InsuranceNewsNet Magazine - June 2020

PLUS: Annuity Special Section • PAGE 38

June 2020

BETWEEN A LOCKDOWN AND A

HARD RATE

Annuity carriers try innovating through the COVID-19 world

PAGE 14

COVID-19 Won’t Stop Industry Regulation And AG 49 PAGE 6

The American When Trusts Bust: College’s George How Celebrity Estates Nichols: Now Is The Crumble Time For Growth PAGE 26 PAGE 8

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IN THIS ISSUE

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JUNE 2020 » VOLUME 13, NUMBER 06

14

FEATURE

Between A Lockdown And A Hard Rate

By John Hilton

One thing is certain: Near-zero interest rates and little prospect of going any higher have carriers scrambling to overhaul their annuity shelves.

INFRONT

6 COVID-19 Isn’t Stopping Industry Regulation

By John Hilton and Susan Rupe Regulators continue to work toward Regulation Best Interest and language aimed at Actuarial Guideline 49.

INTERVIEW

8 When The Going Gets Tough, The Tough Keep Growing Distance learning may be the new normal, but The American College has been a leader in distance learning for years. The college’s new president, George Nichols, talks to Publisher Paul Feldman about his vision for the institution and the professionals it serves.

IN THE FIELD

20 M eeting The Challenge

By Susan Rupe Julian Good’s practice and family were upended by Hurricane Katrina. He tells InsuranceNewsNet about the challenges he has overcome and how he finally is building his business the way he wants it.

LIFE

26 When Trusts Bust: How Celebrity Estates Crumble

By Steven A. Morelli The rich and famous may think establishing a trust will solve all their estate planning troubles, but here are cases in which things went famously wrong.

ANNUITY

34 H ow Sequence Of Returns Crashes Clients’ Retirement

By Susan Rupe It can take time for retirement assets to recover from a market downturn.

Annuities protect that principal and provide room for growth.

online

www.insurancenewsnetmagazine.com

38 Annuity Awareness Special Sponsored Section Six elite companies offer their perspective on the future of the everchanging annuity marketplace.

HEALTH/BENEFITS 48 Help Seniors Answer Their COVID-19 Questions

By Lloyd Lofton Your clients look to you as a source of information, and the COVID-19 crisis is the perfect time to position yourself as an expert.

ADVISORNEWS

52 ‘Hold Tight’ Is Not Enough; What Advisors Say Now

By Steven A. Morelli Clients are anxious about their financial situations, and telling them to stay the course isn’t good enough.

INBALANCE

58 What To Expect When You’re Emerging From Quarantine

By Susan Rupe You, your staff and your clients will experience different sets of emotions as life slowly begins to return to normal.

BUSINESS

60 6 Personal Branding Tips All Agents Need To Know

By Eric Goldschein Craft your message, recognize your market niche and serve it better than anyone else.

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2

InsuranceNewsNet Magazine » June 2020

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WELCOME LETTER FROM THE EDITOR

The Angry Normal

S

ometimes, for no apparent reason, I will wince over something I said years ago, usually decades before now.

The memory tends to be connected to something I said in anger. The wince is usually a reminder.

I remember that no matter how satisfying a retort might be in the instance, I almost always regret it. Those angry flashes can take only seconds to shred the trust that took years to thread.

We don’t know why we do what we do. It is impulse hard-wired into the brain, likely in the limbic system. We rely on the prefrontal cortex to control those impulses.

It is fitting that we smack our forehead when we do something boneheaded, because that is where the prefrontal cortex is located. It’s sort of like smacking the side of an electronic device when it malfunctions. (By the way, I was tempted to say the side of a TV, but then I remembered that TVs don’t really have sides anymore. Yeah, I’m a baby boomer.)

Daniel Kahneman, a Nobel Prizewinning researcher and a founder of behavioral economics, has said that we have impulsive actions and apply reason later. We tell ourselves a story about why we did something. It reminds us that we shouldn’t become too attached to that story because it is just that, a story.

Normal Is A Rolling Average

Our impulse control is going to be severely tested for the foreseeable future.

When COVID-19 spread, prompting lockdowns, it helped us to see the lockdown as a hump to get over on the way back to normal. But normal is never what we were used to it is the constantly changing conditions that we adapt to.

Normal is a rolling average.

In this month’s magazine, Managing Editor Susan Rupe helped us understand what to expect as we all venture out of quarantine. Even if you haven’t had to hunker down, some people in your life, including clients, may have. Also, this crisis is still in its early stages.

In our coverage of insurance company first-quarter earnings calls, we have 4

InsuranceNewsNet Magazine » June 2020

seen that carriers are deeply concerned, just as most companies are right now. In fact, the Federal Reserve reviewed the transcripts of 2,500 first-quarter earnings calls and found that companies are more anxious now than they were in the last recession.

“While these results do not address the magnitude of the drawdowns or payout cuts (intensive margins), the dramatic increase in the share of firms taking these actions indicates that financing concerns amid the COVID-19 outbreak are even more severe than they were in 2008,” according to the Fed’s report.

The economic impact will be reverberating for years. We all will be dealing with many levels and guises of anger.

Many of us have already grappled with anger at home, especially those of us who have cooped-up kids. Now we will be encountering more anger in other places, in offices, stores, with clients, everywhere.

Certainly in our news.

It Is Not About Us

It is helpful to remember that anger is the secondary extension of something else — the knife in the hand, not the hand itself.

Here are some conditions that anger masks: hurt, shame, guilt, insecurity, fear and sadness. Especially for men, raging is easier than expressing sadness.

Understanding the motivation helps disarm the anger.

Successful advisors are adept at asking questions and actively listening for the answers. The really good ones know how to keep their own ego out of the process.

They know that anger or rudeness is not about the advisor.

That skill comes from really caring about the person on the other side of the conversation. That is not a prospect or a client, but a person who needs your help.

We see constant “othering” — the other people, the other party, the not us.

It is an easy pattern to fall into, just like reacting in anger. Othering leads to dehumanizing people, which gets us within striking distance of abuse. Here are a couple of things that might help.

Keep the ego out

Say a client accused you of not taking their situation seriously. It is easy to react angrily because, of course, you are an experienced professional doing what you are supposed to do. But that person is reacting to fear, not insulting you. Let that shot blow on by.

Actively listen

It is not just sitting there waiting for them to finish their sentences, although that is important. Reflecting back is the key. Mirroring seems weird at first, but research shows it works. Actually repeat the key things the person has said. They will feel heard, and you will confirm what you heard.

Say what you will do next

How often have you felt frustrated with a retail operation or bureaucracy that took your complaint and did not acknowledge it or explain what they would do about it?

It is infuriating. When someone tells us what they will do about something and when they will do it, we can feel the tension leave our body (assuming we trust they will do it).

Deliver something

Even if the situation could not be resolved, being upfront with clients will let them know you are on their side. Your clients will stick with you if they see you as their advocate rather than just a cog in a system.

This crisis will not be ending soon. The economic consequences will reverberate for years. No one can say if this recession will turn into a depression, but we do know that we are in the midst of something historic.

How we behave now will dictate whether we look back and smile with pride or wince with regret.

Steven A. Morelli Editor-in-Chief

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INFRONT

Securities and Exchange Commission Chairman Jay Clayton says although the Reg BI deadline is June 30, a good faith effort from brokers will be sufficient in the short term.

COVID-19 Isn’t Stopping Industry Regulation And AG 49 Regulators continue to work toward Regulation Best Interest and language aimed at Actuarial Guideline 49.

A

“Given the nature of a market in which competition rewards the bad players, it seems bizarre for regulators to defer the development of market problem solutions to those players benefiting from the current abuses.”

By John Hilton

lthough the insurance industry has spent the past two months working from home like much of America, various regulators are progressing on new rules.

State regulators who make up the National Association of Insurance Commissioners got back to work in May on language to curb indexed universal life illustrations. Actuarial Guideline 49 is their target.

The IUL Illustration Subgroup has a mandate to clamp down on multipliers and bonuses that critics say enable insurers to get around AG 49, which was approved in 2015.

The Life Actuarial Task Force gave the subgroup a directive last year to firm up AG 49, leaving the details unclear. The key wording is this: multipliers or other enhancements should not illustrate better than nonmultiplier designs.

Since then, regulators and industry representatives have struggled for solutions, but subgroup chairman Fred Anderson, a Minnesota regulator, set the goal at limiting illustrations to the 5%–6% range.

6

InsuranceNewsNet Magazine » June 2020

— Birny Birnbaum, consumer advocate At press time, the group was reviewing language submitted by the American Council of Life Insurers. But consumer advocate Birny Birnbaum criticized the effort.

“Given the nature of a market in which competition rewards the bad players, it seems bizarre for regulators to defer the development of market problem solutions to those players benefiting from the current abuses,” he wrote.

Regulation Best Interest

Meanwhile, the Securities and Exchange Commission is sticking with its timetable on Regulation Best Interest, a package of rules covering brokers that takes effect June 30.

While the agency is not delaying the rule, Chairman Jay Clayton said they are aware that brokers are dealing with bigger issues. The SEC has said that demonstrating “a good faith effort” to comply with Reg BI will be sufficient in the short term.

Otherwise, the agency issued risk alerts to help firms understand what examiners will be looking for when they start scrutinizing how brokers and advisors are complying with the new advice rules.

To comply, brokers will need to show they are setting policies and procedures to address the four components of the rule: the obligations around disclosure, care, conflicts of interest and compliance.

Reg BI exams could include requests for documents on disclosures, compensation, account monitoring and lists of proprietary products they sell to clients, the SEC has said.

SEC examiners expect to scrutinize brokers’ decision-making processes for determining that any given recommendation serves the client’s best interest, the alert said. They will also want to see documentation demonstrating how brokers are identifying and mitigating — or when it comes to barred practices like sales contests, outright eliminating — conflicts of interest.

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.

INFRONT

Trump Administration Still Set On Completely Dismantling ACA While millions of unemployed Americans are in danger of losing their employer-based health insurance, the Trump administration reiterated its goal of overturning the Affordable Care Act.

P

By Susan Rupe

resident Donald Trump said in May that his administration will continue to stick with Republican state attorneys general in their Supreme Court case against the ACA. The coalition of GOP attorneys general argue the ACA is now unconstitutional because Congress, in 2017, repealed the penalty on those who don’t have health insurance. The penalty, known as the individual mandate, was one of the crucial parts of the ACA. The case is expected to be heard during the next Supreme Court term, which begins in October.

But Democratic attorneys general are taking their own action. A coalition of 20 states and the District of Columbia filed briefs with the Supreme Court in the case, as the next battle against the decade-old ACA will be decided by the high court.

The Supreme Court agreed to hear the case in March. This came after Democrats challenged a federal appeals court ruling that the individual mandate was unconstitutional. The appeals court shifted the case back down to a lower court, which ruled in 2018 that the law

Lawsuits Piling Up Over Business Interruption Lawsuits are slamming insurance carriers over business interruption coverage related to government-ordered lockdowns.

Carriers are arguing that the cases are bigger than the question over coverage but go to the essence of insurance contracts. As the cases meld into class actions, insurance companies are saying the court’s decision would likely be a broad stroke against the concept of insurance.

For example, in a response to a class action, Erie Insurance said the case folds in different policy forms, endorsements and exclusions. is unconstitutional because it can’t stand without the mandate penalty.

But as the legal back and forth continues, the Trump administration chips away at the ACA in hopes of getting rid of the health care law entirely, millions of Americans are in danger of losing out on one of their options to obtain health care coverage.

With record unemployment in the wake of the COVID-19 shutdown, between 25 million and 43 million unemployed workers could lose their job-based health insurance, according to The Robert Wood Johnson Foundation and The Urban Institute. Those who lose their coverage would be forced to enroll in Medicaid, purchase coverage through

“The idea that any court can … issue sprawling industry-wide rulings that will adjudicate potentially thousands of unknown disputes involving myriad contract forms, an exponential number of different types of businesses, and varying underlying facts is, respectfully, unthinkable,” according to Erie’s filing.

Several states, starting with New Jersey, have bills in the works that would force carriers to cover pandemics in business interruption. The Insurance Services Office introduced the ISO exclusion for losses due to virus or bacteria 15 years ago. The exclusion was accepted by regulators.

Insurance companies are saying if they were required to cover the pandemic losses, the industry would “implode.” the ACA marketplace or go without health insurance.

Prior to the COVID-19 shutdown, about 160 million U.S. workers had health insurance through their employers. Between mid-March and the end of April, 33.5 million people filed for unemployment benefits.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

June 2020 » InsuranceNewsNet Magazine

7

INTERVIEW

When The Going Gets Tough, The Tough Keep Growing The American College’s George Nichols says this is the time for advisors to build competency for their careers and their clients

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InsuranceNewsNet Magazine » June 2020

WHEN THE GOING GETS TOUGH, THE TOUGH KEEP GROWING INTERVIEW

O

ur interview with George Nichols, the president of The American College of Financial Services, straddled the onset of the COVID-19 pandemic.

When we spoke with him in early February, not a word was said about the virus. When we met him at his office outside of Philadelphia in mid-March, we spoke about the impact of COVID-19 seeping into all our lives. When we followed up with a phone conversation in mid-April, we were all hunkered down.

The American College is well-suited for this moment because it has been a distance-learning institution for many years, as it adapted to the needs of its students. After Nichols took over in 2018, the college pivoted to its learners’ latest needs. The college now offers modules of courses that students can take to increase their competency in an area of immediate need.

The college is also intensifying its focus on retirement with its Center for Retirement Income. That area of study is becoming more relevant with each passing year and with each crisis. The latest crisis has brought into the open just how economically insecure most Americans are.

Nichols knows the many facets of the life insurance industry as few others do.

He was an executive with New York Life for more than 17 years, where he worked on initiatives ranging from marketing to governmental affairs. Before that, he was Kentucky’s insurance commissioner.

Although his background is extensively in life insurance, he says all insurance and financial industries should be under the category of retirement and economic security. No one discipline can cover all of a client’s financial needs.

This feature is in two parts, part one is a pre-COVID discussion and part two is during the lockdown. Nichols speaks with Publisher Paul Feldman about the college’s new approach to retirement needs in the first part of the feature. In the second, Nichols addresses what agents and advisors need in order to thrive in this time of crisis and beyond.

FELDMAN: You’ve been at The American College for just over a year now. What has surprised you the most?

NICHOLS: Probably the first thing that I’ve learned is all the great things that are happening here in terms of the content.

Then I think about the number of people who have come through The American College who are in the business, and their acknowledgement that this place helped them build their careers.

When I was at New York Life, we were always really proud about what we were doing, but we only knew New York Life. Now I’m here and it’s MetLife, it’s Equitable, it’s Mass Mutual, it’s Northwestern Mutual, Old Connecticut General; it’s all these companies that go back. You just keep going further and further back. All these people came through The American College and got their designations.

I’m thinking about the future, but what I learned is really how powerful our past and our history are in in the industry going back to 1927.

best-interest standard. But if you actually read why he wanted to do this, he said, “I want to do this to teach agents that they should put their clients’ interests above their own.” In 1927, he was talking about the best-interest standard.

Now our challenge is, how do we take that mission and apply that in more modern times but not fundamentally change what ultimately is the foundation of it all?

Those would be the big things that I’ve learned in my 15 months here.

FELDMAN: How important is retirement planning for agents and advisors today?

NICHOLS: I think for the advisor, it is probably the most critical thing. I will tell you for The American College, it is strategically probably the most important thing we’ll do in 2020. We are doubling down on the retirement space.

Solomon S. Huebner helped start the college in 1927 with a mission to serve clients’ best interest.

Everybody talks about the 80,000-plus with CFP. Well, you know what? The first professional designation was the CLU, and it was through The American College. It’s applied knowledge. It’s not like I just go get a degree and hopefully someday I’ll figure out a place that I may use it.

No, you come here to actually get knowledge that you can go and apply and make a difference in people’s lives.

The year 1927 was a long time ago, but if you go back and read some of the books about how [founder] Dr. [Solomon S.] Huebner started, he was ahead of his time. Right now, the biggest thing is the

When we started looking at what is the greatest need of Americans today, it’s retirement. Am I saving enough? Am I focused enough on the accumulation? Then when I get ready to retire, what’s my right strategy for the distribution?

Everybody’s worried about it. I don’t care if you’re middle-aged, if you’re already retired, if you’re a millennial — you’re thinking about that timeframe.

Any advisor who is not prepared to assist their clients in that space, I think they are doing a disservice to clients because we’re all moving in that direction.

Now, for The American College, a lot June 2020 » InsuranceNewsNet Magazine

9

INTERVIEW WHEN THE GOING GETS TOUGH, THE TOUGH KEEP GROWING of people would think we’re the life insurance college. I would like people to look at us as a retirement college. In our name is “Financial Services,” and we offer a broad array of applied knowledge in that space.

But if you think about our transition from just life insurance and you think about the evolution of the financial challenges of consumers and families today, it’s retirement. Our retirement center, if you think about Michael Finke, you think about Wade Pfau — these are really well-known top-notch experts, and that’s what we have to offer in helping people

FELDMAN: What is your biggest challenge to get more people to step up and learn? How do we get more people to do that?

NICHOLS: When I think of life insurance, when I think of retirement, and I think about what I’ve learned over the course of being insurance commissioner and then working at New York Life, the competition is not the other company. The competition is the other interest related to the dollar in my wallet. Is that fixing my car?

Is that I want to live in that really cool

“Let’s just face the reality that I may typically start as a life insurance agent; but ultimately, I’m going to get into wealth management.”

understand that whole thing around retirement. Actually, we have more faculty in our retirement area than we have anywhere else.

We’re agnostic on what your solution is, because the solution should be based on what your client’s specific needs and desires are.

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InsuranceNewsNet Magazine » June 2020

place? Is it that I want to buy a nice TV or take a nice trip? It’s the battle around the wallet.

Then, with all due respect to Suze Orman and all the others in the world who tell you how to create a perfect retirement solution, I’d like to take your perfect retirement solution and introduce

it to my imperfect life.

It is a challenge for people. When we look at what our numbers should be to have a “comfortable retirement,” that’s a daunting task.

FELDMAN: Where do you see opportunities for growth?

NICHOLS: As we try to think about where the next opportunity is for the college to grow, it is in specialty areas.

Those are retirement, philanthropy, special needs and wealth management.

In retirement, we are finding that, regardless of whether you’re a part of the giving pledge with the Warren Buffetts of the world, everybody is thinking about their legacy. When you think about your legacy and what you leave both to your family and to society, that’s philanthropy.

The other thing is, we really believe that there is a great need around special needs planning. It used to be that whenever we said the term “special needs,” it was always your kid. It’s not your kid. It is your family members.

My father had Alzheimer’s disease, and I found myself in my estate plan having to think about taking care of him in case I died first, to make sure he was taken care of. We now think of special needs in a much broader context around our family, our parents, our siblings, our friends and others. It’s much broader.

In wealth management, let’s just face the reality that I may typically start as a life insurance agent; but ultimately, I’m going to get into wealth management — “I want to help grow your wealth, and you can be rich, and so will I.” But the question is, how do we help the life insurance agent become knowledgeable and expand into wealth management?

In every one of those scenarios, the most important words that I want you to hear are “applied knowledge.” We want to give people something they actually can use to make the situation better. Not “here’s good information just to know,” but actually stuff that you will need to know if you’re really going to deliver for your client.

FELDMAN: I was reading on your website that people who get a designation through The American College increase their income 40% to 50%. Yet,

WHEN THE GOING GETS TOUGH, THE TOUGH KEEP GROWING INTERVIEW what I hear people say is, “Oh, I don’t have the time to get a designation, it’s too hard,” or whatever the excuse is, What would you say to them?

NICHOLS: I would tell them, “Don’t think about yourself, think about your client, and it’s never too hard for you to be smarter for them.”

But I know that is not going to get a whole lot of people excited. Let me tell you what we are doing related to that.

When we think about the future of this applied knowledge that we want to deliver, we have started to think about how.

One of our strategic objectives for 2020 is to look at our content — whether that is within the designation, whether it’s the course, the learning objectives — and create a modular format where you can take it in small bites. The reason for that is that people don’t have time, but they do have 15 minutes on the way to this next meeting while in the Uber. They can go on the phone and start taking part of the learning objectives and the things that they should know within the coursework, and they can do them in small bites when they have time to do them, and all the information that they need is there on their mobile device.

We recognize that people may not want to get a designation. But I believe if you’re committed to your client and your profession, you do want to get smarter.

PART II — A Follow-Up Discussion In Mid-April FELDMAN: You have been speaking to lot of people throughout the industry during these times. What types of things are you hearing?

NICHOLS: I’d say almost every advisor that I talked to, whether they are in insurance or the broader financial services market, is busier than they’ve ever been.

A lot of that was reaching out to their clients, calming their clients down, talking to them about what the various options are. Reaching out to people they had never gotten around to contacting, or people who hadn’t even returned their calls.

When we spoke about being at home, they were saying they can actually be more productive because if their office was an hour away, that’s an hour they

don’t have to travel anymore, so they can actually use that time to be working.

Some of the folks are saying at this point that it’s more of the professional people who are getting ready to be impacted. And the longer this goes, the more they’re going to be impacted.

When a business cuts down and no more revenue is coming in, or they didn’t get the PPP money that they applied for, then they may start furloughing people. And it really seems to be the norm right now, furlough versus layoff.

people who just can’t wait to interact and they’re like, the last thing I want to do is to Zoom with you when I can see you. So I just think we have to wait and see how that plays out.

FELDMAN: Have you seen this environment change the way people are out there selling? Do you think that Zoom might be the way of the future?

NICHOLS: I think it’s too early to tell whether this is actually going to change the selling process.

However, saying that, I do think that there has been an acceleration of the acceptance of online or the Zoom environment. It Publisher Paul Feldman meets with George Nichols, wasn’t embraced by a lot president of The American College of Financial of businesses and now you Services, at the college’s office in King of Prussia, Pa. have no choice.

They met before Pennsylvania went into lockdown.

Those who have had to embrace it in order to maintain their business or their lifestyle Zoom really just captured the world. or whatever it is, they’re going to embrace But then recently there have been the priit further and incorporate it into how they vacy issues that came up that people were do business going forward. concerned with.

We’ve already been looking at robo-advisors and technology and their impact FELDMAN: How is this affecting The on distribution as it is. People are going to American College? go to the internet and the robo-advisors to get information, but they still want that NICHOLS: The beauty of The American human interaction to help them validate College, and I say it every day, is that I’m their decision and that judgment. And we so fortunate that I’m a leader of a higher don’t really see that changing. Now you education institution that is online, and I can still do that, but I’m just looking at don’t have to figure out how to do it right you by Zoom. in the middle of a semester. So that actuThink about the number of people who ally has worked for us. can’t wait to get out and talk to people.

Now when you think about where our That’s why I’m saying that, yes, it’s going strategy is, and as we’ve talked about beto accelerate online for a lot of business fore creating this modularization of our and even the sales part of it. But there are content, we get to stay focused on that.

June 2020 » InsuranceNewsNet Magazine

11

INTERVIEW WHEN THE GOING GETS TOUGH, THE TOUGH KEEP GROWING Short term, let’s see what adjustments we have to make. Long term, we’re staying on course. We’re not making any changes.

It has impacted us like it’s impacted every business in America whether you’re Walmart and your stock goes up, everybody’s impacted. We’ve had a slight revenue hit, which we expected, and actually the revenue hit has not been as bad as we had fully anticipated.

Almost everything has been deferred.

We do these intense programs where we go into a firm and give them a study program that gets them ready for the exams.

We usually do those face to face. We’ve offered to do those by webinar. Some people want to do that. Some don’t. Some want

[is helping] an advisor understand the importance of behavioral finance, which is a nice professional way to say your ability to actually be more humanistic in your relationship.

Do you have compassion about where your client is? And are you showing that this is really about them and about what their strategies, what their plans, what their desires are?

The third thing is clarity. The thing that most people struggle with is uncertainty.

And if you can bring clarity to the strategy and deploy it, you can’t fix the uncertainty of the market and the volatility, but you sure can bring clarity in that you have a strategy about getting your clients where

“You can bring clarity to what is happening today, and this is how we’re going to progress going forward even in uncertain times.” to just delay it and see what happens; we may be doing that in the latter part of the second quarter.

It is giving us a few short-term opportunities just because people are home and we’re trying to promote to people, “Look, here’s an opportunity for you to begin building on your competency in the business.”

they want to be.

You can bring clarity to what is happening today, and this is how we’re going to progress going forward even in uncertain times.

If you can do those three things, then you’re going to be successful down the road into the future, however this plays out.

FELDMAN: What are some skills that you see agents needing right now?

FELDMAN: What do you see as the broader effects on the life insurance industry?

NICHOLS: If you’re an advisor and you’re not good at communications, you weren’t going to survive in the first place, and you’re sure not going to survive now. You have got to be out calling your clients, communicating.

These are the three Cs: communication, compassion and clarity. One of the things I really like to see us do more of

NICHOLS: The last time I looked, the 10year Treasury was down to something like 0.6%. Earlier in the year, it was up to like 1.8%. The advantage is that the industry has learned to live with a low interest rate environment because interest rates have been around 2% for a long time. I think they’ve figured that out in a lot of ways.

One of the things that I always worry

12

InsuranceNewsNet Magazine » June 2020

about is that as you are finding it more difficult to find places to put money to get the type of returns that you need to, how far will a company go out on the risk curve to get the returns it feels like it needs to have?

From most of the companies, I’m hearing anywhere from 8% to 15% earnings yet for the year based on what they’re looking at.

Those life insurance companies that have somewhat diversified their portfolios are going to do well. If you’re pure life or you’re pure annuity, you’ve got to look at what your alternatives are. If I were a single product line company, I’d probably be worried.

I was talking to someone the other day about whether we think there’d be an increase in life insurance sales. And what I heard is that people are more interested in having that conversation now as they’re looking at what’s happening on TV. And so that’s a good thing. Now would that be term? Would that be whole life?

FELDMAN: What is one message you would you like to say to agents and advisors out there today?

NICHOLS: This is a very tragic and historic time for us as a country. And everybody is impacted, whether you have a loved one, have a friend, or you just see the numbers and how Americans are having to go through this.

But I also hope that people recognize the opportunity in this, the opportunity to talk about life insurance, to talk about the importance of taking care of and preparing for your family, for your business long term.

For advisors, I say make sure you’re communicating that. And make sure you have that compassion that this is a human thing. This is not a financial thing. This is about human beings and helping them with solutions. But make sure that they’re smart solutions and you’re competent.

Going through a crisis creates a bond that can’t be created at other times.

People need financial help and knowledge more than ever. I hope that advisors either have prepared themselves or are thinking about preparing themselves to be competent, to help lead people back through this tragedy.

REUTERS/Lucas Jackson

NEWSWIRES

Stock Market Recovers Before Main Street Does Main Street America is hurting from the COVID-19 crisis, but Wall Street showed

major optimism as the nation reached the six-week mark of a major shutdown. April was the best month for stocks since January 1987, CNN Money reported. After the market bottomed out on March 23, it rebounded 30% by April 30.

How can this be, since 30 million Americans filed for unemployment since COVID-19 shuttered many businesses and the U.S. gross domestic product is expected to decline by a whopping annualized rate of 40% in the second quarter?

It’s because the stock market and the economy are two different things, analysts said. It’s common for Wall Street to look at recovery before everyday Americans feel it. Investors look three to six months into the future.

In addition to optimism, Wall Street experienced what some call “melt-up,” driven by the $2 trillion federal stimulus package. On top of that, market valuations have become much more expensive. The S&P 500 now trades at 21.7 times projected earnings, the highest level since May 2002, according to Refinitiv.

AMERICANS HOLDING ON TO THEIR CASH

Americans aren’t just hoarding toilet paper and flour. They are keeping a tight fist on their cash as well, the U.S. Bureau of Economic Analysis reported.

The U.S. savings rate jumped to 13.1% in March, up from 8% in February and the highest savings rate since November 1981. Americans had $2.17 trillion in savings in March.

What’s prompting so many people to stash their cash? One factor is that people are nervous about the state of the economy, analysts said. Another reason is that, with so many businesses closed and so many people under stay-at-home orders, consumers are spending less on non-food expenses.

U.S. Personal Savings Rate Climbed 13.1% In 1Q Mar.

7.7% Jan.

8% Feb.

SOURCE: Bureau of Labor Statistics

DID YOU

KNOW

?

WORKERS FEAR FOR THEIR FINANCES OVER THEIR HEALTH

Employees are more concerned about their finances than any other aspect of their well-being, according to MetLife’s 18th annual U.S. Employee Benefit Trends Study.

72% 61% of women of men

are feeling more stressed as a result of the pandemic SOURCE: MetLife

More than half (52%) of U.S. employees are most concerned with their financial health in the wake of the COVID-19 pandemic. That was a higher percentage than those who said their biggest worries were physical (44%), mental (44%) and social health (44%).

The study revealed that three in 10 workers surveyed (29%) now earn less as a result of the virus. Meanwhile, nearly four in 10 (38%) say their employment status has been directly impacted by the pandemic, and an additional 36% expect to be affected in the future.

QUOTABLE There is no scale to measure the misery associated with COVID-19 on all fronts.

— Diane Swonk, chief economist of Grant Thornton

Workers who make less than $50,000 annually are feeling more stressed over the pandemic than are higher wage earners.

The survey found 70% of those earning less than $50,000 a year were feeling stressed, compared with 66% of those earning between $50,000 and $100,000, and 62% of those earning more than $100,000.

COVID-19 PUSHING AMERICANS INTO EARLY RETIREMENT

Unemployment hit record levels as a result of COVID-19, and many of those who are out of work decided to opt out of the workforce permanently. University of California at Berkeley researchers analyzed the population that is currently out of the labor force and found that the percentage of jobless who said they are retired rose from 53% prior to COVID-19 to 60% at the end of April.

COVID-19 could end up changing a trend toward an aging workforce. Over the past 20 years, the share of Americans in their 70s who are still working rose from less than 10% to nearly 15%, according to U.S. census data. The U.S. Bureau of Labor Statistics estimated that by 2024, some 44 million workers, or roughly 25% of the U.S. labor force, would be 55 or older, including 13 million — or 7% — age 65 or older.

Will these older workers return to employment when conditions improve?

Researchers said that if these retirees find their retirement funds took too big of a hit in the market, they may look for jobs. But because older adults are among the most at risk in this public health crisis, many may decide not to look for work out of concern for their own health.

Nationwide will transition to a hybrid operating model that encompasses primarily working from office in four main corporate campuses and working from home in most other locations. Source: Nationwide June 2020 » InsuranceNewsNet Magazine

13

COVER STORY

BETWEEN A

LOCKDOWN AND A

HARD R

Annuity carriers try innova through the COVID-19 wo

14

InsuranceNewsNet Magazine » June 2020

COVER STORY

First-quarter earnings reports showed just how nervous annuity companies are about doing business in this pandemic.

ATE

ating orld

By John Hilton

At the same time that carriers are trying to sell to a locked-down nation, they have less-attractive products to do it with because of historically low interest rates. At a time when a rush to safety should be ballooning annuity sales, as it did in the 2008 crash, near 0% interest rates are depressing product rates and pushing prospects away.

June 2020 Âť InsuranceNewsNet Magazine

15

COVER STORY BETWEEN A LOCKDOWN AND A HARD RATE

Indexed Annuities Evolve Since The 2008 Crash Year

Surrender Charge

Premium Bonus

2008

10

10.00%

7.62%

8.00%

0.50%

6.86%

$54,068

63

2009

10

8.00%

6.75%

8.00%

0.60%

6.69%

$62,387

64

2010

10

7.00%

6.71%

7.00%

0.75%

4.01%

$68,977

64

2011

10

6.00%

6.33%

7.00%

0.95%

3.61%

$61,356

65

2012

10

6.00%

6.09%

6.50%

0.95%

3.32%

$68,395

64

2013

10

6.00%

6.51%

6.00%

0.95%

3.37%

$83,499

64

2014

10

5.00%

6.63%

6.00%

0.84%

3.56%

$82,114

63

2015

10

4.00%

6.48%

5.50%

0.92%

3.81%

$98,655

64

2016

10

4.00%

6.21%

5.94%

0.96%

3.60%

$105,264

62

2017

10

3.00%

6.13%

6.05%

0.97%

4.85%

$121,240

64

2018

10

4.00%

6.23%

6.10%

0.95%

5.22%

$120,385

64

2019

10

4.00%

5.74%

6.35%

0.94%

4.09%

$127,631

63

Today

10

4.00%

5.58%

0.94%

3.37%

Commission

GLWB Rollup

GLWB Charge

Cap

Premium

Client

Source: Wink’s Sales & Market Report and Wink’s AnnuitySpecs Tool, www.WinkIntel.com

The typical indexed annuity over the past 12 years has seen the premium bonus drop more than half, a commission reduction of nearly 2% and a cap that has declined by more than 3%.

Plus, the typical guaranteed lifetime withdrawal benefit on this product has a rollup that has dropped by 2%, while the charge for the GLWB has effectively quadrupled because not only has the rider fee nearly doubled, but that

That means products will need to change to stay competitive. That is good news for agents looking for annuities that their prospects will want. But some of those innovations will lead to complexity that worries some annuity advocates — and could attract the scornful eye of regulators.

American Equity, for example, finds itself considering what sounds like a proprietary index in its lineup.

“We will be introducing our first multi-asset index strategy in June,” CEO Anant Bhalla said in the company’s quarterly report. “This adds to our distribution partners’ tool-kit of client solutions, while reducing the vulnerability of cost of money to changes in implied volatility in the marketplace.”

16

InsuranceNewsNet Magazine » June 2020

fee is now based off the higher benefit base value, rather than the account value.

Despite all this, the average premium on indexed annuities has more than doubled. This speaks to how consumers continue to value the benefits of indexed annuities.

— Sheryl Moore

That a company is using one is not surprising in itself. After all, the indexes have been growing in popularity for the past several years. It’s just that American Equity was not a fan of those features a few years ago.

“We believe proprietary indices add another level of complexity to a safe money insurance product and do not offer a significant growth advantage,” said President Ronald Grensteiner in a financial press article in 2017. “By contrast, the S&P 500 is a “transparent public index with 60 years of history that a policyholder can easily track.”

‘Ridiculously Low’

Carriers started slashing rates and pulling products in March when the Federal

Reserve cut its prime lending rate.

For many annuity sellers along the distribution route, the market calamity is a repeat of the 2008-09 crisis. While there are similarities, and experience will serve the industry well, the low interest rates are an important difference, said Eric Henderson, president, Nationwide Annuity, at Nationwide Financial.

“While interest rates seemed low back then,” Henderson said, “they are ridiculously low right now.”

The effect is like a “triple whammy” on the industry, he explained. Hedge costs go up, companies need to discount the value of future annuity benefits and reserves must be increased.

The good news is that March also did see the rush to safety that was a hallmark

BETWEEN A LOCKDOWN AND A HARD RATE COVER STORY of the period following the 2008 crash.

Fixed-rate deferred annuity sales spiked in March, rocketing 57% over the previous month, according to early figures from the Secure Retirement Institute.

SRI data confirms the jump in fixedrate deferred annuity sales, and fixed indexed annuities also had a bump at a respectable 22% month over month, according to Todd Giesing, SRI’s annuity research director.

The rush to safety reversed direction for annuities, which were struggling in the strong headwinds from historically low interest rates, Giesing said.

“We started the year [2019] with a 3% 10-year Treasury,” Giesing said. “We ended the year somewhere around 1.9%.

So, sales were steadily falling for prod-

there’s kind of a sky-is-falling mentality … but what I’m trying to do is encourage everyone that, although this is terrible right now, when we get to the light at the end of the tunnel, we are going to experience record sales.”

So far, carriers have not cut sales commission rates, Moore said.

The pandemic and subsequent lockdown have many carriers looking for new or better distribution channels.

Those companies relying on traditional independent distribution through agents meeting clients at their dinner table are particularly vulnerable.

American Equity projects “subdued” sales of even its most appropriate FIA products until it figures out distribution, said CEO Bhalla.

“It seems likely that sales will remain

“What I’m trying to do is encourage everyone that, although this is terrible right now, when we get to the light at the end of the tunnel, we are going to experience record sales.”

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• “The Home Office team provides unbeatable support.”

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subdued until social distancing needs abate or producers find new ways to engage with clients and the dining table discussion in households shifts from primarily health concerns to longer term issues around wealth and retirement income,” he said.

Product Changes

In March, Allianz Life Insurance Co. unveiled a new fixed indexed product, Allianz Benefit Control annuity. The company is touting the product as having all the benefits of an FIA, including guarantees against the loss of principal and credited interest and a death benefit for beneficiaries, while also offering clients the ability to begin income on any monthly contract anniversary after age 50, with no minimum wait period.

During the accumulation phase, clients can choose between two options for June 2020 » InsuranceNewsNet Magazine

Sell life products designed exclusively for Catholics and join a team that succeeds together:

• “It has been a blessing to have joined a committed team that’s 100% flexible.”

— Agent Holly Schweitzer

— Sheryl Moore, Wink Inc. CEO ucts like fixed-rate deferred and indexed annuities throughout 2019, and as we looked at the first quarter of 2020, we expected that slide to continue.”

And sales were in fact sliding early in the first quarter, so much so that even the exceptionally strong March sales could not overcome the drag on the entire quarter.

Total fixed annuity sales were $29.5 billion in the first quarter, 22% lower than the first quarter of 2019, according to preliminary results from SRI’s Individual Annuity Sales Survey.

But it is looking like that momentum did not flow into the current quarter, according to Sheryl Moore, CEO of Wink Inc. “What I’m hearing from everybody, whether it’s a distributor or a product manufacturer, is sales are down and they’re down really bad,” Moore said. “So

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COVER STORY BETWEEN A LOCKDOWN AND A HARD RATE how to grow their protected income value: the Accelerated PIV Interest Bonus or the Balanced PIV Interest Bonus.

Each comes with a different withdrawal calculation.

“Allianz introduced a new approach to provide strong consumer value in an ultra-low rate environment,” said Dan Krueger, assistant vice president of product innovation at Alliance Life.

“We believe this new approach gives advisors and consumers the solutions and flexibility they need to meet their retirement objectives without additional complexity.”

But some product reviewers say the ABC annuity might be an example of the product complexity that could increase in the coming months.

In the meantime, many states are proceeding with best-interest rules for annuity sales. The National Association of Insurance Commissioners finalized a model law in February for states to use as a template.

Iowa is one state moving ahead despite the pandemic, having sent a best-interest rule out for public comment in May. Rules generally require agents to be able to document that their recommendations fit their clients’ financial, age and risk profile.

Then there’s New York, where regulators adopted their own rules that resemble a fiduciary standard. The state announced the first fines for annuity producers in April, against Lincoln Life & Annuity Company of New York, MassMutual Life Insurance Co., and Pacific Life & Annuity Co. The insurers, collectively, agreed to pay $1,084,407 in restitution to New York State consumers, plus $934,000 in penalties.

Companies are also pausing product development altogether.

“I had a couple of companies that I was working with on developing index annuities for the first time, and they have put their plans on hold,” Moore said. “That’s significant because you’re looking at the pricing environment, how challenging it is seeing companies that are working to get in and suspending those efforts just because of the challenges of the present pricing environment.”

Smaller independent marketing organizations are feeling the squeeze.

18

InsuranceNewsNet Magazine » June 2020

In the days of and following the Labor Department’s annuity fiduciary rule, small IMOs were being absorbed by larger ones.

In this environment, smaller IMOs might feel the pressure to sell once again, but larger IMOs might not want to spend the cash right now, said Chris Conroy, executive vice president of national accounts and principal of Insurance Agency Marketing Services, a national IMO. “Having spoken to medium- and small-sized firms, they are nervous,” he said. “The idea of partnering with a bigger firm is of more interest to them today than it ever has been. That said, some of the likely buyers out there, I’m not sure they have the capital or the strategic position to make those same kinds of offers as they have in the past.”

Good Public Relations

One positive development is coming from an unusual place: the halls of Congress.

The momentum began in December when the Senate surprisingly passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The bill was included in the massive $1.4 trillion spending bill signed by President Donald Trump at the end of the year.

The bill’s many changes pushed retirement security, and by extension, annuities, into mainstream discussion.

SECURE creates a safe harbor that employers can use when choosing a group annuity to include as an investment within a defined-contribution plan.

Soon, the conversation around annuities changed dramatically.

“I’ve been tracking the annuity press for 15 years now, and it used to be I’d be lucky if I get one accurate, not even pro-annuity, but just one accurate annuity article a month,” Moore said. “Now I’m seeing at least one a week, and that’s fantastic because it gives us a greater opportunity to educate consumers.”

The pandemic and resulting economic crash is further boosting annuity lobbyists looking for more legislation.

A proposal by the Insured Retirement Institute focuses on further easing rules to permit Americans to keep their tax-deferred savings longer, make catchup contributions, and make it easier to roll money into qualified longevity annuity contracts.

On the regulation side, the news is

BETWEEN A LOCKDOWN AND A HARD RATE COVER STORY mixed. Insurance regulators at the state level have virtually halted efforts to enact an array of proposals that could lead to a dreaded “patchwork” of differing standards. Most insurance regulation is done at the state level, and understaffed offices are focusing on pandemic issues, Moore said.

“I don’t think that best interest regulation is going away by any means,” she added. “I think that it’ll still be a huge focus once we get through COVID-19.”

Other standards have not been de-

Nationwide New Heights is a fixed indexed annuity with 8-, 10- and 12-year surrender charges. The company pulled the 8-year product from the market once interest rates bottomed out, said Eric Henderson, president, Nationwide Annuity, at Nationwide Financial.

“The shorter the product is, the more difficult it is in a low-interest rate environment,” he explained.

But a recent Nationwide survey confirms that consumers place a very high value on guarantees, Henderson noted.

just creepy in today’s technological age,” Moore said.

With nearly all face-to-face meetings canceled for weeks, change has been forced upon the entire insurance distribution chain. From electronic signatures to accelerated underwriting to many other technological advances, insurance selling is advancing at lightning speed.

“There is a silver lining in this whole thing because it really could ultimately result in much more efficient sales and much greater sales because of how

“I think here’s a situation that if you lived through 2008, 2009, and you’re living through this as well, I think that helps people appreciate the value of guarantees that much more.”

— Eric Henderson, president, Nationwide Annuity, at Nationwide Financial layed. So that means the best-interest standard for brokers adopted by the Securities and Exchange Commission will take effect June 30, Chairman Jay Clayton has said.

Product Diversity Key

As bad as the selling situation might be at the moment for annuity agents, it would be worse if not for the Great Recession of 2008-09, said Gary Phifer of Beacon Research.

At that time, many carriers were stuck with product portfolios heavy on the variable annuity side. The market crash forced product diversification and hedging against future downturns. Hence the growth of fixed annuities.

“When you’re building a product where your worst-case scenario is zero, it’s easier to price or design a living benefit rider that has some value,” Phifer explained. “The economic value that was found in the FIA benefits over VA played a big role in some of that shift.

“You saw comp carriers diversifying their product offerings where they were, maybe in some cases 100% VA started offering the RILAs, or they started offering FIAs, or more fixed offerings so that they had something to offer during these periods of time.”

Eighty percent of all respondents and 85% of investors agreed they can still be blindsided by outside events even if they make responsible financial decisions.

According to 49% of respondents and 52% of investors, the COVID-19 pandemic made them realize that they need help managing their finances and investments in order to succeed in the future.

“I think here’s a situation that if you lived through 2008, 2009, and you’re living through this as well, I think that helps people appreciate the value of guarantees that much more,” Henderson said. “That’s why I think that annuities will continue to be an important part of people’s portfolios.”

Faster Processing

Moore remembers starting out for a small life insurance company 21 years ago and hearing executives talk about an innovative new idea called “electronic signatures.” That idea was supposed to make it easier for companies to migrate to straight-through processing of new applications.

Alas, insurance companies do not do technology fast or well.

“Prior to COVID-19, most companies were not even able to accommodate straight-through processing, which is

everyone has been forced to embrace technology as a result of COVID-19,” Moore said.

Technology aside, it remains a challenge for the industry to do business as usual while social distancing.

“Carriers are struggling with how to wholesale these products to producer,” Phifer said. “They’ve just always been in the office doing the dog-and-pony show, if you will, buying them lunch and so forth. How do you engage when you’re missing that hands-on approach, that touch? The phone has always been secondary to that face-toface contact.”

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback. com. Follow him on Twitter @INNJohnH.

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19

the Fıeld

A Visit With Agents of Change

MEETING THE Julian Good found success by refusing to be mediocre.

By Susan Rupe

20

InsuranceNewsNet Magazine » June 2020

MEETING THE CHALLENGE IN THE FIELD

A

catastrophe that upended the lives of millions of Americans.

Thousands of people dead. Countless others separated from their homes and their loved ones. An economy taking a hit and taking jobs with it. A recovery that took years.

That scenario might describe the current COVID-19 crisis, but it actually describes an event that occurred 15 years ago. Hurricane Katrina devastated the Louisiana and Mississippi coasts in 2005.

With $81 billion in property damage and an estimated economic impact of $150 billion, Katrina holds the title of the costliest hurricane in U.S. history.

Advisors who lived through Katrina were hit from all sides. They had to help their families and maintain their practices in the aftermath of the hurricane while being there for clients who needed help in putting their own lives and businesses back together.

normal, but he also had to assist his clients who were going through their own difficult time while he was 400 miles away from them.

It was an unsettling time for his family and his clients, Good recalled. “We moved back to New Orleans, but we had to live in an apartment for about a year because there weren’t enough houses available. Everything had to be rebuilt. I didn’t know how business in New Orleans would be impacted — no one knew.”

He said many companies temporarily set up shop in Baton Rouge, more than 80 miles inland from New Orleans, and employees commuted between the two cities. It was a challenge to serve clients who were dispersed throughout the region.

“It was just a mess,” he said of the post-Katrina environment. “It took a year to determine whether business in New Orleans would bounce back, whether we could get our infrastructure rebuilt.”

Good said he was optimistic New

CLU, and I got all my securities licenses.

I wanted to learn as much as I could — I didn’t want to go out on a call until I figured I was ready. I needed to know — what was I trying to sell? Who were the people I was trying to sell to?”

Good said that after reading as much as he could about the life insurance business, he overcame his fears and began setting appointments. He found clients among adults his own age — doctors, attorneys and engineers who were starting out in their careers. Many of those early clients are still his clients today. “My client retention rate is very high,” he said.

Even though Good had been afraid to go on appointments, it didn’t stop him from attaining success early on. He qualified for MDRT his first year in the business. “I didn’t enter this business to be mediocre,” he said.

He credited much of his success to his use of the Al Granum One Card System and the Tom Wolfe Capital Needs

Julian Good was in the thick of Katrina, assisting clients while dealing with the temporary loss of his own home. Good is founder and principal of Good Financial Group in Metairie, La., and was the 2011 president of Million Dollar Round Table.

A native of New Orleans, Good said he has faced a number of challenges in his 38-year career, but Katrina “was a whole different kind of challenge.”

“Eighty percent of the people who lived in our metropolitan area lost their homes to water, or they had some kind of water damage or wind damage to their homes,” he recalled.

Good and his family lost their home to flooding from Katrina. They temporarily relocated to Atlanta for four or five months. During that time, Good not only had to help his family adjust to their new

Orleans would come back from the hurricane, and his rosy outlook eventually proved to be true. “The city is better than ever. Although a lot of bad things transpired during that time, we survived as a family and I was able to help my clients, and all of it was good for me.”

The Katrina experience was one of a number of challenges Good said impacted his insurance and financial services career. The first challenge hit him right out of the gate, when he was a 26-yearold starting out with Mutual Benefit Life in 1982.

“For my first three months in the business, I was afraid to go out on an appointment,” he said. To gain the confidence he needed in order to meet prospects, he spent as much time as possible studying.

“I immediately started studying for my

Analysis, a widely used approach for estimating life insurance coverage. “I immediately began to use Wolfe’s method of fact-finding, and as for the one card system, it made sense to me because it made everything easy to keep track of,” he said.

By “keeping things simple,” Good was able to build a large client base in his first five years in business. “I knew that if I could build that base in my first five years, I would be a success. I tried to average 10 to 12 appointments a week, and I still average 10 to 12 appointments a week.”

Good said his practice continued to grow when he faced another challenge.

Mutual Benefit Life failed in 1991, and it was the largest U.S. life insurance company failure in history. He said the failure of that company had a huge impact on his career.

CHALLENGE June 2020 » InsuranceNewsNet Magazine

21

the Fıeld

A Visit With Agents of Change

Julian Good (center) served as president of Million Dollar Round Table in 2011.

Here he is with his fellow MDRT Executive Committee members (from left) Guy Baker, Jennifer Borislow, Scott Brennan and Michelle Hoesly

“We had one child, another child on the way and we had just bought a big house,” he said. “And we didn’t have email in those days, so I had to get on the phone and call all my clients as soon as the news about Mutual Benefit broke. I had very little time to react. I spent two weeks calling 400 clients, telling them what happened, reassuring them that their insurance and their annuities weren’t at risk at that time — unless they had permanent life

While Good was moving ahead in the life insurance business, he also was active in a number of industry organizations in addition to moving up in the ranks of MDRT leadership.

Jennifer Borislow followed Good as MDRT president. Borislow is founding principal and CEO of Borislow Insurance in Methuen, Mass., but their friendship began before they started on the MDRT Executive Committee.

“Once you’ve built relationships with clients, that’s when you know you’ve done things right. Because clients believe in you.” insurance. At that time, the risk with permanent life was whether changes could be made to the coverage. Universal life was the hot product at the time. Because a company has the ability to increase or decrease the cost of insurance, what happened was people’s costs increased overnight, the company reduced interest rates on a lot of the product and it became much more expensive.”

Good became a career agent with MetLife and took his clients with him.

“I had to rebuild trust with my clients, which is a big deal. But once you’ve built relationships with clients, that’s when you know you’ve done things right. Because clients believe in you. They believe in the products you sell and the services you provide. But they believe in you first.”

22

InsuranceNewsNet Magazine » June 2020

“Julian is a no-BS kind of guy,” she said.

“Everyone has so much respect for him.”

Borislow went on to describe Good as “resilient.”

“He is a master of overcoming adversity, and a good example of that was when he had to move his family when Katrina hit. He continually reincarnates himself in working with his clients, and he perseveres no matter what.”

By 2013, Good’s time on the MDRT Executive Committee was complete and his two daughters were nearly finished with college. “I decided it was time to do what I always wanted to do, and that was to start my own company.”

Good Financial Group was born that year. “It was the best professional decision I ever made, and that began the journey

of having to make a change again. This time, the challenge was how to build the business in the way I wanted to,” he said.

Good has some individual clients who are professionals, but small and midsize businesses such as physician groups and law firms are his specialty. His practice is affiliated with Valmark Financial Group, which he described as a boutique broker-dealer.

“My business is a little bit different from a lot of others,” he said. “I do a lot of fee-based consulting work. It’s consulting on life insurance and other protection products, where I’m paid for my time to consult. I work with a lot of attorneys and CPAs and their clients. But I also have a very traditional life insurance-oriented business. The bulk of what I do is still life insurance, disability insurance and longterm care insurance. I also have a wealth management part of my business, but that’s not a large part of what I do.”

Looking back on his career, Good said the challenges he faced taught him that he can start over. “If you really love what you do, you will find success.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com. Follow her on Twitter @INNsusan.

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LIFEWIRES

Consumers Have High Interest In Life Insurance Half of all consumers are interested in

LEVERAGING HIS WAY TO SUCCESS IN THE FIELD

Young people are twice as likely to buy/increase life policies.

40%

37% 30% 20%

increasing or buying life insurance, but 19% they are 90% certain that they don’t want 10% to do business face-to-face. That is according to a late-March survey conducted by 0% Lightico (in partnership with Sapiens) as 18-39 40+ COVID-19 and lockdowns were spreading nationally.

Young people were also more interested in life insurance. With 37% of respondents ages 18 to 39 likely to buy or increase life insurance, they doubled the percentage (to 19%) of those 40 and over who were interested in buying or increasing insurance.

Nearly nine out of 10 consumers of all ages did not want to go to an agent’s office, with 89% saying they would shop online.

COVID-19 CHANGES HOW CONSUMERS SHOP

Consumers turned to online shopping more than ever as businesses shuttered because of COVID-19. So it should come as no surprise that the pandemic prompted consumers to shop for life insurance online as well.

LIMRA found that one-third of insurers reported a drop in face-to-face applications for life insurance while one-quarter saw an increase in online applications during March.

LIMRA surveyed life insurers to learn what, if any, changes they were making due to the pandemic and the resulting social distancing guidelines. The most common response was that there was no significant change in overall applications in March. But there was a shift in how consumers applied for

DID YOU

KNOW

?

24

life insurance. Twenty-four percent of U.S. companies that accept online or mobile applications experienced an increase, while half saw no change.

SOME SAY NO TO OLDER APPLICANTS

Some life insurers are saying no to applicants above a certain age during the COVID-19 crisis, temporarily suspending applications from certain age groups or imposing tougher requirements.

Prudential and Protective are temporarily halting applications from individuals aged 80 or older, while Lincoln National has postponed approving policies for that age group and others.

Mutual of Omaha and Penn Mutual Life temporarily suspended applications for individuals aged 70 or older. Securian Financial stopped accepting new applications for those 71 and older until at least June 15, according to memos seen

by Reuters.

QUOTABLE The life insurance profession is a business of stories. Don’t make it complicated.

— Scott Brennan, MassMutual agent and past president of Million Dollar Round Table

Insurers said they are making the changes for their companies’ long-term financial health and ability to pay claims for existing policyholders. A Mutual of Omaha spokeswoman said the company acted on the advice of its reinsurers.

COVID-19 DEATH BENEFIT CLAIMS COULD HIT $160B

U.S. life insurance death benefit claims from COVID-19 could range anywhere from $8 billion to $160 billion, Moody’s Investors Service said in a new report.

However, if the total number of deaths remains within the credit rating agency’s projections, the uptick should represent a modest decline in capital from death benefits.

“For the U.S. life insurance industry, we are projecting $8 billion of gross coronavirus-related death benefit claims in our low base case, $40 billion of claims in our high base case and $160 billion of claims in our stress scenario,” Michael Fruchter, a Moody’s vice president said. “For context, total 2019 death benefits for the industry were $76 billion.”

MassMutual is offering $25,000 of free term life insurance to frontline health care workers in Connecticut and Massachusetts Source: MassMutual

InsuranceNewsNet Magazine » June 2020

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LIFE

David Seelig/Polaris/Newscom

Tom Petty

DIED: Oct. 2, 2017; 66; Santa Monica, Calif.

CAUSE: Drug overdose MISTAKE: Built the plans for a company to handle rights, but didn’t build the company’s plans

When Trusts Bust: How Celebrity Estates Crumble When the trust structure is incomplete, it can take years for courts to fix it.

By Steven A. Morelli

L

inger over Tom Petty’s grave and you just might hear a faint “Don’t Do Me Like That.”

OK, probably not. But the classic rocker’s legacy was done dirty by his feuding second wife and two daughters for nearly two years after he died of a drug overdose in 2017.

As with many multimillion-dollar estates, there were trust issues. A lack of trust, obviously, which leads to issues with the trust set up to distribute the estate according to the wishes of the deceased.

Celebrities’ lives can be complex when blended families don’t mix well. Not to mention extramarital activities complicating matters. Both of those elements 26

InsuranceNewsNet Magazine » June 2020

played a role in this year’s celebrity estate disaster stories.

In Tom Petty’s case, he did the right things with his estate, but he didn’t take the extra step to ensure that his wishes would be carried out. His planning called for a company to be set up within six months of his death to manage his intellectual property, but that did not happen.

That left his two daughters from his first marriage, Adria Robin Petty and Annakim Violette, in a power struggle with his widow, Dana Petty. They accused her of mismanagement and locking them out of participation in marketing Petty’s material. His widow said they were banding together against her to do goofy things like put his name on salad dressing.

Cue the suits — lawyers and lawsuits.

The daughters sued and then the widow countersued. Things got ugly, as they tend to get when disagreements erupt into litigation.

Andy Mayoras, a divorce litigator, knows that too well. That is why when families get complicated, so do estate plans.

“Any time you have a second marriage situation, you have to be prepared for the possibility of conflict between the surviving spouse and the children from a prior relationship,” Mayoras said, adding that conflict is common in those cases. “[Petty] certainly anticipated it to a certain extent when he set up his trust.”

Mayoras, who with his wife, Danielle, wrote the book Trial and Heirs: Famous Fortune Fights, said Petty specified that a company would be set up and the three family members would be given equal participation in it. But it would have saved the family a lot of trouble and money if he had established the company while he was alive.

“Why not set up the company yourself and specify?” Mayoras said. “Did he really

WHEN TRUSTS BUST: HOW CELEBRITY ESTATES CRUMBLE LIFE want the two daughters to be able to outvote his wife? Or did he want her to vote equally to the two daughters collectively?”

Those questions were left to a judge, who set up the company, after which the three said they regretted the things they did to each other when they wouldn’t back down.

If Petty had formed a limited liability corporation, it would have existed as the shell company until he died, and upon his death the assets would have been transferred into Tom Petty LLC, Mayoras said.

Petty could have created an operating agreement that specified how the management of that LLC was going to work after he died, and then there wouldn’t have been a fight over it and there wouldn’t have been the delay in releasing material.

But how does an advisor get a client to take those extra steps to avoid conflict?

“It’s simply pointing out that nobody ever thinks a dispute like this is going to happen in their family,” Mayoras said.

“But they’re a lot more common than people realize, especially in second-marriage situations.”

Keeping The Plans Up To Date

A New York Law School wills, trusts and estates professor and author of the book Inside Wills and Trusts, can say from a lifetime of examining trust issues, he has seen a lot of trust issues.

“People can be one thing while you’re alive and behave differently after you die,” said William P. LaPiana, an associate dean at New York Law School.

Thorough planning can prevent many of those trust issues, but planning must be updated regularly. In the case of Kobe Bryant, his estate planning attempted to safeguard against his philandering ways.

His wife, Vanessa, had filed for divorce in 2011 and accused the former Los Angeles Lakers star of more than 100 affairs. They reconciled.

So, it made perfect sense to exclude any

children that Bryant might have fathered outside the marriage, not an unusual tactic. It is also not unusual that a child who comes along after the documents are drafted can be left out of the estate.

“In fact, it is so common that when that happens, we have statutes that fix that,” LaPiana said. “They’re called omitted child statutes.”

Bryant and his wife had four daughters.

He and his daughter Gianna, 13, died in a helicopter crash just north of Los Angeles in January. His last daughter was born in June 2019 and was not named in the trust and therefore excluded.

His widow had to go to court for that issue, among others. But COVID-19 was starting to settle in. She had to petition the California court to make a quick decision on guardianship for the children’s interest before the court closed in March.

It was the last thing a widow already grappling with the sudden loss of her husband and daughter wanted to deal with.

Image of Sport/Kirby Lee/Newscom

Kobe Bryant

DIED: Jan. 22; 41; Calabasas, Calif.

CAUSE: Helicopter crash MISTAKE: Left youngest daughter out of the trust

June 2020 » InsuranceNewsNet Magazine

27

LIFE WHEN TRUSTS BUST: HOW CELEBRITY ESTATES CRUMBLE LaPiana said he was surprised, however, that she had to deal with it at all.

The omitted child statutes don’t apply to trusts, LaPiana said. Ordinarily the trust document itself should have spelled out that any children from the marriage not named would still be included.

“It surprises me the trust was drafted that way because if it’s simply said in the beginning of the trust, ‘This is my spouse and references to my spouse are to this person. These are my children, A, B and C, and references to children are to these children and any children either born to

— one from a century ago.

They involve two authors and a fine artist. Even though it is their work that is the center of each fight, the issues fall into two distinct areas: literary rights and asset management and marketing.

John Steinbeck died in 1968, but the fight over his intellectual rights was still going as of last year. That was when a federal appeals court upheld a decision in a lawsuit among his relatives.

His stepdaughter, Waverly Scott Kaffaga, was trying to license her stepfather’s work for projects such as a remake

has to end. We cannot say it any clearer,” according to AP. Steinbeck’s work might make it back onto the big screen after decades of absence. Might.

The problem is, contrary to what the judge wrote, the fight does not actually have to end. Kaffaga can still push the case.

Gail Steinbeck had previously said that she wouldn’t stop fighting until “I draw my last breath.”

But the Franz Kafka case shows that estate issues can continue long after family members have died off.

of The Grapes of Wrath to be directed

by Steven Spielberg and also an East of Eden remake with Jennifer Lawrence. But Steinbeck’s daughter-in-law interfered with the projects, Kaffaga said.

The appellate court upheld a verdict from two years earlier that Gail Steinbeck had indeed interfered with Kaffaga’s ability to profit from Steinbeck’s work. They were actually fighting a previous generation’s battle, The Associated Press reported.

Steinbeck’s late son, Thomas, was fighting with Kaffaga’s mother, Elaine, over control of the intellectual rights.

Elaine was John Steinbeck’s third wife.

One of the appellate judges wrote, “This

Kafka died nearly 100 years ago and left instructions for a friend to destroy his papers. Luckily for literature, that friend, Max Brod, kept the papers and published some of the work, resulting in the novels, The Judgment, The Castle and Amerika.

Brod had promised to give the work to the National Library of Israel. But when Brod died in 1968, he left much of the collection to his secretary, who sold some of it in breach of the will, according to the Israeli newspaper Haaretz. The Judgment reportedly sold to a collector for $2 million.

After 50 years of fighting in court, the library won the rights to the papers last

John Steinbeck

DIED: Dec. 20, 1968; 66; New York City CAUSE: Heart disease MISTAKE: Did not specify wishes with intellectual property

or adopted by my spouse and me after the date of this instrument,’ that would be taken care of,” he said.

“I’m quite sure that the court will fix this” LaPiana said, “but it’s just one more thing his surviving spouse has to do. At a time like this, who needs any more complications?”

Estate Battles That Go For Decades

As complications go, Vanessa Bryant’s are not to be envied but quite often celebrity estates can unspool decades of complicated issues.

Just recently, some estate cases from long-departed celebrities have resurfaced 28

InsuranceNewsNet Magazine » June 2020

WHEN TRUSTS BUST: HOW CELEBRITY ESTATES CRUMBLE LIFE year. Already, scholars have been uncovering new facts about Kafka’s background and legacy.

When it comes to fine art, the management of the assets’ sale is of paramount importance. LaPiana sees that often from his vantage point in New York City, which has seen many big fights over artists’ estates.

“When what you have is artwork, maximizing its value is very different because that requires the most careful planning of how often you bring it to market,” LaPiana said.

according to Artnet.

Benton’s family also claims the work is not being kept in climate-controlled conditions and is being damaged. The family is asking for the bank to be removed as the executor and damages paid.

LaPiana said it takes particular expertise to handle an artist’s estate.

“What generally happens with artists is that the big challenge is, how do we work out a plan for dribbling this stuff into the market so that it gets the highest possible prices at auction?” LaPiana said. “If you bring this all out at once,

with estate planning. For example, changing beneficiaries for life insurance can be a simple fix.

LaPiana acknowledged that the last thing clients want to do after a divorce proceeding is talk to more lawyers about estate planning. Even lawyers hate that, he said.

“A very prominent lawyer in my area, we’re walking from one meeting to another and he said, ‘The divorce is almost done. I never want to deal with another lawyer as long as I live,’” LaPiana said.

“When lawyers get frustrated with law-

Thomas Hart Benton DIED: Jan. 19, 1975; 85; Kansas City, Mo. CAUSE: Heart attack MISTAKE: Estate’s art possibly mishandled by bank

Franz Kafka

DIED: June 3, 1924; 40; Kierling, Austria CAUSE: Tuberculosis MISTAKE: Did not direct intellectual rights That is one of the key issues in the Thomas Hart Benton case. Benton died in 1975, but a bank in Kansas City is managing more than 100 of Benton’s paintings for his multimillion-dollar estate.

His family says the bank is mismanaging those assets.

The artist’s daughter and her three children sued the bank last year, alleging the institution was selling work for below market value and in batches without identifying individual works, Artnet News reported. “[The bank’s] actions and failures described herein have resulted in an excess of millions of dollars in damages to the Benton Trusts,” reads the complaint,

ridiculous, right? You’re going to flood the market and you’re not going to get anywhere near as much as you might’ve been able to.”

It goes beyond the usual expertise required in law and finance. “It requires experts in the art market who can negotiate with the auction houses, work up a plan for gradual sale and then get interest among the cognoscenti,” he said.

Even Lawyers Get Tired Of Lawyers

Many of these cases can be avoided by dealing with issues while the client is alive, LaPiana said. A particular instance is in coordinating divorce settlements

yers in the divorce context, can you imagine what happens for laypeople?” LaPiana said. “And after they’ve gotten the divorce, who wants to go back to a lawyer and make sure your estate planning is all up to date?”

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at smorelli@insurancenewsnet.com

June 2020 » InsuranceNewsNet Magazine

29

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ANNUITYWIRES

QUOTABLE

Younger Workers Like Guaranteed Income

Younger generations have plenty on their minds — from education to careers to families. You can add one more to the list: guaranteed income.

What? According to Secure Retirement Institute data, it’s true. A recent SRI study finds younger workers are more open to guaranteed lifetime income investments, such as annuities, in their direct contribution plans.

Nearly two-thirds (64%) of adult Generation Z and millennial workers say they are somewhat or very likely to contribute to this option, compared with 52% of Generation X and 42% of baby boomer workers.

Younger Workers Are More Interested In Guaranteed Income DC Option Likelihood of contributing to guaranteed lifetime income DC option 15%

21%

14% 6% 16% Gen Z / Millennial

Very likely

33%

Somewhat likely

10% 9% 27%

22%

Not very likely

Gen X

Baby Boomer

39%

43%

11%

13% 21%

Not at all likely Not sure

SOURCE: Secure Retirement Institute

Younger workers are the least likely to have pensions, and thus would benefit more from lifetime income. In fact, nearly half (47%) of millennial workers expect their employer retirement plan savings to be their primary source of income when they retire.

Knowledge about annuities also plays a role. Forty-six percent of workers with poor annuity knowledge (as measured by their answers to 10 annuity knowledge questions) are somewhat or very likely to invest in an in-plan annuity, compared with 64% of those in the high-knowledge category.

IS THE 4% RULE STILL IN PLAY?

Is it time to bag the 4% rule for spending down retirement savings? A leading retirement income planning researcher says it is worth consideration.

The 4% rule is a rule of thumb that says you can withdraw 4% of your portfolio value each year in retirement without incurring a substantial risk of running out of money.

“But interest rates are so low today that it’s tough to get up to the 4% withdrawal rate without risking running out of money,” said Wade Pfau, director of the Retirement Income Certified Professional program at The American College.

DID YOU

KNOW

?

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Annuities can be a good way for retirees to overcome low interest rates, Pfau said. “Annuity mortality credits are not affected by interest rates, and that makes annuities attractive in the low-interest rate environment,” he said.

FIXED-RATE ANNUITIES SOAR AS ECONOMY TANKS

Fixed-rate deferred annuity sales spiked in March, rocketing 57% over the previous month as a flight to safety took off, according to the Secure Retirement Institute. The sales spike owes plenty to markets falling amid the COVID-19 pandemic. Overall, sales were down for the first quarter, SRI reported. Total fixed annuity sales were

We are now in a different universe than just three months ago.

— Todd Giesing, Secure Retirement Institute’s annuity research director

$29.5 billion in the first quarter, 22% lower than in the first quarter of 2019.

Variable annuities had a steady 2019 with the strong equities market, with registered index-linked annuities charting large increases in sales. That momentum continued into 2020.

Total VA sales rose 16% in the first quarter, marking the fourth consecutive quarter of sales increases. Registered index-linked annuity sales were $5.1 billion in the first quarter, up 44% from the prior year.

CONSUMERS BAFFLED BY ANNUITIES: SURVEY

If you’re an advisor preparing to discuss annuities with a client, there’s a chance you’ll hear a lot of “not sure.”

According to a recent Secure Retirement Institute study, only one in four consumers can correctly answer at least seven out of 10 annuity-related questions. In addition, more than 40% answered “not sure” to each of the 10 questions.

The research also showed that Americans are confused about how to turn workplace savings into lifetime guaranteed income. Based on the quiz, only one in four consumers understood that annuities could be purchased with money saved in workplace retirement plans, such as 401(k) and 403(b) plans.

77% of workers currently enrolled in an employer-sponsored plan would consider adding an option that offers guaranteed lifetime income. Source: Allianz Life

InsuranceNewsNet Magazine » June 2020

ANNUITY

How Sequence Of Returns Crashes Clients’ Retirement Clients know that market losses can take a bite out of their retirement portfolio. But they may not be aware of just how much those losses can add up over time.

By Susan Rupe

I

f you were planning to climb a mountain, how would you prepare?

Most people would prepare for the ascent to the top of the mountain, but few would consider what they needed to do to make the trek back down.

It’s the reason why most of those who die while climbing Mount Everest do so on their way down from the summit instead of on their way up.

The same is true of retirement planning. Most would-be retirees are focused on accumulating enough money to carry them through their retirement years.

But the day they retire is like the point at which they reach the summit of the mountain. Now they must fund a downhill trip that could take 20 years or more.

Market volatility and sequence of returns can make that downhill trip a treacherous one, said Josh Woodvine, Midland National regional sales vice president. He and Isaac Norton, Midland National associate vice president of strategic marketing, Josh Woodvine spoke at a webinar on longevity planning held by the National Association for Fixed Annuities.

Consider the tale of George and Jane.

George and Jane each had a $500,000 retirement nest egg. George retired in 1998 and began to withdraw $30,000 from his investment portfolio each year.

Jane retired in 2000, two years after George, and she also withdrew $30,000 from her investment portfolio each year.

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InsuranceNewsNet Magazine » June 2020

But by Year 15, Jane was out of funds while George still had money in his portfolio. Why? Sequence of returns — the coincidence of market timing — had a major impact on these two hypothetical clients.

George began taking his income during the 1998-1999 bull market run that led up to the dot-com crash. But Jane began taking her income during the dot-com crash of 2000-2002.

indexed annuity could provide a solution, he said.

The George-and-Jane scenario is especially applicable now because of the recent market crash and uncertainty about the future, Norton said. “What are the risks? What are the market influences that could happen? The market correction that most people thought would happen at some point happened in an incredibly dramatic way. So this topic

It can take time for retirement assets to recover from a market downturn.

SOURCE: Midland National

Sequence of returns is not a new concept, but it’s a way to tell the story against the backdrop of longevity risk, Norton said.

Consumers and their financial advisors spend so much effort on accumulating retirement savings, but often lack a strategy for how to draw down those assets in the post-employment years.

Could a sequence of returns deplete your client’s retirement savings? A fixed

only makes more sense, not less, as you’re talking to prospects and clients.”

Clients who have assets that are heavily exposed to market variations are challenged to make those assets last throughout a retirement that could span at least 20 years, he said. “How are they going to get down from that mountain when the timing of the market is going to impact whether their money is going to last as long as they do?”

HOW SEQUENCE OF RETURNS CRASHES CLIENTS’ RETIREMENT ANNUITY

The risk spectrum illustrated below goes from assets with the least growth potential on the left to assets with the most growth potential on the right. Everything listed above the center line can lose value. Fixed indexed annuities are well positioned to combine growth potential with protection.

Stocks

Mutual funds Variable annuities

Principal/premium not protected: can lose value

Bonds Fixed index annuities

Principal/premium protected Fixed annuities CDs Bank money market accounts Cash

Norton noted that many clients have experienced the ups and downs of the S&P 500 over the past 20-plus years — through the dot-com downturn of 2000-2002, the Great Recession of 2008-2009, and the crash that hit in the first quarter of this year.

In each of the first two downturns, it took longer for the market to rebound than it did for it to fall, he noted. That can play havoc with a client’s retirement

SOURCE: Midland National

market losses mean to their retirement portfolio, Norton said. To illustrate that, he said it’s a common misperception that if you lose 10% of your portfolio, you need to gain 10% to break even after one year. The reality is that you need to recoup 11.2% to break even. The percentage of gain required to make up bigger losses increases on a bell curve, with a 50% percent loss requiring a 100% gain to break even.

Clients may be looking to products such as money market accounts and certificates of deposit for safety, but they have little growth potential. savings. For example, he said, it took two full years for the market to drop 49% when the dot-com bubble burst, but five years for the market to return to the level it was at in 2000. As for the 2008-2009 recession, the market took two full years to drop 57% and five years to return to prerecession levels before heading into an 11-year bull run.

Many clients aren’t aware of what

Clients may be looking to products such as money market accounts and certificates of deposit for safety, Norton said, but they have little growth potential. He advised showing clients a risk spectrum with retirement assets ranging from the least risky (cash) to the most risky (stocks). On this spectrum, FIAs are at the intersection where safety meets growth.

Woodvine said advisors can show clients the stable growth potential of FIAs by reviewing the past 20 years of the market. “Show clients three ways that FIAs could have given them a smoother ride through all of this.” Those three ways are: 1. FIAs let you participate in some of the market upside, although not all of it.

2. But owning an FIA means you don’t participate in any of the market downside.

3. FIAs have an annual reset feature enabling clients to lock in gains and step up growth: “It can take you to the next level.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

June 2020 » InsuranceNewsNet Magazine

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Special Sponsored Section

In this year’s Annuity Awareness Month Thought Leadership Series, great minds from six elite companies offer their perspective on products, process, and the future of an ever-changing annuity marketplace.

INSIDE Why Fixed Indexed Annuities are so Important in a Post COVID-19 World

By Charles J. DiVencenzo, Jr., President & CEO of NAFA PAGE 39

Annuity Awareness Month: Talking Annuity Benefits Year-round Featuring American Equity Investment Life Insurance Company PAGE 44

Preparing For Retirement Is Not Like It Used To Be With Chris Previti, VP Managing DIrector, Annuities, Transamerica PAGE 40

Insure Retirement With Fixed Annuity Options by OneAmerica

By Kevin DeGray, Vice President, Head of Career Distributing at OneAmerica® PAGE 45

Guardian Life: Planning for an Endless Weekend With Annette Hammortree, Owner of Hammortree Financial Services, Representative of Guardian PAGE 42

The Ultimate Solution to the NAIC’s Best Interest Model

By Nick Randall, Life/annuity Marketing Director at Western Marketing PAGE 46

2020 Annuity Thought Leadership Series proudly sponsored by

The Annuity Issue • Special Sponsored Section

Why Fixed Indexed Annuities are so Important in a Post COVID-19 World

A

key for our clients is to develop the spending plan that they desire in retirement and then establish a realistic retirement income plan to achieve their goals.

A carefully designed investment strategy requires an allocation of long-term and short-term investments, as there is a strong possibility that clients will need a 20 – 30 - year income stream from retirement savings. When selecting product and asset allocation, the Fixed Indexed Annuity (FIA) is an extremely important tool to accomplish many clients’ goals by providing a vehicle to allow portfolio growth over the long term, without the outsized risks of the equity markets and a more robust return over the long term then traditionally low risk products like bank Certificate of Deposits. In addition, a very important feature of FIAs are the income riders that allow for guaranteed lifetime income so that clients Lifestyle choices have been affected in the short ahave the flexibility of an accumulation peterm by the COVID-19 crisis, including riod and the promise of receiving stable income for life. The COVID-19 crisis has made entertainment, restaurants as well as travel. of these needs ever more apparent.

These expenditures may actually be impacted both The stability of protecting a portion of your longer term as we come out of the crisis. retirement assets from dramatic market downturns and the stability of a consistent income stream during your retirement years help accomWhy do we try to understand these issues? First, our plish certainty as well as peace of mind for our clients. modern world has never seen a scenario such as the one There is no magic product that gives clients all of the that has played out over the last several months. There upside during a bull market while protecting them from will be plenty of longer-term ramifications on a macro levthe catastrophic losses during these black swan events. el that will require a critical assessment from healthcare However, proper planning and leveraging products like experts, economists and government officials to hopefully FIAs to help our clients position their retirement savings ameliorate the need for the world to go through this again. to maximize their stable income That said, those of us planning for a successful retirement and ensure that they have it over have now had four significant “Black Swan” events in 25 the course of a lifetime is certainyears: the “Internet Bubble,” 9/11, the “Great Recession,” ly a strategy that will help many and now COVID-19. Each of these events have wreaked Americans approaching or already havoc in the market, and the greatest unknown in the in retirement. current COVID-19 crisis is how long and how deep this current recession will be.

While most of us are affected by this crisis in some manCharles J. DiVencenzo, Jr. ner, individuals either close to or already in retirement President & CEO, NAFA have more significant challenges, as they do not have the luxury of time to make up for substantial losses to their retirement savings. Longevity issues, in most cases, will not change and will continue to move in an upward direction.

The lifestyle choices have been affected in the short term by the COVID-19 crisis, including entertainment, restaurants as well as travel. These expenditures may actually be impacted longer term as we come out of the crisis. The s we go through this unprecedented time period, we will all make adjustments in our daily routines by the habits we formed during social distancing and the impressions on our minds that we presume will make us navigate our way in this new world called Post COVID-19. The recent events have pointed to some altogether human characteristics that had some people going into survival mode, while others wouldn’t get off the beaches. The behavioral economists would likely be able to model these behaviors and understand the risk profiles of these individuals and, as the data on the consequences was realized, how the actions of any of the characteristics might be modified.

June 2020 » InsuranceNewsNet Magazine

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The Annuity Issue • Special Sponsored Section

PREPARING FOR RETIREMENT IS NOT LIKE IT USED TO BE.

T

oday, Americans nearing or entering retirement are being exposed to a world of uncertainty. To begin with, efforts to contain the COVID-19 pandemic have pummeled markets, stalled economies and hampered investment growth — decreasing nest eggs at an inopportune time for many. Life spans are growing longer as well, forcing people to prepare to meet the financial obligations of a retirement that could last three decades.

With pensions becoming a thing of the past, 80 million Americans actively participate in 401(k) plans.5 The prevalence of these and other defined contribution plans has shifted the picture for many. Despite their tax benefits, they could expose individuals to market risks that can leave them short of retirement income goals.

ability to retire comfortably.2 Twenty-nine percent of baby boomers do not have access to an employer-sponsored plan, such as a 401(k),2 and only 50% participate in one.2 Rising expenses are compounding matters. A healthy 65-year-old couple can plan on projected lifetime health care costs of nearly $400,000.3 Social Security represents one of the few forms of guaranteed retirement income retirees can rely on, yet many express concerns about its future. In fact, 77% of workers worry Social Security won’t be there for them when they retire.2 Still, workers might not be doing enough to shore up their plans. Only one in five has actually written down a retirement strategy. What’s more, only 25% have a backup plan for retirement income should something happen to them to prevent them from working before they retire.2

“In 2008 the stock market experienced some of the biggest losses in its history. Investors watched as their retirement nest eggs diminished by as much as 37%.1 If you were an investor who was nearing retirement during this crisis, you may have had to continue to work for several more years or adjust your retirement goals significantly in order to retire.

However, owning a variable annuity or fixed indexed annuity with an optional living benefit may have helped avoid that dilemma entirely.

“Living benefit riders are guarantees* that allow you to stay invested in the market to take advantage of growth opportunities while [being provided with] a benefit base that guarantees income for life at a certain percentage (5% at age 65 is industry average). So in 2008, if you lost 40% of your account value in the annuity, the guaranteed benefit base would have been unaffected, thus enabling you to receive the guaranteed withdrawals of 5% for life at age 65. Your retirement income would be unaffected by the market downturn and you could move forward without having to make adjustments to your retirement goals.”

Chris Previti

VP Managing Director, Annuities – Transamerica

Chris Previti, VP Managing Director, Annuities – Transamerica Annuities can take some of the uncertainty out of the picture. As part of a balanced plan, annuities can offer strategies to help protect investments while still allowing for growth. They can also provide guaranteed, reliable income for life to help cover necessary expenses and create the retirement lifestyle retirees planned for.*

IS RETIREMENT WITHIN REACH?

Americans worry about running out of money and being able to afford a comfortable retirement. Workers have saved an estimated median $50,000 in total household retirement accounts.2 Just 18% of workers are very confident in their

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InsuranceNewsNet Magazine » June 2020

THE ROLE OF RETIREMENT INCOME TOOLS

Guaranteed income products, such as fixed index and variable annuities, can take some of the guesswork out of retirement income. Annuities can help workers:

» Supplement Social Security or pension income. » Receive lifetime guaranteed income. » Cover essential or even discretionary expenses. » Accumulate assets for retirement. » Leave a financial legacy.

The Annuity Issue • Special Sponsored Section

Annuities also can offer optional benefits that aren’t available through other retirement savings vehicles. They can provide protection against downturns in the financial markets, the means to protect legacies and families, and additional flexibility and control to better fit an individual’s income needs.

The promise of guaranteed income is appealing. Nearly half of Americans would be willing to convert some of their assets into a guaranteed lifetime income stream.4 Those who already own an annuity may feel they are on firmer financial ground than those who don’t. In fact, 69% of those who own an annuity agree they won’t outlive their savings by age 90, compared with 57% for those who don’t own an annuity.4

UNDERSTANDING FIXED INDEX AND VARIABLE ANNUITIES

Although they share many characteristics, they feature some key differences that could influence individual investment decisions. Here’s a look at both types and the benefits of adding a living benefit.

FIXED INDEX ANNUITIES (FIAs)

The main feature of FIAs is their potential downside protection. Even if financial markets decline, FIAs offer a guaranteed minimum return and guaranteed* payments. That reduces the risk that market movements will interrupt an income stream. The trade-off is a cap on growth that could limit exposure to market upside.

FIAs offer tax-deferred earnings accumulation potential by locking in interest earnings based in part on the positive movement of an index. They earn interest, in part, based on changes in a market index, which measures how the market or part of the market performs. Index growth may be subject to caps, participation rates and spreads.** For instance, an FIA may focus on a broad equity market index, such as the

S&P 500®. As the index grows, the policy can periodically lock in that tax-deferred growth. When it falls, the policy maintains its value until markets rise again.

Flexibility is an important component of financial planning, so some FIAs offer withdrawal options that don’t trigger a surrender charge. For example, individuals may make withdrawals up to 10% of their total premium payments.

VARIABLE ANNUITIES

Variable annuities often offer a wide range of professionally managed investments. Variable annuities are long-term, tax-deferred vehicles designed for retirement purposes and are subject to investment risk, including possible loss of principal.

Variable annuities also offer opportunity to share in potential market gains. The level of income derived from a variable annuity is linked to market performance. Variable annuities allow individuals to take greater advantage of market upside — along with the opportunity for downside protection when combined with an optional living benefit for an additional fee. That helps keep market fluctuations from knocking an owner’s income strategies off track. Like FIAs, variable annuities offer tax-deferred growth, surrender charge-free withdrawal options and optional benefits to provide lifetime income.

For more information to help your clients navigate their financial future with annuities in these trying times visit transamerica.com/forlife today.

1. MorningStar Direct, “S&P 500 Yearly Returns,” 2008.

2. Nonprofit Transamerica Center for Retirement Studies, “19th Annual Transamerica Retirement Survey of Workers,” December 2019.

3. HealthView Services, “Retirement Health Care Costs,” July 2019.

4. LIMRA, “The Facts of Life and Annuities,” 2019.

5. American Benefits Council, “401(k) Fast Facts,” January 2019.

Variable annuities are long-term investments and sold by prospectus. Before investing, you should consider the investment objectives, risks, charges and expenses. This and other important information are contained in the prospectus. Please read it carefully before investing.

The variable annuity policy value, death benefit and other values will fluctuate based on the performance of the investment options and may be worth more or less than the total of all premiums paid when surrendered.

Variable annuity fees and charges include mortality and expense risk fee and administrative charge, surrender charges, annual fee, and investment option management fee. Additional fees may apply to optional benefits selected, including living benefit riders.

Variable annuities are underwritten and distributed by Transamerica Capital Inc., 1801 California St., Suite 5200, Denver, CO 80202, FINRA member.

Transamerica annuities are issued by Transamerica Life Insurance Company, Cedar Rapids, Iowa and Transamerica Financial Life Insurance Company, Harrison NY. *All guarantees, including optional benefits, are based on the claims-paying ability of the insurance company issuing the annuity. Withdrawals of taxable amounts are subject to ordinary income tax and may be subject to a 10% additional federal tax if withdrawn before age 59 1/2. **A FIXED INDEX ANNUITY IS NOT A SECURITY and fixed index annuity policies are not an investment in the stock market or in the indexes. Index account interest is based, in part, on index performance.

Past performance of an index is not an indication of future index performance. There is no guarantee that the index interest rate will be greater than zero percent. There is no guarantee that the Company will declare an interest rate greater than the guaranteed minimum effective interest rate.

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05/20 June 2020 » InsuranceNewsNet Magazine

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The Annuity Issue • Special Sponsored Section

Guardian Life: Planning for an Endless Weekend A Holistic Discovery Process Helps Build Solid, Personalized Retirement Plans

R

etirement is like one very long weekend — but how do you plan for a weekend that can last decades? It’s all about having a vision and the planning a retiree has put in place to make that vision a reality. A consumer study conducted by Guardian found that 20% of Americans who are financially confident have a plan and stick to it.1 So how do you help your clients know what they want in order to build that plan? How do you ensure you cover all the facets of their vision so their plan is solid and lasts through their whole retirement? We spoke with Annette Hammortree of Hammortree Financial Services to gain some insight into holistic planning and learn how Guardian helps support this approach.

“As financial professionals, we Annette Hammortree help our clients think about what it Hammortree is going to be like to wake up and Financial Services have seven Saturdays,” says Hammortree. “With the right planning, it can be a great vision, but advisors have to have some hard conversations with clients to get there. It’s also important to be OK to make some adjustments when there are setbacks or life has thrown a curveball.”

The Client’s Vision for Endless Weekends

“Part of being successful at those conversations is helping [clients] understand why you’re asking the questions — because knowing the answers allows you to plan more appropriately, not generically,” says Hammortree. “This isn’t just a template that you overlay on people. It’s a very custom process.”

Holistic planning starts with listening carefully to what clients want to accomplish and then developing a game plan to help them get and stay there. By showing genuine concern and interest in their personal goals and dreams, financial professionals can help clients open up and explore all the elements they need to address in retirement.

“You have to take a bigger view of what is going on in their life,” says Hammortree. “What’s going on overall, and what things are going to touch their lives and change things for them? Do they have dependent parents? Do they have a special needs child? That’s part of the bigger view before you can do a deep dive into finding solutions.”

Drawing out a client’s vision of who and what their retirement will include — travel, housing, hobbies, healthcare, family and more — sets the stage. Then, it’s helpful to think in terms of monthly expenses with an understanding that the future of Social Security is uncertain.

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InsuranceNewsNet Magazine » June 2020

A Full Tank of Gas for the Retirement Journey

The next step is helping clients understand the risks to their vision, and that by planning for those risks now, they can better counter them for the future. Here are three of the big risks to consider:

» Longevity Risk — Clients might not understand that they could outlive their assets and their income stream could become a mere trickle unable to support them and their lifestyle. » Market Risk — The market goes up and down.

As clients age, a dip in the market when they draw from their investments for income could deplete assets faster than they want, and assets possibly might not last for a lifetime. » Inflation Risk — When

Annuity Discussion Points

1. An annuity can help mitigate longevity risk because you continue to receive payouts no matter how long you live.

2. Market volatility can become a non-factor because the fixed payout is not affected by market fluctuations.

3. Inflation risk can be lessened because you have the flexibility to customize your income stream at different periods of your retirement years as your expenses grow or decline.

you’re retired, every day is Saturday. Your clients will have more free time, but the activities they enjoy today will likely cost more in the future because of inflation, and they will spend more time doing those activities. Inflation risk is very real and has an even greater impact when income becomes fixed during retirement.

“It’s helpful to discuss 401(k)s and other retirement vehicles many people accumulate savings in. Leaving money in those vehicles subjects them to these risks,” says Hammortree. “Then we need to provide education around how do you take that 401(k) and transition it into a retirement conversation. The idea of doing an annuity that's going to amortize income that represents principal and interest so it's more tax efficient while addressing those risks. Helping to manage your tax bracket in retirement will give you more net income to live on."

Avoiding Risks Along the Route

One solution that addresses these three risks is to devise a retirement strategy that includes guaranteed income payments for life.2 Some say life is a journey, and retirement can be a fulfilling and fun road trip with the right plan. To ensure clients have a full tank of fuel for the entire ride, exploring a lifetime income annuity is an option.

The Annuity Issue • Special Sponsored Section

SOURCES OF GUARANTEED INCOME

SOURCES OF NON-GUARANTEED INCOME

• Social Security • Pensions • Bonds, CDs • Annuities2 • Whole life insurance3

• Bank and investment accounts • Individual retirement accounts (IRA) • Health savings acounts (HSA) • Employer-sponsored 401(k), 457(b), 403(b)

“Guaranteed income is my client’s happiness factor. There were studies done4 that showed the more guaranteed income you have in retirement, the happier you may be. You’re likely to be less stressed when you don’t worry about a paycheck not being there," says Hammortree.

Trusted financial professionals help clients realize their dreams, creating a sound financial support system for their future. Clients will turn to you to help make confident decisions that can alleviate the stress involved in managing their complex financial lives.

A Guaranteed Source

“Sometimes I have clients who start with an end number, and [they] tell me they can live on a fraction of what their current annual salary is once they retire,” says Hammortree.

“I ask what they are going to stop doing when they have seven Saturdays to do the things they love doing.”

A great retirement for clients is their knowing they can enjoy the life they imagine.

“People tend to spend more money on the weekends, on Saturday and Sunday,” says Hammortree. “There is a lot of education that goes into helping clients really consider what life would be like if their income is reduced drastically. No matter what the client’s income level, it’s a common challenge for them to understand how that would impact their lifestyle and goals.”

As with any facet of retirement planning, there are many things to consider. For annuities, those considerations can

include the cost and terms of the annuity and the reputation of the company behind it. Financial professionals can help clients weigh the pros and cons and develop a plan that matches their goals and lifestyle.

With the right plan and products, clients can enjoy their seven Saturdays and the journey of retirement. Sometimes sharing content on various realities that clients may face in retirement can be helpful. Consider leveraging the resources Guardian provides, such as infographics, flyers or interactive tools, to make connections matter.

You can connect with a local agency that’s part of The Guardian Network®, to help you grow your retirement business while helping your clients live more protected lives in retirement. For more information about Guardian, visit www.guardianlife.com/FR-Careers.

For tools to help your clients live more confidently in retirement, visit www.Retirement-Conversations.com.

1. The Guardian Study of Financial and Emotional Confidence, 2016.

2. Annuity guarantees are backed exclusively by the strength and claims-paying ability of The Guardian Insurance & Annuity Company, Inc. (GIAC).

3. While the primary purpose of life insurance is death benefit protection, it is important to understand the advantages that cash value accumulation can provide to clients, including supplemental income during retirement.

4. Source: https://www.protectedincome.org/annuities/retirement-happiness-studies-article/ Annette Hammortree is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. OSJ, 1166 Quail Ct. Ste 100 Pewaukee, WI. 53072.Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Hammortree Financial Services is not an affiliate or subsidiary of PAS or Guardian.

The Guardian Network® is a network of preferred providers authorized to offer products of The Guardian Life Insurance Company of America (Guardian), New York, NY and its subsidiaries.

Guardian® is a registered trademark of The Guardian Life Insurance Company of America. www.guardianlife.com 2020-98615

June 2020 » InsuranceNewsNet Magazine

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YEAR-ROUND.

CONTENT The AnnuitySPONSORED Issue • Special Sponsored Section

nnuity Awareness Month

Most likely, your clients don’t know June is National Annuity Awareness month. That’s because most clients are not looking for a retirement product, they are pursuing their retirement priorities.

Annuity Awareness Month

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American Equity conversation does not offer legal, investment, tax advice.what’s Please consult a qualified professional. to get the goingorabout important to your clients and how these products can help. *LIMRA. “Behavior Financevalue and Retirement Income Preferences” 2020. owner. But, what’s of primary importance to one client may not be to roduct benefit holds for the contract Annuity contract issuedEquity’s under form series ICC17of BASE-IDX, BASE-IDX-B, ICC17 IDX-11-10, ICC17 American line fixedICC17 index annuity products IDX-10-10, ICC17 IDX-10-7, ICC17rider IDX-10-5 andopportune state variations Availability by state. r. Annuityand Awareness Month is an time to may getvary conversation going about what’s important to your clients lifetime income options offer thereof. a combination ofthe benGuarantees are based on the financial strength and claims paying ability of American Equity and are not INVESTMENT LIFE INSURANCE COMPANY® efits to meet your client’s needs, wherever they are in their w these products can help. guaranteed by any bank or insured by the FDIC. 01AD-INN-AAM0420 04.01.20 ©2020retirement.

American Equity. All Rights Reserved. journey to and through 888-221-1234 | 6000 Westown Parkway, West Des Moines, IA 50266

To learn more, visit www.american-equity.com.

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AMERICAN EQUITY

an Equity’s line of fixed index annuity products and lifetime income rider options offer a combination of benefits to our client’s needs, wherever they are in their journey to and through retirement.

American Equity does not offer legal, investment, or tax advice. Please consult a qualified professional. *LIMRA. “Behavior Finance and Retirement Income Preferences” 2020.

Annuity contract issued under form series ICC17 BASE-IDX, ICC17 BASE-IDX-B, ICC17 IDX-11-10, ICC17 IDX-10-10, ICC17 IDX-10-7, ICC17 IDX-10-5 and state variaer it’s building up assets for retirement or preserving income for life and securing a legacy, we’ve got you covered with our tions thereof. Availability may vary by state. Guarantees are based on the financial strength and claims paying ability of American Equity and are not guaranteed by any bank or insured by the FDIC. Shield and IncomeShield fixed index annuities. For more specific information on products and resources on features, visit 01AD-INN-AAM0420 04.01.20 ©2020 American Equity. All Rights Reserved. oduct pages.

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www.american-equity.com

InsuranceNewsNet Magazine » June 2020

The Annuity Issue • Special Sponsored Section

Insure Retirement With Fixed Annuity Options by OneAmerica Support your clients with a solid income distribution strategy

T

he exceptional financial strength and growth of OneAmerica® enables the company to deliver on it’s promise to “be there when our customers need us most.” As a mutual organization with 140 years of history, the companies of OneAmerica have remained focused on the long-term financial interests of its customers. This includes offering a wide variety of products — including fixed-annuities — and services to accommodate the financial needs of its customers.

Secure Income Stream Annuity

Secure Income Stream Annuity is a flexible deferred income annuity designed to provide a guaranteed income stream that clients cannot outlive. The Secure Income Stream Annuity can be a flexible and valuable addition to a personal retirement portfolio.

“Consumers are in various stages [of their lives] and have different goals when preparing for retirement.

Some may not have an employersponsored pension, while others may need to rebuild their income or protect against outliving their money,” says Kevin DeGray, vice president, head of Kevin DeGray career distribution, OneAmerica.

Vice president, head of “With Secure Income Stream, career distribution financial professionals can help consumers put an income strategy in motion and address their retirement goals with confidence,” says Kelly Hall, director, advanced sales, OneAmerica.

“In preparing for retirement, many consumers focus on accumulating assets but aren’t quite sure how they can make their money last for their lifetime,” says DeGray. “With Secure Income Stream, consumers will know the exact amount of income they will receive and that it’s guaranteed for their lifetime.”

The annuity does not allow withdrawals at any time; however, clients establish guaranteed income to start at a date that they select for their retirement future.

“Secure Income Stream lets contract owners choose between beginning income payments in as soon as 13 months or deferring payments up to age 85, depending on the contract type,” says Hall.

Clients can take comfort in knowing their income stream will be there when they need it.

arrangement is that income taxes are calculated with an exclusion ratio that spreads the return of your client’s principal over a portion of the payout period.

“If your clients are concerned about outliving their assets, consider a single-premium immediate annuity with a life annuitization option,” says Hall. “The income is guaranteed for life. And with a payout period certain, your client’s income may be passed to their heirs.

“With a single-premium income annuity, [clients] are sent a set amount of money for the frequency they choose,” says DeGray. “If you add an income payment increase rider, you can give yourself a payout boost in the second contract year and beyond.”

Clients select the increase amount, from 1% to 10%. The increase is consistent over the SPIA’s lifetime and compounds annually.

“The income payment increase rider is a free add-on to the base policy. This rider effectively allows clients to keep pace with expected future inflation. For example, if the annuity owner selects a 5% increase on the SPIA application, they will get a 5% raise from the previous year’s payout. This will continue for the life of the annuity,” says DeGray. “With people living longer, this means that time in retirement could extend to 30+ years and that the cost of living could also go up. It’s important to be prepared for that.”

IPIR is available with all SPIA contracts with an issue age of 55 or older. It must be added at the time of application and cannot be canceled.

At OneAmerica, our focus is on your client. We’re there when they need us most and we’re built to last.

With the annuity’s ability to address a variety of income goals, clients can implement a strategy that works for them: build predictable income over time and/or shield a portion of their retirement assets from market loss and/or protect against outliving their assets.

Backed by an organization that has been meeting customer commitments for more than 140 years, OneAmerica offers annuity contracts that can meet a variety of your client’s needs.

To learn more about these and other sales ideas, call us today at 1-877-999-9883 or email oasalesdesk@oneamerica.com.

Single-Premium Immediate Annuity (SPIA) With Income Payment Increase Rider (IPIR)

OneAmerica offers a single-premium immediate annuity that can guarantee a periodic income for a fixed period of time — or for life. One of the benefits of this type of OneAmerica® is the marketing name for the companies of OneAmerica. Products issued and underwritten by American United Life Insurance Company® (AUL), a OneAmerica Company. Form number LA-33. Not available in all states or may vary by state.

June 2020 » InsuranceNewsNet Magazine

45

The Annuity Issue • Special Sponsored Section

The Ultimate Solution to the NAIC’s Best Interest Model

M

ost agents and advisors know the NAIC’s best interest model will change the face of annuity sales forever.

Modeled on the Security and Exchange Commission’s Regulation Best Interest, the National Association of Insurance Commissioners’ (NAIC) ruling will force anyone selling annuities to prove through meticulous documentation that the selected product is the best possible option for a client.

It’s a ruling that has many agents in the market on edge, nervous about making the wrong decision — or not having the proper documentation to back up their recommendation. It’s a ruling that Nick Randall, life and annuity marketing director for Western Marketing, believes his company has the perfect solution for.

Nick Randall That’s no surprise, conLife/annuity marketing director sidering Western Marketing’s staunch reputation for agent and advisor support. As a 100% holistic insurance marketing organization (IMO), the company knows the importance and value created when a workforce — whether someone is a health broker, life agent or financial advisor —is equipped with state-of-the-art tools and the industry’s best sales strategies.

It’s how Western Marketing reliably turns even rookie agents into multimillion-dollar producers in a matter of months. Live support doesn’t mean just an actual person always will answer the phone — the company remains on the cutting edge of technology that makes the day-to-day lives of those in the field as easy as possible.

When it comes to the NAIC’s best interest model, it’s no different.

The famous family-owned IMO has already armed their agents and advisors in the field with the ultimate marketing and sales platform to ensure everyone working with Western Marketing remains 100% compliant.

The platform is called AdviseRight. And if your computer doesn’t currently run this platform and you currently are or plan to sell annuities, you owe it to yourself to give it a thorough evaluation.

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InsuranceNewsNet Magazine » June 2020

More than a platform with customer relationship management features and way more advanced than the industry’s average “product selection tool,” AdviseRight is a 100% self-contained, end-to-end sales platform that takes the fear away from anyone selling annuities and replaces it with confidence in compliance.

Being a purely self-contained platform, AdviseRight ensures that every part of the sales process is automatically documented and easily audited, helping advisors effortlessly defend their product recommendations and stay ahead of any coming regulations.

It starts with a presales component that, among other things, includes a detailed needs and risk assessment that helps suggest, based on a suitability score, best-fit products for clients.

Straight from the platform, advisors can run illustrations and comparisons for selected products, which then lead directly into an electronic application that is submitted directly to the insurance carrier.

“The goal was to create a seamless technology for advisors with easy-to-understand point-and-click features, including business tracking. And it’s foolproof because it will not allow you to advance to the next step until all of the information is filled out correctly,” Nick pointed out.

What’s even more impressive is that because it is so easy to use and compliant, AdviseRight — which is already receiving rave reviews from advisors using it — is the easy way for insurance professionals interested in selling annuities to get started. Many brokers working in Medicare or at other health-based agencies are starting to realize the potential for annuity sales in their existing book of business and are now able to capitalize on these opportunities with the greatest of ease.

For an in-depth look at how AdviseRight could help launch and protect you annuity business so it can flourish, visit AdviseRightNow.com to access a free starter kit.

HEALTH/BENEFITSWIRES

Health Insurance Outlook Optimistic U.S. health insurers will likely remain

How Will Health Insurers Fare With COVID-19?

QUOTABLE

MILD: 2% of the U.S. population

infected — insurers could see higher earnings in 2020 than in 2019.

MEDIUM: 10% of the U.S. population infected — insurers stay profitable.

SEVERE: 40% of the U.S. population infected — insurers experience financial losses.

The last thing we need is insurers pricing their coverage unnecessarily high at a time like this.

profitable despite the uncertainty surrounding COVID-19 and its financial impact, Moody’s Investors Service said in a new report. In looking at health insurers, SOURCE: Moody’s Investors Service although Moody’s had an optimistic view of their financial situation, the analysts cautioned that health insurers could experience lower revenue, tighter cash flows and declining enrollments as a recession emerges from the COVID-19 pandemic.

Moody’s found that medical costs related to COVID-19 are partly offset by lower usage and annual premium repricing. Since March 15, 31 states have stopped elective surgeries. Beyond these official bans, utilization of medical services not related to COVID-19 is down significantly.

Meanwhile, health insurance policies are renewed annually, and this renewal allows companies to recover, even if it takes a few years.

INSURERS HELPING BUSINESSES RETAIN BENEFITS

Businesses are tr ying to maintain employee benefits during the COVID19 pandemic, and insurers are lending a helping hand, a LIMRA survey found.

Many companies have reduced employees’ hours, or laid off or 42% of carriers are furloughed their automatically continuemployees to ing worker coverage. mitigate the loss of income. This 22% are extending not only impacts eligibility. employees’ paySOURCE: LIMRA checks but also affects their insurance benefits. LIMRA surveyed insurance carriers to determine what steps they have taken to help ease the challenges for employers and their staff.

LIMRA found a large majority of carriers are making exceptions to their usual method of determining benefit eligibility in order to extend coverage for employees affected by COVID-19. Many (42%) are choosing to automatically continue coverage for all employees for a specified period of time, and another 22% are extending eligibility on a case-by-case basis to employees whose status has changed.

DID YOU

KNOW

?

— Peter Lee, executive director of Covered California

and Trump administrations had argued that the provision means the government has no obligation to pay.

FEDS OWE INSURERS $12B UNDER ACA

The Supreme Court ruled that health insurers are owed $12 billion by the federal government under the Affordable Care Act’s “risk corridor” provision. The money is to cover carriers’ losses in the early years of the ACA. The risk corridor provision promised health insurers a financial cushion for losses they might incur by selling coverage to people in the marketplaces created by the health care law.

Congress inserted a provision in the Health & Human Services Department’s spending bills from 2015 to 2017 to limit payments to the carriers. Both the Obama

BROKERS SEE INDIVIDUAL MARKETS STABILIZE

Brokers report that conditions in the individual health insurance market have improved in recent years, with more choices and sometimes lower premiums, an analysis by Georgetown University and the Urban Institute revealed. But they are concerned that many consumers are still having trouble affording premiums. On top of that, they are unsure what will happen to individual market enrollment when millions are losing jobs and income.

Although brokers said they were pleased with recent marketplace premium stability and a greater choice of plans, they remain concerned with increasing out-of-pocket costs and narrow provider networks.

In addition, a number of brokers said they refused to sell short-term health plans and other products that do not comply with the ACA, saying that the products are risky despite the fact that they offer higher compensation to brokers.

12.7 million Americans lost employer-provided health insurance during a six-week period in March and April. Source: The Economic Policy Institute Source: Associated Press

June 2020 » InsuranceNewsNet Magazine

47

HEALTH/BENEFITS

Help Seniors Answer Their COVID-19 Questions Position yourself as an expert by informing your Medicare clients about what the program covers regarding COVID-19.

F

By Lloyd Lofton

or years, I’ve said, “Thank goodness for the federal government. They modify, create and revise laws and regulations on a continuous basis.”

You see that now more than ever. The feds spend hundreds of millions of dollars notifying the public of new laws and regulations, and as changes are made to them.

Consumers are then driven to find trained professionals to clarify and help them design solutions to the problems these changes identify or create.

Then the salesperson steps on their own message by using the same opening, sales presentation and close as every other salesperson does. They come across to the consumer just like every other salesperson!

During this current crisis, how can you sell past the noise occurring in prospects’ and clients’ lives? How can you find out the things that matter the most to them and open a conversation?

I received a message from Tim after a recent webinar I did for a call center client.

Thank you in advance for your time.

My name is Tim and I work in the marketing department.

I am about a month into my training and I’ve found your webinars quite helpful.

48

InsuranceNewsNet Magazine » June 2020

However, like I mentioned, I am relatively new to this industry and sometimes I am not sure if I’m saying the right things to hook people into having a conversation with me.

Some of the pushback I get includes: » I am happy with my current Medicare plan and do not want to change anything. » I do not pay for anything and I do not need anything. » I do not want to change my plan because I’ve been going to the same doctor for many years. » I am not 65; I do not need your help. » I am still working and have insurance through work.

Does this sound like you or someone on your team? Is this a theme that is common to your distribution?

Medicare is not as complicated as everyone thinks. The Medicare program provides great information for its beneficiaries, communicating frequently with its enrollees.

Believe it or not, we advisors can take a lesson from Medicare’s playbook.

Senior citizens are always concerned about managing these costs: » Doctors and hospitals. » Prescription drugs. » Recovering at home after a medical or surgical procedure (short-term or long-term care). » Covering their final expenses; leaving a legacy instead of a financial burden for their family.

The COVID-19 crisis has uncovered some additional concerns all seniors

have about Medicare right now. These are what your conversations should be about; inform, educate, counsel and stop selling your product.

Sell the problem they have now (the questions that are most on their mind), and then tell them what their solution is.

Here are answers to some of the questions your clients and prospects have about COVID-19 and what Medicare covers.

COVID-19 Test

Medicare Part B (medical insurance) covers a test to see whether you have COVID19. This test is covered when your doctor or other health care provider orders it.

Your cost in original Medicare. You usually pay nothing for Medicare-covered clinical diagnostic laboratory tests.

What it is. Tests done to help your doctor diagnose or rule out a suspected illness or condition. In some circumstances, a home health nurse, a laboratory technician or an appropriately trained medical assistant may give you this test in your home.

Things to know. Medicare also covers preventive tests and screenings to help prevent, find or manage a medical problem.

Clinical Laboratory Tests

Medicare Part B (medical insurance) covers medically necessary clinical diagnostic laboratory services when your doctor or practitioner orders them.

Your costs in original Medicare.

You usually pay nothing for Medicareapproved covered clinical diagnostic laboratory services.

HELP SENIORS ANSWER THEIR COVID-19 QUESTIONS HEALTH/BENEFITS

Familiarize yourself with these resources so that you can help your senior clients.

Medicare.gov/coverage/telehealth – Provides updated information on Medicare coverage for telehealth services to treat COVID-19 and other medical conditions.

Coronavirus.gov – Provides the latest news on federal guidelines related to COVID-19 as well as resources on how to protect yourself from the virus and what to do if you think you are sick.

CDC.gov/coronavirus – The latest public health information from Centers for Disease Control and Prevention.

USA.gov - Has the latest information about what the federal government is doing in response to COVID-19.

What it is. Laboratory tests include certain blood tests, urinalysis, tests on tissue specimens and some screening tests.

Things to know. A laboratory that meets Medicare requirements must provide them.

Virtual Check-Ins

Medicare Part B (medical insurance) covers virtual check-ins (also called “brief communication technology-based services”) with your doctors and certain other practitioners.

Your cost in original Medicare.

You pay 20% of the Medicare-approved amount for your doctor’s or practitioner’s services, and the Part B deductible applies.

What it is. Virtual check-ins allow you to talk to your doctor or certain other practitioners, like nurse practitioners or physician assistants, using a device such as your phone, integrated audio/video system or captured video image without going to the doctor’s office.

Your doctor or other practitioner can respond to you using: » Phone. » Audio/visit. » Secure text messages. » Email. » Use of a patient portal.

Things To Know

» You must talk to your doctor or other practitioner to start these types of visits. » The communication must not be related to a medical visit within the past seven days and must not lead to a medical visit within the next 24 hours (or the soonest appointment available).

» You must verbally consent to the virtual check-in, and your consent must be documented in your medical record. Beginning Jan. 1, 2020, your doctor may obtain a single consent for a year’s worth of these services. » Medicare also covers e-visits and Medicare telehealth.

E-visits

Medicare Part B (medical insurance) covers e-visits with your doctors and certain other practitioners.

Your costs in original Medicare.

You pay 20% of the Medicare-approved amount for your doctor’s services, and the Part B deductible applies.

What it is. E-visits allow you to talk to your doctor using an online patient portal without going to the doctor’s office.

Practitioners who may furnish these services include: » Doctors. » Nurse practitioners. » Physician assistants. » Licensed clinical social workers, in specific circumstances. » Clinical psychologists, in specific circumstances. » Physical therapists. » Occupational therapists. » Speech language pathologists.

Skilled Nursing Facility Care

During the COVID-19 pandemic, some people may be able to get renewed skilled nursing facility coverage without first having to start a new benefit period.

If you’re not able to be in your home during the COVID-19 pandemic or are otherwise affected by the pandemic, you

can get SNF care without a qualifying hospital stay.

Your doctor or other health care provider may recommend you get services more frequently than Medicare covers.

Or they may recommend services that Medicare doesn’t cover. If this happens, you may have to pay some or all of the costs.

Ask questions so you understand why your doctor is recommending certain services and whether Medicare will pay for them.

Start The Conversation

Now how do you start this conversation with prospects?

Ask, “When you think about how Medicare can help you during this COVID-19 crisis, are you more concerned about COVID-19 testing, e-visits or virtual check-ins? What concerns you the most?”

Have the answers to their questions. Check out the Centers for Disease Control and Prevention’s website at www.cdc.gov/coronavirus, or check out www.coronavirus.gov and www.medicare.gov/coverage/telehealth to get the most up-to-date information to help your clients through this time.

Lloyd Lofton is the founder of Power Behind the Sales. He is the author of The Saleshero’s Guide To Handling Objections, voted 1 of the 11 Best New Presentation Books To Read in 2020 by BookAuthority.

Lloyd may be contacted at lloyd.lofton@ innfeedback.com.

June 2020 » InsuranceNewsNet Magazine

49

Financial facts and figures powered by AdvisorNews.com

World Unravels, But Stocks Are Great

Warren Buffett’s Woodstock Goes Virtual

In a world gone mad, stocks are going crazy. Crazy great if you moved money back into equities in late March. Or just plain crazy if you’re merely watching the numbers bounce around.

April had the equities market’s biggest monthly surge since 1987 at 12.7%. It would have been the best since 1974, if equities did not dip a little in value at the end of the month.

It wasn’t the usual 40,000 Warren Buffett fans flocking to Omaha to Berkshire Hathaway’s annual meeting, but the show did still take place on the usual stage in a massive arena.

It was just two guys, Buffett and a standin exec for Charlie Munger, but it was mustwatch viewing for the historic context.

Though Berkshire Hathaway has been holding on to cash to buy companies in the downturn, Buffett said he was not ready just yet. In fact, the company sold its airline stock along with other moves that led it to end the first quarter with a record $137.2 billion in cash and equivalents.

Buffett started his remarks with a tour through comparable economic downturns in America, starting in 1789. Although the

Top months, measured by percentage change, since World War II

SOURCE: FactSet

It was not a complete V-shaped recovery — more like a backward check mark-shaped recovery because stocks recouped a good portion of their losses from the 34% drop over the previous

basic message was that America always bounces back, many of those deep periods

Dow jumps 11.1% in April, biggest monthly gain in 33 years

took decades to recover from.

“I remain convinced,” Buffett said, “that nothing can basically stop America.”

two months. Drastic action by the Fed and Congress helped push the optimism.

But even so, it was difficult even for those in the thick of the markets to feel good about the spike.

“The disconnect between the market and the economy in April is about as wide as any of us have ever seen,” said Ryan Detrick, senior market strategist for LPL Financial.

Most Voters Can’t Pay Bills After One Month Of Losing Income Likely voters were asked: “If you lost your current source of income, how long could you go before you were unable to pay your bills?”

SOURCE: Data For Progress national poll from April 5-6 of likely voters.

50

InsuranceNewsNet Magazine » May 2020

CFP Delays Test

The Certified Financial Planner Board of Standards has postponed the July 2020 CFP Certification Exam administration to Sept.

22-29. People registered for the July exam will be notified by email by May 31 with details on rescheduling their testing appointment to dates in September and November.

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10-year deferral =

FOR AGENT USE ONLY. NOT FOR USE WITH CONSUMERS.

‘Hold Tight’ Is Not Enough; What Advisors Say Now As the financial crisis deepens, advisors are finding that “stay the course” is not going to cut it with clients, even though it might be good advice. This is the time to help people understand the structure of their plans and discover their real concerns. • Steven A. Morelli

L

ike most financial advisors now, Robert DeHollander knows that it is not enough to counsel waiting out the storm as the lockdown batters the economy.

The Greenville, S.C., advisor has seen the spectrum of effects in his clients — from business owners who have had to shutter their operations to those on the essential side of things scrambling to keep up, and everybody in between.

“We got to hear everybody’s story,” DeHollander said of reaching out to clients. “And it was educational because I 52

InsuranceNewsNet Magazine » June 2020

don’t know that I had fully appreciated how pervasive the shutdown was and every nook and cranny of the economy that’s receiving damage from it. Talking to our clients in disparate stages of life, different industries, different roles — it was really an eye-opener.”

Financial planners tended to counsel their clients to hold tight in the early days of the COVID-19 crisis. But now, only about a third of Certified Financial Planners are giving that advice, according to a survey of 1,078 CFP professionals conducted between April 6 and April 13.

The Certified Financial Planner Board

of Standards poll showed that 36% say their primary recommendation to clients is to sit tight and wait for volatility to decrease before making any major financial decisions. Most advisors describe their clients as anxious, with 64% of planners seeing clients experiencing high or very high levels of stress. The survey found that the top three financial concerns clients have expressed are managing volatility (74%), protecting assets (72%) and liquidity (35%).

DeHollander finds himself dipping into behavioral economics to help his clients cope with the stress. First of all, he recognizes that clients who are stressed are not necessarily listening to rational logic.

“In the midst of a crisis, it’s our lizard brain, it’s human nature, that tells us that it’s going to go on forever like

‘HOLD TIGHT’ IS NOT ENOUGH; WHAT ADVISORS SAY NOW

this and that it’s going to get worse,” DeHollander said.

First, he offers context to show that downs also have ups.

“We have to step in and say, ‘Look, we lived through the tech wreck. We lived through 9/11. We lived through ’08. We lived through all the crises in all our collective memories,’” he said. “‘We made it through, and it got better.’”

Then he has clients envision their future selves.

“We don’t want to diminish the magnitude of what we’re going through, but we’re telling clients, ‘Imagine that you just put everything on hold and you woke up in 36 months. We probably have a vaccine for this. We probably have the economy back open. We probably have a better mechanism or plan the next time there is some type of a serious contagion that moves through our economy. We’re in a better place.’”

That helps clients feel that there is an end to the crisis. And three years is how long DeHollander thinks it will take to be completely on the other side of the damage the COVID-19 crisis will cause.

“The challenge with this one is essentially we’re living through a triple black swan event,” he said. “We have a pandemic. We have an economic crisis. And now we have an oil crisis, all overlaid at the same time.”

Building The Firewall

The second part of DeHollander’s message to clients is that the downturn also

presents some opportunities.

“We’re using this to rebalance portfolios, and we’re overweighting certain sectors that we think will hold up better during the crisis and should recover quicker coming out of it,” he said. “We did that on March 23, and it just so happened that, at least so far, that was the bottom of the market. The next day, we had the best day in the markets since 1933. There was a lot of luck involved in that, but we did repurchase stocks just because they look so deeply oversold.”

DeHollander focused on the technology and health care sectors. He said he does not often make big moves like that, but he looks at the overall picture as a tactical asset allocator.

“We build long-term portfolios,” he said. “We like to invest with the idea of a normal market cycle. But there are just weird times in the market like December 2018 and March 2020, when you have these events that are imbalances, and at that time we tend to rebalance and reallocate.”

He also developed business practices from the 2008 aftermath. At that time, he used what he called old-fashioned, paper-based risk questionnaires where clients would pick A, B, C or D. “And no matter how many times we did that,” DeHollander said, “it just didn’t illustrate risk well.”

That led him to develop strategies to help the 120 households that he serves (with $1 million and $5 million in investable assets) to be more secure in their

An Anxious Nation Nearly two-thirds of respondents describe the general stress level of their clients as high or very high.

0.27% Very Low

financial positions.

Two primary strategies are:

1] Stress Tests

He stress-tests clients’ investments by using Riskalyze and MoneyGuide Pro to show clients how their financial position would fare in situations such as the Great Recession and the early 2000s recession.

Then clients’ risk tolerance can guide their own choices whether to be more or less aggressive.

2] Buckets

DeHollander uses a bucket strategy to protect clients. The first bucket is safe money they should be able to live on for three to five years, he said. Then the next several years would be funded by bonds, annuities and fixed-income assets. The third bucket is for equities.

So today’s downturn is diluted by many years of growth.

Even though he came from an engineering background before his 21 years of financial advising, DeHollander learned that the human side of the business is at least as important as the charts and projections.

“I sort of survived in spite of myself the first few years,” he said. “Then I got the understanding that people really care more about feeling safe, having a relationship with somebody who they trust, who is competent. It’s more about having a good plan and a good, trusted guide to help come beside them and walk them along.”

57.95%

30.90%

6.49%

4.39% Low

Neither High Nor Low

High

Very High

Source: Survey of 1,078 CFP professionals conducted in early April

June 2020 » InsuranceNewsNet Magazine

53

The Human Side Of Money

Elizabeth Windisch, a registered investment advisor with Aspen Wealth Management in Denver, also counsels clients to take the long view, even though they typically ask her to prognosticate what the markets will do in the short term.

She recognizes that is tough to do even in stable times. With the uncertainties about the pandemic, that question becomes even more problematic.

“I will answer it by saying, ‘You can’t touch this money for 20 years or 15 years’ or whatever their situation is,” Windisch said, in an answer similar to DeHollander’s. “And I’m confident that 15 years from now, you’re going to be fine.”

And also like DeHollander, Windisch finds that it is best to transcend the numbers and connect with the client.

In these times, advisors can be more like counselors.

“I think we just need to have compassion for clients and where they’re coming from,” she said. “We eat, sleep and breathe this every day, but they don’t.

So it’s very easy for us to be rational, but understanding where they’re coming from and understanding that they may need to talk a little bit more than they usually do, if only because people are socially isolated. Sometimes I might be the only person they talked to that day, so I’m not going to rush them off the phone.”

Taking the time to listen is key, said Michelle Buonincontri, a CFP who became a personal finance coach after years of feeling frustrated as an investment manager. She said clients needed help understanding their relationship with money to break their cycle of bad financial decisions.

Although she is more of a counselor than a money manager now, she said advisors can adopt more of the soft skills that clients need right now.

“If you weren’t the type of person who really listened before or paid attention to the cues of your clients, now would be a really great time to start to learn those emotional IQ skills,” she said.

Part of it has to do with the difference between the way men and women approach problems. Advisors tend to be male-centric, she said. It’s all about the returns with them.

54 54

InsuranceNewsNet Magazine Magazine »» June June 2020 2020 InsuranceNewsNet

“With women, we’re more about the stories and our goals and are we meeting them,” Buonincontri said.

“We want to feel OK. We want things explained, and we want those who are more patient.”

But in other ways, men take a bit of patience as well because they tend to put up a wall of “I’m fine.”

“It’s been my experience that men will say, ‘Everything’s fine. Yeah, it’s great. It’s fine,’” she said. “And then you start digging a little bit, and you find out that he and his spouse are not on the same page financially. And they argue about money, and there are trust issues. And now you can start to talk about some of those things.”

Those are some of the skills that come into play in a time like this, when clients will need more than the “touchbase” check-in. A few extra questions might be in order, but it is even more important now to listen to the answers to detect if they are saying more than the words might indicate.

That might be especially true with clients who are cooped up with their families, and money tensions can be ratcheted up by relational stress.

Buonincontri said finance is more than the dollars and cents on a spreadsheet, a fact she had reinforced by a client she helped recently.

“At one point, he apologized and said, ‘Oh, I know you’re not a therapist,’” Buonincontri recalled. “And I said, ‘Well, no, you’re right. I’m not a therapist, but money is very emotional.’”

Steven A. Morelli is editor-in-chief for AdvisorNews. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at smorelli@adnewsfeedback.com.

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Take advantage of our award-winning journalism, licensure and reprint options.

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INBALANCEWIRES

Recognize And Beat Burnout

of US workers 83% suffer some kind of work-related stress.

It causes 1 million people to miss work every day.

Workplace stress already was a serious SOURCE: American Institute of Stress problem before COVID-19 hit, with 83% of employees telling the American Institute of Stress in 2019 that they suffer from some sort of work-related stress. But with more people working from home, researchers say they expect to see work-related stress become even more prevalent, as the boundaries between work and home life become blurred.

If that stress keeps up for too long, it can lead to burnout — thoughts and feelings associated with feeling overwhelmed and fatigued by life circumstances.

So how do you know whether you have burnout? Burnout usually is characterized by feeling tired or exhausted, a lack of enthusiasm and increased job negativity, and a decreased ability to perform your job. Burnout often is accompanied by frustration, anger, irritability, agitation, restlessness, headaches or body pains.

Not all burnout can be prevented, but there are some things you can do to alleviate it if you are feeling it. The first step is to recognize what parts of your job are causing stress. Other tactics include communicating with co-workers, employees or supervisors; prioritizing sleep; and getting regular exercise. Meditation and mindfulness also help reduce stress and depression.

BEE ON THE LOOKOUT FOR STINGING INSECTS

The advent of warmer weather means we will be spending more time outdoors, and that increases our likelihood of meeting up with bees and wasps. For most people, a bee sting isn’t a big deal. But for others, a sting can land them in the emergency room — or worse. A study in Wilderness & Environmental Medicine stated that 220,000 people visit the ER each year because of a bee, hornet or wasp sting, and 60 people die from stings each year.

If you don’t want a bee sting to ruin your And look out for “murder hornets” from Japan that just started appearing in the Northwest! They are big, mean and love to snack on honeybees. time outside, it’s important to know how to avoid stinging insects and what to do if you wind up on the wrong side of one.

Avoid sweet-smelling soaps or lotions, brightly colored or loose-fitting clothing.

Instead, wear closed-toed shoes outdoors, DID YOU

KNOW

?

56

and make sure food is covered until it is ready to be served. If a bee approaches you, don’t swat at it or flail your arms.

If you do get stung, remove the stinger as quickly as possible using tweezers or your fingernail. Next, clean the area with soap and water. Finally, apply a cold compress. If the sting proves to be bothersome or you’ve suffered multiple stings, the Mayo Clinic recommends you also take over-thecounter pain medicine, elevate the affected are, and apply calamine lotion or hydrocortisone cream if the site is itchy.

KEEP YOUR SHOES ON

Going barefoot in the house might seem comfortable, but it’s not the best thing for your joints, said Dr. Rock G. Positano of the Joe DiMaggio Heel Pain Center in New York. Going barefoot for extended periods of time, coupled with any foot issues you have and the stress the ground puts on the foot, can create a potentially damaging situation for your feet.

Positano said wearing slippers in the house is a good idea, because they serve as both a protective barrier and a shock

QUOTABLE Worry draws our attention to something bad that might be coming, and it gives us the boost of motivation we need to do something about it.

— Dr. Kate Sweeny, professor of psychology at the University of California, Riverside

absorber for your feet as well as promote foot function and stability.

But not just any slippers will do. Positano recommended something he described as a “supportive-type shoe.” He said this type of shoe would include structural elements such as a firm backing or heel counter, an upper (or top enclosure) with some kind of lacing, and a firm yet substantial midsole.

CAFFEINE MIGHT SLOW WEIGHT GAIN

There’s a joke that says the reason they call it COVID-19 is because everyone will gain 19 pounds while sheltering at home. But although many of us turned to “quarantine baking” and stress eating during lockdown, it’s possible that drinking some caffeine along with those treats might slow down weight gain.

A study in the Journal of Functional Foods said lab rats ate a fat-dense diet for a month, and a group of them got the equivalent of four cups of coffee a day. The caffeinated crew gained 16% less weight and 22% less body fat than did their caffeine-free friends.

The researchers said caffeine can help offset some health risks and downfalls of a high-fat diet by limiting weight gain and the amount of lipids stored in fat cells.

Consuming an adequate amount of omega-3 fatty acids found in fish such as salmon can decrease depression and hostility.

Source: Registered dietitian Elizabeth Somer, author of Food and Mood

InsuranceNewsNet Magazine » June 2020

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INBALANCE

What To Expect When You’re Emerging From Quarantine Anxiety and fear can strike bosses and employees as they return to the office. Here are some insights into those emotions.

By Susan Rupe

S

o after nearly three months of dividing time between client meetings on Zoom and managing the kids’ education from the kitchen table, it’s time for you and your staff to transition back to the traditional office.

You might think that everyone is ready to get back to the way things were in the pre-COVID-19 environment, but you may be surprised that returning to the office carries many of the same emotions as moving to remote work.

That was the word from Lequita Brooks, a licensed clinical social worker and founder and CEO of TherapyTopia.

Brooks specializes in helping people reenter the workforce. She said that the shift from remote work to the traditional workplace carries a range of emotions that bosses and workers alike need to 58

InsuranceNewsNet Magazine » June 2020

recognize and deal with. In addition, clients also will have their own emotions as the world moves toward reopening, and advisors will need to recognize and deal with those client emotions as well.

The workplace that people left in March may not be the same workplace that people return to.

“It’s definitely going to be stressful as we return to the office, and people will be very anxious,” she said. “Some employers will be understanding. They will make sure that even if people are working in cubicles, they will have a way to put some distancing in place. They may decide to do a rotating work schedule where half the staff come in from 8 a.m. to noon, for example, and the other half is in the office from noon until 5 p.m. But then you also may find some employers who just say, ‘Get back to work’ and don’t care about social distancing.”

New Normal

As workers return to the office, Brooks said, they need to focus on controlling what they can while thinking of ways to make their office situation work for them under a new set of circumstances.

“How can you restructure your workplace so that everyone can do their work but still maintain safety? So for example, you need to be at work, but do you need to sit in your cubicle the whole time? Are you able to sit in the break room or sit on a bench outdoors? Can you move meetings into a larger room where you can establish some distance?”

You and your employees had to establish new work routines when remote work began. Now it’s time to change routines again, and that means some emotional adjustment. Brooks gave advice on how to make the transition go a little more smoothly.

“Before you go back to the office, start thinking about all the things you will need in order to get through the work day,” Brooks said. “Will you need to wear a face mask? If so, make sure you have your mask ready to go. If you’re accustomed to going out to lunch with your colleagues, what will you do if restaurants aren’t open? Can you pack a lunch and still eat with others? Think about all the pieces of the workday and how they might change under the new way of doing things, and then figure out how you will

WHAT TO EXPECT WHEN YOU’RE EMERGING FROM QUARANTINE INBALANCE address those changes.”

Brooks said that thinking through all the possible changes in the workplace will empower you and your staff to prepare for the new reality and function under a new set of practices. “Do your preparation so that you can navigate everything.”

Putting Employees First

Social distancing is not expected to go away soon, and that will change the way people interact with their colleagues, Brooks said. “Maybe you won’t be able to go out for happy hour with your colleagues, but you could do something virtually after hours, such as a group chat or a game — something where you have communication and an activity without physically being next to each other.”

Anxiety and fear may be the two main emotions experienced by advisors, their staff and their clients, Brooks said. Each of these groups will experience those emotions in different ways.

For advisors, combating those emotions begins at the start of the day, Brooks said.

“For example, in the morning, you’re on the treadmill or you’re on your commute.

Use this time to think about your employees and the questions they will have about operating under new conditions. Create some pre-scripted responses to their questions and concerns. Put yourself in your employees’ shoes and imagine what they will need from you. Planning will help head off a lot of that anxiety and fear.”

Take some notes on what you imagine your employees will ask you. Notes can be dictated into your phone to transcribe later.

Employees may experience anxiety and fear over returning to work if they feel unsafe doing so, Brooks said. Maybe they don’t have to come back to the office just yet. “If you decide that you can continue having your staff do virtual work, and your staff wants to continue doing virtual work, I would impose weekly expectations on them. As long as staff is meeting those expectations, and meeting the needs of the workplace, and they’re not in positions where they have to interact with clients in person, virtual work might be the ideal situation.”

If employees are needed in the office and feel unsafe being there, Brooks suggested that staggered shifts could be a solution. Workers could spend a specified number of hours in office and work

Emerging From Quarantine Can Be Stressful Emotional reactions to coming out of quarantine may include:

» Mixed emotions, including relief. » Fear and worry about your own health and the health of your loved ones. » Stress from the experience of looking for signs and symptoms of COVID-19. » Sadness, anger or frustration because friends or loved ones have fears of contracting the disease. » Guilt about not being able to perform normal work or parenting duties during quarantine.

SOURCE: Centers for Disease Control and Prevention

remotely the remainder of the time.

How Not To Fear The Future

Staffers are looking to their bosses to help alleviate their anxiety and fear as they return to work, Brooks said. “You need to tell your staff, ‘I know we’re still in the COVID-19 pandemic and we feel there’s a lot we need to know, not just for our business but for our lives in general. I’m trying to figure it out; you’re trying to figure it out. It’s normal to feel anxious. It’s normal to feel uncomfortable. It’s normal to just not know, but we’re open to suggestions on how we can make this work for all of us.’”

Employers and workers may feel isolated in their emotions, Brooks said, and need to know they are not the only ones feeling anxiety and fear about the current situation.

Anxiety comes from concern over the future, and those who are experiencing that emotion should listen to their bodies, Brooks said. “The No. 1 thing you can do is breathe. Get into a good space where you can think about the situation and listen to your body. If you feel your chest start to pound or your hands start to feel tingly, take a moment to step back. Take a walk down the hall, take a walk out to your car, take a few minutes to breathe and regroup.”

Fear stems from anxiety and it comes from not knowing what to expect, Brooks said. Many people will feel fear over their lack of knowledge over who might be carrying COVID-19 and whether they have been exposed to the virus. “People are also fearful that they might not be able to get together with their friends or go back to the activities they enjoy,” she said. “But

telling yourself that this situation is temporary is one way to combat fear.”

Clients are feeling stress and anxiety over the impact COVID-19 has had on their finances, and advisors will need to help them deal with their emotions.

“Clients see their portfolios have gone down in a short period of time, and they are worried about how this will impact their future,” Brooks said. “That kind of stress depends largely on the age of the clients. For example, those who are in their 60s and getting near retirement are really freaking out. They are probably putting pressure on their advisor to do something about it right now. Younger clients may be worried, but they also may realize that they have time to make up those losses.”

Advisors can provide the reassurance that these anxious and fearful clients need, Brooks said. “It’s important to normalize those clients’ emotions. I would ask, ‘I understand a lot is going on, a lot is changing. Is there anything you want to talk about?’ And I would encourage them to let it out. Listen to their concerns and give them solutions. Tell them what you are doing to maintain their portfolio. Let them know they are heard.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

June 2020 » InsuranceNewsNet Magazine

59

BUSINESS

6 Personal Branding Tips All Agents Need To Know Six simple ways to differentiate yourself and stand out from the crowd.

By Eric Goldschein

W

hen you’re working as an individual agent, you might think it’s unnecessary to worry about branding.

But in an industry like insurance, where consumer confidence isn’t always a given, you need a strong and trustworthy brand to set you apart from the 1.2 million other insurance brokers in the nation.

Technology continues to make prospects more and more accessible to any given insurance broker throughout the nation, no matter where they’re based. So how will you stand out from the crowd?

The simple solution to differentiating yourself is your brand. Actually building that brand, however, will require a bit more thought. Here are six actionable tips for building your brand as an agent.

1. Craft your brand message.

Before anything else, you must decide what message your branding efforts will send to potential customers. Odds are, you already have a general idea of what you want this to be, but creating a concrete brand message will be crucial 60

InsuranceNewsNet Magazine » June 2020

to the focus — and success — of your branding efforts.

To craft a concrete branding message, start by considering your purpose. Why did you become an insurance agent in the first place? And what part of your role keeps you going? Write it all down.

Also consider the unique value proposition you offer. This could include specific skills, profound industry expertise or even a great personality. Whatever differentiates you from your competition, write it down. This should look a bit like a business plan, in fact.

Now take a look at what you’ve written down and circle all of the most compelling bits and pieces that you’ve come up with. Based on these chosen notes, craft your brand message. Create different versions of increasing length — think one sentence, one paragraph, one page. Having these versions on hand will make you prepared for sharing your brand message in different contexts and capacities.

2. Develop a suite of assets as your brand foundation.

Now that you’ve come up with a solid brand message, it’s time to make it even more concrete. Create a suite of brand assets that will work to make your brand more than just an idea. Think business cards, a business website, social media

accounts, logos, email templates and an email signature.

These assets will constitute the foundation of your branding efforts, so be sure to invest the appropriate amount of time, effort and money setting them up.

It will be up to you whether that means hiring a short-term team, investing in a self-service web hosting platform, or anything in between. Regardless, make sure you feel confident and proud of your assets before moving forward with your branding efforts. After all, what’s the value of a business card if you’re not eager to hand it over to potential customers?

3. Request customer testimonials and reviews.

After you’ve set up all the brand assets you need, you can move forward with a proactive strategy. One easy, free way to raise your branding game is to request testimonials from happy clients. These client testimonials can live on any of the previously mentioned brand assets to increase your clout.

Put simply, prospects like to know that you’re good at your job and that your current clients have had good experiences with you. Client testimonials can help address these concerns. Pulling quotes from reviews from happy clients and placing them on your website demonstrates to prospects that you have a track

6 PERSONAL BRANDING TIPS ALL AGENTS NEED TO KNOW BUSINESS record of client success.

Nonetheless, a filtered, calculated client testimonial can instill only a certain amount of trust in your prospects.

Because you control your website and what goes on it, you’re certain to choose the most glowing reviews possible — especially if other reviews aren’t as effusive.

For this reason, requesting that happy clients leave reviews on review sites like Yelp and Facebook (seen as more impartial platforms for reviews) is crucial.

After all, a Status Labs study found 83% of consumers don’t trust advertising and fewer than 20% of consumers trust advertising, and a Brightlocal study found 93% of consumers say that online reviews play a role in their buying decisions. No matter how many customer testimonials you paste onto your website, your brand won’t be complete without a solid compilation of customer reviews on third-party sites.

4. Shape a meaningful presence on social media.

You have your social media accounts set up. Now it’s time to use them. Post links to articles that offer insights to your industry, participate in online forums that concern your work, and interact with potential customers in a way that adds value to their online experience. Don’t post just to post — make sure you’re providing useful, engaging content to anyone who follows you.

To boost your brand exposure in the beginning of your social efforts, tag your location, include high-impact hashtags and consider paying for promotional posts. Eventually, your top-tier content will garner a following.

5. Create a thought leadership blog and newsletter.

Social media isn’t the platform for comprehensive, long-form content. People don’t go to Facebook, Instagram, Twitter or even LinkedIn to read dissertations.

For this reason, you should consider setting up a blog vertical on your business website. Most self-service business website builders offer a blog tab feature that is easy to add on to your website.

Through this feature, you can self-publish thought leadership articles that offer valuable insights into your industry.

To hit the ground running, you can

The Building Blocks To Creating Your Personal Brand » Find your people — and serve them better than anyone else. » Take inspiration from others — and do it without trying too hard to be somebody else. » Be authentic. » Use the power of storytelling to truly connect with people. » Use outlets and earned media opportunities to build your audience and bolster your credibility.

SOURCE: Status Labs

author an industry white paper, using insights and statistics culled from industry leaders and your own experiences. If you have the available resources, make this white paper a “gated” download. A gated download requires users to hand something over in order to access the file. In this case, you could require users to provide their email address to access the white paper.

All of a sudden, you’ll have a list of subscribers who are actively engaged in the insurance industry. Think about setting up a weekly newsletter through which you send out the best content you published that week. Having your brand reach their inboxes on a weekly basis will remind customers that you exist and publish leading content about insurance.

These consistent and useful brand interactions will help you be top of mind the moment a newsletter subscriber needs insurance.

6. Stay in touch — especially at pivotal moments.

Staying in touch directly — not through mass email newsletters — is also a must.

Your newsletter can earn you a spot in your prospects’ inboxes on a weekly basis, but that doesn’t mean they’ll open the newsletter. An email that’s written by a human — namely, you — will almost

always have a better open rate than any mass email.

Write personalized check-ins to send to clients at crucial moments — maybe a month before a policy expires, or if you notice that they’re undergoing big life changes or business changes (this is where interacting on social media can be a huge game changer).

Additionally, the insurance industry is rife with uncertainty these days. So, past and current clients might be happy to hear how these shakeups might affect them specifically. If there’s big insurance news that will affect their coverage — or lack thereof — drop a line to let them know of any potential implications.

Moving Forward

Now that you’re familiar with these branding concepts, your next steps are to turn them into practice. Take out a notepad and start forming your oneof-a-kind branding message.

Eric Goldschein is an editor and writer at Fundera, a marketplace for small business financial solutions. He has nearly a decade of experience in digital media. Eric may be contacted at eric.goldschein@innfeedback.com.

June 2020 » InsuranceNewsNet Magazine

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INSIGHTS

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

The Simple Question That Leads To Retirement Predictability Asking clients how important it is for them to generate income will pave the way to develop a plan for retirement security.

By Michael J. McNeil

I

n times of uncertainty, predictability can provide great comfort. We offer an invaluable service, helping clients who have worked hard to set aside savings ensure they have reliable income throughout their retirement.

A simple question can add an entirely new dimension to an advisor’s relationship with their client and trigger a different conversation: “How will you manage your finances throughout your retirement to ensure you will have the income you’ll need?” Assuming a thorough fact-finding process is conducted to determine the client’s specific post-retirement financial targets, including income annuities as part of their plan may provide that element of predictability they lack.

Navigate The Perception Of Annuities

By the time many of our clients reach their early 60s, they often have identified most of their retirement resources, including Social Security and qualified plans such as 401(k), 403(b), etc. Yet many clients have no understanding of how income annuities might be of value within their existing retirement plan. Often in preliminary conversations, many clients say they are skeptical of the unique benefits that this product can provide due to confusion created within the investment industry. I focus on the benefits of investing in an income annuity and not about the bells and whistles that the annuity industry purports to buyers.

I initially ask clients what is most important to them in retirement: the total amount of their assets or having a sustainable and adequate income? Typically, they acknowledge that generating income 62

InsuranceNewsNet Magazine » June 2020

is more vital than their net worth. I educate the client within this context on why an income annuity is one of several logical steps that can provide for a safe and sustainable income that they can rely on throughout their retirement years.

Explore Distribution Plans

Annuities can also align with your clients’ retirement needs as a solution for income distribution plans. Although some clients might assume that they have a stable plan in place because they have relied on their financial professional for years, the reality is the relationship will end when the advisor retires. It’s important to show clients how to create a plan that can run practically on autopilot and improve the odds for a financially secure retirement outcome.

When I discuss this reality with clients, some say they expect to rely on family to navigate their finances in the future. The reality, though, is that their children often have their own families, careers and obligations to focus on and might not be equipped to manage a parent’s finances.

To say nothing of the risk in some situations where a family member is called upon to manage the finances and fails due to incompetence, lack of integrity or both.

Beyond these issues, the more income that is available during their retirement from known sources such as Social Security and income annuities, the less a client should need to rely on family or advisors to navigate their financial future. Clients may be comforted to know that predictable income can reduce the impact of portfolio risk, market volatility and external global events such as the current pandemic.

I believe that of all the reasons for having an income plan, the most important one is to ensure a client’s outcome is more predictable.

Leverage Clients’ Sound Financial Judgment

An income plan can leverage a client’s

own financial literacy instead of relying solely on a professional or family member who may or may not provide guidance in the years ahead. Many people believe that their investment skills increase over time as they gain experience. Although it’s true that people have higher confidence in their financial capabilities as they age, research has found a person’s financial literacy begins to decrease 2% on average each year in retirement. This makes seniors increasingly vulnerable to investment errors when left to manage their money in retirement.

This stark reality often demonstrates the benefits of establishing an income annuity while clients still have full cognitive abilities and can decide on a monthly income that will offer consistent and reliable financial security. Doing so allows clients to transition into retirement with peace of mind knowing their future doesn’t depend on one financial professional, their children or their own judgment.

Provide Reassurance During Uncertainty

I find great comfort in knowing that my clients are not as greatly affected by volatile markets or world events, and that their fixed expenses will be covered each month throughout their retirement. Anxious clients are turning to their advisors to seek input on adjusting their asset allocation, often to their ultimate detriment when the market turns around. Understanding this all-too-common human reaction, we owe it to our clients to work with them to create strategies that are sustainable, predictable, and that meet their needs now and in the future.

Michael J. McNeil, CLU, ChFC, CASL, is a wealth management advisor with Northwestern Mutual.

His practice includes business succession planning, retirement planning, estate planning and special needs planning. He is a 42-year MDRT member. He may be contacted at michael.mcneil@innfeedback.com.

INSIGHTS

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

The Second Responders: Agents & Advisors Agents and advisors show up on the scene without sirens or flashing lights, but they perform an important service in time of crisis.

By Adam Solano

T

he other day from my office window, about a mile away, I saw a huge plume of black smoke billowing up to the sky. You probably have had the same experience, and you thought to yourself: “I hope no one is hurt. I hope everything is OK, because it doesn’t look OK. Seconds later, you see the usual cast of first responders speed by to the rescue.

Right now, the entire world is dealing with the COVID-19 pandemic. It’s extraordinary. The fire a mile from my office took a few minutes to consume that home, just like how the COVID-19 virus has consumed the pattern of everyday living.

I remember other seminal moments in my adult life that interrupted the order and priorities of work, travel and school: the 9/11 terrorist attacks, the wildfires in California, Hurricane Katrina and the catastrophic Midwest floods in 2019.

With each crisis, there is a group of people and professionals who respond.

We know them as our first responders.

But it doesn’t have to be a national or regional catastrophe that calls them to the scene. They show up in the everyday course of life: » When your doctor calls with positive test results. » To the car accident at the intersection. » To the fire that ravages your home or business. » To the downed power lines that supply your neighborhood with electricity.

» To an office building to protect employees from workplace violence.

The Second Responders

We — the insurance agents and financial advisors — are the second responders. We show up on the scene around the time the headlines fade or when the family is back from the hospital or the morgue. The second responders arrive on the scene without sirens or flashing lights.

The COVID-19 pandemic has lifted our collective gratitude and respect for our first responders.

But don’t think we aren’t playing a vital role because we aren’t making headlines.

That’s not our part. That’s not how this profession plays out. We don’t put out fires — we bring checks to rebuild the home. We don’t hop into the back of an ambulance to deliver lifesaving measures for someone in cardiac arrest — we deliver the money to keep the surviving spouse and children in their home, enabling them to pay the mortgage and medical bills.

And in this specific international crisis, we are responding to frightened clients who have replaced our collection of professional wisdom and insight with the incessant headlines of economic doom and collapse: Guaranteed income and diversification? “But the market is in a free

fall!” Dividend-paying cash value life insurance and six months of cash reserves?

“I lost my job, and I am going to lose all of my money!”

Often, we aren’t only responding a second time, but a third and a fourth time as the news and the headlines become more dire.

Now, I do not mean that our second responders’ work is better than that of the heroic front-line first responders. It’s different, but it’s just as important.

First responders can proudly say, “I just saved that man’s life!” A second responder can reply, “I’ll take it from here.”

Adam Solano, CRCP, LACP, began his career in the financial services industry with Mass Mutual in 1993 and later branded his practice under Lakeside Financial Group in Chicago. He is immediate past president of NAIFA Illinois and is a past recipient of Advisor Today’s Four Under Forty Award. Adam may be contacted at adam.solano@innfeedback.com.

Like this article or any other?

Take advantage of our award-winning journalism, licensure and reprint options.

Find out more at innreprints.com.

June 2020 » InsuranceNewsNet Magazine

63

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

Top Trends Of The ’10s LIMRA and Life Happens study a decade of consumer insurance and financial trends.

op Trends Of The 10s

national health care legislation over the past decade (e.g., the Affordable Care Act).

effects of the COVID-19 pandemic will accelerate this trend in the near term. » Life insurance purchase intent is at its highest point to date. Currently, 36% of consumers said they intend to purchase life coverage in the next 12 months. Purchase intent had fallen as low as 10% in 2014. The COVID-19 pandemic might increase likelihood to buy life insurance in the near term and may have a long-term impact.

» Ownership of long-term care insurance is rising. Ownership of LTCi rose y James T. Scanlon ata from the 10th edition of the from 15% in 2011 to 18% in 2020. The rise Insurance Barometer study, of 3 points represents an increase of 20%. an annual consumer survey Market penetration has grown in seg- » Product innovations increase purata from the 10th edition of the Insurance Barometer study, an annual consumer survey co-sponsored by co-sponsored by insurance LIMRA and ments in which ownership rates are low,regarding chase intent. Developments such as IMRA and Life Happens, allows the industry to review a decade of consumer trends allows issues. the insurance lower-income households. combination products, continuous unsuranceLife andHappens, related financial Here are insome such of theastop trends the survey revealed. dustry to review a decade of consumer derwriting and simplified underwriting Life insurance market insurance penetration declined Between 2011 and 2020, insurance life insurance can increase a consumer’s purchase intrends regarding and relatedby 14%. » Ownership of disability ownership among American adults declined from 63% to 54% (See chart.). Declines in ownership are financial issues. Here are some of the top is declining. Market penetration for DI tent by as much as 50%. The industry has highest among those ages 45 and older and in households with annual income under $100,000. The the survey revealed. declined from a high of 31% Thus, in 2012 toof innovated in different areas (e.g., proddrop trends in ownership relates to a broad decline in employer-paid group life benefits. loss uct, sales, service, marketing and uncoverage is occurring in working-age households in the low- and middle-income classes. derwriting). Technology is the common Figure 1 - Insurance Ownership Trends, 2011 to 2020 denominator and shows that the industry is adapting to trends in the broader conLife DI LTC Health sumer market.

EAD IN:

By James T. Scanlon

D

Insurance Ownership Trends, 2011 to 2020 79% 63%

27%

76% 59%

31%

78% 62%

30%

80%

57%

29%

86%

57%

26%

15%

14%

14%

13%

13%

2011

2012

2013

2014

2015

86%

87%

59%

59%

57%

20%

20%

20%

16%

14%

15%

15%

2016

2017

2018

2019

84%

83%

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23%

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54%

16% 18% 2020

» Consumers consistently overestimate the cost of term life insurance.

A common reason for not buying life insurance is concern over cost, but perceptions of cost are often wrong. Half of all respondents estimate the cost of term insurance at more than three times the actual cost. Broadcasting more information on the true cost of coverage may increase the number of prospective life insurance buyers.

» The proportion of Americans looka financial advisor is at its point to date. Currently, 25% 2020, life insurance ownership among surance ownership. Both trends relate to of respondents are looking for an adviAmerican adults declined from 63%isto changes in theofemployer market. sor, a spike of 8 points in one year. In the Ownership of long-term care insurance rising.

Ownership LTCi rosebenefits from 15% in 2011 to 18% 54% in 2020. rise of 3 pointsin represents an increase of 20%.

Market penetration has grown last in three study periods, the percentage (seeThe chart).

Declines ownership Employers reduced life and DI benefits segments whereamong ownership rates lower-income are highest those agesare 45low, and such old- as as a means ofhouseholds. compensating for rising of respondents looking for an advisor er and in households with annual income health coverage costs. Over time, this rose significantly. This suggests the volOwnership of disability insurance is declining. Market penetration for DI declined from a high of The drop in ownership trend will drive mirrors more consumers theinsurance ume of consumers seeking a financial 31% under in 2012$100,000. to a low of 16% in 2020.

The decline in DI ownership the declineinto in life relates Both to atrends broadrelate decline in employindividual disability market. advisor is expanding quickly. Given the ownership. to changes in the employer benefits market.

Employers reduced life er-paid group life benefits. Thus, loss of youthful demographic of respondents coverage is occurring in working-age » Purchase preferences have seeking advice, financial advisors should households in the low- and middle-in- changed. In-person sales remain the consider greater use of social media to come classes. most preferred, yet over the past decade, reach new clients. preference for in-person sales declined » More consumers have health insur- from two-thirds (64%) to less than half James T. Scanlon, M.S., ance than say they need it. Currently, (41%). At the same time, preference for leads LIMRA’s research program focused on insur85% of respondents say they have health internet/online sales grew from 17% to ance markets. He may be coverage, an increase of 8% since 2011. 29%. This reveals important changes in contacted at james.scanThe growth in health coverage reflects consumer purchase preferences, and lon@innfeedback.com.

More»consumers have health than say theyofneed of respondents sayfor Life insurance marketinsurance penetration a low 16% it. in Currently, 2020. The85% decline in DI ing they have health coverage, an increase of 8% since 2011. The growth in health coverage reflects declined by 14%. Between 2011 and ownership mirrors the decline in life in- highest national healthcare legislation over the past decade (e.g., the Affordable Care Act).

64

InsuranceNewsNet Magazine » June 2020

Many INvestors

are worried about having

the money

they’ll need in the future.

A Jackson® variable annuity with the purchase of a living benefit1 has features that can protect2 your client’s income and keep it growing during market upturns and downturns—for life.3 And that can give you both a reason to smile.

Visit Jackson.com to see how your clients can protect and grow their income in any market.

Variable annuities are long-term, tax-deferred investments designed for retirement, involve investment risks and may lose value.

Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½.

Before investing, investors should carefully consider the investment objectives, risks, charges, and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses, which are contained in the same document, provide this and other important information. Please contact The Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

1

Add-on benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity. Only one add-on living benefit and one add-on death benefit may be elected per contract. Once elected, benefits may not be cancelled or changed, please see prospectus for specific benefit availability. The long-term advantage of the add-on benefits will vary with the terms of the benefit option, the investment performance of the variable investment options selected, and the length of time the annuity is owned. As a result, in some circumstances the cost of an option may exceed the actual benefit paid under that option.

2

Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York and do not apply to the principal amount or investment performance of the separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

3

On the contract anniversary on or immediately following the designated life’s attained age 59½, the for-life guarantee becomes effective provided: 1) the contract value is greater than zero and 2) the contract has not been annuitized. If the designated life is age 59½ on the effective date of the endorsement, then the for-life guarantee becomes effective on that date.

All withdrawals reduce the GWB and, depending on the amount of withdrawals taken, adjusted for any GWB step-ups and, any applicable bonus, the GAWA may be reset to a lower amount when the for-life guarantee becomes effective.

In certain states, we reserve the right to refuse any subsequent premium payments.

Variable annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These products have limitations and restrictions.

Contact the Company for more information. Jackson® is the marketing name for Jackson National Life Insurance Company® and Jackson National Life Insurance Company of New York®.

Firm and state variations may apply. For institutional use only.

Not for public distribution or use with retail investors.

Not FDIC/NCUA insured • May lose value • Not bank/CU guaranteed Not a deposit • Not insured by any federal agency CNC18960A 04/20

STRONGER TOGETHER

TO SUCCEED, YOU NEED STRENGTH. As an industry leader, we help advisors stay strong and overcome adversity.

www.BrookstoneStrong.com