InsuranceNewsNet Magazine - December 2018

Muddled Middle Ground: New Annuity Rules Are Coming PAGE 36

Sandwich Generation: When Insurance And Caregiving Collide PAGE 50

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HOW FAMILY FIRST LIFE CREATED THE

BEST LEAD PROGRAM //////////////// IN THE INDUSTRY //////////////// Shawn Meaike

With just five years in the business, Family First Life (FFL) has proven that there isn’t a better IMO at helping new agents become top producers. FFL does this by providing presumptive sales training with the most dynamic lead program on the market. Their goal from day one was to break away from the pack and lead the industry by teaching any agent willing to put in the work how to become a top producer, which is why they continue to live up to being The Rogue IMO.

In this article, FFL President Shawn Meaike shares why their lead program outperforms all of its competitors, along with how FFL has simplified the insurance sales process so that any agent can issue pay over $20,000 per month.

Q: FFL claims to have the best lead program in the industry.

Can you explain?

A: I’ve been in this industry a while.

I’ve seen two basic approaches to how agents grow their business. The first is the “call your list” approach. This is a very difficult way to start your career, but, despite that, many legacy carriers still use this approach for their captive agents. They tell them to get a list of 200 friends and family and start calling them.

They also encourage networking and marketing groups. Most agents can’t get their career started — much less sustain it — with this technique.

The second approach is lead driven.

Having access to quality leads that can be generated quickly is the key to getting an agent up and running fast. This is where FFL excels. We pride ourselves on constantly discovering and vetting new

lead sources. We then negotiate exclusive deals for discounted pricing and, in some instances, exclusive FFL programs. This is done the same way an annuity company leverages the billions of dollars they manage. They can go to an institution and negotiate a better yield and payout because they carry a lot of weight. FFL has nearly 3,000 licensed agents across the company buying leads. That means we have clout. Any deals we negotiate, we pass on to the agents, not line our pockets.

Q: What makes FFL’s lead program different from other IMOs? A: First, it’s important to understand that FFL approaches this industry in five different sectors: mortgage protection, final expense, Medicare, annuity and IUL. You might find an IMO that has one or two of these, but not all five. This gives us massive diversity. It also allows us to train

our agents to sell in all five “quintants” and pivot from one quintant to another in order to maximize the lead value.

Furthermore, our free agent CRM helps them with automated annual reviews and mining reports for upsell opportunities.

Q: Describe the different lead programs at FFL. A: We have direct mail, including the traditional pay-per-mail drop program. We also offer exclusive buy-per-lead (BPL) programs where agents have no risk on poor returns because they pay for the lead only once it comes in. Furthermore, we give the agent the opportunity to isolate what lead type they want. Other IMOs require an agent to buy all lead types if they want to lock out a county.

In doing so, they get a mix of leads that might not fit their business plan, but they are stuck paying for them.

We also have internet leads, but our newest and fastest-growing lead type is social media leads. These leads can be generated within 24 hours, so they work great for a brand-new agent or for an agent who wants to do a travel trip and have leads only for a week. Again, we use our leverage to negotiate exclusive deals with new companies like SocialInsuranceLeads.com and other vendors, which we pass on to the agents.

Q: How does FFL do this?

A: It’s about commitment. When we began FFL, we knew we needed to disrupt the industry and appeal to a newer type of agent. IMOs and carriers don’t take into account how savvy these

new agents are. FFL has stuck with its commitment to provide transparent lead programs across five sectors with unparalleled discounts to agents, and the results are apparent.

FFL will finish 2018 with nearly $200 million of issue paid volume. This is direct growth, not M&E or contract shifting, and we’ve done this in our fifth year of existence. We don’t stop there.

Last year alone, FFL spent well over $500,000 in lead research, and we are currently involved in more than five lead pilots. Other IMOs have become greedy and aren’t willing to reinvest. They’re especially reluctant to lose money in their lead programs, just to pass the savings onto the agent.

Q: What advice would you give agents looking at FFL or any insurance lead program?

A: Leads are nothing without the right training. Too many agents fail in this industry because they have poor training and false expectations of what a lead is supposed to do. A lead is a reason to engage a consumer. It’s not a bill of sale that says, “I’m ready to buy life insurance.”

At FFL, we set the bar on agent sales training. Our agents understand the psychology of the sale, and they are trained on everything from the phone call, to the appointment, to the in-home presentation, to the close and to the follow-up.

//////////////// FFL LEAD MATRIX //////////////// MORTGAGE PROTECTION

FINAL EXPENSE

MEDICARE

IUL

ANNUITY BUY PER LEAD MAILER INTERNET LEADS SOCIAL MEDIA LEADS SECOND CHANCE LEADS DIGITAL MARKETING LEADS PREDICTIVE ANALYTIC LEADS

Want to see the Family First Life difference for yourself? Visit www.FFLLeadChallenge.com for more information today.

Then, join us free on Facebook live every Friday at 11 a.m. ET for our “Next Level Call,” and we’ll show you how we train.

HOT LEADS AND VPS:

THE SECRET TO PRODUCING THE INDUSTRY’S ///////////// TOP-PRODUCING ROOKIES! ///////////// Andrew Taylor FFL U.S.A. Andrew is motivated to help change an industry that has been abused for hundreds of years, and he works to make sure there are no more broken promises and shattered dreams.

FFL has real numbers and real people. Win with FFL!

Athena Villanueva FFL Coastal President of FFL Coastal, Athena uses her success in the industry to help others reach their full potential.

FFL Coastal’s rapid and consistent growth can be attributed to Athena’s compassionate nature and ambitious spirit.

Conrad Pawlowski FFL Midwest A former electrical engineer, Conrad believes that people from all backgrounds can have success at FFL, so long as you are open, believe in genuine communication and have compassion for your clients.

Eric Anthony FFL Texas Eric’s ability to work with people from all walks of life makes him very successful with clients and his growing team of young, independent agents. Eric funnels his positive and productive energy into whomever needs it.

Frank Eufemia FFL Maryland Frank is the owner of FFL Maryland and a Hall of Fame producer, having issued more than $1.5 million in life insurance since joining FFL. He is one of FFL’s best sales trainers and has a passion for helping agents and clients alike.

Gaylin Ware FFL Balanced Options Gaylin joined FFL in 2015 and aggressively worked his way to becoming a VP and Elite Producer. Under his leadership, guidance and unwavering commitment to helping families, FFL Balanced Options was founded.

Jack Yiu FFL Financial On track to join the FFL Hall of Fame for the second straight year, FFL Financial has doubled in size and volume this year and looks forward to doubling again in 2019, thanks to the agent-friendly system FFL has put in place.

Marc Meade FFL Tri-State Marc’s drive stems from helping as many people with a desire and “want” to achieve financial prosperity as possible. As he’d say, “It starts with understanding the opportunity in front of you, going to work for it and staying focused!”

Mickey Taylor FFL 4 Corners Mickey started selling insurance in 2016 and has become the fastest growing vice president in all of Family First Life. He doesn’t over complicate it; he believes strongly in following the successful system FFL created.

Mike Killimett FFL South East Mike entered the insurance industry in March 2010 and has grown his agency from $0 to $2.6 million a month.

He looks at this business as a way to support his family and to help many other agents change their family’s lives.

Paul McClain FFL West Coast Paul started selling insurance at 19. Thanks to the standard of excellence, training from top producers, leadership, great lead diversity and high comp Family First Life offers, he’s achieving the financial freedom he always desired.

Tray Honeycutt FFL Coast to Coast A former Marine driven by a desire to help, Tray is the ultimate team player. His consistency and focus on teaching the fundamentals and putting others first has been the recipe for becoming one of the fastest growing VPs in 2018.

Rk

2018 Rookie Producer

1

SPENCER F.

As of week 43

Life Volume YTD

All Lines YTD

$208,658.66

$536,649.53 $328,696.22

2

NICK D.

$308,116.76

3

VANINA B.

$207,972.41

$207,972.41

4

GRADY P.

$188,092.94

$188,092.94

5

VICTOR V.

$152,282.57

$171,390.03

6

BRITTANY S.

$115,660.57

$170,795.84 $167,243.45

7

ABE C.

$161,324.47

8

DAVID P.

$59,793.31

$149,108.93

9

DEAN P.

$114,179.65

$142,004.65

10

DAVID W.

$140,259.52

$140,259.52

$1,656,340.86

$2,202,213.52

Total

FAMILY FIRST LIFE’S HIGH-REVVING ROOKIES! Spencer F. “Before I was welcomed into Family First Life, I was lost, poorly trained and running out of resources! How much longer will you wait? Make that leap and jump on board with an organization that provides the things you need.

There is no reason that I, as a 27-year-old who got his license in May 2017, can put more than $500,000 into my bank account in one year and you can’t. Step up!

Make the call! Make your income dreams come true.”

Nick D. “Family First Life is truly an exceptional IMO, from top to bottom. They are redefining the industry by turning agents into partners, not profits. You know a company cares when their starting comp is 80% to 120%. There are multiple lead sources, so they never ask me to bring people in or sell to family and friends.”

Grady P. “I never could have imagined the rapid success I’ve had at Family First Life. Issuing over $200,000 and growing an agency to the VP level all in my first year is a testament to the platform they created. They have the best training, quality leads and highest payouts; often touted, rarely provided!”

Bryan Mendenhall FFL Central Division Bryan became a VP with Family First Life after a decade in the fitness industry. His passion for helping people has led him to start his own agency. This has given him the opportunity to help families and create a place for agents to grow and prosper.

Brent Abernathy FFL Gulf Coast Brent brings to the insurance industry the same work ethic and team mentality that made him a major league baseball player and Olympic gold medalist. FFL Gulf Coast is issuing nearly $2 million in business each month by protecting client families the same way agents want their own protected.

Drew Jerdan FFL Global VP of FFL Global, Drew started selling insurance after the housing market collapse. With a true passion for helping people, FFL Global is a top 5 FFL agency and finished 2017 with more than $8.5 million ISSUE-PAID premium.

And it’s on track to issue over $15 million in 2018.

John Wetmore FFL East Coast On track to hit $10 million in 2018, John’s foundation for achievement, unrivaled work ethic and admirable selflessness while staying true to his core values of helping others has earned him countless accolades!

Ryan Montalto FFL United Ryan entered the industry in 2014 and became one of the Top Rookie Producers that year.

Since then, he’s earned three Top 25 National Producer awards.

Matt Smith FFL Northwest As the #1 career producer, Matt owns and operates one of the largest agencies inside FFL, where he believes he can train agents to have the same success he’s experienced over the past five years.

Domonique Rodgers FFL Golden State Domonique’s Golden State agency takes pride in a diverse work force.

Your experience or lack thereof, ethnicity, religion or beliefs do not dictate your success with FFL. The Golden State agency aims to help as many people as possible.

Terry Herron FFL T.H. Group Selling insurance since 2011, Terry is a natural leader and coaches new agents to reach and surpass their goals. He sets the example for hard work.

His strong passion for making families feel secure is the foundation of the T.H. Group’s overall success.

Do you want the best lead program in the industry? Call 844.277.2761 or visit www.FFLLeadChallenge.com today!

IN THIS ISSUE

View and share the articles from this month’s issue

» read it

DECEMBER 2018 » VOLUME 11, NUMBER 12

36

online

www.insurancenewsnetmagazine.com

FEATURE

Muddled Middle Ground

By John Hilton

Regulators of all stripes are looking at annuity sales and tougher rules are coming. But independent agents are left wondering how the new rules will affect their livelihoods.

27 2018 Movers and Shakers

We’re surveying the industry to find people and products that are shaping the future of the insurance industry.

LIFE

48 ‘These Go To 11:’ Indexing Beyond Rates, Renewals

INFRONT

12 I llustrating A Way Forward

By John Hilton It might be time to put everything on the table when it comes to life insurance illustrations.

By Eric Thome Financial professionals recommending index solutions need to explore all of the options for their clients.

INTERVIEW

18 Why Your Elevator Pitch Stinks

An interview with Michel Neray Michel Neray is a master at helping people tell stories that literally light up the brains of those who hear them. In this interview with Publisher Paul Feldman, Neray describes why the elevator pitch doesn’t work and how we can substitute it with something that elicits a better reaction from those who hear it.

50 Sandwich Generation: When Insurance And Caregiving Collide

By Kim Anderson An insurance professional gained insight into the world of family caregiving and describes the lessons she learned.

14 S uper Conference 2018: Inspiring Attendees To Ignite Growth

IN The Field

42 Objectives And Reflectives

By Susan Rupe An all-star lineup of master motivators shares their secrets of success at this marquee industry event.

6

InsuranceNewsNet Magazine » December 2018

By Steven A. Morelli Kathleen Owings took the service ethic and leadership skills she learned as a U.S. Army officer and uses them to help her clients reach their financial goals.

ANNUITY

54 G uaranteed Income Amount Depends On Client, Timing

By Susan Rupe Researchers compared several annuity products to determine which provides the most guaranteed income in retirement.

Navigate a strong path for your clients’

financial future with the Compass Elite IUL

Set your sights on the Compass Elite Indexed Universal Life (IUL) from Kansas City Life Insurance Company, which offers: • Streamlined design • Numerous riders designed to meet individual needs, situation and budget • Three types of Indexed Account options to build cash value while managing against potential market volatility • Competitive cap rates • Competitive target premium

For information about a career with Kansas City Life Insurance Company, call Tom Morgan, Vice President, Agencies 855-277-2090, ext. 8120 or

www.CompassEliteIUL.com

IN THIS ISSUE

View and share the articles from this month’s issue

» read it

DECEMBER 2018 » VOLUME 11, NUMBER 12

HEALTH/BENEFITS

70 M DRT: Streamline Your Operations And Drive Long-Term Success

60 W orkers Need Brokers To Cut Through Benefits Confusion

By Susan Rupe Despite the use of digital enrollment tools, workers need experts they can trust to help them choose the right voluntary benefits for their needs.

64 After The Funeral: Navigating The Three Stages of Widowhood

By Kathleen M. Rehl Understanding the steps of the widow’s journey will help you serve this market niche with compassion.

By Peter Hill Strategies to help you serve clients on a deeper level while running your practice more effectively.

BUSINESS

66 3 Steps To Improving Your Professional Selling Presence

By Reggie Pearse Having a sales process is a good thing.

Having presence adds magic to the process.

INSIGHTS

68 NAIFA: Five Great Ideas For Retaining Customers For Life

72 LIMRA: Helping Retirees Crack Open Their Nest Eggs

By Matthew Drinkwater How to keep clients from worrying over their nest eggs and create income from them.

By Danny O’Connell How to hold on to the clients you worked so hard to acquire.

EVERY ISSUE 10 Editor’s Letter 26 NewsWires

online

www.insurancenewsnetmagazine.com

46 LifeWires 52 AnnuityWires

58 Health/Benefits Wires 62 AdvisorNews Wires

71 Advertiser Index 71 Marketplace

INSURANCENEWSNET.COM, INC.

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8

InsuranceNewsNet Magazine » December 2018

American National's Accelerated Underwriting programs keep speeding up the underwriting process!

See for yourself: 44%

50%

81%

86%

76%

Percent of Xpress Plus eligible cases are issued without an exam.

Percent of Xpress Plus eligible cases are issued without an exam for $750,001 to $1,000,000.

Percent of Xpress Plus eligible cases are approved in 5 days or less. This was only 7% prior to Xpress Plus!

Percent of Xpress eligible cases are issued without an exam or APS.

Percent of Xpress eligible cases are approved in 5 days or less.

Information above is based on Independent Marketing Group applications from 1/2018 - 2/2018.

American National Insurance Company, headquartered in Galveston, Texas is licensed to conduct business in all states except New York. Business is conducted in New York by American National Life Insurance Company of New York, headquartered in Glenmont, New York. Each company has financial responsibility for only the products and services it issues.

For Agent Use Only. Not for Distribution or Use with Consumers.

IMG22339 | INN 12.18

888-501-4043 | img.anicoweb.com

06.18

WELCOME LETTER FROM THE EDITOR

Down The Slope

D

ad sat low in his wheelchair as he whizzed down the slope in the hall and zipped around the corner to the elevator.

Although he showed no expression, I could tell by his intensity that he enjoyed zooming down the hall. At the other end would be a meal in the assisted living center’s dining room and then a cigarette outside.

Except on this day, I stood in the hall, my hand over my mouth as I watched this memory play out.

Then I reached down to the contractor-strength bag full of dad’s stuff that I had dropped next to my feet during yet another trip down that slope to the elevator and out the back door to the dumpster.

This was the last time I would appear in Dad’s life, for the epilogue. The previous four times since he had his stroke in 2009 were also to catalyze some kind of change.

After his stroke, we saw each other for the first time in more than 30 years. When I walked into his room at the rehab center on Sunset Boulevard just outside Hollywood, I saw my grandfather’s ghost hunched over a child’s alphabet book as he mouthed out the sounds of the letters.

But when he looked up, I saw my dad had morphed into the father he so hated. I could see he was trying to make sense of seeing a middle-age version of himself appearing before him.

The Apparition Returns

Although the stroke did not seem to affect him physically, his brain was substantially damaged. Ever since he regained consciousness from his coma, he had always seemed to be struggling to wake up.

During the 40 years since he left New York City for the West Coast, he had almost nothing to say to his immediate or extended families. He wanted to vanish from our lives. Now here was his son — or to him, a blended apparition of his family — reappearing to help him understand that not only could he no longer drive, but he also could not live on his own.

When I appeared a few years later, it was to move him to a cheaper assisted living facility 10

after his facility jacked up the rates. Then a few years later when he ran out of money, I had to find an even cheaper place — only to be rescued by the Veterans Administration with a pension approval at the last minute.

This last time, Dad would not be there to make sense of who I was while I cleared out his room and relived his life as I went through his things.

The Heavy Lift

This is just one small story behind some of the themes in this month’s magazine.

One theme in particular is in the article “When Insurance And Caregiving Collide: A Sandwich Generation Story,” in which Kim Anderson describes how her mother’s dementia changed three generations of her family. And here is the important part: Even though she has been in the long-term care insurance business for 20 years, she has been struggling to find the right solutions for her parents.

Even an expert can’t save her parents from the financial disaster of long-term care expenses. Her mother is in a memory-care facility. Her parents lost their house. So, her father moved in with her as she tended to her school-age kids.

Anderson has a good job that allows her some flexibility, so she is one of the lucky ones. Although it is difficult describing the stressful life she leads as fortunate, many other Americans are simply going broke with no one able to help them. And that population is only growing.

I have no idea what would have happened to my father if his landlady did not happen to find my phone number in his apartment after his stroke. I had to fight the VA for two years to get his rightful benefits. Without that benefit, he would have lived in a tiny, shared room in one of the worst parts of Los Angeles. But he might not have even gotten that lousy room, much less the better, VAsubsidized one, without an advocate.

InsuranceNewsNet Magazine » December 2018

What about all the other people I saw adrift in those dingy halls that I toured?

What about the elderly outside on the largest skid row in the country?

Questions Fade

A good friend advised me not to leave anything unsaid as Dad’s health declined. I thought I had said all that I needed to say.

But now I wish I had said just a little more and also had the opportunity to ask about many of the pictures and mementos I had found. Who was this person you have your arm around? What is the significance of this decades-old matchbook? Why didn’t you open any of these holiday cards?

But questions lead to more questions. At some point it has to be enough just to see them off, our loved ones and their answers trailing behind them.

Parents go to their peace. Our peace comes when we let them go.

Steven A. Morelli Editor-in-Chief

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Indexed UL Can’t Should Be Sold to Seniors IT’S ABOUT TIME SOMEONE SET

My name is Gabe Myers, founder and CEO of Peak Pro Financial, and I’m tired of seeing hard-working producers take the fall for poorly designed IUL products and misinformation from uneducated annuity wholesalers posing as IUL experts.

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INFRONT

Illustrating A Way Forward No clear resolution on new index rules or practices for insurance products.

By John Hilton

T

he National Association of Insurance Commissioners is tweaking some illustration rules as part of its mission to protect consumers. So far, that does not include the major overhaul sought in some quarters.

Illustrations are a perpetual source of concern for regulators, who thought they had achieved some stability with Actuarial Guideline 49. Introduced in the summer of 2015, AG 49 was supposed to tamp down overly rosy return illustrations in indexed universal life products.

The main life insurance illustration rule took several years of work before it was adopted in 1995.

But some in the industry say it did not take long for a new wave of IUL products to emerge to take advantage of weaknesses in the regulation.

It might be time to put everything on the table when it comes to life insurance

weren’t even contemplated, specifically no-lapse guarantees and indexed contracts.”

NAIC President Julie Dix-McPeak did not return a call seeking comment.

A Tweak Here, A Tweak There…

Meanwhile, two working groups are debating a pair of relatively minor changes related to illustrations. Both groups ran into difficulties that required further guidance at the fall meeting (which took place after press deadline).

The two models are:

Life Insurance Disclosure Model Regulation (Model Law 580)

This group is debating a short policy overview summary to accompany life insurance sales.

Designed to enhance consumer understanding, the summary proposal has been in the works for nearly three years.

Commissioners are bogged down on two issues, the first being how detailed the policy overview might become if some products offer multiple index options.

Secondly, the group’s charge calls for dual policy summary reviews for model

Changes would come in 2019.

Annuity Disclosure Model (245)

The annuity model is drawing more attention as commissioners were unable to reach any consensus before the NAIC Fall Meeting Nov. 15-18 in San Francisco.

The working group is considering tweaking a rule allowing insurers to illustrate indexed annuities using indices that have been around less than 10 years.

In these instances, insurers use index components to create a hypothetical “history.”

However, the Annuity Disclosure Working Group wants to double the 10year limitation to 20 years.

“As long as a unique history can be established going back 20 years, then I think we are in good shape,” said John Robinson of Minnesota during the group’s early November call.

The change is one advocated by Birny Birnbaum, executive director of the Center for Economic Justice.

“The purpose of the 10-year limitation in the model is to prevent the use of illustrations based upon a short time frame that misrepresents the likely longer-term

“When illustrations get too difficult, with too much math, consumers are more likely to default to the conclusion and just accept it.”

- Mike Yanacheak, Annuity Disclosure Working Group Chairman illustrations, said Richard M. Weber, a former life insurance agent and executive and now a fee-only advisor.

“Regulators need to reopen the whole issue of policy illustrations and apparently they don’t want to,” said Weber, noting the “long battle” that went into the 1995 illustration regulation.

“A lot of energy and resources went into the creation of the illustration regulation,” he said. “That was 23 years ago and since then, there are products that 12

laws 580 and 582 — the Life Insurance Illustrations Model Regulation.

But the group reached general agreement that the overview, while related to illustrations in concept, should be limited to Model 580. On its last call, the group put out a new policy overview with some revisions that would be required in tandem with the buyer’s guide on all life policies.

The group enters December accepting public comment on the revisions.

InsuranceNewsNet Magazine » December 2018

risk-return of the product,” he wrote in an October comment letter. “But it is now clear that 10 years is too short a period of time to capture an economic cycle.”

When illustrations get too difficult, with too much math, consumers are more likely to default to the conclusion and just accept it, Chairman Mike Yanacheak said in agreeing with Birnbaum.

The working group is hoping for approval from its parent committee to continue working on the model.

ILLUSTRATING A WAY FORWARD INFRONT When illustrations get too difficult, with too much math, consumers are more likely to default to the conclusion and just accept it, Yanacheak added.

UL Problems Persist

Part of the reason illustrations are back in the spotlight can be traced to issues with universal life policies sold in the 1970s and 1980s. A September story by The Wall Street Journal highlighted the plight of seniors across the country who are stuck with failing UL policies.

Some say that rosy illustrations from that time period are to blame.

“Policies are either lapsing, or they are reaching maturity with far less value than anticipated,” Weber said.

UL was a very popular product in the 1980s, when interest rates routinely hit double digits. The policies offer a savings account in addition to the life insurance components. Money deposited into the savings portion earned interest to help

and they have less cash value because they’ve been drained of cash value to pay for higher expenses, which is a self-fulfilling negative spiral. There are a lot of issues and I would say the industry has

LIMRA estimates that carriers sold between 2 million and 3 million UL policies during the 1980s and 1990s.

“My focus really is on credibility of an industry that always implicitly had the

“A lot of energy and resources went into the creation of the illustration regulation. That was 23 years ago and since then, there are products that weren’t even contemplated, specifically no-lapse guarantees and indexed contracts.”

- Richard M. Weber, Fee-Only Advisor pay future costs while keeping premiums down.

And everything was all good until interest rates plummeted below 4 percent following the 2008 financial crisis.

Furthermore, many UL policies permitted customers to pay lower payments, or skip a payment altogether, and borrow against the savings account.

Now some policyholders in their 80s and 90s are facing steep premium bills.

Their only alternative is to surrender a prime retirement plan asset and be left with nothing to show for years of paying premiums.

“It’s a significant problem for seniors,” Weber said. “These policies are weaker

not responded in a responsible way.”

From the insurer standpoint, everything was done by the book. Illustrations routinely showed customers fat returns of 11-12 percent, but interest rates matched those numbers during the 1980s.

While companies also showed and disclosed worst-case scenarios, customers either didn’t pay attention or didn’t understand.

Industry veteran Kim O’Brien asked the NAIC to intervene during a recent conference call. Iowa Insurance Commissioner Doug Ommen, who was chairing the Life and Annuities Committee call, agreed to meet with O’Brien to discuss the issues.

trust of its customer base,” Weber said.

“The credibility of a life insurance company is really, really important.”

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

Like this article or any other?

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

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December 2018 » InsuranceNewsNet Magazine

13

SPECIAL COVERAGE

InsuranceNewsNet Publisher Paul Feldman opens Super Conference 2018.

Super Conference 2018: Inspiring Attendees To Ignite Growth If you didn’t attend this year’s event, here is what you missed.

By Susan Rupe

H

ow do you propel your practice to explosive growth? Those who attended the InsuranceNewsNet 2018 Super Conference came away with all the tools they need to ignite their business.

InsuranceNewsNet’s second annual Super Conference brought advisors to suburban Chicago to get the secrets of success from some of the biggest motivators.

Finding Retirement Alpha

“Your clients are retiring miserable,” said retirement coach Tom Hegna at 14

the conference.

“Assets will make your clients miserable in retirement,” he said. “The only thing that would make them happy? A guaranteed income.”

Hegna built a career on crafting successful retirement plans. He described how to find that magic formula that allows clients to indulge in the retirement good life while setting aside enough income to carry them through.

Hint: annuities are a big part of Hegna’s plan.

After decades with major life insurance companies such as New York Life and MetLife, Hegna turned full time to speaking and writing about how to ensure fulfilling retirements. He has written several books, including Paychecks and Playchecks and Don’t Worry, Retire Happy!

InsuranceNewsNet Magazine » December 2018

Hegna’s approach is about bringing “retirement alpha” to clients. Alpha is a measurement of outperformance that the fund manager brings.

A 75-year-old couple can still find retirement alpha in the form of life insurance and annuities, Hegna explained.

Investing in life insurance and annuities enables these retirees to spend their money without worrying about outliving their funds or being unable to leave a legacy for their children.

A Relentless Drive For Success

Grant Cardone does not lack energy.

And he does not want for success.

Ask Cardone why he is successful — he owns about 5,000 apartments, has written seven books, and advises major companies such as Ford and Aflac on sales strategy — and he will say it is all

INSPIRING ATTENDEES TO IGNITE GROWTH SPECIAL COVERAGE

Tom Hegna

about thinking big.

One of Cardone’s notable books is The 10X Rule: The Only Difference Between Success and Failure.

In it, he lays out his ideas and principles for “extreme success.” Cardone has spent much of his life studying what super-successful people do to achieve that level of accomplishment.

Success doesn’t mean having money, Cardone said. Successful people seek freedom instead of money.

In addition, he said, successful people spend time connecting with others and focusing on marketing instead of sales.

“It’s easier to make $100 million than

Stephen M.R. Covey

$1 million. It’s all about your target. If you aim low, you get low,” he said.

It’s All A Matter Of Trust

Markets run on trust and there’s a bit of a trust deficit in financial services.

That was the word from Stephen M.R. Covey, who spoke on the topic of trust and its importance in attracting and keeping clients.

Covey is the son of the legendary Stephen R. Covey, who wrote The 7 Habits Of Highly Effective People, the groundbreaking book that became essential reading for anybody wanting a more productive life.

Stephen M.R. Covey became CEO of his father’s company, Covey Leadership Center, and he doubled its sales within three years. He then orchestrated the merger to create FranklinCovey.

There are a few ways Covey recommends establishing trust. For starters, show character and competence.

“The first step is to declare your intent.

Tell them not only what you want to do, tell them why,” Covey explained.

“Always give the why behind the what.

Sometimes people give the what but they often don’t give the why. The why gives meaning. The why gives context. The why can change everything. So give the why.”

Grant Cardone

December 2018 » InsuranceNewsNet Magazine

15

SPECIAL COVERAGE INSPIRING ATTENDEES TO IGNITE GROWTH

Patrick Bet-David

From ‘Greenies’ To Sales Stars

Anyone can sell insurance, Patrick BetDavid said. He is out to prove it by creating a 500,000-strong sales force within 10 years. And most of them will have little experience selling insurance.

Bet-David shared his approach to selling at the Super Conference. Bet-David would rather work with a clean slate than deal with salespeople full of war stories from other jobs. He calls non-sales candidates “greenies.”

“I would much rather bring in greenies because I can direct them with the culture that we have and that gets them to move at the speed that we’re growing

versus having any hiccups,” he said. “So I’m a fan of speed and efficiency. With greenies, we tend to work a lot faster than with people who are not greenies.”

Born in Iran, Bet-David served in the U.S. Army before starting a career in financial services one day before 9/11. He is a proud capitalist whose strategy includes turning people with no experience into successful agents.

“In our company, we’re 54 percent women,” he said. “It’s intentional. Women can challenge both men and women on a sales call. Men can only challenge men. Our No. 1 earner in our company is a woman.

We’re 51 percent Hispanic or Latino.”

Finding Motivation, Deflecting Rejection

Every sales professional faces rejection.

Dan Seidman teaches these professionals how to deflect it and turn it into success.

“How are we distinguishing ourselves?”

Seidman asked during the opening session. “How are we getting appointments we’re not supposed to get?”

Seidman challenged attendees not to give up on buyers who are hiding. He described the time he called a prospect 47 times before she agreed to meet with him. Sometimes a little creativity can close a sale and match a reluctant consumer with a needed insurance product.

Dan Seidman

Terri Sjodin

16

InsuranceNewsNet Magazine » December 2018

INSPIRING ATTENDEES TO IGNITE GROWTH SPECIAL COVERAGE your efforts,” Sjodin explained. “That includes research, due diligence and sweat equity. It helps you to channel these efforts in the most productive directions, and it’s the tactical planning necessary to achieve a specific goal.”

If you can take that determination and effort and combine it with creative ideas, then you have something, she added.

InsuranceNewsNet Publisher Paul Feldman closes the Super Conference with a challenge for attendees to take what they learned and kick butt.

“If an alien came down and he was collecting specimens of great sales producers, would he pick you?” Seidman asked attendees.

Get ‘Scrappy’

Marketing maven Terri Sjodin is a big advocate for getting “scrappy” if that’s what it takes to find success.

In fact, she titled her recent book Scrappy: A Little Book About Choosing To Play Big. Sjodin is the principal and founder of Sjodin Communications, a

sales training and consulting firm in Newport Beach, Calif.

“Most people are pretty happy, so why do they need to get scrappy? Some people get scrappy because they want to get a new client,” she said. “Sometimes they just want to earn the right to be heard.

Sometimes they’re trying to get a promotion.

“Usually, people have had enough irritation to want to break out of where they were.”

“A scrappy strategy encompasses all of

Susan Rupe is managing editor for Insurance N ewsN et .

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

Watch InsuranceNewsNet Super Conference 2018: On-Demand Online! Visit www.INNmb.com/ ISCVOD to find out how you can stream it instantly.

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www.GrowLifeInsuranceSales.com December 2018 » InsuranceNewsNet Magazine

17

INTERVIEW

R U O Y Y WH

R T A ELEV

H C T I P

S K N I T S how s n i a l p x e y a r e Michel N questions are better provocative r pitches than elevato

18

InsuranceNewsNet Magazine Âť December 2018

E

ven you probably don’t want to meet an insurance agent at a social function.

You’re at a chamber of commerce event, chatting with someone and you ask what they do.

Then, there it is: “I help families keep their family business in their families.”

You know what’s going on and you are probably imagining what it’s like for someone not familiar with life insurance. At the end of a bunch of questions, it finally dawns on that person, “Oh, you’re a life insurance agent” and suddenly that person realizes how late it is getting and they really should be getting home.

It’s the dreaded elevator pitch and it has stunk up more elevators than burritos have.

Do you remember when you used that practiced value/benefit statement line and saw the blood drain out of the other person’s face?

You probably do and that insight is an example of what sales trainer Michel Neray says can save your opening line from becoming a smelly old elevator pitch. It is the provocative question.

Neray has helped more than 1,000 clients, and many thousands more who have attended his talks, understand how to open conversations and how to tell stories. Neray is also the co-author of the book The Great Crossover: Personal Confidence In The Age Of The Microchip.

In this conversation with Publisher Paul Feldman, Neray explains how to find the right provocative questions.

FELDMAN: You say that elevator pitches don’t work and they’ll never work. Why is that?

NERAY: Elevator pitches drive me crazy because it was one of those things that maybe was a good idea 40 or 50 years ago, but no longer works today.

People can smell an elevator pitch a mile away. It tries to be all things to all people. It’s a standard phrase that you would use over and over again regardless of who’s stuck in the elevator with you. And an elevator pitch basically communicates sales pitch.

But we do need something that we could use to quickly communicate what we do and how we do it and what makes us different and why you should listen to us or give us a call or accept our business card.

The problem with elevator pitches is that they are one size fits all. As a result, you have no choice but to construct a phrase that is very high-level and very generalized, which is exactly the opposite of unique and differentiated.

So in order to explain the next point, I would have to explain another concept that I’ve developed. It’s a very, very simple concept that’s incredibly powerful in explaining what we should say and what people are interested in. I categorize my audiences, my listeners, my prospects, basically into two categories.

Category one is the people who are not familiar with your industry — they’re not educated buyers. And category two are the educated buyers.

This is an exercise that I use at the beginning of almost all of my workshops.

WHY YOUR ELEVATOR PITCH STINKS INTERVIEW

Address The Stereotype Head-On You know how as soon as people discover you’re an insurance agent or financial advisor, they immediately form an impression about you that’s based on a stereotype?

Unfortunately, that stereotype is often negative.

For professions such as life insurance agents or used car dealers, where the negative stereotypes run strong and deep, I recommend you address the stereotype head-on: “If I tell you I’m a used car salesman, you’d probably think ‘plaid jacket guy who sells lemons to unsuspecting customers’, right?”

Pausing here is important, because you want to give the listener time to move the image of the stereotype from the unconscious part of their brain to the conscious part. They might even want to chime in and give you their negative experience about dealing with “people like you.”

Perfect — now their guard is down. Now you can continue on to explain how your business, service or approach “fixes” the problem that everyone else in your industry has created.

That’s your most compelling differentiator.

Stop selling and start having real conversations.

Simple as it may seem, everything truly does start with a conversation. You’re not trying to tell your entire story, nor are you even trying to get the most important points out of your mouth first.

All you want to accomplish is to elicit interest from the other person; to have that person say, “tell me more.”

So don’t think of these as sales techniques – think of them as conversation starters. The rest is up to you. If you are genuinely interested in helping the person you’re chatting with, chances are better than excellent you’ll finish with a referral or a sale.

Now go out and have some conversations!

– Michel Neray

December 2018 » InsuranceNewsNet Magazine

19

INTERVIEW WHY YOUR ELEVATOR PITCH STINKS Imagine that you are being called in by a prospect.

You’re sitting at the prospect’s desk, and the prospect says, “Why should I buy from you?” You list all of the reasons why.

Most of the time when I do this exercise, people will list all of the high-level reasons for their industry, for the category. For example, in the case of insurance, how insurance could help you.

In a workshop setting, I get people to list all of these things on the left-hand column and then I ask them, “Now let’s repeat this experiment. And we’re going to do it again, except in this case we’re going to do a little twist. The twist is as follows. You’re going to go into the person’s office, but in this case it’s 11:59.

It’s just before lunch and they’ve already seen five people with your exact same title or role or business card that morning.

Now look at your list and ask yourself if the five people before you would’ve said similar things.”

And at this point in the workshop I usually see people put their elbows on their desks and their hands on their

The best provocative question pinpoints a problem or a symptom of a problem that the other person has. However, don’t get trapped into thinking that the problem has to be a big, generic problem that the category as a whole solves. It can be a small but nagging problem, or even one that people have when they deal with your competitors.

Many people have a hard time coming up with provocative questions because, ironically, the most compelling ones are also the simplest and most obvious. foreheads, because they realize they’ve been using the same arguments as everybody else in working with customers.

I’m not saying those are not important.

That column on the left, I call them category challenges. These are things that, if you don’t do these things, you have no right calling yourself an insurance broker or whatever it is that you do in your industry.

Now you’d better do those things.

That’s why you’re in the field. But everybody in the industry should do that. And

if you’re talking to somebody who is unfamiliar with your industry, then that’s exactly where you want to start.

However, if you’re speaking to somebody who is what I call an educated buyer — and if they’ve called you in, they’re probably an educated buyer — then they know all that stuff.

So back to your question of why I hate elevator pitches and why they drive me crazy is because most elevator pitches are focused on the left-hand column, the category challenges.

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InsuranceNewsNet Magazine » December 2018

WHY YOUR ELEVATOR PITCH STINKS INTERVIEW But to do that one-size-fits-all, you’re trying to shove 30 to 50 words down somebody’s throat in as little time as possible. It’s no wonder they get their back up. It’s no wonder that they can’t even focus on what you’re saying.

They’re just thinking in the back of their minds, “Sales pitch, sales pitch, they’re just giving me a sales pitch. That’s an elevator pitch. I know what that is. I’m not even listening to what they’re saying.”

FELDMAN: I was in a bar and this guy introduced himself. I asked him what he did, and he said to me, “I help small business owners save money on taxes.” Well, as soon as he said that, I knew he was an insurance agent.

NERAY: Yes. And all of the financial services companies have shot themselves in the foot over the past 50 years. Because they’ve known they’ve had this challenge of how do we get people interested in what we do? And that’s a genuine challenge.

The way they’ve tried to solve or overcome that challenge is by training their

people to do all these techniques that we’ve now come to realize are just not truthful. What was going on in the back of your mind, Paul, when this person said this?

FELDMAN: Well …

NERAY: “They’re not being straight with me,” right?

FELDMAN: Exactly.

NERAY: Funny enough, the insurance broker that I deal with says, “When people ask me what I do, I say that I sell insurance. And it’s amazing how many times the response I get is, ‘Oh, yeah, I need that. Let’s talk.’”

FELDMAN: But there’s also the opposite where they’ve heard, “I already have all my insurance taken care of.”

NERAY: Yes, that’s true. And that goes back to one size does not fit all.

We need something short. Let’s agree

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with that. We need something short to quickly establish a potential fit, create rapport and do all that stuff.

The way that I teach people to do it is, “Do not be drawn into a response.” You don’t have to say what you do. Instead, you can ask a question.

And it’s really hard to do, because when somebody asks a question, it’s a natural response to answer. So we need something to answer. But what I teach people to do is to replace the elevator pitch with what I call a provocative question.

Everything we’ve been talking about is interrelated — whether it’s storytelling, elevator pitches or skepticism or sales telepathy.

The definition of a provocative question is, what question can I ask that the response allows me to say, “Well, that’s what I do”?

FELDMAN: How do you find the question that will lead to that statement?

NERAY: This requires you to have done the work ahead of time in the sales

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December 2018 » InsuranceNewsNet Magazine

21

INTERVIEW WHY YOUR ELEVATOR PITCH STINKS telepathy process. That is to understand what it is that you do that’s different, that’s unique and why you do it.

I’ll give you two examples. One example is my own. I talked to you about how I realized I had this gift of helping other people discover their unique differentiation, but I was not even aware of it. [Refer to “How Stories Are Better Than Sex” in the November issue.]

I also understand that for most people, their differentiation is obscure for them. It’s hard for them to even know what it is, at that specific level. I also know that the challenge surfaces in places like networking events. Also in places like in sales calls, where they’re often uncomfortable or unsure of the best way to describe what it is that they do. They’ve learned the elevator pitch, but they know it doesn’t work.

So I have a series of questions. And I would love advisors to have a library of key questions.

After people ask, “What do you do?” I say, “Let me ask you a question. When you go to a networking event, how comfortable and confident are you in the way you describe what it is that you do?”

And that engages the listener’s mind. That’s an NLP [neuro-linguistic programming] thing. We are hardwired to answer questions. It makes people think.

So, in their minds they go back to the last time they were at a networking event and they say, “You know what?

I probably spoke for too long. I probably didn’t make my value clear.”

And I will say, “That’s what I do. I actually work with people to help them clarify and home in on their unique point of difference and their greatest value and articulate it in a way that’s compelling so that when you’re asked in a situation such as a networking event or a sales call, you know exactly how to position yourself more confidently and more clearly.” Then I’ll get the response, “Oh, yeah, wow, I sure can use that.” Or not. Sometimes I’ll get, “Oh, yeah, I’m totally confident with the way that I respond to that question,” and I say, “Well, what is it? I’d love to hear it, because maybe I could learn.”

Then nine times out of 10, I dig a little deeper and they’re really not confident. They give me an elevator pitch and I say, “Oh, yeah, that’s an elevator pitch. How often does that work?” They say, “Well, it works sometimes.”

That still allows me to say, “That’s what I do. I help people clarify and hone in on their greatest value and their unique differentiation, so that when they’re in situations like this, they have something to say. But I have to tell you, it’s not an elevator pitch. It’s an alternative to an elevator pitch. Let me explain to you why I believe elevator pitches don’t work.” Now we’re in a conversation.

I’m not selling them. I’m not pushing anything on them. It’s an interactive, two-way thing. It’s not, how many words can I get down their throats in 30 seconds?

It’s a conversation where they can ask me questions based on what they are interested in that’s related to what I do.

That’s far more powerful than an elevator pitch.

22

InsuranceNewsNet Magazine » December 2018

The LevelSetting Statement If you’re a financial advisor, consultant or in any other crowded profession where your prospects are very familiar with — perhaps even jaded about — the kind of work you do, this one’s for you.

The ‘level-setting statement’ is a universal statement that gets the other person nodding in agreement and then, WHAMMO! your point of difference hits them like a ton of bricks.

This is a powerful technique because you can only be different in comparison to something else.

That’s what the level-setting statement does — it establishes what that something else is.

Here’s just one example from an event planner who is a member of the coaching group I run for independent professionals: “There are five specific areas of expertise that are absolutely critical in major event planning. (Pause – and wait to see if the other person wants to know what they are.) While there are a lot of excellent event planners who can do a good job in one or two of them, it’s extremely unlikely that any one event planner would be an expert in all of them.

Because I’ve been in the business for 15 years — on both the corporate as well as on the vendor side — I’ve developed a detailed planning process around each and every one. That’s what enables me to track and manage the myriad of details to guarantee a successful event.”

By stating the level-setting statement up front, you educate the other person about the industry you operate in, and establish a frame of reference that gives meaning to the differentiation you want to communicate.

You can use this approach to challenge an underlying assumption that people have about the industry, to illustrate a small but significant problem that generally annoys customers when dealing with your competitors, or anything else that allows you to highlight your solution.

Take a look at your own point of difference. Can you come up with a level-setting statement that will help you stand out even more?

– Michel Neray

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Consumer Confidence Hits 14-Year High American confidence in the U.S. economy is

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Fifty-four percent of survey respondents said economic conditions were “excellent” or “good,” while only 12 percent said they were “poor.”

Fifty-seven percent said the economy is getting better rather than worse. That puts the Gallup Economic Confidence Index at plus 33, tying the level it hit in January 2004. The last time the index was higher was in November 2000, around the end of the dot-com boom, when it hit plus 39. The record high for the index is plus 56, from January 2000.

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“[The bull market] could last to 2035 or 2038. That’s going to coincide with millennials peaking.

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NEARLY 60% WANT TO KEEP ACA

Nearly 60 percent of likely voters across the nation want the Affordable Care Act to remain in place, according to a Reuters/Ipsos poll.

The ACA’s protection for those with pre-existing medical conditions is especially attractive to voters, with 80 percent of those polled saying they favor keeping that protection in place.

Despite the love shown for the ACA, poll respondents weren’t happy with the U.S. health care system. About 52 percent said they view the health care system as “poor” or “terrible.”

DID YOU

KNOW

?

26

December is the month when hopeful high school seniors receive their early decision notices from their dream colleges.

Then comes the fun part — figuring out how to pay for it.

Family income and savings covered nearly half (47 percent) of all college expenses last year, according to Sallie Mae’s annual study. The average amount spent on college in 2017-18 was $26,458.

Although the growing student loan debt has attracted national attention in recent years, the study found that loans covered only about one-quarter (24 percent) of college costs. Nearly half of college costs, 47 percent, were paid out of pocket from parents’ and students’ income and savings. Scholarships and grants paid 28 percent of college costs, and extended family

Tax es

nt emeg r i t e r en din sp

YELLEN: U.S. DEBT PATH ‘UNSUSTAINABLE’

If former Federal Reserve Chair Janet Yellen had a magic wand, what would she do with it? She would raise taxes and cut retirement spending.

Speaking at a Charles Schwab Impact Conference, Yellen warned the rising federal deficit is “unsustainable.” She added the situation will be worse as more baby boomers retire and spending on retirement and health care programs keeps rising.

Yellen also has the U.S. trade war with China on her radar screen. The former Fed chair said she worries about the “role of the U.S. economy” as the U.S. and China impose tariffs on each other’s products.

74 is the average age at which Americans consider someone to be “old.” Source: TD Ameritrade

InsuranceNewsNet Magazine » December 2018

(all 74 years old.. .)

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JOIN US IN OUR SEARCH FOR THE “ONE” We’ve surveyed the industry to find ONE IMO, carrier, individual, technology/platform and product that is disrupting the status quo and shaping the future of the insurance industry.

INSIDE New Industry X-factor Breaks Retirement Planning Mold with Chris Conroy and Rhonda Elming of North American Company for Life and Health Insurance PAGE 28 Answering the Call to Serve the Underserved with Brian Bulakites of Pacific Life PAGE 30

This is How the Cookie Crumbles with Steve Craig of Impact Partnership PAGE 32 Vitech® Taking Lead in Modernizing Insurance Admin Software with Frank Vitiello and Michael Aronow of Vitech Systems Group PAGE 34

2018 Movers & Shakers • Special Sponsored Section

New Industry X-factor Breaks Retirement Planning Mold

North American Strategic Design Annuity X Doubles Up Growth Potential

U

nlike most fixed index annuity (FIA) products offering a linear approach with level payout or standard increasing payout, Strategic Design Annuity XSM (SDA X) offers a personalized income plan with flexibility to help manage life’s surprises — including one of the richest penalty-withdrawal features in the industry.

It’s the latest innovative entry from North American Company for Life and Health Insurance.

“We built the SDA X as a first-of-its kind liquidity solution,” said Chris Conroy, head of annuity sales. “It’s designed to complement Chris Conroy many savers’ overall retirement plans.”

He added that the dynamic income product provides “a unique means to access money when clients need it most.”

Flexibility that grows

One of the most exciting features of the embedded benefits rider1 on SDA X FIA is its flexibility. Most FIAs allow clients to withdraw a portion of their premium without penalty each year. With SDA X, that annual penalty-free withdrawal percentage starts at 10 percent after the first contract anniversary, but it can grow as large as 32 percent.2 “The withdrawal provision on Strategic Design Annuity X is unique in that the maximum amount available for withdrawal without penalty increases by contract year and is locked in at the time the first withdrawal is taken,” said Rhonda Elming, senior vice president, product development. “That gives policyholders a lot of flexibility to personalize their policy benefits to help meet their individual needs.”

Plus, SDA X offers a doubled-up growth opportunity with a guaranteed lifetime withdrawal benefit (GLWB) value roll-up of 200 Rhonda Elming percent of interest credited — boosting competitive growth potential. During the roll-up period, the GLWB value grows at double the weighted average rate of interest credited to fixed and/or indexed accounts (based on account allocations at the beginning of the contract year).

Flexibility to deal with the unexpected

In addition, outliving income in retirement has become a concern for many retiring consumers. The SDA X can help improve confidence by providing income your client can’t outlive or providing for the possibility of increasing payments over time.

The lifetime payment amount can be doubled for up to five years of payments when a covered person is unable to perform two out of six activities of daily living.3 Once lifetime payments are available, they can be started or stopped at any time.

“This product feature can help provide peace of mind to a consumer who is concerned about common issues in retirement,” said Elming, “for example, funding potential future health care needs.”

Downturn protection

Give your client the potential for positive growth in times of negative index performance with the all-new Inverse Edge Trigger crediting strategy.4 It was designed to provide credited interest when its index loses value — the bigger the loss, the bigger the potential credit.

“If the decline in the index exceeds a threshold amount, the interest credited is higher than if the decline in the index is less than the threshold amount,” said Elming. “Given the current economic environment, we think policyholders will appreciate the ability to allocate a portion of their premium to a strategy that credits interest in the event the index goes down.”

Unique to this strategy, a larger index loss could result in a larger declared performance rate and therefore a larger credit.

(On the flip side, if the index grows, those periods will result in 0 percent credited to the account.) And as always in a fixed index annuity, the accumulation value can never lose value due to market downturns.

“SDA X is dynamic,” said Conroy. “It allows customers a way to couple their liquidity needs as the rest of the retirement asset value may be fluctuating.”

Features are crafted with the annuity marketplace in mind.

“We specifically designed SDA X from feedback from our distributors, who were demanding more liquidity flexibility,” Conroy said. “SDA X delivers on that market demand. It truly is the industry X-factor.”

Visit IndustryXFactor.com to download your free SDA X starter guide.

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

Contract numbers: Strategic Design AnnuitySM X Fixed index annuities are not a direct investment in the stock market. They are long-term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from your accumulation value for additional optional benefit riders could under certain scenarios exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients.

1. The embedded benefits rider is automatically included for a 0.95 percent annual fee. The charge is calculated by multiplying the rider charge percentage by the GLWB value on each contract anniversary. This amount will be taken from your contract’s accumulation value on each contract anniversary as long as the rider is in effect.

2. 32 percent is based on the first year of withdrawal being in Year 8 or after.

3. For full ADL definitions, please refer to the product disclosure.

4. Additional crediting method options are also available.

717.441.9357

28406Z | PRT 11-18

|

www.InsuranceNewsNetMagazine.com

Strategic Design Annuity SM

THE INDUSTRY X-FACTOR

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

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

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

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

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

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

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

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

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

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

28375Z | PRT 11-18

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

2018 Movers & Shakers • Special Sponsored Section

Answering the Call to Serve the Underserved Expansion into the broad market can be good business for everyone

P

rotecting families is Pacific Life’s business. And according to Brian Bulakites, national sales manager for their broad market channel, Pacific Life was missing out on one of the industry’s most underserved markets. That’s why they recently expanded their distribution to reach this key segment in groundbreaking ways. This means Brian Bulakites offering financial professionals* affordable products and a cost-effective way to access this $3.7 billion market1 and the steady revenue it can provide. It also means being an ally — not just a carrier — to its financial professionals. But most important, Bulakites explains, Pacific Life offers the opportunity to represent not only a product but also something more meaningful for them and their clients — trust and confidence in their insurance company to deliver on their promises at those moments of truth.

Pacific Life acquired the new business platform from a long-standing leader in the broad market. Discuss what this acquisition means to Pacific Life and the diversification of the business.

Historically, Pacific Life has been an industry leader in the affluent market, with accumulation-focused life insurance products as well as quality asset-based, long-term care solutions. With the acquisition of the Lynchburg platform, we are expanding into the broad market channel, offering solutions focused on meeting the specific needs of the broad market consumer — affordable death benefit protection-based products. The Lynchburg acquisition diversifies our overall distribution footprint, sales mix, and business and operational results. And, most important, it allows us to expand into the vastly underinsured broad market, which is in desperate need of quality protection products.

Why has Pacific Life elected to make this market a priority?

This is a market segment that’s in crisis. More than one third (35 percent) of U.S. households would feel adverse financial impacts within one month if a primary income earner died.2 This is especially true at younger ages (married couples age

45 or younger with children) who are settling for “several months” of life insurance protection instead of “several years.” Approximately 37.5 million U.S. households currently have no life insurance coverage.3 Of those who do own life insurance, 48 percent recognize that they need more — with an average gap in coverage need of $200,000 per U.S. household — representing a $12 trillion market opportunity.3 We feel this lack of adequate coverage presents a significant financial risk to the consumer broad market, characterized by U.S. households with incomes of $50,000 to $250,000.

What is Pacific Life doing differently to meet the needs of the broad market?

We have developed solutions specifically for this market that offer simple products with lower minimum coverage amounts and competitive pricing, especially when paying monthly.

Our products are primarily protection-focused products with underlying guarantees to ensure predictability of premiums.

In addition, our consistent, predictable underwriting means no surprises, even with fluidless underwriting that offers clear qualification criteria and no surprise knock outs.

Pacific Life’s leading-edge digital capabilities can help financial professionals deliver the best possible service to their clients. For example, our ePolicy platform enables clients to electronically complete and submit outstanding forms, eliminating the work from the distributor while keeping them updated through status feeds. Our application upload feature bypasses labor-intensive data entry and delivers faster cycle times. In addition, we’ve built in flags for our underwriters to use when assessing the potential opportunity for an upsell, for distributors who continually look to offer upsell opportunities to their clients.

Our technology team is eager to explore opportunities to work closely with distributors, allowing us to be a true extension of the broker general agent (BGA) office and further streamline the process to issue a life insurance policy.

Being a mutual company puts Pacific Life in a unique position in this middle market space.

Talk about how that position has shaped your core philosophy.

There are two kinds of insurance companies: mutual and stock life insurance companies. There are a lot of great stock

*In order to sell life insurance, a financial professional must be a properly licensed and appointed life insurance producer.

1. “Mass Affluent Market: Financial Product Ownership,” LIMRA, June 2016 2. LIMRA’s 2018 Insurance Barometer Study, April 2018.

3. LIMRA’s Life Insurance Ownership in Focus, U.S. Household Trends, 2016 LIMRA Ownership Study, Sept. 2016.

2018 Movers & Shakers • Special Sponsored Section

and service model. Pacific Life has taken a focused approach and created different business segments that focus solely on either the affluent or the broad market. This helps ensure the products, solutions and service models meet the needs of distributors and consumers in each market. It also lets our sales teams focus on positioning the offerings for their unique markets.

What advantages do the independent financial professional and the BGA enjoy by being part of Pacific Life?

companies out there. But stock companies tend to exist for the benefit of their shareholders. A mutual life insurance company like Pacific Life exists for the benefit of our policyowners, and that can be a meaningful difference for the financial professional and consumer.

We’re proud that Pacific Life is celebrating its 150th anniversary this year as a mutual life insurance company. And, above all else, our goal is to do good business. We’re always thinking about the decisions we make; the products we put on the street; how we price them; and how our insureds, policyowners, producers and distributors are impacted by our decisions.

We have a highly recognizable and well-respected brand within our industry. We’ve made a significant commitment to expanding our distribution via the independent BGA life brokerage channel through the acquisition of the Lynchburg life platform. We’re building a comprehensive product portfolio as well as bringing leading-edge technology platforms to the marketplace, allowing the financial professional to acquire broad market clients in an efficient and cost-effective manner.

Financial professionals and distributors can be proud to represent our company because we have a unique value proposition that will resonate within the marketplace and with the consumer. We’re a quality company that, for the past 150 years, has always acted in the best interest of our policyowners, our insureds and our distributors.

Want to learn how Pacific Life’s broad market channel can work for you and your BGA? Call 855.538.6445, option 3.

Why is this market space — and your philosophy about how to approach it — exciting for the independent financial professional and the BGA? Most carriers try to serve both the affluent and broad markets through a single sales team, product portfolio

This article is intended for Financial Professional Use Only. If you are not a Financial Professional, please visit our public website @www.pacificlife.com.

Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued

by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance products and their guarantees, including optional benefits and any crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the broker-dealer, insurance agency, or their affiliates from which products are purchased. Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company.

Life insurance is subject to underwriting and approval of the application and will incur monthly policy charges.

InsuranceNewsNet is not affiliated with Pacific Life.

This article is distributed through Pacific Life, Lynchburg, VA (844) 276-5759.

Pacific Life’s home office is located in Newport Beach, CA. 18-324

2018 Movers & Shakers • Special Sponsored Section

THIS is how the cookie crumbles Cookie-cutter strategies are out. Industry innovation is in.

Partnering with carriers is an important part of your business. Why are these partnerships critical?

None of us are in business without insurance companies.

Early in my career, I worked closely with a number of insurance companies, which helped me understand their dynamics and critical success factors. At the end of the day, it’s important that everybody succeeds. For something to work, it has to work great for everybody — the insurance companies we partner with, our advisors, the end consumer. We all need each other to do well in order to succeed.

I

mpact Partnership CEO Steve Craig is revolutionizing what it means to be an advisor in today’s high-impact, media-rich world. Instead of relying on the cookie-cutter tactics of old, Craig is turning his advisors — and there are thousands — into local celebrities. Through innovative offerings that target high net worth clients, as well as through future-thinking technological advances, media branding and digital marketing, Impact Partnership’s high-energy culture is shaking up the IMO space and turning out some of the most successful advisors in the business.

Nearly a decade after you started the company, the industry still regards Impact Partnership as a leader in innovation. Explain why.

If there was a primary innovation when we started, it was our level of investment in real value for advisors. For example, instead of just hiring a radio coach, we built 11 state-of-the-art radio studios in our office and provided studio equipment for our advisors to use in their own offices. Then, we invested in a 15-person team of the very best co-hosting, production and media-buying talent. We went a step further and built a million-dollar television studio and hired an outstanding team.

We take that same approach throughout our company. We go the extra mile to take the services we offer and the value we add to advisor practices. We never reinvented the wheel; we built upon what was already there. And we continue to make it better. We are also careful to hire talent from outside the industry. Instead of hiring a team of people who have worked in insurance all their lives, we hire from ad agencies, news networks and radio stations — and all these people bring real experiences and fresh ideas from their fields. It certainly helps to be headquartered in Atlanta, where the talent pool is deep.

Those things really put us at the forefront of everything we do.

How is Impact Partnership advancing technology to stay on top of the latest developments?

Technology is our biggest focus and area of investment. It is going to make our advisors’ and agents’ practices much more profitable. We will be the absolute leader in technology. In 2019, we will roll out a true plug-and-play digital advisor platform. It will create and manage digital leads and drip campaigns with automated video, and it will still manage all forms of more traditional marketing. It will also seamlessly interact with a completely digitized advisor office solution that we are developing.

Discuss how Impact Partnership is using the latest media marketing strategies to help advisors reach key prospects and turn them into clients.

Media marketing is the most powerful way for an advisor to reach prospects. When someone is very successful on radio or television, they’re generating not only a prospect, but also credibility. So when they meet with that prospect, they’re in the best position to become their advisor. There’s nothing more effective than being known as a radio or TV expert.

An additional important, but often overlooked, part of media strategy involves buying the right media. The best stations and time slots have to be negotiated, and our media-buying team makes sure our advisors are in front of the right listeners and viewers. We provide this strategic positioning for our advisors without accepting a commission, which typically gives them an extra 15 percent buying power.

And you can’t mention the latest media-marketing strategies without also talking about digital. It is also media and the current frontier of marketing. We provide digital marketing options as a holistic solution, managing the process from lead to prospect to client.

2018 Movers & Shakers • Special Sponsored Section

Y E A R S O F I N N O VAT I O N What makes Impact Partnership different from your competitors?

We have great people and are genuinely passionate about helping our advisors be successful.

One thing I hear every time an advisor or insurance company partner comes into our office is that they’re blown away by the energy and enthusiasm of the entire team. That’s difficult to communicate without experiencing it, but it’s very real.

Why do you think Impact Partnership continues to be a top performer year after year?

We continue to be top-performing because we do the same things today that we did the year we began the company — we go the extra mile to add value to our advisors.

We don’t have to change our formula or our business model every year because what we’re doing now and what we’ve always done really works. We make updates, of course, but the core of our business has remained the same from day one: We’re investing heavily in our advisors’ success, we’re hiring the best talent in the world and we really care about what we’re doing.

The innovation doesn’t stop here. Download your free guide, “The Advisor of the Future: How to Use Technology to Accelerate Your Practice,” by visiting AdvisorOfTheFuture.com or call 844.346.6614 for more information.

APRIL Opened for business in Atlanta, GA OCT Partnered with Fox Business MAY Chosen as one of only four businesses to offer Security Benefit Life products APRIL First in-house radio studio constructed OCT Partnered with Fortune AUG First NYC radio summit & launch of radio program JAN Partnered with Money MAY Opened additional in-house radio & TV studios Passed $1 billion in annuity premium in a calendar year AUG Named one of the country’s fastest-growing businesses by Inc. NOV Unveiled digital marketing program APRIL Partnered with CNN Money

SEPT Received four MarCom Awards for graphic design/copy

JAN Partnered with Forbes MAY Launched Lincoln Impact Advantage

2018 Movers & Shakers • Special Sponsored Section

Vitech® Taking Lead in Modernizing Insurance Admin Software V3® platform consistently delivers on mission-critical projects to support growth of group products

G

roup health care benefits have become largely homogenous, thanks to the Affordable Care Act (ACA). Employers are asking their brokers to think outside the health insurance box for group benefits solutions that continue to attract and retain talent While brokers have been anxious to respond with innovative voluntary products, most carriers are racing to establish capabilities to support these new needs. In the eight years since ACA implementation, carriers have been struggling with product development to head off competitors. Most are finding that they also need to adopt nimble systems that support administration of these products — from sales and billing to enrollment and claims processing.

“Ancillary products are hot in the market today with employers and consumers. Because it was a sleepy product group for so long, carriers’ admin systems ossified and weren’t Frank Vitiello upgraded. The old systems simply won’t support new ancillary product launches,” says Frank Vitiello, Vitech Systems Group (Vitech) CEO and founder.

“Beyond launching a new product, you need the ability to make changes quickly in response to what’s selling or not.

The systems behind your product need to be able to adapt quickly, whether it’s changing product features or responding to the complexity of state variations,” Vitiello adds.

With carriers looking for reliable, experienced technology companies to craft solutions to support products — group and others — that meet market needs, it’s no wonder New

vice president. “Our experience with software that’s needed to support benefits payouts, retirement calculations, eligibility and other requirements helped our V3 platform take off in the insurance space.”

In order to meet current demands for group benefits and other products, insurance carriers need logic and capabilities similar to those of Vitech’s early pension clients.

“Vitech has been a great partner, with a robust product and proven implementation process and team,” says Donna Carbell, SVP, Group Benefits, Manulife. “As our Manulife team has partnered with Vitech, we’ve trusted its process, resulting in solid outcomes for both sides. Vitech’s highly skilled and knowledgeable resources have kept our combined teams focused on the MVP and timelines that we need to achieve together.”

Vitiello notes that clients are seeking an organization that unMichael Aronow derstands and can address the complexities of group and group voluntary insurance. Vitech’s software product can handle those needs and is sufficiently mature, user-friendly and robust.

“We have the experience, skills and flexible V3 platform to help carriers deliver new insurance products, make enhancements to existing products, and be more flexible — and faster to market,” says Aronow.

Beyond the extensive experience behind V3 and its suitability for meeting insurance carriers’ needs, the V3 platform is a comprehensive solution that can be used for sales, enrollment, policy administration, billing, claims processing and enterprise workflow. Within each of these categories, functional capabilities run deep.

“Many tech companies that are new to this space are unprepared. They have old technology that cannot support deep functionality, or they simply lack the ability to evolve or configure their software to work within a carrier’s infrastructure,” says Vitiello.

For instance, V3’s sales solutions can fully support the quote-to-case life cycle. Dashboard intelligence, smart work queues and automated escalation allow greater transparency, faster sales and the ability to handle higher volumes with reliable results. Other sales components include reporting and workflow that can fill the sales pipeline more effectively and close new business.

“The old systems simply won’t support new ancillary product launches.”

York-based Vitech is in high demand for its modern, customer-centric V3 software. While the company has been around for more than 30 years, it has experienced exponential growth in the past seven, with its number of employees increasing from 300 to more than 1,000.

“We started in the retirement space, where the software is used by organizations that are responsible for administering public pension, multiemployer union, defined-benefit or defined-contribution type plans,” says Michael Aronow, Vitech

2018 Movers & Shakers • Special Sponsored Section

V3 Platform Delivers • Group and individual processing • Rapid deployment options • Rules-based, straight-through processing

V3 Platform Carrier Benefits • Smart sales, streamlined onboarding • Quck, accurate, flexible enrollment

• Accurate billing and reconciliation

• Flexible, consolidated billing

• Policy portability and direct billing • Efficient, employer-based enrollment

• Customer-centric policy administration

• Employer, employee and broker self-service

• Efficient, accurate claims processing

V3 software is a highly scalable, fault-tolerant and secure SOA solution. It can be installed as a complete suite or as a stand-alone component within a broader enterprise strategy.

Vitech helps carriers with planning and decision-making.

Because the V3 platform is customizable and scalable, the Vitech team helps assess important needs so the software can be tailored. During a high-level design (HLD) “We have the expeprocess, key points like rience, skills and the carrier’s current flexible V3 platform to processes and systems, sales goals, competitive help carriers deliver landscape, three-to-fivenew insurance prodyear vision, and more ucts, make enhanceare assessed in order to support an effective imments to existing products, and be more plementation.

“We help carriers flexible — and faster find the right solutions.

During the HLD proto market.” cess, we work with prospective carriers to understand their pain points and what they’re trying to achieve in the space. We work with them to develop their road map and their vision,” says Aronow.

“Our upfront work with Vitech — the high-level design phase — gave both teams an excellent foundation on which to build. While learnings and plan changes are inevitable, the Vitech team has continuously demonstrated an ability to consume new and adjusted requirements

and, when required, has stepped back and worked with us on new approaches and solutions,” says Carbell.

Vitiello notes that Vitech’s size, girth and institutional experience have made the tech company a great partner for carriers exploring mission-critical insurance administration system changes.

“When a carrier undertakes a massive enterprise transformation project that can last from 12 to 36 months, you want a stable, reliable partner for the duration. We are always ready and willing to do a demo, where we feel Vitech’s strengths are easily recognized and appreciated,” says Vitiello.

To learn more about V3 — Vitech’s award-winning, integrated, contemporary technology platform — or to schedule a demo, visit www.vitechinc.com/contact.

MUDDLED MIDDLE GROUND Negotiations On Conduct Standards Break Down Over Best Interest

By John Hilton

I

daho Insurance Commissioner Dean Cameron made the unusual call for a break before a National Association of Insurance Commissioners group voted on applying best-interest annuity sales rules to in-force policies.

The commissioners and representatives from industry and consumer groups had spent the previous 90 minutes in a fierce debate over the issue. Any middle ground seemed elusive and the good will built over months was evaporating.

Commissioners huddled in small groups around the large Marriott ballroom in Chicago in an October special meeting of the annuity suitability working group. Committee Chairman Cameron joined New York Deputy Superintendent for Life Insurance James Regalbuto in a cordial discussion with representatives from Jackson National.

The 10-minute break became 20, then longer. Finally, Cameron called the meeting back to order and delivered a somber assessment of where the working group was with its difficult task.

The NAIC planned to meet Nov. 15-18 in San Francisco with the goal of presenting a finished annuity sales rule by then.

Actually, the goal had been to complete the work by the NAIC August summer meeting in Boston.

But things had slowed to a crawl. Some compromises had been reached between 36

conservative and liberal factions on the working group, but many other contentious topics had been set aside to be revisited later. The in-force policy issue was one of those topics.

Cameron seemed to recognize the futility of the exercise when he told the group he will give its parent committee an update in San Francisco, but otherwise, the rule might never be finished.

“The work will sort of be left open, but it will provide a framework as a draft the NAIC can use in talks with the SEC, and other states may want to use as they move ahead,” he added quietly.

The NAIC’s attempt to reshape annuity regulation tells the story of where the industry is heading into 2019. Regulators of all stripes are looking at annuity sales and tougher rules are coming — nearly everyone acknowledges this fact.

But while insurers, intermediaries and big producers are able to adapt and roll with the changes, independent agents are left with a lot of questions crucial to their livelihoods.

Will new rules be closer to fiduciary, or strengthened suitability? Will commission-based products survive in some recognizable form? Will

InsuranceNewsNet Magazine » December 2018

the Securities and Exchange Commission supersede state regulators?

Iowa Insurance Commissioner Doug Ommen acknowledged the difficulty establishing a “best-interest” standard that applies fairly, and legally, across the spectrum of agents, brokers and registered representatives.

Idaho Insurance Commissioner Dave Cameron speaks with industry representatives as he tries to save the state insurance commissioners’ effort to craft a best interest sales rule for annuities.

MUDDLED MIDDLE GROUND COVER STORY “When I look at the market that we regulate, I just don’t see that best interest is going to be the answer,” said Ommen, a vocal leader of the conservative faction.

Holistic Planning

It’s one thing for regulators to fumble their way to new rules, fighting turf battles all along the way. But the timing of that movement could not be worse for financial professionals who also need to adapt to the new realities of investing and retirement planning.

The statistics tell a very clear story on where the advice game is heading: » Ten thousand baby boomers reach retirement age every day. » The plan rollover market involved more than $600 billion in assets this year, about three times what it was 15 years ago, according to LIMRA. About half of plan owners discussed their rollover with a financial professional. » Seventy-two percent of Americans say Social Security will not provide enough money in their retirement, a TD Ameritrade survey found.

The days of the insurance agent selling random life insurance policies and annuities to customers he or she might never see again are fading. Momentum is growing for an ongoing advice model that strategizes financial planning over the long term.

Consumers seem to favor that change.

Surveys consistently show that working with an advisor gives consumers greater confidence about their finances and less stress about retirement.

“Financial wellness is about being able to meet one’s financial needs as they evolve throughout a lifetime,” said Kent Sluyter, president of Prudential Annuities.

“The retirement planning model is now adopting this holistic approach — ensuring that retirees don’t simply reach their retirement but can maintain financial security throughout retirement.”

Health care costs are the big unknown in retirement planning. And it is a big reason why advice and holistic planning with a professional are crucial. The specter of long-term care brings the potential to wreck even the best-laid plans.

The annual median cost of care now ranges from $18,720 for adult day care services to $100,375 for a private room in a nursing home, according to the Genworth Cost of Care Survey. Between 2017 and 2018, the cost of assisted living facilities increased the most at 6.7 percent, followed by the cost of a semiprivate room in a nursing home at 4.1 percent.

“The year-over-year cost of any kind of long-term care is rising quickly, with no sign of slowing down,” said Gordon Saunders, Genworth senior brand marketing manager, who manages the Cost of Care Survey. “Increasingly, people and their loved ones are finding that the cost of long-term care services is staggering and often they are unaware of it in advance.”

Bye-Bye Commissions?

The long-expected impact of regulation on advisor compensation revealed itself in 2018. A Cerulli Associates report captured the accelerating trend of declining commissions and increasing fee structures. The report found that by 2019: » 66 percent of advisors will derive their income from asset-based fees, up from 58 percent in 2017. » 23 percent of advisors plan to derive income from commissions, down from 33 percent. » 5 percent of advisors will rely on a fee for a financial plan, up from 4 percent.

Commission-based models have suffered in the face of new regulation, and the popularity of low-cost, commission-free investing and more fee-based product options for advisors.

In short, the industry momentum is all moving toward a fee-based process and advisors are feeling the brunt of it in their compensation.

No one expects commission-based models to disappear. Commissionable products can sometimes be less expensive than fee-based cousins.

But the commission-versus-fee battle has “largely been put to rest,” the Cerulli researchers wrote, and much of the debate seems to have moved on to what kind of fee — AUM, hourly, retainer or menu fees — advisors should charge.

December 2018 » InsuranceNewsNet Magazine

37

2018 At A Glance March 15: The Fifth Circuit Court of Appeals tosses out the Department of Labor fiduciary rule, in a major surprise victory for opponents. The court rules 2-1 for the industry plaintiffs.

April 16: Nationwide revealed plans to set free its 2,000 captive agents and sell through independent agents by July 1, 2020. Based in Columbus, Ohio, Nationwide already distributes products through 10,000 independent agents.

April 18: The Securities and Exchange Commission votes 4-1 to tentatively adopt a package of rules governing brokers giving investment advice. The rules call for a best interest standard and require brokers to eliminate conflicts of interest.

May31-June 1: A National Association of Insurance Commissioners’ working group reaches partial agreement language and definitions of a bestinterest standard for annuity sales.

June 20: The Trump administration finalized plans to let small companies and the self-employed band together to buy health insurance outside of the Affordable Care Act’s rules. This move is aimed at offering coverage to people priced out of the market by the ACA.

June 21: After a lengthy delay, the Fifth Circuit Court of Appeals issues a threesentence mandate that officially kills the DOL fiduciary rule.

2018 At A Glance July 17: New York issues its final best interest rule covering all sales of annuities and life insurance. Considered the toughest state rules in the country, the new rules take effect Aug. 1, 2019.

Aug. 1: The Trump administration finalized a rule that allows health insurers to sell short-term plans that last up to 364 days. The Obama administration limited those plans’ terms to 90 days.

You're welcome !

Sept. 21: The U.S. Department of Health and Human Services issues rules making it easier for consumers to claim a hardship exemption and get out from under the requirement that they carry health insurance.

Sept. 28: Ohio National informs broker-dealers that it will terminate “any and all servicing agreements” on Dec. 12. That means all compensation, specifically trail commissions, stops on that date.

Oct. 22: The Trump administration offers new guidance that would allow states to move their health insurance markets away from the ACA’s rules and regulations. This new policy would make it easier for states to pursue waivers under Section 1332 of the ACA. Oct. 22-23: A second in-person meeting of the NAIC working group attempting to craft an annuity sales model law yields more Cameron agreement, but no final draft. Chairman Dean Cameron says NAIC leadership will determine whether their work continues.

COVER STORY MUDDLED MIDDLE GROUND Very few firms went back to a pure commission model, and not even the final death of the dreaded Department of Labor fiduciary rule slowed the march to fees.

Merrill Lynch had gone completely feebased, but the company said in September it will again accept commission-based

every Main Street in the United States.

Jackson will provide them with commission- and fee-based versions of both its variable and fixed indexed annuities.

“State Farm is big,” said Bob Garofalo, vice president and senior credit analyst with Moody’s Investors Service.

“State Farm is very big.”

Still, although the trend is clearly with fee-based products, those sales are still small. Total annuity sales were $111.3 billion at the midpoint of 2018, 5 percent higher than the first half of 2017, LIMRA reported. Of that, the percentage of feebased sales is in the low single-digits.

On the VA side, 17 consecutive quarters of sales declines finally bottomed out in the first quarter. Second-quarter sales of VAs rose — if ever so slightly — 2 percent to $25.8 billion compared with the year-ago period, LIMRA reported.

Registered index-linked annuities are credited by analysts for spurring the VA rebound. RILAs, which are referred to as structured annuities, tend to be sold without guaranteed living benefits.

They are on track to sell about $10 billion this year, up from $9.2 billion last year.

The outlook for interest rates and regulation improved, which contributed to improved VA sales. However, complex VA products remain on the outs with insurers wary of attracting unwanted attention from regulators, said Todd Giesing, annuity research director for the LIMRA Secure Retirement Institute.

“Despite introducing new products and making changes to enhance their existing products to make them more competitive,” Giesing said, “companies are not having the same success with VAs as they are with fixed annuities.”

The industry momentum is all moving toward a fee-based process and advisors are feeling the brunt of it in their compensation. individual retirement accounts, but not commissioned annuities.

Only fee-based annuities will be allowed, but Merrill Lynch said there was a reason for that. Annuities are complex, and a fee-based advisory platform is the best way to serve advisors who have clients with annuities in their IRAs, the company said.

“Big broker-dealers would rather keep it simple,” and move forward with fee-based advisory platforms, said Danny Sarch, founder and owner of advisor recruiting firm Leitner Sarch Consultants.

New Products Galore

That means plenty of creative new feebased products hit the shelves in 2018.

At Allianz, developing fee-based products that fit various platforms that allow the company to take insurance into the RIA world is “one of our top initiatives,” said Jason Wellmann, senior vice president of life insurance sales.

The company is one of many insurers who are trying to walk a fine line between maintaining their sales bulk through traditional commission annuities, while simultaneously creating new fee-based products to meet the demands of the future.

Jackson National teased how future distribution arrangements might work when its October partnership agreement with State Farm went public. The deal allows Jackson to distribute variable and indexed annuities through State Farm agents beginning in the second half of next year.

State Farm has 19,000 independent contractors fanned out through nearly 38

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

InsuranceNewsNet Magazine » December 2018

MUDDLED MIDDLE GROUND COVER STORY

ACA Not Dead, But Not Quite The Same, Either

By Susan Rupe

P

resident Donald Trump and congressional Republicans have not yet killed the Affordable Care Act, but they certainly have reshaped it.

Nearly two years later, most parts of the law remain in place, although the Trump administration chipped away some of the law’s provisions.

Four of the most significant ACA changes that occurred in 2018 were:

short-term plans that last up to 364 days.

Previously, those plans were limited to 90-day terms.

The plans are usually less expensive, but they often don’t cover the minimum set of benefits such as prescription drugs, mental health or maternity care that ACA plans must cover. These short-term plans can also exclude or limit coverage based on pre-existing medical conditions.

Easier Hardship Exemptions

It is now easier for consumers to claim a hardship exemption that relieves them of Association Health Plans the requirement to have coverage.

Small companies and self-employed Under the new rules, people can apply for individuals are allowed to band together a hardship exemption that excuses them and buy health insurance outside of the from having health insurance if they live in an area where there are no marketplace plans The Trump administration or only one insurer sellannounced that, on average, ing marketplace plans. prices on the Healthcare.gov In addition, people can exchange are 1.5 percent seek a hardship exemplower for 2019 than they were tion if they can’t find an affordable marketplace last year. plan that doesn’t cover ACA’s rules. Such plans are referred to as abortion. Finally, consumers can get out of association health plans and can be sold having coverage if they experience “personacross state lines. al circumstances” that make it difficult for This was the first major change to the them to buy a marketplace plan, including ACA since Congress repealed the indi- not being able to find a plan in their area vidual mandate penalty in the tax cut bill that gives them access to specialty care at the end of 2017. they need.

The Congressional Budget Office estimates that 4 million people, including State Waivers 400,000 who otherwise would go with- Expanding the state waivers under Section out insurance, are expected to join asso- 1332 would allow states to move their ciation health care plans by 2023. health insurance marketplaces away The plans must keep same protections from the ACA’s requirements. In particfor sicker or older Americans as those ular, states that apply for these waivers that apply to large companies, yet they could permit the ACA subsidies to be used wouldn’t have to cover the full range of for short-term health plans and associabenefits mandated by the ACA, so cov- tion health plans that don’t cover the full erage for things such as mental health or range of health benefits specified under maternity care might be missing. the health care law.

Also, the cost of premiums on the federShort-Term Plans ally facilitated health insurance exchanges Health insurers are now allowed to sell came down for the 2019 open enrollment

period. The Trump administration announced that, on average, prices on the Healthcare.gov exchange are 1.5 percent lower for 2019 than they were last year.

More carriers entered the marketplace and offered new plan options. Insurers now have a better idea of what their costs would be after six years of the ACA and some insurance companies are beginning to turn a profit on their exchange business.

Where does all this leave health insurance brokers?

“It seems like it’s a mixed bag,” said B. Ronnell Nolan, president and CEO of Health Agents for America.

“Some of our members are excited about selling short-term medical and association plans. Some members are still in the individual market where they are not getting paid commissions and they’re still struggling. So I guess it depends on what market or even what state they’re in.

Because some states increased commissions a little bit but some aren’t paying during special enrollment periods.”

Nolan characterized the past year as positive overall for her organization’s members.

“I think we are making strides,” Nolan said. “I think the administration realizes our agents are important to the process.

They recognize when we have problems, such as the commission issue.”

She praised the administration’s changes to the health care law as “allowing consumers to buy what they want and not necessarily what the government thinks they need. But we have to do our part and educate consumers about what they are purchasing.”

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.

December 2018 » InsuranceNewsNet Magazine

39

COVER STORY MUDDLED MIDDLE GROUND

DOL Rule’s Ghost Still Fights On Conduct Standards

By John Hilton

O

ne thing became crystal clear during 2018: Anyone selling annuities is going to be doing business under tougher regulations.

And a related message was also apparent — it’s coming sooner rather than later.

The best-interest trend at the state and agency level might be considered a stunning development at first glance.

After all, a conservative, anti-regulation mood swept into Washington, D.C., with the Trump administration, leading to the death of the hated Department of Labor fiduciary rule.

With President Donald J. Trump ensconced in the White House and Republican majorities in both chambers of Congress, tighter annuity sales regulation was unexpected. Certainly, it wasn’t expected so quickly.

But the extended DOL rule fight essentially provided three years of education and change for all involved.

Regulators settled on “best interest” as a compromise standard to bridge the gap between fiduciary and suitability.

Meanwhile, insurers spent millions to upgrade compliance systems in anticipation of the DOL rule taking effect.

By the time the Securities and Exchange Commission — under Trump-appointed Chairman Jay Clayton — announced it would pursue a best-interest standard for brokers, it did not seem shocking. “(Investors) can’t expect the things we can’t give them, but what can they expect in a reasonable commercial relationship?” Clayton said during FINRA’s annual conference. “They can expect the core principle that the professional can’t put their interests ahead of the investor.”

SEC Package

The SEC officially dropped its bombshell with an April 18 meeting and tentative 40

vote to put a package of three rules out for public comment.

The proposal calls for a best interest standard and requires brokers to establish policies and procedures to identify and avoid conflicts. A new customer relationship summary disclosure would enhance the investor’s participation in the relationship with their broker, SEC staff said.

Additionally, the titles “advisor” and “adviser” would be more strictly defined.

What is nowhere to be found is a private right of action giving investors the right to sue, a controversial component of the Department of Labor fiduciary rule.

Highlighting the difficulty in finding a middle ground, the SEC proposal found immediate criticism from both sides.

SEC Commissioner Kara Stein dismissed the package as a lightweight attempt at regulation.

“The proposals before the commissioners today squander the opportunity for us to act in the best interest of investors,” she said. “It merely reaffirms that broker-dealers need to meet their suitability obligations.”

Meanwhile, industry executives are particularly concerned about vague language

InsuranceNewsNet Magazine » December 2018

regarding “mitigation” of conflicts.

“It is unclear what specific concerns the commission is trying to address around mitigating conflicts, or what additional mitigation measures it is seeking,” wrote Marc Cadin, chief operating officer for the Association of Advanced Life Underwriting. “There should be flexibility around mitigating conflicts of interest — it should be based on individual facts and circumstances, rather than establishing a one-size-fits-all framework.”

Those issues could be ironed out in a final rule, which might be married to a revised DOL rule. The initial DOL fiduciary rule was tossed out by a federal appeals court in June.

The Office of Management and Budget issued a fall agenda that lists a final rule for the DOL’s fiduciary and SEC’s Regulation Best Interest standards due in September 2019, noted Bradford P. Campbell, a partner with Drinker Biddle, a Washington, D.C., law firm.

“It’s the DOL and the SEC trying to end up in the same place in terms of regulation,” said Campbell, former assistant secretary of labor for employee benefits and former head of the Employee Benefits Security Administration.

MUDDLED MIDDLE GROUND COVER STORY

States In Play

If there is a problem bigger than tough regulation, it’s inconsistent regulation.

And some eager state insurance officials brought that into play in 2018 — starting with New York.

Under the direction of Gov. Andrew Cuomo, New York approved tough best-interest standards that apply to both

“It’s going to result in this very uneven, patchwork of regulation that is very difficult for regulators to enforce and difficult for consumers to understand,” said Kim O’Brien, CEO of AssessBEST, a compliance software company.

Other states are already pushing regulations of their own. Connecticut, New Jersey and Maryland officials all have

“There should be flexibility around mitigating conflicts of interest — it should be based on individual facts and circumstances, rather than establishing a one-size-fits-all framework.” life insurance and annuity sales. Those rules take effect Aug. 1, 2019, for annuity sales and six months afterward for life insurance.

Some insurers, such as Allianz, do not do business in New York, so the new tough rules are not as much of a concern. However, industry officials fret that other states will adopt the Empire State framework.

proposed legislation that would establish fiduciary standards in their states.

In Maryland, a financial reform bill was brought to the table by Democratic State Sen. James Rosapepe. Rosapepe’s bill leaves room for the SEC to create and adopt new legislation before it acts independently on the matter; a chance not given by the other states.

In the meantime, a National

Association of Insurance Commissioners’ working group toils to produce an annuity transactions model law. The outlook is bleak for their efforts after several meetings and calls this year failed to bridge the gap between conservative states such as Iowa and liberal states such as New York.

The working group last met in October in Chicago, but discussions broke down over whether to apply new rules to existing annuity contracts.

What happens next is anyone’s guess.

“Whether other states will follow the New York model, we don’t know, but it’s concerning,” O’Brien said. “The whole idea of the NAIC model is to establish uniformity across the 50 states.”

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

Follow him on Twitter @INNJohnH.

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December 2018 » InsuranceNewsNet Magazine

41

the Fıeld

A Visit With Agents of Change

Objectives ––––––– AND––––––– Reflectives

Profile

42

InsuranceNewsNet Magazine » December 2018

How a hard-driver learns to take a moment and appreciate her achievements.

By Steven A. Morelli

OBJECTIVES AND REFLECTIVES

K

athleen Owings was 23 years Finally, she would be nominated by old, fresh into her career and Vice President Al Gore, the same person speaking on a phone with who would later pin lieutenant bars to her husband — but there was her uniform. so much she could not say.

Her uniform would later also be decShe could not say that as a lieutenant orated with a Bronze Star for leading in the U.S. Army Corps of Engineers, she that small group of men using heavy was about to lead a group of her men to machinery through a war zone to rejoin help Marines.

She could not guess how this disparate group would come together to do the tough jobs that needed to get done quickly.

And she could not tell her husband that even though women were not yet alMike and Kathleen Owings in lowed in combat, she was Kuwait near the Iraq border. about to lead this group into Iraq, ahead of fighting forces on the first day of the 2003 Iraq war. their battalion at a loosely defined objecBut she could see her way past all that tive without losing anybody. to the most essential thing to say: “Hey, I So, she must be tough stuff, right? love you. I’ll see you on the other side and Sure, but not with the bluster you might if I don’t, it’s been great.” imagine from a military officer. Owings No ornamentation. No hedging. No might be no-nonsense, but her method falsity. Just the things that need to be said. is to listen and ask questions.

That skill made Owings a leader all Bob Ross saw Owings’ skill in action her life. It also made her into a finan- many times when he was the president cial advisor who tells clients what they of National Association of Insurance need to hear, rather than what they and Financial Advisors-Colorado. Ross want to hear. nominated Owings for the Four Under If the potentially last communication Forty Award from NAIFA’s Advisor with her husband seemed brusque, it was Today magazine. an appropriate tone for a fellow Army ofOwings, who turned 40 this year, ficer. Michael Owings was waiting to lead is a principal and financial advisor at his own men into Iraq.

Westbilt Financial Group, Colorado Springs.

Devouring Goals She was 38 when she was nominated They met as cadets at West Point, the for the under-40 award. Owings also academy that she determined at age 13 she won the Women in Financial Services would someday attend. She pursued that Circle of Excellence Award in 2016. goal with her usual tenacity. Straight from Ross, who has since retired from his Point A to Point B but she will gladly wend insurance practice, said Owings had a through Points C and D to get there. way of asking just the right questions so Owings decided to go to West Point that other people could reexamine their even though women had been allowed to own reasoning. attend the academy only around the time she was born.

She became a congressional page, but the congressman she worked for did not nominate her for the academy.

Competition was fierce for the limited slots available at West Point and no other congressional or Senate member from her state would nominate her.

IN THE FIELD

For example, tension ratcheted up during a NAIFA state association meeting when a local president demanded that the state organization do something for the local. Owings asked a few questions about the issue.

“She asked, ‘If you were in our shoes, what resources would you use?’” Ross said. “He knew what we had available. Then she asked, ‘If we did that for you, wouldn’t we have to do that for all the associations?’ He knew we didn’t have the resources to do that.”

The local president realized his own organization was in the best position to handle the issue.

“Hey, I love you.

I’ll see you on the other side and if I don’t, it’s been great.”

Bigger Than She Appears

Owings honed that leadership skill as an officer. If two soldiers were fighting, she would want to know what triggered the conflict. Was it a lack of resources? Was it tension from being in a war zone? Then she could solve the deeper problem.

Although she was a woman overseeing men doing heavy construction in a combat zone, she never felt disrespected. For one thing, she learned to rely on advice from fellow officers and her own noncommissioned officers to solve problems.

For another, there is that sense of presence.

“I’m like 5’4”,” Owings said. “I always saw myself bigger than probably how I actually appear.”

Her Myers-Briggs personality type, ENTJ, is known as The Commander.

That indicates she’s an extrovert who values order and logic.

She brings all that to the table with her clients, many of whom are headstrong entrepreneurs. She starts by understanding, which also helps establish her authority.

Owings had a way to ask just the right questions so that other people could reexamine their own reasoning.

December 2018 » InsuranceNewsNet Magazine

43

IN THE FIELD OBJECTIVES AND REFLECTIVES

“It’s asking questions and knowing what their challenges are, showing interest in their situation,” Owings said, adding that she withholds conclusions. “We might have a solution for them.

But I really want to understand what’s going on for them. I don’t want to bring my own biases like, ‘Oh, I’ve worked with entrepreneurs before. I know exactly what your problems are.’”

Once she does that, she usually finds cooperation. But some hard-driving entrepreneurs are not great about taking direction.

“Some like to joke about it, especially men — ‘Oh, I don’t need life insurance,’” she said. “I’m like, ‘Oh really, so your wife who’s been staying at home raising the kids is going to get up one day, make a job and replace a six-figure income? Let’s talk to her and see what she thinks about that.’ I let them hear what they’ve said.”

Or she will pose another scenario with questions, such as, would the client like to move in with his parents? Most likely, the response would be an emphatic “No.” Then she asks why the client thought his spouse would want to do that.

And how do clients react to that?

“Well, usually I get them to buy life insurance,” Owings said.

“It’s never settling to be where you are.

So, I have to work on being happy when I achieve those goals.

You can’t blow through goals and say that’s not enough — I want more. I have learned to be better at reflecting.”

Service Runs In The Family

She credits her military experience for shaping her approach. But even before she attended West Point, there was something pushing her to lead and serve.

“I feel like I’ve had it my whole life,” she said. “It really does come up from a place of service whether it be my soldiers, other officers or my clients. I want them to walk away from the experience having felt it was meaningful and that they were heard.”

She comes from a long line of people who serve. Her father, Robert Quinlan, was a captain in the Army, stationed in Korea during the Vietnam era. Her grandmother served as an Army captain and nurse in Europe during World War 44

II. Her grandfather was an Army veteran serving in Europe.

Her father and mother are also life and health insurance agents in upstate New York, where Owings is from. But her parents did not guide Owings into insurance and financial services.

“Never in a million years did I think I would end up in this business,” Owings said. “I remember as a kid hearing about commission checks in the mail and life insurance. I remember hearing these conversations that I now have as well.”

When she left the Army, she tried a civilian version of her military job. She was a civil engineer overseeing construction workers, but after a year she believed it was clearly not her calling.

Then she tried being an executive recruiter. Although that was not ringing any bells for her either, it did lead to her eventual profession.

A colleague of hers put the pieces together. She was a friend, fellow West Point grad and a sharp executive recruiter.

“She said, ‘Hey, you like math and you like problems and you like pushing yourself,’” Owings said. “She pieced all these parts together for me and said, ‘Why don’t you call the managing director at New England Financial here in Colorado Springs?’”

Owings did and things just clicked.

She eventually ended up partnering with him at Westbilt Financial.

She liked the constant learning and not feeling static. Owings is now licensed in life

InsuranceNewsNet Magazine » December 2018

Kathleen and Michael with their daughter Emma at Rock Ledge Ranch in Colorado Springs.

and health insurance and maintains Series 6, 7, 63 and 65 securities registrations.

The profession calls on almost every aspect of her personality type. She is high up the extrovert scale and loves to intuit her way through a problem to establish order and develop a plan.

“I like the problem-solving part of it,” she said. “The parts that people are turned off by. Many times, people don’t do something because it seems like such a monumental task to figure out a plan, their investment, their insurance and all these parts. I’m like, the messier the better. I like that aspect where you piece it all together and make it work. And I like the fact that it can change as well.”

She enjoys turning the dials, asking the what-ifs and thinking several steps ahead. Owings employs what she and her husband call “flexecuting,” following a plan but improvising along the way.

Much like someone would do to build infrastructure in a combat zone.

Learning To Turn Around

Owings was in a reflective mood recently after returning from her husband’s 20-year reunion at West Point. He was in the class of 1998; she graduated in 2000.

Both of those classes were in peacetime with not a hint of war on the horizon — certainly not the endless war in Afghanistan and against terrorism.

Owings and her classmates were joining as a career. For them, wars were brief conflicts like Desert Storm in 1990.

OBJECTIVES AND REFLECTIVES

Part of their visit was to the graveyard where they saw the final resting places of far more of their classmates than they might have imagined when they graduated from the academy. She had come to terms with her mortality before — over the phone with her husband, the day before she charged into Iraq.

“So at a very young age, I had to come to grips with my own mortality in a weird way knowing that I could have easily died there,” she said.

But this latest revelation was different.

Her life had always been about pushing ahead to her next goal. Even when she runs, she’s training for the next race and climbing the next Colorado mountain.

“I always felt that I wanted to do more, be more,” Owings said. “And it wasn’t even to be the best. I wasn’t the top of my class at West Point. It’s never been that drive for the recognition to be the best.

But it’s to be the best version of myself.

I’m very much inspired by hard work and driving to be better and better. It’s a double-edged sword, though.”

And what’s that other edge?

“It’s never settling to be where you are,” she said. “So, I have to work on being happy when I achieve those goals.

You can’t blow through goals and say that’s not enough — I want more. I have learned to be better at reflecting.”

That has meant taking the time to appreciate the moments with her husband and their 13-year-old daughter. She still competes and conquers mountains, but she is turning around afterward.

“My husband and I run and we do races,” she said. “And I can look back and say, ‘I just climbed that better. I just ran up that hill.’ I can stop and say, ‘Wow, look what I did,’ and be cool with that.”

Another experience back in New York reminded Owings that she still has a mission in front of her. She and her parents were admiring a restaurant where they were having dinner when they learned it would be shuttering soon.

They were surprised because they had enjoyed the food and service.

The server said the owner died and Owings recognized the typical, sad story of a small business dying with its

IN THE FIELD

proprietor. That owner needed an advisor who would have set the business up with a key man plan funded by insurance.

Owings saw through the sad story to her own simple, essential truth: “People like me help people like that.”

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

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

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

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LIFEWIRES

QUOTABLE

Industry Pressured To Find UL Policy Fix Pressure is growing on insurance regu-

lators and carriers to address failing universal life insurance policies sold decades ago.

Universal life was a very popular product in the 1980s, when interest rates routinely hit double digits. The policies offer a savings account in addition to the life insurance components. Money deposited into the savings portion earned interest to help pay future costs while keeping premiums down.

And everything was all good until interest rates plummeted below 4 percent following the 2008 financial crisis.

Furthermore, many UL policies permitted customers to make lower payments, or skip a payment altogether, and borrow against the savings account.

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

Industry activist Kim O’Brien became the latest to call on the National Association of Insurance Commissioners to intervene. Meanwhile, Birny Birnbaum of the Center for Economic Justice said his organization would welcome a regulatory review of why the policies failed and what can be done to avoid a repeat scenario.

Exit stage left!

VOYA EXITING LIFE INSURANCE

Voya will ring out 2 018 by getting out of the life insurance business.

Company officials announced Voya will stop all new life insurance sales Dec. 31 while retaining its in-force block.

The move comes on the heels of Voya’s announcement last year that it would sell its closed block of variable annuities and its portfolio of fixed and fixed indexed annuities.

Voya’s total individual life sales, which primarily consist of indexed life insurance, were $20 million in the third quarter of 2018, up from $18 million in the third quarter of 2017.

DID YOU

KNOW

?

46

After shedding its life insurance and annuity lines, Voya will concentrate on its asset management and benefits business, which is more profitable.

PRUDENTIAL NO LONGER ‘TOO BIG TO FAIL’

Prudential is the latest entity to be freed from a set of federal rules that governed big banks. Federal regulators no longer consider Prudential too big to fail, and lifted the strict government oversight imposed on the company.

It was the last financial company still

Despite all of this increased sophistication, we aren’t increasing the number of people who buy. In fact, it’s declining.

— Robert Kerzner, outgoing LIMRA/LOMA CEO

carrying the “systemically important financial institution” label that subjected it to special restrictions stemming from the 2008 financial crisis. These restrictions were Obama-era regulatory requirements aimed at averting another financial meltdown.

Prudential is the last of four nonbanks to get rid of the SIFI label. Regulators previously removed GE Capital, AIG and MetLife from the SIFI list.

LIFE INSURERS SET RECORDS IN 2017

America’s life insurers set records last year for life insurance payouts and coverage issued, according to figures included in the American Council of Life Insurers 2018 Life Insurers Fact Book.

According to the Fact Book, life insurance companies paid $77 billion to beneficiaries of life insurance policies and $82 billion to owners of annuities in 2017. In addition, life insurers issued a record-high $3 trillion in individual life insurance coverage.

Meanwhile, the industry’s investments in corporate bonds rose to $2.4 trillion, making it the largest institutional investor in corporate bonds.

23% of millennial families surveyed said they would be forced to file for bankruptcy if the primary breadwinner died.

InsuranceNewsNet Magazine » December 2018

Source: SE2

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LIFE

‘These Go To 11:’ Indexing Beyond Rates, Renewals Indexes have increased in choice but with more choice comes greater complexity.

By Eric Thomes

T

here’s a famous scene from the movie mockumentary This Is Spinal Tap in which guitarist Nigel Tufnel proudly demonstrates an amplifier whose volume knob is marked from zero to 11, instead of the usual zero to 10.

When the film’s director, Marty DiBergi, asks Nigel the logical question “Why don’t you just make 10 louder?”

Nigel hesitates before responding blankly, “These go to 11.”

This exchange is often used to reference situations where things that are essentially the same are seen as different due to mislabeling or a lack of necessary context. Unfortunately, this type of confusion is becoming more prevalent in the world of indexing inside of annuity and 48

life insurance contracts.

Comparisons between indexes too often are made without a firm understanding of the structure behind the index. This causes frustration for financial professionals and clients with something that should be viewed as a positive — that is, the variety of index choices now available in today’s annuity and life insurance products to support the specific client goals the indexes have been designed to achieve.

The popularity of index solutions has steadily increased over the past several years. From fixed indexed annuities to fixed index-linked universal life insurance to indexed variable annuities, indexing is becoming the method of choice for providing accumulation potential while limiting risk.

Indexing also has experienced significant innovation in recent years. The days , of having a few benchmarks to choose from are over. A wide variety of new options with different objectives and

InsuranceNewsNet Magazine » December 2018

structures allows financial professionals to offer a better match to the client’s goals and the economic environment.

However, with this increase in choice comes an attendant increase in complexity. Financial professionals recommending index solutions need to explore all of the options before they assist their clients with the appropriate strategy for their specific situation and the current economic environment. This evaluation requires an understanding of what an index tracks, how the index tracks it and how those factors impact the rates available on a product.

What The Index Tracks

Indexes track diverse segments of the U.S. or international markets or specific market sectors. These market segments may represent the equity market, the bond market or a mix of these elements. Indexes today also may employ additional techniques to control volatility — such as daily balancing between equities, bonds and

‘THESE GO TO 11:’ INDEXING BEYOND RATES, RENEWALS LIFE other constituents (using cash, commodities, etc.) — in an effort to reach a desired level of volatility. How these elements are incorporated into an index design will have a direct impact on its potential for both growth and volatility.

Before making any comparisons between indexes, you must first understand how the index is structured and how that affects its long-term outlook for performance. In other words, there is a wide variety of index structures designed to react to the economic environment in a variety of ways. Each index first should be evaluated based on how closely these options match your client’s goals and how many indexes are available on the particular contract.

How The Index Tracks It

First you must understand the “what” or goal of the index, its constituents and the mechanisms it includes to achieve that goal (equities, bonds, cash, daily balancing, etc.). Then you must turn your attention to the “how.” Each index will track changes in its constituent parts in different ways. Two of the most common variations are using changes in the “current price” of the index or using changes in the “future price” of the index to track its value. This distinction is critical because it can affect the client’s experience — even if the ultimate credits are expected to be the same.

“Current price” indexes typically do not reflect changes in short-term interest rates and do not include dividends.

“Future price” indexes reflect changes in short-term interest rates and dividends. These two factors — whether interest rates and dividends are included — have a major impact on the rates that will be available for a particular index. Price return indexes typically will see the most change in new and renewal rates available. Meanwhile, “future price” indexes typically will see more stability in new and renewal rates available on a contract.

When evaluating the index offerings available on a given contract, you should know if there are options available in terms of “how” the index will be tracked.

Having the ability to select between both approaches can be valuable because they will provide a different experience for your clients.

Index Rates

Finally, how does this combination of factors impact index rates? Among available participation rates on three different indexes, which would you choose?

A. 100 percent.

B. 75 percent.

C. 50 percent.

D. Need more information.

Under the “these go to 11” model of thinking, Option A seems to be the obvious choice, since more is always thought of as better. However, the correct answer is actually Option D: Need more information.

The interplay of “what” the index tracks and “how” it is tracked has an important impact on the amount of change — in terms of performance, index volatility and rate volatility — a client should expect to see from year to year. The rates (e.g. participation rate, cap or spread) available on the index need to be understood in the context of these factors.

You cannot simply assume that 100 percent par option is always best and offers the most opportunity for growth and that a 50 percent par offers the least opportunity for growth. In fact, 100 percent par on a “future return” index and 50 percent par on a “price return” could represent a very similar outlook for performance, but the experience of the client along the way would be very different.

A client who chooses the “future return” version should typically expect to see the renewal par rates stay close to the original 100 percent year after year. A client with the “price return” index should typically expect to see the par change more frequently.

If you look at only the participation rate number itself, you risk missing out on the experience that index will give your client. This becomes more important when the “price return” index offers a 110 percent par versus 90 percent par on the “future return” version. The 110 percent par will give your clients a very different experience (more volatility in renewals) and both you and the client should be aware of that when the decision is made.

Bottom line, an understanding of the stability in renewal experience, in conjunction with interest credit outlook, can be very important when addressing your

client’s expectations for their contract.

This should be a factor you consider when assessing which index is appropriate for a client’s specific financial situation.

Focus On Product Value

Indexes in life insurance and annuity contracts have come a long way since the days of having only a few well-known benchmark (mostly price return) indexes to choose from. The value you can bring to your clients as a financial professional has increased substantially as well.

Knowledge of these index elements is precisely the kind of value you bring to clients. You are uniquely able to provide guidance on the allocations that are appropriate for your client’s individual goals.

If index solutions are part of your recommendations, move beyond comparing rates to delivering tailored solutions using all the available allocations within a product. Assess whether steady, predictable credits and renewal rates is the goal for your client, or whether maximizing potential credits while providing the assurance that “0” is the worst-case scenario is the priority.

And, since no single allocation performs the best in every economic scenario, a diversified approach is often the most prudent strategy to pursue. Client preferences differ, so you can make the difference for your client between success and failure across many economic environments.

Having a detailed understanding of an index’s goal and structure — and more importantly when and why to recommend adjustments to a client’s allocations — is part of your value proposition.

Avoid being the Nigel who indicates an index “goes to 11.” By demonstrating a deeper knowledge of index products, you can set yourself apart as a financial professional who brings a higher probability of success to your clients.

Eric Thomes is senior vice president of sales for Allianz Life. Eric can be contacted at eric.thomes@ innfeedback.com.

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December 2018 » InsuranceNewsNet Magazine

49

LIFE

Sandwich Generation: When Insurance And Caregiving Collide An insurance professional describes her family’s experience with caregiving and compares it with the experiences of others who are dealing with aging family members.

By Kim Anderson

S

andwich generation.

I remember the first time I heard this phrase. I had just started my career in financial services and I was confused. I thought, “Are they saying my generation likes sandwiches?”

Then the instructor explained what it meant: a person who is sandwiched between caring for aging parents while also caring for children at home. Clever term — but even as I watched my parents care for my grandparents (three of whom died of Alzheimer’s disease), I couldn’t relate. After all, I was a recent college graduate, living on my own and just starting my career.

Now, everything is different.

When I look back on the past 18 months, I realize how naive I was. When my parents moved from Oregon to Minnesota to be closer to my family, we looked forward to kids’ sports and choir concerts, holiday meals and planning my parents’ 50th wedding anniversary celebration. Little did we know just how fast things would change.

Although my mom struggled with memory loss for a few years, it was swept under the rug. “It’s just part of aging.”

“She’s under stress.” “It’s not a big deal.”

Only after my parents moved, and after my siblings and I insisted, did we finally have her evaluated by a neurologist. The doctor confirmed our worst fears - Mom had Alzheimer’s disease. In fact, she was entering the disease’s advanced stage.

What? How did we go from “casual memory loss” to advanced stage Alzheimer’s disease? But her body is 50

healthy, so we have time — right?

Wrong.

At the time of their move, my mom occasionally used a cane, actively participated in conversations and enthusiastically joined activities in their retirement community. By spring, shortly after her diagnosis, she started falling and could no longer walk notable distances. By summer, she stopped walking altogether.

By August, she stopped talking, reduced

it all, juggling my parents’ care with my kids’ school events, homework and sports.

Sandwich generation. Now I get it. And I’m not alone.

Securian Financial recently conducted a survey of more than 800 people who are currently providing, or who have provided, unpaid care to a parent, in-law or spouse who is aging, or has a disability or chronic disease.

Here’s what we found: The majority of caregivers (60 percent) spend more than 10 hours per week caring for a family member, and about one in four (29 percent) spend more than 20 hours weekly. Women (32 percent) are more likely than men (26 percent) to spend more than 20 hours each week on caregiver duties.

As the oldest female child, I can certainly relate. Between calls, doctor appointments, memory care center visits, balancing checkbooks, ordering services, communicating with siblings, and organizing medical equipment and prescriptions, I spend about 15-20 hours a week, after work, providing care.

And although more than half (55 percent) of us characterize our role as “supportive,” one-third of us feel “concerned” (33 percent) or “overwhelmed” (32 percent) by our caregiving responsibilities.

Juggling And Struggling

to one word at a time. By September, we moved my parents into an assisted living apartment. By December, we made their final move — my mother to a memory care center, and my father into my home.

How Did We Get Here?

It quickly became evident that, despite working in the long-term care insurance industry for 20-plus years, I knew nothing about finding and managing quality care.

And I didn’t know how I could balance

InsuranceNewsNet Magazine » December 2018

We say the most difficult aspects of being a caregiver are maintaining emotional stability (60 percent) and maintaining a healthy balance between the time we spend caregiving and being with immediate family members (56 percent).

There are days when I start with well-intentioned plans, only to have them completely blow up. And although I feel blessed in many ways, the lives of my family members have changed dramatically. My children and spouse have made tremendous sacrifices, and they have done so with love and patience.

Other areas caregivers struggle with

SANDWICH GENERATION: WHEN INSURANCE AND CAREGIVING COLLIDE LIFE are keeping up with day-to-day tasks (54 percent) and maintaining our own financial well-being (52 percent), with one in six people (17 percent) finding the latter very difficult.

One of the hardest aspects of my parents’ journey is watching their retirement plans disappear. Not only did they lose vacations and dreams, they’ve lost their home and they’re now living apart. My father was forced to move into my home in order to manage the financial burden of my mother’s care, as her needs are now beyond my ability to manage.

Our survey found that 48 percent of caregivers say the person they are caring for does not have long-term care insurance. Those who care for a family member for more than 20 hours per week are the least likely (34 percent) to say their care recipient has long-term care insurance. Cost is the No. 1 reason why people do not purchase LTCi. Half of caregivers (50 percent) whose care recipients do not have LTCi believe it is too expensive, while another 10 percent do not think it is a worthwhile investment.

Some of this is true of my family, as neither of my parents medically qualified for a long-term care insurance policy.

However, even if they could, they likely would not have been able to maintain the premiums into retirement.

Caregiving can affect more than just the balance at home. Half (50 percent) of us who hold jobs while providing care say it affects our job performance, with the most common impact being the need to take days off from work (41 percent). In addition, more than one-fifth of us (22 percent) say our work hours or responsibilities were reduced. Moreover, 15 percent of employed caregivers had to take a leave of absence, and 12 percent said they quit work altogether because of their caregiving responsibilities.

I’m thankful my company allowed me some flexibility. However, it meant sometimes working late or on weekends.

And although I could do some work from home, my family certainly noticed my lack of presence.

Individual LTCi wasn’t an option for my family, but there are other insurance

options designed to help pay for longterm care. These include life insurance and annuity policies with long-term care funding riders, and hybrid policies combining life insurance with long-term care benefits. Self-funding (i.e., paying out-of-pocket) is the most common way Americans pay for long-term care, and Medicaid is an option for care recipients with depleted assets — a bridge my family may cross in the near future.

In saying all this, my family is doing what we do best — we continue marching forward, one step in front of the other, one breath at a time. And we’re doing it with hope. Hope for a cure, and a better future — for us and for generations to come.

Kim Anderson, CLTC, LTCP, FIC, manages life product research and consulting for Securian Financial and recently leveraged her personal caregiving experience to help design the company’s new permanent life insurance policy with longterm care benefits. Kim may be contacted at kim.anderson@innfeedback.com.

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www.PaulFeldman.com/IgniteGrowth December 2018 » InsuranceNewsNet Magazine

51

ANNUITYWIRES

Consumers See Annuities As Easing Retirement Worries

QUOTABLE

What do they want? Guaranteed income!

When do they want it? For life!

A LIMRA Secure Retirement Institute study of annuity owners finds the top two reasons consumers buy annuities are to supplement Social Security/pension income and to receive guaranteed income payments for life.

Less than half of pre-retirees (49 percent) and less than a third of younger workers (32 percent) say they will rely on Social Security and pensions as their primary sources of income. Instead, they will primarily use savings from employer-sponsored retirement plans, individual retirement accounts and other savings vehicles to fund their retirement years. Four in 10 pre-retirees and more than half of workers ages 4054 (53 percent) expect their primary source of income to be from their 401(k), IRA and other savings. two-thirds of today’s pre-retirees haven’t taken the critical step of calculating their expected retirement expenses, and half of retirees admit they had not determined their expenses before they retired.

LUMP SUM? OR LIFETIME INCOME? AMERICANS IN NEED OF PROTECTED INCOME

Only 38 percent of U.S. households have protected lifetime income in the form of an annuity or pension, leaving approximately 63 million households without protection. That was the latest finding from the Alliance for Lifetime Income, which found Americans are focused on accumulating retirement assets without considering how to create income from those assets.

Those who have protected income in the form of an annuity or pension are more confident their retirement savings or income will last the rest of their lives. The alliance research found that 74 percent feel this way versus only 33 percent of those without an annuity or pension.

In addition, the alliance found

What would you choose — a lump sum of $120,000 or $660 a month for life? LIMRA posed this choice to a group of Americans ages 50 to 79 and found that 53 percent of them would choose the monthly sum for life. In other words, they would choose an annuity!

When asked why they would take the guaranteed lifetime income rather than the lump sum, 57 percent said it was because they expected to live long in retirement and 46 percent said it was because it would provide them with peace of mind.

Those who favor lifetime-guaranteed payments over a lump sum are generally not willing to change their preference when the value of the lump-sum offered is increased. When asked to select the minimum value the lump sum would need to be in order for them to choose it over the guaranteed lifetime income, nearly half (46 percent) say that they would never switch to the lump sum.

DID YOU

National will begin distributing indexed and KNOW Jackson variable annuities through State Farm agents beginning

?

52

in the second half of 2019.

InsuranceNewsNet Magazine » December 2018

Source: Jackson National

We’re facing the first generations of American workers approaching retirement with no clear idea of how much money they can count on receiving or what they can safely spend from their savings such as IRAs and 401(k) accounts, without running out of money.

— Dr. Michael Finke, chief academic officer of The American College

For those who chose to receive the lump sum, almost two-thirds say it was to maintain control over the funds and almost three in 10 say it is because they already have enough guaranteed lifetime income from other sources.

NEW PRODUCT UPDATE

Here is a rundown of some new annuity products hitting the market.

Delaware Life is positioning the Delaware Life Masters Prime Variable Annuity as “back to basics” and “straightforward” in that clients can choose only the optional benefits they need. This annuity offers an optional guaranteed lifetime withdrawal benefit rider that guarantees clients will receive a specified retirement income payment amount for life, even if the annuity account cash value drops to zero.

A noteworthy feature of the GLWB is its bonus period reset. It enables a client to reset to a new 10-year bonus period every time there is a step-up in the GLWB benefit base value and is available until the income start date.

American Equity Investment Life added a fixed indexed annuity to its portfolio. The AssetShield offers multiple allocation strategies, strong growth opportunity potential and increased liquidity options for added access to and control of money when clients need it.

The AssetShield, with 5-year, 7-year and 10-year terms available, offers multiple index crediting allocations — all backed

by S&P indices, plus added access features for increased asset control.

ANNUITY GUARANTEED INCOME ACROSS ANNUITY PRODUCTS:

WITHDRAWAL GUARANTEES COMPETE WITH INCOME ANNUITIES

Guaranteed Income Amount Depends On Client, Timing RESULTS

Guaranteed Income

As the only pure income-generating vehicle, the general assumption has traditionally been that

On the basis of the guarantee alone, the income annuities tend to provide the greatest income for

scenarios with immediate income and can also be the income annuities always produce the highest Researchers looked at fixed The report looked at more fixed indexed an- for aSingle annuities valuable man.premium With a immediate delay in income, guarantee amount. deferred However, due tonuities, product design indexed annuities, deferred incomeFIAs annuities, single were generally found to provide the highoften perform best. However, VAs excelled in a variations and single utilization other annuities and vari- est income guarantee for those planning income annuities, pre- assumptions, premium immediate number of joint life cases. Complete tabular results mium immediate and able to see which product gen- on drawing immediate income. But, for deferred annuitiesannuities can outperform theannuities SPIA/DIA. with statistical on performance are available variable annuities.

Here is what erated highest guaranteed income. details a couple who are of different ages, the Our findings demonstrate that there are the scenarios they found.

It has been assumedinthat income of study found that a variable annuity with thethe appendix this report. where each of the three product types produces the produce the highest guaranteed income may generate the annuities always greatest amount of guarantee.

Furthermore, there are However, because of highest annual payments.

By Susan Rupe guaranteed amount.

Single Life Scenarios product design variations and utilization A fixed indexed annuity provides a situations where a modest reduction in the guarantee one of the main reasons to assumptions, other deferred annuities greater guaranteed stream of income can yield a significant potential for upside.

For single life, the greater the delay, the more that the buy annuities is to receive can outperform the SPIA and DIA. The than a deferred income annuity or a variFIA typicallythat provides greaterfor income guarantee guaranteed income in re- CANNEX findings demonstrated ableaannuity an individual who than wants The guarantee amount provides an apples-to-apples tirement, then which type there are scenarios where VAsor the to begin drawing down money In in some five or eitherSPIAs, the DIA VA (See Exhibit 2 below). comparison across all product For produce clients the greatest amount 10 years. of annuities provides the types. and FIAs instances, the VA also has higher guaranteed income greatest guaranteed income? of guarantee.

Furthermore, there are sitThe difference among annuities also concerned purely with income that will not decrease than the DIA, although not as much as the FIA does.

CANNEX researchers putfor a number uations where modest reduction in the shows up when looking at whether the and with no tolerance market risk, there is ano The effectpotenis more pronounced fororwomen than it is for of different annuities to the test in an guarantee can yield a significant owner is a man a woman. need to look further. However, it is common among attempt to solve that puzzle. The answer tial for upside.

Forare women, difference in due income men because DIA rates lower the at the same age to and FIAs that greater market potential comes isVAs — it depends.

On the basis of the longevity guaranteeexpectations. alone, between an FIA and a DIA is even greatTo better explore this difference, A CANNEX compared dif- the income tend to provide er. DIA benefit payments for women with a lowerreport guarantee.

Consequently, it is annuities also we conducted additional analysis at age 70. ferent annuities that have equivalent in the income useful to analyze performance thegreatest context of for scenarios where are lower than they are for men, based benefits. Researchers found that the immediate income is drawn and also can on longevity expectations. The longer upside potential even though the income annuities highest guaranteed income product var- generate more incomeGender-Based for a man than Pricing the delay and in taking income, the greater “Unisex” Income no market variance.

Therefore, examine ieshave significantly depending on the client we for also a woman.

FIAs often perform best the benefit for women who choose an Annuity Rates FIA over a DIA. For example, based on —the whether a man or aboth woman, a single in scenarios where income is delayed. findings along metrics to elucidate product person or a couple as well as when inHowever, VAs excelledGender-based in a number ofratea differences $100,000 premium investment are rare outside inofa differences and—circumstances where this analysis come begins. joint life cases.

DIA at 65 years old, a woman of average income annuities, although such pricing does exist can be appropriate and valuable for clients.

If

Highest Guaranteed Income at 65: by Annuity Type, Years of Income Delay $15,000

Source: CANNEX VA Benefit Analysis, CANNEX FIA Benefit Analysis, CANNEX Income Annuity Exchange.

$12,500

Note: Annual income is based on a starting account value of $100,000 and assumes no positive market contribution to the benefit base for the VA and FIA guarantees. Rates are effective August 10, 2018 and represent the highest rate available for each product type.

$10,000 $7,500 $5,000 $2,500 $0 0

n VA n FIA n SPIA/DIA (Woman) n SPIA/DIA (Man)

54

$5,600 $5,500 $5,822 $6,070

InsuranceNewsNet Magazine » December 2018

5 $7,560 $8,798 $8,000 $8,594

10 $10,819 $14,313 $11,721 $12,960

At age 70, there is a stark difference between guaranteed

rate that applies in certain situations and does not

income for men and women, and is past the inflection

ask for gender. We retrieved income annuity rates

line where different products provide the highest

for the 70-year-old scenarios in Montana, which has INCOME DEPENDS ON CLIENT, TIMING ANNUITY income depending on gender. GUARANTEED If there is no delay, the AMOUNT unisex pricing.

As the data in Exhibit 4 below shows,

Guaranteed Income by Product at Age 70, Top Rates $16,000

Source: CANNEX VA Benefit Analysis, CANNEX FIA Benefit Analysis, CANNEX Income Annuity Exchange.

$14,000 $12,000

Note: Annual income is based on a starting account value of $100,000 and assumes no positive market contribution to the benefit base for the VA and FIA guarantees. Rates are effective August 10, 2018 and represent the highest rate available for each product type.

$10,000 $8,000 $6,000 $4,000 $2,000 $0 0

n VA n FIA n SPIA/DIA (Woman) n SPIA/DIA (Man)

5

$6,000 $6,000 $6,448 $6,803

10

$8,100 $9,970 $9,323 $10,183

$12,025 $15,537 $14,621 $16,668

Exhibit 4:longevity Guaranteed Product 70,income, Top 5 Products projected wouldIncome receive,byafdelayat inAge taking the more likely ter 10 years deferral, around $11,700 in that an FIA provides a greater income VA FIA annual income, versus approximately guarantee than either a DIA or a VA (See Woman $12,900 for a man. By contrast, an FIA chart). In some instances, the VA also $12,025 $15,537 $14,621 could generate as much as $14,313 of an- has higher guaranteed income than the $11,193 $14,030 $14,285 nual income for a woman or $11,050 a man.

DIA, $13,000 although not as much as the FIA $13,716 10-Year Delay For a single annuitant, the$10,819 greater the does. $12,914 The effect is more pronounced for $13,581

5-Year Delay

No Delay

women than it is for men because DIA rates are lower at the same age due to SPIA/DIA longevity expectations.

Man Unisex Looking at gender, the CANNEX re$16,668 $14,822 searchers found that a single woman is $15,197 $14,783 likely$15,074 to see an even greater gain from an $14,214 income guarantee in a savings annuity. At $14,961 $14,168

$10,625

$12,868

$13,483

$14,945

$8,100

$9,970

$9,323

$10,183

$9,410

$7,898

$9,660

$9,106

$9,516

$9,330

$8,960

$9,513

$9,186

$8,869

$9,506

$7,800

$8,704

$7,714

$8,700

$7,425

$8,700

$6,000

$6,000

$5,600

$6,000

$5,600

$6,000

$5,600

$6,000

$5,400

$6,000

Why Partner with F&G?

$13,983

$9,134 For 60 years, we have been the silent, unseen $8,830 $9,398 $9,088 enabler of the hopes and dreams of millions of $6,448 $6,803 $6,639 $6,343 Today, we provide $6,606 Americans. annuities $6,479 and life $6,292 $6,587 $6,397 insurance for over 700,000 people across the $6,276 $6,485 $6,391 United$6,240 States. $6,480 $6,378

Source: CANNEX VA Benefit Analysis, CANNEX FIA Benefit Analysis, CANNEX Income Annuity Exchange.

Note: Annual income is based on a starting account value of $100,000 and assumes no positive market contribution to the benefit base for the VA and FIA guarantees.

Rates are effective August 10, 2018. Also, there is a modest difference in one result between FIA guarantees for a man and woman, so we show the rates for a woman.

Our goal is to establish F&G as the carrier that creates the most collaborative and effective relationship with distribution partners, enabling us to better understand individual customer needs and deliver the most relevant and trusted © 2018 CANNEX Financial Exchanges Limited. All rights reserved. products in the category.

|

This is our competitive advantage.

Visit us today at home.fglife.com to find out what makes us different.

For Producer Use Only - Not For Use in Solicitation to Consumers “F&G” is the marketing name for Fidelity & Guaranty Life Insurance Company issuing insurance in the United States outside of New York. Life insurance and annuities issued by Fidelity & Guaranty Life Insurance Company, Des Moines, IA. 18-1135 55 December 2018 » InsuranceNewsNet Magazine salesdesk@fglife.com • 888.513.8797

PAGE 7

follow, the blue line shows the guarantee for each of the top five c ontracts. T he d ots a bove t he b lue l ine

as “fair,” and the 75th percentile as “good.” This

represent the increase to income based on market

sets the stage for performance expectations and an

understanding of how much a mediocre, fair, or good performance, or the upsideINCOME potential,AMOUNT with the DEPENDS green ANNUITY GUARANTEED ON CLIENT, TIMING market can bump up income. being the average. Since income annuities have no

Annuity Income Performance: 60-Year-Old Woman, 10-Year Income Delay Top 5 by Minimum Guarantee

Top 5 by Average Income $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8,000

VA1 VA2 VA3 VA4 VA5

FIA1 FIA2 FIA3 FIA4 FIA5

DIA1 DIA2 DIA3 DIA4 DIA5

Guarantee

25th %ile

VA1 VA2 VA3 VA4 VA5 FIA1 FIA2 FIA3 FIA4 FIA5

50th %ile

75th %ile

DIA1 DIA2 DIA3 DIA4 DIA5

Average

Source: CANNEX VA Benefit Analysis, CANNEX FIA Benefit Analysis, CANNEX Income Annuity Exchange.

Note: Annual income is based on a starting account value of $100,000. Rates are effective August 10, 2018.

age 70, there is a stark difference between guaranteed income for men and women.

If there is no delay in taking income, the income annuities provide higher income for both men and women. However, with a delay, men obtain higher income from income annuities, while women receive higher income from FIAs.

FIA outperformed a DIA and a SPIA if income was delayed by five or 10 years.

Although income annuities are designed to be efficient vehicles to provide The CANNEX analysts looked at the cir- clients with guaranteed income, there cumstances where the upside potential of are circumstances where living benefit an annuity is effectively a “bonus” on top guarantees provide higher levels of guarof a guarantee that is already higher than anteed income and the possibility of even greater income due to market upside, the researchers © 2018 CANNEXCANNEX Financial Exchanges Limited.found.

All rights reserved. | In the scenarios examined in the research, SPIAs generally provide the highest guaranteed income for those looking to start payments right away. However, FIAs and VAs are more likely to fare better with a delay. Here’s why.

Most guaranteed living withdrawal benefits include deferral bonuses and other incentives to start taking income years after the annuity contract was purchased. These increases appear to exceed the income boost that the DIA provides from a similar delay. The DIA benefits from mortality credits in combination the corresponding income annuity. with the underlying return assumptions The research showed that FIAs were for assets that the insurer holds during the highest over VAs and DIAs in terms the delay period, but the income definiteof minimum guarantee when looking at ly begins at that point. the income performance for a 60-year-old In contrast, withdrawals may begin at woman taking a 10-year income delay. any point in the contracts with GLWBs. It’s a different situation when looking Therefore, insurers position most of at a 60-year-old couple who aren’t delay- these riders to encourage policyholders ing taking income. In this case, the DIA to delay using them. generates the highest guaranteed income Although the research looked specificalas well as the highest average income. ly at maximum guarantee amounts, it does

Upside Potential

The researchers also concluded that there is no conventional wisdom that dictates the best product to generate that guaranteed income.

For couples who own annuities with joint life contracts, each category of annuity performs best depending on the specific scenario.

Researchers looked at an example of a 65-year-old man and a 60-year-old woman. They found that a VA outperformed a DIA, SPIA and FIA in generating income. However, a SPIA or DIA came in a close second to a VA if there was no delay in taking income. Meanwhile, an 56

Where Living Benefit Guarantees Come Into Play

InsuranceNewsNet Magazine » December 2018

PAGE 9

1 has an average income of $13,327 and guaranteed income of only $8,141. It is possible to get an FIA with

Two of the top five VA contracts as judged by minimum

guarantees are also included in the top five by average a guarantee as high as $12,532 (FIA 1 on the half GUARANTEED INCOME AMOUNT DEPENDS ON CLIENT, TIMING ANNUITY income (See illustrations for Exhibit 7). Nevertheless, sorted by guarantee), but that contract has no upside

Annuity Income Performance: 60-Year-Old Couple, No Income Delay Top 5 by Minimum Guarantee

Top 5 by Average Income $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500

VA1 VA2 VA3 VA4 VA5

FIA1 FIA2 FIA3 FIA4 FIA5

DIA1 DIA2 DIA3 DIA4 DIA5

Guarantee

25th %ile

VA1 VA2 VA3 VA4 VA5

50th %ile

75th %ile

FIA1 FIA2 FIA3 FIA4 FIA5

DIA1 DIA2 DIA3 DIA4 DIA5

Average

Source: CANNEX VA Benefit Analysis, CANNEX FIA Benefit Analysis, CANNEX Income Annuity Exchange.

Note: Annual income is based on a starting account value of $100,000. Rates are effective August 10, 2018.

not address the other differences among annuities that would cause an advisor to recommend one product over another.

For example, researchers said, a DIA may not have the highest guaranteed income for a client but it is difficult to misuse. Meanwhile, the flexibility of a GLWB may be beneficial to one client but may be dangerous to another. It is possible for the client to take out too much money and unintentionally disrupt the income guarantee, while investment decisions for the portfolio may be confusing and onerous.

It’s important to determine the guarantee values and potential for additional upside for clients who have income needs, CANNEX researchers concluded.

It’s also important to assess a broader selection of products to meet those income needs. However, the researchers concluded that there is no conventional wisdom that dictates the best product to generate that guaranteed income.

“We were surprised that all three products — SPIAs, FIAs and VAs — had places where they excelled,” said Tamiko Toland, CANNEX head of annuity research.

“Although we have these rules of thumb, they’re not always good rules of thumb,” she continued. “For example, we say usually if you’re taking income immediately, the SPIA is best. But there are examples where a VA is actually better, even if you’re taking the income on day

one, which is actually surprising.”

Another surprising finding, Toland said, was that DIAs don’t always generate a large amount of income if there is a delay in taking income. “At age 70 for men, you see a DIA actually does really well

the income guarantee, we see just on that basis alone there are circumstances where any three of these product types might be best.

“There are many factors that go into the selection of an annuity. Income generation

© 2018 CANNEX Financial Exchanges Limited. All rights reserved.

|

The core lesson of the research is: check and compare results across categories for each client scenario before settling on a specific product. after a five-year or a 10-year delay, but those are not common delays. Usually, folks who are taking income at age 70 are taking it immediately. So that may be one reason for that.”

The core lesson of the research is: check and compare results across categories for each client scenario before settling on a specific product.

“If you have a client who has an income objective, then it’s really important to look across product types and figure out what’s going to be best for that client,” Toland said. “If you want to look at purely

is not the only one, but it is central to their value proposition and advisors need to rely on real analytics, not traditional perceptions or best guesses of how guarantees work, to best serve their clients.”

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

December 2018 » InsuranceNewsNet Magazine

57

PAGE 1

HEALTH/BENEFITSWIRES

LTC Costs Continue To Rise Americans’ increasing lifespans are good news; but it’s more

likely that some of those additional years will be spent requiring long-term care. And the cost of that care continues to rise.

The blended annual median cost of LTC support services has increased an average of 3 percent from 2017 to 2018, according to the annual Genworth Cost of Care Survey.

Some care categories exceed two to three times the 2.1 percent U.S. inflation rate.

The annual median cost of care now ranges from $18,720 for adult day care services to $100,375 for a private room in a nursing home. Between 2017 and 2018, the cost of assisted living facilities increased the most at 6.67 percent, followed by a semi-private room in a nursing home at 4.11 percent.

Factors driving up the costs include the shortage of skilled workers as well as the increasing incidence of Alzheimer’s disease and dementia. In addition, aging Americans need more specialized care as a result of waiting too long to receive professional care. By then, the diagnosis has progressed beyond the need for basic care to a specialized and intensive level of care, which is more expensive.

EMPLOYERSPONSORED PREMIUMS UP 5%

Premiums for employer-sponsored family health insurance continue to rise, increasing by 5 percent in 2018, Kaiser Family Foundation reported.

This year, the annual family premiums for employer-sponsored health insurance averaged $19,616, and annual premiums for single coverage increased by 3 percent, averaging $6,896. On average, employees are contributing $5,547 toward family coverage and $1,186 toward single coverage, with the employer picking up the rest.

The increase is comparable to the increase in workers’ wages (2.6 percent) and inflation (2.5 percent), Kaiser reported. However, over the past 10 years, average family premiums have increased by 55 percent, twice as fast as wages (26 percent) and three times as fast as inflation (17 percent).

The survey also found that the burden of deductibles on employees continues to grow, with an increasing share of covered employees facing a general annual deductible and the average deductible rising for those who face one.

DID YOU

KNOW

?

58

WHEN THAT PRESCRIPTION COSTS TOO MUCH

It doesn’t matter how effective a prescription drug is if a consumer can’t afford to take it. Nearly half of consumers have abandoned a medication prescribed by their physician because it was too expensive, according to a survey by DrFirst.

The survey also revealed that 73 percent of consumers would change pharmacies if they knew that doing so would save them money on a prescription.

Most physicians fail to reveal the cost of the drugs they prescribe, the survey found. Fewer than half (44 percent) of consumers said their physician advised them about medication costs or offered lower-cost therapeutic alternatives. Even fewer (41 percent) reported receiving advice from their doctor or pharmacist about possible cost-saving coupons or having a prescription filled at a less-expensive pharmacy.

QUOTABLE As long as out-of-pocket costs for deductibles, drugs, surprise bills and more continue to outpace wage growth, people will be frustrated by their medical bills and see health costs as huge pocketbook and political issues.

— Drew Altman, president, Kaiser Family Foundation

MILLENNIALS DITCH PRIMARY CARE DOCS

The urgent care clinic has replaced the family doctor for a growing number of young adults.

Almost half — 45 percent — of 18- to 29-year-olds nationwide do not have a primary care provider, according to Kaiser Family Foundation. That compares with 28 percent of 30- to 49-year-olds, 18 percent of 50- to 64-year-olds and 12 percent of seniors 65 years and older.

A number of stand-alone clinics have sprouted up as the generational shift toward faster service and immediate access to care becomes the priority for younger people. To attract and retain patients, especially young adults, primarycare practices are embracing new ways of doing business. Many are hiring additional physicians and nurse practitioners to see patients more quickly.

They have rolled out patient portals and other digital tools that enable people to communicate with their doctors and make appointments via their smartphones.

Some are exploring the use of video visits.

About one-third of the nation’s rural health care facilities — 673 — are financially vulnerable and in danger of closing.

Source: American Association for Medicare Supplement Insurance

InsuranceNewsNet Magazine » December 2018

Source: National Rural Health Association

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HEALTH/BENEFITS

Workers Need Brokers To Cut Through Benefits Confusion Employees have a greater interest in buying voluntary benefits, but they are confused about making the right decisions.

By Susan Rupe

I

t’s that time of year when employees sit in conference rooms, listening to presentations on enrolling in voluntary benefits for the coming year.

Employees have questions. What should I sign up for? How much will it cost? Do I even need this product?

Despite the use of online enrollment platforms and other digital tools, workers need benefits brokers to help them make the best choices, according to studies released from some major players in the benefits world.

Have A Conversation

Eighty percent of people don’t talk about insurance or finances with anyone, MetLife researchers found. So the carrier has launched a campaign encouraging workers to “have meaningful conversations” with people they trust as they make their benefit decisions.

MetLife provides voluntary benefits that cover more than 47 million employees and their families, and has a 15.4 percent share of the total voluntary benefits market in the U.S. “We invest so much time and money trying to communicate benefits every single year. And we recognize that we’re still not breaking through,” Meredith Ryan-Reid, MetLife senior vice president and head of distribution development and benefits delivery, told InsuranceNewsNet. “So we did a little bit of specific research at the end of last year. And one of the major takeaways is that people don’t think about insurance only when a life event happens. And that’s been the conventional wisdom.

We think people have real benefit and 60

those real ‘aha’ moments when they speak with someone they trust, and they just have a conversation.”

MetLife created a website featuring videos of “real people” talking about a wide range of employee benefits from critical illness coverage to legal insurance.

“Our real big theme this year is encouraging people to have conversations with those they know and trust, whether it’s a family member, a friend, a trusted coworker. Because we know that has the good potential to help people think about the important stuff in a real way. And in a more personal way,” Ryan-Reid said.

Workers have an array of voluntary benefits to choose from.

“We’re actually talking about a broader range of benefits — everything from group life to disability to some of the

benefits as part of their voluntary benefit offerings. “As more players offer high-deductible health plans, more companies are offering supplemental health benefits to help employees offset those costs,” she said.

Another trend is an increase in benefits such as tuition reimbursement and benefits relating to employee financial wellness.

“Any help that can be provided around financial wellness is really important,” Ryan-Reid said. “Employees are struggling with their financial health. This creates a distraction at work and results in lost productivity. People have a lot of financial stress.”

Employers also can offer some lesserknown benefits such as legal plans or discounts on auto insurance, RyanReid said.

Topics Discussed Between Small-Business Owners and Benefits Brokers

Source: Guardian

53%

50%

35%

26%

26%

18%

15%

Plan Design Recommendations

Carrier Recommendations

Compliance Support

Benefits Funding Options

Voluntary Benefits Enrollment

Resolve Service Issues

Benefits Technology

supplemental health products like critical illness or accident insurance,” RyanReid said.

“Those have become increasingly important and more popular because of the high-deductible health plans in the workplace today. People don’t realize the out-of-pocket expense they might incur, so having some of those types of products are increasingly important.”

Ryan-Reid predicted that more employers will offer supplemental health

InsuranceNewsNet Magazine » December 2018

As the variety of workplace benefits has increased, so has employees’ willingness to spend money on them, she added.

“People are spending more on benefits than they ever have,” she said. “Employers have had to shift more health care costs on to employees. And a lot of that has been driven by the Affordable Care Act and some of the limitations on how much employers can fund their plans, limitations on how rich their plans can

WORKERS NEED BROKERS TO CUT THROUGH BENEFITS CONFUSION HEALTH/BENEFITS be. So there has been a shift for regulatory reasons as well as cost containment, and more of the cost burden is being transferred to employees.”

But although workers have many benefit options available to them, they also are confused about choosing the benefits that are right for their own situations. “Our challenge is to help people cut through the noise and make the right choice,” Ryan-Reid said.

‘That’s A Terrible Thing!’

In 2018, 85 percent of employees see a need for voluntary benefits as opposed to 64 percent in 2015, according to the Aflac annual WorkForces Report. But even though more employees want these benefits, the Aflac research showed the vast majority of them — 93 percent — chose the same benefits year after year, while nearly one out of five workers didn’t do any research at all before selecting their benefits.

“That’s a terrible thing!” said Matthew Owenby, Aflac senior vice president and chief human resources officer, of the lack of homework employees do on benefits. “It’s a trend that’s pretty troubling and the reason why it’s troubling is that people leave a lot on the table.”

Aflac has a 19 percent share of the U.S. voluntary benefits market, according to Eastbridge.

“People simply do not take the time to think about what is coming up from a health care perspective in the next three to six months of their lives, maybe even longer than that,” Owenby said. “What makes that a big problem is we know that more than 50 percent of the workforce is unable to cover unexpected outof-pocket medical bills.”

“When you see that type of financial constraint, and you see that people aren’t doing research or planning properly, then it’s a problem.”

Why aren’t employees spending time researching their options? “What they generally tell us is it’s confusing, it’s too hard,” Owenby said.

He said brokers and employers need to work together to simplify the benefits message for what he called “the text-message society — 240 characters or less.”

Choosing the right kind of supplemental insurance is even more important as

45% of employees say they’re more likely to buy insurance if it’s recommended by a benefits professional.

Source: Aflac

traditional major medical plans become more expensive and workers are subject to higher deductibles and out-of-pocket costs, Owenby said.

“As this continues, I think the interest around voluntary benefits will continue to grow,” he said.

Businesses Want More Help From Brokers

An increasing number of small businesses rely on technology to solve their employees’ workplace benefits needs, a Guardian Life study said. Despite a growing dependence on technology, employers said they believe they are not being contacted enough by their brokers.

That was the word from Gene Lanzoni, an assistant vice president at Guardian Life. Guardian ranked sixth in the U.S. in total voluntary/worksite sales at $292.7 million in 2017, according to LIMRA. Using technology may give small-business owners a leg up in competing with larger employers in terms of benefits.

But 9 in 10 of these small-business owners still are dependent on a benefits broker, Lanzoni said. “(Small-business owners) are very dependent on a broker to help them with benefits design, planning, looking at different carrier options,” he said.

“But the definition of broker is what’s changing.”

The Guardian study revealed one in three small-business owners who work with a broker for their company benefits work with more of a nontraditional broker such as a technology company or a payroll company.

“More small businesses are gravitating toward technology and they’re not

being consulted with and spoken to about their benefits technology strategy by the more traditional benefits brokers,” Lanzoni said.

“So I think the message for many benefits brokers is they really need to develop a benefits strategy of their own.

They need to have a position on the use of benefits technology for their clients.

They need to have relationships with other carriers who have technology or they have to acquire technology on their own. They have to have a strategy of their own because more and more small business clients they work with will be looking for that.”

How can a traditional benefits broker compete with a technology platform?

Begin with having a strategy that includes some form of tech, understanding your clients’ needs and understanding what kind of solution is best for each client, Lanzoni advised.

Guardian released a report earlier this year, “Game Changer And The Digitization Of Employee Benefits,” that took a deep dive into tech solutions for employee benefits. The report, Lanzoni said, contained “a road map to how to assess what the right technology options are, depending on your book of business and kind of clients you work with, what industry are they in, what’s their size, are they already using technology for various aspects of human capital management.

“That can dictate what the right next steps will be regarding bringing in benefits administration and enrollment technology.”

Eighty percent of small-business owners told Guardian researchers they have not spoken with a broker about a benefits technology strategy, while only 18 percent said they had, Lanzoni said.

He added, “That’s too small, that’s too low given where the market’s going, and the important role technology has and will continue to play.”

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.

December 2018 » InsuranceNewsNet Magazine

61

NEWSWIRES

Powered by InsuranceNewsNet.com

Don’t Let Money Woes Ruin The Romance

The holidays are prime times for couples to get engaged, but financial incompatibility can quickly derail a marriage. Lincoln Financial Group’s “Love and Responsibility Survey” shares insights on how couples are prioritizing finances in their relationships.

The good news is 95 percent of couples feel setting a plan for their family’s financial future is an important priority. But only 30 percent believe they are doing a very good job. Even more distressing, the survey found that one in three couples say they dread talking about their finances.

An advisor can make all the difference for a couple who wants to keep the financial part of their relationship healthy, the survey showed. Married couples who have met with an advisor are twice as likely to feel that they are doing a “very good job” planning for their family’s financial future than couples who are going it alone. dream would require work. Eighty percent expect that flexible and part-time jobs will play a bigger role in supporting retirement savings, and 79 percent said Americans will need more opportunities to work, earn and save later in life.

Further, most of those surveyed said they expect to self-fund their retirement.

PICTURE IT: RETIREMENT

When people envision what their retirement will look like, they are likely to save more money to make that vision a reality. That’s the word from Capital Group, which looked at Americans’ changing expectations for their retirement years.

Survey participants who were asked to picture their retirement years recommended saving 31 percent more per paycheck in a retirement savings plan on average than those who did not envision their retirement. For women and millennials, 40 percent to 50 percent of those who pictured their retirement saved more money than those who did not.

Whether or not they imagined what retirement would look like, Americans agreed that funding that retirement DID YOU

KNOW

?

62

FINANCIAL PLANNING LEAVES CONSUMERS ‘MORE CONFUSED THAN EVER’

The vast majority of consumers who find a financial task difficult don’t seek help. This opens up a gap for financial advice, according to a report from Hearts & Wallets.

Consumers say a range of financial tasks are more relevant to them now than they

34% of men began claiming Social Security benefits at age 62 in 2017.

Source:Source: LIMRA Social Security Administration

InsuranceNewsNet Magazine » December 2018

QUOTABLE I’ve never seen a president who wanted interest rates to go up.

— Jamie Dimon, JPMorgan Chase CEO

were six years ago. Two of the most relevant tasks are “knowing how to find resources to plan financially in retirement” and “developing a strategy to withdraw from multiple accounts.”

The study showed that despite all the advertising by financial services companies, “people are more confused than ever,” said Laura Varas, Hearts & Wallets CEO. “So some part of this message isn’t resonating with consumers.”

GEN Y WAITING FOR ECONOMY TO TANK

Affluent millennials grew up in the shadow of the Great Recession, and they expect to see another market meltdown in the future.

Nearly eight out of 10 affluent millennials say “it is just a matter of time before the bad behavior of the financial industry leads us into another global financial crisis,” according to an Edelman survey. This pessimism extends to advisors, with 80 percent of affluent millennials saying they are “suspicious of recommendations” from financial professionals.

But the outlook is not all doom and gloom.

Eighty-one percent of affluent millennials say they are financially successful and will have greater financial success than their parents had.

After The Funeral: Navigating The Three Stages of Widowhood You have a wonderful opportunity to assist women during one of their most significant life transitions. But you must understand the three steps of the journey. • Kathleen M. Rehl

I

still remember his enthusiasm. “So, how do you want to celebrate our 20th anniversary, honey? Should be special. How about a Caribbean cruise? I’m the luckiest husband to have married you, Kathleen! And I’m gonna love you forever!”

We never enjoyed that cruise. We didn’t celebrate our special wedding anniversary either. Tom died. Yes, I became a member of the group no woman wants to join — the widows’ club.

I was heartbroken. I cried a lot, couldn’t sleep, lost my appetite, was forgetful, felt numb and worried about finances. I wasn’t alone. Almost a million women a year become widows in the U.S.

characteristics of each stage, you can offer sound advice to guide her.

Stage 1: Grief/Numbness

Early on, a widow is vulnerable and needs to focus on taking care of herself. The emotional stress of a spouse’s death affects her cognitive abilities. Her attention span may be short, her memory may be faulty

Say you’re there as a thinking partner on her new journey.

Focus on financial triage, encouraging a “decision-free zone.” Susan Bradley of the Financial Transitionist Institute coined this term. Don’t confuse that with a nodecision zone as you concentrate on financial matters needing attention soon. Delay other decisions, such as rebalancing her portfolio, until her thinking normalizes.

Create a flowchart, showing money coming in and going out. Make sure bills are paid. File for death benefits from her

3 Stages of Widowhood

Serving Widows Is A Great Niche

You have a wonderful opportunity to assist women during one of their most significant life transitions — after a husband’s death.

What does a widow want and need from you? That depends partly on the stage of her journey. If you understand her passage through the three stages of widowhood, you’ll earn her trust and confidence, and she will gladly refer her widowed friends to you as well.

Three Stages Of Widowhood

In addition to my own personal 12-year journey, I’ve observed three stages of widowhood with the hundreds of women I have advised over the years. Widowhood is a process that takes time.

Each widow moves along her path at her own pace. As you learn to identify the 64

and making decisions will be very challenging. Some women refer to this state of mind as their “widow’s brain.” A widow’s physical health may deteriorate, especially if she doesn’t eat well, isn’t sleeping enough or is not exercising. Her biggest concern may be “Am I going to be OK financially?”

As a compassionate advisor, communicate with empathy. Talk about her late husband, using his name. Don’t use clichés such as “I’m so sorry for your loss.” Instead, share a memory of your client’s husband if you can or ask her about the happier times.

InsuranceNewsNet Magazine » December 2018

husband’s former employer if applicable.

Be sure health and other insurance policies continue. List various accounts and where they’re located. Check what’s in the safe deposit box. You may help to start the estate settlement process. Do a financial reality check, relieving her of scary homeless scenarios. During this unsettling time, help her feel safe and secure.

Encourage your widowed client not to make big irrevocable decisions she could regret later, such as moving from her house too fast. This isn’t the time to invest life insurance

AFTER THE FUNERAL: THE THREE STAGES OF WIDOWHOOD

proceeds in a new venture she doesn’t understand. Talk about keeping money liquid, for nearterm expenses, before making longer-term investments.

To help her remember what you have discussed, use this one-page tool. Fold a blank page into thirds, writing the words “Now,” “Soon” and “Later” at the top of each column. She can start to fill it in with a few of the actions you’ve talked about.

The yoga term “breathe” fits Stage 1 well. I enjoyed my first yoga class the same day I picked up my husband’s ashes from the mortuary, and I still take classes today. I’ve encouraged other widows to try yoga for their body, mind and spirit.

Action Items List

Stage 2: Growth/Journey

When she’s thinking more clearly, a widow is ready to take care of business in Stage 2. Discuss investments and general financial planning. Plan basic estate updates, examine her financial portfolio for possible repositioning as a single woman and look at her tax situation. Pre- and post-retirement decisions are important, as are housing decisions.

Stage 2 is a time of “balance,” to use another yoga term.

I’m often asked how long it takes to move from Stage 1, grief, to Stage 2, growth. That depends on several factors

Tom’s death. I thought, “Yes, I’m making progress.” But then I found a card he gave me years before, signed “I’ll love you forever.” I burst into tears and felt I was losing all forward momentum. I acknowledged my feelings and kept moving forward.

Unfortunately, some widows get stuck in Stage 1. They may be elderly women who were enmeshed with their late spouse with little life of their own. These women may die a few years after their partner’s death or even days afterward. This broken heart syndrome is a medical condition,

Do a financial reality check, relieving her of scary homeless scenarios. During this unsettling time, help her feel safe and secure. possibly influenced by circumstances of the death. For example, a sudden fatality, such as an accident, is different than an anticipated death, such as a long terminal illness. When death is expected, a widow often starts grieving before her husband dies. The widow whose husband died of a heart attack may linger in Stage 1 longer than someone whose husband died after a long battle with cancer.

It’s not a straight linear path from Stage 1 to Stage 2. It’s more like days of two steps forward and one step backward. That’s what it was like for me five months after

called stress-induced cardiomyopathy. If your client remains stuck, consider recommending grief counseling.

Stage 3: Grace/Transformation

Many widows ultimately arrive at Stage 3 of widowhood — grace or, as some say, transformation. It can be a fulfilling time as new life evolves with a renewed sense of purpose. Women enjoy new people, experience and opportunities. Stage 3 is a time of taking care of more.

The widow will see herself as an independent woman. She may choose to focus

on advanced planning concepts, such as family issues or legacy and charitable planning for those she loves. A business may be involved. It is very rewarding to assist a widow as she moves from heartbreak to breakthrough living. The yoga term “fulfilling” fits here.

A widow may welcome a new romantic relationship in her life. I advise widows to be careful about a potential mate looking for a woman to be his purse. In a committed long-term relationship, she’ll want to talk about how money will be handled with her new partner — separate, blended or both. Your skills will help her navigate money conversations. A prenuptial conversation is appropriate for those who are marriage-minded.

Moving Forward, Feeling Financially Secure

Your widowed client has loved. She has lost her husband and her former lifestyle with him. But she can move forward into a transformed life that includes new passion and purpose. With your help, she’ll move forward on her own but not alone.

Kathleen M. Rehl, Ph.D., CFP, CeFT, is author of Moving Forward On Your Own: A Financial Guidebook For Widows.

Kathleen may be contacted at kathleen.rehl@innfeedback.com.

December 2018 » InsuranceNewsNet Magazine

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BUSINESS

3 Steps To Improving Your Professional Selling Presence The best sales professionals have traits and characteristics that make them stand out from the rest of the pack.

By Reggie Pearse

B

ernie strode confidently toward the table at the restaurant on the ground floor of the financial company’s office building, hand extended and a warm smile across his late middle-aged face. The financial advisor had coldcalled Bernie and scheduled this lunch meeting to discuss his retirement and estate-planning.

The advisor rose from his chair, straightening his pinstriped suit jacket.

He managed a half smile. They talked as they ate a light lunch. The advisor asked questions from an arsenal learned during a variety of training sessions.

“When do you hope to retire?” “What are your biggest fears when you think about retirement?” “Do you have life insurance?” Good questions to ask.

66

The advisor also spoke about his role and philosophy. He sounded forced and a little overpracticed. His version of superprofessional. Somewhere along the way, he asked Bernie what he did for a living.

“I’m a sales trainer,” he answered. The advisor made some wisecrack and they both laughed.

At the end of a reasonably satisfying lunch meeting, Bernie got up to leave.

He leaned in toward the financial advisor and said, “Take a look around and notice how there are many others dressed like you, likely having a similar meeting to the one we just had. In my experience, you all ask the same questions and behave in a similar way. What are you going to do to differentiate yourself?” With that, he turned and left.

The best sales professionals, those with long-standing relationships and consistently successful careers, have traits and characteristics that set them apart. They have great “presence.”

What is your presence? Do you know?

How do you make other people feel, not just about you but also about themselves,

InsuranceNewsNet Magazine » December 2018

when they are in your company?

Presence Transcends Process

There is no doubt that as financial advisors, following a process in your interactions with clients is a good thing.

Having a prepared agenda, a time frame and a set of objectives are necessary components of effective meetings.

However, these components of a typical sales process are not the artful magic that helps close deals.

The magic is your presence. Your ability to connect with your prospects and clients in a way that makes them trust you enough to be transparent about their business or personal objectives, challenges, hopes and desires, makes them open to hearing your insights and solutions, and keeps them engaged as you navigate objections and negotiations.

Your presence can create a willingness to collaborate. It’s a quality of interrelationship that puts both client and advisor on the same side of the table, working together to achieve the client’s financial goals.

3 STEPS TO IMPROVING YOUR PROFESSIONAL SELLING PRESENCE BUSINESS

3 Ways To Improve Your Selling Presence

1. Know yourself. The foundation for improving your presence begins with increasing your self-awareness. For sales professionals, this relates to your ability to monitor your emotional state and correctly identify it in any given selling situation.

It is not just noticing your behavior, but becoming tuned in to underlying emotions. Emotions drive behavior, and your clients respond to the ways in which you behave toward them. Being able to tune in to how you feel will help form the work you need to do to consistently behave in the right way.

Here are some tips on building your self-awareness: » Tune in to yourself by consciously noticing what’s happening internally. As you wait in the lobby before your first meeting with a prospect, notice how you are feeling. Are you relaxed and appropriately stressed or too stressed and distracted?

Any number of factors can influence how you feel. These factors include your confidence level as it relates to your technical job skills, your excitement about the particular opportunity, how well you

coach or a loved one. Receiving constructive feedback and actually making changes in behavior can be difficult for many people. Sometimes the initial work is to get better at being open to receiving feedback.

engaged in what matters, so they are able to perform at a peak level in demanding, high-stress situations. Groppel encourages us to build healthy practices into our daily routines and maintain a sense of control and balance in our lives.

» Taking an assessment is an effective way to help increase your understanding of what you do, why you do it and how it may be perceived by others.

For example, the Myers-Briggs Type Indicator includes a measurement of where you lie on the introvert-extrovert dichotomy. Since most sales professionals are extroverts, understanding how you are perceived by more introverted clients can help you emphasize behaviors that will allow you connect with them more deeply. This might include being comfortable in silence.

» Practice meditation and mindfulness. This is an effective way of restoring calm and inner peace. Focus your attention and eliminate the stream of jumbled thoughts that may be crowding your mind and causing stress. This process may result in enhanced physical and emotional well-being.

2. Improve Your Ability To Manage Stress. Long working hours, work overload, high-pressure deadlines and personal conflicts — sound familiar?

There is irrefutable evidence of the negative impact sustained, excessive stress has on our brain function, heart health and overall well-being.

Excessive stress also affects your presence. It limits brain function, thereby

What is your presence?

Do you know? How do you make other people feel, not just about you but also about themselves? are doing against your sales plan, what’s happening in your work or personal life or how well you are sleeping. However you feel and whatever the reasons, start to notice them more. Practice nonjudgmental awareness. This simple technique can begin to help you regulate your emotions and alleviate anxiety. » Ask for honest feedback about your presence from people whose opinions you trust and respect. The source of the feedback can be a boss, peer, presence

diminishing your ability to listen, appear confident, empathize and be comfortable in your own skin.

Consider some of the following ways to manage stress. » Become a corporate athlete. Jack Groppel, author of The Corporate Athlete, highlights the need to help people in stressful jobs improve their health and performance. He frames his work around the need to become a “corporate athlete.” Corporate athletes learn to be fully

» Focus on your breathing. Almost everyone in sales experiences excessive stress at one time or another — working to close the deal, meeting your goals, the big final presentation and so on. One of the most accessible and impactful relaxation techniques is diaphragmatic breathing, also called deep breathing or abdominal breathing. It is the one aspect of your unconscious of which you can gain conscious control simply by bringing your attention to it.

3. Participate in a sales presence workshop. Attending a training workshop to develop your sales presence is the ideal solution if you are looking for broadbased training with some individualized coaching. The duration of these workshops ranges from two hours to two days; the breadth of presence skills and behaviors taught will be influenced by the duration of the workshop. Individual presence coaching is also available instead of or subsequent to the presence workshop.

Remember, in a commoditized industry where a product-based competitive advantage can be marginal, you are the difference. How well you show up, engage, inspire and persuade your prospect will be the difference in whether they choose you or your competitor.

Reggie Pearse is the managing partner of Organization Learning Group and author of Selling With Presence, Use Your Personal Power To Close More Deals. Reggie may be contacted at reggie. pearse@innfeedback.com.

December 2018 » InsuranceNewsNet Magazine

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INSIGHTS

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Five Great Ideas For Retaining Customers For Life Holding on to clients for life is not as difficult as it seems. Just follow these steps.

By Danny O’Connell

N

ewsflash: Ours is a relationship business. Sure, there are online resources and other areas where people can feel like they are just another number, but most of us pride ourselves on providing personal service and knowing about our clients’ grandkids, vacation plans and favorite sports teams.

So the big question is: How do we get there? How do we transform our clients into “clients for life?”

The following are five suggestions I would recommend to any advisors who are interested in holding on to the clients they have worked so hard to acquire.

1

Be sincere. This sounds like a no-brainer, but for many of us who do a high volume of business, it is easy to get wrapped up in our process and start thinking: “This is the fifth time I have seen this today.”

You must remember that to the client, you are their resource, their ally and, at times, their savior when things go wrong.

Remember to listen, to be sincere, to be earnest, as well as to empathize and connect with your clients. Treat them as you would want to be treated and get to know them.

2

Compete for their business each year. How many times have we sent out a renewal or reviewed a renewal and thought to ourselves: “This is good enough”? It’s not. You must be willing to shop the market or show options to your clients, and explain the differences between these options so that they don’t go and find someone else who will.

Every year at renewal time, we shop 68

all the major options that would apply to our clients. We review and talk about their needs, whether those needs are changing or not, and the differences.

We focus on value, not price, and our clients know that we have their backs. As a result, they know they don’t have to go elsewhere.

3

Connect with them on social media. We are going a million miles per hour these days. So how do we keep up? By using social media.

Think about, when you post something, how many times you check to see whether that post is “liked” and who “liked” it.

Be the person who “likes” your client’s life. They see you and your comments, and you build a stronger bond with them. You develop more meaningful conversations and can help them plan, change auto policies, get more life insurance, save for college, or plan for retirement. It is there in front of you — all you have to do is go and become a part of their lives.

4

Hold annual client events.

We do a client event at least once a year. During these events, it is no longer about me. Instead, we have politicians, professional speakers and heads of companies come in and give presentations.

People don’t want to listen to talks

InsuranceNewsNet Magazine » December 2018

about insurance; they want to be inspired and get things they can’t get elsewhere.

Holding these events also demonstrates a high level of confidence in your ability and commitment to what you do and ultimately to your clients as well.

5

See them regularly. Don’t get wrapped up on doing things only on social media or email. My clients tell me they love to see me and they miss me if we don’t visit in person.

Remember that your clients crave personal connection just like everyone else. The minute you become “Johnny or Jane 800-Insurance” is the moment you lose personal connection with them and they start looking for someone who wants a relationship.

It has been said that people are the best and the worst parts of our jobs. Go find the people you would like to have in your life, make them your clients, and build a relationship with them so that you can have the clients you want and a career that makes you happy.

Danny O’Connell is CEO of Next Level Insurance Agency, a Dallas-based agency specializing in employee benefits, executive benefits and retirement. Danny may be contacted at danny.oconnell@innfeedback.com.

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INSIGHTS

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

Streamline Your Operations And Drive Long-Term Success Use these technology and staffing strategies to make your practice more efficient and serve clients on a deeper level.

By Peter Hill

P

ractice management is one of the most important factors impacting advisor success. It influences every aspect of operations — from prospecting to client management, staffing and networking. When advisors streamline their operational mindsets, their practices have the potential to engage clients on a deeper level and drive long-term success.

My practice recently underwent a restructure to consolidate resources with a business partner as we prepare to share the same office space. Through the moving and organization process, I’ve taken the opportunity to consider my resources, processes and staff to create a successful, streamlined operation.

Use Tech And Staff

Our ultimate goal is to drive revenue and schedule as many meetings as possible with clients, but that cannot happen without the right process and human capital in place. To achieve that, we went through a complex human resource process that structured internal assets to empower and enable the team to operate with a high capacity. My practice uses a combination of technology and freelance contractors to supplement full-time staff as we restructure and reallocate resources.

We rely on a client relationship management tool to keep track of clients and prospects. Most CRM programs have powerful and flexible software to fit a variety of needs and supplement existing staff. Our CRM tools help the team keep track of and store a high volume of information in a central location to help us all understand what the client relationship 70

When advisors streamline their operational mindset, their practices have the potential to engage clients on a deeper level and drive long-term success.

looks like.

Although the upfront time and cost of investment to implement and fine-tune a CRM platform can be significant, after it’s calibrated to perform in the necessary capacity, it can fill in the gaps in your staff and process model to save time and money over the long term.

Some strategies can fill the staffing and talent gap that technology solutions can’t overcome. Answers to growing pains might be building flexibility into a staffing model with a mix of full, parttime or remote employees or relying on third-party resources.

Remote contract workers and freelancer communities are good resources for a number of potential needs — from marketing assistance, to developing paperwork and presentations, to virtual assistants. If telephones and bridging technology are set up properly, clients won’t sense a difference between traditional employees and remote or contracted workers.

Build Traction Through Processes And Procedures

It’s vital to implement internal procedures to ensure clients and projects don’t

InsuranceNewsNet Magazine » December 2018

fall through the cracks. Documented processes help safeguard the time and effort invested in relationship development and prospecting. It was important for my team to identify and include the vision of the company and why clients choose to work with us — the why behind our core values, mission and objective — in our new policies.

Our practice adapted the Entrepreneurial Operating System from Gino Wickman’s book Traction: Get A Grip On Your Business as we developed processes and procedures to improve efficiencies and adjust for growth. It is a natural instinct to look forward to guide businesses into the future, but the EOS method encourages leaders to look backward and analyze the elements of their success at a micro level.

Through this process we took a holistic look at practice management and made necessary adjustments to encourage future growth. It’s important to understand the elements of past success as processes

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Financial planning is a key component of my practice’s foundation and value proposition to clients. As our main tool, it provides a touchpoint to explain our services and goals for the client as we outline a strategy. Planning may carry a different meaning to a lot of different people, but it is ultimately a road map of how you will reach financial goals and objectives.

Documented processes help safeguard the time and effort invested in relationship development and prospecting.

As we help clients protect, accumulate or distribute wealth, financial planning inevitably touches on other competency areas such as investments, risk management, taxes, estate planning and more. It’s important to develop a network of strategic partnerships with other professionals to understand these areas and create synergy to serve clients. If you lack the acumen or expertise to accomplish certain tasks for clients, farm them out to other professionals and experts.

As the client’s main advisor, you act as the coordinator between other relationships such as CPAs, attorneys or bankers. Networks of related financial professionals empower advisors to focus on key specialty areas, rather than serve as generalists.

Peter Hill, ChFC, is an Investment Advisor Representative with Voya Financial Advisors. He is a 22-year Million Dollar Round Table (MDRT) member with 17 Court of the Table qualifications and one Top of the Table qualification. Peter can be contacted at peter.hill@innfeedback.com.

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December 2018 » InsuranceNewsNet Magazine

71

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

Helping Retirees Crack Open Their Nest Eggs Some retirees are more interested in preserving their assets than in spending them. Here is how advisors can help them convert those assets into income.

By Matthew Drinkwater

P

eople spend decades saving for retirement. Then some people reach retirement — but they don’t do anything with their savings and investments. Ten years later, they’re still not withdrawing even a dime from their accounts. In some cases, many have more money now than they did at the start of retirement.

That’s the case for about a quarter of retired investors, according to LIMRA Secure Retirement Institute research.

Who are these retirees who refuse to crack open their nest eggs?

In a recent LIMRA SRI survey of more than 500 retiree investors, 3 in 10 reported that they are taking regular, systematic withdrawals from their savings and investments. Nearly half reported that they are taking occasional withdrawals, but 26 percent are taking neither systematic nor occasional withdrawals.

LIMRA SRI describes retirees who don’t withdraw their assets as “Preservers.” While Preservers resemble their savings-tapping counterparts in most respects, they typically can be distinguished in five ways: 1. Age. Younger retirees are less likely than older retirees to make withdrawals.

Often, they haven’t yet reached the age when the IRS requires their taking minimum distributions from qualified retirement savings accounts.

2. Years into retirement. Those further into retirement are more inclined to withdraw assets. This is partly a function of age, although those who retire at a relatively old age may only be a few years into retirement.

3. Sources of income. Those 72

retirees who have more income from lifetime-guaranteed sources have less need for withdrawals from their savings. More than 4 in 10 retiree investors who receive 50 percent or more of their income from traditional defined benefit pension plans are “Preservers.” In contrast, among retiree investors for whom pension plan income represents 15 percent or less of their income, just 2 in 10 are Preservers.

4. The timing of retirement. People who retire when planned are less likely to take any withdrawals (70 percent) than those who retired earlier or later than planned (77 percent and 89 percent, respectively). The link with pension income may be relevant — eligibility for full pension benefits could anchor retirement timing.

5. Sufficiency of guaranteed lifetime income to cover expenses. Twothirds of retirees say that Social Security, pensions or other forms of guaranteed lifetime income are enough to cover their basic living expenses. Of these retirees, one-third are Preservers. But among retirees for whom these income sources are not sufficient to cover basic living expenses, only 12 percent are Preservers.

These characteristics by themselves provide clues to explain Preservers’ behavior, but even more revealing are Preservers’ top stated reasons for not taking regular withdrawals from their savings and investments.

First, about 6 in 10 Preservers claim to be just fine living off whatever income sources they are receiving. But research by the Employee Benefits Research Institute suggests that “need” is an elastic concept; retirees, regardless of wealth level, appear to adjust their spending to match how much they received from regular ongoing sources.

The second most common reason is that more than half (51 percent) of Preservers plan to access their retirement accounts later in retirement, possibly when forced by law to do so (due to required minimum distributions). If some

InsuranceNewsNet Magazine » December 2018

portion of their assets were converted into guaranteed income, while keeping another portion in reserve for long-term needs, Preservers could boost discretionary spending in the “go-go” early retirement years without being concerned about running out of money.

Do any of these Preservers present opportunities for providing advice and solutions? In short, yes.

Those who are early in retirement, and have not yet determined how best to deploy their assets, will likely not have everything squared away. More and more of these retirees will be “assets rich and income poor,” lacking the same options as prior generations to live off pensions and Social Security exclusively. Many will have questions about how much they can “safely” spend on discretionary expenses without putting themselves at risk later in retirement.

A formal planning process, resulting in a detailed plan for managing income, expenses, and assets in retirement, would allow more retirees to safely deploy their assets, either through systematic withdrawals or conversion to lifetime-guaranteed income (annuitization).

LIMRA SRI research shows that those who have formal written retirement plans are more likely than those without them to take systematic withdrawals.

Comprehensive plans developed by advisors would also address risks associated with health or long-term care costs by apportioning savings for specific goals. A well-designed plan should convince more Preservers to crack their nest eggs, and thereby achieve their dreams.

Matthew Drinkwater, Ph.D., FSRI, FLMI, AFSI, PCS, is corporate vice president and director of retirement research within the LIMRA Secure Retirement Institute.

Matthew may be contacted at matthew. drinkwater@innfeedback.com.

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Please keep in mind that the primary reason to purchase a life insurance product is the death benefi t.

Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods.

Agreements may be subject to additional costs and restrictions. Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements.

SecureCare may not be available in all states. Product features, including limitations and exclusions, may vary by state.

These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances.

It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affi liates, have a fi nancial interest in the sale of their products.

The Acceleration for Long-Term Care Agreement is a tax qualifi ed long-term care agreement that covers care such as nursing care, home and community based care, and informal care as defi ned in the agreement. This agreement provides

for the payment of a monthly benefi t for qualifi ed long-term care services. This agreement is intended to provide federally tax qualifi ed long-term care insurance benefi ts under Section 7702B of the Internal Revenue Code, as amended.

However, due to uncertainty in the tax law, benefi ts paid under this agreement may be taxable. Please ensure that your clients consult a tax advisor regarding long-term care benefi t payments, or when taking a loan or withdrawal from a life insurance contract.

The death proceeds will be reduced by a long-term care or terminal illness benefi t payment under this policy.

POLICY FORM NUMBERS: ICC17-20103, 17-20103 and any state variations; ICC1720111, 17-20111 and any state variations INSURANCE PRODUCTS ARE ISSUED BY MINNESOTA LIFE INSURANCE COMPANY or Securian Life Insurance Company, a New York authorized insurer.

Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the fi nancial obligations under the policies or contracts it issues.

Securian Financial is the marketing name for Securian Financial Group, Inc., and its affi liates.

Securian Financial Group, Inc. www.securian.com

400 Robert Street North, St. Paul, MN 55101-2098 ©2018 Securian Financial Group, Inc. All rights reserved.

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For fi nancial professional use only. Not for use with the public. This material may not be reproduced in any form where it is accessible to the general public.

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