Mining Your Book Of Business

NAILBA

Q2 2019

Independent brokerage industry insights

Varying views A look at mid-year trends 10

90 day DI challenge: Increasing sales for DI awareness month

14

Never run out: Easy ideas for social media content

20

Mining your business: Solutions for secondarymarket gold

27

CONTENTS

Varying views 10

As the second half of 2019 begins, a panel of industry leaders from COVER STORY:

Foreign National Market:

varying sized agencies share their perspectives on the trends, carrier relationships, and adjustments for finishing the year strong.

By Pam Sheehan

Columns & Departments

Features

4

14 Take the 90-Day DI Challenge

CEO COLUMN

LifeMark, ICMG, IDA, NBA & TMA… Oh my!

6

8

17

Today, the need for life insurance is not exclusive to high net worth foreign nationals.

NWL® is expanding to meet those needs.

•

Initial requirements include a U.S. bank account established for at least six months, a U.S. address, a nexus, and must be from an approved country.*

EVENT CALENDAR

Listing of industry events for May – August, 2019

FOUNDATION

Calling all superheroes

By Robin Landers, CLU, President, NAILBA Charitable Foundation

To best or not to best…that is the question… Or is it?

By Kim O’Brien

Perspectives magazine is published quarterly by NAILBA, the National Association of Independent Life Brokerage Agencies, as a resource to the insurance and financial services industry. It is distributed both in print and digitally to NAILBA members, industry professionals, and attendees of the NAILBA annual meeting.

NAILBA STAFF Daniel LaBert Chief Executive Officer

www.nailba.org

Kathy Allison Director, Membership and the Foundation

Seixas “Chad” Milner III, Chair-Elect Jason E. Lea, Secretary/Treasurer Jeffrey D. Mooers, Immediate Past Chairman John Gilbert Debbie Hannam

For producer use only. This document has not been approved under the advertising laws of your state for dissemination to individual purchasers.

Content is king, especially in social media.

Discover content tips for creating ongoing connectivity with your target market.

By Tiffany Markarian

11325 Random Hills Road, Suite 110 Fairfax, VA 22030 • (703) 884-1525 NAILBA BOARD OF DIRECTORS

nwlforeignnationalmarket.com

Understanding the facts and being able to dispel the myths around long-term care (LTC) paves the way for productive prospect conversations and stronger retirement strategies for your clients.

By Tracey Edgar, RN, BSN, CLTC.

20 Never run out of social media content

Myra Palmer, Chair

FN-1030

18

Myths & facts of LTC protection

24 NAILBA CHARITABLE

* Subject to traditional underwriting guidelines

Expand your opportunities

Being in a business that thrives upon relationships, several top producers share their thoughts on expectations and what makes a healthy relationship with a wholesaler.

By Charles K. Hirsch, CLU

Strengthening advocacy, professional development through NAIFA/NAILBA partnership

26 REGULATORY No minimum asset requirements - subject to underwriting guidelines

NEWS

By Emily Holbrook

•

16

Top producers talk about their wholesaler relationships

CHAIR COLUMN

Change is our constant companion

By Myra J. Palmer, CLTC, NAILBA Chair

Face amounts starting at $250,000

With May being Disability Insurance Awareness Month, it is time to raise awareness for DI. Find tips and tools for accelerating your DI business.

By Joe Russo

By Dan LaBert, NAILBA CEO

an expanding opportunity

•

Luke Ramsey Victoria Van Dusen-Roos James Wong

Ana M. Carreras Manager, Finance and Administration Joangel Concepcion Director, Digital Strategy Pam Sheehan Director, Content and Strategic Partnerships Ellen Toups Director, Advertising, Exhibits and Sponsorships Shara Wells Manager, Annual Meeting and Member Engagement

22 Managing the marketing details

Advisors can miss the mark when it comes to successful marketing. Include these critical ingredients to ensure campaign success.

By Kim Magdalein

27 Mining your book of business

Seniors are prone to throwing away one of the most valuable assets they own because they don’t realize the secondary market value. Understand who are the ideal candidates and the policy review value chain for life settlements.

By Chris Orestis

28 Understanding indexed life illustrations

A look at the question plaguing the life insurance industry since IUL began — what rate is cash value growth of indexed life insurance products illustrated?

By Sheryl J. Moore

30 Life Lessons – Don’t take it personally

Let’s keep it in perspective, there is a fine line between being passionate about the work and feeling personally responsible for what is ultimately the client’s decision on buying.

By Charles K. Hirsch, CLU

Q2 2019 Volume 12, No. 2 PERSPECTIVES STAFF EDITORIAL AND CONTENT: Pam Sheehan • PSheehan@nailba.org LAYOUT AND DESIGN: Tim Ingersoll • tim@tsolldesign.com PRINTING AND DISTRIBUTION: Clare Printing • www.clareprint.com ISSN 2639-9784 (PRINT) ISSN 2639-9806 (ONLINE) Copyright is reserved throughout Perspectives.

No part of this publication may be reproduced or reprinted without the expressed written consent of NAILBA. The views expressed in Perspectives are those of the authors and are not intended to represent the views of NAILBA.

POSTMASTER: Please send change of address notices to Perspectives magazine, c/o NAILBA, 11325 Random Hill Road, Suite #110, Fairfax, VA 22030.

AUTHORS AND INTERESTED WRITERS: Perspectives welcomes comments and feedback on articles and content. Visit NAILBA.org/ Perspectives for content submission guidelines and schedule, or to submit your article for consideration. Contact Pam Sheehan at PSheehan@NAILBA.org with further questions.

ADVERTISING: Please visit NAILBA.org/ Perspectives for our 2019 Media Kit for ad rates, terms or to easily download a Perspectives advertising contract. To learn more about additional opportunities to partner with us, contact Pam Sheehan at PSheehan@NAILBA.org.

CEO COLUMN

LifeMark, ICMG, IDA, NBA & TMA…Oh my!

NAILBA’s new brand of Belong, Connect and Grow is gaining ground.

As Bob Dylan so eloquently sang, “The times, they are a-changing.” NAILBA’s success hinges on our members’ success, our IMO partners and the carriers who support independent distribution.

Dan LaBert, CEO NAILBA DLaBert@nailba.org

It’s been an exciting 1st quarter for NAILBA as I was invited to attend the LifeMark Partners Annual Meeting (Scottsdale, AZ), the Inter-Company Marketing Group Annual Conference (Scottsdale, AZ), the National Brokers Alliance Spring Conference (San Antonio, TX), The Marketing Alliance Annual Meeting (Tampa, FL) and the Insurance Designers of America Spring Meeting (Scottsdale, AZ). The AimcoR Group Annual Partners Meeting (Park City, UT) is my schedule for Fall 2019.

These meetings provided excellent opportunities to interact with current, former and potential members of NAILBA, see the first-class operations of our IMO partners and continue to build strong relationships with our carrier comrades and vendors who support independent distribution.

In addition to the fantastic networking and attending the carrier presentations to further my own professional development, both ICMG and IDA invited me to deliver keynote presentations for their attendees.

My rock star colleague, Bonnie Godsman, Chief Executive Officer at GAMA International, joined me on the ICMG Annual Conference main stage to discuss the “Impact of National Associations and Progressive Leadership Styles.”

The Insurance Designers of America Spring Meeting was extremely welcoming and offered an exciting opportunity to discuss NAILBA’s new brand of “Belong, Connect and Grow.” Part of the presentation (under the “Grow” section) included a brief background on New York Reg 187 and other states (Nevada, New Jersey and Maryland) that will soon follow with similar fiduciary standards.

A few points on New York Reg 187: Regardless of what the standard is being called, in effect it will be a fiduciary standard— the main concern with that is it will drive more and more producers away from a commission based/broker-dealer business model and into a fee-based model, which will result in mid-market clients losing access to service/advice/products. Clearly, this would have a significant impact on brokerage.

The standard will be ongoing in nature, rather than a snapshot at the time of the recommendation/sale duty.

It applies to not only annuities but to life insurance as well.

Individual states each doing their own version of an enhanced standard will create compliance nightmares for firms/producers who operate in multiple states.

Both the Big I and NAIFA NY have initiated a court challenge to the reg.

However, NAIFA NY’s challenge is based on: 1 The reg goes beyond what the operative law permits; 2 The reg will place agents in a difficult, maybe impossible situation—as an agent of a company, the agent owes his duty of loyalty to the company, but the reg will require the agent to owe a duty of loyalty to the client—and it is not possible to owe the duty of loyalty to both sides.

In addition to the IMO meetings, I represented NAILBA at the Industry Alignment Group (IAG) meeting in Washington, D.C. Six insurance industry professional associations and four life insurance carriers have joined forces to address issues that affect the industry and their respective members.

4

Perspectives

Q2 2019

The group includes representatives from the following associations: National Association of Insurance and Financial Advisors, Association for Advanced Life Underwriting, National Association of Independent Life Brokerage Agencies, GAMA International, Women in Insurance and Financial Services and Life Happens.

The carriers represented are Principal, New York Life and MetLife.

Initially, Northwestern Mutual was part of the group but is no longer active. Economics, declining association membership (in some associations) and the value proposition of membership were some of the driving factors leading to the group’s formation.

The IAG is an exciting opportunity for NAILBA and our members. We’ve already experienced return on our investment of time as per the exciting announcement regarding NAILBA and NAIFA. (see page 8) As Bob Dylan so eloquently sang, “The times, they are a-changing.”

NAILBA’s success hinges on our members’ success, our IMO partners and the carriers who support independent distribution. To achieve future success, we need to embrace the changes all around us. NAILBA navigated through change the past few years and is now positioned for greater success with increased value proposition.

Many thanks to all the BGAs who joined or renewed your investment in 2019 membership. NAILBA’s membership is growing. There is safety in the herd!

Let’s “Belong, Connect and Grow” together.

GRAB BROKERAGE

Dan LaBert, CEO of NAILBA spoke on April 2, at Insurance Designers of America’s Spring meeting on making membership an experience, not just a transaction.

by the

HORNS!

November 7– 9, 2019

#SaveTheDate

Gaylord Texan Resort and Convention Center Dallas, Texas www.nailba.org

Registration opens May 15, 2019

CHAIR COLUMN

Change is our constant companion

“It is your metrics that can either drive or hinder your growth, depending on which angle you look at them.”

As we finish up the first half of the year, the one constant that we have seen in the industry has been change. Challenges and success can vary depending upon your location, business size, personnel, and products. This Spring issue of Perspectives magazine looks at the first four months of 2019, sharing trends, ideas and viewpoints on managing business through the year.

When I think about evolving the business, I look at what we can do to affect profitable growth. As many firms have seen over the years, increased size or an increase in case count does not necessarily result in increased profits. As Tiffany Markarian of Advantus Marketing, shared in her Winter 2019 article on metrics in Perspectives, “It is your metrics that can either drive or hinder your growth, depending on which angle you look at them.” We need to look at the type of business coming through, which markets are trending as most profitable per advisor and what we can we do to assist in the insurance consulting process to facilitate the right business. I believe starting with business metrics is essential.

Keeping metrics in view Understanding your case thresholds, advisor/market metrics, as well as age trends can help in planning the second half of the year’s success. From there it is helping your team gain perspective with these metrics to facilitate needed growth and change.

In recent years, we have seen an uptick in managing more people and things — from staff to products and services to finances, as well as deepening relations with carriers and advisors.

Recognizing how much you are juggling within your organization, NAILBA has expanded digital resources and NAILBA38 to be the “Go-to” for market support and networking opportunities.

We help each other NAILBA has been working hard in these first four months to deliver additional tools, educational resources, and discussion platforms for helping you to be more efficient and effective. The Brokerage in Motion podcasts and webinar series on NAILBA.org offer discussions with executives and leading figures across insurance and financial services on trends and topics impacting the independent brokerage distribution community. NAILBA University, along with education opportunities from NAILBA’s partners — LOMA and The American College of Financial Services — are also great resources on NAILBA.org.

Myra J. Palmer, CLTC NAILBA Chair President The Palmer Agency Myra can be reached at mpalmer@palmeragency.com

Recent and upcoming NAILBA.org events include: The “Vitality” of Independent Distribution podcast Paychecks and Playchecks webinar on retirement planning solutions Attracting Top Talent and Managing Performance for your New Business Team webinar Don’t Worry, Retire Happy webinar on May 21 at 10 am EST Things to Remember about Succession Planning webinar on May 29 at 1 pm EST Coming together To further the networking and sharing of ideas and management tools, NAILBA38 is gearing up to be, once again, the largest gathering for independent brokerage distribution. November 7 through November 9 at the Gaylord Texan Resort & Convention Center, NAIBLA38 will offer educational sessions, networking opportunities and exhibits.

These first months of 2019 have reinforced the realization that change is our constant companion in this industry. NAILBA is excited to provide insightful content, digital resources and an engaging annual conference to help you navigate these changes and ensure your business success.

did you know…

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Perspectives

Q2 2019

NEWS

Strengthening advocacy, professional development through NAIFA partnership Dan LaBert, NAILBA CEO and NAIFA CEO, Kevin Mayeux, CAE

“NAILBA and NAIFA have worked together on previous programs that benefit our members, and we welcome the evolving collaborative relationship to advance our missions of advocating on behalf of the industry, our members and the clients we serve.”

Dan LaBert – NAILBA CEO

Emily Holbrook Emily Holbrook is former editor in chief of National Underwriter Life & Health and Retirement Advisor magazines. Her business, Red Label Writing, offers writing, editing and content strategy for insurance and financial services firms. She can be reached at emily@redlabelwriting.com.

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Perspectives

Q2 2019

NAILBA has partnered with the National Association of Insurance and Financial Advisors (NAIFA) to further support advisors and agents, the industry as a whole, and consumers.

Specifically, the two groups have increased coordination of programs that support member professional development and networking, and political advocacy and engagement on Capitol Hill and in state legislatures across the U.S. “NAILBA and NAIFA have worked together on previous programs that benefit our members, and we welcome the evolving collaborative relationship to advance our missions of advocating on behalf of the industry, our members and the clients we serve,” NAILBA CEO Dan LaBert said.

“Americans’ ability to save and plan for their futures is at an all-time low. Consumers need access to advisors and agents who can help them address the financial realities of retirement.”

NAIFA CEO Kevin Mayeux, CAE, further explained, “This partnership reflects commitments from both organizations to create opportunities to leverage our organizational strengths while ensuring our members have the knowledge to serve their clients and to speak in a unified voice.”

Opportunities for formal collaboration in the areas of membership and professional development include: NAILBA and NAIFA will each encourage membership in the other party’s organization.

NAILBA and NAIFA will collaborate on mutually agreed upon professional development and education offerings including the NAIFA Life and Annuity Certified Professional (LACP) certification.

Opportunities for formal collaboration in advocacy and government relations include: NAILBA and NAIFA will form a joint task force to foster greater collaboration of advocacy efforts and leadership across both organizations.

NAIFA will represent NAILBA on agreed upon industry task forces and coalitions that work to advance the parties’ mutual interests on key legislative and regulatory issues.

NAIFA will represent NAILBA on agreed upon issues in state capitals, before state insurance and other financial regulators, and at the federal level as appropriate.

NAIFA can provide advocacy experts at NAILBA meetings, as well as lead government relations webinars and other presentations.

NAILBA members can participate in NAIFA’s Congressional Conference and NAIFA state chapter Days at the State Capitol.

NAIFA can provide grassroots advocacy training for NAILBA members, as well as access to NAIFA GovAlerts and other resources.

There are a number of challenges coming from Washington, including state-run retirement plan proposals, tax reform, and federal and state efforts to revise the standards of care owed by advisors to their clients. Other challenges include recent amendments to New York State’s Regulation 187 that impose a complicated new standard of care on annuity recommendations and broaden the scope of that regulation to include life insurance as well as annuity products.

“The mid-term elections brought dozens of new state and federal lawmakers in office,” LaBert said. “We need to build relationships and educate these new legislators about our members’ day-to-day activities, and to caution them against taking action that could be harmful to consumers’ access to needed and informed advice, products and services.”

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453963

A+

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This rating is the second highest of 16.*

This rating is the 5th highest of 21.*

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A.M. BEST

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INSURANCE

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For producer use only. Not for use with the general public.

COVER STORY

Question & Answer

Positive momentum

Varying adjustments

When asked how the first part of 2019 was tracking, the group shared an optimistic perspective.

Looking at what adjustments or strategies are being considered at mid-year, the answers varied from one leader to another.

Bosnack: “Actually, there has been a surprise, albeit a positive one. Last year was a difficult year, but we are off to a nice start this year.”

Hannam: “We experienced an interesting fourth quarter in 2018, with the last couple months ramping up for a strong finish. This has allowed us to roll into 2019 with nice growth. Our agency is not expecting any big surprises or major changes despite the changes in regulations in carrier products this year.”

Phillips: “We are having a tremendous year. It’s coming from any number of different directions and product lines. I can’t say that I’m overly surprised, as our marketing efforts continue to pay dividends.”

Wong: “Our sales goal didn’t yield any surprises to what was expected back in Nov/Dec. We are above target for Annuities and Linked Benefits. Our Life insurance sales are slightly below target; however, our inventory and current momentum is expected to bring sales back in line with full year expectations.”

Bosnack: “Predictability in this business is seemingly more elusive every year, so I try to stay out of the prediction biz. As noted, though, we are off to a decent start. I am going to try to keep things moving forward with hopes of capitalizing on the momentum.”

Hannam: “We will continue to work hard to monitor the pulse of the industry, to listen to our advisors, and to pay attention to insurance carrier behavior and changes within our own agency. If we need to be nimble and make changes along the way, we want to ensure that we are mentally and physically prepared to do so.”

Phillips: “We’ll continue to do what we always do which is market, market, market. If things continue as they have, our mid-year plans will likely involve bringing in more staff to help us address the additional opportunities. I don’t think we’re a typical BGA in that we are adept at multiple product lines. We have deep rooted knowledge in those lines and that has served us well as markets ebb and flow.”

Wong: “To stay on course, we are putting additional focus on having more face-to-face (or FaceTime live feeds) interactions with our existing relationships and prospects to share our role with them in their value chain. I’m really energized by the results from our key relationships and their success. After spending several days with our very best distribution folks, I am confident in our team’s ability to hit our goals for the year.”

Be nimble. ses.

Streamline carrier proces

mmunicate

co Rethink the methods to with the market.

with advisors Emphasize engagement and consumers. ket some more.

Market, market, and mar panel the views provided by a These are just some of e rspectives magazine. Th of industry leaders for Pe red g sized agencies sha four leaders from varyin ges t, the trends and challen thoughts on the marke the o es as they head int impacting their business second half of 2019.

Those surveyed were Joe Bosnack, Jr., President, Katz Nassau Agency, Inc.; along with Debbie Hannam, President, Brokers Clearing House, Ltd.; Raymond Phillips, President, The Brokers Source, Ltd. and James Wong, Area Executive Vice President, Partners Advantage Insurance Services, LLC.

Independent agents are looking to grow 70%

14% Reduce

33 No action %

22% Aggressively growing

7% Moderately growing

Not growing

53% Expand

Source: Independent Agent Business Placement Preferences Survey, LIMRA, 2019.

53% are looking at increases in both types of products and numbers of products.

All things considered, which of the following best describes your practice’s current stage of growth?

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Perspectives

Q2 2019

www.nailba.org

11

Joe Bosnack, Jr., President Katz Nassau Agency, Inc.

Debbie Hannam President Brokers Clearing House, Ltd.

Carrier impact In thinking through how to streamline processes and be more efficient, the question was asked if there were ways for the carriers to help in bettering the system for the agencies, advisors and the consumers.

Bosnack: “Carrier help is always appreciated and needed.

Education is a big key, back office support when problems arise can be a differentiator, but mostly we appreciate efforts to simplify the process. The sooner we are out of the tree killing business with paper use, the better!”

Hannam: “The obvious answer might be that we intend to deliver products as effectively and efficiently as possible to consumers who desire aggressive technology for applications. While I believe that is important, the word that resonates most with me is partnership! We must be able to depend on the carrier’s integrity. Life is unpredictable, but the carrier’s commitment to deliver on its promises to policyholders must be totally predictable and unwavering.

I also believe carriers should be careful not to put every advisor or consumer in the same box. Everyone has a story, and it’s our responsibility to make sure we have communicated it correctly so the carrier can make informed decisions on contracting an advisor or underwriting the insured.”

Phillips: “Carriers have done an excellent job at enhancing their websites and providing training tools and resources to help recruit and retain advisors. But I think the support a carrier could provide is to hire better people internally; train them more effectively; and instill a sense of what we do in the brokerage community, our issues and pain points.

Maybe that’s a Quixotical, almost unrealistic, notion given the multi-channel distribution world we all work in. I find our time is increasingly spent chasing down errors, missteps, and no-way-that-should-happen situations. It’s a time-consuming 12

Perspectives

Q2 2019

Ray Phillips, President The Brokers Source, Ltd.

James Wong, Area Executive VP, Partners Advantage Insurance Services, LLC.

effort that takes us away from generating revenues and laying the groundwork for new opportunities.”

Wong: “As we better address consumer needs (product features, benefits and customer experience) one core objective is to deliver awareness and education on the many options available to the independent financial professional (IFP). With this as a backdrop, the two items that would aide our efforts would be for carriers to share their intelligence on products relative to competitive products. Secondly, it would be beneficial for carriers to get underwriting/suitability reviews through a common portal/system, ultimately bringing greater consistency to the buying experience.”

Change — the constant denominator With change being the constant theme in the industry, the four leaders provided their perspectives on business growth and ways to achieve it.

Bosnack: “Coming off last year, I decided to ‘go back to basics.’ I am on the ground more, trying to stay in front of the producers and helping them grow their business. More face-to-face, phone time, etc. to help them meet goals.”

Hannam: “I don’t believe it is a big secret that the financial planning space is where we are all seeing changes in insurance conversations. It’s our job to better equip financial planners by giving them the education, guidance, and means to offer insurance services to their clients. Long term care continues to be in urgent need of attention in the financial planning space.

The importance of protecting assets that clients have taken years to grow should be part of an advisor’s conversation with every client to ensure that a catastrophic LTC event doesn’t consume those assets in a very short period.

With the partners and employees in our agency, we are well equipped to serve this space while continuing to service all our

advisors in various capacities and helping them provide coverage to consumers. Statistics tell us we all have a lot more work to do!”

Phillips: “I don’t think change in our agency — and maybe our industry — comes in a sudden, flashpoint way. It’s more of an oozing into pliable strategies, protocols and offerings. We’re not making any ‘changes,’ per se. We are continuing to engage the market the way it wants, by using new tools and resources to meet the ever-changing ways our market wants to consume our services.

Along those lines I still favor the hand-to-hand combat approach to marketing, face-to-face meetings, workshops and appointments. Over the last year or so I have started to recognize that isn’t, perhaps, what the market wants from me or my firm. We’re doing more webinars, screen shares, recorded video sessions, etc. than I ever thought we would.

And, grudgingly, our metrics support this direction.”

Wong: “I’m a big believer in Jack Welch’s philosophy of ‘change before you have to’ and so we are continuing our investment into two growth areas. One is the Registered Investment Advisory (RIA) space, both to serve as an insurance exchange for them and Investment Advisor Representatives (IAR), and as a professional development opportunity for insurance-only IFP’s. The other is supporting what I consider as international business that includes foreign national cases. Our leadership team believes there’s great growth ahead for US dollar-based insurance products, and with our skill set, relationships and carrier support, we increase the odds of our ability to serve this sophisticated marketplace.”

Consistently trending Acknowledging that change is a constant trend raises the importance of being nimble, as well as providing ongoing education and marketing along with increasing the collaboration between carriers, agencies, advisors and consumers. As Ray Phillips stated, “We’ve started to become an ‘insurance partner’ rather than an ‘insurance wholesaler’ for many of the firms and agencies that engage us.”

As the second half begins, further discussions around efficiency, streamlined processes, and improved communications can equate to business growth at all levels. As Debbie Hannam summarized, “Without insurance carriers, agencies, advisors, and consumers working together, we have nothing.”

In order to keep ahead of the changes, look to Tiffany Markarian’s article on social media (page 20) and Kim Magdalein’s column regarding marketing essentials (page 22). And, in the next issue of Perspectives in the 3rd quarter, the focus will be on technology for the industry.

Pam Sheehan Director of Content & Strategic Partnerships, NAILBA PSheehan@nailba.org

Checking in with the independent agents Graphs from

Use and desire for life insurance sales tools Independent agents

Source: Independent Agent Business Placement Preferences Survey, LIMRA, 2019.

Online access to insurance carrier

69%

Tools to speed up the application process (e.g. eApp, eSignature)

69%

Client marketing and education tools

Digital support tools to help identify appropriate solutions for my clients

Already have & use

15%

44%

14%

41% 26%

Have now, but do not use

33% 41%

Do not have but want

6%

17%

6%

22% 28%

12% 12%

14%

8%

55%

Modeling tools on life insurance strategies

Analytical tools that help prioritize your opportunities or leads

11%

8% 14% 14% 21%

Do not have and do not want www.nailba.org

13

DISABILITY

Disability Insurance awareness month Take the 90-Day DI Challenge

Your greatest marketing resource is your own book of business.

Joe Russo Joseph Russo is an Underwriter and Account Executive at Petersen International Underwriters. With over 15 years in the financial services industry, Russo is a “specialty market” life and disability insurance expert, as well as the Editor-In-Chief of Petersen International’s weekly publication, The Communicator.

Joe can be reached at Joe@piu.org.

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Perspectives

Q2 2019

Spurred-on by social media and business marketing platforms, personal-growth “challenges” are all the craze in recent years. Examples like the “ice bucket challenge” that successfully raised public awareness for ALS foundations as well as individual fitness and weight-loss challenges that have helped private boot camps and gyms bolster membership numbers.

These highly-publicized self-help programs have proven to be effective marketing strategies that aim to influence paying demographics and expand societal awareness.

Petersen International Underwriters has jumped on that bandwagon and has decreed a “90-Day DI Challenge” to all licensed life and health insurance agents across the country in hopes of raising awareness of the great American disability insurance industry in association with Disability Insurance Awareness Month. Beginning May 1st, 2019, we challenge you to challenge yourself to sell 15 new, non-renewal DI policies over the next three months. The placements can come from either or both personal and business coverage. That is only five policies a month which will assist you in expanding your product portfolio and protect the most important of assets of your clientele — their ability to earn a paycheck.

Below are several strategies and marketing guidelines to help create success in this challenge and future DI sales.

Check your client files Cold-calling and even reaching out on so-called “hot” leads can be daunting and an unfortunate uphill battle for the most confident of sales professionals. Better yet is word-ofmouth advertising and business referrals that come directly from trusted clients. But in your client files dwell the real advantages to making more DI sales.

Your greatest marketing resource is your own book of business. Your current and previous clients trust you as you have worked diligently in the past to protect their financial interests through advisement and worthwhile product sales. Experience has shown they will be open to new, fresh ideas that you bring to protect their families from financial ruin in the way of disability insurance. Contact your life clients. Call your annuity clients. If they are working professionals, earning regular paychecks, they need disability insurance and appropriate levels of coverage at that.

Opening doors for cross-selling After you have run through their personal disability options, turn your attention to their businesses. Another great DI sales strategy is to use business coverage to open the doors to further cross-selling opportunities.

Those of your clients that are business owners of any corporate structure and size face greater loss potential than most, considering their assets and the responsibilities and liabilities that come with owning and running companies with multiple employees. Business owners not only need personal disability insurance for themselves and their employees, but also for the continuity of their corporate entities.

Products like key person insurance, business overhead expense coverage, buy/sell platforms as well as business loan indemnification are all quite important protection facets when it comes to the prosperity of a corporation and its employees that rely on the success and continuation of such a business.

Having the magic number In addition to business insurances, don’t hesitate to upsell your clients on additional personal disability coverage. Most Americans that have some form of income protection insurance don’t usually have sufficient levels as suggested by disability experts across the country. Sixty-five percent is the magic number. If a client isn’t covered to sixty-five percent of their income by some responsible form of personal disability insurance, that client is simply underinsured.

The remedy to such a grievous problem is to prescribe additional layers or tiers of income protection by way of group long-term disability, individual DI as well as excess, high-limit DI. You may also want to turn your attention to the DI industry’s hottest commodity — multi-life guaranteed-issue (GSI) coverage. This product line in general provides excess disability insurance with substantial discounts on a guaranteed-issue basis (no exams or labs or lengthy applications), and can be acquired on groups with minimal participation requirements. GSI has become quite a lucrative tool and the new standard among agents focused on the medical, accounting and legal profession marketplaces.

If a client isn’t covered to 65% of their income by some responsible form of personal disability insurance, that client is simply underinsured.

Challenge yourself The previously suggested strategies, your own lifetime of experience as well as your usual sales repertoire should make the “90-Day DI Challenge” an easily surmountable opportunity that will help raise disability insurance awareness throughout the industry, as well as to prospects that are probably naïve to the real and formidable economic disasters brought about by one’s unforeseen disablement. Millions of Americans become disabled every year due to accident or illness, and they all need to be properly protected with multiple, high levels of disability insurance. Take part in this year’s important challenge not only for the commissions, but also to provide your clientele with peace of mind and financial assurances into the future.

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MANAGEMENT

Top producers talk about their wholesaler relationships Charles K. Hirsch, CLU Chuck Hirsch, CLU, is the former editor and publisher of Life Insurance Selling magazine. He continues to contribute to insurance industry publications, in addition to providing consulting and marketing services through his firm, Hirsch Communications Consulting, LLC. He can be reached at Charles.k.Hirsch@gmail.com.

We’re in a business that thrives upon relationships, and the best BGAs I know are extremely protective of the profitable ones he or she has built.

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Perspectives

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If I were to poll NAILBA member agencies and ask what drives their success with any productive advisor, I believe the word I would hear most often would be “relationship.” We’re in a business that thrives upon relationships, and the best BGAs I know are extremely protective of the profitable ones he or she has built.

But there’s more to it than that. After all, if you’re going to develop new relationships with a new group of advisors, what’s going to attract them in the first place? What are they looking for from you and your team? What’s going to pique their interest long enough to even give you a chance to develop a relationship?

Expectations To help get a clearer view of what top producers are expecting from the wholesalers with which they do business, I recently asked those kinds of questions of a couple of top advisors.

Both Steven P. Arengo, CFP, AIF, of Interdependent Advisors in Glendale, Ohio, and Michelle L. Binder, CFP, of Potomac Financial Consultants in Germantown, Maryland, do business with brokerage general agencies on a regular basis. And both were kind enough to share their thoughts about what advisors expect from their relationships with wholesalers.

Mr. Arengo told me about the importance of the advisor and the insurance brokerage firm working together like teammates. “I like using my insurance brokers like extensions of me,” he said. “So in a perfect world, I would tee up my insurance prospect, and the brokerage general agency would do the rest.”

Importance of support He pointed to the value of support materials that he receives on a regular basis from one of the insurance brokerage firms with which he does business. “I love the kind of stuff I get from them. They’re always open to mentoring me and growing my practice. I’m slowly getting to the point where I have a process that tees them up enough so that they can carry out all the details. The firms I work with do a pretty good job of running with it and keeping me or my assistant in the loop.”

Ms. Binder talked about the biggest value she sees the insurance brokerage firm bringing to the table. “For me,” she said, “it is the firm’s ability to offer us access to various insurance companies and products at one single place. They are willing to work directly with the insurance companies on our behalf without us having to get involved.”

Mr. Arengo added that he sees the greatest value in the firm’s “breadth of knowledge, experience, and mostly support, as if they were an extension of my own practice.”

I asked whether there is a part of the business where the wholesaler offers the potential to be of significant help, but for some reason that potential is not being realized. Mr. Arengo pointed out that he could use help with more complex business arrangements. But he conceded, “This is primarily an issue with me, not the insurance brokerage firms. I’m in the process of tidying up my practice so I can grow.”

Ms. Binder said, “My current wholesaler is great about helping us with life and long-term care insurance needs, but does lack a bit on help with disability insurance.

We don’t write a ton of disability insurance, but it would be nice to have a stronger support system in place for those times when that need does arise with my clients.”

“I like using my insurance brokers like extensions of me.”

Steven P. Arengo, CFP, AIF, of Interdependent Advisors in Glendale, Ohio

Since the competition among brokerage general agencies can be fierce, I thought it would be good to get an advisor’s perspective on what a relatively new insurance brokerage might do to set themselves apart. Ms. Binder pointed toward technology. “I would encourage the insurance brokerage firm to have software available to the advisor that enables people like me to give quotes, process, and follow up with cases if the advisor wants to be a ‘do it yourself’ kind of advisor. On the other hand, the insurance brokerage firm should be willing to do the process work for the advisor if the advisor is the kind who doesn’t want to handle those things by himself or herself. In addition, any new insurance brokerage firm should have access to numerous top carriers.”

For Mr. Arengo, an insurance brokerage firm can set itself apart by keeping it simple.

“Simplify the process,” he said. “Let the advisor tee up the client, and then let the insurance brokerage take it from there.”

He, too, sees effective technology as a plus. “Use DocuSign as much as possible,” he said.

“Some are better than others in this area.”

Certainly, no one expects all brokerage general agencies to appeal to everyone. There is, in fact, a lot of specialization in this business. But generally speaking, good agencies know their market and who they want to do business with. The smartest agencies, though, are good at listening to their market, and improving in those areas where they need improvement. The result, of course, is more — and stronger — profitable relationships.

EVENT CALENDAR MAY 2019

JUNE 2019

NAIFA (National Association of Insurance and Financial Advisors) Congressional Conference May 14 – May 15, Capitol Hill, Washington, D.C.

AUGUST 2019

MDRT Annual Meeting (The Million Dollar Roundtable) June 9 – June 12, Miami Beach, FL.

Registration for NAILBA38 opens May 15, 2019.

NAILBA Webinar: Don’t Worry, Retire Happy! Steps to retirement planning and long-term care for clients.

May 21, 2019 at 10:00am EST.

IAMS 2019 Marketing Summit August 25–29, The Ritz-Carlton Naples, FL. NAILBA Webinar: Life & Annuity Objections and How to Handle Them.

August 22, 2019 at 12:30pm EST.

SAVE THE DATE

NOVEMBER 2019

NAILBA38 – November 7-9, 2019, Dallas, TX, Gaylord Texan Resort & Convention Center.

NAILBA Webinar: Things to Remember about Succession Planning. May 29, 2019 at 1pm EST.

Ongoing: Brokerage in Motion Podcasts: The “Vitality” of Independent Distribution with Brooks Tingle, President and CEO, John Hancock Insurance.

Outlook for Term Life & AXA Product Focus Now & Future with Trey Reynolds, Head of Life Distribution, AXA.

Life Products Development: Current & Future Opportunities for Brokerage with Warren May, National Vice President, Principal.

Product Development, Industry Challenges & Commitment to Independent Distribution with Jeff Barker, Senior Vice President, AIG.

Increase Producers, Increase Revenue & Serving Underserved Markets with Mark Hug, Global Diversity Marketing. www.nailba.org

17

LONG-TERM CARE

Myths & facts of LTC protection When it comes to LTC protection, know the myths, master the facts, and have the conversation.

Retirement readiness risks come in all shapes and sizes, and few looms larger than the potential cost of long-term care (LTC). Most financial professionals understand the magnitude of this risk; however, preparing clients to address LTC costs often means overcoming a set of well-entrenched myths. Understanding some common myths in advance and becoming wellversed in the facts can change the course of the conversation. And most importantly, it can help create a stronger retirement strategy for clients at a range of income levels.

MYTH: “My health insurance provides all the protection I need for LTC.” FACT: Health insurance and LTC protection are not interchangeable. Health insurance helps

cover the cost of medical care, while LTC benefits help pay for other potentially costly services, including help with eating, bathing and getting dressed — needs that generally grow over time.

MYTH: “I can rely on a government program to take care of me.”

FACT: Government programs are limited by financial resources and availability. It can be

difficult to qualify for government programs, and each program carries specific rules and requirements for covered services.

MYTH: “I can save the money I’ll need for LTC.” FACT: Paying LTC expenses out-of-pocket can wipe out a lifetime of savings. Today, the average

cost for a private nursing home room is $7,698 per month ($92,376 annually).1 At that rate, savings of $500,000 would be depleted in just a few years. And 20 percent of Americans aged 65 or older will require LTC services for longer than five years.2 Tracey Edgar, RN, BSN, CLTC, is vice president of sales, Care Solutions, for the companies of OneAmerica. She formerly led brokerage sales for the OneAmerica Care Solutions suite of asset-based long-term care products.

An industry veteran, Edgar has been helping brokerage general agencies for 20 years. She can be reached at Tracey.edgar@oneamerica.com.

MYTH: “LTC protection is too expensive.”

FACT: There are many combinations of LTC protection features and payment options that may

work with a range of financial situations. Standalone LTC policies typically are funded like other insurance policies, with monthly or annual premiums that may be subject to periodic increases. Asset-based protection can provide a healthy mix of funding options — including a single lump-sum premium or options to pay level premiums over a period of 10 to 20 years.

Start the Conversation From a wealth management perspective, it’s important to remember that LTC protection doesn’t exist to make clients rich. It exists to keep them from becoming poor. That makes it an important element of any well-rounded retirement income strategy and certainly a topic worth discussing.

OneAmerica® is the marketing name for the companies of OneAmerica. Products issued and underwritten by The State Life Insurance Company® (State Life), Indianapolis, IN, a OneAmerica company that offers the Care Solutions product suite. Provided content is for overview and informational purposes only and is not intended as tax, legal, fiduciary, or investment advice.

Footnotes: 1 “Costs of Care.” longtermcare.acl.gov/costs-how-to-pay/costs-of-care.html, obtained on 4/15/19.

2 “How Much Care Will You Need?” longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html,

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Perspectives

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High Limit Disability Individuals annually earning in excess of $500,000 need disability benefits that can keep pace with their affluent lifestyle - they need High Limit Disability. The benefits of a recently-insured surgeon, making $1,100,000 consisted of: ⌂ $10,000/month Group LTD ⌂ $15,000/month Individual DI ⌂ $32,000/month High Limit DI Call (800) 345-8816 or visit www.piu.org for more information.

Occupation: Surgeon Age: 51 Income: $1,100,000 Total Benefit: $57,000/month

SOCIAL MEDIA

Never run out of social media content Top ways for ongoing connectivity We’ve all heard the phrase “content is king” in social media. The challenge is not everyone is a great copywriter or has the time to consistently create organic content.

Below are 8 ways to have a consistent source of social media content. These strategies will help you avoid going weeks or months without posting updates.

1. REPURPOSE PAST SOCIAL MEDIA POSTS Many firms think you can only post content once. Social media posts can and should be used multiple times to get traction! This is especially true if you have new followers regularly connecting. You can easily change the title or headline of an older post and share the article link again. This gives the article visibility to recent followers while acting as a great reminder to long-standing followers.

Social media is about content, but it is also about timing. Your followers may not always see your post when you first share it. By repurposing prior content, you can keep your pipeline full, while increasing content visibility.

Tiffany Markarian has been helping wealth advisers and professionals advance their business momentum since 1995. She is a frequent author for industry journals and has spoken at numerous industry conferences, including FPA Mass, NAILBA, GAMA, LifeMark Partners, NAIFA, and regional broker/dealers.

She can be reached at tiffany@advantusmarketing.com.

2. UNCOVENTIONAL HOLIDAYS There are appreciation days and unconventional holidays that foster unique social media ideas. National Day Calendar (www.nationaldaycalendar.com) is an online website that provides a full listing of these days, by month, on their “Calendar At-A-Glance” tab.

The site also provides suggested links and hashtags for featured days, including: March 13th – K9 Veteran Appreciation Day June 1st – National Cancer Survivor’s Day July 28th – National Milk Chocolate Day September 9th – Grandparent’s Day 3. BUILD A SOCIAL MEDIA CONTENT CALENDAR While doing your annual business planning, make sure you build a Social Media Content Calendar. Using the ideas above, you can create a template based on known events.

Choose a Theme for Each Month You can choose a different financial or insurance planning theme each month to build your calendar. In January you could post a reminder for advisors to review clients’ insurance policies. In February, post content from LIFE Foundation for “Insure Your Love” campaign.

Schedule your posts in advance Once you choose the days or concepts to feature, create posts in advance and have them automatically posting on a specific date and time. Facebook allows scheduling 6-months in advance on company pages.

There are additional third-party tools such as Hootsuite (www.hootsuite.com) to help you manage and schedule posts across several social media platforms.

4. RECYCLE OLD POWERPOINTS FOR CONTENT If you deliver webinars or attend industry meetings, you can repurpose the presentations.

You may have hosted webinar presentations — including the presentations carriers delivered for you. There are probably 3 to 5 strategies featured in each presentation that could be made into social media posts or blog articles.

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Perspectives

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5. SHARE CONTENT AS A GRAPHIC Social media posts with images have a higher degree of engagement. There are several inexpensive online apps available to elevate your posts with eye-catching visuals. Several include free stock photos as part of a subscription. Some tools to consider include: Word Swag Word Swag is a subscription app, allowing you to pull a quote or article headline and share it in visual form using their stock photos or a photo from your phone. There are premium features that also allow you to add your logo.

Anyimage.io for Social Cards Anyimage.io (https://anyimage.io) is an online subscription tool that transforms a photo or image into a clickable Social Card, linking to a webpage of your choice. Just upload a photo and the URL for an article or webpage and Anyimage.io turns the image into a clickable link to the webpage. You can also choose a premium service to have a custom domain for your website as shown to the right.

6. INDUSTRY APPRECIATION DAYS The insurance industry has several months which celebrate planning concepts, including Disability Insurance Awareness Month in May, Life Insurance Awareness Month in September and Long-Term Care Awareness Month in November. Each of these opportunities can be turned into multiple content postings for the respective topic, for example: Life Insurance Awareness Month (LIAM) Post a checklist for conducting a Beneficiary Audit Share your In-Force Policy Review services for fee-based or fee-only advisors Share Term Conversion educational material for client use Share a Life Insurance Calculator from your website or from a carrier 7. MONITOR YOUR COMPETITORS Competitors may have some good social media skills to learn from. You don’t want to necessarily follow the competition, but you may want to monitor their social media and look at who they are following. They may have some great sources for content that you can use as well. Tracking engagement of their posts can also help you keep pace with trends.

Follow the influencers your clients follow Follow the top social media influencers for each type of advisor you work with to see who they are following. Twitter is especially helpful in this regard. In just 15 minutes a day you can follow relevant content. You can retweet high engagement posts or use for content ideas.

Note: Before reposting or retweeting, make sure to review post comments. If the comments are controversial, you may not want to be associated with it.

Follow the top social media influencers for each type of advisor you work with...You can retweet high engagement posts or use for content ideas.

8. YOUR COMPANY CULTURE Clients love to see photos of your team. Personalize and humanize your posts, by including: Pictures of your team at professional events or volunteering Anniversaries or firm history Employee birthdays, weddings, or baby showers Employee retirements, passing exams, or new hires These 8 social media strategies will help you plan and organize your efforts. Drive more engagement from your followers and showcase the resources and value of you and your team.

www.nailba.org

21

MARKETING

Managing the marketing details Most advisors miss the mark when it comes to successful marketing.

The proof of that statement is in their production figures. There are several critical ingredients that must be included in any successful marketing campaign.

Critical questions First and foremost, the recipient of information must have a need for that information. The greater the need, the greater the need for a recipient to respond. Makes perfect sense, right?

Frequency and persistence in marketing is key.

With that in mind, the first questions you should ask yourself are: Does my marketing meet the needs of my target audience?

Does the marketing mailer meet the needs of the target audience? Specifically, in the audience’s mind, not yours?

As example, my company, Seminars for Less, produces mailings for attorneys, as well as financial advisors. Elder Law attorneys mail to people who are over 68 years old. Since they are offering crisis planning for elderly people on the topic of long-term care, there’s a strong response rate because of the message’s relevancy to the age group. And, to ensure the attorneys receive the desired level of prospects from the mailing, they send to a large database of seniors with the understanding that only a small percentage of recipients will need or be receptive to the solution at the time of the mailer.

Kim Magdalein is an advisor with 30 years of speaking and writing experience about prospecting for industry publications and websites.

Co-founder of Seminars For Less nearly 20 years ago, he is a leader in seminar marketing, assisting financial advisors, insurance agents and attorneys. Contact Kim at www.seminarsforless.com.

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Perspectives

Q2 2019

Swimming against the current Marketing and advertising can’t create a problem to solve. Advisors have a bad habit of trying to create a problem to solve when the consumer doesn’t agree. We can’t even explain why they should pay attention to a particular situation that may become a problem.

Most people will wait to solve a problem only after it occurs. When we attempt to “create awareness”, we are swimming against the current. Why not catch the flow of what they want and just fulfill their needs?

Timing is critical. Just because they don’t want to solve the problem today doesn’t mean they don’t want to solve it later. Frequency and persistence in marketing is key. Once you have identified a qualified prospect and they’ve shown even a small interest in what you offer, indicating that you can improve their world, stay in touch.

Timing is everything Email follow-up is popular and relatively inexpensive. What happens, however, if the email hits when the recipient doesn’t have a need or desire to solve that specific problem? Another concern, especially with the older consumers, is that they don’t tend to check their emails very often. In fact, some only check email just once a week or less. And, then there is the issue with emails ending up in spam either by accident or by the recipient blocking further correspondence.

With that in mind, I recommend phone calls and snail mail. Sure, they can throw it away or delete your message, but they will have heard your message by voicemail and may have read your correspondence by snail mail before they threw it away. My wife, Carol continued to receive a simple one page typed no-frills newsletter from someone for two years. She didn’t have the problem until the second year, but then had this person top-of-mind for solving the problem. Response happens when the need occurs, and a solution is desired.

Dabbling vs. business growth A marketing budget is essential to any real business. Many producers believe they can run a business without spending money. That’s a “dabbler” mentality. A committed business owner is one who markets effectively. A good starting annual budget for marketing could be $6000 or just $500 per month. A combination of direct mail and phone calls can, at least, provide insight into the effectiveness of marketing.

As leaders in the industry, wholesalers should consistently encourage advisors to invest in marketing. Then continue to bring excellent, effective campaigns to their producers that will help them solve the problems of their prospects.

A combination of direct mail and phone calls can, at least, provide insight into the effectiveness of marketing.

Real life example Over 10 years ago, Social Security marketing was created and went viral among producers as an effective way to get the attention of qualified consumers. When the Social Security administration adjusted their payout of benefits, producers had to adjust their approach.

Mailing to people who are the appropriate ages will cerate a response because the prospect must make a decision soon. That’s solving a current problem that already exists before the marketing gets their attention.

The discussion about Social Security is very important for someone at any age. Just this week I directed a 42-year-old couple to SSA.gov to determine their current status with Social Security. Eddie is making a career change. Since he has a military pension and opted out of a survivorship benefit for Jennifer, I told him to look into what Social Security benefits would be available for her. They were thrilled to know some real numbers. He is now looking at a life insurance policy to cover some of the additional income she may need. This is a great example of approaching people when a need is currently important to them.

Systematic approach to prospecting I’m always surprised to learn that producers don’t have an effective and easy-to-use CRM to stay on top of their prospecting. I recommend a less annoying CRM that meets basic needs without paying for frills that are not necessary. Everything can be accessed by smartphone as well as by computer, so it’s very portable. I use it every day. Everything goes in and it is accessible by staff. Following up by phone and mail is easy when using a great follow up system. I am still an undying fan of the one card system and a good CRM is similar.

Marketing organizations should encourage producers to systematically approach prospects with a problem solving system and invest capital for that purpose. The producers must be able to trust the marketing organization with their time and money. That system should include marketing and follow up that is not too time consuming for the producer yet gets consistent results.

Look to Q3 Perspectives for technology that supports your marketing initiatives. www.nailba.org

23

NAILBA CHARITABLE FOUNDATION

Calling all superheroes

Gi

ft Ask Su U bs s A cr ip bou tio t n Ou Pr r og ra m

!

IDEAS FOR LIFE AND HEALTH PROFESSIONALS

Established in 1980,

BROKER WORLD Springtime is Superhero time. Be one of the Superheroes by sponsoring a grant for an organization in your town.

Whether supporting a disabled child going to camp, or feeding a family through the local food bank, or helping a veteran’s family when the unimaginable happens, the NAILBA Charitable Foundation makes it easy to get involved.

Robin Landers, CLU, owns LandersStein, originally founded in 1959 by Bernie Landers and Marty Stein. A Chartered Life Underwriter, she has served as president of the Miami SFSP (CLU) and NAIFA-Miami and is currently President of the NAILBA Charitable Foundation.

Robin can be reached at Robin@Landers-Stein.com.

Let’s do it together.

NAILBA Charitable Foundation together with past Superheroes have helped a variety of grantees, including: Lotus House – providing school uniforms and bookbags to children living in shelters at the start of the school year. Not having to wear tattered clothes and use grocery bags for their books, the grant helped to bolster the confidence of these fragile and stigmatized children.

Jamie’s Dream Team – funding for a boy with stage 4 Neuroblastoma visit his hometown.

A simple, but important request that couldn’t have been fulfilled without us.

Caring for Kids – purchasing of essential new bedding for foster children that ensured each child had a bed to sleep on during these traumatic transitional times.

Obtain your Superhero status Simply download the Grant application within the NAILBA Foundation section under Industry News on NAILBA’s website. Let your favorite charity complete it and send back to NAILBA with your cover letter.

You can also donate to ensure all deserving grants get funded. Our fundraising goal this year is $300,000 for grants.

Imagine the impact in YOUR neighborhood when we can fund the projects near and dear to your heart. You could be the person delivering the big check to the non-profit that does so much. Think about what that tells your community — it tells them that you are there to give, to help, and to serve.

That’s a powerful message. That’s the message of a Superhero.

is the first—and only—national insurance magazine founded, focused and edited to specifically address the unique informational needs of the independent life and health producer. Timely articles on products, opinions, advanced underwriting, latest sales techniques, legislation, and industry events.

Visit www.brokerworldmag.com where you’ll discover the whole world of content from our print edition… far-reaching focus articles, monthly updates, general interest topics and, of course, our monthly columnists.

PLUS • Direct Link to Advertisers • Editorial Guidelines • Advertising Rates • Long Term Care Surveys • Subscription Information • CE Credits Independently owned! Independent minded!

800-762-3387

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Perspectives

Q2 2019

REGULATORY

LIFE SETTLEMENT

To best or not to best…

Mining your book of business

that is the question… Or is it?

National Association of Insurance Commissioners is continuing to draft an update to the model suitability regulation. They are deciding whether to include an explicit “best interest” provision which has sparked debate between different factions, but we are not convinced it matters.

Commentary on model suitability regulation

Kim O’Brien is a 35-year veteran of the insurance industry specializing in guaranteed annuities and life insurance. She is the current CEO of Americans for Annuity Protection and Founder of AssessBEST, Inc., a sales and compliance software system. Visit www.AAPnow.com, www.AssessBEST.com or www.FixedAnnuityChoice.com for more information.

DISCLAIMER: This article is provided for educational and informative purposes only and not for the purpose of providing legal advice. Readers should consult with their own legal and compliance counsels to obtain guidance and direction with respect to any issue or question.

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Perspectives

Q2 2019

Much ado about nothing?

Perhaps unlike the profound choice confronting Hamlet on whether to go on with life, the question of whether the updated model law should include explicit versus implicit best interest requirements may be the proverbial distinction without a difference. There are legal and practical reasons why the fight at the NAIC over the best interest label may be much ado about nothing and indeed might serve only to underscore reasons why we oppose any change to the model suitability regulation that may head inexorably towards a reincarnated Department of Labor fiduciary rule.

We question why the need for this disruptive and litigiously potent regulation when all agree suitability is working. Any creation of a uniform standard across the wide spectrum of financial service providers runs headlong into legitimate historical differences between insurance and investment providers, products, and services. We contend the annuity marketplace is vibrant, evidence of harm to consumers is dubious, and danger of unintended consequences from tampering with long established regulatory standards is high.

Academic debate Most industry trade groups surprisingly endorse the work of the NAIC working group, while a handful of others have tried to tap the brakes. Most recently groups are debating whether the NAIC should use the words “best interest” or stop short of using those actual words while still adopting equivalent standards. We see the debate as mostly academic and the NAIC draft proposal will be interpreted as “best interest” regardless of whether that term is used or not.

Since the rule calls for placing consumer interests ahead of agent interests, that unto itself will be interpreted as best interest, for there is no sliding scale of interests between agents and consumers and thus putting client interests first is dictating that agents adhere to a quasi-fiduciary standard. Beyond that, the proposed rule uses other loaded phrases and lingo inextricably tied to best interest, such as a requirement for agents to “act with reasonable diligence, care, skill, and prudence” and make various disclosures including material conflicts of interest. And to the extent there is doubt, the record being compiled during deliberations over adoption of the regulation provides ample ammunition that this regulation is for the purpose of imposing a best interest or equivalent standard upon insurance agents.

Turning insurance agents into quasi-fiduciaries We are steadfast in our view that the NAIC should refrain from modifying the model suitability regulation because a best interest standard, whether explicit or implicit, will inevitably turn insurance agents into quasi-fiduciaries which is exactly what industry worked so hard to defeat under a deeply flawed and now-discredited DOL fiduciary rule.

The NAIC proposal, no matter how well intentioned, is simply a warmed-over version of the DOL rule that will lead to overly conservative financial decisions, reduced availability of products, costly lawsuits, and potential reversal of otherwise sound transactions. For more on why “not to best,” and our alternative proposal, visit www.fixedannuitychoice.com.

Chris Orestis With over 23-years in insurance and long-term care industries, Chris Orestis is Executive Vice President of GWG Holdings, and a nationally known senior care advocate, as well as expert on life settlements and long-term care issues. He is a former DC lobbyist, industry speaker, and author. Contact Chris at corestis@gwglife.com.

Millions of seniors every year abandon life insurance policies without understanding it is an asset that has considerable secondary market value. On an annual basis, there is over $200 billion of in-force death benefit owned by seniors who would likely qualify to settle their policy in the secondary market. As many as 9 out of 10 universal life policies are in danger of being lapsed or surrendered, and the abandonment rate for term policies is also quite high.

Seniors are prone to throwing away one of the most valuable assets they own because they don’t realize how the secondary market value could help them address the unique financial challenges of retirement and health care brought on by aging.

These challenges are a subject too often ignored until it’s too late. The challenge for advisors is, how to help someone use insurance-based solutions when they are an automatic decline because of their age and health? Well, for millions of seniors the answer can be found in an existing life insurance policy.

Life settlements has evolved over the last decade into a well-regulated, mainstream financial tool for seniors. More advisors are coming to realize the important role this transaction can play for their clients in circumstances where financial need intersects with advancing age and declining health. One of the best ways to find clients who could benefit most from this solution comes from mining your existing book of clients and aging policies. By engaging in a systematic policy review process, you will find unrealized gold before you receive lapse or surrender notices.

Who are ideal policy review candidates?

Senior clients in declining health who are looking for financial help with retirement and LTC costs Policies in immediate danger of lapse or surrender and may be abandoned if action isn’t taken Policies without critical illness or LTC conversion riders Underperforming UL policies Aging Term life policies reaching conversion deadlines LTCi policy owners on claim By identifying which policies could be eligible for a settlement, you will rescue policies before they are abandoned. This process creates financial solutions for your clients from policies that have in-force for years. The policy review process then continues as an ongoing lapse-prevention business practice, building an ongoing revenue stream and new profit center out of old business.

Policy review value chain Value for IMO: Deliver a no-cost business process to BGA’s that helps generate recurring revenue and agent loyalty.

Value for BGA: Deliver a no-cost business process to agents that will analyze and track books of business on a monthly basis to prevent lapse or surrender of life policies, generate recurring revenue, and leads for new sales from old clients.

Value for Agent: Deliver new value to policy owners from an overlooked asset, create funding solutions for immediate

retirement and long-term care costs, keep renewal rates up by preventing policies from being lapsed or surrendered, expand new sales opportunities, and create new, recurring revenue streams.

Value for Policy Owner: Access the value of a policy before they would lapse or surrender allowing them to address retirement and long-term costs with an asset, they already own without spending any money.

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INDEXED UNIVERSAL LIFE

Understanding indexed life illustrations At what rate do we illustrate the cash value growth of indexed life insurance products?

This is a question that has plagued the life insurance industry since indexed universal life (IUL) was developed in January 1997. The National Association for Insurance Commissioners (NAIC) adopted the life insurance illustration model regulation two years before the development of IUL; it did not address how one should illustrate these unique products promising downside protection and upside potential. So, how should one illustrate indexed life?

Sheryl J. Moore is president & CEO of Wink, Inc. She has authored books and her articles are featured in dozens of industry trade publications. Neither Sheryl J. Moore, nor Wink, Inc. sell or endorse any financial services products. She can be reached at sjm@indexedrockstar.com.

History Insurance companies did their best to interpret their responsibilities, as it relates to the illustration regulations. As a result of the gap in guidance with the existing NAIC’s life insurance illustration model regulation, insurance companies developed a method for determining illustrated rates on indexed life themselves. They used their own discretion for illustrating “reasonable” expectations for non-guaranteed current values on indexed products for nearly 19 years. The most obvious problem was that there was no uniformity in companies being given their own discretion to determine illustrated rate lookback periods. At one time, there were ten different methods that insurance companies used, in determining the rate at which IUL illustrations should be run! The more important matter, however, was that there were IULs being illustrated at rates in excess of 10%. Given that Variable UL was being illustrated at a rate of 8% or less, the industry called for reforms.

Eventually, the American Council of Life Insurers (ACLI) stepped-in and attempted to obtain consensus in the life insurance industry on the matter of indexed life illustrated rates. The work done with the ACLI was the basis for the NAIC’s Actuarial Guideline 49 (AG49) regulation, which provides guidance on indexed life illustrated rates. There were initially two phases of AG49: the first leg addressed maximum illustrated rates in September of 2015, and the second addressed loan rates in March 2016.

To simplify matters — under AG49, the maximum illustrated rate for any indexed life indexed crediting strategy cannot exceed a historical lookback rate of the product’s S&P 500 annual point-to-point strategy, assuming 100% participation rate, with a cap but no spread rate, and a floor of 0.00%. The lookback rate is determined by averaging the annualized rates from all the 25-year rolling periods over the past 65 years of S&P 500 index returns. It is important to note here that two insurance companies with different S&P 500 annual point-to-point caps will calculate different maximum illustrated rates. More on that later…

Ultimately, AG49 reduced the maximum rate at which indexed life was illustrating a mere 0.95%.

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Perspectives

Q2 2019

An oversight in the regulation There were loopholes with the standards set by AG49. In May 2015 the indexed life market was marked by the addition of the very first “buy-up caps” in the industry. Simply stated, “buyup caps” gave indexed product purchasers the ability to have higher caps, in exchange for an annual account value charge. Effectively, this gave the insurance company the opportunity to subsidize their options budget. So, where an IUL purchaser may normally have a 12% cap, a buy-up cap may provide the option for a 15% cap, in exchange for an annual fee of 1%. Would the client receive 15%? Maybe. Maybe not. Would they experience an additional charge of 1% each year? Absolutely. This innovation gave insurance companies the opportunity to increase their illustrated rates under AG49. It also resulted in insurance companies charging the policyholder as much as 6% annually, just for higher caps (and therefore illustrated values).

Product development is ahead of regulation Yet again, product development was ahead of regulation with AG49. The month before the first phase of AG49 was instituted, an insurance company introduced a “multiplier” on their IUL, which multiplied any indexed interest earned by [10%]. While this was not reflected in the “illustrated rate,” of the illustration, the non-guaranteed/current values of the illustration took the multiplier into effect. So, although the illustrated rate may be [6%], the cash values may be reflecting a rate of [9.3%] if there is a [50%] multiplier on the policy (6% x 150% = 9%). Most salespeople don’t understand this, but more worrisome is that most distributors don’t either.

Many multipliers now have an annual account value charge for the feature. This has resulted in insurance companies charging the policyholder as much as 7.50% annually, just for the multiplier alone.

And this is all in addition to the charges for the life insurance. Typically, indexed life charges are 10% – 20% of the premiums paid on a maximum non-MEC (Modified Endowment Contract) cash accumulation solve. Take those charges, and add-in any buy-up cap charges and multiplier charges, and what do you get?

It is important to remember that we are discussing non-guaranteed/current values on an illustration (or what I call “best case scenario”). It behooves us all to remember that some insurance companies have actually increased their insurance charges on inforce blocks of universal life policies. It is also relevant that insurance companies have not been afraid to reduce their caps/participation rates, or increase their spread rates, on inforce indexed life business. Could the annual fees for buy-up caps increase? You bet. Could the caps afforded through the buy-up options go down in years 2+? Yep. Could multipliers be reduced, once the policy is inforce? Without a doubt. Could those inforce charges increase? You betcha.

Indexed life is a fabulous product. It provides an invaluable ability for the purchaser to earn more than the paltry 3.56% average rate being credited on traditional UL today, while still protecting them from market risk. However, it has never been more important that the advisor/agent selling indexed life understand what they are putting in-front of their client.

What you see is not what you get! Prepare your agents, so that they can be educated on what they are presenting to their clients.

Today, the charges on IUL are as much as 121% of the premiums paid, depending on the company and product.

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LIFE LESSONS

Life lessons — Don’t take it personally The best advisors I know are passionate about this business. They have a deep passion for helping people understand the importance of being protected with a sound financial plan, including life insurance at its foundation. And, the best seems to feel a calling to protect as many people as possible.

But there’s a fine line between being passionate and feeling personally responsible. And feeling responsible for what is ultimately the client’s decision can sometimes derail the advisor’s efforts.

No matter how good you are with understanding a prospect’s needs, and building a solid plan, some people simply will not hear what you have to say.

Charles K. Hirsch, CLU Chuck Hirsch, CLU, is the former editor and publisher of Life Insurance Selling magazine. He continues to contribute to insurance industry publications, in addition to providing consulting and marketing services through his firm, Hirsch Communications Consulting, LLC. He can be reached at Charles.k.Hirsch@gmail.com.

The one that got away Think about your most frustrating case. You know the one. Remember how excited you were when you met the prospect and how things seemed to click right away?

Then as you got to know them and understand their situation, it became clearer they had significant risks and real needs. You enthusiastically built a bullet-proof plan, only to have it fall flat in presentation. The prospect never purchased the plan or anything else from you. And, that same prospect today has the same risks and problems that your plan could have solved.

If you have a case like that, you’re not alone. Unfortunately, some advisors end up blaming themselves and ultimately taking personal responsibility for what was the prospect’s decision.

Cutting across cultural grain There is no way to solve every problem for every client or prospect. Quite frankly, no matter how good you are with understanding a prospect’s needs, and building a solid plan, some people simply will not hear what you have to say.

Another harsh reality is that much of our culture fights against you. Today people are encouraged to believe strongly in themselves, and in doing what makes the most sense for themselves. Buying life insurance purely for the good of someone else — even if that someone is a family member — is an act that often cuts against the cultural grain. Even in some areas of the financial world, people frequently hear that life insurance — particularly whole life — is a bad investment. In reality, nothing is further from the truth. But if someone has that mindset, good luck overcoming it.

Five steps for moving forward: 1 Have confidence that your story is worth telling. There is no financial product that accomplishes what life insurance does, so it is important to keep telling and retelling your story.

2 Know your efforts are not wasted. Think about your successes and what a difference you’ve made for your clients.

3 Learn from what didn’t work. When rejection comes, don’t ignore it. Look at what you can do differently the next time to create a better outcome.

4 Accept that there are some people who aren’t ever going to buy, nor take any advice you offer.

5 Know the time and effort you’ve put in is never a waste. Perhaps your discussion has planted a seed, and perhaps you or another advisor will harvest that seed later. You never know.

Long-term care protection may be their best asset We can help you provide peace of mind for your clients by protecting them from the impact of a long-term care event. Our Care Solutions assetbased long-term care products offer lifetime benefits, so your clients may be protected as long as they need*.

Perspectives

Q2 2019

*Lifetime coverage is optional and at an additional cost.

Call 1-866-986-9439 or visit www.oneamerica.com/nailba to learn more.

No doubt, when faced with temporary setbacks, it’s hard not to beat yourself up.

Yet, don’t get caught in that trap. Learn from failure and fuel your passion to do even better the next time.

But don’t take it personally.

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Note: Products issued and underwritten

by The State Life Insurance Company® (State Life), Indianapolis, IN, a OneAmerica company that offers the Care Solutions product suite. Not available in all states or may vary by state.

Life Insurance | Retirement | Employee Benefits

© 2019 OneAmerica Financial Partners, Inc. All rights reserved.

I-30239 04/15/19

5

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This ad is intended for Financial Professional Use Only. If you are not a Financial Professional, please visit our public website at www.PacificLife.com.

Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.

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

Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance products and their guarantees, including optional benefits and any crediting rates, are backed by the financial strength and claims-paying ability of the issuing insurance company. Look to the strength of the life insurance company with regard to such guarantees as these guarantees are not backed by the broker-dealer, insurance agency, or their affiliates from which products are purchased.

Neither these entities nor their representatives make any representation or assurance regarding the claims-paying ability of the life insurance company.

This material may not be used in New York.

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

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Contact Pacific Life - Lynchburg to learn more: (844) 238-4872 Option 3 or LynInternalSales@PacificLife.com