some accumulation, with registered index-linked annuities a lone standout. The health insurance industry actually did OK this year, largely because people did not seek as many medical services other than for urgent needs. Health insurers are prepping for those who deferred health care needs to show up for services in 2021. The end of this year finds the span of the life/health industries in the middle of an epic realignment. Companies, distributors and sellers say they have absorbed the lessons brought by the pandemic and are ready for what’s next. In this three-article feature, we will be looking at how they have reacted to this year’s challenges. — Steven A. Morelli

Life Insurance

Annuities

Health Insurance

PAGE 21

PAGE 23

PAGE 26

The COVID-19 pandemic throttled sales figures, sent insurance executives scrambling to activate emergency financial plans, and spurred product development and delivery changes all along the distribution chain. But as the year winds down, the life insurance industry is better off in some ways than when it began.

InsuranceNewsNet Magazine » December 2020

The fourth quarter brought painful news as producers were laid off across the industry. In that realignment, carriers are innovating products to rely less on attractive rates and more on features and index-linked accumulation.

Even though health insurers picked up the tab for COVID-19 testing and treatment, the pandemic led to record profits for many health insurers because pandemic-related restrictions and fears kept many policyholders from health facilities. How quickly will they come back in 2021?

AFTER THE FEVER

COVER STORY

Life Insurers Regain Footing After Shaky 2020 Sellers are learning how to operate in a remote environment while carriers restructure products.

nsurers entered 2020 believing that the new principles-based reserving rules would be the biggest disruption of the business of life insurance. Oh, how little they knew what was to come. The COVID-19 pandemic throttled sales figures, sent insurance executives scrambling to activate emergency financial plans, and spurred product

» Technology. The pandemic threw those long-discussed technology plans into overdrive. Virtual meetings, accelerated underwriting and e-signatures are some ideas that gained widespread traction in the industry. » Life insurance demand. Perhaps not surprisingly, the pandemic proved better than the best marketing campaign. Interest in the product is very high, and gains are being seen in the coveted age groups. » Favorable regulation. Rulemaking did not stop in 2020, and regulators approved key life insurance rules that industry groups find acceptable. The news is not all great, of course.

Levenson, CEO of LIMRA, LOMA and LL Global. “Frankly, it was hard at points to separate low rates from some of the COVID knock-on effects,” Levenson said. “So, we really tackled it all.”

development and delivery changes all along the distribution chain. But as the year winds down, the life insurance industry is better off in some ways than when it began. For three reasons in particular:

Interest rates plunged as the economy went south and remain near historic lows. Insurers are planning for rates to remain low for at least the next couple years. The issue is an example of how the industry came together, said David

Insurers had three years to adapt to PBR, but many waited as long as possible. The National Association of Insurance Commissioners adopted PBR standards in June 2016. At the time, Fitch Ratings forecast that “level-premium term and

By John Hilton

New Reserving Requirements

The year kicked off with insurers having to meet new principle-based reserving, or a modeled approach to statutory reserves. Canada and some European countries previously moved from formula-based reserving to PBR. The old way proved ineffective once insurers began developing more complex product designs.

December 2020 » InsuranceNewsNet Magazine

COVER STORY AFTER THE FEVER universal life insurance with secondary guarantees are expected to be most affected.” Fitch expected that large insurers would be more able to adopt PBR, “particularly those that write significant amounts of term insurance, while ULfocused companies will likely move more slowly.” The first quarter was winding down when the pandemic hit with full force, shutting down or curtailing regular life for weeks. Insurers reacted swiftly to restrict life insurance sales to older consumers. Prudential is the only insurer known to have completely pulled a product, suspending all sales of its 30-year term offerings in mid-April. Those products

“People were locked up in their houses and not buying insurance because you couldn’t see anyone face-to-face,” noted Sheryl Moore, CEO of Moore Market Intelligence. “Life Insurance has been hit a lot harder and in a lot stranger ways than annuities have.” Insurers were forced to adapt and adapt quickly. Many insurers increased the face amounts of policies they would issue without a medical exam. Others accepted electronic health records. And seemingly every insurer boosted its website application and communication capability as business flooded to online exchanges. “We came out with things that were a lot more customer-centric maybe more quickly than we would have otherwise,”

returned to the market in mid-July, along with some significant rate changes. Insurers have said rate increases are enabling them to survive financially in an extreme low-interest-rate environment.

Levenson said. “That ranges from a suite of digital tools to extended use of accelerated underwriting to other uses of technology.” The acceleration is pushing the industry closer to what Levenson called an ideal client experience with digital tools, such as the expansion of automated underwriting and electronic delivery of policies. Those are some welcome changes, with the momentum for more going into 2021, he said. “I think financial advisors and agents have become better users of technology and communicating with their clients,” Levenson said. “That creates an efficiency that is good for the customer and is good for our industry.”

‘Hit A Lot Harder’

By the end of summer, the industry recognized a sharp uptick in life insurance interest from the coveted under44 age group. According to the MIB Life Index, life insurance application activity increased 4% through the third quarter, a return to “pre-pandemic normal levels.” The third quarter experienced the largest quarter-over-quarter gain since 2011, at 9.2%, MIB said, driven primarily by 12.8% growth in 0-44 age group and 9.2% growth in the 45-59 age group. But application activity to completed sales remained a difficult step for many insurers. 22

Rule Changes

Rules are constantly changing, and

InsuranceNewsNet Magazine » December 2020

COVID-19 did not stop that process. The NAIC approved a significant rule update this fall that will change how indexed universal life policies are sold. The newly named Actuarial Guideline 49A requires that IUL designs with multipliers or other enhancements should not illustrate better than nonmultiplier designs. Also, it permits the IUL illustration crediting rate to be 50 basis points higher than the policy loan rate, down from 100 basis points. The original AG 49 was adopted by the NAIC in 2015 to rein in IUL illustrations that were showing consumers unrealistic returns. Critics say insurers almost immediately got around the new rules by offering IUL bonuses and multipliers. IUL has been a strong seller for insurers and agents. Regulators vowed to keep a close eye on sales practices and did not rule out reopening the new AG 49A should they see abuses resume. Despite the rocky year, life insurers see better days ahead. Low interest rates are likely to persist, but the public is rediscovering the value of life insurance and what it means for families. A record number of Americans (41%) say they have “extreme” or “quite a bit” of confidence in life insurers, LIMRA found in a recent survey. Confidence in financial professionals also hit a new high, with 33% of consumers saying they have this level of confidence in insurance agents and brokers and 37% when it comes to financial advisors. “Other research we have done throughout the pandemic has shown how much insurers and financial professionals have done to adapt and offer digital solutions to help their customers virtually when they couldn’t meet faceto-face,” said Alison Salka, senior vice president and head of LIMRA Research. “I think these efforts, combined with the growing understanding of the value of life insurance, have increased consumers’ awareness of our industry and the people who work in it.” 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.

AFTER THE FEVER

COVER STORY

Constant Drip Of Low Rates Deteriorates Annuity Distribution Sales drop across products except registered index-linked annuities.

By John Hilton nnuity sales fell as COVID-19 spread in 2020, and the year is ending with products and the people who sell them staring at painful transitions. The obstacles to selling in person were in addition to historically low interest rates, which do not allow for appealing products based on rates. As this issue went to press, third-quarter sales figures showed a small rebound from the devastating second quarter. Total annuity sales were $54.8 billion in the third quarter, up 13% from the second quarter, but down 8% from 3Q 2019, according to preliminary results from the Secure Retirement Institute.

Those numbers masked deeper problems, with too many low-rate products unsuited for the uniquely fragile economy and a dwindling sales force hamstrung by the pandemic and unneeded by slimmer distributors. “Insurance companies have had to adjust dramatically to accommodate COVID,” said Sheryl Moore, CEO of Moore Market Intelligence. “Their sales are down, and it’s like, ‘We’re not able to make up for what we’re losing.’ And I’m concerned about that. Because when people aren’t able to make it paycheck to paycheck, it’s going to hit their retirement savings. And that’s what we’re seeing.”

Painful Downsizing

The fourth quarter brought painful news as producers were laid off across the industry. Among insurers, Pacific Life, MetLife, Transamerica, Lincoln Financial and others trimmed hundreds of employees.

Independent marketing organizations and wholesalers also laid off producers, Moore said. Many of them might have trouble getting back in the door, she added. “Everybody’s transitioning to working virtually, and if you can do the wholesaling thing by Zoom, why the heck do I have to pay you a couple hundred thousand dollars a year to go out and spend my money on expensive dinners with distribution groups if I could pay a guy to just sit here in the office and do Zoom and get the same results?” Moore asked. The industry downsizing in response to the pandemic-scarred economy is likely to continue through the holidays, she added. “That’s really scary for the industry,” Moore said. “And it’s scary for Des Moines, or Indianapolis, or Omaha and Hartford. Any big insurance hub in the United States could see an increase in their unemployment rates.”

December 2020 » InsuranceNewsNet Magazine

COVER STORY AFTER THE FEVER

Fine Start

The year started off well, with many annuity products selling well. Variable annuities rose 16% in the first quarter, the fourth consecutive quarter of sales increases. But the 10-year Treasury rate was already falling, entering the year at about 1.9%. Products like fixed-rate deferred and indexed annuities fell along with interest rates. The first case of COVID-19 on Jan. 21 made few big headlines. By mid-February, the pandemic was taking off worldwide, and the Federal Reserve funds rate bottomed out at 0.50% on March 9. Tanking rates meant insurers took a double-barrel shot. The guarantees on inforce books are substantially higher than bond rates, a drag on profitability. In addition, insurers are making a far less return on their safe investments. As the months of low rates and poor sales dragged on, insurers sought out de-risking partners to take some of their annuity blocks. In one of the bigger deals, Athene Holding agreed to fully reinsure $27.6 billion of Jackson National’s in-force

“In this economic environment, RILA products are very attractive to investors seeking downside protection with greater growth potential.” Todd Giesing, senior annuity research director, SRI Through three quarter, RILA sales were $15.8 billion, up 26% from 2019 results. “In this economic environment, RILA products are very attractive to investors seeking downside protection with greater growth potential,” said Todd Giesing, senior annuity research director, SRI. “In addition, we are seeing more carriers enter the RILA market, also spurring RILA growth.” The RILAs, or “structured annuities,” as Moore calls them, give the buyer a chance to do better than a fixed-income vehicle, while sidestepping some of the risk that comes with a variable annuity. “Structured annuities are going to continue to experience sales increases just because fixed and indexed annuities have

“Structured annuities are going to continue to experience sales increases, just because fixed and indexed annuities have been affected adversely by the pricing environment.” Sheryl Moore, CEO of Moore Market Intelligence book of fixed and fixed index annuity liabilities in exchange for approximately $1.25 billion in ceding commission. AIG went one step further in a shocking October announcement that it will spin off its life and retirement business into a separate company, a move reminiscent of MetLife peeling off its life/annuity business, which became Brighthouse Financial.

‘Very Attractive’

As the third-quarter sales numbers showed, just one annuity design has widespread attraction for consumers now — registered index-linked annuities. RILA sales jumped 33% to $6.4 billion in the quarter, the 23rd straight quarter-over-quarter growth for the product. 24

been affected adversely by the pricing environment,” Moore said.

Warming Up

One place annuities could see some growth is with fiduciary advisors. Prejudices against annuities in the advisory world are fading, and firms such as DHR Investment Council in the San Francisco area are turning to guaranteed income to counterbalance a client’s securities portfolio, said Shannon Stone, financial planner, advisor and operations manager at DHR. “Up until a few years ago, I was pretty negative on annuities,” Stone said during an October webinar hosted by DPL Financial Partners. The problem with the advisors’

InsuranceNewsNet Magazine » December 2020

traditional investment-only retirement plan is that it often leads to advisors telling clients they need to spend less than they had planned. “Behaviorally, it’s not necessarily something that consumers want to be told,” said David Lau, founder and CEO of DPL Financial Partners. “And the other thing is, it’s IF you can spend less. You know, spending is not always in the control of the retiree.” Lawmakers are trying to help the pro-annuity trend. The year started with the newly passed Setting Every Community Up for Retirement Enhancement (SECURE) Act, which removes some of the barriers to annuities inside 401(k)s and other retirement plans. The act creates a safe harbor that employers can use when choosing a group annuity to include as an investment within a defined-contribution plan. With a minimal amount of gatekeeping, a plan sponsor can add an annuity option, which doesn’t have to be the lowest-cost option, to a plan with little liability. A SECURE II bill was introduced in late October and would build on the first piece of legislation. Eventually, there is a route out of the darkness, Moore said. Once the pandemic subsides and is better controlled, annuity sales should bounce back in lockstep with the overall economy, she said. “We’re eventually going to see a great rebound,” Moore added, “and even maybe some extra annuity purchases that we didn’t have before because people are saying, ‘I need to catch up because I took so much out.’ I just don’t think we’re there yet.” 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.

AFTER THE FEVER

COVER STORY

Thrivent offers opportunity for growth, driven by purpose

espite the turmoil of 2020, one financial services organization — Thrivent — is doubling down on efforts for growth. Thrivent is a Fortune 500 diversified financial services organization that offers holistic products and solutions for advice, investments, insurance, banking and generosity. But Thrivent has long been a “best kept secret,” and it’s on a mission to change that. Thrivent relaunched its brand this summer and began a significant advertising campaign. It’s also making strategic investments to provide best-in-class support, tools and capabilities that help financial professionals grow their practices and serve more clients. All these efforts are driven by purpose — Thrivent wants to help people align their deeply held beliefs, values and goals with their decisions around money.

A life of meaning and gratitude

support, ongoing training, and access to a suite of technology tools and marketing programs to help them build their practices. These financial professionals receive industry-leading benefits and unlimited income potential. For investment advisor representatives seeking the freedom that comes with owning their own practice, while desiring the human connection and support of being a part of a community of purpose-driven professionals, Thrivent recently launched its hybrid Registered Investment Advisor (RIA) platform, Thrivent Advisor Network. It is positioned to serve as a significant partner to advisors looking to expand their capabilities and build equity in their business.

“Thrivent financial professionals can build a practice that focuses on holistic planning and building long-term relationships with clients while having the products, programs, tools and support needed to serve their clients well.”

Thrivent believes humanity thrives when people make the most of all they’ve been given. Those aligned with the firm are driven by the promise to help clients achieve financial clarity so they can understand where they are today, where they want to be in the future and the path needed to get there. This means helping everyone they work with achieve lives full of meaning and gratitude. It’s a unique approach that ultimately leads to long-lasting relationships built on trust and deep levels of career fulfillment for financial professionals. Backed by one of the — Mary strongest capital positions in the industry, an A++ (Superior) rating from AM Best (its highest rating, June 2020) and more than $152 billion in AUM/AUA (as of December 2019), this purpose-driven approach to financial guidance is why Thrivent also holds the strongest agent retention rate in the industry, as reported by LIMRA in 2019. Ask those working with Thrivent, and they will say that being here allows them to connect with their clients in ways they simply couldn’t elsewhere.

Purpose, products and industry-leading support

While Thrivent’s clients believe money is a tool to achieve a life of meaning rather than an end in itself, its financial professionals are equipped with a broad array of competitive products, programs and services that cater to everything from purpose-based advice to banking, investments, insurance and generosity. Those joining Thrivent’s 2,500+ proud financial professionals through its Career Network are seamlessly guided with veteran

Jane Fortin, chief commercial officer And for those licensed individuals looking to work with clients over the phone, there’s the Thrivent Financial Guidance Team, which helps clients meet financial goals by recommending and implementing insurance and investment solutions through a 100% phone-based distribution channel.

For more information regarding how Thrivent can help you and your clients live a life full of meaning and gratitude, visit Thrivent.com/careeropp.

Rating based on Thrivent’s financial strength and claims-paying ability. Does not apply to investment product performance. RIA investment advisory services offered through Thrivent Advisor Network LLC, a registered investment adviser and a subsidiary of Thrivent. Thrivent is the marketing name for Thrivent Financial for Lutherans. Insurance products issued by Thrivent. Not available in all states. Securities and investment advisory services offered through Thrivent Investment Management Inc., a registered investment adviser, member FINRA and SIPC, and a subsidiary of Thrivent. Licensed agent/producer of Thrivent. Registered representative of Thrivent Investment Management Inc. Advisory services available through investment adviser representatives only. Thrivent.com/disclosures.

December 2020 » InsuranceNewsNet Magazine 3295527

COVER STORY AFTER THE FEVER

Health Insurance Emerges Surprisingly Healthy For 2021 Americans stayed away from health facilities for noncritical needs, but those needs are not going away.

By Susan Rupe ealth insurance experienced a bounce-back year in 2020 — in terms of profitability and in terms of participation in the Affordable Care Act marketplaces. Even though health insurers picked up the tab for COVID-19 testing and treatment, the pandemic led to record profits for many health insurers in the first half of 2020. Why? Because pandemic-related restrictions and fears kept many policyholders from undergoing expensive elective surgery and caused them to postpone things such as annual physical examinations and preventive health screenings. But those record profits appeared to level off by the third quarter as consumers returned to the doctor in numbers closer to normal.

UnitedHealthGroup, parent company of the nation’s largest health insurer UnitedHealthcare, registered its most profitable quarter in history in the second quarter, with $6.6 billion in profits, according to an analysis of company financial data from FactSet. But the third quarter told a different tale with net income of $3.17 billion, compared with $3.54 billion in the same three-month period in 2019. Likewise, Anthem, which operates Blue Cross and Blue Shield plans in 14 states, had a stunning second quarter, with its profits doubling to $2.3 billion. But that was followed by a drop in 3Q income, as expenses grew despite an increase in revenue from higher premiums. Humana followed suit, with its 2Q income more than doubling to $2.6 billion. Cigna’s 2Q net income rose to $1.8 billion in 2Q, an increase of $400 million over the year-ago period. What impact did COVID-19 have on the Affordable Care Act marketplace? Kaiser Family Foundation looked into it

and found that rate filings among insurers planning to offer ACA coverage for 2021 considered COVID-19 costs in determining their premiums for the coming year. The most common factors that insurers cited as driving up health costs in 2021 were the continued cost of COVID-19 testing, the potential for widespread vaccination, and the rescheduling of medical services delayed from 2020. At the same time, many insurers expect health care usage to remain lower than usual next year as people continue to observe social distancing measures and avoid routine care. In addition, record-high unemployment is forcing millions of workers off their employer-based plans and into the ACA marketplace, America’s Health Insurance Plans reported. A number of health insurers jumped ship from ACA plans a few years ago after seeing huge losses resulting from higher-than-expected claims. But more recently, some insurers have concluded that Obamacare is a safe and stable

Average Numbers of Insurers Per State, 2014–2020

Source: Kaiser Family Foundation analysis of data from Healthcare.gov and a review of state rate filings

InsuranceNewsNet Magazine » December 2020

AFTER THE FEVER

COVER STORY

Average benchmark plan premiums on the ACA exchanges started creeping downward after reaching highs in the 2018 and 2019 plan years. PY17

PY18

PY19

PY20

PY21

PY19– PY20 Change

PY20– PY21 Change

PY17– PY21 Change

Average Benchmark Plan Premium 27-Year-Old

$300

$411

$406

$389

$379

-4%

-2%

27%

Family Of Four

$1,092

%1,590

$1,591

$1,524

$1,486

-4%

-2%

36% Source: CMS

business, in part because people with preexisting conditions have guaranteed access to coverage under the ACA. UnitedHealthcare announced it would reenter the marketplace in 2020, while Anthem and Cigna continued to increase their reach this year. The wave of newly jobless Americans is providing a new market for insurers that want to serve them through the ACA marketplaces. “The puck is going to those places,” Kathy Hempstead, a health insurance expert at the Robert Wood Johnson Foundation, said in a recent Politico report. “That whole [employer] sector is shrinking. You have to go where people are going.” Kaiser found insurers serving the ACA market saw continued profits last year, and that there were no signs that the elimination of the law’s individual mandate, which took effect in 2019, led to a widespread exit of healthy customers. Obamacare plans typically can charge high deductibles and copays and count on paying out less in claims for all but the sickest patients, Kaiser said.

ACA Marketplaces: More Issuers, More Stability

The Obamacare marketplaces turned seven years old in 2020, and this year was marked by more choices and lower premiums in much of the ACA world. As enrollment for 2021 opened in November, consumers saw more carriers in the marketplace and premiums expected to stay somewhat level. “It’s the third year in a row with

premiums staying pretty stable,” Louise Norris, an insurance broker in Colorado who follows rates nationwide and writes about insurance trends, told Kaiser Health News. “We’ve seen modest rate changes and an influx of new insurers.” The last major wave of ACA premium increases came in 2018, after the Trump administration cut some payments to insurers. Twenty-two more issuers will offer coverage in the marketplace, the Centers for Medicare & Medicaid Services reported, bringing the total number of ACA issuers to 181. The average premium for the secondlowest cost silver plan (also called the benchmark plan) dropped by 2% for the 2021 coverage year. Three years of declining average benchmark plan premiums combined to deliver an 8% premium reduction across HealthCare.gov since the 2018 coverage year, CMS reported. But although CMS said the ACA marketplace has stabilized, affordability remains a challenge for many who buy health insurance on the exchanges but don’t qualify for a tax credit to help pay for coverage. The average benchmark plan premium for a typical family of four has increased from $794 in 2014 — the first year the ACA went into effect — to $1,486 for 2021.

Employer-Based Insurance Costs Keep Climbing

Despite massive unemployment, the majority of Americans continue to receive

coverage through employer-based plans. The cost of those plans continued to climb in 2020, as did the share paid by workers and their families for that coverage. Average family premiums rose 4%, to $21,342, in 2020, according to Kaiser Family Foundation. Kaiser’s annual survey found workers on average paid nearly $5,600 toward family coverage in 2020, up from about $4,000 in 2010 and $1,600 in 2000. Despite that modest percentage of increase, Kaiser found the cost of family coverage rose 55% in the past decade — more than twice the pace of inflation and wages. Since 2012, the cost of family coverage has increased 3% to 5% annually. On average, workers pay 17% of the premium for single coverage and 27% for family coverage, the survey found. Workers at smaller companies pay 35% of the premium for family coverage, compared with 24% at larger companies, the survey found. The average annual deductible for single coverage is $1,644 in 2020, up 25% in the past five years and 79% in the past decade. Susan Rupe is managing editor for Insurance NewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

December 2020 » InsuranceNewsNet Magazine

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Financial Security For All: The Finseca Initiative

How to elevate, accelerate, advocate and educate your way to success in the financial security profession

inseca, a transformative professional trade organization, recently launched with the inspiration to bring financial security to all. Although this admirable goal might seem too ambitious to some, the diverse team of experts at Finseca are already proving they have the integrity, knowledge and resources to make the change possible. Marc Cadin, CEO of Finseca, is laying the groundwork for financial security professionals to become a unified force. In this Movers and Shakers Special Interview, we look into how his vision gives back to professionals Marc Cadin, CEO of Finseca and their communities.

Q: What was the need identified that fueled the creation of Finseca?

There was a noticeable disconnect between the internal perception of the financial security profession and the public perception of the profession. Finseca is built with four pillars in mind — Elevate, Accelerate, Advocate and Educate. We united the profession to advance these critical goals.

Q: What types of benefits will financial professionals find when they join Finseca? Finseca looks to provide our members with the education, resources and insights they need to realize better outcomes for their clients. To do that, it was important to create a more inclusive environment to recruit and retain the best and brightest and keep our focus on bringing financial security to more diverse communities.

“We know that helping a client improve their financial savvy can be the difference between life and death. Our profession’s responsibility is to help advance the cause of financial security.” I felt it was important to build innovative pathways to professional growth by facilitating peer-to-peer learning, building communities where all members of distribution can network inside and outside their marketplaces, and ensuring that all our members are experts on products and their solutions and can then use that knowledge to educate their clients in a consultative manner. Our magazine, Finseca Focus, provides thought leadership by leaders in our profession, and we will lead research on consumer insights that will help our members thrive.

Members will be part of our advocacy as we guide policymakers at both state and federal levels. Currently, especially at the state level, the profession tends to operate defensively. Our members are part of our new, more proactive team. And our newly launched Finseca Foundation will research, identify and address complex issues so our members can educate consumers about best practices that will deliver financial security for all.

Q: What would you say to the financial security professional who is thinking about joining Finseca?

This profession is built around the singular concept of responsibility. We know that helping a client improve their financial savvy can be the difference between life and death. Our profession’s responsibility is to help advance this cause of financial security. We saw how this profession was able to affect the Tax Reform Act of 1986. Because the profession was united, we were able to stand up and defeat those tax increases and usher in more financial security for millions more people. We must do the same today.

Q: As a visionary for the industry, what types of policy changes would you like to see happen that would put financial security within the reach of more Americans?

The 199A deduction, which Finseca helped achieve, is one example of legislation that made it easier for our industry to do business. We helped shape the 2017 tax reform acts that affected our industry. We’d like to see stronger public-private partnerships on financial empowerment. I see an opportunity to do more on emergency savings. Congress did a good job addressing the liquidity issues within financial institutions during the Great Recession, but the middle-class liquidity issue was not addressed. This emergency savings crisis must be addressed to ensure a financially secure country.

Q: What does the future look like for Finseca? What are your goals and vision moving into 2021?

The ultimate vision for Finseca is to unify the profession so we do not have several different inefficient groups with different messages. I would like us to be an organization of 200,000-plus members who are working together to elevate our profession. The only way we are relevant is if we are a vibrant and growing community of professionals.

Are you ready to elevate, accelerate, advocate and educate your way to success with Finseca? Visit www.Finseca.org to learn more.

December 2020 » InsuranceNewsNet Magazine

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2020 Movers & Shakers • Carrier Spotlight • Special Sponsored Section

FIUL Sales Process Continues To Evolve With AG 49 A How Allianz is leading the evolution with enhanced client education and the potential for greater indexing control

llianz Life Insurance Company of North America (Allianz) continues its long-term leadership by sharing its lengthy experience with — and vision for — trends in the fixed indexed universal life insurance (FIUL) space. In this Movers & Shakers Q&A, we interview Austin Bichler, FSA, MAAA, Senior Director Actuary & Illustration Actuary, Allianz, who shares the latest on AG 49, how the rule will continue to impact the industry and the company’s continued insight into what’s ahead for FIUL. Austin Bichler

Added conservatism in illustrations is not a bad thing if this leads to a shift in focus from numbers on the page to more of a discussion and education and a truly holistic view of all the product features. We believe this fresh approach is a benefit to the consumer and will make the FIUL industry as a whole stronger. Our industry will have to get creative with additional benefits we offer and how we market them, and that is always a good thing when innovation and invention are at work.

What’s the latest on AG 49?

It is always good to create more discussion, conversation and education because that can lead to a more informed consumer. When you manage expectations and the consumer has insight into what can happen in the future, I believe that consumers will be more satisfied, feel confident in their decisions, see the long-term value of FIUL and have a better understanding of the total picture of what it offers as part of their financial strategy.

The impacts of Actuarial Guideline 49, part A, were effective for FIUL policies sold on or after December 14. It adds conservatism to FIUL illustrations by reducing the index credit performance that can be shown. When illustrating certain features, such as multiplier bonuses, the illustration cannot show better results than a product without such features. In addition, there are a couple of other changes specifically in the illustration of loaned values. There have been a few different versions of the guideline since it initially came out in 2015, but the regulators’ goal has been pretty consistent: Ensure that there is consistency among different product features and among the assumptions used for non-guaranteed illustrated rates within an FIUL illustration.

How has Allianz changed its illustrations beyond AG 49 requirements?

We’ve used this opportunity to fine-tune our illustrations in order to simplify them, make them more visual and align them with the story we tell in our marketing materials for a more cohesive package. Our goal has always been to focus the illustration so that it facilitates consumer education and understanding. We feel the newer illustration format builds on our previous efforts to help consumers understand how the product works, its potential and its risks.

AG 49 implementation has been a long road for the industry. Are there any silver linings with this latest phase?

It’s important to remember that the rule only changes illustrations. This does not change or restrict any actual product features that can be offered. There is a lot of value to be had in FIUL policies and the features and potential benefits they provide to the customer. They are just going to look different now in an illustration.

InsuranceNewsNet Magazine » December 2020

In practical terms, how does enhancing education and client expectations make a difference to consumers?

Where do you see carriers shifting as AG 49 implementation continues?

Every carrier is wrestling with what may come next and how they will align with changes. Many won’t have their answers immediately after December 14, and some carriers are going to have multiple answers. As things change, our industry and carriers need to focus on opportunity. When I talk with those involved in the sales process, it really is seen as an opportunity for education and to shine in the client’s eyes. Being open and knowledgeable in conversations can leave a great impression with clients, and more business may come a financial professional’s way. I fully expect some changes in product benefits that are offered, but I think it might even be more interesting to see how the sales process and marketing evolves.

Where is Allianz, as a leader in the FIUL space, seeing success in light of AG 49 adjustments and changes?

We will have new features, and we are looking at potential product redesigns that make things even more straightforward and more focused. But at the end of the day, we recognize the power of indexing and indexing potential. We have been selling FIUL since 2005. The actual credits earned on our policies have averaged 6.98%, and that is over 15 years.1 Even though it can’t necessarily be shown in an illustration, we have a great track record for actual results that our clients have seen with their policies. The value of FIUL is

2020 Movers & Shakers • Carrier Spotlight • Special Sponsored Section

Lock in a level of protection against market volatility Allianz Life Pro+ AdvantageSM Fixed Index Universal Life Insurance Policy is for those who have a need for life insurance coverage and seek accumulation potential. There are two ways to build the policy’s accumulation value: indexed interest or fixed interest. In addition, we offer our exclusive Index Lock feature that can help reduce the impact of ongoing volatility and meet financial goals with more consistency. HOW INDEX LOCK WORKS • In the hypothetical example, in policy year 1 the index value rose to 108 midway through the year. • The policyholder decides to lock in the index value at 108. • The index value ends the policy year at 102.

• Because the value was locked in at 108 midyear, the policy would receive a higher credit when compared with where the index value ended on the policy anniversary.

• Because the value was locked in at 108, the policy would receive a lower credit when compared with where the index value would have ended on the policy anniversary.

• In policy year 2, the index value starts at 102 and ends at 112. In month 9, the policyholder locked in at 108.

This hypothetical chart is provided to show how a crediting method and the Index Lock feature could affect policy values. It does not predict or project the

actual performance of a specific product or its allocation options. Although the changes in an external index may affect how much interest is credited to your policy, you cannot buy, directly participate in or receive dividend payments from any index through your life insurance policy.

This hypothetical example is provided for illustrative purposes only. Index Lock is available on certain indexes. Refer to the appropriate product consumer brochure for additional information.

going to be even more apparent in the current interest rate environment, which is really low right now. Customers are going to be looking for higher interest credit potential, and we offer some really unique index allocation options and crediting methods that other carriers do not offer and cannot offer. So far in our experience, these unique offerings are playing a role in what continues to drive our success.

How does the Index Lock feature on Allianz FIUL insurance policies reflect the company’s innovation and leadership in the marketplace?

Our Index Lock feature offers clients greater control by providing the opportunity to lock in an index value one time during the crediting period; that index value will remain locked until the end of the crediting period 2, and it is used to determine the interest credit to the client. It is another tool available to financial professionals and their clients that no other FIUL carrier currently offers. Features that can provide greater control are especially important in a rapidly changing market environment. We’re also adding the Index Lock feature to select, previously issued policies at the policy anniversary, so it’s been a great opportunity to spark discussions between the client and the financial professional at policy review.

Do you have any other thoughts to share on where the NAIC might be headed and what the future might hold in light of AG 49? I think it will be an evolving topic, and I don’t discount that at some point the path might go toward disclosures. As far as illustrations, the regulators could look at more ways to disclose realistic ups and downs with credits in FIUL policies in order to show the risk and the reward. A lot of good work was done by regulators and the industry to get us to this point today, and it will be interesting to see if and when the discussion gets picked up again and whether we can continue to increase client education within FIUL illustrations.

Allianz is proud to be a leader in indexed solutions and to use its experience and knowledge to develop unique FIUL products. To learn more, visit www.allianzlife.com/lifesalestools.

1. The average interest credited shows FIUL insurance policy crediting history of Allianz FIUL policies from 3/1/2006 through 12/31/2019 for products with complete 12-month data available. Credits are based on actual caps, participation rates and interest rates that have been applied to in-force policies. This is only one aspect of an FIUL insurance policy, which does not take into account policy fees and charges and does not describe any other features. Many factors, including the current market environment, may affect the interest credited to the policy. You should consider all product features before purchasing a policy. 2. The index value is locked at the end of the business day, and the actual index value locked may be higher or lower than the value at the time of the lock.

December 2020 » InsuranceNewsNet Magazine

2020 Movers & Shakers • IMO of the Year • Special Sponsored Section

2020 IMO OF THE YEAR: M&O MARKETING

n a year of disorientation and unpredictability, for an independent financial services professional in the indexed annuity and life insurance industry, the level of uncertainty about the next lead or even the next sale was never higher in the past 30 years than it was in 2020. We all faced that reality. That goes without saying. So in these difficult past nine months, what was your plan? What did your practice do to adapt to the challenges that COVID–19 brought you? Perhaps you learned some things and have some good answers you are proud of. But isn’t this the more important question? Who was it that you were able to lean on and look to during these challenging times, when maybe you were wondering how you were going to get in front of the next prospect, close the next piece of business or ultimately get paid in order to keep the finances of both your practice and your household in good shape? Some say that their RIA or broker/dealer helped them. Some say that certain annuity carriers were godsends in the ways they lent producers money, advanced their commissions, etc. Unfortunately, very few have said that their IMOs stepped up and provided proactive solutions to help them keep their businesses afloat. A common mantra among the indexed annuity industry is that all IMOs are the same. In 2020, however, that was completely untrue as one IMO demonstrated how being a family-owned, nimble organization has major advantages when compared with bureaucratic, multibillion dollar groups in the midst of a pandemic, M&O Marketing.

Proactive Prospecting Through A Pandemic

When the pandemic hit America full force in mid-March, producers were receiving calls from venues and restaurants

Dennis M. Brown

Owner & CEO, M&O Marketing 32

InsuranceNewsNet Magazine » December 2020

that their events were being canceled because of government lockdown orders. Consumers were canceling in-person appointments that producers paid for and worked hard to get. “How am I going to do business if I can’t meet people face to face?” Within the very first week of the pandemic, M&O Marketing had every single one of its producers converted to work on virtual platforms. In-person workshop events were rescheduled to webinars, using social media as a driver for prospect attendance. Whereas many organizations spiff off the advertising spend, M&O does everything at cost and for free for its advisors. Seeing the stock market tumble upon news of hospitals being filled to capacity, prospects attended many of M&O’s producers’ virtual events to learn about CARES Actrelated strategies on how to protect their life savings. “Having never done a virtual presentation, I went over my presentation a thousand times. It sounds too good to be true, but I picked up over $1 million in new assets from my very first virtual event,” says Mike T. in Cary, North Carolina. “M&O helped my business tremendously during a time when other advisors were struggling to stay afloat. If it hadn’t been for M&O, I would be out of business.” M&O also retained an Emmy award-winning newscaster — Roop Raj — to coach producers on how to effectively give virtual presentations. TV is actually pretty similar to a virtual webinar. Both have only a short window in which to engage viewers before they tune out. “The ability to have weekly coaching calls with Roop before my TV appearances and virtual presentations has been one of the best value-adds I’ve ever received in my 30-year career. I’m not shy to admit that M&O has helped me triple my production.”

2020 Movers & Shakers • IMO of the Year • Special Sponsored Section

Credibility Is Most Important Characteristic In The Virtual Sales Process

In a recent survey, consumers aged between 55 and 75 years old were asked this question: Which of the following is most important to you when selecting who handles your retirement and financial planning? Services, location, credibility or price? The overwhelming majority of consumers answered that a financial professional’s credibility was the most important

sometimes the ugly regarding an in-force annuity. Over the course of these past nine months, AnnuitySCOPE has helped producers identify sales opportunities by arming them with in-depth commentary on why a prospect’s existing annuity may not actually be best for their retirement goals. Analysis on fees, market value adjustments, index renewal rates, etc., are all laid out in a compliant, consumer-facing fashion to help a producer present why one’s current annuity may not be as good as what the current marketplace offers. 2020 was difficult for every constituent in the annuity industry, regardless of whether you were a carrier, an IMO, RIA, broker/ dealer or advisor. But in a year when many producers either retired or were forced to exit the profession because of lack of new prospects, new cases and/or new revenue, the advisors who did business with M&O Marketing did not fail. Rather, they worked through adversity with a partner who was there for them every hour of every day of every week. The pandemic forced many advisors to make changes this past year. Unsurprisingly, however, one change that frequently took place was a switch to a different IMO. This alltoo-common transition was only amplified because of these simple questions: “What did your IMO do for you when you needed help the most? Were you content with your results in

“If it hadn’t been for M&O, I would be out of business.” consideration in their decision-making process, especially today given that so many business and financial transactions are taking place virtually. Simply put, Americans, and especially retirement-aged Americans, at every level find you have increased credibility when you are published or featured as a subject-matter expert, whether through a news article, a TV appearance or a book. In fact, public relations is the single biggest driver behind any advisor’s credibility. You instantly become reliable, and your opinions, suggestions and recommendations are immediately valid. M&O recognized that credibility would be the most important component to build up for its producers in this new virtual world. As a result, it tasked its internal public relations department with having its producers placed literally hundreds of times within financial publications like The Wall Street Journal, Forbes, USA Today, etc. Whereas most IMOs offer producers pay-to-play opportunities, M&O handles all of its producers’ TV and media publication opportunities in-house and at no cost to them. When people are watching TV more than ever before, being featured as a subject-matter expert on your local news station is extremely powerful to leverage within your sales process.

“I’m not shy to admit that M&O has helped me triple my production.”

Looking For Sales: Annuity Replacement/Improvement Analysis

It is no surprise that many producers were looking for sales opportunities within their existing books of business. One popular concept was looking to see whether clients or prospects had older annuities that may no longer be best serving their retirement goals and objectives. Some variable annuities that policyowners may have, for example, might be high in fees and not have the level of downside protection they now seek after seeing the –34% coronavirus market. Enter AnnuitySCOPE. AnnuitySCOPE is a proprietary annuity analysis software tool that provides both consumers and financial professionals with the good, the bad and

2020, or would you have been better off with a more agile, proactive, hands-on concierge support team?” As the year comes to a close, those are questions to reflect on. The end of the year provides advisors with an opportunity to give a vote of confidence or no confidence in those they do business with. Your sales and results through the COVID–19 pandemic are a referendum on how well your IMO supported you in dire times. Ask yourself: Is now the time to open up to the idea of making a change.

For more details regarding why M&O agents continue to thrive in this environment and to see for yourself how AnnuitySCOPE can change the way you do business, visit GetAnnuitySCOPE.com.

December 2020 » InsuranceNewsNet Magazine

2020 Movers & Shakers • Technology • Special Sponsored Section

Lead with Success: How Controlling Your Data Unlocks Growth

There’s a problem with how we get our data these days. It’s very common for client and business data to be spread out across different places and platforms. Commission information is on one website, your policies and their statuses are on a different one, and submitting applications is something else entirely. It can be hard to keep track of it all and stay on top of things. Not to mention the extra time and effort it takes to open up different websites and applications every time. If you aren’t super organized, it can feel like you’ve lost control of your data, and you aren’t sure where all of it is. The good news is there’s a better way to manage your business data. It doesn’t have to be difficult to get the information you need. We saw and heard from many field organizations and financial professionals about the need for one place for their data, not five. So, we got to work. After a lot of testing and hard work, we emerged with Business Builder, a digital platform that gives you access to 34

InsuranceNewsNet Magazine » December 2020

a central hub where all your business data and resources are located. Now every part of your business is in a single place. We think this can be a game-changer for field organizations and independent financial professionals alike. Let’s dive into some of the details to show you how much of a difference this can make to your overall success.

More In-Depth Access Than Before Ever feel like you’re wading in the shallow end of the pool when it comes to your business data? You know there’s a deeper section of the pool, but you have to figure out how to get there. Digital platforms like Business Builder let you dive in deep. More than just a single source of truth, it gives you access to every aspect of your business. Now your sales tools, marketing programs, policy updates, and commissions are all together. Everything that extends from your business lives in Business Builder, giving you more control and more access than ever before.

2020 Movers & Shakers • Technology • Special Sponsored Section

Free Up Your Time We all wish we had more time, right? Even falling back for Daylight Savings Time isn’t enough. That’s another benefit of having your data all in one place, with complete access to it. It allows you to spend more time on building your business, not managing it. There’s a relief and weight off of your shoulders that comes from not having to hunt down your data. It’s the freedom to focus on your growth, because you have a complete view into the status of your business.

There’s a relief and weight off of your shoulders that comes from not having to hunt down your data.

Get Policies Processed Faster

Boost Loyalty with Clients

Let’s talk more about this complete view of your business. What does that mean exactly? Business Builder is equipped with real-time insights and up-to-date statuses on your policies, so you can see exactly where your production and policies are currently. You can track your submitted and pending business, view pending requirements and policy details, and see what you’re getting paid and when. On top of all that, you can also identify potential delays or roadblocks with your policies, so you can resolve them and get paid faster. The better view into your policies, the faster everything gets issued and paid. It’s bringing the blurry and the “unseen” part of your business into focus, so there aren’t any surprises.

When you’re informed, you’re in a way better position to be a reliable resource for your clients (or your downline if you’re a field organization). Think of it in terms of voting. You are way more confident in your vote when you know who you’re voting for and why you’re voting for them. The same is true when you’re informed about your business data. Knowing where your client’s policy is at in the process, and if there are any roadblocks to address with them, shows that you are in complete control, and gives them the confidence to rely on you with all of their needs.

Make Intelligent Business Decisions A complete view into your business data also helps you make decisions that are based on facts and observable trends. Think of the last time you had to make a difficult decision. What factors helped you make the decision? Often, it’s data, statistics, and past or similar situations that influence you the most. That’s why having all of your business information easily accessible can set you up for success. If you’re a field organization, this helps you manage your downline, see who’s performing, and utilize the real-time data in Business Builder to make decisions you can back up. You can also see trends for multiple carriers and understand how long it takes policies to issue by viewing data over specified time periods. Using your business data to identify trends provides opportunities to make your business even better.

Plus, Business Builder gives you the ability to see upcoming contract anniversaries, so you have another way to stay in touch with your clients. A lot of times, loyalty with clients is developed in the little things, and this kind of digital platform empowers you to be a valuable and credible resource whenever they need you. That’s what success looks like with clients when you have control over your data. Success isn’t something that happens overnight, but digital platforms like Business Builder that bring all of your data together in one place are a key way to improve your processes and boost your growth. We pride ourselves on breaking the mold by being the Original Agency Builder, and we’re committed to providing you with innovative ways to build your business.

If having control over your business data is something that you’re looking for, give us a call at 800.362.1097, and we’d be happy to tell you more about Business Builder.

December 2020 » InsuranceNewsNet Magazine

2020 Movers & Shakers • Product of the Year • Special Sponsored Section

A cure for costly tobacco usage nondisclosure?

Verisk’s innovative voice analysis could save insurers millions in lost premiums

erisk’s Tobacco Usage Propensity Model offers the life industry a two-prong solution: It can assist in substantially reducing the number of lab tests insurers order in the underwriting process, while simultaneously helping tackle the $10 billion problem of smoker nondisclosure. In this Movers & Shakers Q&A, we interview Nick Irwin, product director for life insurance analytics, about Verisk’s patent-pending voice technology that pairs with other data assets to help identify, with a high degree of accuracy, individuals who may have misreported their tobacco usage Nick Irwin status when applying for life insurance.

What spurred the development of Verisk’s Tobacco Usage Propensity Model?

Tobacco usage nondisclosure has been a long-standing issue in the life industry, and many models have been developed historically that attempted to address this issue. Verisk has estimated that the life industry loses $10 billion of premium every three years from tobacco usage nondisclosure, and

and evidence-based clinical studies that have documented smoking-based dysphonia — changes in the voice as a result of prolonged smoking. Studies conducted in 2015 and 2017 both reported specific, significant variations in vocal patterns for smokers versus nonsmokers. In particular, the phonation of the sound “ah” is quite different for a smoker versus a nonsmoker. Our model gets that with a high degree of accuracy. Plus, we make quarterly updates to our model, and we are seeing more highly tuned performance with each iteration as we continue to collect more data to refine the model.

How does the Tobacco Usage Propensity Model work?

The model leverages our patent-pending voice technology combined with several other variables to estimate the likelihood that an individual is a tobacco user. Those who receive a high likelihood score can be flagged by an insurer for possible traditional lab testing or further investigation. The voice model is actually an ensemble of several models leveraging both classical audio analytics techniques that closely mimic how humans perceive sound and modern techniques leveraging convolutional neural networks. The model has been trained and validated on data from Verisk-commissioned focus groups as well as from data collected from pilot insurers.

By unlocking the power of voice analytics, Verisk has paved the way for an entirely novel method of overcoming smoker nondisclosure. nearly half of all tobacco users fail to disclose their true status on their applications. In a survey we conducted with 15 insurers and reinsurers, tobacco use nondisclosure was confirmed as the respondents’ No. 1 issue.

Does Verisk’s Tobacco Usage Propensity Model use a science- and evidence-based approach?

Because our survey identified a clear need to address this nondisclosure problem, we invested quite a bit of resources in developing this technology. We started with multiday strategy sessions with our data scientists. When ideas began to surface of using voice to identify tobacco users, we brought on some medical doctors to further research the issue. They brought forth a number of peer-reviewed 36

InsuranceNewsNet Magazine » December 2020

Is it relatively easy for insurers to fold the model into their current processes?

Voice samples are already routinely collected through the telemed process at many insurers, so for most of our users, no additional data collection is required. We do offer a vocal attestation web app for carriers without telemed. And because our voice model measures physiological changes rather than pure socioeconomic correlations, it can also help lower exposure to regulatory risks or concerns such as those related to unconscious bias.

How would insurers incorporate Verisk’s Tobacco Usage Propensity Model?

For insurers that have telemed, our model requires a simple API [application programming interface] integration. The recording of each customer interaction with the call center gets submitted to Verisk’s model for scoring. The resulting score is then used as part of an insurer’s underwriting rules engine to flag applicants for lab testing or further investigation. For insurers without telemed, we offer a mobile web application. Applicants complete a voice attestation, and Verisk

2020 Movers & Shakers • Product of the Year • Special Sponsored Section

13.7%

of U.S. adults are smokers, according to the Centers for Disease Control and Prevention.1

$10 billion

in lost premiums over the next 3 years.

1.3 billion

people around the world smoke tobacco.4

Up to 47% of smoker life applicants don’t disclose their smoking status.2

7 million deaths globally each year are due to tobacco-related diseases.

handles all requisite API calls within the app itself. Insurers without telemed may find that implementation is even simpler. After consumers submit their applications, the applicants will receive a text message with a custom link. The applicants then click the link, which will direct them to a mobile web app, where they will record a 45-second statement, essentially certifying that information on their application is accurate to the best of their knowledge and they permit the usage of their voice for underwriting purposes.

Does the model benefit insurers and applicants?

Our model can help reduce the number of lab tests required as part of an accelerated underwriting program, which is especially important in the age of COVID-19, when obtaining labs is particularly inconvenient and, in some cases, distressing for some consumers. It’s a “winwin” for customers and insurers alike, as customers can bypass the inconvenient lab test process in most cases, and insurers may have greater protection against tobacco usage nondisclosure. Our model only identifies a small percentage of total life insurance applicants for laboratory testing, with the remainder often being allowed to bypass traditional laboratory testing requirements.

How was Verisk uniquely positioned to develop this model?

Verisk has hired a global team of some of the world’s leading audio analytics experts. Moreover, we have nearly 50 years’ experience in developing insurance products, including models, that comply with relevant statutes and regulations. We have an extensive legal, regulatory and compliance team to help review, monitor and evaluate changes in the regulatory landscape. Our models within the life program

are evaluated for unconscious bias by testing performance on an annual basis by ethnicity, religion, gender and age, and are revised for findings from the internal review process. For example, early in design, we found that males tend to disclose the incorrect smoker status more frequently than females do, so we built separate models for males versus females to help ensure that the performance didn’t vary materially by gender.

Are your clients seeing success with Verisk’s Tobacco Usage Propensity Model?

Based on our pilots, our model is estimated to provide an annual net present value benefit between $15 million and $30 million, or a 15% rate of return for an insurer that processes 100,000 individual life insurance applications per year through an accelerated underwriting program. Our model costs are only a small fraction — approximately less than 3% — of the economic value provided to our customers. The solution became available for pilot in October 2019. In September 2020, we made the tool available for use by our customers in a production setting. This solution is part of Verisk’s suite of end-to-end life software and analytical offerings, from underwriting to portfolio analysis to claims.

Discover how Verisk’s audio analytics and a short snippet of an applicant’s voice can reveal hidden tobacco use. Download Verisk’s white paper at Verisk.com/smoke-signals.

1. “Current Cigarette Smoking Among Adults in the United States,” Centers for Disease Control and Prevention, accessed on December 19, 2019. 2. Brian Lanzrath, et al., “Applicant Medical and Smoking History Nondisclosure in the Life Insurance Marketplace,” Contingencies, November/December 2016, accessed December 13, 2019. 3. Kavitha Hariharan, et al., Insurer Perspectives on Smoking Risks, Marsh & McLennan Advantage, 2019, accessed on January 29, 2020. 4. Tobacco fact sheet, World Health Organization, accessed on November 2, 2020.

December 2020 » InsuranceNewsNet Magazine

LIFEWIRES

Americans ‘Panic-Buying’ Life Insurance What does life insurance have in

Google Search traffic for “life insurance” jumped 50% between March and May this year compared with the same period in 2019. SOURCE: Policygenius

common with toilet paper, hand sanitizer and flour? It’s on the list of things that consumers have been panic-buying since the pandemic. Many carriers have seen double-digit increases in the number of life insurance policies they have sold in the COVID-19 era as compared with last year. Byron Udell, CEO of AccuQuote, compared this recent wave of buying with a similar phenomenon that occurred after the 9/11 terrorist attacks, when consumers became more aware of their mortality. That sense of mortality isn’t the only factor driving life insurance sales during the pandemic, according to Haven Life, an online seller of life insurance. Consumers who might have been reluctant to meet face to face with an agent were more likely to seek out digital channels to buy insurance as more transactions went virtual because of COVID-19 restrictions. Younger consumers appear to be buying insurance in greater numbers than other age groups. There was a 13% increase in life insurance applications among the under-44 age group in the third quarter versus Q3 2019, compared with a 9% jump for 45-to-59year-olds and 0.4% in the 60-plus category, MIB reported.

CONSUMERS GO FOR HYBRID EXPERIENCE

online to obtain information about life insurance, then met with an advisor to complete the transaction.

Buy life insurance online or buy it through an advisor? For many consumers, the answer is: both! LIMRA and Boston Consulting Group found 4 in 10 consumers bought life insurance the hybrid way, using a mix of online and consulting with a financial professional. This way of buying life insurance increased 10 percentage points compared with life insurance purchases made prior to the pandemic. Despite life insurers working to make purchasing life insurance online easier, the study found consumers still AIG SPLITS OFF LIFE/RETIREMENT wanted to consult American International Group During COVID-19, 4 in 10 Americans with a financial will spin off its life and retirebought life insurance through a hybrid professional. More ment business. approach — online and consulting with an advisor than a quarter The company provided no of consumers details on what form the new said talking to an life and retirement company agent eased the would take. The company purchase process. also announced that Peter Researchers found Zaffino will become CEO on consumers were March 1, 2021, and remain interested in going president of AIG. CEO Brian SOURCE: Unum Duperreault will become DID YOU

KNOW

QUOTABLE

Life insurance is for everyone. There’s nothing only older people need to have. — Manjo Upreti, senior life insurance analyst at Aite Group

executive chairman at that time. One of the largest U.S. insurers, AIG reported a $9.7 billion net loss for the second quarter off $9.4 billion in revenue. Its life and retirement business was a big bright spot overall, reporting $650 million in adjusted pretax income on $4.5 billion in revenue.

MASSMUTUAL LAYS OFF 160 ASSOCIATES

Empower Retirement has agreed to buy MassMutual’s retirement business for $3.35 billion. About 160 employees are being laid off in the transition, while about 90% of MassMutual employees who are affected by the transition will receive new offers to join Empower. Empower Retirement is the United States’ second-largest retirement record-keeper by total participants, administering $667 billion in assets for more than 9.7 million retirement plan participants as of this summer. The MassMutual retirement plan business comprises 26,000 workplace savings plans through which approximately 2.5 million participants have saved $167 billion in assets.

Northwestern Mutual saw a 15% jump in the number of life insurance policies it sold between April and September over the same period in 2019. Source: CNBC Source: The Wall Street Journal

InsuranceNewsNet Magazine » December 2020

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LIFE

Why Agents Should Be Careful With Financial Aid Planning A family can benefit from cash value life insurance in many ways, but how does it affect college financial aid? By Allison Anne Hoyt

aying for higher education is foremost on many Americans’ minds. An entire industry has evolved to help individuals maximize financial aid to soften the blow of the tuition bill. Financial aid can come in many forms, such as scholarships, grants and loans. Aid also can come from many sources, including federal or state governments, institutions of higher education, or banks. Financial advisors may be quick to suggest cash value life insurance to bolster a student’s financial aid award package, but 40

the impact of cash value life insurance on federal financial aid may be negligible at best. This is because the federal methodology is primarily an income test (not an asset test), and federal need-based aid is available only to the most financially needy students. Let’s examine some the components of the federal financial aid formula (i.e., the federal methodology) that are used to determine a student’s expected family contribution. We will explore the three types of financial aid provided by the federal government: loans, grants and federal work-study.

The federal methodology is primarily an income test.

To be eligible for federal financial aid, every prospective student must file the Free Application for Federal Student Aid,

InsuranceNewsNet Magazine » December 2020

or FAFSA. Although the FAFSA is relevant for graduate and professional students, we will approach the FAFSA through the lens of a parent and their dependent child who plans to attend an institution of higher education. (See chart on next page). The same countable/noncountable rules apply to parents’ assets as well as students’ assets. However, in the EFC formula, students’ assets are assessed at 20% whereas parents’ assets are assessed on a sliding scale depending on income. The maximum assessment on parents’ assets is 5.65%. In other words, the most parents will have to contribute is slightly more than five and a half cents for each additional dollar of assets. A solidly middle-class family may already have the bulk of their net worth tied up in noncountable assets, such as equity in their primary residence and

WHY AGENTS SHOULD BE CAREFUL WITH FINANCIAL AID PLANNING LIFE retirement accounts. Moving $100,000 from a CD into a cash value life insurance policy would theoretically lower that family’s EFC by $5,650 — at most. And that decrease in EFC will likely not be enough to get that student any additional federal financial aid to which they were not already entitled.

All student and parent borrowers are eligible for federal loans — regardless of need.

Federal financial aid is designed to help fill the gap between the cost of attendance and the EFC (the unmet need) or to be

received. The point to highlight here is that purchasing a cash value life insurance policy does not increase the amount of money a parent can borrow from the federal government and does not increase the amount of unsubsidized loans an undergraduate student can borrow from the federal government. Showing more or fewer countable assets on a family’s balance sheet does not impact eligibility for these loans, at all. These are nonneed-based loans and EFC is irrelevant in determining the amount of non-needbased loans that may be borrowed.

Chart 1: Countable Vs. Noncountable Assets Countable Assets

Noncountable Assets

Checking, savings, money market accounts

IRAs

Certificates of deposit

Nonqualified annuities

Stocks

Cash value life insurance

WealthChoice is the Choice with More.

Certain farms and business Cars interests Current market value of Qualified retirement real estate holdings other plans than the primary residence Equity in primary residence

available as part of the EFC if the family doesn’t have the cash on hand. Unsubsidized student loans are available to all student borrowers regardless of financial need. They are non-needbased loans; all students regardless of their EFC are eligible. However, unsubsidized loans are only offered in limited amounts, which depend on a student’s year in school. (See chart 2 on next page.) If Mom or Dad does not have an adverse credit history, and sometimes even if they do, they will be able to get a PLUS loan from the federal government. PLUS loans are also non-need based, and can be disbursed up to the total cost of attendance, minus other financial assistance

Only the financially neediest of students will be eligible for needbased federal aid.

The remaining aid that is available from the federal government is referred to as need-based aid and includes subsidized loans, grants and work-study. Subsidized loans and federal work-study are awarded to students with “financial need.” Subsidized loans, however, do not increase the amount of federal loans a student will be able to borrow; subsidized loans indicate that a portion of the student’s federal loan will receive preferential interest treatment. As far as Federal Work-Study, every school will have different funding levels for the program.

December 2020 » InsuranceNewsNet Magazine

The FIA that gives more accumulation, more income, more commission, and more flexibility. Provide more for your clients by calling 800.362.1097

ICC19-GI-FIA02 features & avaliablity may vary by state. For Financial Professional use only, not for use with the general public. ©2020 Brokers International, Ltd. All rights reserved. AD-WCBI (08-20)

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LIFE WHY AGENTS SHOULD BE CAREFUL WITH FINANCIAL AID PLANNING

Chart 2: Unsubsidized Loan Amounts Dependent Year Students First Year $5,500 Second Year $6,500 Third Year And Beyond $7,500 However, the number of hours worked cannot exceed a student’s total Federal Work-Study award. There are currently four federal grant programs available to borrowers. Financial need is irrelevant for two of the grants. The Pell Grant and the Federal Supplemental Educational Opportunity Grant are available only to students with

Students who receive subsidized loans, grants and Federal Work-Study are more likely to be from families receiving federal means-tested benefits such as food stamps, Medicaid, Supplemental Security Income, or the free or reduced-price school lunch program. These families may have incomes close to or below the poverty guidelines. Low-income families

It will be very difficult for middleclass families to compete with low-income families for needbased federal financial aid because the federal methodology weighs income so much more heavily than assets. “exceptional financial need,” a higher showing of financial need than is required for subsidized loans and for Federal Work-Study. Grants, unlike loans, do not have to be repaid if the terms of the grant are fulfilled. Not all schools participate in the FSEOG program, and those that do give priority to Pell Grant recipients. 42

get various benefits when it comes to the EFC calculation. Assets do not count in the EFC calculation for certain families with an AGI of $50,000 or less; certain families with an AGI of $25,000 or less will have an automatic EFC of zero. It will be very difficult for middle-class families to compete with low-income

InsuranceNewsNet Magazine » December 2020

families for need-based federal financial aid because the federal methodology weighs income so much more heavily than assets. The purchase of a cash value life insurance policy is unlikely to change a family’s financial profile enough to create a picture of poverty (i.e., “financial need” or “exceptional financial need”) and qualify that student for subsidized loans, grants or Federal Work-Study. Because the federal methodology is primarily an income test (not an asset test) and federal need-based aid is available only to the most financially needy students, repositioning assets into cash value life insurance is unlikely to have a dramatic impact on a student’s EFC and their eligibility for need-based federal aid. Further, all students and parents are eligible for federal loans, regardless of need. Cash value life insurance is probably one of the most versatile and valuable financial products on the planet. However, positioning it to enhance a student’s federal financial aid award because cash value life insurance is a noncountable asset (a) likely will not work and (b) likely cheapens its worth in the eyes of the consumer. Further, the reputation of the individual financial advisor or firm that recommends such a strategy may be called into question. The time to have the conversation about cash value life insurance is not two years prior to a child’s attending college. That time was probably right around the time the child was born. Encourage a young family to purchase permanent protection that can be used in innumerable ways to their benefit — and guess what! It doesn’t impact their child’s eligibility for federal financial aid. Allison Anne Hoyt, JD, CLU, is technical director, Nationwide Advanced Consulting Group. Allison may be contacted at allison. hoy t@innfeedback . com.

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ANNUITYWIRES

Some Annuity Sales Stumble Back

Annuity sales that plummeted due to the pandemic managed to rebound a bit during the third quarter. Variable Total annuity sales were $54.8 billion $17.5 -19% in the third quarter, up 13% from the Registered index-linked second quarter, but down 8% from 3Q $6.4 33% 2019, according to the Secure Retirement Fixed indexed Institute U.S. Individual Annuity Sales $13.2 -29% Survey. Fixed-rate deferred “Annuity manufacturers and distribu(in billions) $14.6 47% tors have largely overcome the operationTotal annuities SOURCE: Secure $54.8 -8% al hurdles caused by COVID-19 and social Retirement Institute distancing measures, which has helped improve sales of most product lines, compared with second quarter results,” said Todd Giesing, senior annuity research director, SRI. Registered index-linked annuities continued to star, with sales jumping 33% to $6.4 billion, the 23rd consecutive quarter-over-quarter growth. Year-todate, RILA sales were $15.8 billion, up 26% from 2019 results. “In this economic environment, RILA products are very attractive to investors seeking downside protection with greater growth potential,” Giesing said.

Annuity Sales

NEW YORK FINES INSURER FOR REPLACEMENT ERRORS

AMERICAN EQUITY MAKES DEALS TO SURVIVE

American Equity is ready to make deals to beat back the pandemic’s impact on business. An industry leader in fixed indexed annuities, American Equity recorded third-quarter gross sales of $574 million, down 56% over third quarter 2019. CEO Anant Bhalla described the “AEL 2.0” strategy, which includes efforts to broaden the company’s investment portfolio into real estate and equities, while pushing its annuity products into new channels, particularly the bank and broker-dealer channels. AEL’s biggest move is a partnership with Brookfield Asset Management in which Brookfield will acquire a 19.9% ownership interest in the common shares of AEL in two stages. DID YOU

KNOW

Principal Life will pay a hefty price after New York regulators found the insurer guilty of violations of its lion Mil $6 disclosure and suitability regulations in deferred to immediate annuity replacement transactions. Principal will pay more than $6 million in restitution and penalties. Regulators found that Principal failed to properly disclose to consumers income comparisons and suitability information, causing hundreds of consumers to exchange more financially favorable deferred annuities with less favorable immediate annuities. Many New York consumers received incomplete information regarding the replacement annuities, resulting in less long-term income, the state claimed. New York said its industry-wide investigation into deferred to immediate annuity replacement practices has resulted in settlements with more than 10 carriers, totaling more than $12 million in restitution and penalties.

QUOTABLE There are going to be times when it’s harder to communicate information in a digital way than it may have been when an agent could sit next to a policyholder. — Preston Schnoor, AIG vice president

‘PROTECTED’ HOUSEHOLDS ON THE INCREASE

For the first time since the Alliance for Lifetime Income launched the Protected Lifetime Income Study in 2018, the number of protected households in the U.S. has increased. Protected households are those that have a source of protected income — a pension or an annuity — to supplement what they receive from Social Security. The share of protected households grew from 37% in 2019 to 40% this year, representing approximately 3.1 million newly protected households. Additionally, the study determined that this year’s increase is attributable to annuity ownership. The study finds that more than 4 in 10 pre-retired Americans are more anxious now about their retirement savings, with the No. 1 retirement question pre-retirees are asking themselves being: Will my savings and investments be enough? “Our research shows the pandemic and resulting market and economic conditions have triggered what we are calling a ‘retirement reset,’ forcing Americans to rethink their retirement plans and protect their retirement income,” said Jean Statler, CEO of the Alliance for Lifetime Income.

In February, 71% of consumers thought guaranteed lifetime income was very valuable in a survey. But that percentage dropped to 63% in August. Source: Cannex

InsuranceNewsNet Magazine » December 2020

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ANNUITY

FIAs: The Right Strategies At The Right Time Why now is a good time to employ these insurance vehicles for asset accumulation goals. By Doug Wolff

inancial professionals have a multitude of options to choose from in helping their clients save for retirement. But with interest rates at historic lows, stock market volatility high and clients concerned about risk, the job of choosing has become more challenging. As annuities have come further into focus, a number of additional savings options are now available for consideration. Fixed annuities provide tax-deferred accumulation potential and security for savers, especially if they hold the contract through the guarantee period. Fixed index annuities, however, have many of these same unique features but usually with even greater accumulation potential. An FIA offers contract owners the opportunity for growth linked to a portion of the positive changes in one or more financial indices, while protecting the contract from all market loss. Your client’s funds are never directly exposed to the financial markets but can receive interest credits based in part on the performance of the available indices. FIAs’ range of interest crediting strategies offers accumulation potential in various market conditions. Because of this protected accumulation potential not found in investments, and multiple crediting options, FIAs are becoming an integral component of many clients’ overall retirement planning.

Investment Management Is Key

Similar to a fixed annuity, the return from an insurance company’s general account runs the FIA engine; a superior fixed income investment strategy is required, and the gross earned rate on the GA is 46

the starting point for funding the various index crediting options. Factors in enhancing the index crediting and potentially delivering better contract value growth include an issuing insurance company’s higher gross earned rate, more efficient derivative hedging, reasonable profit target and a lower expense model. Negative index returns do not decrease the owner’s account value, as crediting rates are floored at 0%. In order to guarantee this downside protection and afford the derivative that sits behind the index credits, the issuer limits a contract’s interest credits through a combination of index account parameters including caps, participation rates and spreads. They are reflected through the various derivatives purchased by the FIA-issuing company.

Common Crediting Options

Typically, clients are locked into their selection of a crediting option through each index account’s term, at the end of which they have the opportunity to reallocate the value in the account. The benefit of having a variety of index crediting options is the ability to diversify how you approach your client’s interest potential, depending on current market conditions. Here are a few examples of common crediting options. » Fixed account. These typically provide a predictable rate of interest each year that is credited daily. Issuers credit an interest rate that is guaranteed to be no less than the contract’s guaranteed minimum interest rate for each contract year. This kind of reliability appeals to clients who are most risk averse or require a consistent and fully predictable rate of interest. » Annual point-to-point index account. One of the most common options, an annual point to point account,

InsuranceNewsNet Magazine » December 2020

allows an interest rate to be paid (usually up to a cap) based on the growth of the underlying index (ending index term value compared to the starting index term value). Interest is credited annually, on the contract anniversary. So, in years when the underlying index rises, a portion of its performance is credited to the contract. In years when the index drops, the contract receives no interest, but its value (the original principal and any accumulated interest) is locked in. This protects the client from losses and any ongoing downside volatility. If the index experiences steady growth, so does the annuity. » Multiyear point-to-point index account. In this variation of the annual point to point option, interest is credited on every multiyear (every two, three or more years) contract anniversary. Issuers calculate how much interest to credit to the contract value based on the percentage change in the underlying index from each multiyear contract anniversary to the next. An annual spread or a participation rate often applies. » Annual average index account. The annual average is also a commonly offered index option. The sum of each monthly ending index value is totaled and divided by 12 to get the average ending monthly index value. Interest is credited to the client’s contract (up to a cap) based upon the average monthly index value compared to the starting index value. » Monthly sum index account. The monthly sum is another commonly used index option. As its name implies, it looks at the index change from month to month. It adds all the monthly gains (up to a monthly cap) and losses to determine a total interest rate to be applied at the end of the index term.

FIAS: THE RIGHT STRATEGIES AT THE RIGHT TIME

ANNUITY

SOURCE: Security Benefit Life

How Caps, Participation Rates And Spreads Work Caps limit how much interest the contract is credited from the underlying index and are in force at the time your clients choose an index crediting strategy and enter the annuity contract. When your client chooses an index crediting strategy, the index account is subject to the rates offered at that particular time. In an uncapped strategy, your client may benefit from higher interest credits compared to capped index account strategies. So, if the cap is 5%, 5% is the most your client will receive in any given period. If the index earns 12%, they get 5%. If the index earns 3%, they get 3%, and so on. Participation rates are similar to caps but limit interest

Caps

credits to a percentage of the index return for the period. If the participation rate is 75% and the index returns 10%, your client is credited 7.5%. If the index is up 20%, your client gets 15% or 75% of the index performance. Spreads offer a baseline over which interest may be credited. If the spread is 3%, your client receives interest only if the index performs better than 3%. If it returns 3%, your client’s contract value does not change. If it returns 8%, the client’s contract will be credited 5% and so on. With all three of the rate methods discussed above, caps, participation rates, and spreads, if the index is negative, the contract value does not change (the credit is 0%).

Participation Rates

Maximum % Change

Spreads

% of the Change

% Not Credited to the Contract Minimum Crediting Rate Floored at 0%

In all of the common crediting strategies discussed here, if the index experiences a negative change over the measurement period, the contract value is credited with 0% (it is protected from negative index returns).

Accumulation Strategies

Financial professionals need to help clients decide how to allocate their funds among the various FIA crediting options and evaluate the underlying indices. Historically, FIAs have used the S&P 500 as a common index to tailor many types of index options available inside the FIA, while guaranteeing a floor of 0%. Today, a broad variety of traditional and proprietary indexes are being used to provide retirement savers more options to consider for the underlying index. The various crediting strategies also come into play depending on your view, and your clients’ view, of market conditions. For example, the annual average

strategy could be used during a period of market volatility from a sharp decline in stocks, versus the annual point to point strategy. The annual point to point could potentially lose gains before the index term ends. The annual average would average out the gains and losses, while still giving the client an opportunity for interest despite the volatility. The monthly sum strategy typically gives the opportunity for greatest interest but also includes in its calculation negative months with no cap on the negative. Therefore, this strategy is typically best during terms when you expect more consistent growth and less volatility. Financial professionals often use a diversification approach by employing two or more index strategies in client contracts. Current market conditions make many clients uneasy about their retirement,

raising the need for additional savings options that help ease these concerns while providing a way to continue accumulating assets. To be clear, though, FIAs do not replace equity holdings with equitylike returns. Instead, they provide some of the upside potential of a market index in return for downside protection. And importantly, FIAs also benefit from tax-deferred accumulation. Doug Wolff is president of Security Benefit Life. Doug may be contacted at doug.wolff@innfeedback.com.

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December 2020 » InsuranceNewsNet Magazine

HEALTH/BENEFITSWIRES

Americans Confused On Coverage Basics

26%

of Americans have avoided care or treatment because they were unsure of what their insurance covers.

The COVID-19 pandemic made Americans aware of their health. But their health insurance? Not so much. That was a finding from a Policygenius survey that showed a majority of Americans (62.8%) do not realize Affordable Care Act plans cover those with preexisting conditions. Nearly nine out of 10 Americans (87%) could not identify the correct timing of open enrollment on the ACA marketplaces, and almost 44% of Americans did not believe plans sold on the exchanges covered required benefits like pediatric care. The lack of knowledge about their coverage may be keeping Americans from seeing the doctor. The survey found that around one in four Americans (25.5%) has avoided seeking medical care because they didn’t know what their health insurance plan covered. More than 8% have avoided COVID-19 testing, treatment and care because they were unsure whether it was covered. reversing since 2001, to the point that one study observed that employees are becoming an “endangered species,” Carney said.

QUOTABLE We’ve got a whole new batch of people who are going to be shopping for health insurance this year. — Jeremy Smith, program director for the navigator program in New Hampshire

cost before they go in for treatment, according to the Department of Health and Human Services.

EMPLOYERS UNCERTAIN OVER WORKERS’ FUTURE COSTS

The pandemic prompted many working Americans to defer nonessential medical care this year. But what will happen in 2021? Many employers are uncertain about WHITE HOUSE REQUIRES MORE how much medical care their employees PRICE TRANSPARENCY will consume in the year ahead, The Wall A Trump administration rule requires Street Journal reported. Health benefits private insurers to publish the prices they typically account for a large portion of a have negotiated with providers. The rule company’s personnel costs. is aimed at giving consumers more inforBefore the pandemic, health-benefit mation about their out-of-pocket costs were on charges. Private insurers will have Delayed Treatments the rise, but were benefit costs are expected to accelerDI SALES COULD DOUBLE IN 2021 to post the negotiated prices for Health generally easy ate next year compared with 2020 Individual disability insurance sales might 500 “shoppable” services in 2023, Percentage cost increase over previous year. for companies double next year because of the greater with the mandate extended to all to forecast, said gig economy, according to a Forrester services by 2024. Francis Coleman, researcher. Insurers and hospitals have a managing diThat prediction is based on inquiries the criticized the rule as too exrector at Willis research firm has been getting from insur- pensive and burdensome and Towers Watson. ance companies, said Ellen Carney, prin- of little use to consumers they But the task has cipal analyst, application development & say are unlikely to shop around become more delivery at Forrester Research. The find- based on negotiated rates. challenging for SOURCE: Willis Towers Watson ing is one of the trends the firm identified The rule for insurers covers finance chiefs to watch in 2021. about 200 million Americans as people have altered their habits and The group disability market is far who have individual-market postponed medical care not considered larger than the individual market, and employer-based cov- urgent. Some insured companies in inso why are carriers asking about erage. These consum- dustries hardest hit by the pandemic, the individual market? Probably ers will get access to including retail and restaurants, have bebecause insurance companies a list of real-time gun pushing their providers for lower preare following where workers price informa- miums, citing a drop in employee claims, are going, especially with the tion, including Coleman said. Others are modeling the pandemic’s impact, Carney c o s t-sh a r i n g , potential for costs to increase in the years said. The ratio between full-time letting them know ahead if the medical conditions employemployees and gig workers has been how much care will ees have left untreated begin to worsen, he said. DID YOU Meanwhile, companies that are self A federal judge has ordered UnitedHealth Group insured have recognized immediate savto reprocess 67,000 claims from behavioral ings, although it isn’t clear how long that health patients. Source: Minneapolis Star-Tribune side benefit will last, Coleman said.

KNOW

InsuranceNewsNet Magazine » December 2020

Always Wanting More Protection Always Needing More DI

GSI High Limit DI

If you are not selling GSI High Limit DI you have no idea what you’re missing. Instead of the $3,000 to $5,000 commission cases of the individual market, the GSI market boasts regular commissions of $300,000 to $500,000! We are serious and there is a fortune to be made in the guaranteed-issue disability (GSI) marketplace.

Disability • Life • Medical • Contingency

Petersen International Underwriters

Source: Associated Press

Source: Economic Policy Institute

(800) 345-8816 F www.piu.org F piu@piu.org December 2020 » InsuranceNewsNet Magazine

HEALTH/BENEFITS

Disability Insurance Underwriting Fatigue — It’s A Real Thing There are plenty of ways a ID application can get bogged down. Here are some suggestions to maneuver your way through the underwriting process. By Lynn Christofferson

e all have had the symptoms. The disability insurance underwriting requests go drip, drip and drip some more. Your client is nearing the end of their rope, and you know if you ask for one more thing, you are going to get shut down. You’ll hear things such as “I’ve had enough” or “I don’t think they are ever going to offer me a policy.” All that time and effort go down the drain, and you’re left with a client who still needs insurance and may not want to get it from you because you appear incompetent. Who’s at fault, and how can we fix it? There’s enough blame to go around, but let’s see what parts of the process we can manage. 50

Begin with the application. Yes, applications are tedious, but remember — this is the first impression the underwriter has of your client, so make it count! All these new online application systems seem simple enough, but they take us out of the loop and often send our clients down the wrong rabbit hole. Even though you don’t have to ask questions, maybe you should try asking a few on your own. Try this one: “What medications do you take?” You’ll be amazed what you can learn about your client with that question. Being armed with a little information can help you find the best fit for your client before you apply and possibly get a less-than-favorable offer or even get declined. Nothing drags out underwriting longer than having to change companies mid-stream. Don’t let these super-duper online application systems replace your client relationships. Now you’re in underwriting. In general terms, here are the things that can go sideways.

InsuranceNewsNet Magazine » December 2020

» Telephone interview. This is key because of all these simplified application systems. The real underwriting doesn’t start until the telephone interview is completed. Let your client know they need to get on this call right away. Prepare them for the amount of time it will take as well as the type and the volume of information that will be asked. Your client must be as accurate as possible. Everything your client misses or misstates will have to be corrected down the road. » Motor vehicle record. If you are just one character off in reporting your client’s driver’s license information, your client’s driving record will come back as “not found.” Try to get that driver’s license number right. You can lose weeks waiting for the state to come back with a no-record reply. » Medical information bureau. If there are MIB hits that differ from what your client discloses about other coverage, applications, or any history

Solutions to Medicare Uncertainty

COULD REFERENCE-BASED PRICING BE THE ANSWER TO HIGH GROUP COSTS? HEALTH/BENEFITS

A unique opportunity for long term care insurance carriers and professionals.

As the need for Medicare benefits increases and reimbursement for long-term care coverage scales back, the future of Medicare is uncertain. This presents a unique opportunity for long-term care professionals to provide insurance-based solutions. Families preparing for long-term care needs are seeking guidance. With Amada Senior Care, you can confidently address the ongoing concerns of clients who prefer to age in place. Delivering caregiving services while addressing the escalating cost of care requires a strong partnership. For over 20 years, Amada Senior Care has served the ongoing needs of families in local communities.

To learn more about how a partnership with Amada Senior Care can help you address the needs of your clients amid Medicare uncertainty, visit:

www.TheAmadaSolution.com December 2020 Âť InsuranceNewsNet Magazine

HEALTH/BENEFITS DISABILITY INSURANCE UNDERWRITING FATIGUE — IT’S A REAL THING

The list of documents requested for underwriting will depend on the type of income the client receives and whether they own their business or are someone else’s employee. Every carrier also has individual rules for what documents it needs.

BUSINESS

DOCUMENTATION NEEDED

Non-owner W-2 employee

Most recent Form 1040 including schedules and W-2s; or paystub showing a minimum of six months' income.

Non-owner 1099 employee

Form 1040, including Schedule C.

Owner of sole proprietorship

Form 1040, including Schedule C.

C corporation owner

Form 1120, U.S. Corporation Income Tax Return, if you own more than a 20% stake; otherwise W-2s.

S corporation owner

Form 1040, with W-2s and relevant schedules; or Form 1120S, U.S. Income Tax Return for an S Corporation, with Schedule K-1 and W-2s.

Partnership

Form 1040; or Form 1065, U.S. Return of Partnership Income, with Schedule K-1.

Limited Liability Corporation (LLC), single member, individual

Form 1040, including Schedule C, E, F.

Limited Liability Corporation (LLC), single member, Corporation

Form 1120 or 1120S.

Limited Liability Corporation (LLC), multiple members

Form 1065.

Students, residents, new professionals

Underwriter's decision.

of ratings or declines, you’ll be asked to follow up. Ask your client about prior applications ahead of time so if there are issues, you’ll be prepared with answers. » Prescription history. Like with the MIB report, if your client fails to disclose accurate prescription information, the underwriter must ask you to ask the client to clarify what they are seeing on the Rx check. If you already asked the medication question, you are ready to provide those answers. » Exams, labs, EKGs. Different levels of exams may be required, depending on the amount of coverage your client is seeking. Know what your client needs, and prepare your client for that scheduling call. Know upfront who is responsible for ordering exam requirements. Don’t assume it will magically get done. » Medical records. This usually causes the biggest delay in underwriting. It’s also pretty much out of our control. The best thing you can do is 52

prepare your client for the lead time to obtain the necessary medical records and everything that goes with them. Give them a heads-up that one set of records can lead to needing another set. Your client may need to sign another HIPAA form if the doctor or clinic has their own special authorization requirements. We may ask for the client’s help by contacting their doctor to expedite a request if it’s taking too long to obtain the medical records. » Financial records. Obtaining the client’s financial records can sometimes be more difficult than obtaining their medical records. This is typically a big issue with disability insurance. Check with your wholesaler about what is required, and then communicate those requirements to your client before you start the application process. If you need to submit a complete tax return, such as in the case of a business owner, submit a complete tax return — not just the couple of pages the client may send you. Explain to the client that

InsuranceNewsNet Magazine » December 2020

you are insuring their ability to earn a living or the cost of their doing business, so it makes sense that we would need to see how they earn and spend money. You know how you feel when you have spent six weeks in underwriting and you get an email about needing even more information? I think, why wasn’t I asked for this six weeks ago? It’s so frustrating, but whatever the reason, if you’ve set the right expectations with your client, you’ll continue to move forward without the threat of losing your case. Technology has helped us in many ways, but don’t rely on technology to do your job for you. Know your client, and prepare your client for the underwriting process. Your client will appreciate you! Lynn Christofferson has been a disability insurance wholesaler since 1991. Lynn may be contacted at lynn. christofferson@innfeedback.com.

SOURCE: Policygenius

Financial Underwriting: What Documents Are Needed

Financial facts and figures powered by AdvisorNews.com

Consumers Power Economy, Rebounding in 3Q If the second quarter could be seen as an economic low tide, then the third quarter could be seen as the economy rushing back to high tide. And just like the tide, the economy is expected to ebb a bit, but not before giving good news. Domestic national product surged at a historic 33.1% annualized rate in the third quarter,

up sharply from a 31.4% drop in the second quarter. The extremes even out to a -2.9% average over the past four quarters.

Real GDP: Percent Change From Preceding Quarter

Even with record high unemployment, consumers led the way, with a 40.7% annualized third-quarter increase, which followed a 33.2% drop in the previous quarter. Durable-good sales were up 82.2%, indicating solid consumer confidence. Despite the rebounds, several key components of domestic demand in the early fourth quarter remain well below their fourth-quarter 2019 level. Consumer services, all three major components of business fixed investment and exports are lower. A resurgence of new COVID-19 cases and deaths and ensuing shutdowns could further slow growth into the fourth quarter as winter sets in.

Tech Is Key To Advisor Satisfaction

Wealth management firms have been making huge investments in new advisor workstation technologies designed to coalesce market data, client information, account servicing tools and AI-powered analytics into a single interface, according to the J.D. Power 2020 U.S. Financial Advisor Top Firms Satisfaction Study. For Advisor The successful execuSatisfaction tion of that investment Among independent will be key to firms’ abiladvisors ity to attract and retain advisor talent. Commonwealth Financial: 942 “While firms are investing heavily, many have Cambridge: 866 been missing the mark on Raymond James delivering technologies Financial Services: that truly meet advisor 850 needs,” said Mike Foy, Among employee senior director of wealth advisors and lending intelligence Edward Jones: 920 at J.D. Power. “In fact, just Raymond James: 867 48% of advisors say the core technology their firm Ameriprise: 743 currently provides is ‘very SOURCE: J.D. Power valuable.’ That needs to change if firms want to win the talent war.” According to the study: Improvements in technology are a key differentiator for advisors, predictive analytics show promise, and there is a disconnect between reliance on technology and value of technology, because most advisors (92%) say they rely on core planning, portfolio allocation, portfolio management and customer relationship management technologies provided by their firm. However, just 48% of advisors say that technology is “very valuable.”

Investors Going Robo

20% 50% of stock trades are made by retail investors. Source: Bloomberg

of Robinhood’s new customers this year say they are first-time investors.

75%

of all options trades in July expired in less than two weeks, a record, according to Goldman Sachs. Shorter-dated trades are seen as a telltale sign of retail investors.

December 2020 » InsuranceNewsNet Magazine

Take Steps To Bridge The Women’s Longevity Gap How advisors can add value by planning for the specific financial challenges women face in retirement. • By Ron Mastrogiovanni

depending on how well or how poorly their health conditions are managed as they age. Relevant, personalized data and actuarial longevity figures can help advisors pinpoint specific future costs, such as health care expenses. With this information, advisors can develop retirement income plans that are appropriate for their clients’ expected life spans and avoid overly conservative plans that unnecessarily restrict spending.

InsuranceNewsNet Magazine » December 2020

SOURCE: HealthView Services

peaking frankly to married clients about the implications of survivorship is a critical service that financial advisors not only can and should provide but also are uniquely suited to address. Given women’s longer life spans and the fact that women in opposite-sex marriages Average Life Expectancy for a 55-Year-Old, By Gender And Health Status tend to marry men who are older than they are, women often must be prepared to cover their expenses single-handedly for years after their husbands die. Compounding the problem, widowhood will likely occur during a phase of life when health care expenses will be at their highest. The financial and longevity disparities between women and men create a unique challenge. In our white paper “Addressing The Women’s Longevity Gap” we discuss the challenges women face in retirement, largely stemming from lower working salaries and greater lon- Plan For Retirement Health Care Costs Today gevity relative to men, making the threat of poverty quite real Three in five women age 60 and over say they are worried that for millions of women. their health care costs will exceed their retirement income, Financial advisors have an opportunity to help married men the National Council on Aging reported. On average, women and women plan strategically for the women’s longevity gap. A pay more than men do for health care in retirement, primarily prepared advisor can help women mitigate — and potentially due to women’s longer life spans rather than increased use of even eliminate — the unique financial challenges of the longev- medical services. ity gap by taking the following steps: When comparing projected retirement health care costs between a healthy 45-year-old man and his 43-year-old wife, • Make financial plans based on personalized data and actu- her costs are projected to be about $200,000 more. While arial longevity. that is a large sum, she can fund that amount by investing • Address retirement health care costs today. just $8,000 more today, assuming an investment in a bal• Start Social Security optimization planning today (with a anced portfolio of 60% stocks and 40% bonds with an average focus on survivor benefits). annual return of 6%. • Discuss finances, including Medicare surcharges, for the This example demonstrates the value advisors can provide surviving spouse. by tackling retirement planning early with couples. The nota• Plan for end-of-life costs for both partners. ble lifetime cost increases women face can be offset more easily with early planning for investments and insurance products. Make Financial Plans Based On Actuarial Longevity Advisors can sharpen the efficacy of these plans by using reliOn average, a healthy 65-year-old woman is expected to live to able, personalized actuarial health care cost projections. age 89, compared to age 87 for a healthy 65-year-old man, according to actuarial data. Compounding this longevity gap, women Start Social Security Optimization Planning Today tend to marry men two years older than they are, stretching the Designed to replace 40% of preretirement earnings, Social average length of widowhood by four years or more. Security benefits never expire. As a result, women on average HealthView Services data indicates that a given client might collect more years of benefits than men do, but a couple’s decilive much longer or much shorter than the average, largely sions about Social Security will have a major impact on benefit

TAKE STEPS TO BRIDGE THE WOMEN’S LONGEVITY GAP

Discuss Medicare Charges For The Surviving Spouse

Although Social Security is meant to replace 40% of preretirement income, other savings and investments comprise the remaining income stream and support a consistent standard of living. The sources that fuel retirement income are not treated consistently from either a tax perspective or by Medicare, making this another area where financial advisors have a real opportunity to shine for clients. Known as means testing, Medicare’s Income-Related Monthly Adjustment Amount determines the surcharges paid for Medicare Parts B and D. These surcharges vary by income and marital status. But when one spouse dies, the survivor’s income threshold is reduced by 50%, despite the fact that many may reduce their household income by only 20% after the passing of a spouse. As a result, women may be pushed into higher surcharge brackets, potentially resulting in tens of thousands

of dollars of additional costs. A financial advisor could address this challenge well before it comes up, with the understanding that Medicare measures one’s means by modified adjusted gross income. Some forms of income, such as required 401(k) distributions, do count as MAGI; and other forms, such as health savings accounts, life insurance, annuities and Roth IRAs, do not. Therefore, advisors have a significant opportunity to help clients build a balanced portfolio of savings and retirement income vehicles that will limit taxes as well as substantial Medicare surcharges.

Plan For End-Of-Life Costs

Death can come very quickly, or it can be a slow, debilitating and expensive decline, but it’s an eventuality for all. Being prepared for significant end-of-life care expenses is not something couples will ever regret. Savvy financial advisors can help client couples plan — years before retirement — for the cost of end-of-life care. In 20 years, a year of nursing home care is expected to cost $175,000, while a year of assisted living would run $100,000,

Judy’s Social Security Benefit Protection (2045-2051) SOURCE: HealthView Services

calculations and the wife’s income during the longevity gap. Social Security’s benefit calculations are based on a complex formula that tracks past earnings. Women tend to have lower earnings over their lifetimes due to their pay inequality as well as time spent out of the workforce caregiving for children, parents and spouses. Lower earnings produce a lower primary insurance amount, which is the starting point for all Social Security benefit calculations. The following strategies can help female clients maximize the stream of income they receive from Social Security. Delay retirement. Social Security benefits are based on the highest 35 years of Social Security-taxed earnings. Filling as many of those years as possible with employment is beneficial, especially with late-career, high-income years. Delay Social Security filing age. Claiming benefits at 62, the earliest possible age, permanently reduces an individual’s retirement benefits, and yet it is the choice made by about onethird of women. Delaying benefits, especially if still working, ensures that women earn a higher income later. Optimize Social Security from a household benefit perspective, including survivor benefits. Advisors should help couples maximize household income rather than looking at each spouse separately. Since many women will outlive their husbands, this approach is particularly important. For example, benefits for a man (Paul) who claims Social Security at 70 instead of at 62 will be 76% higher during his lifetime. After his death, his wife’s (Judy) survivor benefit would be 60% higher — a meaningful increase. As the lower-wage earner, a woman who is eligible for Social Security benefits may begin collecting her husband’s benefits and forgo her own, which are likely to be lower for reasons stated earlier. Plan for benefits from former spouses. Women (and men) may be eligible to collect survivor benefits from a former spouse if they meet certain criteria. Making them aware of all of their claiming options can help maximize the benefits they ultimately receive.

with dramatic regional variations in costs. This consideration is crucial for women, who, on average, spend about two-and-ahalf years in long-term care facilities at the end of life. That’s a full year longer than what the average man experiences because he has his wife to care for him. Accurately planning for a man’s end-of-life care costs is critical to his widow’s ongoing financial security. But planning for her end-of-life care costs is critical to her experience. It will define whether she has suitable care options for her final years or ends up dependent on state support or her children. Whether couples choose to buy long-term care coverage or free up additional cash to invest, or both, the steps they take now can help fill the women’s longevity gap with financial security. Understanding their personal health outlook can help guide savings amounts and selection of the most advantaged vehicles to ensure a financially secure retirement and the ability to manage future health care costs without dramatic reductions to the couple’s hoped-for standard of living. As their trusted advisor in these sensitive, important areas, you will earn their confidence, trust and referrals. And you will give your clients the invaluable: genuine peace of mind as they age. Ron Mastrogiovanni is CEO and chairman of HealthView Services. Ron may be contacted at ron.mastrogiovanni@innfeedback.com.

December 2020 » InsuranceNewsNet Magazine

INBALANCEWIRES

Just Say No To Stress Eating Do you find you’re almost at the bot-

QUOTABLE

What Makes You Eat?

Positive thoughts buffer stress, so keep your brain out of trouble 2-3 hours pre-sleep.

» Emotional eating. This is the act of eating in response to certain emotions.

tom of the bag of chips before you realize you weren’t even hungry? You » External eating. This occurs when you might be a victim of stress eating. Here eat in response to environmental, are some ways to sidestep the triggers food-related cues, such as the sight or leading to the kind of eating that stems smell of food. from emotions or feelings instead of physical hunger. Listen to your body. Ask yourself if you’re really hungry or if you’re bored, fearful or stressed instead. Lack of sleep also leads to stress eating and weight gain. Caffeine, baked goods, even sugar-free goodies can leave you craving junk food even more. Nutrition experts advise eating mindfully — eating when you are hungry and finishing when you are nearly full, eating slowly, and appreciating your food. Drinking adequate amounts of water and making time to prep and plan healthy meals also help combat stress eating.

WINTER IS A SAD TIME FOR MANY

Some call it the “winter blues,” but seasonal affective disorder is a distressing form of depression for many people. The American Psychiatric Association suggests SAD is triggered by the change in seasons when reduced exposure to sunlight creates a chemical imbalance in the brain. Some people might feel a persistent sense of sadness, sluggishness or disinterest in activities. Others may have difficulty concentrating. Nicolle Osequeda, clinical director at Lincoln Park Therapy Group in Chicago, offered some tips for combating SAD. She suggested getting outside in the sunlight or using a light therapy box every day, sticking to a consistent sleep schedule, and staying connected to friends and family. Want another tip? Go for the cozy — fill your home with warm lights DID YOU

KNOW

— Peg Baim, director of clinical training at BensonHenry Institute for Mind Body Medicine

and scents, cuddle up in a warm blanket, and wear your comfiest clothes.

MORE AMERICANS ON DIETS

MAKE YOUR MORNING MORE

If it seems as though you hear more peo- PRODUCTIVE ple turning down that slice of dessert and What you do after you get out of bed can saying, “No thanks, I’m on a diet,” that’s set the tone for the whole day. So how because more Americans are dieting can you turn a good morning into a good than there were a decade ago. day? Here are some suggestions, courtesy The Centers for Disease Control and of productivity expert and coach Ellen Prevention report that more people are Goodwin. attempting to A good morning starts the night lose weight as before, when you plan ahead. Map Who’s On A Diet? obesity rates out the tasks you need to do the next 18% of non-Hispanic white continue to day, and have the ingredients for a Americans climb. The healthy breakfast handy. Resist the 16% of Hispanic Americans CDC said 17% temptation to hit the snooze button. 15% of Asian and Black of Americans Drink a glass of water shortly Americans reported they after rising, and spend some time were on diexercising or meditating (preferaets during 2017-2018, up from 14% a bly outdoors in the sunlight). One more decade earlier. Over the same period, thing that will boost your wallet as well obesity rates in the U.S. rose to 42% of as your mood: If you’re a coffee drinker, Americans, an increase from 34%. brew your favorite beverage at home inThe heavier and more educated people stead of buying it. were, the more likely they were to report being on a diet. The report found 23% of Americans who are obese said they were on diets, compared with 17% of overweight people and 8% of those who were normal weight or underweight.

54% of Americans sleep only 6 hours per night. Source: YouGov survey

InsuranceNewsNet Magazine » December 2020

Help your clients put their equity to work with an Investors Insurance Credit Line. As more and more people face financial challenges, an Investors Insurance Credit Line may provide a solution. It’s a fast, simple way for your clients to take advantage of the equity in their whole life insurance policy to help fund critical needs like tuition, home renovations, emergencies or other unexpected expenses. With easy and convenient access to funds, an Investors Insurance Line of Credit is an option worth discussing––offering advantages to your clients and an opportunity to strengthen your relationship as a helpful and proactive advisor. • Up to 95% of cash value of whole life insurance policy 1 • Minimum credit line of $65,0002 • Competitive tiered variable rates and 84-month terms

To find out more about an Investors Insurance Credit Line, contact: Justin Delle Donne 973.924.8319 jdelledonne@investorsbank.com

1. 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, and Brighthouse Financial. 2. Exceptions available above $5,000,000. | *Other restrictions may apply.

INBALANCE

3 Ways To Break Up The Day Take a few minutes to move away from the computer screen and refresh. By Susan Rupe

eeling Zoomed out after too many video meetings? Tired of being cooped up indoors? Is your work time melting into your leisure time since you’ve been working from home? Not feeling safe enough to go back to the gym? You don’t need exercise equipment and you don’t even need to leave your workspace to enjoy a quick “reset.” Here are some simple ways to take a break and come back refreshed.

1. Stretch

There’s nothing like a good stretch to get the blood flowing and perk up your mind. Here are some suggestions, courtesy of the Mayo Clinic. Your shoulders end up stiff and painful from all the time you spend standing or sitting. To keep your shoulder muscles from feeling sore and tight, stretch the back of your shoulder by doing the following: 58

» Place one hand under your elbow. » Lift your elbow and stretch it across your chest. Keep the rest of your body still while you do this; don’t rotate your body. » Hold the stretch for 30 seconds, then relax and slowly return to the starting position. Repeat the stretch with your other arm. The back of your upper arm and shoulder also could benefit from a good stretch. Here is how you do it. Start with one arm, then repeat with the other arm. » Lift one arm and bend it behind your head. » Place your other hand on the bent elbow to help stretch your upper arm and shoulder. » Hold the stretch for 30 seconds, then relax and slowly return to the starting position. The muscles in your neck also feel the strain from too much sitting and too

much screen time. Do this head-turning exercise to stretch your neck muscles. » Face straight ahead. » Turn your head to one side while keeping your shoulders straight. » Hold the stretch for 30 seconds. Feel the tension in the side of your neck and your shoulder. » Relax and slowly return to the starting position, then turn your head to the other side and repeat.

2. Breathe

Breathing is automatic, but conscious breathing is a great way to refocus your mind and relax for a bit. The experts at the University of California at Berkeley advise taking several breathing breaks during the day. Stand and take a deep breath while you slowly raise your arms over your head. Exhale while you lower your arms, and repeat this three times.

Breathing is automatic, but conscious breathing is a great way to refocus your mind and relax for a bit.

InsuranceNewsNet Magazine » December 2020

3 WAYS TO BREAK UP THE DAY INBALANCE Another breathing technique, paced breathing, can help lower your stress levels. Here are the steps: » Inhale for a count of 2-4 seconds, and exhale for a count of 4-6 seconds. Find the combination that works for you, but make sure you exhale longer than you inhale. » Focus your attention on a specific object or sound. This will free your mind of distractions. » Take a normal breath, and then take a deep breath. Breathe in slowly through your nose, letting your chest and lower belly expand. Breathe out slowly through your mouth, pursing your lips and making a swoosh sound. » If your mind wanders, gently redirect your focus back to the counting and breathing. Abdominal breathing can bring about calm, renewed energy and increased focus. » Sit with one hand on your chest and the other on your belly. Take a deep breath in through your nose. Make sure your diaphragm (not your chest) inflates with enough air to create a stretch of your lungs. » Purse your lips and exhale slowly. Repeat three times in the beginning; then work your way to 6-10 deep, slow breaths per minute for 2-3 minutes.

hold for a breath. Release your shoulders, and slowly roll them around and back, dropping them away from your ears. Repeat five times, and then relax your shoulders.

» Open Chest Stretch. Sit near the edge of your chair, and interlace your fingers behind you, palms together and facing your back. Lean forward slightly and lift your arms so that you feel the stretch in your chest. Inhale slowly, lifting your chest. Exhale, and relax your shoulders away from your ears. Hold for 10 to 15 breaths. Slowly release your hands and return them to your sides.

are pointing up. Slide your palms back together in prayer position. Use one hand to help pull the other hand up to a comfortable spot further up on your back. Keep your shoulders straight, not rounded. Press the outside edges of your palms lightly into your back. Press your palms together gently. Press your feet into the floor. Breathe deeply, completely filling and emptying your lungs. Hold the pose for 10 to 15 breaths. Exhale, and release your arms.

3. Everyday Office Yoga Exercises

Harvard University compiled a series of exercises aimed at alleviating the tension that our shoulders, necks and upper back feel after a day of sitting at a desk and staring at a screen. Each exercise takes about two minutes, and the entire series takes about 10 minutes. Make sure you breathe deeply throughout the poses to give your muscles enough oxygen to enable them to relax.

» Shoulder Rolls. Sit upright and lift your right shoulder to your ear. Slowly roll your shoulder around and back, dropping it away from your ear. Repeat with your left shoulder. Continue these rolls three more times, alternating right and left. Lift both shoulders up to your ears and

» Neck Stretch. Sit upright without letting your back touch the back of the chair. Hold your head directly over your spine, as if there is a string lifting the crown of your head up. Drop your right ear toward your right shoulder without lifting your right shoulder or turning your head. Take several breaths in and out, feeling the stretch on the left side of your neck. If you want a deeper stretch, reach your right hand over your head and place it on the left side of your face. Hold the pose for at least five more breaths, and then release your hand and straighten your neck, gently massaging your neck and shoulders with your left hand. Repeat on your left side. » Reverse Prayer Pose. Sit near the edge of your chair. Reach your arms around behind you, and bring your palms together, fingertips pointing down. Rotate your wrists and turn your fingertips in toward your spine until your fingertips

» Twisted Arms. Sit upright without letting your back touch the back of the chair. Reach your arms out in front of you at shoulder level. Tuck your right elbow into the crook of your left arm, and curl your forearms up into a 90-degree angle. The backs of your hands will be against each other. If you can, place your left fingers on your right palm, keeping palms straight in a single line with your nose. Breathe deeply, completely filling and emptying your lungs. Hold the pose for 10–15 breaths. Return to the center. Repeat with the right arm, placing your right fingers on your left palm. Susan Rupe is managing editor for Insurance NewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

December 2020 » InsuranceNewsNet Magazine

BUSINESS

The 3-Part Day, Or How To Avoid Being A Workaholic The way to make time for the things you want to do is to plan the time you spend doing work. By Lloyd Lofton

ife should have the right balance between work, family, sports, exercise and spirituality. That balance will help us be more productive and better able to cope with our problems. I work the way I do because I have been programmed into a certain way of thinking. One of the most important things I learned in the early days of my career was time management. When I started as a debit agent in 1977 with John Hancock in Alton, Ill., we were taught to break our day into three parts — the morning (typically 8 a.m.-noon), the afternoon (typically 1-5 p.m.) and the evening (6-9 p.m.). Back then we made about $8 for each sale and there were no renewals, so it was important that we get a sale in each part of the day. That was the goal we shot for every day, because it was difficult, and you had 60

to make a living! My manager did not accept excuses. He was a seasoned door-to-door guy, and he would tell us excuses are like rear ends — we all have one and they all stink. He recorded our production on the blackboard every day. If you wrote a Little Giant (that’s what Combined Insurance Co. called the product), he wrote an “S” in your column. If you sold a policy with a rider, he wrote an “SR”; if you wrote a policy on a spouse, an “H/W” was put on the board; and a family plan earned you an “F”. If you blanked — that is, you didn’t write any business — he wrote a “B.” As he explained it, “If you blank today, I’ll put up a “B”; if you blank tomorrow, I’ll put up a “B”; if you blank the third day, I’ll put up a “BD.” I asked him, “Mr. Thompson, what is a ‘BD’?” He responded, “Son, if you blank three days in a row, you’re out the back door!” We were taught discipline back then. We were taught to set goals in each period of the workday, in each week and in each month. We discussed our goals, and we were held accountable for our results,

InsuranceNewsNet Magazine » December 2020

regardless of what they were. When I became a sales manager in 1980, one of the things I did when running a team was to help them recognize the importance of time. I held my team accountable for their time. The only time that would count was time spent working with a customer. We didn’t count the time you were reading the map (no Google maps back then), drinking coffee, eating lunch, driving by the prospect’s house wondering whether you should knock on the door. The only time we counted was time spent in front of a customer. I learned from all of this. I listened to motivational speakers and read motivational books. I studied from motivators such as Dale Carnegie, Earl Nightingale, W.C. Stone, Zig Ziglar and Robert Schuller, and I learned the clichés that would speak to me. “Act like the person you want to become and pretty soon you’re that person.” “When the day is done, make one more call and go home feeling good with a sale.” “You’re either getting better, or you’re getting worse — there is no status quo.”

THE 3-PART DAY, OR HOW TO AVOID BEING A WORKAHOLIC BUSINESS “If you have two jobs to do, do the one you dread the most first and get it out of the way.” I’ve been accused of being a workaholic, but I don’t think I am. I read two books a month, practice my guitar every morning, work in the yard, antique shop with my wife of 35 years on the weekends, and participate in National Speakers Association, Toastmasters and other groups. My wife and I visit our kids around the country often and make time for each other. I coach salespeople for free several times a month and frequently take calls from business owners just looking for some quick advice. The way I make time for the things I want to do is to plan as effectively as possible the time I spend working. I still break my workday into three parts. I wear my management hat in the morning — recruiting, training and problem-solving as needed. In the afternoon, I am selling. My lunchtime is spent planning my afternoon and early evening. I believe in work and reward. I try to have lunch with my wife at least twice a week, go with her to the grocery store, shop for the grandkids or wait in the car outside Hobby Lobby. I reward myself with other activities during the week, but only after I have my

As you move toward a new year, setting your goals and determining what you want to accomplish to be the best you can be, I’d like you to remember three things as you prepare yourself for the best sales year ever: 1. Have a good prospecting plan and have your friends (your customers) help you with referrals, which are a big part of growing your business. 2. Continue to learn the best techniques possible. You need to meet weekly with your manager or with your people. Sales meetings are very important to refine and define those techniques that bring the best results. Learning and applying the best-practice sales processes never end. 3. Last and most important — be the owner and manager of your most important commodity — your time! — Lloyd Lofton

work done, and that is the way I like it. When I was a field trainer and regional manager with Combined Insurance, I was accustomed to being out of town each week, working with a crew and living in a motel where there were no interruptions. When I would work closer to home and stopped home for lunch, it seemed like the sink was always leaking, or something would delay or ruin my sales day. We need to learn early in life that we are not plumbers or mechanics. If my car breaks down, I take it to the garage and let them fix it instead of trying to do it myself. Our time is too valuable to mess around with things we can get the experts to do for us.

4 MOTIVATIONAL QUOTES That Helped Me Be A Better Manager “When the day is done, make one more call and go home feeling good with a sale.” better, “You’re either getting rse or you’re getting wo o.” there is no status qu

“If you have two jobs to do, do the one you dread the most first and get it out of the way.”

Here are seven ways to lose control over your workday. 1. Do not schedule your time. Just let the day flow and other people will schedule it for you. 2. Do not break the day into parts, knowing in advance what you want to get done in each part. After all, you never know what may come up. 3. Do not set goals, especially short-term ones. Setting goals can make you feel guilty when you do not achieve them. 4. Do not feel guilty when you do not finish what you plan to get done for the day or the week. 5. Do not listen to any motivational messages or read any books on sales or management techniques. This could even infect your co-workers. 6. Stay in your office in the afternoon. After all, your hardworking salespeople may want to come in and tell you their problems. 7. Go home for lunch. The sink may need fixing, or your neighbor may need help with some problem. Work can wait; after all, you are a manager. Every one of us is a manager. We are managers of the most important commodity we have — our time, of which we have no guarantees. Lloyd Lofton is the founder of Power Behind the Sales. He is the author of The Saleshero’s Guide To Handling Objections, voted one of the 11 Best New Presentation Books To Read in 2020 by BookAuthority. Lloyd may be contacted at lloyd.lofton@innfeedback.com.

December 2020 » InsuranceNewsNet Magazine

INSIGHTS

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

Three Steps For Review Appointment Success How you can move the needle within your business and lead efficient meetings. By Timothy Daniel Clairmont

s you have progressed through your career, you have probably developed a great strategy to approach prospects, showcase your knowledge and explain the benefits of becoming your client. But how do you keep your clients engaged in your financial planning process year after year? You usually have only one hour during an annual review to make sure your clients’ needs are met and to skillfully address any new priorities and opportunities they have to leverage your expertise. By following our clear process in every review appointment, you can move the needle within your business and lead efficient meetings.

Step 1: Begin With Clients’ Questions

At the beginning of every review, ask your clients what questions, thoughts or concerns they have. Over time, your longterm clients will anticipate this first step and appreciate that their concerns are your top priority. I always begin the meeting by laying out the agenda and explaining that this step can take as long as the whole hour for some clients or just a few seconds for others. Only after we have finished reviewing their questions, thoughts and concerns will we move to Step 2. Clients quickly realize that to reach the next step — your recommendations — they need to succinctly address their concerns so they can learn what you are prepared to share.

Step 2: Provide Your Recommendations

Now that you have addressed your clients’ most pressing concerns, you can move on to your questions, thoughts, concerns and 62

recommendations. Your clients know they have only an hour for the review. They want to get your input and recommendations so they can lean on the expertise that you continue to provide each year. If you have a lot of things to cover, this step can take up much of your meeting time. But you started the meeting by putting the client first.

Step 3: Cover The Five Tenets Of Financial Planning

Provided that you have enough time, hit the third step, which is covering the five tenets of financial planning. The five tenets are set up by the Certified Financial Planner Board of Standards and include rate of return, retirement income planning, estate planning, tax planning and protection planning. This portion of the conversation is an important reminder to establish your role as their most trusted advisor. It informs them that you care about the whole picture; it identifies which parts of the planning process are your responsibilities, and it clearly communicates the roles that your clients’ other professionals play in their overall financial plan. Recapping these five tenets each time ensures that no critical areas of your clients’ overall plan are being neglected.

Rate Of Return And Retirement Income Planning

As a financial advisor, I own the first two categories of financial planning — rate of return and retirement income planning. I let the client know that these are my primary responsibilities, and that we work with other professionals who will be responsible for their roles in the overall financial plan. If you are strictly an insurance professional, you might not own these tenets, but it’s important to touch on them so that you show your clients you are aware of their entire picture.

Estate And Tax Planning

Similarly, an attorney or accountant may

InsuranceNewsNet Magazine » December 2020

own the next two tenets: estate planning and tax planning. Although I regularly collaborate with other professionals, I am clear about who carries the responsibility for these tenets. It’s important to make sure the client feels they remain completely taken care of and that someone is watching their whole picture. With estate planning, we make sure every client has a will, an advance directive, a durable power of attorney and other basic legal documents. These basic legal documents may vary by country. We also want to routinely check in on our clients’ tax planning and ensure that they are legally minimizing taxes throughout the entire financial planning process.

Protection Planning

Protection planning breaks into three subcategories — health insurance; property and casualty insurance; and life, long-term care and long-term disability insurance. Although I do not handle health insurance, I refer clients to ensure they are adequately covered. Property and casualty or auto and home insurance is the next subcategory, and I work with their other professionals to be sure my clients have appropriate protection amounts in place. The final area that I review and take primary responsibility for is one vital to my role as their financial advisor: life insurance, long-term care insurance and longterm disability insurance. By going through the five tenets of financial planning, your clients will feel thoroughly reviewed and more confident in facing the year ahead. Even if you don’t own one of the tenets, your clients know you’re paying attention to the full picture and can delve deep into your respective specialties. By addressing client questions first, your own recommendations second, and the five tenets of financial planning last, every review appointment will keep your clients engaged in the process and committed to your relationship. Timothy Daniel Clairmont, CFP, MSFS, is the founder and CEO of Clear Financial Partners, a holistic financial planning firm serving pre-retirees and retirees in the Pacific Northwest. He is a member of MDRT’s Top of the Table. He may be contacted at timothy.clairmont@innfeedback.com.

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.

INSIGHTS

‘Four Under 40’ Recipients Describe Their Steps To Success These rising stars discuss how they navigated their first few years in the business. By Ayo Mseka

hat does it take to find success early in your career? For an answer to this question, we turned to a group of NAIFA members who know a thing or two about achieving early success: the 2020 recipients of NAIFA’s Four Under 40 Awards. The responses we received from these rising stars will help you navigate your first few years in the business and empower you to move your career forward.

Steps To Success

A common response we received from all the award winners was the pivotal role NAIFA membership played in their rise to the top. In addition to joining NAIFA, here are steps the Four Under 40 recipients took to move ahead.

From Andy Bartling, Modern Woodmen of America, Rapid City, S.D.

Create meaningful bonds with clients. Bartling enjoys working with clients who are as varied as the people he meets in his community outreach — from young families to retirees to small-business owners. His practice offers them individually tailored service, creating unique financial plans that include life insurance, health insurance, retirement planning and investment components. He approaches client relationships the same way he approaches networking, and he avoids the superficial in favor of establishing meaningful bonds.

From Sam Sones, Lincoln County Farm Bureau, Brookhaven, Miss.

Enjoy what you do. It all boils down to how much you love what you do, Sones said. If you serve people and serve them well, you will succeed. If you enjoy what you do and you do it well, you will find success. Don’t be afraid to do business in a personal way. Sones sends personalized greeting cards to all his clients and is in constant touch with them. Make it your primary objective to take the time to find out your clients’ financial needs. “If you can agree with the client about their financial need, then there is a high possibility you will make a sale,” Sones said. And even if you don’t make a sale, taking the time to discover your prospect’s need is always a good thing and helps build meaningful relationships. Keep it simple. Don’t overcomplicate what you are saying to the client. Lay out options in simple terms and communicate them simply. Be organized. You must figure out a way to be organized because lack of organization is a major barrier to growth, Sones said. For at least 10 years, he has used a system that organizes all his activity. He faithfully uses this system every day. “I make my living by doing the little things that many people do not want to do,” he said.

“If you can agree with the client about their financial need, then there is a high possibility you will make a sale.”

From Joyce Yoo, New York Life, San Francisco

Embrace continuous learning. Yoo’s love of learning is one thing that helped her move ahead. For example, she attends a tax seminar every year to learn about the latest tax changes that might help her clients. “I believe that by constantly learning, I can help my clients with more of their financial problems,” she said. Participate in study groups. Yoo is able to learn from the successful advisors who belong to the same study groups that she does. “I know who I can call on in my network for advice, motivation and support,” she said.

“I believe that by constantly learning, I can help my clients with more of their financial problems.”

From Richard Demko, The Guardian Group, The Woodlands, Texas

Tap into the knowledge of seasoned professionals. In order for new agents to find success, they should make it a point to draw on the expertise of industry veterans, Demko said. “Our industry is really a game of survival,” he said. “For the guys who have been around a long time, there’s a reason they’ve been around a long time; so it would be silly not to tap into that knowledge and expertise.” Ayo Mseka is editor of NAIFA’s Advisor Today magazine. She may be contacted at ayo.mseka@innfeedback.com.

December 2020 » InsuranceNewsNet Magazine

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

INSIGHTS

Coverage Concerns And The COVID-19 Effect The life insurance coverage gap already was a concern before the pandemic became a reality.

Concerned About Adequate Life Insurance Yes, Somewhat

By Alison F. Salka

mong all of the intense effects the pandemic has imposed, perhaps the most universal is also the most human — a greater-than-ever awareness of how fragile life can be. Intertwined with this reality is a deep sense of the need for financial preparation should the worst occur. The devastating economic fallout that has rippled through the U.S. further underscores this need to ensure that people have reliable safety nets “in case of emergency.” It is noteworthy that the life insurance conversation fits both of these contexts. LIMRA’s life insurance research program, which has closely tracked the product for decades, has uncovered some interesting new findings from the pandemic. One relates to the presence of a “coverage gap.” To explore this issue, it’s helpful to first step back for a moment. When we discuss the life insurance coverage gap today, we acknowledge that it was already a pressing challenge and a social concern before COVID-19 turned the world upside down. According to this year’s LIMRA-Life Happens Insurance Barometer Study, over the last decade, there has been a steady decline in the percentage of the U.S. population with life insurance coverage. This year, just 54% of Americans own the product in any form — individual, group or a combination. It is also valuable to clarify that the gap refers not only to people who are completely uninsured, but also to those who do have some insurance (yet not enough). Even those who are insured are typically underinsured. For example, earlier LIMRA research shows that households already owning 64

Yes, Definitely

26%

30%

34%

23%

24%

March

May

July

Source: Consumer Sentiment in the Time of COVID-19, LIMRA, 2020

life insurance still have an average need gap of nearly $225,000. This was the general situation before COVID-19 entered our reality, ushering in an era of even more grave concern. To date, almost 7 million Americans have contracted the virus, and more than 200,000 have died from it. This tragedy can produce some overwhelming financial repercussions for the families these people leave behind. Consider that, according to our Barometer study, 44% of American families would face financial adversity within just six months if they lost their primary wage earner. So, how has the pandemic — as both a human and an economic crisis — affected the American mindset? LIMRA’s Consumer Sentiment Study reveals that general anxiety about COVID-19 is prevalent. Thirty-two percent of respondents are extremely concerned about it; an additional 26% are very concerned. Some people also express wide-ranging worries about the personal impact of the pandemic. For instance, 34% report they are extremely or very concerned about their household’s long-term financial security, and 34% say the same about their own physical health. Specific to life insurance, LIMRA research indicates that COVID-19 has increased consumers’ readiness to buy:

InsuranceNewsNet Magazine » December 2020

» 68% of recent buyers (those who already purchased coverage in the past 24 months) say COVID-19 makes them more likely to buy life insurance in the next 12 months. » 22% of non-buyers (those who have not purchased any life insurance in the past 24 months) say the pandemic has increased their likelihood to buy the product. What’s more, as the crisis wears on, there is evidence that consumers are becoming more concerned over time about having sufficient coverage. In March, 49% agreed they were concerned about having adequate life insurance. This proportion increased to 53% in May and to 58% in July. Ultimately, under today’s difficult circumstances, it is more critical than ever for the life insurance industry to act on what consumers are telling us. They have articulated both a substantial opportunity and a real obligation to reach out to them to meet coverage needs and help ease their worries. Alison F. Salka, Ph.D., is LIMRA senior vice president and director of research. Alison may be contacted at alison.salka@innfeedback.com.

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