March 2013

Life Annuities Health Financial

March 2013

PLUS Jay Abraham’s Four Steps to Achieving Greatness P.12 Five ‘Life’ Changing Strategies to Win Business Clients P.36 Knowing S, C and LLC Means $ P.50

Sponsors

Learn the great and powerful secrets of eight $1 million earners May 3-4, Fort Lauderdale, Florida Ever wonder if that advisor consistently earning over $1 million-a-year has a secret?

Odds are, he does. Usually, it’s the kind of high-level sales and prospecting secret that’s closely guarded - shrouded in mystery and accessible only after you’ve met the demands of some wizardly FMO. But now, for the first time, Advisors’ Academy is offering a no-obligation peek “Behind the Curtain” at the systems and strategies that eight elite producers have created, perfected and use regularly to earn over $1 million-a-year in income.

We’ve scoured the country for the most successful systems in the industry and now, for two days only, we’re bringing together the producers behind eight of the very best.

Discover Great and Powerful strategies that: • Attract qualified prospects and maximize closing ratios • Turbo-charge your seminars and workshops •“Posture” you in roles of influence and trust • Build your brand and set you miles ahead of the competition • Mine gold from your existing client base • Can help double your income within a year!

2 days - 8 programs - $1 million or more reasons to not miss it!

You already have the power to take your business to the next level - you’ve had it all along.

Now all you need is the desire… and the Great and Powerful secrets.

May 3-4, 2013, The Atlantic Resort & Spa, Fort Lauderdale, Florida Call Steve Archer 877-727-9675 for more information Seats will fill up fast, so CALL NOW!

For a COMPLIMENTARY sample of just one of the powerful tools you’ll discover “Behind the Curtain,” visit www.GetMarketProof.com now.

If you are S.M.A.R.T. your world will change

forever...

And there’ll be no looking back.

These bold words are from Mike Steranka, a $250 Million producer 8 years running, top sales award earner, and trainer of some of the best annuity producers in the world.

His S.M.A.R.T. Advisor System has helped thousands of advisors build the foundation for success, acquire and master the tools to maintain systems, and reap the revenues that follow when they practiced Mike’s proven Unfair Advantage. And he can do it for you.

S.M.A.R.T. stands for: Systems – the “HOW TO” that gets you there Momentum – the essential things that keep you there Accountability – the measurement to keep you there Resources – the manuals that determine you’re there Training/Teaching – sharing your “there” with others

Quite frankly, I don’t know why anyone in our business would NOT follow systems. I do not work Fridays. I take 3 months a year off and I generally work about 10 to 12 days a month. I write $3,000,000 in new annuity premium in those 10 to 12 days because I follow my systems.”

– Mike Steranka

Visit www.GetSmartReport.com to download your FREE copy of The Unfair Advantage – 7 Keys for Exponential Growth and start next month off S.M.A.R.T.

March 2013 » Volume 6, Number 3

» read it

online

insurancenewsnetmagazine.com/March13

Scan this QR code with any QR code reader on your smart phone

IN THIS ISSUE

View and share the articles from this month’s issue

40 ANNUITY

24 INFRONT

8 NAIC Works on Consumer-Friendly Annuity Buyer’s Guide

By Linda Koco This will be the first revision to the guide in over a decade, and it is aimed at bringing clarity, simplicity, transparency and disclosure to the annuity purchase process.

12

FEATURES

24 The Taxers Are Coming

By Steven A. Morelli The favorable tax treatment of life insurance products turns 100 this year, and the industry continues to remain vigilant against attempts by Congress to change that status.

LIFE

34 Social Media Lessons from Carriers

By Ian M. Lundahl Insurers are recognizing the importance of having a strong social media footprint, and the industry is evolving rapidly to incorporate social media as a primary driver for product and firm marketing.

36

12 T he Four Steps to Achieving Greatness An interview with Jay Abraham Too many of us are content to live in mediocrity, but Jay Abraham, marketing master and author of Getting Everything You Can Out of All You’ve Got, knows that there is greatness inside of everyone.

In this interview with InsuranceNewsNet publisher Paul Feldman, Abraham describes the four steps of greatness and why they are worth attaining.

2

InsuranceNewsNet Magazine » March 2013

40 What Happens If Annuities Are Considered ‘Complex’

By Linda Koco Security regulators in the U.S and elsewhere are indicating that they want to step up review of distribution of complex financial products, such as variable annuities and equity-linked instruments.

Eventually, this could affect advisors who handle such products.

42 When Is the Right Time to Have the Income Annuity ‘Talk’?

By Linda Koco The prime time for today’s advisors to have “the talk” about income annuities is when clients reach their late 60s or early 70s, around the time when they must take required minimum distributions from 401(k) and other retirement plans.

HEALTH

46 HHS Specifies Covered Benefits, Levels of Health Plans Under ACA

By Susan Rupe More information on various qualified health plans and benefits covered as we get closer to implementation of the Affordable Care Act.

FINANCIAL

50 Knowing S, C and LLC Means $ 36 5 ‘Life’ Changing Strategies to Win Business Clients

By Kenneth A. Shapiro Effective sales ideas that will help you advise small- to mid-size business owners on how to maximize the value they have created.

By Russell E. Towers Every town in the U.S. has successful “Main Street America” business owners who operate under C Corp, S Corp or LLC legal status. Knowing your business client’s status can help you to provide them with certain cash flow possibilities to fund various life insurance solutions.

Uncover The

Most

Qualified (And Lucrative) Buyers Of Annuities.

“Psychographic Cluster Marketing” (PCM) Finds Clients Who are More Likely to Purchase Annuities.

Using in-depth psychographic information (rather than oldfashioned demographics), Covenant Reliance Producers can give you a complete analysis of households in your target market area.

The same old demographic data used by direct mail companies doesn’t cut it anymore – age, income, assets and zip code, etc. Wouldn’t you really like to know who would most likely BUY an annuity from you? PCM gives you the laser focused details you need to market to the ideal annuity prospect, which will cut your marketing expenses up to 50% and increase your revenues by 100%!

(PCM has been used by large corporations such as Wal-Mart, Bank of America, Target, Macys, GE and Sprint use prior to marketing to prospects using direct mail. Now for the first time ever, you will have this same technology to identify “your” ideal prospect.)

Using buying behavior data, “Psychographic Cluster Marketing” (PCM) finds the most qualified annuity buyers using: The entire 235 Million U.S. Residential File for Research 1,000 Data Points Per Address Psychographics identifies the Top 20-25% of a market area that typically generates 50% of your revenue!

Avoid the 70-75% of your market that is the other 50% of your revenue Identifies potential customers’ drive time to your office (not just their ZIP code)

Watch our FREE informational video that reveals how PCM can work for you, then download our FREE report on Psychographic Cluster Marketing at www.CRP-PCM.com or call 866.907.4275.

866.907.4275 www.CRP-PCM.com

ALSO IN THIS ISSUE March 2013 » Volume 6, Number 3

BUSINESS

52 Wrapping Up the Conversation and Seeing Them Again

60 L IMRA: Informativeness, Service Quality Are Top Buyer Concerns

By Nilufer Ahmed Improving the quality of information and services insurers offer to prospective buyers would go a long way in reducing the risk that consumers perceive in making the decision to purchase life insurance.

By Bryce Sanders How to make a graceful exit while leaving the door open for seeing the other person again. (Yes, it’s a lot like dating!)

INSIGHTS

More advisors are moving to Independent status than ever before.

But…as an independent, you face a new set of challenges that can keep you up at night: The 7 Monsters Under Your Bed.

Dreaded Lack of Government Isolation New Sales Intervention ... just to name a few. These monsters can create sheer panic and derail your path to success.

THERE IS A SOLUTION...

Unified Insurance Network can enable you to slay those monsters and become your own Super Hero. UIN offers: • Help handling your most difficult underwriting cases • Assistance preparing effective presentations • Superior lead-producing illustrations and ideas Don’t go it alone. Find your superpower and slay those monsters keeping you from success.

To register for a FREE VIDEO, text MONSTER to 385-244-4064 or simply visit

www.slaythemonsters.com

56 MDRT: Once There Was a King

62 NAILBA: A Century of Protection

58 NAIFA: The Power of Gifting

64 T alent Gap in Financial Services Hurts Us All

By R.J. Kelly As the “king” of your business empire, you should immediately implement a three- to five-year planning process for the ultimate transition in leadership that will someday occur.

By David E. Appel and David B. Shannon The use of annual gift exclusions into a properly structured life insurance policy held in an irrevocable life insurance trusts can create a legacy for your client’s heirs.

By Raymond S. Phillips Congress needs to know that any revenue increases gained from the taxation of life insurance benefits is not worth the risk to the financial security of 75 million American families.

By Larry Barton Why are there so few women in the financial services industry? Larry Barton of The American College gives some theories and presents some solutions.

EVERY ISSUE 6 Editor’s Letter 20 NewsWires

32 LifeWires 38 AnnuityWires

44 HealthWires 48 FinancialWires

INSURANCENEWSNET.COM, INC. 355 North 21st Street, Suite 211, Camp Hill, PA 17011 tel: 866-707-6786 fax: 866-381-8630 www.InsuranceNewsNet.com

Publisher Paul Feldman editor-in-chief Steven A. Morelli

Assistant editor Susan Rupe

Copywriter Kathryn Rolston

CHIEF OPERATIONS OFFICER Jim Barton Creative Director Jake Haas

PRODUCTION EDITOR Natasha Clague

Senior graphic designer Carlos Centeno

Director of marketing Anne Groff and sales

Marketing Coordinator Technology Director Regional Account Manager (NorthEAST)

Regional Account Manager

(CENTRAL) Regional Account Manager

(southeast) Regional Account Manager

(WEST)

Copyright 2013 InsuranceNewsNet.com. All rights reserved. Reproduction or use, without permission, of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail editor@insurancenewsnet.com, send your letter to 355 North 21st Street, Suite 211, Camp Hill, PA 17011, Fax at 866-3818630, or call 866-707-6786. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 866-707-6786, Ext. 115 or reprints@insurancenewsnet. com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 866-707-6786 ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.insurancenewsnetmagazine.com, or call 866-707-6786, Ext. 115 for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 355 N. 21st Street, Suite 211, Camp Hill, PA 17011.

Please allow four weeks for completion of changes.

Brenda Salyer Joaquin Tuazon Mark Waters Jesse Barden Brian Henderson Ken Landis

Legal disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information “as is,” without warranties of any kind, either expressed or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration, for any errors, inaccuracies, omissions or other defects in, or untimeliness or unauthenticity of, the information published herein.

Do You Sell

Annuities Like This?

TRUE 10% Premium Bonus* 8% Commission Payout+ 2 Choices on

Lifetime Income Benefit Rider

(LIBR-2010)**

CALL

888-647-1371

For More Details About this Unique Fixed Index Annuity!

*Bonus applies to 1st year premiums. Bonus Gold (Index-1-07) + May vary by state. Commissions paid over 25 months.

MGA-10 level. See commission schedule for details. **Form number and availability may vary by state.

WE ANSWER THE PHONES!

888-647-1371

www.american-equity.com

FOR AGENT USE ONLY. NOT FOR USE IN SOLICITATION OR ADVERTISING TO THE PUBLIC.

13 INN 03.13 March 2013 Âť InsuranceNewsNet Magazine 5

WELCOME

Letter From the Publisher

The Good Fight – In Print, In Congress Dear readers, I want to start this off by truly thanking our readers and advertisers. Without your support and feedback we wouldn’t be here looking back at five years of publishing this magazine.

This month marks our 60th issue of this magazine, with more than 3,600 pages of content and more than 24 editorial, design and marketing awards. We are proud of those, but what really gets us going is the challenge of making each issue better than the previous.

Little did we know when we launched this publication in March 2008 how many changes we were about to face.

Our first cover story was “Storm of Scrutiny,” which predicted an avalanche of oversight facing our industry. Five months after that story was published, the SEC issued rule 151A, which threatened the status of indexed products and introduced us to an entirely new world of compliance.

During that month, the Fed reduced its rate to 2.25 percent, Eliot Spitzer admitted to being involved with a prostitution ring, the price of gold topped $1,000 for the first time and Barack Obama during his presidential campaign called for tougher oversight in the financial sector. A lot has happened since then, with even more on the horizon In its five years, this magazine has been an embodiment of thriving in tough times. The insurance and publishing industries faced probably their worst year in 2008. It would have been easy for us to retrench then but we were committed to a mission inspired by our readers, to deliver the best content.

Many people look at difficulty and decide to take the easier route or even quit.

I guess that’s why so many agents fail in this business and why those who do survive are so resilient.

To me, it is rather timely that our fifth anniversary issue contains an alarming 6 InsuranceNewsNet Magazine » March 2013

The cover story of our inaugural issue, March 2008, predicted a coming storm of industry oversight.

message that I really hope moves you to take action. Our industry is facing what looks to be the biggest battle of what has been dubbed the “100 Year War” to tax the insurance products we sell. While some might think it’s crying wolf, I beg to differ. As the Obama administration and Congress focus on more sweeping and radical tax reform this year, our products are on the list of tax “expenditures.”

Editor-in-Chief Steve Morelli lays out the issue in this month’s feature article, but I want to take the extra step and urge everyone who cares about this business to let their legislators know how important our products and services are.

A century ago, President Woodrow Wilson and Congress understood the special place life insurance has in American lives. But it has been a fight ever since to keep that status. For insurance advocates, that means telling our story to a new president every four to eight years and new congressional members every year.

We must never become complacent and assume other people are going to be taking care of things on behalf of you and your clients. It is especially true this year, with everything on the political table. And you know the saying, if you’re not at the table, you’re on the menu.

So, visit our resource page at INNvolved.org for tools and links to get you started. The way I see it, you have two choices: You can be proud that you helped protect your industry and your clients when they needed you most, or you could wake up one day to see that your business changed for the worst and you did nothing to prevent it.

I know because you read this magazine that you want the best for your own development and the industry as a whole. This is your call to arms to support the associations fighting the battle and to take action by contacting your representatives. The war is far from over and your industry calls.

How will you respond?

Paul Feldman Publisher

Visit INNvolved.org for background documents, tools and links to volunteer for the cause and help protect your industry.

Introducing a new 10-Year FIA with a 5-In-1 Rider!

Refreshingly New. Refreshingly Inclusive.

ATHENE Benefit 10

SM

Wouldn’t it help simplify your business if you had one product that addresses your clients’ key retirement “what ifs” instead of searching for multiple products?

Guaranteed Lifetime Income

Enhanced Guaranteed Lifetime Income

Confinement

Terminal Illness

Death Benefit

SINGLE BENEFIT BASE

+

Your clients can use one benefit—or all five.

The entire benefit base will be paid.

Annual 8% roll up rate for the first 10 years* 6% premium bonus* Early income bonus

Contact M3 Financial at 1.800.308.5555 to learn more. * Current as of February 1, 2013.

†

Entire benefit base is paid when death benefit is paid over a five-year period.

This contract is issued by Athene Annuity & Life Assurance Company and contains exclusions, limitations and charges. Please see product literature for details. ATHENE Benefit 10 is issued by Athene Annuity & Life Assurance Company, Wilmington, DE. Products/features not available in all states.

FOR PRODUCER USE ONLY. NOT TO BE USED WITH THE OFFER OR SALE OF ANNUITIES. AN1243

insuring tomorrow today sm

(02-13) March 2013 » InsuranceNewsNet Magazine 7

INFRONT

timely issues that matter to you

NAIC Works on Consumer-Friendly Annuity Buyer’s Guide The National Association of Insurance Commissioners’ revised guide would be required at point of sale.

By Linda Koco

A

n updated buyer’s guide for deferred annuities appears to be close to completion. Is this a case of someone reinventing the wheel or does the re-do have merit?

Iowa’s First Deputy Commissioner Jim Mumford contends the new document will be a lot easier to read than the one currently in use, which was last updated over a decade ago. “The language is more tuned to the consumer,” he says, “and it’s a lot shorter than the current version. We wanted to make sure of that, so people will actually read it.”

Mumford chairs a National Association of Insurance Commissioners (NAIC) working group that has been working on the revisions along with several industry groups and some consumer representatives. In recent weeks, the group has been reviewing final language before sending the document on through NAIC channels for formal adoption.

The revised NAIC Buyer’s Guide for Deferred Annuities is definitely aimed at consumers, but it may prove of value to advisors, too.

Simpler

For instance, if the final version of the revised guide really is simpler, shorter and more consumer-friendly than the previous version, that might come in handy when advisors are introducing annuity concepts to customers. (The word “if” appears here only because the final version is not yet approved.)

Advisors who take an educational and consultative approach to their practice typically like to refer their customers to easy-to-read resources from authoritative bodies. They use the materials to reinforce points and serve as refreshers.

8

InsuranceNewsNet Magazine » March 2013

Also, the question list near the end of the revised document could make a difference. These are questions that consumers might want to discuss with their annuity salesperson. But advisors can use the questions, too – as a reminder of points to cover with the customer, and as a heads-up on topics that customers might bring up, particularly customers who have read the guide.

In addition, the revised guide is one with which advisors will need to be familiar. That is because of a provision in the amended Annuity Disclosure Model Regulation that NAIC adopted just over a year ago.

The amended model requires that, when annuity applications are taken in face-to-face meetings, the NAIC approved Annuity Buyer’s Guide must be delivered along with an annuity disclosure document. Delivery must occur at or before time of application.

Iowa has already adopted this model, and several states are expected to do likewise this year. In addition, a number of states are using an earlier version of the disclosure model that has a similar delivery requirement. (In all, nearly 20 states have some form of disclosure regulation.)

So, advisors who work in states that have such regulations will likely find themselves sliding the new buyer’s guide, once available, across the table to customers. They will need to know what’s in it.

This could entail a lot of transactions because, with a few exceptions, the model applies to all group and individual annuity contracts and certificates.

Advisor Interests

The revised guide reflects the combined work of many hands, including some who are keenly aware of advisor-related concerns regarding consumer education and disclosure.

State regulators – via the Annuity Disclosure (A) Working Group of NAIC’s Life Insurance and Annuities (A) Committee – are the ones who have been

“The language is more tuned to the consumer and it’s a lot shorter than the current version. We wanted to make sure people actually read it.”

– Jim Mumford Iowa First Deputy Commissioner

shepherding the buyer’s guide project.

But several industry groups have participated too, among them the National Association of Insurance and Financial Advisors (NAIFA), the National Association for Fixed Annuities (NAFA), the Insured Retirement Institute (IRI) and the American Council of Life Insurers (ACLI). During the commenting process, the American Academy of Actuaries and some insurers weighed in as well.

Two funded consumer representatives – Brenda Cude (University of Georgia) and Karrol Kitt (University of Texas) – were also on the team. Their role was to help keep consumer comprehension issues on the front burner. Hence, the new version focuses on deferred annuity essentials, not minutia, says Mumford.

The pages include callout boxes and bullet point lists, to highlight certain ideas and support readability.

Advisors will be relieved to learn that the proposed guide does include technical annuity terms and concepts. However, it does so in short sentences and active voice – writing techniques that have been found to enhance comprehension.

For example, in describing the two phases of an annuity, the most recent draft says: “All deferred annuities have an accumulation period and a payout period. During the accumulation period, your

Do MEDICAL annuity earns money based on the type of annuity. During the payout period, the annuity makes income payments to you.”

(The wording may change in ensuing days, but this example shows the style.)

The material discusses only deferred annuities, but covers all three types – traditional, indexed and variable. “Under the disclosure model, the NAIC Buyer’s Guide must be provided with applications for all three types of annuities,” Mumford explains.

Revision History

This will be the first revision to the guide in over a decade. The last revision came out in the late 1990s when indexed annuities were still quite new and when regulators were getting a lot of questions about those products. That’s when regulators added indexed annuities to the material.

Work began on a newest version about four or five years ago. That’s when national attention began to intensify on having clarity, simplicity, transparency and disclosure in various financial and insurance products. This demand is one of the many consequences of the financial issues raised by the recession of 2007-2009, spreading well beyond sophisticated instruments for business clients and on into retail.

In the old days, the entire buyer’s guide document was woven into the appendix of NAIC’s previous disclosure model.

That made updating difficult, Mumford says, because regulators had to open up the entire model in order to update the guide. Now, under the amended Disclosure Model, the NAIC Buyer’s Guide for Deferred Annuities is a stand-alone document; this will permit more timely updates, he says.

When will the newest version get the official go-ahead? The NAIC working group scheduled a conference call to discuss the issue, and as of press time, no further announcement was made. If everyone agrees on the language, it will head on to the NAIC (A) Committee for approval, then to the NAIC Executive and Plenary for approval, and finally to the states for adoption.

Mumford thinks NAIC approval will happen this year.

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Linda can be reached at Linda.Koco@innfeedback.com.

IMPAIRMENTS

for Life Insurance Make Your Head Spin?

Breast Cancer with Negative Receptors Regurgitation of the Tricuspid Valve

Lacunar Strokes

EBCT Score in the 95th Percentile

NT-proBNP of 400 Hypertrophic Cardiomyopathy

Sleep Apnea with Bi-Pap

Stress Imaging Study with Apical Defects

Bicuspid Aortic Valve Positive CDT Remitting Relapsing MS

Hepatitis C with Bridging Fibrosis Enlarged Aortic Root

Elevated GGT, SGOT and SGPT

Lowered Ejection Fraction

Episodes of DVT

You’ve heard the health impairments above from your clients and underwriters. Don’t know what they mean?

That’s okay, we do!

From impaired risk clients, to low-cost term, to jumbo sized cases, we have the experience to help you find the right company for your client.

Helpin Broker g s Sin

1981

ce

EUGENE COHEN INSURANCE AGENCY, INC.

Life - Disability - Long Term Care - Annuities

9933 N. Lawler Ave., Suite 140 Skokie, IL 60077

Call Today 800-333-4340

Please ask for an Impaired Risk Life Marketer

www.CohenAgency.com

NOTE: All conditions, scenarios, and medical impairments may not be considered insurable by the insurance companies.

Only the insurance company can accept or deny an application after»a formal underwriting process.

Informal inquiries March 2013 InsuranceNewsNet Magazine 9 and trial applications do not guarantee coverage or rate classes. FOR AGENT USE ONLY • NOT FOR CONSUMER DISTRIBUTION

LIFE INSURANCE

PERMANENT COVERAGE DESIGNED TO BE AFFORDABLE IN THIS LOW INTEREST RATE ENVIRONMENT? THAT’S SOMETHING TO FEEL GOOD ABOUT.

*Past performance does not guarantee future results. **When comparing 20 and 30 years of cumulative policy charges for policies starting at ages 35-55 with other IUL competitors.

PruLife Index Advantage UL is issued by Pruco Life Insurance Company in all states except in New York where, if available, it is issued by Pruco Life Insurance Company of New Jersey.

Both are Prudential Financial companies located in Newark, NJ and are solely responsible for their own financial condition and contractual obligations. All guarantees are based on the claims-paying ability of the issuer.

The potential to build cash value in the Indexed Account is based on the performance of the S&P 500® Index, which excludes dividends (using an index growth cap and floor) on an annual point-to-point basis based on a 100% participation rate (subject to change). Money that is placed in the Indexed Account is not a direct investment in the S&P 500® Index. If amounts in the Indexed Account are withdrawn prior to the end of the one-year term, no interest will be credited. The cap is generally stated as a percentage, which is the maximum rate of interest that will be credited at the end of the one-year Index Segment Duration, regardless of performance of the index over the cap. The cap is declared for each Index Segment in advance of each 0228883-00001-00

PruLife® Index Advantage UL (Advantage UL) is a death benefitoriented policy that’s designed to help keep out-of-pocket payments affordable in times like these.

DEATH BENEFIT FOCUS While other IULs are built for accumulation, Advantage UL is focused on death benefit protection.

STRAIGHTFORWARD DESIGN Clients have the opportunity to build potential cash value—which could lower their lifetime out-of-pocket costs—by choosing between two simply designed interest-crediting accounts. And, our 25-year look-back helps set realistic expectations of potential performance and premiums.* So you can present with confidence.

LOW EXPENSE STRUCTURE Advantage UL’s straightforward design allows for a lower cost structure, compared to other IULs in the marketplace.** To learn more, contact your Brokerage General Agency or visit prudential.com/AdvantageUL

Index Segment Duration. The cap is subject to change at our discretion, both up and down, but is guaranteed to never be less than 3.00%. Changes to the cap could result in different policy performance and/or different values than shown here. Changes to the cap are not tied to the performance of the underlying index and may be based on interest rates, market volatility, and other factors. Caps and floors may be different in selected states.

“Standard & Poor’s®”, “S&P®”, “S&P 500®”, and “Standard & Poor’s 500™” are trademarks of Standard & Poor’s and have been licensed for use by The Prudential Insurance Company of America for itself and its affiliates. This indexed product is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representations regarding the advisability of purchasing an indexed policy. S&P 500® index values are exclusive of dividends. © 2012 Prudential Financial, Inc. and its related entities.

FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR CONSUMER USE.

Jay Abraham, marketing master and author of Getting Everything You Can Out of All You’ve Got, knows that there is greatness inside of everyone. In this interview with InsuranceNewsNet publisher Paul Feldman, Abraham describes the four steps of greatness and why they are worth attaining.

12

InsuranceNewsNet Magazine Âť March 2013

March 2013 Âť InsuranceNewsNet Magazine

13

FEATURE

The Four Steps to Achieving Greatness

W

e all want to achieve a level of “greatness” in our lives and in our business.

But the question is what is greatness and what does it even look like?

be executed and what it looks like from the recipient’s side.

I had a client in Mexico who sold entry-level homes for people who were just getting married. Their entryway on their model house had graffiti on it.

The bathrooms were not clean and the That has been a lifetime pursuit of Jay experts and specialists much brighter environment was dirty. Yet when peoAbraham, a marketing master and au- than I and we have come to the conclu- ple went there, they were being asked thor of influential books such as Getting sion that every human being is inher- to choose this as the place they wanted Everything You Can Out of All You’ve ently programmed in their DNA for to raise their family and spend the rest Got. Jay has spent the past 25 years greatness. Now that’s the good news. of their lives. And it was not doing well. solving problems and significantly in- But there are four reasons that few if The managers of the facility were workcreasing the bottom lines by more than any perform even remotely close to ing their hearts out but no one had made that connection. $9.4 billion for more than 10,000 clients greatness.

So the first move toward in more than 465 industries greatness is recognizing that worldwide. it’s inherent. We all have it. We Jay has seen and dealt sense in our hearts that we are with every type of business not necessarily performing to you can imagine. He’s studthe nth degree of our capabilied and solved every kind of Know what ity. And a lot of times we try business question, problem, great Get a road to correlate it to money but it’s challenge and opportunity. looks like, map to much more complex than that.

But in his dozens of years of specifically greatness.

We want more fulfillment, we helping other people become for you. want more connection, we successful, he was constantly want more contribution but no seeing people fall to inertia, one ever paints a clear picture. to choose mediocrity. EvIt applies everywhere in your erybody grew up thinking life. It’s greatness in your role as they’d be a superhero and a spouse, parent, friend or conmany ended up a bit part in Stay the tributor in a community. The someone else’s heroic stocourse.

Develop more clarity you get, the more ry. Jay saw that people had Success is not your selfliberating, exciting, fulfilling greatness inside, yearning to a straight, or confidence. and impactful you become. run free. easy, road.

So the first problem with He researched the path greatness is most people don’t to greatness and concluded even realize it’s there and it’s that it has four steps. In this just dormant, waiting to be discussion with InsuranceNewsNet Publisher Paul Feldman, Jay The difference between mediocrity released like a tightly coiled industrial describes how to achieve greatness. and greatness is not linear. When you spring, ready to explode productiverealize how to operate in that rarefied ly and constructively in your life. But FELDMAN: How do you define “Great- strata of greatness, the impact, the per- somebody has got to help you paint ness” and why should everyone strive formance, the results, the connection, a clear picture – internal, external of for it? the relevancy that emanate from it is what it looks like, how it looks when you execute it, when you perform on asymmetric. It’s geometric. it. And, if you don’t know what the picABRAHAM: We started looking at greatness a couple of years ago and it FELDMAN: So, why do so few people ture looks like, you’ll never get there or transcend it. was tormenting to me because I see all operate in the realm of greatness? kinds of people around the world who perform at levels of mediocrity. And yet ABRAHAM: The first, biggest and most FELDMAN: How does someone get the there is never any man or woman in fascinating reason and the reason that’s momentum to start step one? any role in life and certainly in your pretty easy to solve is they do not have industry that ever wants to be average a clue. They don’t know what greatness ABRAHAM: You’ve got to decide what’s or mediocre. So the question is why looks like relative to the performance important to you. A lot of people really would they do it? of their job, their career, their role or don’t know. A lot of people want to make I did a lot of thinking and had a lot their life. Not only what it looks like, but a lot of money but don’t know why. Is it to of stimulating discussion with a lot of also how it feels, how it is supposed to give themselves freedom? Do they want

Four Steps to Greatness

14

InsuranceNewsNet Magazine » March 2013

See How GLWBs, Fees and Caps Affect Your Bottom Line...

E E R F e h Get t ive t a r a p Com Report

“There’s more to consider than just the rate”

Point Check 6.50%

2

Royal Select fixed indexed annuity

™

8% Premium Bonus ➤

COMMISSION

1 The 8% premium bonus vests over a 10-year period. Non-vested bonus amounts will be recaptured for surrender or withdrawal amounts exceeding the penalty-free amount.

2 Reduced commissions at older ages and for some states.

3 The income account value is not available for withdrawal or cash surrender and is only used to calculate the guaranteed lifetime withdrawal benefit amount.

4 Not available in all states.

1

Guaranteed Lifetime Withdrawal Benefit available with 7.00% Income Account Accumulation Rate 3.

➤ Only 0.50% GLWB fee based on Account Value. ➤ Waiver of withdrawal charges

See how the top annuities match-up in your FREE Comparative Report ➤

for terminal illness, home health care and nursing home benefit.4

Contact a Regional Director at

888-342-3551 www.oxfordlife.com

— FOR PRODUCER USE ONLY— Not intended for soliciting or advertising to the public. Oxford Life Royal Select™ annuity is issued by Oxford Life Insurance Company ®. For use with contract/rider forms FIA500. FIA510, ICC12-FIA510, DA520, GLWB200, GLWB210, ICC12-GLWB210 and state specific variations where applicable. Not available in all states.

RS300P

Rev. 2-2013 ©OLIC 2013

FEATURE

The Four Steps to Achieving Greatness

What normally happens is we default and go right back to status quo. It’s a vicious circle that brings us right back to mediocrity and average. to make a lot of money to acknowledge their proficiency? Do they want to make a lot of money because they think they are protecting and enriching their clients?

You have to be clear on your purpose – that’s the first thing.

Then you have to see people within your industry who are doing what you think it is you’re trying to do and you’ve got to see why and how they are doing it. Contact them to find out. It’s not a big deal if it’s outside your field and it’s really not even a problem within because no one has ever approached it like this.

You can ask: What’s your vision of what you do and how do you do it?

What’s your strategy on it? What do you look at your job as being? How do you see your responsibilities or your obligations or your opportunities?

How do you see your interaction with the other side? When you wake up in the morning, what are you thinking about? When you are interacting on the phone, what’s going on in your mind? What are you thinking about yourself and your client, if it’s a selling situation? If it’s a managing situation, what are you doing there? Do you see

The first problem with greatness is most people don’t even realize it’s there and it’s just dormant, waiting to be released like a tightly coiled industrial spring, ready to explode productively and constructively in your life.

16

InsuranceNewsNet Magazine » March 2013

yourself growing and developing the success of that other person?

You must ask a myriad of questions and you listen to the answers and you ask the same question of a number of different people who seem to represent where you are trying to get to.

The second thing is: You look within your life, both in the business context and in the personal context. Who do you deal with in your life who was either preeminent or great? Somebody that you can’t wait to have interaction with. Maybe it’s a place you go to buy things. Somebody who is your advisor.

Somebody who makes you feel like $1 trillion. Somebody who guides you, somebody who helps you, somebody who makes you feel better off every time you are in their life. But what is it about them?

Then ask: What does it look like when it’s applied in my business or life situation? Who else inside this industry is doing what looks like a better use of time, opportunity, effort, but also emotions? It’s about a higher use of your ability to communicate.

The Four Steps to Achieving Greatness Higher use of your ability to move people to greater action because they respect and trust you. And it can’t happen with just intention. Intention is a great concept but it is useless if you don’t have a frame of reference to compare against like a template and to keep course correcting.

FELDMAN: Once you have seen and understood what your vision is for greatness, how do you get there?

ABRAHAM: That’s step No. 2. Someone might know what it looks like, but most people really do not know the best, safest, most effective path to get there.

You’ve got to really be very candid and ask “where am I right now?”

So if I am at mediocrity, average or what we call suboptimal, how do you go from there to greatness? What are the steps? What are the processes?

Unfortunately, human nature has a tendency to want to be an Olympic pole-vaulter and do it in one fell swoop, which is almost impossible. So you need someone to paint a path that’s going to be the highest and best route, the safest and least divergent, the most progressive so that at each stage, you are seeing successes to reinforce and even further fuel your progression to get there.

On to step No. 3. The few people who get that far have the confidence, certainty, courage and self-belief to shift their action, and aspiration to get themselves on this new path.

This is the concept of preeminence.

That is being seen as the most trusted advisor in whatever role you are in.

Preeminence is having the well-being of everybody you interact with as your driving force. Preeminence is being totally focused on adding value for the other side and understanding what value looks like.

FELDMAN: Which leads us to the fourth step, which is probably the most important, isn’t it?

ABRAHAM: Yes, it’s the final element, which is pretty simple and it’s easy to understand.

So, to recap, with No. 1, you are fortunate enough to get a picture inside

FEATURE

GET THIS Visit www.insurancenewsnet.com/preeminence to download a free report written by Paul Feldman and Jay Abraham.

As a special 5-year anniversary gift to InsuranceNewsNet readers, we have created an exclusive 36-page report that could transform and transcend your business to new heights.

For more details see page 61. and out. No. 2, you are blessed enough to get a clear-cut path that’s going to get you there without taking you through the quagmire or detours, dangers and roadblocks. No. 3, you get that far and you believe in yourself enough to want to really shift. The last element is when you fall off the wagon in step 3 – which you are almost always going to do – you need to have someone who is your champion or your advocate who is going to hold you to a higher standard and not allow you to accept less than the effort, the time, the life, the job, the opportunity.

And it’s a privilege. We have a privilege, an opportunity, a responsibility and a moral obligation in whatever we do to do it full out not even for the money but because we can make a difference. Most of us don’t realize it but whatever we do, whether it’s end-user to the client or it’s supporting the process of the business that ends up adding the value to the client, we have a chance to impact lives in a very big way.

It’s like anything we have ever done different in our life. If you have ever tried a new sport or to learn a new language, you will see that unless you are exceptionally rare, the first time you try it, your execution sucks and it’s bad.

And most people, the moment they have that unsatisfying outcome, they’ve got to be a very rare person to get back on the horse and redouble their commitment. What normally happens is we default and go right back to status quo. It’s a vicious circle that brings us right back

to mediocrity and average. And that’s sort of the reality.

FELDMAN: Besides working with a mentor or coach, how can people keep themselves on the path?

ABRAHAM: It ’s a un iversa l ma lady but it’s a malady that is no one’s fault. The key to everything is verbalizing what you feel. Most people carry gnawing frustration and uncertainty, dying aspirations in their heart that they are not even aware of because they’ve never even put it into words.

The moment you put it into words and you break those words down to the actions that need to f low from them to fulfill the objectives, it’s liberating because it demystifies it.

If you say, OK, I know that I’m destined for greatness. I know that I am not performing at greatness. I know there’s a big chasm, a gap between where I am and what greatness is supposed to look like. I’ve got to first figure out what greatness needs to look like for me and my role. I’ve got to know what it’s got to feel like for the recipient. I’ve got to find a way that I can verify it. I’ve got to find role models inside and outside that can help me calibrate and then I’ve got to start experimenting. But then I’ve got to figure out how to get to that because I’ve never done it before. And I’ve got to get the best stage. And then I’ve got to believe in myself that it’s a waste to operate the rest of my life at a fraction of the level that I can perform at.

March 2013 » InsuranceNewsNet Magazine

17

FEATURE

The Four Steps to Achieving Greatness

This is the concept of preeminence.

That is being seen as the most trusted advisor in whatever role you are in...

Preeminence is being totally focused on adding value for the other side and understanding what value looks like.

FELDMAN: Is that when they reach the level of what you refer to as preeminence?

ABRAHAM: Yes, preeminence is a life philosophy of being seen as the most trusted advisor and adding enormous value. It starts with an attitude and most people don’t really have that attitude.

But if you had that attitude, the concept of referrals – which is business that emanates from your trusted clients – is an obligation. It’s not just the hope and expectation that somebody has, it’s a responsibility that you have to your client to help people that are important to them and give them the best advice and referral generation becomes an ongoing integral part of the whole interactive process that you conduct throughout your professional life.

FELDMAN: That’s interesting that you have taken referrals not just as a way to perpetuate business, but also as an indicator that you are preeminent.

ABRAHAM: Most people get referrals 18

occasionally and it’s usually the lifeblood of their business. They might run ads and do cold calling to get business, but those who have any value to their clients, they get referrals.

FELDMAN: You have spoken quite a bit about having the right mindset and attitude to be successful. I can imagine a lot of people reading this and thinking that sounds new-age-y and that selling is about activity and carrying through on your promises. Wouldn’t they be right that simply doing that would be a path to success?

ABRAHAM: There are a few good reasons why attitude and mindset are important.

One is that we are rewarded for the quantity, quality, complexity and consistency of how we solve problems for ourselves and others and the number of opportunities we make possible. Why would you not want to solve as many problems as possible?

Also, if you look at the concept of competition, competition is really determined more on value creation because

InsuranceNewsNet Magazine » March 2013

price is a detour from value. Value creation is the whole key of life, but value has to be understood.

Why would you want to be in any situation in life – whether you’re a salesperson or own an agency – and get up on Monday morning and say to your loved one, “Honey, guess what?

I’m going to work this week and I’m going to accept about 30 percent of the impact I can make. And I am not going to really add a lot of value, just sell a couple things so we can pay the rent.

At the end of the day, I’m not going to really feel like I have made a difference in people’s lives. I’m not going to really feel like I’ve transacted myself above and beyond the maddening crowd.

I’m just going to feel like I made some money so I could come home and feel sort of purposeless.”

I can’t imagine why you would want to do this because at the end of your life, you will look back and ask what was it all about? We were either takers or givers.

Our life is denominated by the contribution we make. You’ve got a chance to make a difference.

Fixed Annuity Rates Are BACK for 2013!

FEATURE

How to be the Most Fascinating Person in the Room

TWO of Our BEST MYGA’s 3.20% Guaranteed for 7 Years!* 2.70% Guaranteed for 5 Years!* • Interest available 30 days after issue • $10,000 Minimum Premium 2.50% Commission thru age 80 (Issues to age 90) Call Fairlane Financial for your sales kit today!

1.800.327.1460

FOR AGENT USE ONLY. NOT TO BE USED FOR CONSUMER SOLICITATION PURPOSES. *RATE IS FOR HIGHER BAND $250K AND UP.

M-2572

[NEWSWIRES]

Insurance companies rank high on list of top companies for executive women bitly.com/QRworking_women

New Opportunities In Mid-Sized Business Market

Big 2012 for Mid-Market

1.7

Million Jobs in 2012

$650 billion in

The year 2013 might have some bright pros- new revenue pects for insurance advisors and financial planners serving medium-sized business clients. That’s because middle-market customers – those with annual revenues ranging from $10 million and $1 billion – enjoyed growth last year and so may be in a position to do some new business.

Take a look: These firms added an estimated $650 billion in new revenue and an estimated 1.17 million jobs in 2012, according to the National Center for the Middle Market (NCMM). What’s more, middle-market businesses expect to grow by 5.2 percent ($520 billion) in 2013. The firms aren’t on easy street, though. For instance, only 8 percent of the firms told NCMM that they are confident in the outlook for the global economy, and just 25 percent said they are “somewhat confident.” Then again, that’s up “significantly” from second quarter 2012 when confidence levels were at 5 percent and 17 percent, respectively.

The broader business market is showing mixed sentiments too. For instance, another business group – the National Association of Corporate Directors – found that, in fourth quarter 2012, directors at public companies had an economic confidence level of 44 (negative outlook) for the next three months but a level of 55 (positive outlook) for all of 2013. And a Prudential Insurance Company of America survey says that while fewer employers in mid-2012 were reporting negative economic effects from the financial crisis, those predicting their financial position will be better or improving in one year had dropped to 54 percent from 70 percent in 2010.

Are FIDUCIARY ISSUES BACK IN PLAY FOR ADVISORS?

The Securities and Exchange Commission could revisit the issue of making the fiduciary standard uniform for advisors and broker-dealers once the SEC

gets its new chairman, points out a Financial Planning article.

That’s plausible, given that the SEC had fronted the idea back in 2011 in a study required by the Dodd-Frank Act. The fiduciary standard calls for putting customer’s best interests first. When the proposal met with swift opposition from insurance and broker-dealer interests that favor the suitDID YOU

KNOW

?

20

ability standard (recommend what is suitable for the client), the SEC turned down the heat. But a fiduciary-minded SEC chairman just might turn the heat back up.

If that happens, it would be like turning on the heat in the middle of summer. After all, the Dow is now inching close to 14,000, which is near its all-time high back in 2007.

That may cool Dodd-Frank fervor, and the SEC may find it has other top priorities steaming on its plate – like examinations and enforcement of existing rules.

Managers are no doubt nodding their heads at that. They are first to point out that priorities in go-go markets are usually different than those in so-so markets and low-low markets.

In 2013, American workers and their employers will pay taxes for Social Security on annual earnings of up to $113,700. About 5 percent of workers earn more than that cap. Source: The National Academy of Social Insurance

InsuranceNewsNet Magazine » March 2013

TAX DEFERRAL BECOMING MORE IMPORTANT

“With all the talk of increasing tax rates and fiscal cliffs, the ability to defer more money is especially attractive,” says Dmitriy Fomichenko, the president of Sense Financial Services. He was making the point while discussing the higher annual contribution limits that are now in effect for individual 401(k)s, which are tax-deferred defined contribution plans for the self-employed and the small business owner.

The maximum contribution amount went up by $1,000 for year 2013, so now the limit is $56,500 for people over age 50 and $51,000 for the under-50 set, says Fomichenko, adding that the

increase “couldn’t have come at a better time. For those who qualify, a great option just got better.”

That’s a reminder for insurance advisors, too, since annuity and life insurance also have tax deferral and other tax benefits. Maybe that could be a talking point to bring up with clients who are facing higher federal tax bills this year.

THEY’RE WARMING UP TO SOCIAL MEDIA

Advisors holding a Certified Financial Planner (CFP) designation are definitely using social media like LinkedIn, Facebook and Twitter. In fact, about 73 percent of them are using social media, according to the Certified Financial Planner Board of Standards.

But compliance folks can rest easy.

Only 45 percent of CFPs say they use social media for professional purposes —

and they cite compliance as a key reason.

For instance, 37 percent said “compliance prohibitions and limitations” is a reason they do not use social media for professional purposes. Thirty-three percent also cited “uncertainty over compliance and regulatory requirements” as a reason.

That raises an interesting question: When CFPs do use social media for professional purposes, what’s it for? They answered: To network with other financial planning professionals (44.8 percent), keep up with professional news and trends (43.1 percent), and do marketing and business promotion (33.1 percent).

[NEWSWIRES] SOME DETAILS ON THE PRUDENTIALHARTFORD DEAL

It’s a done deal now. The Prudential Insurance Company of America has completed the acquisition of The Hartford’s individual life insurance business, as first announced last September.

But what exactly did Pru buy? Pru said it

paid The Hartford a cash consideration of $615 million consisting primarily of a ceding commission to provide reinsur-

ance for approximately 700,000 Hartford life insurance policies. The contracts have face amount in force of approximately $135 billion, and the policy benefits and provisions remain unchanged. Prudential will receive the premiums and be responsible for paying claims and providing customer service and administration.

And now for the answer to the question a lot of us have been asking: Whose name will be on the paper? According to Pru, The Hartford’s issuing companies will continue to be the named insurers. Interesting, huh?

QUOTABLE As taxes rise following the fiscal cliff and the ongoing budget deficit debate, tax-deferral is only going to grow in importance.

— Dave D’Amico, president and chief market strategist, Braver Capital Management

HOW TO PEG WELLHEELED CLIENTS

It’s confusing, but advisors might as well get used to it. Different firms have differ-

ent definitions for the wealthy.

For instance, Northern Trust’s recent survey on wealthy Americans defines high-net-worth individuals as those having $5 million or more in investable assets; the affluent, $1 million to $4.99 million; and the mass affluent, $250,000 to $999,999.

Meanwhile, in a study published last fall, Spectrem Group defined ultra-high net worth investors as having between $5 million and $25 million excluding primary residence; millionaire investors, $1 million to

LTCi Premiums – Known Unknowns $7,000

Apparently a lot of Americans don’t really know what long-term care coverage costs. That’s what Inperceived Annual Cost of suranceQuotes.com found out when it asked 1,000 LTCi $2,700 adults in telephone interviews to predict the average Actual LTCi annual cost for a long-term care insurance premium Annual Cost covering a healthy 55-year-old couple.

The most popular response was $7,000 a year or (for a healthy 55more.

But the correct answer is $2,700 a year, acyear-old couple) cording to the San Francisco company, citing statistics from the American Association for Long-Term Care Insurance.

In fact, 56 percent overestimated the cost, 26 percent underestimated it and only 16 percent got it right at between $2,000 and $3,000 a year. What will it take to get consumers up to speed on this?

One thing consumers might be surprised to know: women are far more likely than men to need long-term health care, according to the American Association for Long-Term Care Insurance. So guess what? The nation’s leading insurers will soon start charging women 20 percent to 40 percent more than men for long-term care coverage, the association says.

But advisors aren’t without solutions to offer female clients. They can always point out to women clients that long-term care insurance costs do vary among carriers – by as much as 40 to 90 percent, the association says. And advisors can point out that the best time to explore options is between ages 55 and 65, says association director Jesse Slome. For instance, a woman age 55 can currently purchase $170,000 of immediate long-term care insurance benefits for roughly $150 per month whereas someone age 65 will pay more than $250 a month for similar current coverage.

Those are good points to keep in mind, since long-term-care insurance prices will likely keep on going up. Consider: Women account for 65 percent of all newly-opened long-term care insurance claims, and the coverage tends to cost 8 percent to 10 percent more each year that a person delays making a purchase, the association says. $5 million, and the mass affluent, $100,000 to $1 million. Last April, a Schwab Advisor Services survey pegged the high-net-worth investor as between age 34 and 80 and having a minimum of $1 million in investable assets. And in a late 2011 survey, a Harris Interactive/Wells Fargo survey came out that defined affluent Americans as having investable assets of $100,000 or more, excluding real estate and other property.

What’s a conscientious advisor to do?

Upon hearing of a new product or strategy for target markets such as high-net-worth, affluent, etc., get the numbers for those terms.

EMPLOYEE BENEFITS—CHALLENGE OR OPPORTUNITY?

Here’s a wake-me-upper: only 47 percent of U.S. small businesses (2-99 employees) offer benefits to their workers, according

to LIMRA. That’s the lowest level in two decades, says the researcher, attributing much of this to the weak economy.

That’s discouraging news for advisors in the small business market. But the specialists may want to munch on this related LIMRA finding, too. Namely, other smaller firms still do offer benefits, especially medical, prescription drug, dental, vision and yes, life insurance. So, even though nearly half of small firms are off the benefits sauce for now, opportunities still exist for advisors in of small U.S. the rest of that market. businesses offer The challenge will be to identify the receptive candidates, and to find solutions and services that will ring their bells. to their workers

47%

March 2013 » InsuranceNewsNet Magazine

21

Advertisement

Interview: Scott D. Tietz, CEO of Partners Advantage The mosT commonly used words This year in the insurance world are change and consolidation. But, ask scott Tietz and you will also hear the words opportunity and growth.

Photo

Q What do you see ahead?

Q Can an agency “buy out”?

A We’re going to see two or three more major companies and a lot of businesses in the next 12 months at least diminish due to sales. As an example, as an agency owner, I’m sitting here with a company I think is worth $4 million and in reality today it’s worth $1.5 million.

They can’t sell and they can’t hang on so they’re between a rock and a hard place.

A We are interested in buying a stake of any agency needing help and working with owners that want to build a respected and strong organization, working with people who know making money isn’t the only goal, and working with people who want to do the right thing. After a two-year period, if they’re not happy for any reason, they can buy their company back. If they join us and their company doubles or stays at the same level, in two years, they can get out. Plus, in an unfortunate case, we could buy the rest of the company. The contract terms are specific to each agency but we are willing work with agencies to give them what they need in order to complete the buy-out. We want to make it easy.

Q Given this environment, why does Partners Advantage have an optimistic outlook?

A Because we have developed an entire division – Partners Premier – that will come up alongside and agree to purchase between 10%-50% interest in an agency without disruption of the business, its leadership or brand. So partnering with us, we bring in a renewed value prop adding cash and resources.

The agency is now able to go to their producers and drive more revenue and more premium. It’s interesting because we entered the M&A market accidentally, but since 2007, we have purchased six agencies from around the country, and our continued growth has been completely organic.

Q What makes this appeal to the agency owner?

A

I think one of our partners says it best:

“As a Partners Premier agency, being able to leverage Partners Advantage platform and experience has allowed us to grow our business on both, top and bottom line.”

— David C, Las Vegas, NV 22

in a country where economic reporting comes from something as uninspiring as the Federal reserve’s “Beige Book” and the economic challenges are counted in years, how can he have this optimism? well, he shared some thoughts on surviving and growing along with his company’s compelling new story.

Q Is giving up a percentage of your business as risky at is seems?

A In the hypothetical example of the agency originally worth $4million that is now a $1.5 million shop, in a year from today it might be worth $1 million. Joining forces as a Partners Premier agency could potentially turn that trend – take that shop and make it worth $2.5 million or more in two years, all for the price of giving up 10%?

They have the potential for substantial growth and would have come through another two years. Really, if they are not capable of investing back in their company, if they are not trying new things, if they are not doing more advertising and not growing their employees, they

are not going to be here in a year or so. They are going to get squeezed out, not at 10% but 100%.

Q What else do you offer besides a cash investment in their business?

A One of the big advantages Partners Premier agencies have is training. According to a LIMRA study, training is the number one thing that agents want and I don’t know another marketing company that does more training – not only live, but video and webinars. We’ll do, this year, in excess of a dozen live road shows, 150 webinars and we’ve got access to 800 to 900 training videos and other weekly training for case managers and agents plus two yearly training events for marketers.

Q So, what concerns people most about starting this process?

A When I talk to people they are most apprehensive about taking that first step.

Our first step is a brief phone call. If it goes well for everyone, we schedule a face-to-face interview. If that goes well, and the next step in the process finalize the agreement, typically it will take 4 to 6 weeks. For the people who are thinking, “But what If we don’t move forward?” There’s absolutely no obligation.

Even if they don’t move forward, they’re going to hear what we would do and they’ll walk away with ideas. We want to be partners – we hope to be a good fit for good companies that need help.

ABOUT THE COMPANY Partners Advantage is a one-stop shop for insurance professionals, financial advisors and registered representatives. Our mission at Partners Advantage is to deliver solutions and opportunities for financial professionals to succeed with the highest standard of integrity.

The testimonial statements may not be representative of the experience of other financial InsuranceNewsNet Magazine » March 2013 professionals and is no guarantee of future success. The testimonials were not paid for.

partnersadvantage.com

A brief phone call.

No obligation.

It’s THAT Simple.

Do any of these sounD like you? #1: Experienced Agency

#2: Established Agency

#3: Emerging Agency

Agency with 10+ years in business; Declining revenues and profits for last couple of years; Decreasing resources and staff; No succession plan in place.

Agency with 5-10 years in business; Not growing revenue or profits; Wants to grow, but not enough talent or support available; Doing OK financially, but wanting to grow more; Needs a partner.

Agency with 1–5 years in business; Great ideas and high energy; Needs capital; Probably a good sales person or business person, Needs some help in either sales or business.

If you fit any of the criteria above, Partners Premier could build a customized plan to help you meet your needs. Our joint goal for your agency is simple; help you increase profit and help build wealth.

Your challenges today don’t lead to the choices of IN or OUT of business. You have another choice with PARTNERS PREMIER. Your heart, time, sweat, and tears spent starting and working your business is worth a short phone call to find out more.

here’s the first step.

As Premier Agency, You Have Access to: One of the best training platforms in the industry and Ongoing Training for Your Team Exclusive Marketing and Selling Systems Incentive Trip and Impressive Live Events Our Advantage Website Portal A Top-Tier Technology Platform

Go to TheFirstStepToPartnership.com and Download the Partners Advantage Premier Partnership Guide.

“Becoming a Partners Premier agency with Partners Advantage has been an exciting experience. With their support, we have been able to increase our production numbers and our profit.”

— Kevin G, Windom, MN

Ad Review #1302064

March 2013 » InsuranceNewsNet Magazine 23

24

InsuranceNewsNet Magazine Âť March 2013

The Taxers Are Coming!

O

f all the things to be called these days in Washington, D.C., a “tax expenditure” might be the most insulting.

That’s the name – and target – hanging around the neck of life insurance as Congress takes aim at tax reform. Tax treatment is what the insurance industry prefers to call the government’s handsoff approach to key features such as the death benefit and the inside build-up in permanent life policies. The favorable tax treatment legacy turns 100 this year.

It was a century ago that insurance agents with the National Association of Life Underwriters (NALU) descended on Washington to make the case why life insurance deserved special status as legislators established an income tax system. A direct appeal to President Woodow Wilson won the day for the industry. NALU is now the National Association of Insurance and Financial Advisors (NAIFA) but although the association’s name has changed, the fight has not.

NAIFA is planning a congressional conference April 8-9 in Washington to promote the favorable tax treatment because once again, legislators are edging a real reform effort. And they might mean it this time, especially with everyone’s head hitting the debt ceiling every few months.

“They will deal with the ceiling and whenever they do, they ask if they should pursue policies that would allow us to continue on a more sustainable basis rather than having to face these challenges every few months,” said Diane Boyle, NAIFA’s vice president of federal government relations.

Those questions about sustainable revenue lead to louder demands for comprehensive tax reform, which goes down a familiar path.

“Whenever they get to that discussion, the conversations that we had been hearing leading up to the fiscal cliff as well as from the Simpson-Bowles Commission, or when you had the gang of six/eight/ pick a number, were the same,” Boyle said. “Everyone was saying we need to simplify the code, lower rates and broaden the base.”

That sounds good to everybody until those simplifying the code and broadening the base produce a hit list of “tax

FEATURE

TAKE ACTION! Industry advocates are asking advisors and others in the insurance business to get involved by educating legislators on the value of life insurance. Even with issues of national importance, it’s the voice from a congressional member’s district that carries the loudest.

For tools, such as a sample letter, and ways to find your congressional member’s contact information, you can visit these sites:

INNvolved.org For background documents, tools and links.

SecureFamily.org For a petition and other tools offered by this coalition of six insurance associations. expenditures,” which is a clinical way of saying tax loopholes and breaks. Although “loopholes” might conjure images of tax delinquents sneering greasy lips at a responsible, overburdened public, each one of them was a promising brainchild of a legitimate union of interests, such as insurance.

The official list of expenditures and costs is produced by the congressional Joint Committee on Taxation, which serves the House Committee on Ways and Means and the Senate Committee on Finance. In its latest expenditure report, released in February, a certain number in the financial institution section pops out like a low-hanging, plump

plum. It’s $157.6 billion, the amount of tax revenue expected to be lost in the five years from 2013 to 2017 by excluding investment income in life insurance and annuity contracts, also known as inside build-up. The next largest figure is $13.2 billion for the special treatment of life insurance company reserves.

The national debt is past $16.5 trillion and the United States is adding to that with a deficit of about $1 trillion a year.

For a sense of how fast the debt is growing, visit usdebtclock.org. (This is not recommended for those prone to motion sickness.)

The deficit and debt numbers are so large that the $30 billion of annual rev-

March 2013 » InsuranceNewsNet Magazine

25

FEATURE

The Taxers Are Coming!

enue from taxing the inside build-up could be lost in a rounding error. But it could be the baby in the bathwater in the case of wholesale reform, as promoted by the IRS’ Taxpayer Advocate Service and the National Commission on Fiscal Responsibility and Reform, led by Alan Simpson and Erskine Bowles.

“If someone were to take that route and start with zero-based budgeting, you’re eliminating all tax expenditures without looking at the merits of them,” Boyle said “You’re eliminating everything on the list and then building some of them back in.”

Is It ‘Wolf’ This Time?

But let’s be frank. Haven’t we all heard this before? Like maybe every year for the

past several? For decades, even?

It all sounds familiar to Glenn E. Stevick, adjunct professor of insurance at The American College, who had been an advisor and trainer in his long career.

“I came into the life insurance business in August of 1983, which is just short of 30 years ago,” Stevick said. “And one of the first things I heard about was the pending possibility of the inside buildup of life insurance being taxed.”

Since then, Stevick has heard the call to battle many times. “I have taken the view that until the dotted line is signed, it is nothing,” he said. “Until they actually sign it in to law, I would not get too excited.”

But he acknowledges insurance is a tempting target for taxes. “There are certainly an awful lot of tax benefits and

Taxes & Life Insurance

sheltered money in life insurance contracts and annuities and certainly that would be a place for our government to get money.”

He also agreed that the taxation could reduce life insurance ownership, which is already at a historical low. That could be the very reason Congress would not go along with that tax.

“That’s the one thing that I think that they would be very hesitant to which would harm the product and the protections,” Stevick said. “The number of people who have life insurance is already pathetically low.”

Why Now

Insurance associations and other advocates understand that advisors and others might be burned out on alerts, but by

Over 100 YEARS of Conflict

1913 – States ratified the 16th Amendment, giving Congress the authority to enact an income

tax. An appeal directly to President Woodrow Wilson helps codify special treatment of insurance products, such as the tax-free death benefit and tax-deferred increases in the cash surrender value of life insurance contracts, also known as inside build-up. But the income tax was extended to life insurance proceeds exceeding $40,000 that were receivable by the estate or its executor and property subject to a general power of appointment.

1918 – During World War I, the top rate

of the income tax rose to 77 percent to help finance the war effort. It dropped sharply after the war, down to 24 percent in 1929.

1930s – Tax rates rise again during the Depression.

1942-1945 – During World War

II, Congress introduced payroll withholding and quarterly tax payments.

26

InsuranceNewsNet Magazine » March 2013

1954 – The estate tax treatment of life insur-

ance was changed so that the estate tax applied to life insurance proceeds paid to the decedent's estate or executor or if the decedent retained "incidents of ownership" in the life insurance policy.

1977 – Jimmy Carter administration proposes to tax the deferred growth of annuities.

The Taxers Are Coming! the advocates’ calendar, this is the Year of the Wolf.

First the confluence of events provides powerful impetus for tax reform. Besides the national debt, pressure is building on Social Security and Medicare as the population ages without a substantial number of replacements to pay for those in the system. Then, of course, the political standoff pits revenue growth against budget-cutting with political opposition to higher tax rates and program cutting.

The significant parts of the budget and spending growth are Social Security and Medicare, two entitlement programs with a vocal constituency who paid into the system and expect the benefits they were promised.

Add to that a growing contingent of legislators demanding tax reform this

year. Right after the November election, the chairman of the House Ways and Means Committee, which would write tax reform, promised action.

“Tax reform is more necessary now than it was in 1986, and that is why the Ways and Means Committee will write, act on and pass comprehensive tax reform legislation in 2013,” Rep. Dave Camp, R-Mich., said in a Nov. 15 speech to the Tax Foundation, according to The Hill. “Let me repeat that: We intend to move a comprehensive tax reform bill in 2013 – no matter what.”

Insurance advocates believe that reform-crafting process is going on now.

“We think February or March was the plan to start doing that,” Boyle said. “And so having our folks come in to meet with the tax writing committees in February

FEATURE

made a lot of sense to us. We don’t know when they’ll begin hearings, but they’ll have a better sense of where they’re looking to go in early April.”

Six insurance associations formed SecureFamily.org and planned a Capitol Hill visit the end of February. NAIFA expected to participate in that along with its own effort in April. One of the main SecureFamily organizers, American Council of Life Insurers (ACLI), refused several requests for comment on the campaign.

“That’s why we’re bringing our folks in, so that every member of Congress ideally will have an opportunity to talk with an agent and understand the value that our products play,” Boyle said Although Congress seems to move slowly on issues, events move quickly

1984 – Ronald Reagan administration proposes to tax interest and dividends of new permanent life insurance.

1990 – Government

reports target inside build-up. George H.W. Bush administration advocates taxing build-up.

2009 – President Barack Obama also proposes reforms to corporate-owned life insurance policies, or COLI, taken out by businesses on their executives and employees, which have sometimes been used for tax arbitrage.

1994 – Bill Clinton administration considers but rejects a proposal to finance higher welfare spending by taxing at least some of inside build-up in an annuity holder's policy.

2005 – President George W. Bush’s Advisory Panel on Federal Tax Reform proposes to tax life insurance inside build-up like gains on other types of savings.

SOURCES: NAIFA, Joint Committee on Taxation, American Progress, AnnuityNews.com,

2012 – Many proposals are made to elim-

inate almost all tax expenditures, including inside build-up, which has been identified as a tax expenditure projected to cost $157.6 billion for the five years from 2013 to 2017.

2013 – House Ways and

Means Chairman Rep. Dave Camp vows, “We intend to move a comprehensive tax reform bill in 2013 – no matter what.”

March 2013 » InsuranceNewsNet Magazine

27

FEATURE

The Taxers Are Coming!

once a decision is made. And although Stevick and other observers are correct that the tax treatment of insurance is often threatened and then saved, Boyle said that’s because someone did the saving. In Washington, the strongest voice is one from a legislator’s district.

“Frankly, our products are on the line every year and we’re successful at having them taken off the table,” Boyle said “So it’s not so much crying wolf as it is being prepared and making sure that the folks on the Hill understand.”

This is particularly important as the heat turns up.

“Look at the desperation and how quickly we have to revisit issues and extend short-term fixes,” Boyle said.

“They’ve become much more frequent than what they have been in the past.”

The Most Effective Voice

The most effective voice in Washington is one from a legislator’s own district.

“Members of Congress are having to deal with so many issues that they rely on their constituents who have an

understanding in a given area to explain what the realities are with some of the decisions that they’re having to make,” Boyle said. “And that’s what our agents do. And that’s the value of bringing them in and having them share the story.”

Bob Roach, a Northwestern Mutual agent from Columbus, Ohio, doesn’t have to go far to talk to an influential legislator. He has one among his clients – Rep. Pat Tiberi, the chairman of the subcommittee that would do the tax-writing for the Ways and Means Committee. Roach says he has been able to impress the value of insurance on not just Tiberi but also his staff members, who would be involved in the nuts and bolts of reform.

The most powerful argument is how much money insurance products save for Americans.

“I talk to them about the savings rate in America today, and how poor it is, and then point out that over 20 percent of the savings in America today is represented by our products,” Roach said. “To

74%

of business owner clients are missing the most

important component of their retirement.

do anything to discourage people from taking responsibility and using our products, all that’s going to do is further deteriorate the savings rate of Americans today.”

Another advisor, Hyatt Erstad of Boise, Idaho, said another reason for his colleagues to contact their representatives is to remind them who they work for.

“I think often that legislation passed in Washington, D.C., is intended for people that are doing business on Wall Street, whereas we deal with Main Street people,” said Erstad, who focuses on employee benefits. “We have people who make minimal income, and when an employer provides a retirement plan, it’s our job to sit down and be able to say, ‘Let’s see if we can help you plan for your own security and retirement.’ ” Boyle said that is an important point because if Americans are not planning for their retirement, they will be falling back on the federal government.

“We’ve seen what happens when people don’t have protection in place,” Boyle said. “They end up running through

Ask the right questions and

open up a world of bigger sales According to LIMRA statistics, nearly three-quarters of business owners don’t have a succession plan in place. From retaining key employees during the transition to creating retirement income and maintaining family prosperity, show clients how you can help their businesses survive into the second generation and beyond.

uccession Business S s Readines A questio

nnaire for

business

owner clie

nts

__________

____________

2) Right-click

____

____________

____________

____________

Name: ______

______ Date: ______

to PowerPoint.

Word or image. Drag in Microsoft select paste your logo directions, : 1) Open area above INSERT LOGO On PDF, left-click NAME. .

HOW TO 3) COMPANY resize image type your select copy. center or logo and above and instructions ZIP : Delete all , City, ST ANY NAME 12345 Street 0.0000 ESS: UPDATE ADDR 0.0000 Fax: 000.00 Phone: 000.00 save as.

Select file, SAVE FILE: HOW TO

Access a customizable Business Succession Readiness Questionnaire you can use in your next client meeting, and partner with Creative Life to tackle this niche market with confidence.

ADD COMP

800.992.2642 ANNUITIES • LIFE • SECURITIES

FOR AGENT USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC. 12669 - 2013/2/6

BusinessSuccession_INN_Ad_halfpage2_020613.indd 1

28

InsuranceNewsNet Magazine » March 2013

www.creativemarketing.net/getready ©2013 Creative Marketing International Corp.

2/6/13 4:41 PM

FEATURE

The Taxers Are Coming! limited savings that they have and relying on government programs. We know now that the government programs are strained, so we want people that are able to take responsibility for themselves to take that planning step.”

Erstad said nothing drives that point home more than a personal story.

“What I find useful is sharing situations of how our products have helped people here within the community – people within their own district,” Erstad said. “Because often you say ‘insurance’ and it can be very nebulous. You can bring it back down when you talk about the fact that one employer provided the ability to have supplemental life insurance, and one of their key employees was diagnosed with cancer. And because of the living benefits, they were able to pull part of that death benefit out, plan all their wills, a final trip taken – all of those things – before that employee ultimately passed away.”

Then he takes examples to show how the products benefit future generations and radiates through that legislator’s own

“Eternal vigilance is the price of liberty.”

– Wendell Phillips district. “Here are the children who have been educated because people planned ahead and used the products to help fund for their education,” Erstad said.

“Here is the business that was allowed to continue on in the event of the loss of a key person and save jobs. Nobody likes to talk about insurance and nobody wants to contemplate death, but the fact of it is, we are all mortal. It’s our job to plan for the inevitable and make sure that, whether it’s a family, an individual, or even a small business, that when the

inevitable does happen, that they’re in a position of financial security.”

Fighting Back

Roach said he understands that his colleagues get the sense of déjà vu on these alerts, but advisors are gambling with their livelihood if they’re caught sleeping.

“Congress is not very good about moving very fast and it seems like their feet have to be totally in the fire before they make a decision,” Roach said. “But one of the reasons we have to be vigilant

IMPORTANT INFORMATION:

Your Senior Clients May Be Overpaying Taxes The IRS has the ability to tax up to The Complete Client Tax Review Kit 85% of Social Security benefits.1 puts the entire process in your hands with marketing tools for step-by-step Clients can’t rely on the govern- appointment instruction, direct mail ment to notify them of tax-saving and client letter samples. Our point-ofstrategies on their Social Security sale guides will help pinpoint potential tax saving opportunities – and open income. the door for additional sales.

It’s up to trusted professionals to bring the strategies and products that Get the facts and straight may reduce or eliminate the tax bite, answers on how to possibly eliminate and identify customer needs and or reduce tax on Social Security potential planning opportunities. income.

FREE

Fully Compliant & Updated for

2013

Visit TaxSaving Kit.com to instantly download your Reducing Your Tax Burden client letter, and request your copy of our BRAND NEW 2013 Client Tax Review Kit. www.socialsecurity.gov For agent use only. Not for use with the general public. In order to comply with certain U.S. Treasury regulations, please be advised of the following: unless expressly stated otherwise, any U.S. Federal tax advice contained in these materials is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service. Neither the Company nor its agents or representatives may give tax, legal, accounting or investment advice. Individuals should consult with a professional specializing in these areas regarding the applicability of this information to his/her situation.

1

19508_049273

March 2013 » InsuranceNewsNet Magazine

29

FEATURE

The Taxers Are Coming!

FACTS

is because when it moves, it seems to move in light speed. Something can happen so much more quickly than it used to be able to happen. That’s because now people don’t even have to read bills and legislation gets attached to other pieces of legislation. Then you pick up the paper one day and find out something’s been passed before you even knew it was being considered.”

The first objective is to provide a background of understanding of value that Americans derive from the tax treatment of insurance. The second one is to act fast and massively if needed.

“About 10 or 15 years ago when it was published that it was going to be the taxation of inside build-up, we put on a public relations campaign and just showered D.C. with 200,000 postcards and tens of thousands of phone calls and we rallied everybody,” Roach said.

Roach had a very influential legislator in his clientele, but Erstad makes sure many of his clients know what’s at stake for them to help make the taxation issue less esoteric.

“We’ve been having an ongoing discussion since last fall with a number of our clients,” Erstad said. “We just say, ‘This potential change could be coming down the pike, and it could really impact what you’re doing, or what you may want to do into the future, too.’ ” When the time comes to rally opposition, Erstad can enlist his own clients to help and he has done so for state issues.

The Wealth Gap

Life insurance might seem like a tough sell with legislators, but the industry does have the advantage of being able to say it protects 75 million families, holds 20 percent of America’s savings and pays out $1.5 billion in benefits a day. The industry also has a wealth of personal stories that can connect legislators to the value of insurance products.

This defense is sometimes cynically called the “widows and orphans” strategy. But the industry has become a little more vulnerable on this because fewer families in the lower and middle market are being covered and more are in the high-net-worth group.

Some media reports, most notably an Oct. 3, 2010, Wall Street Journal article titled, “Shift to Wealthier Clientele Puts 30

Life insurers are the single largest source of bond financing for American businesses, holding more than 18 percent of all U.S. corporate bonds. This helps fuel the growth of private sector research, innovation and jobs.

Life insurers pay out $1.5 billion to families and businesses every day.

The life insurance industry generates approximately 2.5 million jobs in the United States, including direct employees, those who sell life insurance products, and non-insurance jobs supported by the industry.

One out of every five dollars

of Americans’ long-term savings is in life insurance and annuities.

With $4.9 trillion (90 percent of the industry’s total assets) invested in the U.S. economy, life insurers are one of the largest sources of investment capital in the nation.

Life Insurers in a Bind,” point out the industry’s vulnerability.

This is the section that can come back to bite industry advocates: “According to Federal Reserve survey data, 22 percent of assets accumulated tax-free in wholelife and universal-life policies were held by the wealthiest 1 percent of U.S. families in 2007 – those with more than $8.4 million in net worth. More broadly, 55 percent of the assets in such policies were held by the wealthiest 10 percent of families. The bottom half by net worth held 6.5 percent of these assets.”

Boyle said NAIFA members can remind legislators that they represent middle America, with 58 percent of their clients earning less than $100,000 and just 11 percent making more than $250,000

InsuranceNewsNet Magazine » March 2013

annually. She also points to the savings, jobs and bond purchases the industry represents. But perhaps most importantly, there’s the promise.

“Changes to public policy that make it harder and more expensive to obtain retirement security will have a negative effect on all families,” Boyle said. “It would be wrong to change the rules on these families.”

Steven A. Morelli is editor-inchief 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.

How to be the Most Fascinating Person in the Room

FEATURE

Your clients trust you to help them reach their retirement income goals.

Two disastrous market drops in the last 15 years have challenged traditional approaches to creating retirement income.

Security Benefit is taking a new approach to help you optimize income portfolios. Learn how we can help you improve outcomes – and help your clients gain confidence in retirement.

FAILURE is NOT an

OPTION

For valuable research on building optimized income portfolios, go to: RetirementIncomeChallenge.com For Financial Professional Use Only In all states except New York, annuities are issued by Security Benefit Life Insurance Company (“Security Benefit”). Security Benefit is not authorized in and does not transact insurance business in New York. Security Benefit is indirectly controlled by Guggenheim Partners, LLC. 99-00465-22

March 2013 » InsuranceNewsNet Magazine

31

[LIFEWIRES]

New York discovers and pays out $665.7 million in unclaimed life insurance benefits bitly.com/QRunclaimed_funds

Most Americans Fail Life Insurance IQ Test

% 1 y l n O

If life insurance were a subject on a final exam, about two-thirds of Americans would fail the course.

Recently, LIMRA provided a life insurance IQ test to 4,000 Americans to gauge their knowledge and understanding of life insurance. Less than a third passed the

test e h t aced

10-question exam and the majority answered fewer than five questions correctly. Only 1 percent aced the test.

“In addition to identifying the aspects of life insurance that consumers understand and where consumers admit to being in the dark, the study also shed light on some widespread misperceptions,” said Jennifer Douglas, LIMRA associate research director for strategic and developmental research. “With life insurance ownership at an all-time low, it is important that the industry not only overcome consumers’ lack of knowledge about life insurance but address the misinformation that is out there confusing them and possibly having a negative impact on their image of the industry.”

Those who scored a higher grade on the IQ test tended to own life insurance, to be older, have a higher level of education and have more investible assets.

Requests For Life Insurance Quotes Rise

I need a quote

I need a quote

I need a quote

I need a quote

I need a quote I need a quote Maybe more folks I need a quote

acted upon a New I need a quote Year’s resolution to need a quote buy life insurance. I need aI quote Maybe the approach of Valentine’s Day prompted more folks to think about protecting those they love. Whatever the reason, one website providing life insurance quotes reported that it saw a major upswing in requests during January. With news that the U.S. economy contracted in the fourth quarter, a surprising trend has been reported in the life insurance industry.

TermLife-Insurance.com, a website providing quotes to life insurance shoppers, said it has seen an increase in the number of life insurance quotes requested in the new year.

“In the month of January, our website DID YOU

KNOW

?

32

saw five times the number of people who ran life insurance quotes and three times the number of people who requested applications for poli-

cies,” compared with December, said Steve Schillereff, call center manager of TermLife-Insurance.com. “We’re interested to see what February will bring in terms of traffic from life insurance shoppers. So far we are seeing the same trend going into the first week in February.”

What’s surprising about the sudden rise in life insurance interest is that people typically cut back on spending during tough economic times. It is also surprising that a good portion of the quotes were 30-year term life insurance quotes, which will help lock in rates for a long period of time. Schillereff stated, “The only explanation we have is, with the uncertain economy, people are looking to lock in rates while they can, considering life insurance costs are at all-time lows.”

Globally, life insurance premiums are projected to increase by approximately 3%. Source: Swiss Re

InsuranceNewsNet Magazine » March 2013

QUOTABLE One of the top reasons consumers give about why they don’t buy life insurance is because it is ‘too confusing.’

Consumers with a better understanding of life insurance have a higher level of confidence in insurance companies than those less knowledgeable about life insurance.

— Jennifer Douglas, LIMRA associate research director for strategic and developmental research

Life Policies Outpace Rest Of Industry

Life insurance was still the big fish in the insurance pond from 2007 through 2011, but its book of business looked more like a guppy during that time, according to a report.

The market research firm Timetric’s report, “Life Insurance in the U.S., Key Trends and Opportunities to 2016,” indicated that although life insurance remained the largest segment in the overall industry in terms of gross written premium from 2007 through 2011, its book of business shrank during that same period.

During those five years, the total written premium value of the life insurance segment decreased at a compound annual growth rate (CAGR) of 0.7 percent.

A separate financial analysis prepared

by SNL Financial reported that, while industry revenue grew by 8 percent between 2010 and 2011, it has been nearly flat over the five-year period. Revenues totaled just over $815 billion in 2007, grew to $844.7 billion the following year, then slipped during the financial crisis before rebounding to $835 billion in 2011.

The decrease is blamed on high unemployment rates, which depressed the demand for group life insurance products, and the uncertain economic environment, which resulted in a decline in gross written premiums in the term life category, researchers found. In addition, the low investment returns due to low interest rates represented earnings losses for life insurers.

Our General Agent’s Contract Includes:

013 – 2 n i New ’s ity Life C s a l Kans versa i n U ed t!

Index roduc P e f i L

• High Cash Payouts • Multi-level Hierarchy • General Agent Retirement Plan • Preferred Agency Group • Co-op Advertising Allowance • Deferred Compensation Plan • Stock Bonus Plan • Life Renewal Bonuses

Strengths: • • • • • • •

117 Years Financial Stability Home Office and Field Training Technology Support Advanced Marketing Support Advanced Underwriting Incentive Trips (Monte Carlo, Maui, Lake Louise and Banff) • Effective Customized Direct Mail Marketing Programs • A Company that Cares!

Fixed Products: • Universal Life (Including a no lapse guarantee universal life) • New Indexed Universal Life • Whole Life • 10, 15, 20 & 30 Year Term • $1 Million Banded Term • Return of Premium Life • Living Benefit Riders • Lifetime Income Rider on Fixed Annuities • Group Life, Dental, Vision & Disability • Strong Fixed Annuity Portfolio

Variable Products*: • Variable Universal Life • Variable Annuities

*Kansas City Life’s Century II Variable Product Series is distributed through Sunset Financial Services, Inc., 3520 Broadway, Kansas City, MO 64111, 816-753-7000. Member FINRA/SIPC.

all this with a non-captive contract!

FO R I N FO R MATIO N O N A C ARE E R WITH KANSAS CITY LIFE INSURANCE COMPANY, CALL

800 258 4525

Ryan Beasley

MSFS, CFP, CLU, ChFC, CLF, LLIF Vice President, Agencies

Ex t e n s i o n 8120

March 2013 » InsuranceNewsNet Magazine

33

LIFE

Social Media Lessons from Carriers T he insurance industry is bound by compliance, but there is still room to interact successfully in social media.

By Ian M. Lundahl

I

nsurance companies have trailed other segments of financial services, such as brokerage and banking, in social media usage and innovation. This is partly because of the industry’s stringent compliance and regulatory constraints.

Despite these challenges, insurers are showing they recognize the benefits of having a strong social media brand, and the insurance industry is evolving rapidly to incorporate social media as a primary driver for product and firm marketing.

The stakes are high. Social media affords firms the opportunity to posit their own message, but it also democratizes the brand, allowing users to influence and shape opinions of the firm on a public forum. In the past year, we have seen insurance companies create several campaigns on prominent social media networks such as Facebook, Twitter, YouTube, LinkedIn and Google+.

Independent insurance agents looking to capitalize on social media can follow strategies already established by major insurance firms.

Each of the different social media networks is valuable in its own unique way, catering to a wide audience but with a predesigned formula for fostering communication.

LinkedIn is utilized primarily as a recruiting and prospecting conduit for both firms and agents. Twitter, on the other hand, has been used to disseminate press releases and real-time insurance news while YouTube typically hosts brief company promotional videos, commercials and client testimonials. As insurance companies develop strategies for each platform, a set of best practices for engaging the consumer has emerged. In looking at a sampling of particularly effective social media strategies offered by top-tier insurance companies, independent agents can gain a better sense of what tools and ideas have engaged prospects and consumers. Agents can look to these firms for ideas to help grow their practices, and in some cases, generate additional leads to offset a few of those dreaded cold calls.

The most effective social media strategies are those that elicit responses from their audience. However, this level of engagement presents a challenge for companies and agents alike: how should they respond to negative comments and postings?

MetLife presents a good example of how to interact with customers on their Facebook page. MetLife’s “Peanuts”-themed campaigns draw much interest from the Facebook community and contribute to a very active page with high consumer engagement. Unfortunately, an active community likely will serve as a platform for some to voice complaints, and MetLife does a good job responding to even the most negative feedback in a professional and resourceful way.

34

InsuranceNewsNet Magazine » March 2013

Liberty Mutual sets a strong example on how to respond appropriately to consumers on Twitter, while also promoting key campaigns and tools. The following snapshot of Liberty Mutual’s Twitter account reveals that the firm achieves quite a bit with only 140 characters at its disposal.

In these tweets, the firm promotes a new Facebook app, highlights a new marketing campaign, links to a video, and most importantly, responds to customers who are inquiring about specific policy questions or complaints. The tone of Liberty Mutual’s tweets is professional and courteous, while not robotic in nature. A personalized response is offered to each of the users, along with the contact information necessary to handle the issue in a compliant manner.

Facebook also provides a number of opportunities for firms and independent agents to engage their prospects and clients.

Consider MassMutual’s Facebook page, launched in October 2010.

The firm’s corporate page has more than 56,000 fans and provides a wide scope of content that is focused on stimulating conversation online. MassMutual’s Facebook content

Social Media Lessons from Carriers

LIFE

includes information on life insurance products that direct users back to the firm’s public website. It highlights the company’s philanthropic events, such as the firm’s partnership with Easter Seals. It even includes quizzes that combine financial education with fun themes, such as baseball (as seen in the Financial Curveballs game). Most posts have an impressive response rate, with the majority of posts and photos generating double-digit “likes.” MassMutual responds to user content in a thorough conversational and professional manner, and makes sure to include several posts that highlight the benefits of annuities and life insurance, among other product offerings. The broad Facebook content posted serves as a good example of how to use Facebook.

The ROI from social media marketing continues to be a hot topic for debate within financial services institutions. There is less debate, however, as to the usefulness of social media in supporting business practices. A social media strategy is a necessity for insurance firms in the modern age, and independent insurance agents can use the examples set forth by major carriers to develop their own plan to harness social media’s benefits. Agents must remember a few key guidelines in establishing their own social media strategies.

First, agents must communicate in a manner that is appropriate to the social media channel or platform that they are using. Frequent posting of links to articles, industry news or other third-party materials is acceptable on Twitter, but not recommended for Facebook. The relentless assault of third-party links or news postings may have a numbing effect on Facebook users, whereas this practice is expected on Twit-

ter, as updates can be posted multiple times daily. The tone and volume of communication with followers is paramount in creating an effective social media page.

Second, agents should offer a set of guidelines that serve to moderate user posts and communication on a social media platform. Fund giant Vanguard features a section on its Facebook page that outlines what fans should and should not post on their wall. By offering a set of rules ahead of time, firms can establish a tone and remove comments that fall outside of the scope of what they deem appropriate. This is not to say that agents should delete all comments that are negative; agents must be sure to respond, to the best of their ability, to users’ issues. Professional and courteous responses help to establish trust and transparency with other social media users who may become prospects.

Social media is here to stay. Americans spend a tremendous amount of time on Facebook, and life insurance companies are striving to increase their presence and remain relevant on a number of social media platforms. As an agent, simply having a Twitter account or Facebook page is not enough. Independent agents should invest time and resources to actively managing their social media presence, and to engage with prospects and other consumers.

Ian M. Lundahl is a senior analyst for Corporate Insight, a New York-based research and consulting firm that specializes in helping financial institutions improve their online user experience. Ian heads the firm’s annuity and life insurance research practice and has been featured in a number of media publications including Barron’s, Wholesaleinsurance.net and Businesswire. He can be reached at Ian.Lundahl@innfeedback.com.

March 2013 » InsuranceNewsNet Magazine

35

LIFE

5 ‘Life’ Changing Strategies to Win Business Clients he business market is too big T to ignore. These strategies will help you get started.

By Kenneth A. Shapiro

T

oday, the U.S. work force is just about equally divided between large corporations (51 percent) and mid-sized and small businesses (49 percent). For advisors who want to be more active in the business marketplace, these statistics express the magnitude of the opportunity.

With mid-size and small businesses employing nearly half the work force, this marketplace is an attractive niche, particularly for specialization. Besides the sheer numbers, the needs are nearly identical, whether a business has five, 50 or 500 employees.

For those who own and manage these companies, their primary focus is on making or keeping their enterprises successful rather than on protecting the assets they have created. This is an unusual opening for astute advisors. Here are five strategies that can benefit owners and managers of small- to mid-size businesses:

1 Partnership Protection

Frequently, partnerships start with a handshake and continue over the years the same way they began, with each partner bringing something special that makes the business successful.

Yet, over the years, partnerships can falter and cripple a business. The partners may have a falling out or one just wants out. Frequently, it can end with a partner’s death and the consequences that follow – including a loss of customers, a surviving spouse’s expectation of continued income in the face of a revenue crunch or some combination of these.

Partnerships can have their own special magic. There’s often the feeling that nothing should be allowed to upset the synergy that created the relationship. To

36

do so could upset the special trust that exists between the partners. Simply put, if the partnership works, don’t mess with it.

The aware advisor can play a role in helping the principals preserve their relationship by recognizing the value of a funded buy-sell agreement. Having such an agreement without a funding mechanism is like buying a car but refusing to put gas in the tank. And that can happen to buy-sell agreements that are drawn up and signed, but never funded due to insufficient capital or the inability to borrow the money when needed.

However, with a life insurance policy, funds can be available from its cash values or death benefit to purchase a deceased partner’s share of the business.

InsuranceNewsNet Magazine » March 2013

2 Estate Protection

A split dollar plan is an easy way for owners of successful businesses to reward key employees selectively, as well as themselves, with life insurance at little or no cost to themselves or the company.

Split dollar plans are flexible in terms of meeting specific needs of the individuals involved and those of the company.

With the endorsement method, the employer owns the policy, but the key executive names the beneficiaries. Quite often, the employer pays the non-deductible premiums, with the key employee receiving a “taxable benefit” and residual death benefits are paid to the company to offset its costs. Finally, the employer owns the cash values, which

5 ‘Life’ Changing Strategies to Win Business Clients are carried on the company’s books as an asset.

Gifting strategies can be incorporated in the planning to gain substantial estate benefit.

Most importantly, the life insurance provides liquidity when it may be needed most – at the time of death.

3 Business Stability Protection

While it may be true that no one is indispensable, the death of a key employee or business partner can raise havoc, even to the point of placing an enterprise in jeopardy.

The turmoil caused by an untimely death can come from a loss of customers, management turmoil, a negative impact on the organization’s financial stability or marketplace doubts.

Even though those involved in a going enterprise may be slow in coming to terms with a need to protect the stability of their business, today’s customers, suppliers and lenders expect such assurance.

They want to know that the business will remain stable should the loss of a critical player occur.

The solution is providing key person life insurance coverage. The process is simple: the company purchases a policy with the participant’s consent, which makes the business the owner, premium payer and beneficiary on the policy. If a death occurs, the company receives the policy proceeds to fund its needs in keeping it sound and productive.

Assuring stability is good for everyone involved – including vendors, customers, employees and owners.

4 Workforce Protection

As the economy climbs ever so slowly from its recessionary doldrums, there are signs that companies are gaining confidence but with a cautious outlook when it comes to risks. This offers advisors a significant opportunity for marketing Employer-Owned Life Insurance (EOLI).

However, it’s important for advisors to overcome employer reluctance because of the adverse publicity associated with EOLI. Starting in August 2006, EOLI life insurance contracts had to meet specific requirements to qualify for favorable tax treatment. In summary, employees must be given notice of insurance and

With mid-size and small businesses employing nearly half the work force, this marketplace is an attractive niche. must consent to the coverage before the contracts are issued and understand that the employer will be the direct or indirect beneficiary of the death proceeds. There are also annual reporting requirements.

EOLI makes good business sense. Today’s employers invest heavily in their employees, whether it’s reimbursing them for educational programs, investing in training or helping them to enhance their skills and knowledge base.

The loss of such an employee is a loss to the company, which EOLI can help offset. Non-qualified deferred compensation and executive benefit bonus plans are serviceable concepts that provide excellent flexibility for employers.

5 Retirement Protection

It’s quite common for self-employed persons and those with less than a handful of employees to both work hard and live well but fail to set aside funds to maintain their standard of living in retirement.

While some may opt to continue working, a fully-insured defined benefit retirement plan can be an attractive alternative, particularly since it’s simple to set up, offers maximum tax-deductible contributions and can help to make up for lost time.

A fully-insured plan is funded with annuity or life insurance contracts, or a combination of the two – and contributions are tax-deductible. The plan is particularly appealing since it offers a guaranteed, stable income, up to $195,000 a year.

LIFE

However, a fully-insured plan is not for everyone, since it requires contributions over a limited period of time. However, it can be particularly helpful in situations where there is substantial profitability.

Bonus: Financial Crisis Protection

While the product is long-term care insurance (LTCi), it might be more accurate to call it “financial crisis protection” since it helps meet the high cost of nursing home care.

Even though “long-term care represents the single largest financial risk faced by the elderly and their families,” according to America’s Health Insurance Plans (AHIP), the sales of LTCi have been rocky. Since 2000 alone, a number of companies have left the market, premiums have increased, doubts have risen about governmental financing and the economic downturn have made consumers wary of purchasing the product.

However, a major change has occurred that can improve LTCi sales. Instead of individual LTCi policies accounting for 90 percent of the sales as they did in the past, today the group market represents 42 percent of the sales, according to an AHIP report. In particular, married couples in the 50- to 65-age group and college graduates with incomes of $50,000 and over are the bulk of that market, based on AHIP information.

By identifying work groups that fit this profile, advisors have an opportunity to market LTCi successfully, including both voluntary and employer-paid programs.

In addition, employer groups benefit from a variety of group discounts and portable coverage so employees can take it with them when they retire or leave their job.

These six business marketplace sales ideas are effective strategies that can help position life insurance agents as valuable advisors for small- to mid-size business owners. Since most have spent their working years in building their company, the knowledgeable advisor has an opportunity to help them maximize the value they have created.

Kenneth A. Shapiro is president of First American Insurance Underwriters Inc., a national life insurance brokerage firm based in Needham, Mass., and specializing in coaching growth-oriented producers.

He can be contacted at Kenneth.Shapiro@ innfeedback.com.

March 2013 » InsuranceNewsNet Magazine

37

[ANNUITYWIRES]

Brought to you by:

DID YOU

KNOW

The Yin-Yang of Annuities in 2012 Annuit me ies co

82%

-6%

Annuit ies All

The 2012 annuity inflow figures are out and they aren’t pretty, at least not most of them.

The Depository Trust & Clearing Corp.

(DTCC) Insurance & Retirement Services (I&RS) tracks annuity transactions it processes for carriers that use its service. In 2012, the firm says, annuity inflows dropped by more than 6 percent, to $84.7 billion, from 2011, while outflows increased by almost 11 percent, to $73.5 billion.

But here’s a surprise. Although the inflows for fixed, group and variable annuity categories were all down, and although the inflows for a separate variable annuity category were essentially flat (up by 0.1 percent), the inflows for fixed income annuities were way up – by more than 82 percent, year over year.

Of course, there is more to the numbers than the numbers. For one thing, In

the income annuity transaction amounts were comparatively small – $2.4 billion in 2012 inflows versus $63.8 billion inflows for variable annuities, for

example. For another, the jump in income annuity activity could be reflecting that more carriers started using the DTCC system in 2012, and not just that income annuity sales are soaring. Still, an 82 percent surge is worth an eyebrow raise or two.

Q: A:

STUMPER QUESTION AND AN ANSWER

The question a lot of industry professionals ask is, why do some retiring workers with a pension choose to take a stream of lifetime income, while others cash out their entire benefit in a lumpsum distribution?

The Employee Benefit Research Institute (EBRI) found this out: The choice

the retiring worker makes “depends to a large extent” on whether the individual’s pension plan allows or restricts lump-sum distributions. Between 2005

and 2010, for example, pension plans with no lump-sum distribution options had annuitization rates (the rate at which workers choose to take their benefit as an annuity) very close to 100 percent, the researchers report. But with defined benefit (DB) and cash balance pension plans that had no restrictions on lump sum distributions during the same period, the annuitization rate was only 27.3 percent.

For the history buffs out there, here’s a brief review from EBRI on how DB plans evolved in this area over the past several decades: “Through the 1960s, DB pension plans offered mainly one

38

distribution choice: a fixed-payment annuity. That changed beginning in the 1970s, as some DB plans began to offer the option of full or partial single-sum distributions, and as ‘hybrid’ pension plans expanded in the 1980s, so did distribution options. Today, most DB pension plans offer some type of single/ lump-sum option, in addition to the traditional annuity choice.”

AN INDEXED ANNUITY OFFERS TWO BONUSES

Allianz Life has added a bonus-type indexed annuity to the IAs that is sold exclusively through its “preferred” distribution network. Called the Allianz 222

Annuity, this contract provides for bonusing the policy’s “protected income value.” (That’s the value the carrier uses

to determine lifetime income withdrawals, which can occur after the first 10 years and if income election occurs between ages 60 and 100). The bonus has two components. First, the contract will pay a 15 percent premium bonus on the protected income value for any premium added in the first three contract years. Second, it will pay an interest bo-

InsuranceNewsNet Magazine » March 2013

?

Nineteen percent of baby boomers ages 60 to 66 say the most important trait of a retirement product is guaranteed income each month, and 14 percent of boomers ages 50 to 54 say the same.

Source: Insured Retirement Institute

nus on that value equal to 50 percent of any earned interest for as long as the contract is held.

Of course, there are considerations.

As Allianz puts it, “Bonus annuities may include higher surrender charges, longer surrender charge periods, lower caps, higher spreads or other restrictions that are not included in similar annuities that don’t offer a bonus feature.”

THIS CFP LEADER IS RESEARCHING ANNUITIES

Craig Lemoine is the new chair of the Council on Examinations at the CerCraig Lemoine tified Financial Planner Board. That should interest annuity professionals because not only does he have street cred in financial planning – he is

a former team manager and financial planner at Lincoln Financial Advisors.

Lemoine is also an assistant professor at The American College and his current research interests include compensation conflicts in financial planning and annuity use with clients.

Go to AnnuityNews.com for exclusive sales ideas and more!

Warren Buffett Among Investors Striking Annuities Deals Buffett’s Berkshire Hathaway closed a deal to take over up to $4 billion in liabilities from Cigna. Apollo Global Management, Guggenheim Partners and Harbinger Group also have acquired annuities.

bitly.com/QRBuffett

@Annuity_ News

Preserve Your Income.

We’re poised to protect broker compensation.

Preserve Your Income.

With today’s uncertain regulatory climate in the

insurance industry, it is important for you to shore up your threatened sources of compensation. We can help you reduce the employer’s premium cost while increasing your compensation!

Reduce employer’s premium cost while increasing your compensation!

Insured HRA Plan

We’re poised to protect broker compensation.

Groups size: 5 or more

Offered exclusively by:

Available in 34 states:

AK, AL, AZ, AR, CA, CO, DC, DE, FL, GA, IA, IL, IN, KY, LA, MI, MS, MO, MT, NE, NM, NV, OH, OK, OR, PA, SC, SD, TN, TX, VA, WI, WV, WY

Visit PS-AD-1-13

1-800-800-1397

marketing@morganwhite.com

www.PremiumSaverPlan.com/INN

for more information!

March 2013 » InsuranceNewsNet Magazine

39

For Agent Use Only - Not For Use With General Public

annuity

What Happens If Annuities Are Considered ‘Complex’?

END

I nternational regulators are stepping up their examination of variable annuity sales, but that scrutiny has not yet trickled down to state and federal rulemakers.

By Linda Koco

S

ecurity regulators in the U.S and internationally are sending out signals that they intend to step up review of distribution of complex financial products, such as variable annuities and equity-linked instruments. This could affect advisors who handle such products eventually, if not in the immediate moment.

For example, the Financial Industry Regulatory Authority (FINRA) sent out a letter on Jan. 11 to broker-dealers indicating that variable annuities are among its regulatory and examination priorities in 2013.

The same letter also says it will examine B-D firms and registered representatives to ensure they have a full understanding of complex or high-yield products, particularly in regard to market risk, credit risk and liquidity risk exposures. This reinforces points FINRA raised last year in its Regulatory Notice 12-03 on Heightened Supervision of Complex Products.

Meanwhile, an international securities organization has just released its final report on suitability requirements in the distribution of complex financial products. The report does not name life insurance or annuity products in the long list of examples of complex products, but it does include the term “equity-linked instruments and instruments whose potential pay-off is linked to market parameters.”

That equity-linked phrasing will be of interest to U.S. financial professionals for two key reasons.

First, that term has a variable/indexed product-like ring to it, and so may be

40

Federal & Start State Regulators

viewed as “catching” certain insurance products that have equity-linking features. The final understanding will likely depend on how international regulators, and country-specific regulators, interpret equity-linked instruments. For now, it’s sufficient to note that the language may be encompassing enough to sweep in certain insurance product types.

Second, the organization that published the report is the International Organization of Securities Commissions (IOSCO). This organization is no stranger to variable products. In fact, in announcing its new report, IOSCO points out that the report is intended to complement work completed by the Joint Forum on the topic of complex

InsuranceNewsNet Magazine » March 2013

products which include, among many others, variable insurance products.

The Joint Forum is an international group of regulators from banking, securities and insurance. IOSCO is a parent committee of this group, as is the Basel Committee on Banking Supervision (BCBS) and the International Association of Insurance Supervisors (IAIS).

A Convergence

The above would suggest that regulatory thinking may be converging around suitability standards and complex products.

It may also be that some regulators will consider treating certain insurance and annuity products as complex products within this context. This is not certain at

What Happens If Annuities Are Considered ‘Complex’? this time, but one thing is certain: There is definite linkage between U.S. regulators and the international regulatory community.

For instance, the U.S. Securities and Exchange Commission (SEC), FINRA and the National Association of Insurance Commissioners (NAIC) all have relationships of some kind with IOSCO. The SEC: The SEC website says that the SEC is an IOSCO member. As such, it says, the SEC actively participates in the organization’s policy committees, its standing committee on risk and research and certain IOSCO task forces. “The standards developed by the policy committees or task forces, and then publicly issued by IOSCO, become the benchmark against which an IOSCO member’s regulatory practices are assessed,” the website adds.

FINRA: This self-regulatory organization says on its website that its international activities include deepening involvement and developing FINRA viewpoints in policy dialogues with global regulatory organizations. One of those organizations is IOSCO. NAIC: This organization of U.S. state insurance regulators is a member of The Joint Forum, the international organization mentioned above. The Joint Forum addresses “cross-sectoral issues” common to insurance, banking and securities, NAIC says on its website.

The Joint Forum does not have the power to pass regulations, according to the NAIC. That may be an important point for U.S. financial advisors and insurance professionals who may be wondering what impact the Forum, IOSCO and related bodies could actually have on everyday business.

However, NAIC also says that the Joint Forum can “make strong recommendations and these are often adopted by member nations, as well as other countries.” In addition, the Joint Forum develops guidance, principles and identifies best practices of mutual interest to the three supervisory standard setters, NAIC says.

Impact for Advisors

It would appear that U.S. advisors won’t need to start looking for an IOSCO regulator or members of the Joint Forum to come knocking on their doors. But

advisors may want to stay tuned to increased FINRA supervision and examination of variable annuity sales and to influences from abroad, especially concerning complex products, however these may be construed down the road.

The IOSCO report on complex products will probably function more like a set of guidelines for securities regulators in the countries that participate in the organization, says James J. Eccleston, a Chicago attorney who has been following regulatory interest in complex financial products and who often represents financial advisors.

“But individual advisors don’t need to pay close attention to the provisions,” adds the chief strategist and lead attorney at Eccleston Law Offices.

“These are international guidelines, and they could impact what regulators do in the U.S. regarding complex financial products,” he allows. “But nothing definitive would happen here without formal rulemaking.”

It’s much more important to heed the regulations from the state insurance regulators, the SEC and FINRA, he says.

Of course, Eccleston adds, it might be good for advisors to check out the IOSCO report, “so they can see what the world of securities regulators are contemplating. Just remember that, at most, they are looking at only a potential impact on the U.S. market.”

The FINRA Letter

As for the FINRA letter to B-Ds and its earlier Notice 12-03, that’s another matter. Eccleston says FINRA’s actions regarding complex products have been the subject of discussion among securities lawyers and their clients in recent times.

Of most significance for annuity professionals are FINRA statements about variable annuities in the January letter to B-Ds, he says.

On the one hand, the letter concedes that variable annuities “can offer valuable benefits to investors seeking predictable income streams, tax deferral for investment gains and flexible investment choices.”

On the other hand, the FINRA letter warns that “long holding periods in conjunction with significant surrender charges can make them unsuitable for

annuity

investors who have near-term liquidity needs.”

In addition, the letter warns against the negative impact on variable annuity performance of “high fees and expenses” and cautions that high commissions can invite switching.

Even more surprising, Eccleston says, is the letter’s admonition that variable annuity company consolidation “may provide an inappropriate incentive for brokers to recommend exchanges” through buy-back offers, spurs to swap out product guarantees, etc.

The letter includes a list of several variable annuity areas where FINRA examiners plan to focus in 2013.

These areas include “suitability of recommendations, the brokers’ level of product-specific knowledge, the level of due diligence in assessing the risk tolerance and liquidity needs of the customer when making investment recommendations, the manner in which material risk exposures are disclosed to customers and the impact on broker compensation associated with competing investment alternatives.”

To Eccleston’s way of thinking, “That is a big deal. They are saying they are going to focus on suitability, product-specific knowledge, due diligence, disclosure and broker compensation impact.”

That is in addition to the letter’s comments about focusing on complex products. Given current market conditions, the letter says FINRA is particularly concerned about B-Ds and reps having “full understanding of complex or high-yield products, potential failures to adequately explain the risk-versus-return profile of certain products, as well as a disconnect between customer expectations and risk tolerances.”

The letter also states that, “Certain, sometimes complex, products have recently surfaced as potentially unsuitable and otherwise problematic for retail investors based on their underlying market, credit and liquidity risk characteristics.”

Eccleston’s take is that, in 2013, there will be more enforcement action through FINRA in these areas.

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning.

Linda can be reached at Linda.Koco@ innfeedback.com.

March 2013 » InsuranceNewsNet Magazine

41

annuity

When Is the Right Time to Have the Income Annuity ‘Talk’? hen clients reach the age at W which they need to start taking RMDs from other retirement plans, that’s the trigger for starting a discussion on income annuities.

By Linda Koco

W

hen do most advisors start talking with clients about income annuities? Quick, grab a pencil and jot your answer. Then read on.

Executives from CANNEX USA say the prime time for today’s advisors to have “the talk” is when clients reach their late 60s or early 70s.

This is not accidental, according to 42

CANNEX President Gary Baker. When people turn age 70 1/2, they must, under U.S. law, start taking required minimum distributions (RMDs) from 401(k)s and other deferred compensation retirement plans they may hold. That drives consumers to their financial advisors for help with the RMD calculation, and that in turn drives advisors to ask their clients about other income sources.

Pretty soon, advisors start hitting up the payout annuity database at CANNEX to find out about income annuity products and features available to meet the customer’s need.

A new report on advisor activity on the CANNEX database shows that the average age of potential income annu-

InsuranceNewsNet Magazine » March 2013

ity buyers, as inputted by advisors in 2012, was the pre-RMD age of 69.1. (For women, the average was 70.5, and for men, 68.1.)

Trends and Trolling

Baker believes that the 69.1 average age is significant. The late 60s and early 70s represent the time of life when many people start intentional income planning, he points out. What happens is that the RMD gets people to sit down with their financial advisor, to find out how much they must withdraw under government rules.

“Clients put their papers on the table, the advisor answers the RMD questions, and then the advisor starts checking to

When Is the Right Time to Have the Income Annuity ‘Talk’? be sure the clients have a sufficient floor on income to supplement other retirement income they may have.”

That’s when the income annuity discussion comes up, he says.

This is a time in life when people move from savings to cash flow, Baker adds.

But in many cases, “that’s like going from math to calculus”—because many variables are involved, including time segmentation of the income flows, age

cy to, say, take care of the RMD withdrawals. But the tax penalty for inadequate RMDs is very steep, he cautions, so it’s important to be very sure that an income annuity payout would cover the RMD now and in the future. If tax provisions involving RMDs should increase, older products would likely be grandfathered, Dobler allows. However, in dire circumstances, “all bets would be off.” For that reason, he says, “it would take a sophisticated financial representative to do it right.”

An Easier Conversation

of the client, contracts that are available and options for the consumer.

Even so, “in most cases, at age 70, clients are willing to lock in some income,” Baker says.

The CANNEX report supports that contention. In 2012, 90 percent of the advisor requests were for products making monthly payouts that start immediately. Just a fraction – 0.2 percent – involved products that would start income up to 300 days later.

It’s About Non-Qualified Funds

The report also shows that nearly 77 percent of the advisor’s payout annuity requests named non-qualified funds as the source for the income annuity funding. By comparison, only 21 percent of the requests named qualified individual retirement accounts as the source.

So, even if RMD rules did drive a lot of clients to visit advisors in the first place, advisors did not limit their discussions with clients to qualified plan issues, says Barker. “They looked at the client’s other savings and explored using non-qualified funds to lock in basic retirement income.”

Only the more sophisticated financial advisors tend to use qualified funds in income annuities, notes Jim Dobler, national sales manager for CANNEX USA. Such advisors might set up a poli-

The 2012 data suggest that advisors may be stepping up their conversations with clients about taking the cash refund option. This increasingly available income annuity feature typically provides that, if the annuitant dies before receiving payouts equal to the annuity purchase payment, the beneficiary will receive the remaining amount.

The 2012 survey shows that 15 percent of advisor inquiries involved cash refund contracts. That’s up from 13 percent in 2011.

Dobler, who used to be a financial advisor, thinks advisor interest in offering the cash refund option is growing in part because “it’s a nice across-the-kitchentable story to tell the client.”

The rep can point out to the client that “although you will start out receiving a few dollars less each month with this feature, you know that your estate won’t lose any money that’s coming to you,” he says. This is easier to talk about than to lay out some sort of financial plan that accomplishes something similar, he adds.

The cash refund feature also creates an opportunity for advisors to discuss with clients how today’s income annuities are different from those of the past. Many people don’t know about the cash refund

annuity

feature or that the products have liquidity features, Dobler explains.

No-Load and Low-Load Income Annuities?

A trend that the survey did not pick up on, but that Baker says is on the way, is the arrival of income annuities that have no loads (for commissions) or very low loads.

A few large distributors are offering such products on a one-off basis, only for use by their own advisors and clients, Baker says. But other distributors are talking about asking insurance companies to make the products available to the broader market so that fee-based advisors – especially registered investment advisors (RIAs) – can use them when working with retirement-minded clients.

RIAs see the products as taking the place of bonds in a client’s portfolio, he says, but they want the product design to fit into their fee-based practice.

Incidentally

Worth noting is that the 2012 survey shows that advisors entered 18 percent more income annuity requests into the system in 2012 than in 2011. (In terms of raw numbers, advisors plugged in 485,482 requests on cases in 2012 versus 412,460 in 2011.)

This occurred in a year when LIMRA reported that actual sales of income annuities increased while sales of most other types of annuities decreased. Baker views this as an indication that income annuities are making a slow but steady climb in the marketplace, despite what other annuities are doing.

Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning.

Linda can be reached at Linda.Koco@ innfeedback.com.

March 2013 » InsuranceNewsNet Magazine

43

[HEALTHWIRES]

How much does a procedure cost? Hospitals can’t always tell you. bitly.com/QRhospitalcosts

Help Wanted: Health Insurance Navigators Tens of thousands of “navigators” will be needed to help uninsured Americans sign up for coverage under the terms of the Affordable Care Act (ACA). But the big question is will insurance advisors be welcome to apply?

An estimated 30 million uninsured Americans will be required to purchase health insurance under the terms of the ACA, and they will need help in making the right choice for their needs. The navigators will have the job of helping them to understand their options and make their coverage choice. The Washington Post reports that the challenge of hiring and paying for these navigators is huge, and is one of the most pressing issues as the details of ACA are implemented.

Agents and brokers are permitted to serve as navigators, provided that they meet the standards proposed by the Department of Health and Human Services.

However, navigators may not have what HHS refers to as “current conflicts of interests” or receive any payment from health insurers for placing individuals or groups in qualified health plans.

Lawmakers at least two states have imposed strict standards on navigators, while three other states are considering similar navigator standards. These include proposals to explicitly prohibit them from giving advice, require them to get a state license and mandate that they post surety bonds to cover any liability in case they provide someone with faulty guidance. Insurance agent organizations in many states are lobbying to prohibit the navigators from giving advice on which plans to choose and to make them liable for their guidance if it results in financial harm.

More U.S. Children Insured, But by the Government

More U.S. children than ever before were covered by health insurance in 2011 because of increased participation in government-sponsored health insurance programs, according to a study by the University of New Hampshire.

The economic downturn and subsequent job losses between 2008 and 2011 led to declines in private insurance.

During that same period, government policies enacted to increase participation in public insurance programs placed more children on the rolls of government programs such as the Children’s Health Insurance Program (CHIP).

DID YOU

KNOW

?

Between 2008 and 2011, the rate of private coverage among U.S. children decreased by more than 5 percentage points, while public rates increased by more than 9 percentage points.

“While unemployment rates have declined since 2008, research shows that some individuals are taking jobs with no health benefits, with health benefits that are not available to dependents, or with unaffordable premiums.

Therefore, many parents have turned to public programs such as Medicaid, the State Children’s Health Insurance Program or other state programs,” said Michael Staley of the University of New Hampshire.

The rates of insurance coverage for children age 18 and under increased from 90 percent in 2008 to 92.5 percent

Health insurance plans with the five highest declination rates include South Dakota’s John Alden Life Insurance Company (73%), Utah’s Assurant Health (71%), North Dakota’s Assurant Health (58%), Kentucky’s Time Insurance Company (56%), and Idaho’s Assurant Health (56%). Source: HealthPocket

44 InsuranceNewsNet Magazine » March 2013

QUOTABLE

What is unclear is whether some insurers have increased their declination rate in order to improve risk pool health and profitability prior to 2014, when insurance companies can no longer reject applications based upon health status or pre-existing medical conditions.

— Kev Coleman of HealthPocket on the high rates of rejection for health insurance applications

in 2011. Rural places and central cities in the South and West experienced the greatest increases since 2008, Staley said.

Smokers Could See Health Insurance Premiums Go Up in Flames

If you or your clients are thinking about kicking the habit, here is one more reason why it would be a good idea. Millions of smokers could be priced out of health insurance because of tobacco penalties in the Affordable Care Act (ACA), according to experts who are just now figuring out the potential impact of a little-noted provision in the massive legislation.

Under the ACA, health insurers would be able to charge smokers up to 50 percent higher premiums on individual policies, starting on January 1, 2014.

For a 55-year-old smoker, the penalty could reach nearly $4,250 a year. A 60-yearold could wind up paying nearly $5,100 on top of premiums. Younger smokers could be charged lower penalties under rules proposed last fall by the Obama administration.

But older smokers could face a heavy hit on their household budgets at a time in life when smoking-related illnesses tend to emerge.

Workers covered on the job would be able to avoid tobacco penalties by joining smoking cessation programs, because employer plans operate under different rules. But experts say that option is not guaranteed to smokers trying to purchase coverage individually.

Nearly one of every five U.S. adults smokes. That share is higher among lower-income people, who also are more likely to work in jobs that don’t come with health insurance and would therefore depend on the federal health care law.

Wise financial thinking. pass it on.

Looking for a way to meet your client’s wealth accumulation and wealth transfer needs?

GOLD SERIES Fixed indexed SingLe Premium WhoLe LiFe inSurance1 Your clients will enjoy a wealth of great features, including:

Plus, 3 distinct crediting strategies for wealth management and diversification:

• Issue Ages 18 to 85

• 1 Year Term Declared Fixed Rate

• 10% Premium Bonus

• S&P 500 ® Index 1 Year Term with cap

• 100% Guaranteed Return of Premium Day 1 • Terminal Condition and Chronic Illness Benefit • Point-of-Sale Underwriting2

1

• Global Advantage Indexed 1 Year Term with Participation rate (Global Advantage includes Euro Stoxx 50 ® Index, Hang Sang Index, Russell® Index)

1 Product and/or Terminal Condition and Chronic Illness Benefit, not available in all States.

2 Depending on Age, Health and Face Amount.

To learn more about Sagicor, visit our website SagicorLifeUSA.com or call toll-free 1-888-724-4267, option 2.

Sagicor Life Insurance Company is rated “A-” (Excellent) by Best Rating Company.

4530

FOR PRODUCER USE ONLY – NOT FOR PUBLIC DISTRIBUTION

March 2013 » InsuranceNewsNet Magazine

S1000313 45

HEALTH

HHS Specifies Covered Benefits, Levels of Health Plans Under ACA What are “essential health benefits?” And, what’s the difference between a Silver plan and a Gold plan? Here are some of the details.

By Susan Rupe

A

ll that glitters is not gold. In the world of the Affordable Care Act, it may be platinum, silver or bronze.

The names of those four metals will be heard more and more as we move closer to the implementation of the Affordable Care Act (ACA). In 2014, coverage provided for essential health benefits will be included in a qualified health plan that fits within one of four levels: Platinum, Gold, Silver and Bronze. The four levels of coverage indicate the percentage 46 InsuranceNewsNet Magazine » March 2013

of health costs that a health plan would pay for an average person.

Just what are “essential health benefits?”

The U.S. Department of Health and Human Services has specified that the essential benefits covered in a qualified health plan will include at least the following services: Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance abuse treatment services, including behavioral health treatment Prescription drugs

Rehabilitative services and devices Laboratory services Preventive and wellness programs Chronic disease management Pediatric services, including dental and vision care

But, back to those glittering metals

Under the ACA, insurers will be required to offer plans that fit one of those four levels. This requirement will apply regardless of whether a plan is offered through an exchange (and premiums must be the same for plans inside and outside of the exchange). Insurers don’t have to offer plans in all of those levels, but within the health insurance exchanges, all insurers must offer at least one silver and one gold plan except for dental-only plans.

HHS Specifies Covered Benefits, Levels of Health Plans Under ACA

Actuarial Value and Plan Requirements in the ACA

This table shows the range of actuarial values and maximum patient out-of-pocket costs specified in the ACA and to whom they apply.

Actuarial Out-of-Pocket Value Maximum A 60% B 70% C 70% D 70% E 73% F 80% G 87% H 90% I 94%

HSA Level HSA Level 2/3 of HSA Level 1/2 of HSA Level 1/2 of HSA Level HSA Level 1/3 of HSA Level HSA Level 1/3 of HSA Level

Who it Applies to

Bronze plan available to all individuals and small businesses Silver plan available to all individuals and small businesses Silver plan for people with income 300-400% of poverty Silver plan for people with income 250-300% of poverty Plan with cost-sharing subsidies for people with income 200-250% of poverty Gold plan available to all individuals and small businesses Plan with cost-sharing subsidies for people with income 150-200% of poverty Platinum plan available to all individuals and small businesses Plan with cost-sharing subsidies for people with income 100-150% of poverty

The four levels of coverage indicate the percentage of health costs that a health plan would pay for an average person. An insurer that offers coverage at any of these levels will be required to offer the same level of coverage in a plan designed specifically for individuals under age 21.

Platinum plans would pay 90 percent of covered benefits with an average individual paying the remaining 10 percent out-of-pocket.

Gold plans would have 80 percent of health care costs covered for an average person, with enrollees paying an average of 20 percent of the costs.

Silver plans would cover 70 percent of all health care costs for an average person, with enrollees paying the remaining 30 percent of costs.

Bronze plans would cover 60 percent of all health care costs for an average person, with enrollees responsible for paying 40 percent of the costs.

These four levels do not apply to coverage already in existence that meets certain conditions (“grandfathered” plans). A grandfathered plan is one that was in existence as of 2010 and provides no lifetime limits on coverage, coverage for children up to age 26 and no rescinding of benefits if an unintentional error was made on the application.

Almost all employer-sponsored plans are grandfathered.

The ACA also requires that health plans place a cap on the maximum outof-pocket costs for enrollees, based on

the out-of-pocket limits in high-deductible plans that are eligible to be paired with a Health Savings Account. The current out-of-pocket limits are $5,950 for an individual and $11,900 for a family, and will be adjusted over time after 2014 based on increases in premiums.

Most people will be required to have insurance that is at least at the Bronze level or pay a federal tax penalty. People who buy coverage on their own through an exchange and have family income up to four times the poverty level ($89,400 for a family of four and $43,560 for a single individual) may be eligible for premium and cost-sharing subsidies. The premium subsidies are based on family income and the premium (adjusted for age) of the second lowest cost Silver plan in an exchange. In addition, low and moderate income people buying insurance in exchanges may be eligible for coverage with a higher actuarial value and lower out-of-pocket maximum.

The various levels of coverage are defined based on actuarial value – which measures the generosity of a plan for a standard population. This means that the cost-sharing structure could vary from one plan to another. For example, one plan may have a higher deductible than another, but have a lower coinsurance percentage once the deductible is met in order to achieve the same actuarial value.

Or, a plan may cover some physician visits before a person meets the deductible, yet have a higher deductible or coinsurance

HEALTH

Note: Blue indicates

coverage that is available to all participants in the individual or small group market. Other levels of coverage are available only to individuals eligible for subsidies in Exchanges based on family income.

“HSA Level” refers to the maximum out-of-pocket costs in a high deductible plan paired with a Health Savings Account. The current limits are $5,950 for an individual and $11,900 for a family and will be adjusted over time.

Source: The Henry J. Kaiser Family Foundation

percentage. While enrollees would be expected to pay the same out-of-pocket costs in two plans that have the same actuarial value, any given enrollee could have different costs in the two plans, depending on how much and what type of health services he or she uses.

Another plan option permitted under ACA in 2014 is a catastrophic plan. A catastrophic plan will provide coverage for essential health benefits and have deductibles equal to the amounts specified as out-of-pocket limits for HSA-qualified High Deductible Health Plans. Such deductibles will not apply to at least three primary care visits. A catastrophic plan will be permitted only in the individual market only for young adults (under age 30 before the plan year begins) and for those exempt from the individual mandate because no affordable coverage is available or because they qualify for a hardship exemption.

Platinum, Gold, Silver and Bronze: The names of these four metals will be f lashed about frequently as the exchanges get ready for open enrollment beginning in October.

Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Susan may be reached at srupe@ insurancenewsnet.com.

March 2013 » InsuranceNewsNet Magazine

47

[FINANCIALWIRES] Where the Bulls Run Free The Dow Jones average surpassed 14,000 a few times in February, cresting at 14,035.67 on Feb. 19. That’s just a blown kiss away from the all-time high of 14,164.63, set in October 2007. The NASDAQ was doing even better with a 12-year high of 3,213.59.

The temperature is rising with the influx of regular folk running back into the market. In January, investors

rate litigator representing top companies such as JPMorgan that would assuredly have some interaction with the SEC.

White said she would recuse herself from any decisions having to do with former clients, which might leave a short list of stuff to do, especially because her husband is also a corporate lawyer with a roster of fine clients.

White has been expected to bring her prosecutorial skill to bear on financial institutions because the SEC has been criticized for not vigorously pursuing those responsible for the 2008 collapse. She might have a 48

Maybe those people who are having trouble saving just have too dumb of a phone. More than half of Americans (53

those people, 73 percent say the tool helps them keep better track of their finances, according to of Americans the COUNTRY Finan- use smartphones for banking cial Security Index.

As might be expected, younger people, ages 18 to 29, are the most likely to use personal finance applications for multiple functions (35 percent) and say they have helped them save (57 percent). But it might be surprising to know that more people over 65 (43 percent) paid bills online than other groups.

The most significant takeaway from the study is that people who used more tools on their phone and online were able to keep better track of their finances.

53%

so strong, it dwarfed the previous high by $23.7 billion.

Since the low of March 2009, the indexes with a few dips have generally been on a slow, steady march upward, which market watchers like to see. Many observers say that the growth is on sound fundamentals, with businesses reporting real profits.

So this can only mean one thing, right? We’re doomed. This is the part of the movie where we all relax and crack a few jokes only to have the ax murderer come swinging back to life. Or, for a more up-to-date cultural reference, perhaps a zombie horde comes crashing through the gates.

Well, that’s what the bears say, always ready to trip up the happy-go-lucky bulls. Look at The Fed ready to pull the cheap money, they say. Mom and Pop investors always run into the market just as the fiery building collapses, they point out. And for the love of honey, would you look at that $16 trillion debt? The thing about being a doomsayer is, eventually, you are correct. But isn’t riding a bull more fun than sleeping in a cave?

Mary Jo White is a former Manhattan prosecutor ready to take on the challenges of leading the Securities and Exchange Commission, but the nominee is facing a few challenges herself.

Mary Jo White After she left the federal prosecutor’s office, she became a corpo-

Do Smartphones Make Us Smarter With Our Money?

percent) use a smartphone for online banking and investing. Of

socked a record $77.4 billion into traView the full chart at bitly.com/dowjonesaverage ditional and exchange-traded stock funds, according to TrimTabs.com, which tracks stock market flows. The inflow was

SEC Nominee Faces Questions over Conflicts

Women business owners are optimistic about 2013 bitly.com/QRwomenbiz

small group of institutions left that she can legally focus on, but there is always that fiduciary standard issue that’s been hanging around.

Americans Struggle to Save

Apparently most Americans aren’t aware there’s a party raging on Wall Street.

They can’t even pull together enough to drop into a piggy bank at the end of the month, according to Allstate Financial’s “Life Tracks” poll.

Half of Americans say they have enough money left over to save at the end of the month after paying for essentials. Four in 10 (41 percent) are living paycheck-to-paycheck and 8 percent say they have enough only for essentials. But here’s a spot of

good news for advisors. In the late December 2012 survey, respondents admitted to an overall lack of financial management skills and resources, but a strong desire to do a better job in 2013. After all, knowing you need help is always the first step.

InsuranceNewsNet Magazine » March 2013

States Target Dodd-Frank Bank Takeover Regs

When a new Securities and Exchange Commission leader is finally installed, she or he will be facing quite a bit of the Dodd-Frank financial reform law to put into effect. But a growing number of states are fighting at least part of the legislation.

Texas is the latest state joining a challenge to financial reform, saying it puts banks at risk and denies the state due process. Texas and 10 other states challenge Title II of Dodd-Frank, which gives the U.S. Treasury Secretary and the Federal Deposit Insurance Corporation (FDIC) authority to simply take

over and liquidate large financial institutions. Texas also claims that the law

makes it risky for the state to put taxpayer funds into financial institutions vulnerable to federal intervention.

Perhaps they can get on their smartphone and move that money to somewhere safer and with better returns, like that rip-roaring stock market rodeo we’ve been hearing so much about.

Maybe not.

Barney Frank (top) and Chris Dodd introduced the revised version of the Dodd– Frank Wall Street Reform and Consumer Protection Act in Dec. 2009.

The bill was signed into federal law on July 21, 2010.

Warriors Wanted Are you ready to be part of an exclusive group, or just another in the pack? Minnesota Life aligned with AMZ Financial to EXCLUSIVELY DISTRIBUTE its newest IUL product — Omega Builder IUL. It includes a PATENT-PENDING1 design that helps you stand out in your Þeld.

Product Highlights - PDF Be one of the first to get the indepth product details on this exciting new product.

Cost of Insurance Charges decreased by up to 50%2

Minnesota Life

•

Policy loans enhanced by up to 30%2

Special features

• • •

Select opportunities for both GAs and Agents We only want the strongest sales team

Call Now: 866-279-5677 http://go.amzwebcenter.com/warrior

)!# ĆŤ 1%( !.ĆŤ * !4! ĆŤ *%2!./ (ĆŤ %"!ĆŤ */1. * !

Product Highlights Ä‘ĆŤ *%-1!ĆŤ,.+ 1 0ĆŤ"! 01.!Ä?ĆŤ * +)!ĆŤ .+0! 0%+*ĆŤ #.!!)!*0ƍĨ ÄŠ

Ä‘ĆŤ $.!!ÄĄ5! .ĆŤ%* !4ĆŤ"+.ĆŤ,+0!*0% ((5ĆŤ$%#$!.ĆŤĆŤ %*0!.!/0ĆŤ .! %0%*#

Ä‘ĆŤ %2!ĆŤ%* !4ĆŤ +1*0ĆŤ $+% !/

Ä‘ĆŤ +),!*/ 0%+*ĆŤ /! ĆŤ+*ĆŤ03+ÄĄ5! .ĆŤ.+((%*#ĆŤĆŤ 0 .#!0ĆŤ,.!)%1)/

Ä‘ĆŤ (!* ! ĆŤ%* !4ĆŤ"+.ĆŤ .+ !.ĆŤ %2!./%Ăź 0%+*

Indexed characteristics Indexed crediting method Account allocation Product details Policy type Issue ages Minimum face Maximum COI charges Death benefit test

Ä‘ĆŤ +(( .ĆŤ +/0ĆŤ 2!. #%*#

Point-to-point with annual reset (three year reset for three-year index option) Fixed, indexed (based on the performance of a market index) or both Flexible-premium universal life with an interest crediting option tied to the performance of a market index that pays a part or all of the death benefit in specified guaranteed monthly or annual installment periods 0 to 80 based on ‘age nearest’ birthday $100,000 for all ages Based on 2001 CSO Table which has rates to age 121 Guideline Premium Test (GPT) or Cash Value Accumulation Test (CVAT) chosen only at issue

Level or Increasing Death benefit options Death benefit paid out in a combination of a lump-sum payment and guaranteed installment payments.

Death benefit payout – Income Protection Agreement A minimum of 50 percent of the benefit must be paid out in guaranteed installments. đƍ EURO STOXX 50Ž ii with 100% participation đƍ S&P 500Ž i with 100% participation Index account choices đƍ S&P 500Ž with 140% participation (lower cap) đƍ S&P 500Ž with three-year index segment length

Ä‘ĆŤ Blended index with S&P 500ÂŽ, Russell 2000ÂŽiii, Barclays Capital U.S. Aggregate Bondiv and EURO STOXX 50ÂŽ

Issue classes Surrender charge

Preferred Select (Non-Tobacco only), Preferred, Standard, Special Risk, Tobacco, Non-Tobacco Applies for the first 10 years after issue or face amount increase

Interest options Minimum guaranteed interest rates

Fixed, indexed or combination

Premium mode Loans

Annual, semi-annual, quarterly and monthly; Minimum payment for any frequency is $50

Fixed interest account is 3%; Indexed account is 0% Contract minimum interest rate is 3% cumulative average per year upon death or termination of contract (less surrender charges and withdrawals) Fixed or variable; only one loan interest rate type per policy. May switch between loans once per year. đƍ Fixed loan rates: 4.0% interest charged in arrears; 3.0% interest credited in years 1-10; 3.9% interest credited in years 11+. đƍ Variable loan rates: Will vary with an outside index – the greater of 4% or the Moody’s Corporate Bond Yield Average. Variable loan interest credited the same as the accumulation value of the policy; Net variable loan cost could be positive or negative.

Compensation Optional agreements*

Based on a two-year rolling target premium Accelerated Benefit Agreement, Death Benefit Guarantee Agreement, Early Values Agreement, Guaranteed Insurability Option Agreement, Inflation Agreement, Long Term Care Agreement, Overloan Protection Agreement, Premium Deposit Account Agreement, Surrender Value Enhancement Agreement, Term Insurance Agreement, Waiver of Charges Agreement, Waiver of Premium Agreement

* Additional agreements may be available. 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.

Insurance products described here are underwritten and issued by Minnesota Life Insurance Company. AMZ Financial Insurance Services, LLC serves as a distributor of these products and is independently owned and operated.

1 This

feature is based on methodology developed by AMZ Financial and pending patent approval.

A DB with a 7-pay premium at 7% illustrated rate (6% VLR) with max income age 65-100.

For Ăžnancial professional use only. This material may not be reproduced in any form where it is accessible to the general public. Insurance products described here are underwritten and issued by Minnesota Life Insurance Company. AMZ Financial Insurance Services, LLC serves as a distributor of these products and is independently owned and operated. Omega Builder IUL is designed Ăžrst and foremost to provide life insurance protection. While the interest crediting options are attractive for cash accumulation, the product should always be promoted to Ăžrst meet the death beneĂžt needs of families and businesses with cash accumulation as a secondary beneĂžt. Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. One could lose money in this product. State variations will apply. Policy loans and withdrawals may create an adverse tax result in the event of a lapse or policy surrender, and will reduce both the cash value and death beneĂžt. Consult a tax advisor for speciĂžc information.

2 50/male/stnd/opt

Minnesota Life Insurance Company ¼ A Securian Company ¼ 400 Robert Street North, St. Paul, MN 55101-2098 651-665-3500 ¼ 651-665-4488Magazine Fax March¼ 2013  InsuranceNewsNet 49 A04803-1212 Š2013 Securian Financial Group, Inc. All rights reserved

financial

Knowing S, C and LLC Means $ nowing the kind of company K their clients operate helps advisors serve businesses better.

By Russell E. Towers

T

he Internal Revenue Service revealed significant opportunities for financial planning professionals when it released information about business tax returns gathered from 1980 through 2008.

What can we infer from this data over the 28-year span? Let’s take a look at each of the four categories of business entities and consider an explanation:

S Corporations (Form 1120S PassThrough Entity): A great jump in percentage shares of S Corp tax returns, business receipts and net profits grew between 1980 and 2008. The Tax Reform Act of 1986 provided the spark where personal tax rates became lower than C Corp tax rates. Many existing C Corps switched to S Corps in the late 1980s and have remained S Corps ever since. Many new start-up companies organized as S Corps in the 1990s and 2000s to take advantage of the lower marginal tax rates of pass-through profits that would be taxed only once as K-1 income to S Corp owners in the year earned.

Limited Liability Corporations and Partnerships (Form 1065 Pass-Through Entity): Percentage shares of total tax returns remained essentially level from 1980 through 2008. However, there was a 50

great increase in percentage of shares of both business receipts and net profits in the 1990s, which continued to increase dramatically in the 2000s. All states enacted LLC enabling statutes in the 1990s, which included single-member (100 percent owner) LLCs. LLCs became the entity of choice for “Main Street America” business start-ups in the late 1990s and 2000s because of the generally lower tax rates of pass-through profits that would be taxed only once as K-1 income to LLC owners in the year earned. LLCs also provide limited liability protection that partnerships do not offer.

Sole Proprietorships (Schedule C Pass-Through Entity): Percentage shares of total tax returns, business receipts and net profits remained consistently level throughout the 28-year period that data was collected. Clearly, sole proprietorships show the greatest percentage share of total returns, but the smallest percentage share of business receipts and net profits of all the business types. Many businesses start as sole proprietorships and, if successful, convert to formal LLCs or S Corps after a few years. A great number of business enterprises start as sole proprietorships and fail after a few years.

This accounts for the large percentage of returns filed, but the smallest percentage of business receipts and net profits when compared to other business types.

C Corporations (Form 1120 Separate Tax Entity): Percentage shares of

InsuranceNewsNet Magazine » March 2013

total tax returns, business receipts and net profits all declined dramatically for C Corps in the 1980s and continued to decline at a fast pace in the 1990s and 2000s. The major reasons for this decline was the large switch from C Corp to S Corp status of existing firms that took place in the late 1980s and the huge growth of the LLC legal form of business that took place with state enabling legislation in the 1990s. Also, C Corp profits continue to be taxed twice, first at the C Corp level at C Corp tax rates, and then again at the shareholder level if distributed as non-deductible dividend distributions to the C Corp shareholders personally.

Maybe the most eye-popping numbers from the IRS data is when the percentage share of net profits from S Corps and LLCs/Partnerships are combined together and compared to the percentage share of C Corp profits. In 1980, the combined percentage share of S Corp and LLC/Partnership net profits was only 4 percent and the percentage share of C Corp profit was 78 percent.

However, by 2008, the combined share of S Corp and LLC/Partnership net profits had grown to 54 percent and the percentage share of C Corp net profits had fallen to only 27 percent. This huge switch from C Corp dominance of net profits in 1980 to S Corp and LLC dominance of net profits today reflects the tremendous growth of “pass-though” entities in the 1990s and 2000s.

Financial

Knowing S, C and LLC Means $ From an overall perspective, LLCs and S Corps have become the legal entities of choice for both small and large “Main Street America” business owners because of their limited liability protection and one-time taxation of K-1 pass-through profits. A sharply declining number of closely held small business firms continue to use the C Corp as their legal form of business. Some large closely held firms still operate as C Corps, but C Corps are mainly found among super large firms publicly traded on Wall Street. This accounts for the very low percentage share of total returns of C Corps filed in 2008 (6 percent), yet the relatively high percentage share of business receipts of C Corps (64 percent) among the various business entities in 2008.

The Obama Administration’s 2013 budget includes a proposed business tax rate reduction in which the top marginal rate would be reduced from 35 percent to around 28 percent. This proposed reduction would only apply to C Corp tax rates for firms that file Form 1120.

It would not apply to K-1 profits from pass-through entities that are taxed to owners individually on Schedule E of their personal Form 1040s.

If this proposed reduction of C Corp tax rates ever gets enacted into law, we could see some S Corps become C Corps and some LLCs elect to be taxed as a C Corp. That’s because, under the American Taxpayer Relief Act of 2012, “pass-through” K-1 tax rates on high earning business owners and professionals could be at a personal rate as high as 39.6 percent, whereas C Corp profits could be taxed at only 28 percent if Congress and the Obama Administration ever agree on a lower C Corp tax rate.

What marketing and sales opportunities can be suggested for financial service and insurance professionals, given the trend of the business data portrayed here by the IRS? Owners of closely held business enterprises provide a great marketing opportunity for financial professionals.

These owners have family protection needs, business continuation needs, retirement accumulation needs, and estate creation and preservation needs.

Those financial needs often can be covered by a life insurance policy that is

Ownership Shift

1980

1990

2000 2008

S Corporations Returns Filed Total Receipts

Net Profits

4% 3% 1%

8% 13% 10%

11% 15% 17%

13% 18% 22%

LLCs and Partnerships Returns Filed

Total Receipts

Net Profits

11% 4% 3%

8% 4% 4%

8% 10% 22%

10% 14% 32%

Sole Proprietorships Returns Filed

Total Receipts

Net Profits

69% 6% 18%

74% 6% 30%

72% 4% 18%

72% 4% 19%

C Corporations Returns Filed

Total Receipts

Net Profits

17% 87% 78%

11% 77% 57%

9% 71% 43%

6% 64% 27%

The cumulative data from the IRS measured percentage shares of total tax returns filed, percentage shares of total business receipts, and percentage shares of net business profits for C Corporations (Form 1120), S Corporations (Form 1120S), Partnerships and Limited Liability Corporations (Form 1065) and Sole Proprietorships (Schedule C of Form 1040).

C Corps are separate tax entities with their own progressive tax rates while S Corps, LLCs and Sole Proprietors are “pass-through” entities where business profits are taxed personally to the owners of those entities. The chart above is a percentage share breakdown of the shares of total tax returns, total business receipts, and total net profit results for each type of entity from 1980 through 2008.

Source: Internal Revenue Service, Statistics of Income, irs.gov/taxstats

owned either by the company, a trust or the client personally.

Business owners often wish to use their business cash flow to finance these personal protection, wealth accumulation and wealth preservation needs. Whether funding a plan to cover business debt, a qualified or non-qualified retirement plan, a buy-sell business continuation plan, a plan to offset federal and state estate taxes, or a plan to offset long term care costs, the cash flow of the business is the source of funds business owners want to tap to pay ongoing insurance premiums to finance these important financial objectives.

Every town and city in the U.S. has successful “Main Street America” business owners who operate under C Corp, S Corp or LLC legal status. One of the first questions that financial professionals need to ask when approaching a small business owner is, “What is the tax status of your business, C Corp, S Corp or LLC?” The

answer to this question will provide certain cash flow possibilities to fund various life insurance solutions.

These cash flows could be deductible salary or bonus compensation, which is also subject to FICA withholding; non-deductible dividend distributions from C Corps; deductible contributions to qualified retirement plans; K-1 “pass-through” profits from S Corps or LLCs; accumulated adjustment account (AAA) distribution of previous taxed profits from S Corps; or capital account distributions of previously taxed profits from LLCs. So, it always pays to ask tax status to provide the right answer for clients.

Russell E. Towers, JD, CLU, ChFC, is vice president, business and estate planning, of Brokers’ Service Marketing Group. He can be reached at Russ.Towers@ innfeedback.com.

March 2013 » InsuranceNewsNet Magazine

51

Business

PART 3 of an exclusive 3 part series

Wrapping Up the Conversation and Seeing Them Again PART 3

of a 3 Part Series

In Part 1, we broke the ice with an interesting person. In Part 2, we kept the conversation flowing freely while earning nods and smiles of agreement.

Here are the seven scenarios: The Big Fish – You’ve got one chance to connect.

The Stunner – They’re beautiful and you’re single.

The Casualty – You have a job.

This friend doesn’t.

The College Roommate – You

were friends. Now they’ve made it big.

The Service Provider – They cut your hair or mow your lawn.

The Sideline Parent – Their face is familiar, the focus is on the children.

The Extremist – You are separated by strong political or social opinions.

52

Now, it’s time to wrap up the conversation.

By Bryce Sanders

I

t’s easy to overstay your welcome. P.T. Barnum is credited with saying: “Always leave them wanting more.” You want to leave the person with a positive impression and you want him to look forward to seeing you again. What next?

Exiting In A Hurry

The person is famous. Others are lining up to talk. Your time is up. Or the person isn’t famous but something else – such as your train just arriving at the station – requires attention.

Recap Common Interests – Name a few. It shows you were listening, a desirable trait. Lay the groundwork for why he wants to get to know you better; Close the Deal – After establishing

InsuranceNewsNet Magazine » March 2013

your common interests, exchange contact information. Put the ball in his court. “I would like to stay in touch.

How do I do that?” If he offers a card, hand over yours in return. I like to write “Bryce and Jane” with our home phone number on the back of my card and offer the card with the handwritten side face up.

Assumptive Close – The event is at the Chamber of Commerce or the club. Everyone has the membership directory.

You don’t need to request contact information. Saying “I may be giving you a call” sets the stage.

Wrapping Up Conversations

The conversation has gone well. You would like to see the person again. It’s a relaxed environment. You already have laid the groundwork by listing the interests you share in common. Here are 10 ways to finish the conversation:

Wrapping Up the Conversation and Seeing Them Again [ 1] “Looking forward to seeing you at the next event” – Establishing that you and the other person share this organization as a common interest. [ 2] “We’re heading out to dinner – Want to join us?” – Early evening receptions leave people hungry. You’ve indicated you enjoy the other person’s company and would like to see him again.

If he declines, set the stage with “Some other time perhaps.”

Business

You want to leave the person with a positive impression and you want him to look forward to seeing you again.

[ 3] Compliment his commitment to the cause – The other person is passionate about a political party, land preservation or cancer research. “You are a very dedicated volunteer to the cause. It’s important to us, too.” [ 4] Offer a service – Your children and theirs are on the same soccer team. “I can bring your twins home from practice next Thursday when I collect our own boys.” [ 5 ] Ask the person to do something – Ask for a small favor. “I appreciate your offer to share those restaurant ideas for our upcoming trip to Vienna. I’ll call you on Saturday morning if that’s OK.” [ 6] Person you should meet – Offer to make a connection with someone you know will benefit him. “So, you are chair of the parish’s capital campaign! A friend of mine just finished running one. He’s always saying he wishes he knew then what he knows now. I’ll be glad to put the two of you in touch.” [ 7] Something you will do for the person – Here’s an opportunity to demonstrate your follow-though and attention to detail. “We’re going to the auction house for the advance viewing of the upcoming jewelry sale. It’s no problem picking up an extra catalog. I’ll drop it off on Saturday.” [ 8] Invitation to dinner – When you share common interests, enjoying them at leisure is the next logical step. “So, you visited the Opus One winery when you were in Napa! We have been talking about opening a bottle from our cellar for some time. Why don’t you both come over for dinner the Saturday after next?”

[9] Where you’ll see the person next – You belong to several of the same organizations. “I’ll probably be seeing you at the Chamber’s gala next Saturday. If you haven’t made plans, perhaps you can join us at our table.” [ 10] Leave with a question – Another opportunit y to demonstrate follow-through and get back in touch. “We still don’t have an answer for that question: Who were the original Beach Boys?

I’ll let you know what I find out.”

Matching Strategies to Scenarios

The Big Fish – Time has a higher value than money for senior corporate executives. Something you will do for them is a good fit.

How Does This Sound? “Tickets for the concert go on sale at the box office next Monday and your wife really wants to see the guest conductor. No advance sales. I realize you are leaving for London on Sunday. I can pick up two extra tickets while I’m there.”

Alternate strategy – The person sits on several boards and attends various

events. Where I’ll see you next is an obvious fit. “You’ll be at the hospital ribbon-cutting, I assume?”

The Stunner – In romantic situations, people think several moves ahead and expect the obvious. Establish common interests as a rationale for keeping in touch. Looking forward to seeing you at the next event leans on your common interest in the cause or organization.

How Does This Sound? “We share lots of interests in common. We went to the same university, work in the same field and are members of this museum. I’m looking forward to seeing you at the next opening.”

Alternate strategy – Everybody needs something. Something you will do for him keeps you in touch. “When a Mercedes makes strange noises, it can’t be fixed by just anybody. I’ll call you with the name of my guy.”

The Casualty – The person is having a difficult time. Help maintain the person’s dignity by behaving as a peer. You would

March 2013 » InsuranceNewsNet Magazine

53

Business

Wrapping Up the Conversation and Seeing Them Again fix that. May I come over on Saturday morning and take a look?”

Why don’t both of you come over to dinner next Saturday?

The Sideline Parent – Your children and the school are the shared bonds.

It’s all about them. You are each proud of their activities and accomplishments.

Offering a service makes sense.

How Does This Sound? “Yes, my daughter has joined the band, too.

Practices her trumpet all weekend.

They have band practice three times this week. I’m glad to drop off your son when I bring her home. Sorry your wife has been under the weather.”

You enjoyed each other’s company. Offer an invitation to dinner to keep the party going.

like to help. The person you should meet is a good approach.

How Does This Sound? “Your background is in online education technology. I have a friend in the same field. She was downsized about six months ago but built an extensive network and finally found another position. Is it all right if I put both of you in touch?”

he was inducted into the Rock and Roll Hall of Fame! But I’ll find out and I’ll let you know.”

Alternate strategy – The person still finds time to volunteer. Complimenting his commitment to the cause puts you on the same footing. “You are doing a great job as assistant scoutmaster. I’d like to learn how you got involved.”

The Service Provider – Another scenario where you are peers. Your asking him to do something gives him the opportunity to add something to the relationship.

How Does This Sound? “We lost several trees in the superstorm and getting those trees taken down and cut up is too big a project for me.

Would you mind letting me know the name of your tree guy?”

The College Roommate – You were great friends but time and distance intervened. Now you have a chance to stay connected. Leaving with a question provides a reason to talk again.

How Does This Sound? “You were the biggest Jerry Garcia fan when we roomed together and I was the second greatest. I can’t remember what year 54

Alternate strategy – You enjoyed each other’s company. Offer an Invitation to dinner and keep the party going. “It has been so great to catch up. Why don’t both of you come over to dinner next Saturday? Nothing fancy.”

Alternate strategy – He does something for you. Offer a service and return the favor. “You mentioned the chain came off your chainsaw. I know how to

InsuranceNewsNet Magazine » March 2013

Alternate strategy – Life revolves around the children. They need to eat.

We’re heading out to dinner can be timely. “The game’s over and the kids are starving. We’re going out for pizza after we get the equipment in the car. Why don’t you join us?”

The Extremist – Your politics are opposite but you’ve found common ground in your conversations about vacation or charity work. Complimenting his commitment to the cause is a good strategy.

How Does This Sound? “We may have different political views but we both are truly committed to the community food pantry. Somehow you find the time to volunteer three times a week to stock shelves and distribute food. Let’s see how we can work together to increase donations.”

Alternate strategy – People often like others who share their point of view.

Know any? The Person he should meet fits. “You are passionate about conservation. Our new neighbor is a Sierra Club member. I’ll introduce you.”

Next Steps

Yes, it’s like dating. You need to make the first move. Call and remind him about the next event. Remind him who you are and how you met. Mention the common interest that brought you together.

Bryce Sanders is president of Perceptive Business Solutions in New Hope, PA. His book “Captivating the Wealthy Investor” is available on Amazon. com. Contact Bryce at Bryce.

Sanders@innfeedback.com.

Travel accident and medical concerns?

ident and ncerns?

Yes. We cover that.

Travel worries are many,

Disability • Life • Medical • Contingency

but our travel accident plans can relieve most.

With online application, it’s easy to get protection.

For over 30 years, we have been designing specialty insurance products. We will when others won’t.

Petersen International Underwriters www.piu.org • piu@piu.org 800.345.8816 March 2013 » InsuranceNewsNet Magazine

55

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

MDRT INSIGHTS

Once There Was a King Unless you establish the successor to your “kingdom” and prepare him to wear the “crown,” there will be no “happily ever after” to the story of your business.

By R. J. Kelly

O

nce, there was a king of a fair and faraway land. The king had established his realm through hard work and had provided needed services. All the villagers were grateful to the king for the prosperity that his guidance brought to everyone.

No one imagined that anything could or would someday destroy the success the king had built. While it was not discussed outwardly, many assumed one day the young prince would ascend to his father’s throne.

However, the prince chose to attend a university outside the kingdom. One day, while returning from a full day of intellectual jousting, the prince was hailed by a royal messenger. He was informed the king was dead.

The prince made arrangements to return to the kingdom to stand beside his mother. Ill-prepared to step into the king’s daily role and at the encouragement of the queen, the prince soon returned back to his new world of studies.

The kingdom continued its daily functioning through the direction of the king’s loyal steward, but all too soon the foundation on which the kingdom was built began to crumble. The king, for all his royal wisdom and abilities, had not prepared anyone to assume his role upon the throne.

There is No “Happily Ever After” with This Story

The above is not a fairy tale and there is no “happily ever after.” The kingdom described above was the multi-million dollar business built by my father. It was enormously successful and thriving as long as my father was alive. No one imagined just how quickly the unexpected, when coupled with acts of treachery and betrayal, could and did destroy the business. Like so many other privately 56

owned businesses, the value was not sustainable on its own. Much of the gold and the riches ended up buried with the king.

Unfortunately, we were unprepared when my father died in 1977 at age 66 and, at 18, I was ill-prepared to run a multifaceted financial business.

The significant success of the business over the years had outgrown the training and abilities of the successor management. Grooming a replacement or growing his managers was not a priority to my father during his reign.

As my mother soon discovered, there were fierce “giants” and “ogres,” such as greedy and unethical partners to fight at every turn. A lack of a business plan and well-trained management team were enormous obstacles to overcome, and played a significant role in the eventual downfall of my father’s kingdom and our family business.

Another major chink in the armor was poor planning. My father’s life insurance, purchased many years before, was left uninspected, and it “died” 10 days before he did. His term policy had expired and was not renewable past a certain point. The anticipated cash that would have helped the business through the months and years of transition wasn’t there. Between estate taxes, remodeling debt for the business, legal battles, ongoing accounting and attorney fees, and an unscrupulous national partner, the working capital disappeared. Without the founder and business visionary running operations, the business lines of credit were shut off. My mother had stepped into a business that had no cash to sustain its existence.

As it often happens when there is unplanned transition in ownership or succession, the ugly specters of treachery or greed raised their heads. Ten years after my father’s death, the business folded and the remaining assets were sold for pennies on the dollar. Unfortunately, this is not an uncommon ending. While the founder/owner (king) is on the throne, all is well. When little or nothing is done to prepare for the inevitable transition, all can be lost.

InsuranceNewsNet Magazine » March 2013

When there is unplanned transition in ownership or succession, the ugly specters of treachery or greed raise their heads...

What does your kingdom look like today and what steps have you taken to keep it from being the Camelot of old?

As the “king” of your business empire, you should immediately implement a three- to five-year planning process for the ultimate transition in leadership that will someday occur. The Million Dollar Round Table (MDRT) offers many resources and tools to help you establish a continuation plan. I make sure to surround myself with fellow MDRT members who offer counsel as wise “seers” who have walked along many winding paths of succession. The safety and survival of your kingdom and your royal family depends upon the planning you do today.

R. J. Kelly, ChFC, MSFS, is founder and president of the Wealth Legacy Group and co-founder and chair of The Center for Wealth & Legacy.™ He is a 32-year member of the Million Dollar Round Table (MDRT) with three Top of the Table and one Court of the Table qualification. Contact him at R.J.Kelly@innfeedback.com.

NAIFA

PROTECTS

YOUR BUSINESS Insurance products have been identified as “tax expenditures” and have a price associated with them. Congress is looking for more money in 2013, and your products and your business are at risk.

Join NAIFA, and you’ll be joining other advisors in speaking to State and Federal legislators with one, clear voice.

• Only NAIFA represents insurance and financial advisors regardless of the products they sell or the focus of their practice.

“We intend to move

a comprehensive tax reform bill in 2013 – no matter what.”

Representative Dave Camp (R-MI) Ways & Means Chairman November 15, 2012

• Only NAIFA advocates on behalf of all of your clients and their financial future.

Go to www.NAIFA.org/ItPays or call 1-877-866-2432!

March 2013 » InsuranceNewsNet Magazine

57

Founded in 1890, NAIFA is one of the nation’s oldest and largest associations representing the interests of insurance professionals from every Congressional district in the United States.

NAIFA INSIGHTS

The Power of Gifting Annual gift exclusions in a properly structured policy that is held in an irrevocable life insurance trust offer many benefits.

By David E. Appel and David B. Shannon

W

ith the uncertainty of future tax brackets, along with the turmoil that the stock market has experienced over the past number of years, many clients and financial professionals are eager to seek out alternative plans for successful people who desire to leave money or assets to the generations that follow.

Most of our affluent clients get to a point in their life when they start to think about the next generations of their families, and the strategies and products that they can implement to take care of their children and grandchildren when they are no longer around. Often when clients get to this stage in life the conversation gravitates towards annual gifting, and how these annual gift exclusions can benefit the heirs of these successful families.

Under current federal law, our clients who are U.S. citizens can gift up to $14,000 ($28,000 for married couples) annually to an individual. When these gifts are considered present interest gifts, there are no gift tax consequences on either end of the transaction. When utilized to the maximum levels, these gifts can create a significant amount of money for the recipients.

Life Insurance in an ILIT

When the recipient is not using the gift immediately for living expenses, the question then becomes: What is the most efficient way to invest these annual exclusions? In other words, over the course of 20 years, where can the recipient of these annual exclusions experience the highest rates of return on their gifts? We are going to focus on using these gifts to create a legacy for the next generation through the use of life insurance held in an Irrevocable Life Insurance Trust (ILIT).

58

In the past, many clients have earmarked their grandchildren’s annual exclusions to an investment account for the benefit of each designated child. Say a married couple, both age 75, gift their grandson Tom $28,000 annually to an irrevocable trust that invests the money in mutual funds. The trust is subject to paying taxes annually, and as the account balance grows over the years, the tax brackets will continue to rise, as will the annual income taxes that will be paid on this account.

These gifting strategies are attractive planning tools, regardless of product type.

Juxtaposed to that is a properly structured life insurance policy that is owned by an irrevocable life insurance trust.

Here, your clients’ heirs not only will see solid rates of returns on their premiums at age 100, but will have no exposure to market losses or taxes. Life Insurance death benefits are paid out to beneficiaries tax-free and, when held in trust, estate tax-free as well.

A Case in Point

Now back to our example about Tom. If we assume that the annual exclusion

InsuranceNewsNet Magazine » March 2013

level remains at $28,000 per year going forward, and the top income tax bracket for an irrevocable trust remains at 35 percent, then we can extrapolate the average rate of return the investment account would have to yield in order to outperform the life insurance death benefit in 20 years. In year 20 (Age 95 for this couple), the internal rate of return in terms of premiums paid in ($28,000 per year) to the death benefit paid out (approximately $1.3 million) is roughly 7.95 percent. In order for the investment account to generate a larger pool of money for the intended beneficiaries, the after-tax rate of return required to outperform the life insurance death benefit would have to be greater than 12 percent.

This gifting strategy is not just limited to annual exclusions. Families that took advantage of the large lifetime gifting amounts over the past couple years are also benefiting from these rates of return, in regard to life insurance. There are many funded irrevocable trusts with multiple millions of dollars allocated to them, and depositing some percentage of this lifetime gift in a single-premium life insurance policy generates the same type of leverage and similar internal rates of returns. These gifting strategies are attractive planning tools regardless of product type. Typically, you will see higher rates of return on the survivorship universal life policies versus the individual universal life policies.

When you are working with successful individuals and families who are looking to create some type of “legacy” account for the heirs, explore the use of annual gift exclusions into a properly structured life insurance policy held in an irrevocable life insurance trust. Not only does the life insurance immediately establish a large death benefit in the event of an early passing, but it reduces the risk associated with market returns and tax exposure in the future.

David E. Appel, CLU, ChFC, AEP, a NAIFA member, and David B. Shannon are with Appel Insurance Advisors in Newton, Mass.

Contact David Appel at David.Appel@innfeedback. com and contact David Shannon at David.Shannon@innfeedback.com.

Protect Yourself

Protect

Finally, a competitively priced, comprehensive E&O program specifically tailored to YOU, the independent insurance agent!

The NAILBA E&O program offers: • Comprehensive coverage • No membership fees

• Quality carrier – Everest National Insurance Company • Opportunities for even deeper discounts.

Applicants must work with a NAILBA member agency to qualify for deepest discounts! For more information, or to locate a NAILBA member agency near you, visit www.nailba.org and use the Member Search feature.

To complete an application, visit

www.agenteoprogram.com

The National Association of Independent Life Brokerage Agencies (NAILBA) is a nonprofit trade association with over 350 member agencies in the U.S. and Canada. Since 1981, NAILBA has represented independent wholesale life brokerage agencies; our purpose is to serve as the national association of life, health and annuity insurance distributors.

March 2013 » InsuranceNewsNet Magazine

59

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

LIMRA INSIGHTS

Informativeness, Service Quality are Top Buyer Concerns IMRA research shows that L consumers select a method of buying life insurance based on service and quality of information.

By Nilufer Ahmed

T

oday’s consumers can choose to interact with companies in various ways: they can pick up a phone, go online or visit a brick-andmortar outlet to purchase what they need. They are already using these channels for purchasing products and services in several industries – telecommunications, retail and the banking industries immediately come to mind.

What about the life insurance industry? Are consumers comfortable making purchases of life insurance through these sales channels? Given a choice, which channel will they choose and what factors do they consider when making this decision? Recent LIMRA research provides insight into these issues.

Consumers make their decision of which sales channel to use based on their perceived values of the channel.

What determines perceived value? The risk associated and the time and effort it will take them to use the channel. For example, being face-to-face is considered most valuable by consumers because they are confident that they are buying the right product for themselves at the best value for the price. Assuming the consumer is secure in the accuracy of the information they receive and convenience is more valued by the consumer, it is likely using a call center or the Internet may be preferred. Channel preference depends on how an individual weighs the value of risk versus time and effort. LIMRA’s study found that in all three channels, while consumers felt that both risk and time/effort were important considerations in the purchase process, they were more concerned about the risk factor.

60

What factors influence consumers’ perceived risk of buying the “wrong product” for their needs? LIMRA research indicates that the two factors that consumers feel are critical for the reducing their perceptions of the risk involved are: the informativeness of a channel and the service quality (during the information-gathering phase) provided by that channel. Improving these two characteristics of each channel would go a long way to providing consumers with a more effective buying experience.

What is informativeness? This refers to the quality of information that is available on carriers’ or producers’ websites, presented by producers when meeting with potential clients and described by call center representatives. The clarity and the completeness and the presentation style of the information itself are all considered by consumers. The ideal information will result in consumers understanding the features and benefits of the product, so that they are confident they can make informed decisions about their purchase, such as which type of life insurance, and how much coverage to get that is best suited to their needs. LIMRA results indicate that informativeness is particularly important for the online channel. This could be because there is no personal interaction involved when reading information online and consumers have to rely on their own understanding of the information.

What is service quality? This refers to the quality of the answers, solutions and advice that consumers perceive that they may receive during the entire purchase process through the sales channels.

Consumers want the assurance that the responses they receive are not “one size fits all,” but are tailored to their individual situation. They also expect the service to be accurate, dependable and prompt.

Improving these two factors – informativeness and the service quality that can be obtained from each channel – will have the largest

InsuranceNewsNet Magazine » March 2013

Average Perceived Value of Channels for Buying Life Insurance (7=High Value, 1=Low Value)

5.36

Face-to-Face

5.20 Online

4.44

Call Center

effects on reducing the risk that consumers believe are inherent in buying a complex product like life insurance.

Four suggestions for improving the informativeness and service quality of the sales channels are: Evaluate field force training programs for presentation, communication and advisory skills.

Evaluate the life insurance information on websites for clarity, relevance and completeness.

Ensure that website visitors can easily contact someone (phone or chat) directly from each page of the website.

Ensure that call center representatives (for sales) have adequate training and skills to support and sell a range of life insurance products. In addition, carriers can investigate whether it is feasible to route calls to a product specialist or a producer, if needed.

The goal of these measures is to ensure that sales channels can provide a more effective experience for consumers through reducing the risk consumers perceive – which in turn would increase the perceived value of channels.

Nilufer Ahmed, Ph.D., senior research director, LIMRA Markets Research, is responsible for conducting research related to unique markets (e.g., women, Hispanics, African Americans and Asian Americans). Before joining LIMRA, she was an associate population officer at the United Nations. Contact her at Nilufer.

Ahmed@innfeedback.com.

FREE GIFT

FOR INSURANCENEWSNET MAGAZINE READERS

The Strategy of

Preeminence How to Attract Clients and be the MOST Trusted Advisor in Your Market

Preeminence is the goal every insurance producer should strive for.

Unfortunately, few come close.

Some try, and when they fail, they give up. It’s the extraordinary person that perseveres to greatness.

The truth is, it’s in our DNA to succeed! What most of us lack is the process, the steps to take to reach our goals, and then surpass them – achieving preeminence in our business and life.

As a special 5-year anniversary gift to InsuranceNewsNet readers, we have created an exclusive 36-page report that, if implemented, could transform and transcend your business to entirely new heights.

Paul Feldman Publisher & CEO, InsuranceNewsNet Magazine

Co-written by Jay Abraham and Paul Feldman, Abraham has been acknowledged as a unique and distinctive authority in the field of business performance enhancement. Featured in Investors Business Daily and Forbes Magazine, Jay is listed as one of the top 5 executive coaches in the country and recognized as, “Turning corporate under performers into marketing and sales whizzes.”

Paul Feldman is Publisher and CEO of InsuranceNewsNet Magazine and an award winning marketing expert recognized for his unique approach and contribution to the insurance industry.

Jay Abraham Master Marketer and Influential Author

Get this free, exclusive report available only to INN readers, and available only for a limited time: www.insurancenewsnet.com/preeminence March 2013 » InsuranceNewsNet Magazine

61

The National Association of Independent Life Brokerage Agencies (NAILBA) is a nonprofit trade association with over 350 member agencies in the U.S. and Canada.

NAILBA INSIGHTS

A Century of Protection emoving the tax-exempt R status of life insurance would have a disastrous effect on the financial health of America’s families and businesses.

By Raymond S. Phillips

I

n response to this passage in Section II, Part B of the 1913 Tariff Act, this language was included: Provided, that the proceeds of life insurance policies paid upon the death of the person insured or payments made by or credited to the insured, on life insurance, endowment, or annuity contracts, upon the return thereof to the insured at the maturity of the term mentioned in the contract, or upon surrender of contract, shall not be included as income.

Also known as the Underwood Act after the bill’s author, Alabama Congressman Oscar Underwood, the bill was introduced in response to the passage of the 16th Amendment, which established the federal revenue system. Section B outlined the types of revenue subject to taxation and it specifically excluded inside buildup of life insurance and annuity contracts. The Tariff Act was passed by the 63rd Congress in the summer of 1913 and signed by President Woodrow Wilson on Oct. 3, 1913. Life insurance as the foundation of financial protection was affirmed.

Fast-forward to January 1990. At that time, the General Accounting Office submitted a report to the Senate Finance and House Ways and Means Committees, titled “Tax Treatment of Life Insurance and Annuity Accrued Interest” (GAO/GGD-90-31). The report focused on how much revenue is lost by not taxing the interest on cash value of life insurance, the potential effects such a tax might have on insurance sales and the justification for such a tax.

At the time of the report, it was estimated that the federal government had forgone approximately $5 billion per year in revenue. The amount of revenue lost is now estimated to be about five times that much, according to the latest Joint Committee on Taxation (JCT) report on tax expenditures. The report concludes that 62

Congress should weigh the potential revenue loss to the government against the social good that is provided via tax-free inside buildup. According to the GAO, such a tax is worth considering.

One of the findings of the GAO report was that middle- and upper-class families benefited the most from the tax-free treatment of inside buildup. If tax-free internal buildup were eliminated, the impact will more likely to be felt by lower- and middle-class Americans, should they withdraw or borrow against a policy to supplement retirement, offset college costs for children or use as an emergency fund. One has to wonder if the reality of that impact is worth it, regardless of the advantages afforded those in a more affluent economic class.

The GAO did find one argument against taxing inside buildup: Taxing it would reduce the amount of insurance coverage and leave policyholders with less retirement income. At a time when most studies show that Middle America is woefully underinsured – if insured at all – this alone should be a compelling reason to cause great concern over modifying life insurance’s tax status.

But, think about it. We’re also reminded constantly that Social Security is underfunded and may not be there for many of our populace to access benefits, or that benefits might be severely compromised relative to what we’ve all come to somewhat take for granted. Is this a time when we should be eliminating opportunities to supplement potential Social Security shortfalls?

NAILBA is part of a coalition of peer associations called Americans to Protect Family Security. Their website is www.securefamily.org. I urge you to bookmark that site. For many years, the LIFE Foundation (www.lifehappens.org) has done a yeoman’s job at presenting the abstract of life insurance and its financial impact on the family and small business.

Think of the SecureFamily site as a legislative version of the LIFE site. It provides educational information about the statutory underpinnings of life insurance for professionals, consumers, and legislators.

It provides detail on pending legislation

InsuranceNewsNet Magazine » March 2013

and regulatory issues that most of our clients simply aren’t aware of.

Congress continues to look for all potential sources of revenue, including taxing the internal cash value buildup of life insurance policies. We as life insurance professionals have a responsibility to alert our clients and our own members of Congress. While it is important to the country’s economic stability to update the tax code, taxing life insurance benefits could lead to decreased usage and lessen the viability of life insurance as a vehicle to offset retirement shortfalls and provide access to cash values to soften other financial blows as it has for a century. We must tell our story of our community involvement, and how our products have helped our clients maintain and enhance their financial health. Our representatives in Washington need to know that any revenue increases gained from the taxation of life insurance benefits is not worth the risk to the financial security of 75 million American families.

Congress saw the value of life insurance 100 years ago and deemed it important enough to protect death benefits and inside buildup from taxation.

Over the last century, society has grown and evolved. Very often, it has been the tax-favored structure of cash value life insurance that has fueled and helped in that growth and evolution. Modifying that structure at this time, in this economic environment, could have disastrous effects on the American family, the small-business owner and the overall life insurance industry.

Raymond S. Phillips, CLU, LTCP, is the president of Pittsburgh-based The Brokers Source, Ltd., and the 2013 NAILBA Chairman of the Board. Contact Ray at Ray.Phillips@ innfeedback.com.

Advertiser Index

MARKETPLACE

For more details on an advertiser, use the information below or visit InsuranceNewsNetMagazine.com/spotlight

The importance of Content Marketing continues to grow as does the dollars spent to create it.

Unsure

10%

But, the BIG issue continues to be creating enough relevant and engaging content…

Decrease

Significantly Increase

9%

2%

Remain the Same 34%

Increase 45%

B2B Content Marketing Spending Over the Next 12 Months 2013 B2B Content Marketing Benchmarks North America: CMI/MarketingProfs

Here’s a solution: Take the award-winning editorial from InsuranceNewsNet Magazine and have content to nurture your relationships. Credible and relevant – content to help Take Your Message Further.

Advertiser Website

Phone Page

Advisors’ Academy

www.getmarketproof.com

877-727-9675

IFC

American Equity

www.american-equity.com

888-647-1371

5

AMZ Financial Services

go.amzwebcenter.com/warrior

866-279-5677

49

Athene Annuity

www.m3fin.com

800-308-5555

7

Covenant Reliance Producers

www.crp-pcm.com

866-907-4275

3

Creative Marketing

www.creativemarketing.net/getready

800-992-2642

28

Eugene Cohen Insurance Agency, Inc. www.cohenagency.com

800-333-4340

9

Fairlane Financial

www.888fairlane.com

800-327-1460 19

Financial Independence Group

www.figmarketing.com

800-527-1155

IBC

First Income Advisors

www.getsmartreport.com

888-556-1379

1

Gradient Financial Group

www.gradientfg.com

800-407-4137

BC

Kansas City Life

www.kclife.com

800-258-4525

33

M&O Marketing

www.taxsavingkit.com

800-228-5964 29

Morgan White Group Marketing

www.morganwhite.com

800-800-1397

NAIFA

www.naifa.org/itpays

877-866-2432 57

39

NAILBA www.agenteoprogram.com 703-383-3081 59 Oxford Life Insurance Company

www.oxfordlife.com

888-826-4073

15

Partners Advantage

www.thefirststeptopartnership.com

888-251-5525

22-23

Petersen International Underwriters

www.piu.org

800-345-8816

55

Prudential www.prudential.com/advantageul 800-292-0054 10-11 Sagicor

www.sagicorlifeusa.com

888-724-4267 opt. 2

Security Benefit

retirementincomechallenge.com

800-888-2461 31

45

Unified Insurance Network

www.slaythemonsters.com

800-846-2221

4

Contact us today for details on article reprints at

866.707.6786 ext. 115

If you love annuities, then you will love AnnuityNews.com, powered by InsuranceNewsNet. More Annuity News, Research, and Trends More Winning Sales Strategies More Original Articles from Industry Experts More Product Announcements

Subscribe today to our free weekly newsletter and receive our Media Misinformation Guide filled with tips to beat the media at their own game.

Visit annuitynews.com/ subscribe to sign up today!

March 2013 » InsuranceNewsNet Magazine

63

the last word

With Larry Barton

Talent Gap in Financial Services Hurts Us All

Despite controlling a large portion of the nation’s wealth, women are vastly underrepresented in the financial services industry.

By Larry Barton

W

hat’s on your radar screen now? We could talk about the bond bubble, Washington gridlock or retirement income planning in the face of low interest rates – but let’s face it, you’ve heard it all before.

What we’re not hearing enough about is a major talent gap in financial services.

When the U.S. Bureau of Labor Statistics examined median earnings and employment across multiple industry segments, which profession do you think showed the largest gap between earnings for women as compared with their male counterparts? Construction, maybe?

Wrong. Women working in the construction industry make about 92 percent of what men do. The industry at the bottom was financial activities, where women make only 71 percent as much as men.

FINS.com, an online career resource site, worked with the Bureau of Labor Statistics to obtain more details on financial services careers. It turns out that female financial advisors had an earnings parity ratio of just 58.4 percent in 2010, trending down over the past decade.

With women representing 52 percent of the overall workforce and almost 60 percent of those earning bachelor’s and master’s degrees, why do women represent only a little more than 30 percent of all financial advisors?

Consider, in contrast, the vital role women play as clients and controllers of wealth in this country. Women control $8 trillion in assets in the United States, and the number of women who are wealthy is growing twice as fast as the number of wealthy men. Some estimate that in the next 20 years, women could be the decision makers for more than two-thirds of the nation’s personal wealth.

64

Our profession is missing out on one of the most significant talent pools in the country. We can speculate as to the reasons why we’re clearly not successful in tapping this resource. Managers tend to recruit people most like themselves – usually to the detriment of creating the most effective team – and field managers remain predominantly male. There are fewer female role models and mentors at the leadership level, further complicating the move of talented women in to top spots in financial services. Work/ life balance has never been a hallmark of the financial services industry either, and we could pay more attention to exploring alternative work arrangements.

What are we doing about it? The frustration of this talent gap is that some of the brightest, most creative leaders I encounter in this business are women. There are just too few of them in our profession.

Financial services companies talk a great game when it comes to more diverse recruiting and leadership, and I honestly believe their intentions are good. Some companies execute better than others in this important area, however.

Lest you think I’m negative on our industry’s prospects, look at some of the creative things State Farm is doing.

They are leaders in effective mentoring of women in their field system, offering events and resources that help women succeed in their careers. They partnered with The American College to launch the State Farm Center for Women & Financial Services in 2011 and to create groundbreaking curriculum in this important subject area.

The center sponsors educational events such as the Women’s Leadership Academy and coursework that is embedded into The College’s various programs.

In addition, the center has become a leader in producing research on female financial advisors, female business owners, women and the risk of disability, and the financial needs and attitudes of women of color.

InsuranceNewsNet Magazine » March 2013

Let’s do a quick knowledge check.

Which of the following statements are true?

Once financial advisors reach 16 years of experience, average incomes become roughly equivalent for male and female advisors.

Female advisors are more likely to pursue advanced professional education than their male counterparts.

The No. 1 priority for female consumers is creating an emergency reserve fund, followed by saving for their children’s education.

Women are 20 percent more likely to suffer from the leading cause of disability, which is accidental injury.

In fact, none of the above is true. Income disparity actually is more pronounced for advisors with significant years of experience, and women historically have been less likely to pursue advanced professional designations. The leading priority for female consumers is paying down debt, followed by saving for retirement.

Ninety-seven percent of Americans can’t identify the leading cause of disability, so don’t feel bad if you missed this one. Most think of accidents as the leading cause of disability, but the right answer is arthritis.

Women are twice as likely as men to suffer from disabling arthritis.

We have more work to do, and you can help. We’re conducting a national talent search for a new director for our State Farm Center for Women and Financial Services. It’s a unique opportunity to make a difference for female advisors and consumers across the country, and for our profession overall. If you know the right person to help us close the talent gap for financial services – an articulate advocate who is ready to join The American College and create real impact – email resumes and contact information to Jeff.Snyder@TheAmericanCollege.edu.

Do it now while you’re thinking about it. We don’t have a minute to lose.

Larry Barton, Ph.D., CAP, is president, CEO and holder of the O. Alfred Granum Chair in Management at The American College, based in Bryn Mawr, PA. Contact Larry Barton at Larry.Barton@innfeedback.com.

FINANCIAL INDEPENDENCE GROUP, INC. Your Premier Insurance Marketing Organization

FINANCIAL INDEPENDENCE GROUP, INC.

When I talk about All Points Media, it's Your Premier Insurance Marketing Organization hard not to rave. They have done so much to help me promote my business.

- David

When I talk about All Points Media, it's hard not to rave. They have done so much to help me promote my business.

David continues, “All the design work done by All Points has been highly creative and professional. I am very thankful for the help they have given to my company. We are very appreciative of all they have done to help our business appear to be the first class organization we strive to make it every day.”

Do you have a complete branding strategy and media action plan that separates your unique business from the competition?

- David

Experience why top agents trust their branding and marketing to Financial Independence

Group's

in-house

marketing department, All Points Media.

Whether your needs involve an impactful

David continues,logo“All the design work done by All Points design, a modern website, professional video production, enhanced

has been highlyseminar creativeeventandmarketing, professional.outdoor I am orvery television advertising, we have the ability

thankful for the tohelpfacilitate they have given tothatmywillcompany. a campaign take yourWe business to the next level.

are very appreciative of all they have done to help our For more information about All Points Media, call 1-800-527-1155

business appear to be the first class organization we strive Download your FREE APM Marketing Incentive here: www.goo.gl/K3QtP

Independence Group, Inc. to make it Financial every day.” www.figmarketing.com

If THEY aren’t the brightest bulbs ... ... call us when you’re ready Our infrastructure, strategies and systems enable you to take advantage of tomorrow’s opportunities – whatever the industry or the economy might throw at you.

www.GradientFG.com

It’s not just about sales ideas. It’s not about seminars. It’s about vision and leadership.

It’s our industryaren’t insight couplethe d with KonnexME to provide bulbs the business sol...utions If THEY brightest practiwhen ce wil requireyou’re tomorrow … avai lable TODAY. ... callyourus ready Our infrastructure, strategies and systems enable you to take advantage of tomorrow’s opportunities – whatever the industry or the economy might throw at you.

800.407.4137

It’s not just about sales ideas. It’s not about seminars. It’s about vision and leadership. www.GradientFG.com www.GradientFG.com

www.KonnexME.com

It’s our industry insight coupled with KonnexME to provide the business solutions your practice will require tomorrow … available TODAY.

800.407.4137

www.KonnexME.com www.KonnexME.com