InsuranceNewsNet Magazine - January 2019

THE STATE OF INSURANCE IN 2019 Annuities are going gangbusters but sellers are facing shifting regulation and more demanding clients.

PAGE 16

NEW YEAR • NEW SECTION A Sales Rebound: How Real Is It? PAGE 8

Christophe Morin Serves Up A Sales Cocktail PAGE 10

Introducing InBalance — your new monthly journey into wellness, lifestyle and a better you. PAGE 40

Key Annuity Trends Going Into 2019 PAGE 30

Make Life Easy In 2019, discover how Assurity is delivering faster and easier ways to do business. (page 7)

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Wow, that was easy.

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Get ready in 2019 for new approaches to underwriting, product and process to make it easier for you to serve your clients.

Talking the talk is one thing, seeing results from producers like you is another.

While industry sales are relatively flat, Assurity’s Term Life with Accelerated Underwriting is up 249% from a year ago. Sales on Assurity’s Simplified Critical Illness Insurance increased 119% in 2017 and 2018 is going just as strong.* We’re on to something big, and now is the time to bring on more people like you.

Learn more about how Assurity will help grow your business in the new year at Assurity2019.com.

* Sales are based on individual sales of Assurity’s Term Life Insurance and Simplified Critical Illness Insurance over calendar years 2016, 2017 and 2018.

NOT AVAILABLE IN NEW YORK. Policy Form Nos. I L1702, I H0810 and CI 005 underwritten by Assurity Life Insurance Company of Lincoln, NE. Assurity is a marketing name for the mutual holding company Assurity Group, Inc. and its subsidiaries. Those subsidiaries include but are not limited to: Assurity Life Insurance Company and Assurity Life Insurance Company of New York. Insurance products and services are offered by Assurity Life Insurance Company in all states except New York. In New York, insurance products and services are offered by Assurity Life Insurance Company of New York, Albany, NY. Product availability, features and rates may vary by state.

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IN THIS ISSUE

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JANUARY 2019 » VOLUME 12, NUMBER 1

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FEATURE

Agents Of Transition: The State Of Insurance In 2019

By John Hilton

Annuities are making a comeback while tougher regulations loom on the horizon.

LIFE

26 Why Are So Many Universal Life Insurance Policies Failing?

By Jordan Smith Much of it reflects a fundamental misunderstanding of how these products are designed to work when properly tended to.

INFRONT

8A Sales Rebound: How Real Is It?

By John Hilton The settled regulatory landscape freed agents to resume selling popular annuity products.

INTERVIEW

IN THE FIELD 20 Deep Roots, Strong Growth

By Susan Rupe Karen DeRose grew up in the insurance business and now her children are helping her serve the next generation of financial planning clients.

2

38 Direct Indexing Captures The Imagination Of ETF Enthusiasts

By Teun Lucas Direct indexing offers an appealing solution when an investor is explicitly concerned about tax and liquidity.

INBALANCE

10 The Sales Cocktail

An interview with Christophe Morin Christophe Morin is a leader in the field of neuromarketing — essentially how the brain processes marketing messages. In this interview with Publisher Paul Feldman, Morin reveals how primitive our brain really is and how marketers can use science to close the sale.

ADVISORNEWS

42 Yoga And Meditation: A Ripple Effect Heals More Than Just You

ANNUITY

30 K ey Annuity Trends: Mergers, Simplification, Amazon-ification

By Kent Sluyter With an industrywide sales rebound in 2018, there are reasons to be optimistic in 2019.

By Naama O. Pozniak A health insurance broker believes if agents and brokers incorporate these practices into their own daily lives, they will be more likely to share their positive experiences with others.

HEALTH/BENEFITS

34 Shift In The Asset-Based LTCi Market Is Expected To Grow

InsuranceNewsNet Magazine » January 2019

By Tracey Edgar Asset-based LTCi’s emphasis on guarantees is likely to resonate even stronger if uncertainty in today’s broader economic climate continues to emerge.

44 When An Airport Layover Becomes Party Time

By Bryce Sanders Ever wonder how you can get into one of those airport clubs?

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Don’t Let Your Clients Sign

ANYTHING

ALSO IN THIS ISSUE

JANUARY 2019 » VOLUME 12, NUMBER 1

BUSINESS

46 Let It Go: Delegating Scheduling Can Boost Your Productivity

By Gina Pellegrini Scheduling is the most important component to grow your business. But in most offices, scheduling does not get the proper attention it deserves.

INSIGHTS

48 NAIFA: The Industry Must Attract, Not Recruit, Female Advisors

By Ayo Mseka and Susan L. Combs The industry must change its training model to make the business more attractive to female advisors.

WIRES 14 NewsWires 24 LifeWires

50 M DRT: When Heirs Don’t Understand: Estate Planning Consequences

By Gregory B. Gagne When family members do not understand their loved one’s intentions, or don’t agree with their decisions, quarrels may ensue.

52 LIMRA: Plan Advisors Show Interest In DC Income Strategies

By Mark Paracer New options for building and managing retirement income inside of a defined contribution plan have been competing for the attention of retirement plan advisors.

28 AnnuityWires 32 Health/Benefits Wires

36 AdvisorNews Wires 40 InBalance Wires

CORRECTION: An incorrect photo was inserted into the author biography of Eric Thomes’ article, “These Go To 11: Indexing Beyond Rates, Renewals,” that appeared in the December issue of InsuranceNewsNet. The author’s correct photo appears here:

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CORPORATE ACCOUNTANT Elizabeth Nady Copyright 2019 InsuranceNewsNet.com. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@insurancenewsnet.com, send your letter to 275 Grandview Ave., Suite 100, Camp Hill, PA 17011 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 115, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 717.441.9357, Ext. 115, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 275 Grandview Ave., Suite 100, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein.

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WELCOME LETTER FROM THE EDITOR

Finding The Whole

I

was dizzy and anxious, certain that I had multiple sclerosis, but I was fixated on a distorted image of myself in the doctor’s third eye.

The doctor looked like Larry from The Three Stooges with a head mirror and a few dozen more IQ points as he asked me about my symptoms: increasing dizziness, tingling in my hands and a pervasive sense of doom. Then he flipped down the disc over his right eye and peered at my eyes, throat and ears through the little hole in the middle of the mirror.

I laughed at the absurdity of it. What decade was I in? Then again, everything had been a whirl since the previous September — long hours at the newspaper where I worked, a rocky economy threatening that newspaper along with the rest of the country’s stability and an uneasy sense of something about to explode, anywhere at any time. On a beautiful day, a plane could come out of the clear, blue sky and blot out the sun.

The doctor didn’t need to ask me any more questions, I thought. I was sure I had MS. Why? Because this was 2002 and I knew how to ask the internet. This was before I realized that typing symptoms in the search box yielded the worst possible scenario at the top of results. And the more I would read symptoms, the more certain I was that I suffered whatever dreaded malady they were attached to.

And in fact he did not ask about any other physical symptoms. He flipped the disc back up and asked me about my life.

I was taken aback by what felt like an intrusion. Sure this guy can poke, prod and examine me, but let’s not get personal, all right?

My life then was contained in a small cabin that my wife and I had converted to a year-round residence on top of a hill next to a lake in Northeastern Pennsylvania. It sounds romantic in a tidy sentence like that.

Then add two dogs in this tiny house, drunken and nasty neighbors and slippery accessibility in the icy winter and you fill in the picture a little more. Factor 6

in all the expenses to convert what we thought would be a cheap house into a winter-ready residence (drilling a well was $10,000 alone) and my wife losing her job to get all the makings of a pressure cooker.

The doctor asked me what I did for fun. Well, I didn’t have much time outside of the long hours and commute. I guess I liked walking the dogs.

“So, all you have in your life is stress and dogs?” Dr. Larry asked.

Finding My Way Back

Yes, he had a point there. I slumped in the realization of what my life had become.

He pulled out his prescription pad, scribbled, ripped off the form and said, “I am going through a divorce and this is saving my life,” before handing me the slip and toddling off.

It was for Zoloft. And it did actually help ease my life, although the dizziness persisted. An MRI later revealed the cause — sinus infection, which an antibiotic cleared up.

I stopped taking the antidepressant but it had helped me see that I had been making myself miserable. That was the first step in a long walk to a sense of balance.

Regular exercise helped but the most important thing I did was inhabit my life. I had been absent, too busy worrying about details and how to survive tomorrow. I saw that all the tomorrows came and I dealt with them somehow. It did not matter if I worried about the future or regretted the past — the days came and went.

Meditation helped me get in touch with that. Although it looked to me like just sitting and wasting time, it turned out that concentrating on my breathing helped me make better use of my time.

The biggest lesson was that the only thing I can actually control is my reaction.

Getting acquainted with my own thinking helped me enjoy walking to work and even the drudgery we all face in working.

That is only one of the ways to find a balance in our work life and “real” life. It is all real life. If you are not happy in one

InsuranceNewsNet Magazine » January 2019

aspect, you are not likely to be happy in the other.

Enter InBalance

This is the mission of a new section we are starting this year — InBalance. We will be featuring articles on well-being and living well. For example, this month we have an item on getting started with yoga for wellness, and how to get into those exclusive lounges at the airport for living well.

The term work/life balance has been thrown around for some time now. I am sure many of us think that it’s for other people and we are just fine. But dissatisfaction and dislocation have ways of bubbling up in seemingly unrelated symptoms.

A lot of life can slip by if we are not present. Kids grow up and go away, friends fade away and relatives pass away.

We do not enter and exit states of flux — flux is the state. Change carries us like a boat on a river.

I am enjoying that ride more these days thanks to Dr. Larry. His prescription helped, but it was more his ability to stop what he was doing and ask about the whole person in front of him, much like advisors should be doing with their clients.

Little did I know that looking at a warped vision of myself in a mirror would lead to clarity.

Here’s to a happy, healthy new year.

Steven A. Morelli Editor-in-Chief

Amplify Opportunities With Assurity’s Straightforward Products Quick and easy term life and critical illness solutions benefit clients and producers

A

s producers look to meet the demands of very different generations — from baby boomers to Gen-Xers to millennials — one consumer sentiment applies to all groups: The traditional insurance process is too long and complicated.

Assurity Life Insurance Company has introduced quick, easy and straightforward products and processes to solve this common complaint.

Assurity’s Term Life Insurance Paige Phelps, with Accelerat- Regional Sales Manager ed Underwriting and Simplified Critical Illness Insurance are designed to make buying insurance easier.

is on the same page.”

Open communication can break down barriers caused by insurance complexity says Phelps. “The need for advice and understanding will always be a part of what consumers want from our industry.”

Assurity created Term Life with Accelerated Underwriting to be part of its simple solutions that are quick and easy to support an advisor in building a strong book of business. Assurity’s innovative process uses real-time data to provide instant decisions and policy delivery in a matter of a few days.

“There are advantages on both sides of the table,” Phelps says. “A consumer stays engaged in the process because they don’t have to wait weeks to receive a policy, which helps advisors avoid the issue of buyer’s remorse. The advisor also benefits by being able to spend their time helping more clients, while getting paid quickly.”

Term Life with Accelerated Term Life with AcceleratUnderwriting ed Underwriting appeals to clients who want affordable, • Flexible face amounts from flexible coverage and a faster, $25,000 to $10 million on all easier way to buy life insurance. underwriting classes.

Through the use of technology, such as mobile quoting appli• Competitively priced. cations, electronic applica• Attractive return of premium tion platforms and accelerated underwriting, Assurity is option.* meeting key consumer needs • Conversion available. for speed and accessibility.

Assurity is focused on sim• E-application and accelerated plifying the sales process for underwriting for faster additional products as well, inapprovals. cluding Simplified Critical Illness Insurance — a solution to * Return of premium benefit provided under the Endowment Benefit Rider (ROP rider in some states). provide financial freedom for clients facing a major illness “If insurance had a middle name, it diagnosis. would be ‘complexity.’ Our language With just five health questions, no exis not easy to learn or easy to under- ams and an instant decision, Assurity’s stand. But this isn’t new — we all e-application process can be completed know this,” says Paige Phelps, region- in minutes. al sales manager, Assurity Life Insur“We are at the point with the Simance Company. “One of the best parts plified Critical Illness Insurance policy of my job is helping advisors simplify that an advisor and customer will spend the conversation so everyone involved a total of 15 minutes on an application S P O N S O RED CO N T EN T

and have an approval at the end of the call. Pretty cool stuff,” says Phelps.

For 2019, Assurity is launching a new critical illness product, enhancing the features and benefits of the current offering while retaining a streamlined, simplified approach. To support advisors’ goals of providing solutions of significant value to their clients, Assurity is adding higher issue ages, greater face amounts and more covered conditions.

Simplified Critical Illness Insurance • Instant decision and policy delivery in days.

• Voice signature option.

• Benefit amounts up to $50,000.

• Competitive commissions — both up front and at renewal.

“At Assurity, we continue our mission of helping people through difficult times by providing affordable insurance protection that is easy to understand and buy,” says Phelps. “With both simplified issue and accelerated underwriting, advisors can help customers get protected sooner and stay on track with their financial goals.” •

Want to learn how to reach more prospects with the latest strategies?

Visit Assurity2019.com to download our Social Media Playbook.

INFRONT

A Sales Rebound: How Real Is It? A variety of factors led to impressive quarterly sales for annuities and life insurance.

T

By John Hilton

hird-quarter sales numbers revealed a lot of goodness for both life insurance and annuities — but especially annuities.

Several core annuity product lines posted impressive numbers in the quarter, due to a variety of factors.

Perhaps the biggest reason is that the settled regulatory landscape freed agents to resume selling popular products.

A couple of big numbers reported by the data collectors: » Fixed deferred annuity sales were $29.6 billion, up more than 46 percent when compared to third-quarter 2017, according to Wink’s Sales & Market Report. Fixed deferred annuities include the indexed annuity, traditional fixed annuity and multi-year guaranteed annuity product lines. » Variable annuity sales increased 25 percent in the third quarter over the third quarter of 2017, LIMRA reported.

More on annuities in a moment — the big question is, will it continue?

Looking ahead to 2019, Sheryl Moore,

president and CEO of Wink, said annuity sales should remain strong across the board.

On the fixed side of deferred annuities (indexed, fixed, multi-year guaranteed), sales are up “primarily because rates have been on the uptick and product manufacturers have been offering incentives over the past quarter,” Moore said.

‘Increased Commissions’

Indexed annuity sales drove much of the third-quarter growth, and were up more than 38.4 percent when compared with the same period last year, according to Wink data.

“Some companies have offered increased commissions to their salespeople, while others have offered more attractive credited rates or increased bonuses to the policyholder — all of which have culminated to an increase in overall sales,” Moore said.

The growth of registered index-linked annuities, or RILAs, tells an interesting story, for example. Sales are estimated to be up nearly 40 percent from the prior quarter. RILAs have a limited negative floor and limited excess interest that is determined by the performance of an external index or subaccounts.

RILA sales are up primarily as a result of new companies entering the market and general interest in this rapidly

expanding new product niche, she explained. While RILAs experienced the highest gain, they had the least amount of sales as well, Moore said, referring to it as “making something out of nothing.”

VA sales growth is being driven by an increase in RILA sales, LIMRA said, which were nearly $3 billion in the third quarter.

“With more companies signaling their intention to enter the market, LIMRA SRI expects this market to top $10 billion by the end of 2018,” said Todd Giesing, annuity research director for the LIMRA Secure Retirement Institute. “Greater volatility in equity markets and better pricing due to rising interest rates are attracting consumers looking for a blend of growth and downside protection.”

Third-quarter RILA sales grew 27 percent, representing 12 percent of the VA market. While fee-based VAs increased 43 percent over prior year to $800 million, this is down 6 percent compared with second quarter results.

“There continues to be operational hurdles in the fee-based VA market, which challenge adoption of these products by certain distribution channels. We expect companies will work to resolve these in the next few years,” Giesing said.

LIMRA SRI is forecasting VA sales to increase less than 5 percent in 2018, Source: Wink Inc.

Indexed Annuity Sales By Quarter (in millions) $18,000 $16,500 $15,00 $13,500 $12,000 $10,500 $9,000 $7,500 $6,000 $4,500 $3,000

3Q08 8

3Q09

3Q10

3Q11

InsuranceNewsNet Magazine » January 2019

3Q12

3Q13

3Q14

3Q15

3Q16

3Q17

3Q18

A SALES REBOUND: HOW REAL IS IT? INFRONT Source: Wink Inc.

Non-Variable Deferred Annuity Sales By Quarter

GROW YOUR

BUSINESS

(in millions) $32,000 $28,000 $24,000 $20,000 $16,000 $12,000 $8,000 $4,000 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17

2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

which would represent the first annual growth for VA sales in six years. VA sales are expected to dip slightly in 2019 in anticipation of equity market declines.

consecutive quarters,” said Ashley Durham, associate research director, LIMRA Insurance Research.

Number Crunching

LIMRA also found that fixed UL sales were flat, mainly due to “product discontinuation and rate hikes.”

UL third-quarter sales were $325 million, down more than 20 percent compared to the second quarter and down 39.1 percent year-over-year, Wink reported.

Other lines were up and down, LIMRA found: » Lifetime guarantee universal life declined for the sixth consecutive quarter, down 10 percent in the third quarter. Year-to-date LTGUL fell 16 percent, compared with the prior year. LTGUL represents 17 percent of UL sales and 6 percent of total life premiums. » Variable universal life new annualized premium increased 29 percent for the quarter and 14 percent year-to-date. » Whole life new annualized premium rose 3 percent in the third quarter. » Term life insurance new premium grew 1 percent in the third quarter and year-to-date.

Overall, U.S. life insurance new annualized premium increased 3 percent in the third quarter, and 1 percent for the year, LIMRA found.

Wink plans to add additional product lines, such as term life, to its report in the coming quarters.

Third-quarter life insurance new premium sales data had a little good and a little bad.

How good and how bad depends on the time frame comparison and methodology used. Diving deeper into those things explains why LIMRA and Wink were both correct with their “universal life is up” and “universal life is down” reports, respectively. First, the numbers: » Indexed UL new premium climbed 10 percent in the third quarter and 12 percent year-to-date, LIMRA reported.

Both figures were year-over-year. » Non-variable UL was down 11 percent compared to the second quarter and down more than 15.6 percent year-overyear, Wink reported.

All of these data points are correct, but we need to add some context. Wink tallies “non-variable UL,” which included indexed and fixed UL. Wink went on to note that its numbers show IUL down 4.6 percent compared to the second quarter, but up 10.5 percent over third-quarter 2017.

A LIMRA spokesman said the organization is sticking with strictly year-over-year comparisons “because, in our experience, there is a seasonality factor that comes into play. Sales in certain quarters tend to run higher than other quarters.”

IUL premium represented 65 percent of UL premium, and 24 percent of all individual premium for the first three quarters, LIMRA noted.

“Market conditions continue to be favorable for IUL products. IUL premium has increased for the past eight

Flat Sales

I n s u r a n ce N ews N et 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.

January 2019 » InsuranceNewsNet Magazine

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INTERVIEW

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InsuranceNewsNet Magazine » January 2019

THE SALES COCKTAIL INTERVIEW

W

hen we last spoke in the brain. It sounds spooky but it’s ap- of our operating system, if you will, which with Christophe plying good science to augment what you is higher in the brain. It has given us the Morin, he told us can understand about customers by tap- capacity to use language and to evaluate about the different ping into their brain responses. aspects of our behavior that could have parts of the brain What we’re finding is marketing and consequences in the future. and the various stages of decisions. He advertising spending has been based for Our new research firmly establishwas, and still is, a leader in the field of neu- too long on the assumption that people es that the primal brain, as ancient as it romarketing — which is essentially how are mostly rational, logical decision-mak- may be, continues to dominate our decithe brain processes marketing messages. ing machines. sion-making process.

That was 2011, and now most of us And I don’t know about you, but I have The primal brain is the dominant sysknow that the oldest part of the brain, the rarely met anyone who is truly honest tem that controls and orients our capacity “reptilian” section, reacts to stimuli with about the motives behind the purchases to rationalize, to find logic. So this domiemotion and the rest of the brain pro- they make. We like to think that we do nance makes it crucial for people in sales cesses those stimuli. Basically, we make things with reason but the evidence in to engage with the primal brain first in decisions based on emotion and then ra- my research has proven that we’re most- order to allow the decision cycle to close tionalize those decisions later. ly emotional decision-making machines in the rational brain.

Since then, Morin has been uncov- that like to rationalize. ering a deeper understanding of our FELDMAN: What are some of the emodecision-making through his work with FELDMAN: Many of us realize that we tions that drive decisions?

Trim Size: 6in x 9in Morin c03.tex V1 - 07/25/2018 SalesBrain. Morin helped create the neu- have an emotion about something and romarketing company in 2002 and he has then we rationalize our decision. But is MORIN: The nature of our emotions is worked with more than 600 companies there more going on in the emotional rather complex and abstract but it is simworldwide. He researches the neural end than we are aware of? plified in the book. There are two major physiological responses in people’s brains, skin, facial expressions and eye-tracking pat46 DECODING PERSUASION THEORY terns.

He shares his rePRIMAL BRAIN RATIONAL BRAIN sulting knowledge as a graduate school instructor, speaker and author. His latest book, The Persuasion Evolutionary age • 3-4 million • 500 million years old years old Code, explores some • Fast but limited • Slow but smart of his latest findings.

Processing The most interesting finding might be that we are not as adCognitive capabilities • No thinking-reading-writing • Thinking-reading-writing vanced as we think we are. We might be Very basic math Complex math Vigilance, intuition, and senses Predictions and risk assessment overestimating the power of logic in our Drives short-term actions Confirm actions messaging.

In this interview with Publisher Paul Dominant processing levels • Instinctive and emotional • Cognitive Feldman, Morin reveals how primitive our brain really is and how marketers can Time management • Present only • Past, present, and future use science to close the sale.

The Primal and Rational Brain

FELDMAN: For those who aren’t familiar with neuromarketing and this evolving science, can you explain it and why it’s important to somebody in sales?

MORIN: Neuromarketing recognizes that while you can gain a lot of insights when you talk to your customers, there is a lot of stuff going on in their brains that you will never have access to.

My work is to investigate what is going on below the level of awareness directly

Consciousness level Capacity to control

• •

Low Very low

• •

High

Moderate to high

Figure 3.2 The primal and rational brains.

Source: SalesBrain Source: SalesBrain. Copyright 2012–2018.

MORIN: Let me introduce an aspect of emotions that are implicated in many of our new book we really have only two brain The—primal brain “lives”our in decisions. the present because the notion systems.

The number one is, of course, the fear of of time is too abstract for a survival-centric brain. Also, it is much One system, which is ancient in our regret. And aspects of our decision-makolder in terms of evolution, but it can process remarkevolution, is responsible for our emotions ing are often information about avoidingateither the andable manyspeed of the functions ensure embarrassment shame worries that becausethat your life our depends on it! Weorare not orconscious of survival. this the primal brain. something we what We thecall primal brain does most ofcome the from time.choosing For example, we that do not Then of course, there’s a brand new part later regret.

think about our breath, even though we can, but for the most part, it just happens. It is all regulated below our level of consciousness.

January 2019 » InsuranceNewsNet Magazine 11 So, the primal brain cannot think much, it certainly does not read, write, or perform arithmetic. It is guided primarily by vigilance, intu-

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INTERVIEW THE SALES COCKTAIL

System 1, our primal brain, P T 48 D rules our decisions.

ECODING

Figure 3.3

ERSUASION

HEORY

Rational message.

brain does not control the initial flow of cognitive energy, the message will be quickly discarded.

We initially scan the world for the possibility that something could be a threat and an issue. Therefore, when you anchor your message on what you might regret, what you might not experience if you insure your assets, all those negative consequences do initially create the right proctor, emotionally, to grab people’s attention.

The most effective way to create an emotional lift is, of course, to go from the negative experience of the pain that you may experience to the positive experience or properly takof being properly insured en care of.

And, for our brain, this possibility of feeling both the negative and the positive is what moves us to a decision.

Instead, this next message has far better chance to trigger a primal brain response. As provocative or shocking as this next message may be (Figure 3.4), it does recruit attention and activates the bottom-up effect. We do not really want to think about the value or importance of getting life insurance. However, once reminded that we could die quickly, we do.

FELDMAN: One of the examples in Figure 3.3

your book was from some work you did with a life insurance company.

Rational message.

brain does not control the initial flow of cognitive energy, the message will be quickly discarded.

Instead, this next message has far better chance to trigger a primal brain response. As provocative or shocking as this next message may be (Figure 3.4), it does recruit attention and activates the bottom-up effect. We do not really want to think about the value or importance of getting life insurance. However, once reminded that we could die quickly, we do.

Figure 3.4 doPrimal Friendly When you researchBrain on people expe- message. we constantly dance in our decisionriencing that emotion, you find that, first, making between negative emotion and they don’t communicate it very well or positive emotion. That dance is convery quickly. But we can see in their brain trolled by the primal brain. that there is something almost like pain coming from that sensation. Areas in the FELDMAN: Is that where you want to brain that manage disgust and our rejec- be with your messaging? Do you want tion of things that we don’t want to put in to invoke those two things?

our body are the same areas that light up when we experience regret.

MORIN: You create what we call an emoSo from that one negative emotion, a lot tional lift. That is a journey in our deciof our decision-making process is predi- sion-making where we start grabbing the cated on that fear of finding ourselves in a importance and relevance of an issue and situation that we don’t enjoy or we regret. that first emotion we recommend should On the positive side, there is a very be typically negative. powerful3.4 emotion calledBrain the emotion of message.

Am I promoting the idea of using fear Figure Primal Friendly anticipation. That is our expectation that to get people’s attention? Not necessarily. because of a particular choice, our out- But the primal brain does not initially pay comes will largely improve. This is known much attention to positive information or as a positive or motivating emotion. And positive news.

12

InsuranceNewsNet Magazine » January 2019

MORIN: We’ve been very lucky to work for several very large and influential companies in the insurance space. Selling insurance is not easy for the brain because it’s not a product that is physically allow the brain to tangible, which would lock into the urgency. The importance of insurance is very, very challenging at the level of the primal brain. It’s not a primal easy sell.

Unlike physical products that can be demonstrated in front of our eyes, you have to really move people into an argument that their lives would be threatened or miserable, potentially catastrophic, if they’re not properly covered.

That idea is rather abstract. So we have found that the insurance industry struggles to articulate and prove the benefits of these decisions.

You have to ground the value and the benefit of having proper insurance into an experience that is emotional and one that is potentially relatable and personal.

And so in one message, you can move your clients emotionally from a rather uncomfortable negative state to a more pleasant and more enjoyable positive state. That shift is what I would call the movement of an emotional lift or the creation of an emotional cocktail.

The term “cocktail” is quite common in the field of emotional science because we have chemicals, neurotransmitters, that are responsible for moving information

THE SALES COCKTAIL INTERVIEW and triggering responses that are so crucial to all we do. We also have hormones that travel through the bloodstream.

They’re a bit slower to respond but they’re essential chemicals to help us feel and respond to specific emotions.

So at the end the day, we are all a big bath of these chemicals. The right cocktail will eventually move us to either approach situations or avoid them.

FELDMAN: Of course, the only way you can actually see the benefit of life insurance is to come back from the dead. Can you give us an example of the work you’ve done with life insurance companies to communicate the benefits?

The logical ad would have all kinds of arguments that speak to the logic of having good life insurance. The logic is, of course, that you’re going to protect your family, that you’re going to make sure that everybody is taken care of.

So there are all kinds of ways in text to try to convince people they need life insurance but text doesn’t speak to the primal brain.

In our lab, we test the difference between two types of messages: one that’s using logic, mostly text, and one that is trying to convince people that they should really have life insurance. But those kinds of ads that are rational-centric do not work as well as ads that are mostly emotional and visual for the purpose of

condition where the primal brain is basically pushing the rational brain to consider the value of having life insurance.

The idea is rather simple and it does work at an amazing level with all kinds of products, not just life insurance. We have had companies around the world sell multimillion-dollar software platforms where we use this exact idea of, first and foremost, reaching the primal brain and moving the conversation from the primal to the rational brain.

I know that your audience is a confident and very effective sales force typically on a mission to establish connections and rapport. I want people to understand that I’m not suggesting that these techniques take the place of good,

At the end the day, we are all a big bath of these chemicals. The right cocktail will eventually move us to either approach situations or avoid them.

MORIN: Clients pay top dollar to hire us to perform research that involves monitoring the brain waves and looking at people’s nervous systems and so forth.

So I can’t reveal information that is considered proprietary. But generally speaking, in the field of buying life insurance or any form of insurance, the argument is that you are protecting yourself from situations that bring either embarrassment or catastrophic consequences.

Of course, if you disappear, your ability to attend to your family’s needs and to cover properly for debts that you may still have is eliminated. So, how do you extend that ability?

In the book, we demonstrate the difference between an ad that would try to logically sell life insurance and an ad that has shock value.

creating a condition where the primal brain, that 500-million-year-old-brain, is sending the signal to the rational brain that it is urgent and important that you consider having life insurance.

In an example of a shock-value ad, there was a campaign that was developed in Australia where they decided to show a shark swimming right behind this young woman and you have only a very simple tagline, “You never know.”

The shocking value of this ad is that any one of our primal brains, male or female, would awake to the horror of having a shark swimming right behind you.

So, what appears to be comical and shocking creates, in fact, a very nice and effective emotional cocktail. People start considering the possibility that they could die overnight. It creates a

solid techniques to establish your credibility and your capacity to establish trust.

What I am suggesting, however, is that you can augment and accelerate your capacity to create interest by using techniques. That’s what they are.

They’re techniques that can make your presentation — whether it’s face-toface, on a slide or on a webpage — more brain-friendly.

To be effective in the field of persuasion and sales, you do have to recognize your own admission to influence organs, not just people. And I know this sounds a little awkward but that’s what neuromarketing really is. The promise and the value are to save time, save a lot of money and be far more successful using it.

January 2019 » InsuranceNewsNet Magazine

13

NEWSWIRES

Gen Y Making Strides But Still Cautious Generation Y is making significant strides on the eco-

nomic front, yet their progress is tempered by low economic confidence and uncertainty about the future.

An Ernst & Young survey revealed that members of this generation have graduated from college, found full-time jobs and bought houses at higher rates than two years ago. But they remain uncertain about their economic future as they manage high levels of student debt and costs of living.

The survey found 40 percent of Gen Yers own their own homes, compared with 26 percent in 2016.

However, 80 percent of this group said student debt has forced them to delay homeownership. Meanwhile, 38 percent of Gen Yers said they would like to start their own businesses but don’t have the financial means to do so.

TAKING DEBT TO THE GRAVE

Nearly one-third of Americans expect to be in debt until they die, a study by GOBankingRates.com revealed. Low income is to blame for the belief that they will never escape debt.

About 44 percent of Americans said they don’t make enough to climb out of debt, and that high costs of living and tuition burdens are also weighing them down financially.

The average American owes $52,048 in overall debt. On average men owed slightly more than women — $55,081 compared with $50,124 for women.

DID YOU

KNOW

?

14

The debts included credit cards, student loans, mortgages, medical and auto loans.

A higher percentage of women claimed that their income is too low to pay off debt — 48 percent of women compared with 40 percent of men.

BANK OF AMERICA SEES MARKET DECLINE THIS YEAR

Bank of America Merrill Lynch is looking into its crystal ball for 2019 and seeing stocks taking a dip.

“We believe the peak in equities is likely before the end of 2019,” wrote Savita Subramanian, equity and quantitative strategist at Bank of America Merrill Lynch.

She sees the S&P 500 falling 3 percent in 2019 to 2,900. Stocks could stall out this year as credit conditions tighten and earnings growth slows, Subramanian said.

QUOTABLE I’m not blaming anybody, but I’m just telling you I think that the Fed is way off-base with what they’re doing.

— President Donald Trump

However, Subramanian said investors can now turn to cash as an alternative.

“There is now an alternative for stocks,” she said, noting yields for cash are higher today than for 60 percent of S&P 500 companies.

ECONOMY IN ‘GOOD PLACE,’ FED CHAIR SAYS

Federa l Reser ve C h a i r m a n Jerome Powell said the overall domestic picture looks good, although he conceded that the global economy is not growing at the same pace it was in 2017.

He described the global picture as a “gradual chipping away” at the pace of growth but said it is “not a terrible slowdown.”

Powell noted potential obstacles to growth, including a slowing up in the housing market and the potential that fiscal stimulus through tax cuts could wear off in another year or so.

The Fed chair has faced some criticism for the central bank’s policy. President Donald Trump has been vocal in his belief that the Fed’s interest rate policy is the biggest threat to the growth seen during his administration.

Of people 65 and older, 21.4 percent said not saving enough for retirement is their biggest financial regret.

Source: LendEDU

InsuranceNewsNet Magazine » January 2019

COVER STORY THE STATE OF INSURANCE IN 2019

THE STATE OF INSURANCE IN 2019 Annuities are going gangbusters but sellers are facing shifting regulation and more demanding clients.

AT

44, disenchanted with his job and realizing his 5-year-old daughter needed him more and more, Anthony Arroyo became an insurance agent last summer.

The San Antonio man spent many years studying the giants of insurance, including the legendary Ben Feldman.

Still, Arroyo had not planned to leave his thriving career as a relationship officer at a credit union.

But the job had become more of a business and less of the simpatico relationship Feldman describes in his books, Arroyo said.

“It’s gone from banking as a service to banking like squeezing everything possible out of a person,” he said. “We’re treating them like what we can get out of them.”

Arroyo is one of many new agents lured by the promise and opportunity in the insurance field. More than 4 million baby boomers are retiring annually, while estimates put the insurance industry as 16

• B Y J O H N H I LT O N • needing roughly 400,000 advisors by 2020.

The industry they enter is changing dramatically. Technological innovations are creating consumers with new expectations. Likewise, regulation is leading to new products and new compensation practices.

Here are three top trends to be ready for in 2019: » Annuity rebound.

Annuity sales skyrocketed in the third quarter and are CHANGE METER expected to continue upHIGH ward. The looming threat of regulation, as well as a sudden economic downturn, could change that, however. » Tougher rules. New regulations are on the table and on the books. While CHANGE METER state insurance commisHIGH sioners and the Securities and Exchange Commission work to finalize best-interest proposals, states such as New York have their own rules ready to go live in 2019.

InsuranceNewsNet Magazine » January 2019

» Holistic planning.

All signs point to advisors steadily taking on a bigger CHANGE METER role to guide clients into MODERATE retirement. That can mean factoring in tax planning, health care and longevity — most likely, all three.

“Now It’s Different”

Arroyo is just getting started working his leads with Curiman Brokers Group in San Antonio. While he is still selling financial products to customers with many of the same goals as those at the bank, Arroyo is in a different world now.

“In my old line of work, it was sales, but they came to me. I never had to make a phone call,” he recalled. “I never even looked at my numbers because I knew I was going to make them. Now it’s different. It’s a different skill set that I’ve never had to use before.”

Arroyo, who is also a musician and recording engineer, began his financial services’ career with Security Services Credit Union in 1997. Over the years, he established friendships with many customers

THE STATE OF INSURANCE IN 2019 COVER STORY

A Big Comeback

Anthony Arroyo made the switch from banking to insurance this year. The San Antonio man called it a natural extension of his desire to help people with their financial needs.

“Over the past year, the 10-year Treasury rate has increased nearly 60 basis points and ended the third quarter above the 3 percent mark,” Giesing explained. “In a higher interest rate environment, companies are able to increase their guaranteed lifetime withdrawals rates, making these products more attractive.”

Year-over-year variable annuity sales increased 25 percent in the third quarter.

In the first nine months of 2018, VA sales were $75.4 billion, up 4 percent compared to 2017.

“One of the factors driving VA sales growth is the increase in registered index-linked annuity sales, which were nearly $3 billion in the third quarter,” Giesing said. “Greater volatility in equity markets and better pricing due to rising interest rates are attracting consumers looking for a blend of growth and downside protection.”

RILA sales were $7.68 billion through three quarters, 13 percent higher than 2017.

Finally, overall annuity sales were $58.8 billion, 25 percent above third-quarter 2017 results. For the first three quarters of 2018, total annuity sales were $170 billion, which is 11 percent higher than the prior year.

“I expect that annuity sales will continue to rise in 2019, as consumers continue to take control of their own finances,” Moore said. “They are seeking out information on their own and becoming aware that annuities are the only instruments Source: Wink Inc.

who needed checking accounts, certificates of deposit or other products.

Unbeknown to Arroyo, a couple of his customers knew one another and recommended him for an agent opening at Curiman, a Houston-based agency.

“It was time” to make the move, he said.

Although he has been licensed for only a few months, Arroyo said he is committed to the principles outlined by Feldman, who he considers a mentor.

“From him, it was always ‘I’m helping people. I’m changing peoples’ lives,’” he said. “I’m not going to help people by pushing stuff that they don’t need. This leads up to the kind of agent I want to be.”

Like all new agents, Arroyo needs to build a book of business. A Hispanic man married to a Vietnamese woman, he has a foot in two cultures that are traditionally underserved by the insurance industry.

Arroyo reported 300 leads during an early December interview. Still, many in those minority communities remain naturally skeptical.

“Sometimes they just look at you like ‘Why are you doing this? Do you really have my best interest in mind?’” he recounted. “It’s different if you were trying to sell a car to them because they can see the car.”

Although he is starting with life insurance, Arroyo wants to join the trend toward holistic advising. That means learning the tax code, adding general planning expertise and, eventually, getting a Series 6 securities license.

“I’m coming to people with an answer to a problem,” he said. “I have an answer that in their life, there’s no one else who has this answer. It’s almost like this is the business side of my spiritual life.”

One product line Arroyo is excited about is annuities.

After a few up-and-down years, annuity sales rebounded strongly as 2018 came to a close, a trend that analysts expect will continue into 2019.

Third-quarter, non-variable, deferred annuity sales were $29.6 billion; up nearly 5 percent from the second quarter and an astounding 46.2 percent jump from the third-quarter 2017, according to Wink’s Sales & Market Report. Non-variable, deferred annuities include the indexed annuity, traditional fixed annuity and multiyear guaranteed annuity product lines.

“Sales are up primarily because rates have been on the uptick and product manufacturers have been offering incentives,” said Sheryl Moore, president and CEO of Wink. “Some companies have offered increased commissions to their salespeople, while others have offered more attractive credited rates or increased bonuses to the policyholder — all of which have culminated to an increase in overall sales.”

Fixed indexed annuity sales were $18 billion in the third quarter, LIMRA reported, 38 percent higher than third quarter 2017. FIA sales were $50.1 billion for the first three quarters of 2018, 22 percent higher than a year earlier.

The overall strength of the annuity market is the result of many factors, analysts agreed. Rising interest rates for one, said Todd Giesing, annuity research director at the LIMRA Secure Retirement Institute.

Non-Variable Deferred Annuity Sales By Quarter (in millions) $32,000 $28,000 $24,000 $20,000 $16,000 $12,000 $8,000 $4,000 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

January 2019 » InsuranceNewsNet Magazine

17

COVER STORY THE STATE OF INSURANCE IN 2019 Source: Wink Inc.

Indexed Annuity Sales By Quarter (in millions) $18,000 $16,500 $15,00 $13,500 $12,000 $10,500 $9,000 $7,500 $6,000 $4,500 $3,000

3Q08

3Q09

3Q10

that can guarantee an income that they cannot outlive.”

Rules Of The Game

April 2019 will mark four years since the Department of Labor reintroduced its fiduciary rule. A lot has happened since then and industry lawyers successfully swatted away the fiduciary rule. But its principles remain.

DOL regulators introduced the idea of requiring advisors to put the client’s best interest ahead of their own. It is a concept that lives on in rules being considered by

3Q11

3Q12

3Q13

3Q14

National Association of Insurance and Financial Advisors’ New York chapter and another by Independent Insurance Agents & Brokers of America and the Professional Insurance Agents of New York.

Several other states are pondering best -interest rules of their own, all while an NAIC working group struggles to produce a model law. Meeting throughout 2018, the working group continues to be unable to reach agreement on a few thorny issues.

Progressive states such as New York are pushing tougher rules, while conser-

I expect that annuity sales will continue to rise in 2019, as consumers continue to take control of their own finances. the SEC, several states and the National Association of Insurance Commissioners.

At least one of those rules is scheduled to take effect in August 2019. Regulation 187 is New York’s answer to the court-ordered demise of the fiduciary rule. It applies best-interest principles to both annuities (effective August 2019) and life insurance (February 2020).

Two lawsuits seek to prevent Regulation 187 from taking effect — one by the 18

vative, Midwestern insurance commissioners are opposed. The working group enters 2019 unsure of whether its work will continue.

The industry obviously wants consistency, said Howard Mills, global insurance regulatory leader for Deloitte.

Getting there in 2019 will not be easy.

“I think this particular issue, the annuity suitability, is going to require a lot of debate and negotiation to get to a

InsuranceNewsNet Magazine » January 2019

3Q15

3Q16

3Q17

3Q18

uniform standard and there’s no guarantee that they will get to a uniform standard,” he said.

Congress Could Assert Itself

Meanwhile, the SEC finished the year working behind closed doors on its package of rules, led by Regulation Best Interest.

The rule holds brokers to a best interest standard, with additional disclosures, and restrictions on who can use the titles “advisor” and “adviser.”

Critics say it does not go far enough.

Many in the RIA community were disappointed with the proposal since it does not raise brokers to their tougher fiduciary standard.

The SEC rules are certain to be a big topic in 2019.

Meanwhile, the Democratic takeover of the House could lead to some welcomed legislation as the two sides seek out rare areas of agreement. One of those areas might be retirement security, with The Family Savings Act enjoying broad support.

The bill includes a host of measures, including eliminating required distributions for retirement accounts totaling less than $50,000, encouraging employers to band together to form retirement plans, and creating tax-advantaged savings accounts that can be tapped immediately rather than waiting for retirement.

It would also allow families to make

Source: LIMRA

THE STATE OF INSURANCE IN 2019 COVER STORY

Third Quarter YTD 2018 (in thousands) Rank

Company Name

1

Allianz Life of North America

Indexed Company Name

Fixed-Rate

6,528,879 New York Life

8,877,646

4,741,866 AIG Companies

4,480,429

2

Athene Annuity & Life

3

Nationwide

4

Great American

3,355,012 Principal Financial Group

5

AIG Companies

3,338,183 Pacific Life

6

American Equity Investment Life

3,114,338 Massachusetts Mutual Life

7

Pacific Life

2,270,201 Symetra Financial

1,276,159

8

Lincoln Financial Group

2,016,303 Western Southern Group

1,223,794 1,153,602

3,868,900 Global Atlantic Financial Group

2,827,261 2,008,.623 1,678,447

9

Global Atlantic Financial Group

1,969,889 Berkshire Hathaway

10

Fidelity & Guaranty Life

1,615,960 Protective Life

975,571

11

Midland National

1,523,234 USAA Life

899,753

1,522,660 Delaware Life

860,656

12

North American

13

Symetra Financial

1,421,501 Athene Annuity & Life

14

Delaware Life

1,069,166 MetLife

781,612 742,007

15

Security Benefit Life

920,718 Reliance Standard Life

632,690

16

EquiTrust Life

904,475 Prudential Annuities

620,680

846,848 Northwest Mutual Life

17

Reliance Standard

18

Massachusetts Mutual Life

19

Bankers Life & Casualty

20

National Life Group

828,614 Fidelity & Guaranty Life 761,120 The Standard 742,350 Great American

617,534 573,314 448,535 442,747

Top 20

$43,360,216

$34,785,686

Total Industry

$50,100,000

$44,540,000

penalty-free retirement plan withdrawals to help pay for childbirth or adoption expenses.

Regulators are working on issues other than best-interest rules. In particular, data security remains a significant challenge.

In 2017, the NAIC concluded years of work with the Insurance Data Security Model Law, which creates a legal framework for requiring insurance companies Source: Wink Inc.

3,654,627

to operate cybersecurity programs. South Carolina became the first state to adopt the law in May 2018.

“I think big data, and everything about its use, storage, safety, are going to be a very big issues this year, in 2019 at the NAIC,” Mills said. “Industry will certainly be challenged by that issue.”

Likewise, life insurance illustrations are generating headlines and requests to regulators — specifically, the role

Multi-Year Guaranteed Annuity Sales By Quarter (in millions) $12,000 $10,000 $8,000 $6,000

illustrations played in failing universal life insurance policies sold decades ago.

The UL issue gained prominence when The Wall Street Journal published a September article that told the stories of several older Americans trapped by failing UL policies.

Universal life policies offer a savings account in addition to the life insurance components. Money deposited into the savings portion earned interest to help pay future costs while keeping premiums down.

Everything was all good until interest rates plummeted below 4 percent following the 2008 financial crisis. Many UL policies permitted customers to pay lower payments, or skip payments, and borrow against the savings account.

The end result of this flawed concept is that policyholders in their 80s and 90s are facing steep premium bills. Their only alternative is to surrender a prime retirement plan asset and be left with nothing to show for years of paying premiums.

“Policies are either lapsing, or they are reaching maturity with far less value than anticipated,” said Richard M. Weber, a longtime financial advisor.

Weber is among several advocates, on both the industry and consumer sides, who want the NAIC to reopen the life insurance illustration model law. Doing so would undoubtedly set off a long and arduous process to adopt any changes.

NAIC leadership did not respond to numerous attempts for comment.

“My focus really is on credibility of an industry that has always implicitly had the trust of its customer base,” Weber said. “The credibility of a life insurance company is really, really important.”

I n s u r a n c e N ew s N e t Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john. hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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January 2019 » InsuranceNewsNet Magazine

19

the Fıeld

A Visit With Agents of Change

Deep Roots • Strong Growth How Karen DeRose’s family grew a planning practice organically to serve multiple generations

—

By Susan Rupe

20

InsuranceNewsNet Magazine » January 2019

Karen DeRose’s sons Anthony (left) and Nick are the third generation in her family to be in the insurance and financial services business.

DEEP ROOTS, STRONG GROWTH

IN THE FIELD

K

aren DeRose grew up immersed in the life insurance business. Her father spent his career as a top-selling Prudential agent. And she learned first-hand about life insurance when her mother died when DeRose was only 7.

But when it comes to who approached who about getting into the business, there’s a bit of “he said, she said” between DeRose and her father, Ronald Sempetrean.

DeRose, 56, said when she first talked to her father about entering the insurance business with him, his answer was no. “He said, ‘Go out and sell something,’” she recalled. She went to work for an office equipment company in her hometown of Chicago, becoming their top-producing copier salesperson after three years.

Sempetrean, 85, begs to differ. “I approached her,” he said. “She was selling copiers and she was not happy. She said, ‘Dad, what should I do?’ I said, ‘What about insurance?’”

Regardless of whose account is correct, DeRose spent three years with her father.

She learned the life insurance business from the man who had been Prudential’s top-selling agent in 1972, back when the carrier had 26,000 agents.

DeRose recalled her father giving her a piece of advice that led to her forming her own financial planning practice. “He

Plan. Grow. Protect are at the root of DeRose Financial Group’s planning process. The steps in the process are outlined on the firm’s website.

Wrigley Field. DeRose’s office is near the edge of the city, not far from Interstate 90 and O’Hare International Airport. Her office location attracts clients from both the city and its suburbs.

Her success earned her the 2018 Infinity Award from Women In Insurance &

“I either had to stop taking on clients or I had to grow. It was a tough decision.” said, ‘I want you to interview at firms that do planning because that’s where the future is,’” she said. “My father was very smart. He said that was where the industry was really headed.”

She joined Lincoln Financial Group and started her own financial planning practice, DeRose Financial Planning Group, 22 years ago. Today, her two sons and her niece are among the seven members of her practice team.

DeRose and her family are Chicagoans to the core. Her father serviced debit accounts in the neighborhood surrounding

Financial Services. WIFS presents the award to the member with the highest income for the year. The practice is expected to end 2018 at the $2.33 million mark, DeRose said.

A Way Of Life

DeRose said the life insurance business was a way of life for her family when she was growing up.

“My father was in the business, but then when my mother died leaving five kids under the age of 10, we also understood the value of insurance because of

what happened to her,” she said.

But DeRose didn’t get into the business right away. She married her husband Tony at age 19 and had two sons, Anthony and Nick. During this time, she also was working for a nuclear engineering firm in Chicago. The firm’s leadership saw potential in her and paid for her to attend college. She graduated with an accounting degree at age 32.

DeRose eventually left the engineering firm, sold copiers and made her way into the life insurance business.

“My father taught me life insurance, he taught me company benefits,” she said. “So I really learned insurance because of him.”

But her father’s words about financial planning being the future stuck with her.

She found a certified financial planner to mentor her, then she obtained her securities licenses and her own CFP certification.

Wisdom About Financial Planning

Sempetrean said that even though he was a top seller during his Prudential days, he regrets that he did not become certified as a financial planner.

January 2019 » InsuranceNewsNet Magazine

21

IN THE FIELD DEEP ROOTS, STRONG GROWTH

Karen DeRose made what she called a ‘real clear decision’ to have a multigenerational practice. Here she is with the members of her team (from left): Michela Shipinski, practice manager assistant; Katie Westphal, financial planning assistant; Anthony DeRose, associate planner; Karen DeRose; Nick DeRose, senior financial planning coordinator; NinaMaria Byrd, financial planning coordinator, and Nicole Velazquez, practice manager.

“Had I known then what I know now, I would have become a [Chartered Life Underwriter] and looked at doing financial planning,” he said. “Because I was licensed as a life agent, I was limited with what I could do for my clients. I could not talk about financial planning, I could not talk about investments because I did not

decision. But I’ve been so blessed to have Anthony because he brings a different dimension. He’s a lawyer, a CPA and has an MBA. He has taken our practice to a whole new level. We’re working with a lot more business owner clients now.”

Nick studied financial risk in college and interned with his mother’s company.

“I still serve a lot of my dad’s clients, and then I serve their children. Now we are serving the next generation because of my children.” have that knowledge and I did not want to compromise my clients. I could justify the life insurance to my clients but I knew I wasn’t fulfilling their needs completely.”

Selling life insurance was an entrée to establishing a financial services practice, DeRose said. “I started with my dad’s practice and then moved it from an insurance practice to a planning practice.”

A Family Affair

Many advisors are eager to pass their practice down to the next generation, only to find their children aren’t so enthusiastic about joining the profession. DeRose’s sons, however, wanted to join their mother in her practice.

Anthony joined the practice six years ago, at a pivotal time for DeRose.

“I either had to stop taking on clients or I had to grow,” she said. “It was a tough 22

But he wanted to be a doctor, only to find that medical school was not for him. He found his way back to financial services and is now the agency’s senior financial planning coordinator.

DeRose’s niece, Katie Westphall, serves as a financial planning assistant at the agency.

The family has multiple generations tied to the insurance and financial services world, and as a result DeRose made what she called “a real clear decision” to have a multigenerational practice. “I still serve a lot of my dad’s clients, and then I serve their children. Now we are serving the next generation because of my children.”

A Look At The Future

DeRose’s father may have seen financial planning as the future, but DeRose predicts advisors will need to find a way to

InsuranceNewsNet Magazine » January 2019

combine advice with technology.

“I believe the planning industry as a whole will be more digitized,” she said.

“We will have to offer an easier way to do business with us. Advice is going to be front and center because anyone can go anywhere today to buy products. But people want advice. It’s easy to get the data online but people want to know how that data pertains to them.”

She said advisors would have to do web and video conferencing.

“Clients want to do this in the comfort of their own home on their own time,” DeRose said. “Gone are the days when you’re meeting face to face only.”

But life insurance will continue to be the bedrock of a family’s financial plan, she said.

“Life insurance is a big part of all of this,” DeRose said. “You secure the risk first. If you don’t, all bets are off on everything else.”

DeRose’s father often told her of his experience delivering death benefits to those whose spouse or parent had died.

“The one thing he always said was, when he would deliver the death benefit, people would ask him ‘Is there any more money around?’ or ‘Do we have any more money somewhere else?’”

That question — Is there any more?

— haunts her today and reinforces her desire to help others provide for their families.

“That’s the reason for insurance, for financial planning — to make sure there will be enough.”

Susan Rupe is managing editor for Insurance N ewsN et .

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.

Tell Us!

Do you know someone who would make a compelling profile story?

Shoot us a quick email telling us who it is and why you think so. Send it to editor@insurancenewsnet.com, and put PROFILE in the subject line.

OBJECTIVES AND REFLECTIVES

IN THE FIELD

January 2019 » InsuranceNewsNet Magazine

23

LIFEWIRES

QUOTABLE

Millennials Most At Risk The life insurance gap is more

pronounced for millennials than for any other age group, a New York Life survey revealed. It’s not that millennials don’t have coverage, but their coverage is far less than what they need.

Millennials who have life insurance have a self-reported life insurance gap of $352,000 in 2018, with enough life insurance protection in place ($100,000) to cover only 22 percent of their self-reported coverage needs of $452,000.

This millennial coverage gap is sharply higher — 60 percent greater — than the gap for the general population, which is $210,000, enough to cover 49 percent of the average estimated need.

The survey also showed that only 10 percent of millennials have enough life insurance to cover 100 percent of their needs, which can include mortgages, funding retirements or financing a child’s college education.

MEDICAL MARIJUANA AFFECTS LIFE RATES

More than 30 states legalized medical marijuana and a handful of states legalized recreational marijuana. But the substance is still completely illegal under federal law. So what does that mean for people who buy life insurance?

Using medical marijuana won’t get applicants turned down for coverage, but it could raise their rates, Laura McKiernan Boylan of Haven Life told the Kansas City Star.

“If you smoke marijuana occasionally, it doesn’t necessarily impact your eligibility or rate,” McKiernan Boylan said. “(But) if you’re a heavier user, it can have an impact on the price you pay or eligibility across the board.”

If it’s being taken for medical use, the bigger issue for insurers would probably be what condition it’s being used for, she said. But either way, users need to be truthful about it because if they try to hide marijuana use, it could be grounds to

deny claims or even void policies entirely.

“If you’re upfront and honest about it, it often isn’t a problem, especially if it’s just occasional usage,” McKeirnan Boylan said.

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24

— Eric Sondergeld, LIMRA

surplus, he said. It was a business decision related to where the company wants to invest assets, he added.

On Nov. 7, the company stopped accepting new business. It also laid off 17 workers, mostly in the marketing and telesales departments.

In 1999, Settlers Life became a member of National Guardian. During 2018, Settlers Life was represented by more than 8,500 agents in 47 states.

SETTLERS LIFE MAKES CHANGES

Settlers Life Insurance in Bristol, Va., will no longer accept new business and will move to Wisconsin in mid-2019.

The company’s legal entity will move to Madison, where the parent company, National Guardian Life, has its corporate headquarters, according to Settlers President Michael Lowe.

The decision to move the office was not due to financial concerns, Lowe said.

Settlers Life has assets exceeding $415 million with more than $40 million in

DID YOU

KNOW

If people have negative thoughts about our industry, it’s going to make it harder to sell to them, first of all, but it’s also going to make it harder to hire them.

43% of advisors use social media to search for new clients.

InsuranceNewsNet Magazine » January 2019

Source: LIMRA-Ernst & Young study

PRUDENTIAL SETTLES LIFE INSURANCE CHECKBOOK SUIT

Prudential will pay $9 million to settle a class action suit challenging the way it distributes life insurance benefits, Bloomberg reported. The deal is expected to provide an average payment of more than $900 to each of more than 6,000 people who received benefits through life insurance plans sponsored by JPMorgan Chase and Con-Way. The lawsuit targeted checkbook insurance payments that were made to beneficiaries.

The eight-year-old suit said Prudential’s practice of paying life insurance benefits in checkbook-style retained asset accounts — instead of lump-sum payments — violates federal law.

LIFE

Why Are So Many Universal Life Insurance Policies Failing?

Neglect and lack of attention fuel most of the blame.

By Jordan Smith

T

raditional, nonguaranteed universal life insurance (often described in the insurance industry as current assumption UL) has been subjected to rather brutal criticism over the past few years. It most recently came into the news in a September Wall Street Journal article that blamed the product for the financial hardship being experienced late in life by many policy owners who purchased this coverage in the 1980s and 1990s.

But how much of this condemnation is truly warranted, and how much of it reflects a fundamental misunderstanding of how these products are designed to work when properly tended to?

What Is Current Assumption UL?

Current assumption UL is a flexible premium permanent life insurance product that contains both an insurance component and an investment component. Like other permanent life insurance products, premiums are deposited in the policy’s cash account, which is reduced by policy charges and increased by a crediting methodology set forth under the terms of the policy.

Here is what differentiates a current assumption UL policy from other types of nonguaranteed permanent life insurance.

In current assumption UL, the growth of the policy’s cash value is based on a flat crediting rate that is established by the insurance carrier and adjusted from time to time. In comparison, whole life’s policy cash value growth is based on a flat dividend rate that is established by the insurance carrier and adjusted from time to time. Indexed universal life’s policy cash value growth is based on the performance of an equity index that is collared by a cap and a floor. The cash value growth in a variable universal 26

life policy is based on the actual investment returns of specific equity investments.

Projections of current assumption UL policy performance are based on the forecasting of two variables: annual policy charges and the insurance company’s crediting rate. Many life insurance policies provide that the carrier may increase policy charges under specified circumstances (generally defined broadly by reference to the company’s expectations regarding future mortality, expense and persistency experience). However, this discretion is very rarely exercised and annual policy charges rarely deviate from schedule set forth at the time a policy is issued.

In contrast, the crediting rate, which is tied to the interest rate that the insurance carrier is able to earn on its portfolio of fixed income investments, changes regularly. As interest rates change up or down, crediting rates on current assumption UL policies tend to follow suit. For those whose current assumption UL policies have been dramatically underperforming, the primary source of the problem is that nobody has been monitoring the crediting rate changes and adjusting their annual premiums accordingly.

Understanding Policy Illustrations

When a current assumption UL policy is issued, an illustration is run to project how the policy will perform under the assumption that scheduled policy charges are not changed, and that the then-current crediting rate remains constant. It’s an imperfect system, but without the benefit of a crystal ball that can accurately predict future interest rate changes, it’s at least a good place to start.

It’s also important to recognize that the amount of death benefit paid to the beneficiary under most permanent life insurance products is a level death benefit that doesn’t vary based on the cash value of the policy. What that means is that as the pol, icy builds cash value, the amount of pure life insurance protection that needs to be purchased to produce the policy’s death

InsuranceNewsNet Magazine » January 2019

benefit gets smaller. This reduces policy charges (which, after the first few years, are based largely on the difference between the policy’s death benefit and the policy’s cash value) and accelerates the buildup of policy cash value.

As a general rule, current assumption UL illustrations are intentionally designed to calculate the minimum annual premium necessary in order to keep the policy in force indefinitely (typically age 100, although policies are sometimes run to age 121). This approach to policy design is a big part of what differentiates universal life insurance from the primary alternative in the permanent life insurance arena: whole life.

Whereas whole life policies operate somewhat like a “sinking fund,” with noticeably higher premiums that result in greater cash value but also reduce the policy’s economic yield, universal life policies are typically structured to be cost-efficient and maximize the rate of return that is ultimately realized on each dollar of premium.

The theory behind minimally funding current assumption UL policies is that every additional dollar that doesn’t have to be used to pay premiums is a dollar (plus any future earnings on that dollar) that the insured’s beneficiaries will receive in addition to the insurance policy’s death benefit. This approach may seem risky given the uncertainty surrounding future crediting rate changes. However, it actually works quite well as long as policyholders and their insurance advisors actively monitor policy performance and adjust premium levels whenever there is a change in crediting rates.

To illustrate this point: A 50-year-old man in preferred health can purchase a $1 million current assumption UL policy for an annual premium of $8,808 per year, based on the insurance carrier’s current crediting rate of 3.9 percent. If the crediting rate were to stay level at 3.9 percent, with no changes in scheduled policy charges, the policy’s cash value would gradually rise up to a peak value of just under $79,000 at age

WHY ARE SO MANY UNIVERSAL LIFE POLICIES FAILING? LIFE 70, and then gradually diminish a little bit each year until falling to only $9 of cash value at age 100. The projected economics of this policy are shown in the following chart:

Projected Economics of Projected EconomicsofofaaAssumption $1,000,000 $1,000,000 aProjected $1M Economics Current Current CurrentAssumption Assumption Universal UniversalLife LifeInsurance Insurance Policy Policy UL Insurance Policy $1,000,000 $1,000,000 $800,000 $800,000 $600,000 $600,000 $400,000 $400,000 $200,000 $200,000 $-$-

51 51 54 54 57 57 60 60 63 63 66 66 69 69 72 72 75 75 78 78 81 81 84 84 87 87 90 90 93 93 96 96 99 99 Cash CashVValue alue

Death DeathBenefi Benefit t

As we can see, everything works out exactly as illustrated as long as the crediting rate stays at 3.9 percent. But what happens when the crediting rate ultimately rises or falls? If the crediting rate falls, absent an adjustment of the premium, the cash value will build more slowly, peak sooner than age 70, and drop to zero before the insured reaches age 100 (at which point, the policy will lapse). If the crediting rate rises, then (again, absent an adjustment of premium) the cash value will build more rapidly, peak later than age 70, and (depending upon the magnitude of the rate increase) it’s possible that the cash value may never peak at all and could continue to gradually rise.

Having excess cash value may seem like a great result (and certainly better than watching the policy run out of money and lapse). However, continuing to pay the same level premium into a policy that’s outperforming expectations is less economically efficient and will ultimately result in fewer total dollars passing to beneficiaries because those extra premium dollars will not increase the policy’s death benefit.

Managing Policies Efficiently And Effectively

The real lesson here is that current assumption UL policies require constant monitoring, and periodic adjustment, in order to enable them to perform as intended — to provide a death benefit as cost-efficiently as possible in order to maximize one’s return on premium dollars. Modifying the premium (up or down, as applicable) whenever the crediting rate changes will keep policies operating at

peak efficiency while avoiding nightmare scenarios where policies are allowed to become so dramatically underfunded that policy owners can no longer afford to get them back on track when they recognize there’s a problem many years later.

Policy owners who purchased their coverage in the 1980s and 1990s were never promised that policy returns in the high single digits and above would continue indefinitely. To the extent that some policy owners believed that they were promised such returns, it should reflect poorly not on the underlying insurance product. Instead, it should reflect on the insurance advisor who failed to properly explain the product and then subsequently failed to help ensure that the policy was adequately maintained.

This also highlights the importance of conducting a thorough suitability analysis to ensure that policyholders will still have the financial ability to maintain their policies in adverse crediting rate environments.

A consumer should never purchase a minimally funded current assumption UL policy that already requires the maximum premium they’re able to afford.

ADD RECURRING

REVENUE

BY SELLING

MED SUPP

Post-Sale Service Combats Neglect

Is there a way to salvage a current assumption UL policy that is underperforming because it has been neglected for many years and multiple crediting rate reductions? Maybe, depending upon the degree of underfunding and how much additional cash the policy owner is willing and able to commit to reviving the policy.

It’s also possible that it may not make economic sense to revive the policy, even if the policy owner can afford to do so.

For someone in this situation, the best approach is to have an experienced, independent insurance professional review the policy to determine what options are available. Paying additional premiums is one possible solution, but it may also make sense to consider alternatives such as reducing the death benefit, exchanging the policy for a different product or selling the policy in a life settlement.

Jordan Smith, JD, LLM, is the vice president of advanced design at Schechter, a boutique financial services firm in Birmingham, Mich. Jordan may be contacted at jordan.smith@ innfeedback.com.

January 2019 » InsuranceNewsNet Magazine

27

t Booming Market t Year Round Sales s Great Persistency y Lasting Renewal Comp p Easy Product to Learn Dedicated Support Team

ANNUITYWIRES

FIA Sales Keep SMASHING Records

Fixed indexed annuity sales smashed records for the second consecutive quarter, according to LIMRA Secure Retirement Institute. FIA sales were $18 billion in the third quarter of 2018. That was 38 percent higher than third quarter of the previous year and 2 percent higher than second quarter of 2018.

LIMRA SRI predicted total 2018 FIA sales to be in $70 billion range, exceeding expectations and easily breaking current annual sales records. Slower growth is expected in 2019 and 2020.

Variable annuity sales increased 25 percent in the third quarter to $25 billion, compared with prior year results. In the first nine months of 2018, VA sales were $75.4 billion, up 4 percent, compared with the same period in 2017.

Earlier in September, Carlson announced that Ohio National would no longer accept any annuity applications.

The insurer is focusing on life insurance and disability income insurance, a spokeswoman said.

OHIO NATIONAL NAMES ANOTHER NEW PRESIDENT

Ohio National went through two leadership changes in three months. The company announced the surprise departure of president and chief operations officer Christopher Carlson after just three months on the job. The company’s new president and COO Barbara A. Turner has been with Ohio National since 1997.

She is stepping into a sticky wicket.

Advisors were informed via a Sept. 28 letter that Ohio National was terminating contracts on some variable annuities.

Commissions ended Dec. 12 on VAs with a guaranteed minimum income benefit rider.

The company has been sued twice so far in federal court by broker-dealers. Cetera Advisor Networks and First Allied Securities filed a joint claim with FINRA asking the regulator to require Ohio National to pay the trails.

YOUNGER WORKERS OPEN TO ANNUITIES

Annuities aren’t just for retirees. LIMRA SRI research shows the consumers most likely to be interested in annuities are younger and still working.

LIMRA SRI’s most recent study looked at investors who discussed deferred annuities with their advisors in the past three years but then decided not to buy.

The research found 42 percent of consumers who didn’t purchase were open to the idea of annuities. This group believes annuities are good products and would consider buying them in the future.

The top reason this group had for not buying a n nu it ie s is that it wasn’t the right time (44 percent).

DID YOU

of those who discussed annuities with an KNOW 18% advisor but didn’t buy said they would most

?

28

likely never own one.

InsuranceNewsNet Magazine » January 2019

Source: LIMRA SRI

QUOTABLE The entire annuity market benefited from strong growth in interest rates.

— Todd Giesing, annuity research director, LIMRA SRI

Nearly two-thirds of this segment is not retired and only three in 10 of the non-retirees expect to retire in the next decade.

NEW PRODUCT REPORT

Here are some new annuity products that hit the market recently.

Investors Heritage Life introduced the Heritage Builder Annuity, a single-premium deferred, multi-year, rate-guaranteed annuity. The annuity marks the first product introduced since the company went private in a transaction with Aquarian Holdings in 2018.

RetireOne has teamed up with Great American Life to offer the Index Protector 7 annuity to registered investment advisors and feebased advisors who are seeking non-correlated assets to de-risk client portfolios.

This no-load FIA can serve as a fixed income alternative in client portfolios to help protect the downside, while offering a measure of upside potential with four allocation options.

North American Company for Life and Health Insurance is offering the Strategic Design Annuity X FIA. It is the industry’s first FIA to offer an enhanced penalty-free withdrawal feature through the embedded benefits rider, which increases up to 32 percent. The penalty-free withdrawal amount is based on the customer’s deposit, making the withdrawal amounts predictable each year even after withdrawals are started. Additionally, the FIA has a guaranteed lifetime withdrawal benefit value that increases at 200 percent of the interest credited.

Strategic Design Annuity SM

THE INDUSTRY X-FACTOR

Creating income your client can’t outlive is key in retirement...

GLWB (guaranteed lifetime withdrawal benefit) value roll-up of 200 percent of interest credited.

...but your clients need an income as dynamic as their life...

Penalty-free withdrawal feature that offers up to 32% of the initial premium annually.1,2

...and how can they be prepared for a market correction?

Interest-crediting strategies linked to a proven family of indexes and the NEW Inverse Edge Trigger, offering growth when the market drops.3

Visit IndustryXFactor.com for SDA X fixed index annuity materials or call our sales team at 844.657.5225.

FOR FINANCIAL PROFESSIONAL USE ONLY. NOT INTENDED FOR CONSUMER SOLICITATION PURPOSES. Insurance products issued by North American Company for Life and Health Insurance®, West Des Moines, Iowa. Product and features/options may not be available in all states or appropriate for all clients.

See product materials and state availability chart for further details, specific features/options, and limitations by product and state. The Strategic Design AnnuitySM X is issued on form NA1013A/ICC18-1013A. MVA (contract) or appropriate state variation. Fixed Index Annuities are not a direct investment in the stock market. They are long term insurance products with guarantees backed by the issuing company.

They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Interest credits to a Fixed Index Annuity will not mirror the actual performance of the relevant index. 1. Withdrawals taken prior to age 59½ may be subject to IRS penalties. 32 percent is based on the first year of withdrawal being in year 8 or after. 2. For a 0.95 percent annual charge calculated by multiplying the rider charge by the GLWB value on each contract anniversary and deducted from the accumulation value. 3. Additional crediting method options are also available.

28375Z | PRT 11-18

4350 Westown Parkway | West Des Moines, IA 50266 | NorthAmericanCompany.com

ANNUITY

Key Annuity Trends: Mergers, Simplification, Amazon-ification Consumers will see a growing range of products while advisors will become more flexible in serving client needs.

comprehensive range of products they can offer, coupled with white-glove, back-end service designed for time savings, cost savings and ease of use.

Trend 2: Annuities Industry Undergoes ‘Amazon-ification’

By Kent Sluyter

T

he previous year had more than its share of big news for the annuities industry.

Ambiguity around the Department of Labor’s fiduciary rule led to a bit of a muted start to the year. Despite the rule’s eventual pullback, the industry forged ahead with procedures and policies designed to help increase clarity and simplicity, and provide even greater access and understanding to advisors and investors.

With an industrywide sales rebound in 2018, there are reasons to be optimistic this year.

What does 2019 have in store for annuities? Based on the ripples that are starting to show, we expect four key trends to define the industry in the year ahead.

Trend 1: Provider Consolidation Continues

The annuities industry has gone through significant consolidation over the past year. Voya, The Hartford and Ohio National all exited the annuities sector. In 2019, industry consolidation will lead to opportunities for consumers, as the range of products offered by remaining providers continues to grow to meet consumers’ strategic needs.

For advisors, this means more products are likely to be available on platforms they already use to manage their clients’ business.

You’ll see a greater emphasis on service as fee compression and demand on advisors’ time reduces advisors’ willingness to use multiple platforms to bring products to clients.

The result will be highly flexible onestop shops for advisors to tap into a 30

T h e “A m a z o n ification” of financial services will reach closer to the annuities industry, increasing demand for both self-directed optionality coupled with high-touch service through personal advice. The consumer experience often weaves together self-directed and advisor-guided financial product purchases, according to LIMRA research.

We’ll see more emphasis on enabling customers to shop and get advice wherever they want — with an advisor, in the workplace or on self-directed platforms.

This will give consumers the freedom to invest and buy products independently while also having options for those seeking professional advice.

digital platforms opening to direct consumer access that will only continue to fuel advisors’ business.

Trend 3: Complexity Fades and Fixed Annuities Gain Share

Investors see product complexity as a holdover from the 2008 financial crisis. This will continue to increase pressure on providers to deliver easy-to-understand, transparent products. This drive away from complexity aligns with regulatory trends, such as the Securities and Exchange Commission’s proposed Regulation Best Interest, as well as the momentum for more do-it-yourself investment options.

Expect continued growth in the fixed annuities space. Providers will bring more simplified, transparent offerings to the market. Meanwhile, investors will be more willing to accept limited upside potential for guaranteed floors and risk mitigation in retirement income. LIMRA data shows

With an industrywide sales rebound in 2018, there are reasons to be optimistic this year.

Because of consumers’ preference to be able to shift from self-service to professional advice, self-service platforms will increasingly serve as a pipeline for financial professionals, supporting their business. Financial professionals will still have a key role to play in helping people develop retirement income strategies that meet their retirement goals, and help them realize the lifestyle they want in retirement.

Professional advice is even more accessible than ever and is especially critical in retirement income planning.

In 2019, we can expect to see more

InsuranceNewsNet Magazine » January 2019

that more than 50 percent of consumers will choose the guaranteed income over a lump-sum payment in retirement. This indicates the demand for fixed products is likely to continue as baby boomers continue to retire in record numbers.

In 2011, the annuities sector was heavily weighted toward variable annuities. The pendulum is now swinging in the other direction and fixed products are increasingly prevalent. A continued rising interest rate environment in 2019 will only add fuel to the fire, driving fixed product sales in the new year.

KEY ANNUITY TRENDS ANNUITY

Trend 4: Retirement Income Takes the Lead

The most fundamental shift in the industry is likely to be less tangible, but arguably more impactful in the long run. The financial planning mindset is fundamentally changing. Against the backdrop of an aging population, increasing longevity, risks to Social Security and stagnant wage growth, there is a growing, silent retirement crisis of individuals entering retirement without sufficient income to fuel their lifestyle. As a result, the rates of debt and bankruptcy filings among the elderly have more than tripled since the early 1990s.

Industry-wide initiatives are underway to change the dialogue away from retirement asset accumulation and instead focus on retirement income. This momentum will continue to build in 2019, benefiting from a growing recognition of the challenges an aging population faces, as well as tailwinds from legislative efforts that could

include the Retirement Enhancement and Savings Act and the Family Savings Act. Given the challenges and barriers people face in preparing for retirement, annuities can provide part of the solution, giving them a little more security and confidence in the future. In addition to securing a steady stream of retirement income a retiree can rely on to supplement other savings; annuities can also lower the amount a consumer needs to save in order to guarantee a given amount of retirement income.

A 2017 study found that most Americans favor financial strategies that offer guaranteed lifetime income. Ninety percent of all consumers who responded to the survey said they are very interested or somewhat interested in receiving lifetime income. Further, the new research from the Alliance for Lifetime Income found that 74 percent of households with a guaranteed retirement income stream are confident their retirement savings will last the rest of their lives.

Annuities For A New Decade

for the annuities industry, as the mix of both providers and products changes to suit the needs of advisors and consumers alike. A smaller group of insurers will end the year providing a wider range of product options. These products will be more accessible to advisors on the platforms they use and easier for consumers to understand.

The changing approach to retirement planning will shine a new light on annuities, which are increasingly seen as a critical tool to provide the guaranteed retirement income consumers need to provide the peace of mind and security to live their ideal retirement.

And by this time next year, annuities products and the industry at large will have preserved the best of the past, while reinventing for the new decade in 2020.

Kent Sluyter is the president of Prudential Annuities. Kent may be contacted at kent.sluyter@innfeedback.com.

This year will be another year of transition

Learn more about how life insurance can be Xchanged for value.

Contact Chris Orestis, EVP, Secondary Markets 612.845.4566 | corestis@gwglife.com

Policy Owner .................. 80-year-old male with multiple ADL loss** Policy Type .................................................................. Universal Life Face Amount ......................................................................... $100,000 Cash Value......................................................................................... $0 Premium.................................................................................... $6,339 ** Activities of Daily Living

BENEIFT

STORY: Due to his health conditions, including a recent fall, this insured’s daughter was seeking an appropriate skilled nursing facility for him. As his Power of Attorney, she chose to Xchange his life insurance policy with GWG Life, LLC, to cover the cost of his long-term care.

Once the funds from the Xchange are depleted, he will be eligible for Medicaid.

CASE STUDY

CASE STUDY: How Life Insurance Provided This Family a Long-Term Care Solution

LifeCare Xchange® Long-Term Care Client Benefit .................................................... $60,000 $5,000/month payment to skilled nursing for 12 months

Client Retained Death Benefit ..................................... $5,000 Partial retained death benefit paid to beneficiaries upon passing of insured

Agent Compensation* ................................................... $1,000 ** Referral fee 1% based on face amount.

GWG Life, LLC | 1.855.713.9904 | agents.gwglife.com/inn | agents@gwglife.com Many factors determine the value of a policy in the life settlement market, including but not limited to life expectancy, health of the insured and premium costs. | Case study based on 2017 actual case. Image for illustrative purposes.

For Financial Professional Use Only GWG Life, LLC (“GWG Life”) is licensed as a provider in all states that regulate the secondary market for life insurance except for AK, LA, ND, NV, and VT, and licensed as GWG Life USA, LLC in IN. Only intended for residents in states where GWG Life is authorized to purchase life insurance policies.. The GWG Appointed Agent program is not offered in ID, IN, KY, MT and NH. © 2018 GWG Life, LLC. All rights reserved.

2018-540

January 2019 » InsuranceNewsNet Magazine

31

HEALTH/BENEFITSWIRES

Humana, Walgreens Reportedly In Talks The mating game among health insurers and retail pharmacy chains keeps on going.

Humana and Walgreens Boots Alliance are in preliminary talks to take stakes in each other, The Wall Street Journal reported.

The carrier and the drugstore chain already have a partnership that serves seniors. The two businesses are exploring the potential expansion of that partnership, the Journal said.

The report comes in the midst of some high-level mergers and acquisitions among retail pharmacy chains and health care companies that occurred during 2018. Amazon purchased the online pharmacy PillPack. CVS Health recently acquired Aetna, although the deal was pending a federal judge’s approval at the time this issue went to print.

TRUMP TARGETS DRUG PRICES

President Donald Trump promised to lower prescription drug prices, and he took his most aggressive move toward that goal when he announced a proposal to base payments for certain drugs off of lower prices in other countries.

Trump’s proposed regulation would set up an “international pricing index” that would be used as a reference to set prices paid for drugs paid for through Medicare Part B, the section of Medicare that covers drugs administered in a doctor’s office.

However, some Republicans are opposed to this move, The Hill reported. A coalition of conservative groups, including Americans for Tax Reform and FreedomWorks, wrote a letter calling for the proposal to be withdrawn. Senate

DID YOU

KNOW

?

32

Finance Committee Chairman Orrin Hatch, R-Utah, and other GOP senators have discussed sharing their concerns about the proposal.

The move does not deal with drugs dispensed at a pharmacy counter.

DEMS SEEK VOTE ON SINGLE-PAYER

Progressive Democrats are pushing for a vote on a “Medicare for all” bill after the party takes control of the House.

But the push for the controversial legislation would likely divide Democrats. Many House Democrats, including Democratic leader Nancy Pelosi, D-Calif., have said they would rather focus their efforts on improving the Affordable Care Act than on promoting a single-payer plan.

Supporters said they will push for a vote and organize grassroots efforts to pressure holdouts to sign on to the legislation.

However, political observers say any floor vote would probably fail, with all Republicans and some Democrats rejecting the proposal.

QUOTABLE Health coverage still is too expensive, and I think everyone recognizes that.

— Shawn Gremminger, Families USA

OUT-OF-POCKET COSTS KEEP CLIMBING

Health insurance premiums on the Affordable Care Act marketplaces are 75 percent higher on average than when the marketplaces opened in 2013, according to a Washington Post report.

And consumers are getting hit with other health-related costs, as well. Outof-pocket costs — such as deductibles and coinsurance — have increased for the past three years across all types of health insurance, including for employer-sponsored coverage, the Post reported.

American families paid an average of $625 in out-of-pocket costs in 2017, up 8.5 percent from the prior year, according to a report by the JPMorgan Chase Institute.

These increases hit low-income families particularly hard, as they are seeing larger cost increases relative to their income. Thirty percent of Americans said health-care costs make it hard for them to pay for basic necessities, and nearly one in four non-elderly adults said they forgo necessary medical care because of cost, Health Affairs reported.

The suicide rate among Americans of working age increased 34% from 2000 to 2016.

Source: American Association for Medicare Supplement Insurance

InsuranceNewsNet Magazine » January 2019

Source: Centers for Disease Control and Prevention

Life Insurance | Retirement | Employee Benefits

Long-term care protection can be your best asset.

With asset-based long-term care protection, you can provide peace of mind by protecting your clients from the impact of a long-term care event. Care Solutions asset-based long-term care products offer lifetime benefits, so your clients may be protected as long as they need*.

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HEALTH/BENEFITS

Shift In The Asset-Based LTCi Market Is Expected To Grow Recurring-premium products are expanding the market for asset-based long-term care insurance.

Potential long-term care event outcomes

Planning for Every Possibility With no protection they will: Alternatives to traditional long-term care protection

By Tracey Edgar

L

ong-term care insurance specialist Jack Lenenberg doesn’t need data to tell him there has been a major shift in the LTCi market. He needs only to look at his own business.

In 2014, his firm, LTC Partner, consisted almost entirely of matching clients with stand-alone, health-based LTCi. Today, it’s split down the middle between stand-alone LTCi and asset-based, or hybrid, LTCi. “My business has changed rapidly and in a dramatic fashion,” Lenenberg said from his Alpharetta, Ga., office. “Since 2014, a significant number of consumers have requested information on assetbased products, primarily because they associate traditional, stand-alone LTCi with ‘use it or lose it’ benefits and a rate increase risk.”

The change wasn’t because he started promoting hybrid options, Lenenberg said — the shift came because clients were calling him to ask about these options.

Whether because of client demand or greater awareness among financial professionals, the market for life combination LTC protection is booming. For the past three years, sales of combination LTC products posted double-digit growth. In contrast, sales of stand-alone LTCi posted significant declines in that time (a 22.8 percent decline from 2016 to 2017, and a 12.6 percent drop from 2015 to 2016). Combination LTC protection sales are now more than 10 times the premium volume of stand-alone LTCi. The total market for hybrid LTC protection is now more than $4 billion in annual premium with more than 260,000 policies sold. This accounts for 80 percent 34

With health-based protection they will:

With asset-based protection they will:

Source: Planning For Every Possibility

of the overall market for individual LTC we will use two couples living in the state OneAmerica® is the marketing name for the companies of OneAmerica solutions, according to LIMRA. These of Indiana as our examples. numbers include policies with chronA 50-year-old couple estimates their I-29533 ic-illness and acceleration-only riders, as potential severe LTC expenses could be well as LTC extension products that offer $724,139, which would include a combia more robust LTC benefit solution. nation of home health care, assisted living and nursing home care.

Cost And Benefits: How Do They Health-based LTCi would require that Compare? this couple purchase two policies to enOneAmerica looked at two LTC planning sure both spouses are covered. Estimated scenarios in its study, “Planning For Every out-of-pocket costs, including premium, Possibility.” The actual costs and benefits would be $250,697 and there would be between health-based LTCi and asset- no death benefit in the event that neibased LTCi vary according to state, but ther partner required LTC. In addition,

InsuranceNewsNet Magazine » January 2019

SHIFT IN THE ASSET-BASED LTCI MARKET IS EXPECTED TO GROW HEALTH/BENEFITS health-based LTCi premiums may increase over time.

With asset-based LTCi, meanwhile, this couple would incur an estimated $205,143 in out-of-pocket costs, including premium. Premiums would never increase and one policy would cover both spouses. If no LTC benefits are required, the policy would yield a $125,000 death benefit.

In addition to accelerating the policy death benefit, LTC extension products extend benefits for LTC expenses if the death benefit is exhausted. And if a policyholder doesn’t exhaust the death benefit for LTC expenses, the remaining portion will still pass to beneficiaries.

Another common feature of these products is that they offer guaranteed premiums, benefits and cash surrender values. In an era of rate hikes on standalone LTCi policies, these products are becoming attractive to a growing number of people as they become aware of their options and the significant need for LTC planning as part of their overall financial plans.

These combination products offering extension of benefits for LTC expenses, rather than acceleration of benefits, are the fastest-growing segment of combination LTC products. The number of LTCextension policies sold in 2017 grew 24 percent compared with 2016, while the number of LTC-acceleration policies sold grew 2 percent in that period, and the number of chronic illness-acceleration policies declined 3 percent. The latter two types are primarily life insurance sales and accordingly more closely follow life sales trends.

For the fast-growing ABLTC or LTCextension market, three companies dominate the market, accounting for nearly 70 percent of the market share in 2017. Those three companies — Lincoln Financial, OneAmerica and Pacific Life — have remained unchanged for the past few years; although other carriers in the top 10 of market share have gained some ground.

It’s a market that is still gaining momentum.

“We’re attracting a much wider audience for asset-based LTC protection,” said Brian Ott, an LTCi professional based in Bellevue, Wash., who primarily works with ABLTC products.

Some people like asset-based options because they don’t have the “use it or lose it” risk. The options also attract older, wealthier people who would otherwise self-insure for LTC expenses.

“Some people don’t want to go with stand-alone LTC protection because of the ‘use it or lose it’ risk. Asset-based options are also attractive to older, wealthier people who previously thought self-insuring for LTC expenses was their best option and now realize the risk of that option, or maybe thought they were too old to get LTC protection.”

Because underwriting is typically easier with life insurance- or annuity-based LTC options, the potential market for those extends into retirement age, both Ott and Lenenberg said.

Recurring-Premium Options Expanding The Market

Asset-based LTC protection has been around for several decades, but one of the more recent product innovations is recurring-premium options that allow people to choose 10-year, 20-year, or even up to lifetime premium payment options. These options allow greater flexibility for LTC planning in the context of individuals’ overall financial plans.

Recurring-premium policies account for almost 90 percent of all asset-based LTC policies sold, according to LIMRA. The average premium for these policies was $6,397, and the average face amount was $319,776. At one time, recurring-premium options couldn’t compete on price with stand-alone LTCi. But as stand-alone LTCi rates have risen, the value offered by the recurring-premium options has become more attractive,

especially given the guaranteed rates and additional benefits that stand-alone LTCi can’t provide.

Younger clients also tend to be more attracted to recurring-premium options, Ott said.

“People in the 40- to 50-year-old range tend to choose recurring-premium LTC protection,” he said. “They’re still saving for retirement and they can do a limited-pay option that’s fully paid up in 10 or 20 years.

Some clients also choose an option where they can make a deposit and make ongoing payments. In some cases, especially if they’re still working, the premium expense can be deductible. That’s really attractive for some people.”

Single-premium options, including annuity-based LTC protection, also continue to remain attractive for many people.

Typically, older clients who have already accumulated a sizeable nest egg choose the single-payment option, Lenenberg said. While their working years are focused on growing their asset portfolio, attention in retirement tends to shift toward protecting those assets, he said.

As people re-evaluate their financial plans near retirement, using some of their accumulated savings to secure LTC protection is often an opportunity and a common sales theme. Other times, people have a lump sum — such as an inheritance or buyout. They find a single-premium ABLTC product is a good option to provide LTC protection if it’s needed, or a way to leave a legacy to the next generation through the remaining death benefit, if LTC benefits aren’t exhausted.

Asset-based LTCi’s emphasis on guarantees is likely to resonate even stronger if uncertainty in today’s broader economic climate continues to emerge. The value of this coverage will be magnified if an economic downturn occurs.

The guarantees also provide a strong backdrop for advisors, regardless of what best-interest standard might emerge.

Quite simply, these products do what they are designed to do: provide peace of mind year after year.

Tracey Edgar is vice president, sales, Care Solutions, at OneAmerica.

Tracey may be contacted at tracey.edgar@innfeedback.com.

January 2019 » InsuranceNewsNet Magazine

35

NEWSWIRES

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Where Are The Investment Opportunities In 2019?

How long can it last? That’s the question investors are asking as the U.S. economy hits the late stages of what will probably go down as the longest-ever economic expansion.

Investors have ample opportunities in the market, according to RBC Wealth Management’s Global Insight 2019 Outlook. The authors of the report recommended that investors move away from the riskiest equities and invest in higher quality companies with reasonable valuations.

Other recommendations in the report included reducing credit risk in fixed income portfolios and investing in infrastructure.

ADVISORS OFFERING MORE

The number of retirees in the U.S. is expected to jump by more than 40 percent by 2035. As this demographic grows in numbers as well as needs, advisors are responding by offering a wider array of services. That was the conclusion of a LIMRA Secure Retirement Institute survey that showed both investment-based advisors and insurance-based advisors are expanding their offerings.

More than eight in 10 insurance-based advisors said they are doing retirement income planning and 62 percent said they offer portfolio management. More than a quarter of insurance-focused advisors also offer estate and trust planning services.

Among investment-focused advisors, most said they offer retirement income planning (97 percent) and portfolio management (98 percent). Many also

DID YOU

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36

said they participate in estate and trust planning (44 percent) and health care/ Medicare planning (23 percent).

In addition to expanding their services, advisors across all channels are expanding their practices to reach different market segments, such as affluent and mass-affluent consumers.

QUOTABLE Maybe money can’t buy happiness, but planning early can provide more confidence about the future.

— Joe Ready, Wells Fargo Institutional Retirement and Trust

age 60, up from 32 percent five years ago.

Meanwhile, only 22 percent of respondents now expect to retire after age 65, down from 30 percent in 2013, according to the study.

Slightly more people are confident about being ready to retire at a given age than they were five years ago, the study showed.

Forty-seven percent said they were confident about their retirement readiness in 2018, compared with 45 percent in 2013.

But fewer people were confident their money would last throughout retirement.

Thirty-five percent of those surveyed in 2018 said they worry about outliving their retirement savings compared with 33 percent in 2013.

MANY VIEW LONGEVITY AS FINANCIAL ‘HARDSHIP’

MORE AMERICANS EYE EARLY RETIREMENT

Americans on average expect to retire two years sooner than they did five years ago and more of them say they intend to retire before age 60, according to MassMutual research. A spike in 401(k) balances is a major reason why more employees plan to say goodbye to the workplace.

Those who were surveyed, on average, expect to retire at age 62 compared to age 64 when the study was last conducted in 2013. Four in 10 intend to retire before

Only 31% of investors said they have saved enough for a comfortableSource: retirement.

LIMRA Source: Legg Mason

InsuranceNewsNet Magazine » January 2019

Lifespans are getting longer, and not everyone views that as a good thing.

Nearly four in 10 U.S. workers said it would be a financial “hardship” for them to live past the age of 85, according to the Wells Fargo Retirement Study.

Most workers said they expect to live to age 85, 42 percent said they could live longer, and 10 percent said they could live to 95 or older.

A longer-than-expected life may raise the possibility of financial hardship, but respondents said they looked at retirement through an optimistic lens. Most survey respondents said they looked forward to retirement, with 90 percent saying that retirement will be a “positive new chapter in life.”

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Direct Indexing Captures The Imagination Of ETF Enthusiasts Direct indexing offers flexibility and significant tax savings. • Teun Lucas

A

dvances in financial technology allow investors to look beyond traditional investments.

Exchangetraded funds offer strategies and indices with mass appeal, and investors acquainted with ETFs have started to adopt direct indexing to further diversify their portfolios.

Direct indexing allows flexibility of investor tax management, unparalleled customization and the ability for investors to look beyond traditional investments to build and customize their own index implementations.

entire ETF (and potentially incur taxes).

In the past, a deterrent to direct indexing was the high SMA management fees compared to investing in a low-cost traditional index fund, making it especially unattractive for retail investors. At larger allocations, SMA fees come down as a result of scale, with the added benefit of significant tax savings.

The flexibility of direct indexing enables investors to take advantage of investor tax-management practices not

What Is Direct Indexing?

Direct indexing is when an investor purchases an array of stocks, kept in a separately managed account (SMA) to gain direct exposure to an index or a blend of indices. This is an alternative to holding onto multiple assets bundled together in a package, known as an ETF. Although ETFs and direct indexing both offer easier ways to diversify, the major distinction is what the investor owns. In a direct index, the investor owns the underlying shares. In an ETF, the investor owns shares of the fund.

Direct indexing gives an investor exposure to the entire index, inclusive of all benefits that come with an index fund.

The actual stocks owned can be customized based on the investor preferences, eliminating companies that do not reflect the investor’s interests.

Advantages Of Direct Index Investing

ETFs give investors exposure to indices in a standardized way and they must follow the index provider’s rules. Direct indexing gives the investor an added level of discretion. ETFs need to add or remove shares due to index changes, in return forcing an investor to accept decisions or sell the 38

InsuranceNewsNet Magazine » January 2019

available in the same extent to ETF investors. These two components are commonly used: » Tax loss harvesting. Tax loss harvesting enables investors who suffer a loss on a stock to sell and use the loss to offset taxable income on other investments. Direct indexing provides stock level liquidity, and any stock losses can be “harvested” and used to offset other gains. This provides greater tax benefits than if the loss were buried in an indexed mutual fund or an ETF.

The Benefits of Direct Indexing 01. Tax Alpha Holding the individual stock creates opportunities for tax management within the portfolio.

02. Customization In a separately managed account vehicle, an investor can carve out legacy positions, or adapt portfolios to apply user-defined filters and screens, e.g. Socially Responsible Investing or Shariah compliance.

03. Fractional or Narrow Implementations Indexes can be replicated accurately by holding all the constituents through fractional ownership, or by holding a small subset of constituents through an optimization process known as “narrowing.”

FIND NEW

DIRECT INDEXING CAPTURES IMAGINATION

» Capital gains tax deferral. In a mutual fund or standard index fund, capital gains are not easy to avoid. Taxes are often inevitable, unless the investment is in a qualified tax-deferred vehicle, such as a 401(k). However, direct indexing allows capital gains to be deferred, so these can accumulate tax-free until the investor takes receipt of the profits. By deferring sales, the investor can postpone or defer taxes. The longer an investor delays realizing gains, the more valuable tax deferrals can be. Essentially, they serve as interest-free loans.

technological advances in fractional shares. However, certain investors may instead wish to replicate the index, but also narrow their selection to a smaller number of stocks.

By using modern computer optimization, an index such as the broad S&P 500 can be replicated with tracking errors between 1 percent and 2.5 percent and with between 200 stocks to as few as 50 stocks.

We call this process “narrow replication” (instead of “full replication”), and it is another powerful direct indexing solution investors have at their disposal today.

Unparalleled customization is another major advantage of direct indexing.

Through it, investors can adapt any index, either to change its risk profile or to align it with specific environmental, social, governance or faith-based preferences.

But customization reaches further than only those indices employed by ETFs. Although the investment marketplace is full of indices, those used by providers are mostly created for their mass retail appeal. Beyond that selection, only a small percentage of indices are available

The Future

ETFs revolutionized the market for retail investors seeking pooled investments that were tailored to their interests. Although ETFs offer cost-effective and efficient options, investors acquainted with ETFs have begun to adopt direct indexing to further diversify their portfolio.

Direct indexing gives an investor increased control over stock choices versus an index fund and limits exposure to securities they do not want, while staying close to the market.

The rise of direct indexing allows investors to track underutilized indices with stocks directly or even create their own indices where no suitable ETF exists. as ETFs. The rise of direct indexing allows investors to track underutilized indices with stocks directly or even create their own indices where no suitable ETF exists.

Direct indexing also offers an appealing solution when an investor is explicitly concerned about tax and liquidity. Low volume ETFs are exposed to termination risk, which may result in unexpected capital gains or trading losses. Such investors should consider direct indexing instead.

“Full replication” of an index is where one holds all the constituents of the index in their exact proportions. This is now cost-efficient for small accounts through direct indexing as a result of

Perhaps best of all, direct indexing allows investors, with almost any allocation size (starting at a $100,000 initial investment), to replicate any index at ETF-like fee levels, while realizing the tax advantages offered by owning the individual underlying index securities.

Teun Lucas is head of sales and client relations at Optimal Asset Management, a registered investment advisor specializing in the delivery of institutional-grade investment solutions for all investors. Teun can be contacted at teun.lucas@innfeedback.com.

January 2019 » InsuranceNewsNet Magazine

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QUOTABLE

More Americans Are Meditating Mindfulness is going mainstream. More

Americans are meditating than ever before, according to a report from the Centers for Disease Control and Prevention’s National Center for Health Statistics.

The researchers studied how many people said they used meditation, practiced yoga or visited a chiropractor within the past year. Yoga was the most common of the three, with 14.3 percent of adults in 2017 saying they had done it, up from 9.5 percent in 2012.

Meditation was a close second, with 14.2 percent of American adults saying they meditated within the past year, a threefold increase from 4.1 percent in 2012, according to a report from the CDC. Last year, 10.3 percent of adults said they visited a chiropractor, up from 9.1 percent in 2012.

DON’T WAIT FOR THE SEVENTH INNING TO STRETCH

HOW TO GET A LOVED ONE TO QUIT

We all know someone who we wish would kick the smoking habit. But our nagging is only making them light up even more. What can you do?

According to a study published in The Journal of Consumer Affairs, shaming can actually help someone quit, but under one condition. It only works if the shaming is focused on how the smoker’s actions affect other people.

Many smokers say they can’t quit because smoking helps them deal with stress. So if you’re trying to help a loved one quit smoking, it might be more helpful to tell them how the habit negatively affects you, as opposed to them. And that’s not a stretch. The CDC reported about 2.5 million nonsmokers have died from health problems related to secondhand smoke since 1964.

You! Yeah, you! Get up out of your chair right now and stretch!

That’s the word from fitness experts who said we all understand the need to stretch our muscles and get the kinks out, but few of us actually take stretching breaks during the day. Stretching isn’t only necessary before and after exercise.

Stretching is an important form of exercise on its own, and experts say everyone should do it on a consistent basis.

Just as other forms of body conditioning like strength training and cardio are a necessary part of a fitness routine, “stretching should not be overlooked,” said Kevin Ramsey, lead stretch therapist at Massage Envy. “Stretching helps to resolve tension in the muscles. When this tension is resolved, muscles have a better chance of getting the circulation they need to function normally. Circulation is vital in all tissues of the body because this

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InsuranceNewsNet Magazine » January 2019

There’s a complex relationship between sleep issues and mild depression, and it can be difficult to determine which came first.

— Dr. Aarti Gupta, founder and clinical director of TherapyNest

is how nutrition is distributed throughout the tissues. To that extent, stretching may be seen as a form of self-care or conditioning all on its own.”

RESOLVE TO DRINK MORE WATER

What’s one simple thing you can resolve to do to be healthier in the new year?

Drink more water!

Keeping your hydration levels up keeps your body running efficiently, said Caroline Passerrello, spokeswoman for the Academy of Nutrition and Dietetics. Drinking more water also can help to ward off fatigue, keep hunger at bay and boost metabolism.

Drinking a glass of water before a meal can help fill you up so you eat fewer food calories.

In the same way you plan meals, you can plan your water intake. Carrying a refillable water bottle can serve as a constant reminder to drink more. If plain water is unappealing, try adding fruit or vegetable slices to boost flavor.

Carbonated water is another option.

1 in 4 Americans has a close family member they haven’t seen in a decade.

Source: OnePoll

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INBALANCE

Yoga And Meditation: A Ripple Effect Heals More Than Just You A health broker believes daily yoga and meditation can help lower the cost of health insurance.

By Naama O. Pozniak

O

n many occasions, I’ve watched myself and others delivering a broken health care system. It is incredibly frustrating to have only this terribly fractured health care system to offer my clients today.

I’ve watched our health care system closely and with an extremely judgmental eye as I deliver health insurance benefits across all markets.

I aspire to stay positive about the health care system, but it is ever challenging.

Throughout my own personal journey of 30 years in the health care industry, I can admit that this road has been a long one for me, although I always try to keep an open mind. I remind myself to learn from every person I meet, from every event I attend, and every conversation I have in every aspect of my life.

A dark moment 20 years ago led me to listen to the advice of a friend, which resulted in my taking my first yoga class.

Although I was unaware of it, my journey had just begun.

Over time, I discovered that we are all on our own individual journeys. Each of us has a different path that brings us to our 42

ultimate destinations. But the destination is the least important element. The journey is what counts and our own internal transformation is the main objective.

Most people are taught growing up that the outside world is what matters in life, but that is simply misleading. I discovered that our inner life, what happens inside of us — our thoughts, our hopes, our dreams — is what guides the soul and brings me joy and good health.

As I went deeper into the practice of yoga and meditation, I discovered that not only was I healing myself, but that through my exploration, I was also healing my family, my friends, my clients and the community around me. Everyone noticed the change within me, and wanted to understand what was going on.

I was faced with juggling my home life, my two children, my blossoming career and endless social responsibilities on top of delivering the complexities of the Affordable Care Act since 2014. I was exhausted and barely had time to take care of myself. I tried everything I could find to try to ease the stress of this journey, but it was a constant struggle.

When dealing with a crisis, we can either choose hopelessness and despair or we can persevere and remain hopeful. I have always chosen to stay optimistic. For me, the only genuine moments of authentic healing I experienced was during the time I spent in daily meditation and yoga. I began to feel

InsuranceNewsNet Magazine » January 2019

happy, alive, along with more connection and ease with my daily obstacles.

As a result of my personal success with meditation and yoga, my clients, family and friends began approaching me to help them find new ways to enhance their lives and personal health.

I always encourage my community to take actions toward their own healing and to spend some time in a quiet space. This quiet space can create miracles. Scientific studies from Mount Sinai Hospital and the University of California-San Diego now prove that daily meditation results in the same effects as taking a vacation. The benefits of meditation and yoga are undeniable.

It was an epiphany for me to finally understand why I had stuck around in the health care industry for so long. I finally understood that it is my mission to help people heal themselves. I lived it and breathed it until I finally understood it.

It is now my life’s mission to incorporate yoga and meditation practices into our health care system. Our insurance industry will experience the benefits, which will immediately lower costs. We will have happier, healthier human beings all around and the world will be a more peaceful place.

We must heal ourselves before we can heal others. We are the leaders in health care — the people who write policies, who inform politicians and lawmakers, and who influence and write the history of health care. Our obligation is to begin with

YOGA AND MEDITATION INBALANCE

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ourselves and make sure that each and every one of us is open to the practice of yoga and meditation.

The practice will be different for us all.

There is no “right” way to practice. Once we understand the benefits and the values of the practice, we will be able to influence our families, communities and clients, as well as the insurance carriers that employ us all.

As the people delivering a system called care, we are obligated to support our clients on their journey of healing and self-care.

We can be the agents of change, the agents who bring and share love and compassion as part of global healing.

Yoga is the word for union: uniting mind, body and spirit. This is on a physical, emotional and spiritual level. Yoga enables you to witness your own healing immediately, from the very first experience. It is a blessing in my life, which is why I recommend it to all my friends, family, clients and colleagues.

These experiences led me to create cutting-edge continuing education classes in the insurance industry: “Reducing Health Care Costs With Yoga And Meditation” and “Meditation As A New Way To Wellness.”

These classes were first approved in California and Florida, and now many other states are in the process of incorporating them into their health care programs.

The bottom line is that if agents and

brokers incorporate these beneficial practices into their own daily lives, they will be more likely to share their positive experiences with others. This will truly make a difference to our clients. We are a huge influence on so many people. We should practice what we preach and lead by example.

I am honored to be able to share the wisdom of this ancient method of healing.

Although Western medicine is remarkable, we must remind ourselves that Eastern medicine can work side-by-side with the generally more accepted Western medicine in order to enhance curative properties.

Good luck on this journey and remember, we are what we eat and think, and we must always take some time to spend in a quiet space. Healing is possible when we go within and connect to our own heart and soul. Simply taking an extra breath every day can make a difference.

Naama O. Pozniak is CEO of Paz Holding, doing business as A+ Insurance Service. She is a yogi, a speaker and a Primordial Sound Meditation Instructor, certified by the Chopra Center. She was the recipient of the National Association of Health Underwriters Distinguished Service Award for 2018.

Naama may be contacted at naama. pozniak@innfeedback.com.

January 2019 » InsuranceNewsNet Magazine

43

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INBALANCE

When An Airport Layover Becomes Party Time Ever wonder how you can get into one of those airport clubs?

By Bryce Sanders

T

wo travelers are stuck because of flight delays. One traveler sits by the gate.

Meanwhile, the other traveler relaxes in a comfy chair and sips free champagne. Which traveler do you want to be?

International air travel provides road warriors and frequent fliers the opportunity to go clubbing at major airports. If you find yourself in a place like Heathrow, it’s a great reason to get to the airport three or more hours in advance.

and spending $3,000 doing it earns you Gold status. Your card will have a Ruby symbol. Flying 50,000 miles annually and spending $6,000 on airfare gets you Sapphire status. Fly 100,000 miles with an airfare spend of $12,000 and you reach Executive Platinum, with its Emerald status. If you fly for business, the fastest way to move up the ladder is to consolidate your flying with one airline. Here’s the bad news: Ruby doesn’t get you into the club. Sapphire and Emerald do.

The Basics

Here’s how it works. If you are a frequent flier, you have status with your airline.

As you move up the status hierarchy, you earn a colored symbol on your membership card and a notation on your boarding pass. Travelers in higher tiers get access to their airline’s lounge or shared lounge.

Let’s use American Airlines as an example. Flying 25,000 miles a year 44

Your carrier is probably affiliated with one of three alliances: OneWorld, Star Alliance or Sky Team. The colored symbol on your card gets you access to lounges operated by other airlines within your alliance. At major international airports, airlines operate separate lounges for business and first class

InsuranceNewsNet Magazine » January 2019

passengers. The business class lounge is typically the entry level lounge, the one your airline club membership gets you into back home.

The objective is to either gain access to the lounge without an airline club membership or get into to a better lounge. For frequent fliers, your colored symbol determines which higher lounge level you might be able to access.

How Time Between Flights Becomes A Holiday

Let’s assume you practically live on an airplane, traveling for business constantly. You have achieved Executive Platinum status with American. Now you find yourself at Heathrow Airport in London. You have a long layover. You’ve cleared security with your carry-on luggage. It’s time to go clubbing!

First stop: The American Airlines Admiral’s Club. Your Emerald status gets you into the Flagship Lounge, the higher of the two clubs. The waiter comes to your table and presents a menu. You opt for the Moet & Chandon champagne while making your decision. The food and drinks are free.

WHEN AN AIRPORT LAYOVER BECOMES PARTY TIME INBALANCE

Any Other Ways I Can Go Clubbing?

Heathrow’s American Airlines Admiral’s Club

Second stop: Fun’s fun, but it’s time to move on. A short walk brings you to the British Airways lounges. Your Emerald status gets you waved into the first class lounge. Although the food is good, you choose to focus on the dedicated champagne bar. Henriot 2012 is available in abundance. A stroll into an adjacent room reveals a self-service bar. You notice a bottle of Johnny Walker Blue Label and pour one for yourself.

at Heathrow Airport, or anywhere outside the U.S. that often. But you can still go clubbing.

The American Express Platinum Card comes with many benefits. For the past couple of years, AmEx has been opening Centurion Lounges at major airports around the country. They’ve opened eight so far with more to come. Platinum and Centurion cardholders are allowed two guests. If you have a club membership

The Cathay Pacific Lounge

Third stop: Some Chinese food will hit the spot. A short walk down the corridor brings you to the Cathay Pacific Lounge. The sit-down dining room features Asian favorites such as dim sum along with traditional British dishes.

More Moet champagne is consumed.

Fourth stop: There’s time for one more visit. It’s a short walk to the Qantas Lounge, where they are pouring Perrier Jouet champagne. You check out their menu and order the calamari.

Back To Reality

But there’s a problem. You haven’t earned that coveted status. You don’t find yourself

with your favorite airlines, now you have two clubbing locations.

AmEx offers Platinum members another perk: Priority Pass membership.

It’s a program providing access to more than 600 lounges in about 100 countries.

Some are operated by other airlines; others are lounges without an affiliation, yet offer free food and drinks to members and others who buy day passes. Now, you might be adding a third clubbing stop.

The AmEx Platinum Card also offers access to Delta Sky Club lounges, but you must be flying on Delta or an affiliate booked through Delta in order to use the lounges.

Frequent fliers often buy an annual membership to their airline’s club. This gets you access at their domestic and international locations. You might be drinking the house wine and the well scotch, but at least it’s free. Premium brands of alcohol are also available.

If you are traveling internationally on a business or first-class ticket, the clubs in your airline’s alliance usually offer reciprocity. You might not have Sapphire status to get you into that airline’s business class lounge, but your business class ticket on an affiliated airline will do just fine.

Finally, many airlines offer day passes to their lounges. If you aren’t a frequent flier, it can make sense to buy a day pass to your airline’s lounge network. A day means a day. A flier leaving Philadelphia for Los Angeles with a stopover in Dallas can visit the Philadelphia club before departure and the Dallas-Fort Worth club during their layover. It’s a great place to get Wi-Fi, do some work and make calls.

Frequent fliers and business travelers have a little-known perk: The opportunity to use airport lounges run by affiliated airlines when they are traveling.

You don’t need a ticket on their airline, you just need a higher tier frequent flier status. In addition to plenty of space and a helpful staff, there’s abundant free food and a large selection of free wine and liquor. Did someone say champagne?

Bryce Sanders is president of Perceptive Business Solutions.

He provides high-networth client acquisition training for the financial services industry. He is the author of the book, Captivating The Wealthy Investor. Bryce may be contacted at bryce.sanders@innfeedback.com.

January 2019 » InsuranceNewsNet Magazine

45

BUSINESS

ould Yeah, I c help use some is.. . with th

Let It Go: Delegating Scheduling Can Boost Your Productivity You might think nobody is as good at making telephone appointments as you are. But handing over your scheduling to the right person can free you up to see more people.

By Gina Pellegrini

I

s your calendar filled with appointments every week? Are you cherry-picking your client base because of time? Are you still doing your own scheduling?

Scheduling is the most important component to grow your business. But in most offices, scheduling does not get the proper attention it deserves. If the advisor is making the calls, one week is full and the next week is empty. If a team member is making the calls, they usually procrastinate getting on the telephone. Either way, scheduling is not a priority or consistent.

Regardless of who is making the calls, scheduling appointments must be done 46

daily. As an advisor, you have three options: make the calls yourself, have someone in your office make the calls, or outsource the scheduling.

Many years ago, I worked with an advisor in Chicago. He had been in the business only a little more than a year, so being in front of people was crucial. When I first started making calls for him, I called only his existing clients. He believed referrals were the doorway to the future and he didn’t want to lose them. However, within three months, his calendar was so full, he didn’t have time to call the referrals. From that point forward, I did all his scheduling.

I’m a firm believer in the delegation of all scheduling so you can stay in front of people. Yes, I know what you’re thinking: “Nobody is as good on the telephone as I am.” I disagree. If you have the right scheduler, they can make calls daily and be available to intercept the returned calls.

It’s a waste of your time trying to reach people to schedule an appointment. What if you used those hours to be in front of

InsuranceNewsNet Magazine » January 2019

opportunities? How do you make that happen? Let go of scheduling! You’ll be amazed with the results.

There are two common obstacles most advisors struggle with: cherry-picking the client base and getting calls returned.

Cherry-picking happens because you do not have a system to routinely work the client base or you do not have time to make the calls.

Most of you are truly sitting on a gold mine. When you have a routine process to work the client base, you will turn prospects into clients and clients into referrers. You also can overcome the lack of returned calls by leaving brief messages.

In other words, don’t tell them you want to schedule an appointment; call them every three days to create a sense of urgency.

Every Six Months

To eliminate cherry-picking, you can create a process to work the client base so every person, client or prospect pops up every six months. Why every six months?

LET IT GO: DELEGATING SCHEDULING CAN BOOST YOUR PRODUCTIVITY BUSINESS One call is to schedule an appointment and the other is to touch base. By doing so, you will uncover opportunities, nurture relationships and get new referrals.

Going back to my early years of calling, our system was to pull names based on a birthday — so, names popped up every six months. In other words, we followed the Granum One Card System. If we didn’t have a date of birth, we put in the month and year we met with the referral to be sure they didn’t fall through the cracks.

This is how prospects became clients and clients gave us more referrals.

Let me give you an example. A prospect meets with my advisor for the first time

for because of those semiannual calls. It also became an opportunity for them to provide us with referrals.

Now that you understand how to work the client base, here are some additional ideas to keep the calendar filled every week. » Be clear about the number and type of appointments you want per week.

It’s easy to say, “I want 10 appointments.”

However, filling the calendar with existing clients is not going to grow your business. Ideally, you want a variety of appointments: follow-up meetings, referrals, prospects, clients, etc.

I’m a firm believer in the delegation of all scheduling so you can stay in front of people. Yes, I know what you’re thinking: “Nobody is as good on the telephone as I am.” I disagree. and during that meeting, the prospect decides he’ll stay with his present advisor.

Six months later, I call to touch base and usually nothing has changed. However, one year later I make another call to touch base and try to schedule an appointment.

Again, most times they push you out again. Then, six months later, I finally get them to make another appointment.

How did I do that? Consistency! In fact they would normally say, “Gina you call me more than the advisor I’m currently working with.” I responded with, “Just think of how well we would care for you if you were a client.” Boom, the appointment was made!

On the flip side, our clients would come in at least one time a year for a review or get a check-in call. During the check-in calls, I would simply touch base to see if there were any changes. Most of the time, all was good. However, there were times clients needed a review because of a certain life event. Either way, they felt cared

» On the 22nd of each month, print a list of names — clients and prospects — to be called the following month. Review the list to determine the outcome of each call. Do you want an appointment or do you want to make a check-in call? » Confirm appointments before making outbound calls to schedule new appointments. If by chance someone cancels for the following day, you may be able to replace the open slot. » Be ready to make outbound calls by 9 a.m. daily! By doing so, the calls get made and people have all day to get back to you. Check-in calls can be made in the afternoon. » Prioritize the order of the calls to have a variety of appointments. I suggest the order of priority as follow-up meetings and second meetings, followed

by referrals, prospects and then clients. » Leave a message and make it brief.

When you leave a long-winded message, people usually zone out or delete the message before they get to the reason for the call. Or, if you tell them you want to schedule an appointment they may think they are too busy or feel they don’t need an appointment, so they won’t call back.

Leave a message every three days. Most people wait at least a week to leave a message, which is too long. Calling every three days — Monday, Thursday and then the following Tuesday — creates a sense of urgency. If you don’t get a response after three messages, don’t give up. Try an email or text.

I know some of you believe sending an email is the best way to schedule an appointment. Ideally, an email should be used only if you can’t reach someone by telephone.

Let me strengthen my point about emails. I was talking with a friend of mine, who is a successful mortgage broker, on scheduling tips. As I was sharing my ideas, he said, “I find your suggestions very interesting, especially calling versus sending an email. My advisor only sends an email to schedule an appointment, which seems impersonal to me so I don’t respond. I haven’t seen him in years.”

That’s what I call cherry-picking or not taking the time to truly work the client base. Don’t think of scheduling as a quick fix. Let the scheduler build on the relationship to help the clients, prospects and referrals feel connected and cared for.

Keep in mind, the goal is to turn prospect into clients and clients into referrers by working the client base.

Gina Pellegrini is the owner of Pellegrini Team Consulting, a Minneapolis-based firm specializing in leadership training, staff development and practice management. Gina may be contacted at gina. pellegrini@innfeedback.com.

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January 2019 » InsuranceNewsNet Magazine

47

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

The Industry Must Attract, Not Recruit, Female Advisors The financial services industry can attract female advisors by harnessing causes women are passionate about and employing previous career experiences.

By Ayo Mseka and Susan L. Combs

A

s women continue to be a market segment to be reckoned with, many financial organizations are looking for ways to develop their field force to make it more reflective of the communities they serve. In this interview, NAIFA member Susan Combs shares some helpful hints for attracting more women to the financial services industry.

NAIFA: What can the financial services industry do to increase the number of female advisors?

Susan Combs: The industry I’m in is still on average about 14 percent women. I believe that this is largely due to the compensation structure and the training model. It is very scary to be in an “eatwhat-you-kill” model. Insurance sales are typically 100 percent commission based. I have noticed that the companies that offer a training “base salary” to employees until they are established have been more successful than others in attracting women to their workforce.

I also believe that changing the training model to include the development of niche markets and working in teams is hugely successful for attracting women. The old school mentality is to “sell to your natural market.” This is also known as “sell to your friends and family.” This approach is very uncomfortable for many women. By helping them develop niche markets in possibly their previous industries or on a passion they have, they are better set up for success.

NAIFA: What is the No. 1 thing to keep in mind when recruiting female advisors?

Combs: The first issue is that you need to attract women, not recruit them. Women 48

are very social creatures and we always want to have deeper conversations. So, flip your interview process. It is often the sales manager’s inclination to talk all about the numbers. But keep in mind that women are concerned about their numbers only if they lead to leaving a legacy.

So help her leave that footprint behind.

Go to the bottom of her resume and look at the section that lists her interests and volunteer work. I know that you must be politically correct and not ask about her about family, marital status, etc., but keep in mind that this will help tell her story.

Ask her about a specific role she has had in an organization for which she has volunteered. If she is passionate about it, you can make her passionate about your organization, as well.

When women are looking to change careers or move to a new employer, they look at the time they will spend with that employer. There are 168 hours in a week and you are asking someone to spend basically a third of those hours helping to develop your company. So if she’s going to be giving you that much of herself, she needs to know what’s in it for her. This is where the strategy comes in.

Women typically want three things in a work environment: » To make a difference. » Security. » To be developed.

Making A Difference

Help women develop a niche market in an industry that they are passionate about. Or develop a philanthropic arm of your agency to give back and have them serve on that committee.

For example, at my company, we identify a charity of the year that we are going to support, and all of the employees submit ideas. Then we discuss and select one idea.

I also play football, hockey and softball for a charitable sports league. There are so many things you can do with this.

InsuranceNewsNet Magazine » January 2019

Security

Many women want to feel they are in an industry that isn’t going to disappear and that they can provide a good living for themselves and their families. They also want to make sure that they have secured their future.

With all my employees, we have a financial planner come in and talk to each one of them on an annual basis to give them an opportunity to ask questions and to see if there is something they should be doing differently to protect their legacy.

Desire To Be Developed

Membership in organizations such as Women in Insurance and Financial Services and NAIFA is a great way to make a woman feel you have invested in her. Pay for that membership.

If you can provide these three things to a female advisor, not only will you become a hero to her, she will also become a champion for you. According to the Gender Intelligence Group Study, when something good or bad happens to a woman, she tells, on average, 32 individuals (and I’m not talking about posting on Facebook — she actually tells someone). So it is important to engage her and demonstrate that you are willing to develop a “strategy,” and not just have an “event.”

Susan L. Combs, PPACA, ChHC, is the CEO of Combs & Company, a full-service insurance brokerage firm. She is the youngest national president of Women in Insurance and Financial Services and is a past recipient of Advisor Today’s Four Under Forty Award. Susan can be contacted at susan.combs@innfeedback.com.

Ayo Mseka is editor-inchief of Advisor Today, the official publication of the National Association of Insurance and Financial Advisors. Contact her at Ayo.Mseka@innfeedback.com.

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When Heirs Don’t Understand: Estate Planning Consequences Help clients mitigate potential animosity and create an executable estate plan that will be well-received by their heirs.

By Gregory B. Gagne

C

lients and advisors often operate under the assumption that they can check all the right boxes (trusts, powers of attorney, advance directives, proper beneficiary planning on their retirement accounts, life insurance, etc.) to create the perfect estate plan.

But even though all this preparation is intended to ease the transition for clients’ families after the clients die, sometimes unforeseen complications and conflicts can occur. When beneficiaries do not understand their loved one’s intentions, or don’t agree with their decisions, quarrels may ensue. As trusted partners, advisors can help clients mitigate potential animosity and create an executable estate plan that will be well-received with only a few extra steps.

Hidden Intentions That Hinder Estate Plans

Clients tend to keep their financial lives private. For some clients, this secrecy may even extend to their families. As a result, their beneficiaries may not be aware of the full financial picture surrounding their inheritance until ownership is transferred. Clients do not want to upset their children through discussion of a sensitive topic. Nonetheless, it is better for them to engage in conversations about their inheritance while they can rather than leave their kids with unanswered questions. If family members are excluded from the process, they may second-guess their parents’ intentions, especially if the estate is not divided equally in their eyes.

I see many families who focus on what wasn’t resolved or left for them instead of the significant inheritance their parents secured for them. If siblings receive different amounts or one has limitations to their inheritance, they may fixate on disparities and 50

create fictional, emotionally driven scenarios about departed parents in their minds.

The parents’ intentions get misconstrued and distorted as they are not present to answer these questions and alleviate doubts.

Strategies To Mitigate Animosity

Advisors should encourage transparent communication between clients and their beneficiaries throughout the planning process to prevent future animosity and support healthy family dynamics. You can accomplish this through a variety of methods, such as in-person meetings and extra documentation.

Family conferences. Our firm arranges family conferences as an opportunity for clients to include their families in the planning process. We invite direct descendants to join us in our office or remotely via video chat to walk through the estate plan and address any concerns. Clients are able to explain their decisions and reasoning in their own words to all of their beneficiaries. We’ve seen this strategy resonate with clients and their families, and help clarify the estate plan objectives.

We may not attach numbers to the plan at this point. Instead, we encourage clients to focus on communication with their beneficiaries about their responsibilities.

For example, we review who the successor trustee, successor power of attorney and health care power successor are, if applicable, and teach them what this means. Clients can also discuss their expectations for their children’s actions with their inheritance.

This is an opportunity for families to have a dialogue, instead of a one-way conversation when beneficiaries can’t get the answers they seek. Clients can share their intentions and we can help educate the beneficiaries about the wealth transfer.

Personal letter. We also encourage clients to write personalized “I love you” letters to their beneficiaries as an opening to their estate plan. Although we guide clients with this task, the letter should come from their heart, not our head. This is a

InsuranceNewsNet Magazine » January 2019

last touchpoint and opportunity for clients to use their voice to explain the inherited assets and intended outcomes. Written documentation along with any prearrangement plans remove the guesswork out of the transitional period.

The letter should include the investment advisor’s and lawyer’s contact information and an inventory of physical locations of safe deposit boxes and relevant documents.

Copies of birth certificates, marriage certificates and Social Security cards are important to include. Additionally, clients can pass along a digital imprint so family members can close out social media accounts and sort through files. The letter should conclude with the client’s core values, their wealth accumulation success stories and their hopes for each child who will receive funds.

Plan Continuity

Typically, clients who solicit estate planning services have adult children as their beneficiaries. The children often approach their parent’s advisor with questions about their individual plans. If they engage with us beyond their parent’s passing, we can seamlessly transfer assets with plan continuity. Although that’s not the goal of estate planning, multigenerational planning is an added benefit.

The greatest intentions sometimes create the worst outcomes. If clients and advisors take a few extra steps during estate planning, they can prevent unnecessary family animosity. Often, clients value their privacy or are afraid to approach their family. However, it is essential for them to have these conversations while they still can, to provide financial stability for their family as they intended.

Gregory B. Gagne, ChFC, is a 19-year MDRT member. He is the founder of Affinity Investment Group in Exeter, N.H. and the co-author of four books on estate and financial planning. Gregory may be contacted at gregory.gagne@innfeedback.com.

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

INSIGHTS

Plan Advisors Show Interest In DC Income Strategies As more advanced decumulation strategies enter the financial world, professional advice is more important than ever.

By Mark Paracer

E

mployers often rely on recommendations from their plan advisors to determine what features and investment options they should include in their defined contribution retirement plans. Deciding whether they should allow participants to generate retirement income within the plan (and, if so, what strategies they will offer) is among the important considerations that sponsors bring to their advisors.

As more advanced decumulation strategies have begun to generate headlines, the value of an advisor’s input in this area has grown significantly.

Most plans currently allow for strategic post-employment withdrawals through systematic withdrawal options or plans, or through required minimum distributions. However, in the last decade or so, new options for building and managing retirement income inside of a DC plan have been competing for the attention of retirement plan advisors.

These new strategies cover a wide range of attributes. Most revolve around creating guaranteed lifetime income, including the in-plan guarantee, the in-plan guarantee in the form of a deferred income annuity, and a target-date fund that converts to an annuity. But others are of a non-guaranteed variety, such as a managed payout fund. Another prominent option, managed accounts with a draw-down feature, can offer either guaranteed or non-guaranteed income, depending on the specifics of the retirement plan.

Recent LIMRA Secure Retirement Institute research finds a majority of consultants and advisors for DC plans indicate they are interested in these new approaches to generating retirement income.

52

More than half (54 percent) of advisors said they were most interested in offering a managed account with a draw-down feature. In second place was the in-plan DIA option (50 percent) and the in-plan GLWB came in third at 45 percent. Interest in managed-payout funds was the lowest, with only 37 percent of advisors showing any interest.

Notably, interest among registered investment advisors has increased for each option since 2015. When compared with the results of a similar LIMRA SRI survey conducted in 2015, managed accounts with a draw-down feature and in-plan GLWBs showed the largest increase since that time.

Although it’s not universally true, interest in retirement income options tends to be higher in the smaller advisory practices.

The biggest difference can be seen in the inplan guarantee option, where 57 percent of advisors with small practices show interest, compared with 46 percent with large practices. A target-date fund that converts to an annuity is the only option for which

InsuranceNewsNet Magazine Âť January 2019

advisors in larger practices show a higher level of interest. As advisors with smaller DC practices may be more participant focused than their larger counterparts, it seems logical they would place a higher value on these features.

Although few advisors (9 percent) currently recommend these in-plan guaranteed income products, the continued and growing interest is encouraging for manufacturers. With new legislation such as the Family Savings Act being introduced in Congress, there is hope that advisors will be more comfortable making a recommendation. Current proposed legislation intends to clarify laws around selecting an annuity provider and includes lifetime income portability protections.

Mark Paracer is assistant research director, LIMRA Secure Retirement Institute. He is responsible for conducting research on qualified retirement plans. Mark can be contacted at mark.paracer@innfeedback.com.

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POLICY FORM NUMBERS: ICC17-20103, 17-20103 and any state variations; ICC1720111, 17-20111 and any state variations INSURANCE PRODUCTS ARE ISSUED BY MINNESOTA LIFE INSURANCE COMPANY or 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 fi nancial obligations under the policies or contracts it issues.

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Dean As one of the most respected names in the RIA space, !

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for their groundThey’re offering the first 30 advisors who sign up ission! breaking seminar on Feb. 20-21 in Las Vegas FREE adm You need to be among the select few who will learn: How adding AUM to your insurance practice will lead to EXPONENTIAL GROWTH.

Why Brookstone's unique platform has helped advisors double and triple their AUM.

How Dean's seamless appointment process will help you CLOSE MORE BUSINESS.

Space is limited to select advisors, so don't !wait!

Make this the year you break the bank