One of the major fears clients face is outliving their income. With the Palladium® Single Premium Immediate Annuity (SPIA) your client’s lump sum can be converted into a steady stream of annuity payments, providing a guaranteed income for as long as it’s needed.
Partial withdrawals, full surrender option, and commuted value are not available in MN, NE, NJ, OR, and WA. The interest rate used to determine the death benefit’s commuted value will vary by state. A commutation charge will also be assessed on partial withdrawals and full surrenders of a commuted value. All withdrawal and surrender amounts are determined as the present value of future Annuity Payments using our current SPIA pricing rate plus 0.50%. The policies are not FDIC insured, not a deposit or obligation of the bank, and subject to investment risk, including loss of principle. Any partial surrender must be for at least $2,000, and a commutation charge is assessed based on the following schedule:
It’s not often you read the word “terrifying” in relation to financial matters. So, I was more than a bit surprised to see that term turn up in the 2023 Schroders U.S. Retirement Survey.
The idea of not having a regular paycheck in retirement is not only a matter of concern for 57% of non-retired Americans, but it is actually “terrifying” for another 23%, the survey noted.
Part of the reason so many Americans find that prospect terrifying is their lack of confidence in the Social Security system. Even though many are aware that they will qualify for the highest Social Security payment if they wait until age 70 to start collecting payments, many are starting that process in their mid-tolate 60s — or maybe even as early as 62 — because they want to collect something from the government while the program is still viable.
In fact, according to the study, only 10% of non-retired Americans will wait until 70 to receive their maximum Social Security benefit payments.
About 72% of non-retired investors and 95% of non-retired, ages 60-65, are aware that waiting longer earns them higher payments. So that makes the decision to collect early even more startling.
Here are the reasons those surveyed said they would collect early:
» 44% said they were concerned
Social Security may run out of money or stop making payments.
» 36% said they will need the money.
» 34% said it was their money, and they wanted access to it as soon as possible.
» 13% said they were advised to take it earlier than age 70.
The major problem with this crisis in confidence many Americans have in the Social Security system is that they’re taking action that will ensure they will be living below the best financial position their investment in Social Security should be providing.
A strong ray of good news in the study is that those who have a financial advisor and a retirement plan report they are doing better in retirement than those who don’t.
This reaffirms how important having an advisor is to the many millions of Americans who are nearing retirement. The added complexities of the changing market conditions, the rise of annuities along with interest rates, and the challenges of funding long-term care all make having a strong financial advisor even more important today.
Recognizing the crisis of confidence many Americans have in the Social Security system and helping create a retirement plan they have confidence in is
insurance is as much a part of the home ownership package as intermittent repair bills and paying local taxes.
Maybe not anymore, however.
The Wall Street Journal recently reported that with drastic increases in some home insurance premiums, many are increasingly forgoing home insurance. Why? Gambling that the likelihood of a disaster isn’t high enough to justify the cost of a policy.
With the rise in flood and fire damage, as well as damage from other natural disasters, premiums — especially in significantly affected locations — are rising rapidly. With the recent occurrence of hurricanes on the West Coast and the report of five tornadoes in one day throughout New England, there’s no denying that many areas are feeling the effects of climate change.
This, of course, is having an enormous impact on insurance rates. Consumers facing higher premiums generally fall into two camps: the wealthy, who can essentially self-insure, and the not-so-wealthy who often are feeling knock-on effects, such as the inability to pay other bills when their home insurance skyrockets. Some have said, for example, this has affected their ability to make mortgage payments.
crucial. Especially since the fear factor seems to be at an all-time high for preretirees. More than ever, advisors have a critical role to play.
While home ownership has always been part of the American Dream, home insurance has been an assumed sidecar to that dream. When we buy a house, home
So while the effects of extreme weather have been battering the insurance industry for a while now, the dip in home insurance is possibly a more unexpected outcome that will pose increased challenges as the weather crises worsen.
John Forcucci Editor-in-chief10 Building success on a history of experience
Eric Henderson draws on his decades in the annuity business to guide Nationwide’s annuity business segment. Henderson discusses how to establish guaranteed income streams and create a path to a secure retirement.
By Susan Rupe
Employee benefits are evolving to serve a changing workforce.
20 Benefits and the Bow Tie Guy
By Susan Rupe
Daryl
Perryshows that insurance and employee benefits don’t have to be boring.
LIFE
26 VUL is a Swiss Army knife for small-business owners
By Hector MartinezBusiness leaders can leverage their life insurance policies to access capital in tough economic climates, gaining a key lifeline for their business.
30 How annuities optimize retirement income
By Susan RupeResearch shows how adding guaranteed income to a retirement plan can help retirees generate adequate income from their assets.
34 HPAs: The new way to help employees maintain their physical and financial health
By Chris LabrecqueHelp your employer clients offer their workers a new benefit to help them cover out-of-pocket costs. ADVISORNEWS
38 When clients seek Social Security advice
By Komal MotwaniClients find Social Security confusing. Here are some case studies that can help them make the best decisions on maximizing benefits.
40 Blockchain Jeopardy!: A high-stakes game for the insurance industry
By Sue Kuraja
It can bring trust, efficiency, and speed that are essential for the evolution of the insurance industry. What is the final question?
e-mail editor@insurancenewsnet.com, send your letter to 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011, fax 866.381.8630 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 125, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.comor call 717.441.9357, Ext. 125, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 150 Corporate Center Drive, Suite 200, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or
Canadian wildfires polluted New York City air for days. Maui wildfire deaths are well over 100 and rising. Phoenix recorded 31 straight days of 110-degree tempera tures, smashing the 49-year-old record of 18. Climate emergencies are happening in places they rarely ever happened before. And it’s no coincidence, said Peter Schlosser, vice president and vice provost of global futures and director, Julie Ann Wrigley Global Futures Laboratory at Arizona State University.
Schlosser presented climate data, findings and predictions during a meeting of the National Association of Insurance Commissioners’ Climate and Resiliency Task Force.
Climate change events are costing insurers heavy losses in many states, leading some to pull out of specific markets. There is a mounting concern about whether insurance will remain available as climate-related events grow more intense
In a meeting of the Treasury Department’s Financial Stability Oversight Council, its chairperson, Treasury Secretary Janet Yellen, warned of a “protection gap” for Americans trying to buy insurance against property losses from climate-related disasters, and said only 60% of the $165 billion in economic losses from extreme weather were covered by insurance last year.
More than a quarter of Americans under age 35 say they would be “envious” and “motivated” by someone they know committing insurance fraud.
The finding came from a new study by Verisk and the Coalition Against Insurance Fraud. Likewise, 23% say they would submit a false claim to their vehicle insurer for previous damage after an accident. Founded in 1993, the coalition produces periodic studies on the state of insurance fraud. Insurance fraud costs the U.S. economy a record $308.6 billion annually, the coalition found in a 2022 study.
One big issue is that younger people do not feel fiscally connected to insurance fraud. The 2022 coalition study, which examined all types of insurance products, found that the rising price of fraud penalizes every living American an equivalent of $932 a year, or $3,750 for the average U.S. family.
Young people are more likely to give up higher returns on investments to invest in ways that support causes they care about, new data shows. Nearly twothirds of Generation Z investors want to allocate their portfolios in a way that supports causes they care about, according to a U.S. Bank survey. That’s compared with 59% of millennials, 45% of Gen Xers and 30% of baby boomers.
Values-based investing is so important to young adults that they are willing to give up returns, the survey showed. More than fourfifths of Gen Z and millennials would be willing to underperform the S&P 500 10year average return of 12% to ensure that the companies where they’ve invested align with their belief systems. Only
73% of Gen Xers and 65% of boomers said the same.
This behavior can be connected to a need among young people to signal their values, one behavioral scientist said. “Investing can provide another way for young adults to say, ‘This is the kind of person that I am, and now I get to act in a way that’s in line with my identity,’” said Julie O’Brien, the head of behavioral science at U.S. Bank.
Wells Fargo paid back $40 million to almost 11,000 customers who for years were overcharged on fees for investment advice, the Securities and Exchange Commission reported. The bank also agreed to pay a $35 million civil penalty to settle SEC charges. Wells Fargo neither admitted nor denied the allegations.
The SEC said some Wells Fargo financial advisors agreed to reduce some clients’ standard advisory fees at the time their accounts were opened. However, internal systems failed to account for those reduced advisory fees in some cases. As a result, Wells Fargo overcharged 10,945 accounts — which were opened prior to 2014 — for many years, through the end of last December.
Devastating storms, which now seem to be the norm rather than the exception, are expected to continue to grow in intensity and severity.
— Marcus Winter, Munich Reinsurance America
Insurers paid a record $275 billion in natural catastrophe losses over the past three years, the highest ever three-year total for U.S. insurers.
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Regulators are busy figuring out what to do about artificial intelligence. Financial advisors across the industry reported many of their retiree clients were forced into retirement. Minnesota has been studying the long-term care issue for several years.
insurance regulators added a principle encouraging industry participants to take proactive steps to avoid proxy discrimination against protected classes when using AI platforms.
There was hope that the NAIC would use the guiding principles as a starting point for strong AI regulation, several speakers said during a recent Innovation, Cybersecurity, and Technology Committee meeting.
Peter Kochenburger is a visiting professor of law at Southern University Law Center. He described the AI principles as “a far-reaching and, frankly, exciting document” meant to lay out the framework for how further NAIC work would proceed in various committees. That promise is “largely unfulfilled” by the new model bulletin, he added.
by John HiltonState regulators know that artificial intelligence brings significant potential impacts to the insurance world. But coming up with appropriate regulations for AI is proving to be a lengthy process.
Regulators tiptoed closer to real AI regulation with the July release of the Model Bulletin on the Use of Algorithms, Predictive Models, and Artificial Intelligence Systems by Insurers.
But that effort is seemingly not making anyone happy.
The bulletin is not a model law or a regulation. It is intended to “guide insurers to employ AI consistent with existing market conduct, corporate governance, and unfair and deceptive trade practice laws,” the law firm Locke Lord explained.
Meanwhile, the National Association of Insurance Commissioners met last
week in Seattle. AI featured prominently in several different working group discussions. Regulators released a new batch of AI survey data, with 70% of the reporting homeowners’ insurers indicating that they “currently use, plan to use, or plan to explore using” AI.
Insurers are intrigued with the many uses of AI in all aspects of operations. But regulators are struggling with how to regulate the sweeping technology.
In August 2020, the NAIC adopted guiding principles on artificial intelligence.
The NAIC guiding principles are based on the Organization for Economic Co-operation and Development’s AI principles, which have been adopted by 42 countries, including the United States. After robust discussions, state
“The document does, frankly, very little other than to flesh out and specify what is already in the principles and misses opportunities to start to set not simply expectations but guidance and documentation of what insurers need to do,” Kochenburger said.
He further criticized the document for soft language in important areas. Consumer advocates are concerned by the potential for rampant “proxy discrimination” with AI-fueled use of big data. Read
Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on X @INNJohnH.
[Editor’s Note: These are some of the major stories to which we are devoting ongoing coverage at INN. Visit our website to sign up for our free newsletters at insurancenewsnet.com/subscribe and don’t miss another important story!]
Financial advisors across the industry reported that 40% of their retiree clients were forced into retirement, according to a recent survey by Edward Jones.
Almost all the advisors who were surveyed (97%) agreed that retirement involves more surprises and challenges
than their clients expected, while an almos equal number (98%) agreed that preparation, flexibility, and willingness to adapt are key to a successful retirement.
Advisors also said that cost of living increases (29%), financial assistance for family or friends (26%), and the
declining value of investments (26%) are the most impactful financial shocks for retirees. And in preparing for retirement financially, clients struggle the most with developing an income withdrawal strategy (35%) and determining the optimal timing for claiming Social Security benefits (35%).
“Early retirement can disrupt the financial stability of clients,” said Jennifer Schoonmaker-Dasch, a financial advisor at Edward Jones, in discussing the impact that being forced into retirement early can have on clients.
In certain situations, their savings will need to be stretched further and may involve completely revising their aspirational goals for when they retire. These include travel plans and vacations.
“Financial advisors can step in to provide clear recommendations and help steer their clients toward accomplishing their financial goals,” she said.
Read the full story online: https://bit.ly/forced23
Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@innfeedback.com.
A Medicare companion product might be a better answer than taxing residents to underwrite a public long-term care benefit, a consultant told state insurance regulators.
Minnesota is studying ideas for residents to get LTC coverage. One significant idea is to add home care benefits to a Medicare Supplement (Medigap) insurance or Medicare Advantage plan.
“Essentially you hybridize a Medicare Advantage product, or a Medicare Supplement product, with long-term care insurance or short-term care insurance, or something meaningful to allow these families and their loved ones to actually have coordinated care,” explained Steve Schoonveld, managing director of Global Insurance Services at FTI Consulting.
FTI is working with Minnesota officials
on its Own Your Future long-term care educational campaign. Schoonveld presented some initial findings recently at a Long-Term Care Actuarial Working Group meeting.
The working group met at the National Association of Insurance Commissioner’s Summer Meeting in Seattle. While the ideas Schoonveld presented have been kicked around for a few years, the Minnesota group is nearing the end of its work.
One additional advantage of building an LTC component off of Medicare is it can be done fast, Schoonveld said.
“I could file this product right now in all of your states for the most part,” he told regulators. “With the loose tie to the Medicare Advantage or the Medicare Supplement plan, a person has no regulatory changes whatsoever.”
It opens the door to other LTC insurance solutions as well, Schoonveld added.
Read the full story online: https://bit.ly/medicareltc23
InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com.
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ERIC HENDERSON draws on his decades in the annuity business to guide Nationwide’s annuity business segment. An interview with Publisher Paul Feldman
Eric Henderson, president of Nationwide Financial’s annuity business segment, has seen the annuity business grow and change since 1985.
He began his career at Nationwide as an actuarial assistant in 1985 and spent much of his career as an actuary. He climbed the ladder at Nationwide and now is responsible for the financial health and strategic direction of Nationwide’s individual annuity business, which represents about $100 billion in assets.
In this interview with publisher Paul Feldman, Henderson discusses how to establish guaranteed income streams and create a path to a secure retirement.
Paul Feldman: You’ve had an incredible career with Nationwide, having worn many different hats during that time. Tell me a little bit about your career at Nationwide and some of the biggest changes you’ve seen.
Eric Henderson: I started with Nationwide in 1985. That’s a long time, and I certainly have seen a lot. I came to Nationwide out of college and went into their actuarial program. I spent about a year in the life insurance business and then moved into the annuity business, and I’ve been in the annuity business ever since.
At the time I was an actuary with annuities, I was one of two people in the annuity actuarial department — now there are probably 50 or 60 actuaries in that department. But that was very helpful to
annuity business for a couple of years until I was selected to lead the annuity business in 2007 — right before the financial crisis. From 2012 until 2019, I ran the life insurance business, but for most of my career at Nationwide, I’ve been leading the annuity business.
Feldman: Tell me about the path that Nationwide has taken over the years. You’ve certainly seen a lot of growth and changes.
Henderson: People think of Nationwide as a property/casualty company. That was our roots. We started off there — 2026 will be our 100-year anniversary. And we used to be Nationwide Insurance
None of the company is public right now. So we can say, “OK, I have this financial discipline mindset that public companies need to have, but I have this long-term mindset that mutual companies can have.”
I think that has allowed Nationwide Financial to blossom and grow over the past two decades, so that now we have a strong property/casualty company and a strong financial services company as well. Financial services is the growth engine and the profit engine of the enterprise. You might not think that if you only look at our TV ads, which are more consumer focused.
We’ve had a great run in life insurance. I ran Nationwide’s life insurance segment
me because I got to experience everything. That gave me a good understanding of how the annuity business works — the pricing, underlying financials, things like that.
Then I moved into the product development area and ran that for a time. I served as the chief financial officer of the
agents. And so, we were direct-to-consumer. Whereas, on the financial side of things, we’re really working through intermediaries.
And as you might remember, Nationwide took the financial services part of the company and spun off a little less than 50% of it to go public back in 1997. That was helpful for us because
from 2012 to 2019. And in 2012, we were the 33rd-largest life insurance writer. In 2012, I brought the teams together and asked, “What do we think about where we can grow?” And one person said, “Why don’t we see if we can be in the top 10 by 2020?” That would have been within eight years. Almost everybody in the room said, “Well, that’s not possible. You
the beauty of being a mutual company is that you get to look at the long term. You don’t have to look at those quarterly earnings. Being public for the handful of years that we were public helped us do a much better job in that financial discipline mindset.
can’t go from 33rd to 10th in eight years.” And two years later, we were number 10.
Anytime you have that type of success, it’s a combination of skill and luck. There’s a lot of stuff that we did that enabled us to do that. I think today we’re No. 6 in life insurance. We got to No. 5 in annuities
It’s absolutely a great time for annuities. We often forget that only three years ago, we were talking about whether the 10-year Treasury would go below zero. Now we’re looking at short-term rates above 5%.Nationwide is known for its many TV commercials, including several featuring country music star Brad Paisley.
in the first quarter of 2023. We’re the No. 1 writer of 457 public sector pensions. We’re the top writer of 401(k)s. All these things have grown in the past number of years because of the culture of the mutual company with the experience of being a public company for a period of time. I think that is something that has been a lot of fun to be a part of, and the culture of working together across life annuity and retirement has been fun as well.
Feldman: So, you came into the annuity space during a tumultuous time, and right now is a tumultuous time, but also the best time for annuities. How do you see the market right now?
Henderson: It’s absolutely a great time for annuities. And when you think about where we are today in 2023 and then think about where we were three years ago — we often forget that only three years ago, we were talking about whether the 10-year Treasury would go below zero. Now we’re looking at short-term rates above 5%. So, it has been a tumultuous time.
Equity markets have been fairly good recently, although they have been fairly volatile as well. We have seen a major shift in terms of traditional fixed annuities, which have been the biggest benefactor of the big increase in interest rates. These are simple products that compete with certificates of deposit in some sense. That part of the business has really taken off.
We’ve sold a lot of annuities and had to do some pivoting with the big surge that happened last year.
But we remain extremely bullish on the fixed indexed business, on the variable business, the registered index-linked business. One thing that’s important for us is to have that diversified portfolio, because when you have these tumultuous times, being able to move back and forth between different products is important.
Diversification is important from a new business standpoint. Products fall in and out of favor in terms of what’s sold. But diversification also is important from a risk management standpoint. Having fixed annuity business on your books versus variable annuity with lifetime income guarantees — very, very different risk profiles. In terms of how you manage the risk of the business, which is important to us, diversification is important there as well.
Feldman: What has affected your product design in the short term, and what is impacting where you’re going in the future?
Henderson: From a product design standpoint, it’s more about tweaks. One of the things that happened a few years ago was that we moved toward shorter and shorter kinds of guarantees.
If you think about the fixed indexed space 15 or 20 years ago, those were long 15-, 20-year surrender products, moved to 10 years, moved to seven years. Now you have some products with five-year surrender periods and some with three years. Some of that stuff just changes, and you must adjust to that.
The other thing in the fixed indexed space is the indices. Some firms just straight commoditized indices like the S&P 500. Now there’s a more custom index that will add some nuances to it. And neither one’s right or wrong; they just provide different value propositions.
As interest rates move up, it allows you to do different things. When interest rates were really low, you had a lot less flexibility. With higher rates, you have more options in terms of how you hedge and what benefits you give them and how you split those benefits. I think that’s the biggest thing in terms of product design as the markets change.
Feldman: What is your distribution model right now?
Henderson: Our strategy involves diversified products and also diversified distribution. We started out as a variable annuity company with independent brokers. We then moved into the wirehouse space. Then we moved into the bank space over a number of years. About 10 years ago, I saw the fixed indexed annuity space growing and changing back from something that I previously thought was not a good customer value, to becoming a much better customer value. And at that point I said, “We could build this from scratch, and it would take a lot of time and a lot of money, but instead, how about we partner with somebody?” At that point, we were not in the independent marketing organization space, and we decided to partner with Annexus to do that.
They knew the space well, they knew product, they knew marketing, they had relationships. So Nationwide and Annexus spent a couple years talking in depth, and then we pulled that trigger and decided to move forward with that. That got us into a completely different space, the independent marketing organization channel where we are doing tremendously well right now. Then, as you’re aware, a number of years ago we bought Jefferson National, which is really the leader in the registered investment advisory space, to
really get into that space as well. So now we’re pretty much across the board in any of the different types of broker-dealers, within the IMOs, within the RIAs. And all of those channels are important to us.
Feldman: That diversification strategy makes a lot of sense. Tell me a bit more about how RIAs fit into that.
Henderson: The RIA space is one that’s really interesting to me because outside of annuities, that space is far and away the fastest growing.
You’re getting more and more RIAs. To me, this is an industry issue of how do you get folks out of the wealth accumulation mindset and into the income mindset? How often do you ask, “What’s the present value of my income?” You never think that. You’re just thinking, “How much do I get paid each year?”
And you get to retirement and suddenly you have this big lump sum. What does that even mean? Most people don’t really understand it. If I have $500,000, is that a little? Is it a lot? It sounds like a lot, but is it going to last for 20, 30, 40 years? Just like you’re thinking about an annual income while you’re working, you should think about an annual income in retirement as well. And that’s what annuities do, and that’s really the value.
I think it’s hard for folks who have been focused solely on accumulation and
wealth building to get into this income space. Now, a lot of advisors are good at it, and they do much better financial planning and focus on that as well. But I think the industry must do a better job of asking how we build a portfolio that’s going to give people that income.
Feldman: How do we as an industry communicate that better? I think the RIAs are a little bit different because, as you mentioned, it’s about accumulation and not decumulation. Often, retirees are not touching their nest egg, and they’re not living the life that they should be or could be.
Henderson: You’re exactly right. And there are good RIAs that do it. In every channel, there are good advisors who do that. You could get into the situation of the money not lasting. But then the reverse situation, which you alluded to, is that you don’t spend as much money as you could because you’re afraid that your money might not last.
I think the thing that we’ve done, that others in the industry have done, is to try to get people to focus on core or essential expenses versus other expenses. You have to pay for your food, you have to pay for housing, you have to pay for your medical expenses. There are certain things you must have. And there are other things that are nice to have. Vacations,
entertainment or things like that.
Whatever’s truly essential, you need to cover that with some sort of guaranteed income, whether that’s Social Security, a pension or an annuity. Those are the three ways you can get some sort of guaranteed income.
One of the ways that could help is in the 401(k) space, the retirement plan space, because now we’re seeing more and more of these guarantees making their way into retirement plans.
Feldman: Are there some regulations that are helping in this regard? What can we do as an industry to really push it further?
Henderson: I think the SECURE Act and SECURE 2.0 are steps in the right direction. Another is the auto enrollment in 401(k)s. So that doesn’t force you to enroll, but the default is that you enroll. You can choose not to enroll. And then, auto escalation. So, if you start at 3% of your salary, they’re going to bump it up to 4% or 5% or 6% over time. Again, you can opt out of it. It’s not a mandate, but it’s an encouragement. It’s a way to kind of say, “This is the default.”
I think it would be great if the government could do something like that as well in terms of income. There should be some sort of default such as, “Hey, if you don’t choose otherwise, you’re going to have a portion of your 401(k) that has some sort of an income guarantee on there. You can always choose to opt out of that if you want to.” But I think you can get people thinking, “This is the right thing to do.”
And a lot of employees might not have a financial advisor. They may not have enough money to attract a good financial advisor, so how do you help them? From a government standpoint, how do you encourage people? That would be one way to do it, to put some defaults in there where some portion of your 401(k) should be defaulted to some sort of a guaranteed income stream.
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I think it’s hard for folks who have been focused solely on accumulation and wealth building to get into this income space ...
I think the industry must do a better job of asking how we build a portfolio that’s going to give people that income.
In an ever-evolving industry, insurance carriers are familiar with the value a third-party administrator can offer. But for some carriers, the typical TPA doesn’t address the new challenges they face.
LIDP partnered with Sutherland, a global digital-first business process as a service (BPaaS) provider, to introduce an innovative, comprehensive solution that addresses more than technology and operations. Digital tools and AI drive middle-office and back-office digitization, customer experience (CX), and provide clearer insight into the carrier business and growth.
Their unique approach empowers carriers to fast-track life insurance and annuity product launches, enhance distribution, and improve the customer experience.
We recently had a conversation with Kimberly Duke, CMO and VP of sales at LIDP, about the potential of this carrier solution.
The life insurance industry is at an inflection point, grappling with a significant talent shortage and the difficult task of overhauling core systems that drive business operations. Notably, carriers struggle to find employees who can straddle both the insurance and technology realms. And they are experiencing difficulty shifting legacy mindsets to a more future-oriented, digital perspective.
To solve these challenges, LIDP joined forces with Sutherland to offer a next-gen digital TPA solution.
Sutherland’s vision is to be the premier and preferred provider of digitally enabled services for the insurance industry and help carriers maximize their customer lifetime value and increase their competitive advantage. Over the past decade, Sutherland has invested in and built 144 digital solutions, enabling insurers with integrated digital capabilities and driving ease of doing business.
With this new vision for a digital TPA, carriers will have more clarity regarding their everyday business and the power to launch products and accelerate growth. With control in the hands of the carrier, they don’t have to rely on the TPA to configure products. But the TPA will be there if needed, keeping the environments and technology up to date and core back-office operations running smoothly.
Carriers facing resource losses need solutions to easily transition from legacy systems, without extensive staff retraining or seeking new talent. They aim to control their growth, be it in new products or sales channels, while TPAs manage technology and operations. This highlights a market gap: a
solution that merges technology and services without sidelining the carrier.
To work toward meeting that need, Sutherland partnered with LIDP’s Titanium as its platform of choice — an award-winning policy admin system known for its thousands of launch-ready products, ease of integration through APIs and enhanced ability to facilitate rapid changes.
The Titanium platform, underpinning this new TPA, is engineered to empower carriers with a ready-to-use robust alternative — with functionality previously unseen in the market — and the ability to design the optimal digital experience tailored to its unique needs.
This new approach to the TPA isn’t just about incorporating LIDP’s technology. Its effectiveness hinges on the partnership between Sutherland and LIDP, the latter with 44 years in the life insurance industry. Together, they offer tools and methods that reduce costs and enhance business agility.
LIDP’s deep life insurance expertise, reinforced by extensive research, identified key challenges faced by multiple carriers today, such as outdated legacy technology, a retiring workforce, and the need for comprehensive technological and operational overhauls.
In response, LIDP and Sutherland created a unique offering: a new vision for an insurance industry TPA that solves the resource gap and brings a modern technology core system to the table while also empowering the carrier.
This digital TPA solution is now emerging as a key tool to alleviate common carrier challenges. Its holistic approach — combining technology, operational expertise and advanced analytics tools — means carriers can easily plug-and-play this system into their infrastructure. The primary benefit is that it doesn’t require extensive personnel training or substantial infrastructure overhauls, thus removing the barriers to transformation.
One carrier customer, among the largest insurance companies in the U.S., found itself stuck, unable to launch products as quickly as needed because it had to wait on the TPA to configure them. This new TPA solution changed the game for the carrier.
With it, carriers gain the advantage of swift product launch timelines, unheard of with legacy systems. This ability to launch new, best-of-breed products in just two to six weeks, as opposed to six to 18 months, is revolutionary.
“In an industry where time is often the barrier to innovation, this solution drastically reduces it. Which means the days of being held back by legacy technology are over. Carriers can continue to grow and thrive without fear their
systems can’t handle new demands or won’t support new innovations,” said Duke.
Sutherland has the experience of establishing a direct-to-consumer channel and achieving growth through speed to market for new product offerings. With hundreds of licensed agents and complementing digital technology, Sutherland is a dedicated partner and trusted advisory for the policyholder.
The competitive edge brought about by speed to market, plus the ability to respond quickly to market changes and seize new opportunities, helps carriers better meet the needs of today’s consumer.
“Looking ahead, it’s clear that digital transformation is no longer optional for carriers; it’s a must for survival. And here’s the good news: Our digital TPA solution is designed to fuel this transformation,” said Duke.
However, in considering their path to digital transformation, carriers must understand that one size doesn’t fit all.
A digital TPA option, while powerful and comprehensive, might not be the best fit for everyone. For instance, carriers
processes. A digital TPA can accelerate this transformation by leveraging their experience and best practices, providing advanced digital capabilities coupled with the necessary operational expertise.
Finding product-market fit
As this innovative partnership revolutionizes the insurance landscape, it’s important to consider who stands to benefit the most from this new take on the TPA.
The solution is designed for life insurance carriers with an eye toward the future — those keen on maximizing their growth and delivering superior experiences to their customers while simultaneously streamlining costs.
It’s for carriers seeking more than just tech integration. It appeals to those looking for a strategic partnership, one that brings not only advanced technology but also unparalleled operational expertise.
With this solution, carriers have access to comprehensive services such as call center operations, print centers, digital engineering, analytics tools, AI and more. This fully rounds out the suite of products necessary for success for life insurance carriers.
Duke stated, “It truly is insurance-in-a-box, but it keeps the power with the carrier. We can configure a product, or you, the carrier, can. No longer do you need to depend on the TPA to complete growth initiatives. You decide what’s best for you.”
with a substantial IT department and operational capabilities may be well positioned to implement and integrate a new system like Titanium into their existing infrastructure. By leveraging their in-house IT, product development and actuarial teams, they can adapt the new system to their specific needs, oversee the implementation process, and maintain the system going forward without a TPA.
On the other hand, many insurance carriers find value in a digital TPA solution due to the sheer scale and complexity of their operations. The benefits are many.
• Scalability: Finding and retaining Life and Annuity operations professionals across the back office and contact center is a challenge for every insurer. Leveraging a TPA for operational bandwidth and experience helps eliminate that strain.
• Efficiency and cost reduction: Operational cost reductions are table stakes for today’s TPA offerings. Optimizing and reimagining how your business operates and interacts with your distribution partners and policyholders is where a digital TPA separates itself from its legacy TPA peers.
• Innovation: With deep partnerships with Google, Stanford University and Amazon, Sutherland is constantly looking at and testing emerging digital tools to continually evolve and improve service delivery. This allows them the flexibility to incorporate these concepts into the digital TPA ecosystem in a manageable way.
• Focus: By delegating operational and technological tasks to a digital TPA, large carriers can concentrate their resources on core competencies — product development, underwriting, risk management and customer relationships.
• Digital transformation: Large carriers often face challenges in digital transformation due to legacy systems and
Why does this matter? It’s about focus. By entrusting the tech and operational intricacies to seasoned experts, carriers can channel their resources toward what they do best: crafting top-tier products, honing their distribution strategies and refining their customer experience.
Empowering carriers for the digital future
“With our new technology, we ensure that carriers are up to date with the latest version of Titanium. Any enhancements made by the carrier or LIDP are thoroughly vetted through rigorous QA testing. This method guarantees a seamless upgrade and flawless integration of new products and enhancements into the base system,” Duke said.
She added, “Any life insurance carrier seeking to minimize costs while accelerating growth will find this type of TPA an ideal partner.
Carriers that aim to control their destiny and growth and are open to leveraging LIDP and Sutherland’s decades of expertise in life insurance and digital solutions will find they are in good hands. The future of insurance is digital, and with this robust TPA solution, carriers are well equipped to thrive in this new era.”
Learn more about this insurance-in-a-box TPA solution for carriers and schedule a free demo at www.LIDP.com.
Looking ahead, it’s clear that digital transformation is no longer optional for carriers; it’s a must for survival.
The American workforce has reached a generational tipping point. Millennials and Generation Z are taking over the workplace even as baby boomers remain on the job longer. The old ways of doing business no longer apply in the days of remote work and five generations in the workplace.
Workforce benefits are changing along with the workforce itself. Research shows that workers no longer are satisfied with their employers offering the traditional benefits of health, dental and vision insurance. Today’s workers are demanding benefits that address all areas of their well-being, including mental health and financial health.
When carriers take a fresh approach to benefits and brokers communicate those benefits effectively, the end result is giving employers tools to help them win the war for talent.
Flexible and holistic strategies are key for employers looking to meet the needs of a diverse workforce, according to the LIMRA-EY 2023 Workforce Benefits Study. The research found the following trends regarding benefits:
1. The generational tipping point. Although older workers are working longer, millennials and Generation Z now represent the majority of the workforce. Benefits plans and programs that today are designed primarily for baby boomers and Generation X must be modernized to meet a broader range of needs and preferences and delivered in a way that younger workers can relate to.
2. New working norms. Remote and hybrid models are here to stay, and the gig economy, which younger generations prefer, will continue to grow.
3. New expectations for benefits. Workers place a higher value on benefits, and they want more options. Nontraditional offerings that would have been afterthoughts a decade ago are now central to employers’ value proposition, especially given today’s intense competition for talent.
4. Technology-driven transformation. Workers want more digitalization, especially when it comes to benefits guidance and advice.
Employee benefits are evolving to serve a changing workforce.
LIMRA and EY developed the Wheel of Wellness, which is focused on five key dimensions of wellness:
1. Physical: Products and services to help employees stay healthy and physically fit (e.g., health insurance, dental insurance, gym memberships).
2. Mental: Offerings focused on mental and emotional strength and resilience (e.g., mental health benefits, employee assistance programs, meditation apps).
3. Financial: Offerings that promote economic security and resilience (e.g., life insurance, disability insurance, supplemental health insurance, retirement savings, student loan repayment).
4. Societal: Opportunities to contribute to the community (e.g., corporate volunteering programs, donation matching).
5. Professional: Resources and tools to support performance and career development (e.g., tuition assistance, training, mentoring).
“We created this Wheel of Wellness as a structure within which organizations, brokers and employers can think about their benefit packages based on the needs of the workforce,” said Patrick Leary, corporate vice president, workplace benefits research for LIMRA and LOMA.
Different generations in the workforce prioritize different dimensions of the Wheel of Wellness, Leary said the LIMRA-EY research showed.
“Older generations are putting more priority on physical wellness benefits — health insurance, for example,” he said. “Younger workers — Gen Z — are looking at more of a variety of benefits.”
Workers of all generations are interested in financial wellness benefits, Leary said, but interest in particular financial wellness benefits also varies by generation.
“We found that pre-retirees are more interested in retirement savings, life insurance, some of the more protection-oriented benefits. And younger workers are more interested in things such as student loan assistance or an emergency savings plan.”
As the workforce demands more benefits, brokers have a role to play by being
consultants to their employer clients, Leary said.
“It’s understanding and having those conversations with employers to determine their needs, and using data and analytics to understand things such as usage patterns and participation rates as to what’s working and what’s not working. And then positioning benefits within the Wheel of Wellness to address the holistic needs of the workforce.”
As hybrid work and the gig economy have transformed the world of work, the world of benefits is transforming as well, said Chris Morbelli, EY’s Americas Life Group Transformation leader.
“We believe this is a workforce benefits business now, not a workplace benefits business,” he said.
The younger generations in the workforce are prioritizing their mental health as much as they are their physical health, and those who work in the benefits space must take notice, Morbelli said.
“Our research found that for Gen Z, their mental health is as important to them as their vision and dental plans, and almost as important to them as their medical plan. This was quite a stark revelation.”
With the different generations in the workforce having different needs, employers and benefits providers must tailor their offerings to serve those differing needs, Morbelli said.
“As workers age, their physical health and well-being become more important than when they were younger,” he said. “Benefits must keep up with workers as they go through different life stages.”
The workplace upheaval brought about by the COVID-19 pandemic changed the way workers view their benefits, said Gene Lanzoni, second vice president, enterprise content marketing at Guardian Life.
“There’s a real value placed today on employers that show they care about their workforce well-being,” he said. “And workers say they want to work for companies that care — we are seeing that much more today than we were before the pandemic.”
Guardian’s 12th annual Workplace Benefits Study, released in 2023, showed that 41% of working Americans said they would face financial hardship without their workplace benefits.
“I believe the pandemic, in many ways,
was this tipping point in terms of how workers think about benefits. Things such as compensation, career growth, learning opportunities and advancement opportunities are still very important to workers. But we see this increased focus on corporate culture, work/life balance and diversity, equity and inclusion really accelerating since the pandemic,” Lanzoni said.
Workers are demanding their employer provide a wider array of benefits, Lanzoni said. But workers also need to understand those benefits if they are going to enroll in them and get optimum usage out of them.
“Employers want to make sure that their workers really understand the value of their benefits and are focusing on enrollment and communications strategy,” he said. “Employers recognize that if they want workers to appreciate and use these benefits, they must understand them. So we are seeing more emphasis on using a multichannel approach to communicate about benefits, to make sure you deliver information to your workforce in the ways that they prefer to receive that information so they can make the best possible choices when it comes time for open enrollment.”
Workers and their employers have seen an increased concern about mental health since the pandemic, Guardian’s research showed. Employers and carriers are responding, Lanzoni said.
Guardian partnered with Spring Health to bring personalized mental wellness benefits to employees and their families. Those
benefits include in-person and virtual therapy as well as mental health assessments and mindfulness exercises.
The pandemic also contributed to workers’ growing stress and uncertainty about their finances, with Guardian’s research citing the statistic that only 28% of Americans in 2023 described their financial health as “excellent” or “very good,” down from 44% in 2022.
Lanzoni said that offering benefits is one way to boost workers’ financial well-being in addition to their physical wellness.
“Supplemental health benefits are one of the fastest-growing categories in group insurance today,” he said. “Things such as accident insurance, critical illness and hospital indemnity insurance are benefits that go a long way toward improving the financial wellness of workers and their families. There are often gaps in terms of coverage in what a medical plan will and will not cover, and that results in out-of-pocket costs. Having these benefits in place is especially beneficial to those workers who are in high-deductible health plans. So having benefits that can help cover some additional health-related expenses can go a long way toward a family’s financial wellness.”
The post-pandemic work environment also created a demand for new and innovative benefit offerings, said Matt Darula , Guardian’s head of product and market management, group benefits.
“I think that COVID-19 and work from home were the catalysts for this,” he said. “There’s a trend toward workers looking to their employers for help with wellbeing and that trend isn’t losing momentum. When you think about well-being, it’s physical, it’s financial, it’s social and it’s societal. We’re seeing a much greater interest in mental health, in paid leave, in things that weren’t even talked about in the benefits space five years ago.”
Darula cited some statistics from the LIMRA-EY research that found 40% of workers are looking for a physical wellness offering, 30% want specialized mental health and financial wellness services, and 25% want caregiving benefits. That compares with about 50% of workers who said they were interested in more traditional benefits such as group life insurance.
Disability insurance, considered as a more traditional workplace benefit, also ties in to employees’ increased mental health concerns, Darula said. “One of the biggest reasons people go out on [a] disability claim is for what we call ‘mental/nervous claims.’ So, in many ways, providing mental health services is not just an opportunity to meet worker needs, but [also helps] folks feel comfortable staying in the workplace and not going out on a claim — or if they do go out on claim, they feel comfortable going back to work because they have mental health services available to them. It creates this sort of ecosystem.”
The most important aspect of offering workforce benefits is “the employee experience and how you can help support what makes employees happy,” said Jamie Madden, senior vice president of workforce engagement and benefits connectivity at MetLife.
So many benefits decisions ... so little time spent making them 1 hour 40 minutes average time selecting all benefits at last open enrollment
20 minutes average time selecting nonmedical benefits at last open enrollment 31% spend very little time evaluating options other than medical
are overwhelmed by the enrollment process, so they auto-enroll in prior benefits
MetLife recently released the results of its 21st annual U.S. Employee Benefits Trends Study, which showed three trends, Madden said.
“The first trend is that there’s a continued focus on holistic wellness,” she said. “When you think about wellness, you think about physical and mental and financial [wellness]. But what we’re seeing is that employees are focused on what’s keeping them happy. Employers can support that happiness by offering a benefits package that improves their employees’ happiness as well as their well-being.”
The MetLife study showed employees say “being happy” is the most important aspect of their work experience, and it coincides with the workforce’s transition from “The Great Resignation” to “The Big Stay,” in which employees are increasingly indicating they will stay with their companies for the long term. More than seven in 10 (73%) employees said “being happy” is the most important aspect of their work experience, while 77% said they plan to remain with their employer in a year.
The study also found it’s not enough to offer benefits that keep workers happy. Worker comprehension of those benefits plays a critical role in happiness and retention. More than three-quarters (76%) of workers who understand their benefits are happy, and 62% said understanding how to use their benefits would give them a greater sense of overall stability. Half of employees surveyed said having a better understanding of their benefits would make them more loyal to their employer.
Madden said the second trend revealed
in this year’s survey is the increasing diversity of the workforce. “So it’s really important for employers and brokers to think about a broad benefits offering that’s going to fit the needs of their diverse workforce,” she said.
The third trend is employees’ desire to have their benefits communicated to them in a personalized way that they understand. Nearly half of employees surveyed by MetLife (45%) say there are elements of their benefits package they don’t fully understand.
MetLife also found that workers report feeling what they call “benefits envy.” The survey found three in 10 workers want the benefits their friends, family and colleagues have. Those benefits include longterm care insurance (43%), critical illness insurance (41%), accident insurance (38%), flexible spending accounts (37%), disability insurance (35%) and financial planning tools (34%).
Nine in 10 employees say their mental and physical wellness impacts their financial well-being, and they expect their employers to play a role in their wellness. That was among the findings of Prudential’s 2022 workplace benefits study.
“Holistic wellness is an absolute hot topic, and it’s here to stay,” said Jessica Gillespie, head of distribution for Prudential Group Insurance.
“We are seeing employers prioritizing their employees’ holistic wellness in the workplace. Mental health is absolutely a top concern for employers as they look to ensure their populations stay healthy and productive both at work and at home. The pandemic has certainly shifted the way employees view work/life balance and the need for additional wellness support from their employers.”
Employers also recognize the need for employee wellness, the study showed. Between 80% to 90% say wellness offerings help with productivity improvement, employee retention, burnout avoidance and stress reduction.
Specifically, for financial wellness, the top benefits for employers were lower 401(k) loans/withdrawals and better benefit usage. Physical wellness’ top benefits
for employers were increased productivity and lower claim incidence. Mental wellness, specifically, also helped with reduced distraction at work.
Although 94% and 93% of employers surveyed by Prudential currently offer health and mental wellness programs, respectively, only 63% of them offer financial wellness programs. But close to 50% of the employers that currently don’t offer financial wellness programs plan to provide them in the next few years.
Voluntary benefits providers must continue to evaluate their product offerings to keep up with market demand, said Jeri Hawthorne , chief human resources officer at Aflac.
Aflac launched Aflac Choice, an enhanced hospitalization product that features more extensive protections for mental health treatment, Hawthorne said. “We’re trying to close that gap between what health insurance doesn’t cover for mental health. And so we’ve enhanced that. We are trying to show our employers who are our customers that we’re not just reimbursing for doctor’s visits, but we’re actually providing policies and services for people to get in front of that from a preventive perspective.”
Hawthorne
Another recent Aflac offering is a wellness product where policyholders are compensated for preventive care such as an annual physical, mammogram or dental cleaning.
“You can use that to pay for parking, to pay for gas, for whatever you want to use it,” she said. “We want to encourage you to take care of yourself in a proactive way.”
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on X @INNsusan.
When you think about well-being, it’s physical, it’s financial, it’s social and it’s societal. We’re seeing a much greater interest in mental health, in paid leave, in things that weren’t even talked about in the benefits space five years ago.
— Matt Darula, Guardian
Daryl Perry wants to move away from the image of insurance as “something sold by an older white man who is sitting in the office with a briefcase and who is grumpy.”
“I see Hispanic women, Black women, white women, Black men — all different kinds of people in this business. Insurance is a means to an end. But the way you get it to people doesn’t have to be boring.”
Perry is president of the Way of Life Group LLC in Marietta, Ga., and he has specialized in employee benefits for about a decade. He has devoted his career to taking things that are uncomfortable to talk about — insurance and employee benefits — and making them approachable and less threatening.
“Back when I was cold-calling and trying to build my business, I asked myself, ‘How do I make this more fun?’ Insurance isn’t a fun thing, but how do I make the environment fun? So I smile when I talk about it because I know it’s not a fun topic. Nobody likes to talk about mortality or talk about getting sick. It’s a difficult conversation. But if you can show someone ‘I’m just here to make sure you’ll be OK,’ you can show the consumer you care and you can make the environment fun.”
Perry is easily recognizable as “the bow tie guy.” He owns about 50 neckties that he fashions into the bow ties that have become his trademark. The bow ties helped him back when he was starting his career and needed something to stand out from the crowd.
“When I first started out in this business and I was doing a lot of cold-calling, I would arrange to meet with prospects in a coffee shop or at their business or something. And they would ask me, ‘How will I know who you are?’ And I would answer, ‘I’ll be the guy with the bow tie.’ And that stuck. My business partner started referring to me as ‘the bow tie guy.’”
Perry performs rap videos on LinkedIn, where he calls himself The Notorious
“My personal branding of the bow tie was my choice, but the naming was all just from prospecting and people hearing about me,” he said.
For the past three years, Perry has been the host of a series of YouTube videos titled “Business with Benefits,” in which he showcases entrepreneurs he knows as well as discusses ways business owners and consumers can protect their income. It’s another way for him to inject some fun into the benefits discussion and open doors to possible business.
Perry grew up in a military family. He was born in Germany and speaks fluent Spanish. After obtaining a degree in mathematics and accounting, he worked
Perry’s practice focuses on serving what he calls “small-town America.”
“We serve about 250 different clients, helping them put together benefits packages that make sense for their business,” he said. “Some of them are businesses you’ve heard of, like AutoZone or Red Lobster. Some of them are mom-and-pop shops you’ve never heard of. But I always work with the mindset of making benefits customizable for my clients. I try to find benefits that fit their budget.”
Although Aflac is still a big part of Perry’s business, he also works with dental plans and some different professional employer organizations that work with smaller groups. “I do a lot of minimum
in retail in Las Vegas before deciding to move to Georgia in search of a more family-friendly environment for his wife and children. He turned to a job-search website to find a new career and ended up at Aflac.
“I didn’t know what Aflac was, but I thought this job is something entrepreneurial, I can do it until I get a ‘real’ job,” he said. “I was Aflac’s top account opener in the state of Georgia during my first year in the business, and then I was No. 2 in the entire company in 2014. Ten years later, I’m still an independent associate representing Aflac and I’m happy with what I’m doing.”
In his practice, Perry works with several carriers in addition to Aflac.
“My clients kept asking me about other coverage in addition to what Aflac offers,” he said. “Clients were asking about dental, health insurance, group life. Because I’m independent, I can work with anyone. So, I found other carriers that made sense for my business and my clients, and now I’m able to offer more to my clients.”
essential coverage plans for businesses whose owners can’t afford to offer health insurance but don’t want to pay the penalty under the Affordable Care Act,” he said. “We also do a lot of life insurance — indexed universal life, guaranteed universal life, final expense — different things to help people at various stages of their lives.”
Dental and vision benefits have been among the most popular benefits Perry’s clients want. But he has seen a shift toward life insurance since the COVID-19 pandemic.
“It seems like COVID-19 has made people think more about ‘What if I pass away? Who will take care of my family?’”
The pandemic also has made Perry’s clients more curious about mental health benefits.
“Mental health wasn’t even a thought 10 years ago in the insurance space,” he said. “But over the past two or three years, I have had a lot more people asking ‘What about therapy?’ ‘What about mental health?’ So that’s definitely a big trend, people wanting more coverage for that.”
“Nobody likes to talk about mortality or talk about getting sick. It’s a difficult conversation. But if you can show someone ‘I’m just here to make sure you’ll be OK,’ you can show the consumer you care and you can make the environment fun.”
An annuity is intended to be a longterm, tax-deferred retirement vehicle. Earnings are taxable a s o rdinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Q ualified di stributions from a Roth IRA are generally excluded from gross income, but taxes and penalties ma y a pply to n onqualified distributions. Please consult a tax advisor for s pecific i nformation. There are charges and expenses associated with annuities, such as surrender charges (deferred s ales charges) for early withdrawals.
An annuity is intended to be a longterm, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Q ualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to nonqualified distributions. Please consult a tax advisor for specific information. There are charges and expenses associated with annuities, such as surrender charges (deferred sales charges) for early withdrawals.
These m aterials a re for i nformational and e ducational pu rposes on ly a nd are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered i nvestment ad vice, n or does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action.
Young adults also are showing more interest in buying life insurance since the pandemic, he added. “I think COVID-19 showed them that when bad stuff happened to their mom and dad, they weren’t prepared. So now they want to know how they can prepare themselves.”
all of a sudden, they contact you and say they need something. Something triggered them to come to you and say they need to take action.”
Securian Financial Group, and its subsidiaries, h ave a f inancial i nterest in the sale of their products.
Perry’s prospecting has come a long way from the days when he cold-called and told potential clients to look for the guy wearing the bow tie. Today, he uses a prospecting system he calls “spears and nets.”
Perry also has a strong LinkedIn presence. He began posting content weekly in 2015. He also conducts regular LinkedIn Live sessions and meetup sessions on LinkedIn. His aim is to provide information while appearing approachable.
These materials are for informational and educational pu rposes on ly and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its subsidiaries, have a financial interest in the sale of their products.
Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer.
“I don’t want to chase business; I want business to find me,” he said.
Minnesota Life is not an authorized New York insurer and does not do insurance business in New York.
The “spears” are direct contacts with prospects.
Both companies a re he adquartered in St. Paul, MN. Product availability and features may vary by state.
“The spears are an analogy I use for teaching people how to prospect, so spears means something with direct, instant feedback. It could be a phone call, it could be walking in the door. Think of it like fishing. If I go fishing with a spear, I know right away that I either catch a fish or I don’t catch a fish. It’s instant. It takes a few seconds. I can control that. That’s why I like that the spears are in control.”
In addition to his signature bow ties and his heavy online presence, Perry tagged his business with the slogan “Have a Plan, Not a Plea.”
Each insurer is solely responsible for the f inancial ob ligations u nder the policies or contracts it issues.
Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations u nder the policies or contracts it issues.
Securian Financial is the marketing name for S ecurian Financial G roup, Inc., and its subsidiaries. Minnesota Life Insurance Company and Securian Life Insurance Company are su bsidiaries of S ecurian Financial Group, Inc.
Securian Financial is the marketing name for Securian Financial G roup, Inc., and its subsidiaries. Minnesota Life Insurance Company and Securian Life Insurance Company are su bsidiaries of Securian Financial Group, Inc.
For financial professional use only
The “nets” are akin to fishing nets, he said. They are more of a backup support for direct sales efforts.
“That slogan came from the saying ‘It is better to have it and not need it than to need it and not have it,’” he said. “I think that saying is true when it comes to buying insurance. If you don’t have it, and you need it then you’re begging, you’re kind of saying, ‘Please help me.’ So I thought my goal is to help, you not have to beg. I want you to avoid having to ask for help because you have a plan.”
Not for use with the public This material may not be reproduced in any form where it would be accessible to the general public.
“They’re your email marketing and social media and networking. Those are the things that you don’t get the fruit from right away; you just leave them out there, and sometimes you pull them up again. For example, if go to a networking group, you might meet someone there but never hear from them for three months. Then
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan. Rupe@innfeedback.com. Follow her on X @INNsusan.
F For financial professional use only Not for use with the public This material may not be reproduced in any form where it would be accessible to the general public.
“Over the past two or three years, I have had a lot more people asking ‘What about therapy?’ ‘What about mental health?’ So that’s definitely a big trend.”
Every U.S. driver must have auto insurance. But few of those auto insurance customers realize the carrier that insures their set of wheels also offers life insurance. LIMRA research highlights the untapped potential for multiline carriers to crosssell life insurance to both prospective and existing customers.
The research found 43% of those with car insurance believe their auto insurance company should talk to them about their life insurance needs. The percentage increases to nearly 7 in 10 multiline customers (those who have auto, home and life insurance with the same company). Given their personal experience, multiline customers are the most convinced of auto agents’ competencies when it comes to the topic of life insurance: 64% agree that auto agents are knowledgeable about life insurance compared to just 24% of customers who don’t remember ever discussing the product.
At the same time, the results suggest that multiline customers are not just loyal because they also own life insurance, but they have a “stickier” nature to begin with. Demographically, multiline customers tend to be younger, wealthier, and more educated, often with children under 18, suggesting a potential need for family-focused coverage such as life insurance.
Three industry associations announced their plan to unite into a single organization. The National Association of Insurance and Financial Advisors, the Society of Financial Service Professionals and Life Happens announced plans to come together as one organization, pending membership approval. The merger will take place following a vote of each organization’s membership, and that vote is expected to take place in the fall.
its designations and certification programs, Mayeux said. NAIFA will provide political advocacy on the state and national levels for the organization. Life Happens will serve as the consumer-facing arm of NAIFA.
There is an element of courage in every call and in every sale.
— D. Scott Brennan, past president of the Million Dollar Round Table and Forum 400The proposed NAIC model allows a narrow use of personal data and requires consent for anything else. The privacy proposal has some things in common with the California Consumer Privacy Act, the nation’s first data privacy law, which contains the broadest consumer protections.
A Washington state couple said they are out hundreds of thousands of dollars they expected to help fund retirement after being misled on a Pacific Life indexed universal life insurance policy.
The expanded organization will retain all three brands under the NAIFA umbrella, although each association will retain its separate name and branding, Kevin Mayeux, NAIFA CEO, told InsuranceNewsNet. The newly expanded association will be led by Mayeux as CEO, with current FSP CEO David Maola serving as that organization’s executive vice president.
Under the proposed structure of the new organization, FSP will take over NAIFA’s professional development activities, including
State insurance regulators indefinitely delayed a controversial data privacy proposal that would strictly limit what insurers can do with consumers’ private information. LeAnn Crow, director of consumer assistance for the Kansas Insurance Department, urged her colleagues at the National Association of Insurance Commissioners to abandon the data privacy effort.
The new model is meant to update and replace both the Insurance Information and Privacy Protection Model Act and the Privacy of Consumer Financial and Health Information Regulation. Those two model laws are about 40 and 30 years old, respectively.
Simona G. Marie and Thomas Lewis, from Richland, Wash., filed a lawsuit against Pacific Life, Harding Financial Partners, and Andrew Brown, the producer who sold them a PacLife PDX life insurance policy. Starting December 2017, plaintiffs made five premium payments totaling $505,000, the lawsuit states. Their investment gain added $248,650. The couple surrendered the policy in April 2022 and received a $202,655 check from PacLife. They claim the insurer made nearly $551,000 from the IUL contract.
Plaintiffs allege negligent misrepresentation, breach of fiduciary duty, professional negligence, breach of contract and violation of the Washington Consumer Protection Act. The lawsuit references the ongoing IUL illustration controversy and efforts by state insurance regulators to tighten the rules.
Source: Kemper
Christopher Flint was named president of Kemper Life. He’s had over 25 years of experience in the financial services and insurance industries.
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Business leaders can leverage their life insurance policies to access capital in tough economic climates, gaining a key lifeline for their business.
By Hector MartinezBalancing cash flows with costs has always been a challenge for small businesses. But stubborn inflation and turmoil in the banking industry now are making it more difficult for entrepreneurs to access money when they need it most. And as small-business bank loan approvals continue to plunge, business leaders will need another way to keep their coffers full.
Many small-business owners have faced this financial dilemma before and have come out the other side. Take the visionary Walt Disney: When he struggled to nab financing for Disneyland, he became his own banker by borrowing against his life insurance policy. The rest is history.
Today, both small-business owners and financial professionals can take a page out of Disney’s book and explore the benefits
of purchasing and leveraging a permanent cash value life insurance policy, such as variable universal life insurance. Let’s explore how financial professionals can communicate the value of VUL insurance to small-business clients looking to tough out this uncertain economic climate and even grow their businesses — and what they need to know before leveraging their policies.
When it comes to a small-business owner’s “financial toolbox,” VUL insurance is the Swiss Army knife — more versatile and valuable than many realize.
VUL policies are cash value life insurance policies, meaning they provide income benefits that are generally tax-deferred to loved ones or businesses after the policyholder’s death. This is commonly known as a death benefit. Given how critical small-business owners are to their companies, an injection of capital at this crucial moment can help keep their business afloat and even financially support their successor. Consider the death benefit the “knife” of the policy — the primary
function of the Swiss Army knife, but not the only one.
Like the Swiss Army knife’s corkscrew or scissors, VUL policies have other useful functions that can be exercised during the policyholder’s lifetime. These functions, known as living benefits, can provide small-business owners with generally tax-deferred income at any point in life — be it through policy loans or withdrawals on the cash surrender value the policy has accumulated to date.
With a properly designed life insurance policy, withdrawals from the policy’s accumulated cash value can be made for any reason and without a penalty imposed by the insurance company. As a result, VUL withdrawals can be used to finance a new project, expand a business or even cover essential expenses such as payroll and overhead during a difficult time.
Although a VUL insurance policy can offer critical living and death benefits to a small-business owner, there are important considerations that can determine
whether policy loans or withdrawals best suit that owner’s needs. Here are three important things financial professionals should discuss with their clients before leveraging a VUL insurance policy to support their businesses.
1) Small-business owners should keep the big picture in mind
VUL insurance can provide substantial living benefits, but its ultimate purpose is to provide protection for a business in the form of death benefits.
Taking tax-deferred distributions can reduce a policy’s cash value and face amount, which can result in higher premiums to ensure the policy stays in force. Should small-business owners fail to meet those premiums, they could lose their death benefits and put their businesses at risk.
2) Small-business owners must have a plan for the future
To have capital at the ready when they need it most, small-business owners must enroll in a VUL insurance policy well in advance. Within these policies, there is a wide range of equity, fixed-income and asset allocation investment options that can generate faster growth through tax-deferred compound interest than can paying taxes annually on growth.
However, VUL insurance policies are still subject to market fluctuations, including possible loss of principal invested, and they can take years to accumulate sufficient capital before withdrawal is possible.
Small-business owners also should incorporate their VUL insurance policies into their businesses’ long-term financial
management strategies from the get-go. As with any other financial tool or insurance policy, periodically reviewing the coverage and weighing its advantages can ensure small-business owners’ companies remain resilient and prepared for any challenge.
3) Working with a financial professional is crucial
VUL insurance policies are real financial instruments, so there’s no one-size-fitsall approach to how they can best support a small business. That’s why working closely with a financial professional is essential to effectively leveraging the policy — including accounting for the big picture and future plans.
Financial professionals can help by analyzing an individual’s needs, recommending the right policy, ensuring loans are paid back, preventing costly lapses in coverage and helping manage the risks associated with VUL insurance policies that fluctuate with market performance.
VUL insurance is just one tool in a small-business owner’s financial toolbox. But like witha Swiss Army knife, knowing all its different functions can prove useful when it’s needed most. For financial professionals, knowing how to effectively communicate the importance of VUL insurance policies for solving a variety of key business needs can help small-business owners make the right decisions for their businesses.
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After a record-breaking year in 2022, it didn’t seem as though annuity sales could go any higher. Months later, it appears that assessment was very wrong.
Both LIMRA and Wink Inc. report ed a significant increase in annuity sales through the first half of the year. annuity sales hit $181.1 billion in the first half of 2023, increasing 27% and setting a new record
While second-quarter sales didn’t match the record high set in the first quarter, annuity sales jumped 10% from prior-year results to $87.1 billion.
Fixed-indexed annuity sales led the way, with sales up 34% through six months, LIMRA found. Likewise, registered indexed-linked annuity sales were $21.8 billion in the first half, up 7% over 2022 .
Wink’s data included total second-quarter sales for all deferred annuities of $79.7 billion, up 9.6% when compared with the same period last year.
All deferred annuities include the variable annuity, structured annuity, indexed annuity, traditional fixed annuity and multiyear guaranteed annuity product lines.
to obtain income that is guaranteed to last as long as they live. More than 8 in 10 owners cite this feature as an important reason for purchasing an annuity.
access for lower and middle-income families in the state,” Insurance Commissioner Glen Mulready said.
The NAIC model regulation is a template for states to create their own regulation governing annuity sales that would align with the Securities and Exchange Commission’s Regulation Best Interest.
Annuities can do a lot of different things and Americans are using those features to feel more confident about retirement, a new Gallup survey revealed.
Individual annuities are used primarily by the middle class to accumulate savings and provide income for their retirement, Gallup found. The survey also found that the current federal tax rules for individual annuities are important in encouraging middle-class Americans to save, facilitating better growth in their savings, and discouraging them from using those savings before they retire.
Individual annuities are unique financial tools because they allow their owners
The 2022 Survey of Owners of Individual Annuity Contracts is the 12th in a series of surveys aimed at profiling the demographic characteristics of Americans who own individual annuities and their attitudes toward issues relating to retirement savings and security.
Oklahoma became the 40th state to adopt regulations enacting a “best interest” standard on annuity sales and recommendations, based on the National Association of Insurance Commissioners’ model law. The amended regulations went into effect on Sept. 1 and require a producer to act in the best interest of consumers under the circumstances known at the time the recommendation is made
“The new rules will provide stronger protections for retirees and safeguard
Total U.S. pension risk transfer sales were $16.2 billion in the second quarter, a 31% increase from the prior year. This marks the highest second quarter sales results ever recorded, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey.
In the first six months of 2023, PRT sales totaled $22.5 billion, a 28% increase from the same period in 2022.
Single-premium buyout sales were $14.6 billion in the second quarter, 18% higher than the prior year results. Year-to-date, buyout sales jumped 40% to $20.9 billion. There were 165 buyout contracts in the second quarter, up 16% from the second quarter 2022. YTD, there were 281 buy-out contracts completed, a 30% increase from the prior year’s results.
With rates being as strong as they are, it is no surprise that indexed annuity sales are setting records all overSheryl Moore, CEO of both Wink Inc. and Moore Market Intelligence.
DID YOU KNOW ?Source: LIMRA
56% of pre-retirees do not feel their forecasted guaranteed income streams (Social Security, pension income/guaranteed annuity income) will cover their basic living expenses in retirement.
Research shows how adding guaranteed income to a retirement plan can help retirees generate adequate income from their assets.
By Susan RupeFinancial advice often focuses on the accumulation phase of retirement planning. But the decumulation phase — when households seek to generate suf ficient income in retirement to meet their spending needs — requires an equal focus.
Research from BlackRock and the Bipartisan Policy Center showed how a comprehensive approach to retirement planning that includes annuities can help individuals generate adequate income from their accumulated assets and ac complish two critical retirement plan ning goals. The research was presented during a recent webinar from the National Association for Fixed Annuities.
Retirement savers benefit from a holistic approach to retirement income that focus es on three principles of decumulation, said Kate Tan, BlackRock quantitative re searcher for retirement solutions. Those principles are:
1. Maximize spending ability.
2. Maximize spending certainty.
3. Address longevity risk.
Adding guaranteed income and delaying retirement (and delaying Social Security claiming age) can boost total annual spending in retirement and reduce downside risk, the research showed.
“We looked at how to strike a balance with maximizing spending ability and maximizing spending certainty,” Tan said. “Then we added in the longevity risk and asked, are there better ways to do this than have been done in the past? Things such as annuities and guaranteed lifetime income can address all three of these principles.”
BlackRock developed a case study showing how adding annuities to a retirement plan optimizes the amount of money a retiree has available to spend in retire
and claim Social Security at age 65.
In the base case, the saver allocates 40% of their retirement assets to equities and 60% to fixed income but does not include a guaranteed income product.
itself,” Tan said. “They do two things. They deploy other tools: Strategy 1 and Strategy 2. They also take a holistic view in Strategy 1, where they see that changing one element may require them to change another element.”
Strategy 1 is to have 50% of the saver’s retirement assets allocated to equities and 50% allocated to fixed income and include a guaranteed income product.
“Because they have some future income needs that are now guaranteed by adding the annuity, they can increase the percentage of equity allocation in their portfolio,” Tan said.
Strategy 2 is to maintain the same retirement asset allocation and include the guaranteed income product but delay the age of retirement and claiming Social Security to 67.
The study findings showed that adding the annuity to the saver’s retirement strategy increases the amount of spending from that saver’s retirement savings, Tan said.
By incorporating guaranteed income in their strategy, the saver is able to spend 35% more in their first year of retirement than they would without the guaranteed income product. In addition, the saver is able to have a 29% average spending increase over their retirement span.
Adding an annuity also raises the floor on the retiree’s spending, the study showed. The addition of guaranteed lifetime retirement income provided an annual spending floor of $46,170 in the first 15 years of retirement.
This represents a 33% increase over the $34,598 annual spending floor that the retiree would have had in the first 15 years of retirement if they had used their 40/60 allocation in their original plan and did not add an annuity.
Adding guaranteed lifetime income to the plan accomplishes two client goals, Tan said:
1. It reduces the pressure to underspend early in retirement and save
for later years, allowing more flexibility in spending earlier in retirement.
2. It provides a higher and more reliable spending floor in retirement.
Meanwhile, an even higher level of spending in retirement is possible from adding guaranteed lifetime income to the retirement plan while delaying retirement and delaying Social Security, Tan said.
“This strategy increases the size of the retirement nest egg, shortens the retirement period and increases the Social Security benefit,” she said.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on X @INNsusan.
An increasing number of large employers are reporting a need for mental health services among their workforce, according to the Business Group on Health’s 2024 Large Employer Health Care Strategy Survey. More than 7 in 10 large employers surveyed (77%) reported an increase in mental health needs among their workers, a jump from the 44% who saw an increase in employee mental health concerns in 2022.
As employers see a greater need for mental health services among their workers, more employers report their health and well-being strategy is an integral part of their workforce strategy. About two-thirds of employers surveyed said health and well-being is an integral part of their workforce strategy, as opposed to 42% who said the same in 2021.
Employers are most concerned about employee burnout, access to mental health services and quality of mental health care, the survey showed. In addition to increased mental health issues, 30% of employers reported their workers are seeing more challenges in accessing health care because of a shortage of health professionals and 28% said they are seeing an increase in medical services used because of worsening employee health from obesity and other conditions.
accept help from a robot for activities such as toileting, dressing and transferring. Nearly the same percentage (32%) said they would talk to robots/AI if they are feeling lonely.
generations. But incentives for healthy behaviors were the least important factor in choosing a health plan. For older generations, keeping their doctors was the most important factor, while low costs were the least important.
When it comes to the cost of health care, the survey showed generations also differ in their opinions of who is responsible for high costs. Those who are 18-34 years old are more likely than their older counterparts to blame doctors for high health care costs. The 45-to54-year-old age group is more likely to blame health insurance companies. Those who are age 55 and older are more likely than their younger counterparts to put the onus on pharmaceutical companies.
Will artificial intelligence and robotics replace a home health aide in the future?
About one-third of Americans think so, according to a survey by LIMRA and the Nationwide Retirement Institute.
Nationwide said that it is testing elder care robots in homes of select policyholders who have mobility issues. The goal of this trial is to assess if the robots increase the potential for policyholders to age in their home and remain independent.
And the idea of having robots provide care has some traction among consumers. More than 1 in 3 Americans (35%) would
DID YOU KNOW
What matters most in selecting a health plan? It differs by generation, a HealthEdge survey showed. For younger generations, low costs was the most important factor in choosing a plan. The least important factor was keeping their current doctors.
Low costs were also the most important factor for those in middle
Patients and physicians have taken to social media in an attempt to shame insurers into reversing prior authorization denials, Kaiser Health News reported. Many patients and doctors believe venting online is an effective strategy, though it remains unclear how often this tactic works in reversing prior authorization denials.
The 2010 Patient Protection and Affordable Care Act prohibits health insurance plans from denying or canceling coverage to patients due to their preexisting conditions. But some patient advocates and health policy experts question whether insurers are using prior authorization as “a possible loophole” to this prohibition, as a way of denying care to patients with the highest health care costs, explained Kaye Pestaina, a KFF vice president and the co-director of its Program on Patient and Consumer Protections.
Source: Business Group on Health
88% of large employers said they want to improve affordability of health and well-being programs.
It’s the easiest big decision I ever made.— Louisiana Gov. John Bel Edwards on expanding Medicaid in his state in 2016
Mental health a must-have 94% of employers said they plan to increase access to online mental health resources.
63% said they will work to expand mental health networks.Source: Business Group on Health
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Help your employer clients offer their workers a new benefit to help them cover out-ofpocket costs.
By Chris LabrecqueTrue health equity — promoting equal access to health care throughout the U.S. for all employees, no matter where they work — may seem idealistic, but it isn’t an unrealistic goal. It simply requires more than employer-subsidized health insurance. The fact is, even if an employer pays 100% of premiums, employees often remain on the hook for deductibles and out-of-pocket expenses that lower-earning employees often struggle to afford.
The result? Many employees delay or forgo the health care they need because of cost concerns. This increases the risk of high-cost claims, making matters worse when rates rise down the road.
That’s why it’s vital for brokers to help
employers offer all employees a straightforward, equitable way to pay for the care they need to get and stay healthy: health payment accounts. Let’s explore the ways this innovative benefit can help maintain the financial health of employees when they get sick.
Health payment accounts offer employees a no-fee, interest-free line of credit to pay for out-of-pocket costs of care, repaying those amounts over time in personalized repayment plans that can be adjusted to work for any budget. With an HPA card, for example, employees can convert a $100 doctor visit into 10 payments of $10 each or five payments of $20 each.
This flexibility offers employees the freedom to choose their preferred funding source (e.g., payroll deduction, linked bank account or health savings account (HSA)) and repayment timeline (12-36 months, depending on the employer).
Because the benefit is sponsored by employers, health insurers and hospital systems, using HPA cards for health care transactions does not require employees to pay interest charges or fees. And since no credit check is required for members to receive their benefits and card, HPAs help ensure more employees have access to care without taking on interest-bearing debt.
By making it easier for employees to afford the out-of-pocket cost of care, HPAs support preventive and routine care and medications that help ensure patients’ physical and mental health. This proactive approach reduces the occurrence of severe claims and ultimately enhances employee health.
It’s a simple reality: Healthier employees are happier employees, and happier employees are more productive and more likely to stay in their role. So just as
HPAs help alleviate disparities in health care access, they help cultivate a healthier workforce with lower costs and better performance.
A patient diagnosed with arrhythmia shouldn’t feel the need to postpone — much less forgo — the follow-up care that can save their life. And someone experiencing sudden dizzy spells shouldn’t avoid going to the emergency room because they fear they can’t afford the visit.
We know that unlocking access to care is an urgent need in our country, but helping support better population health is also good business. When employers reduce the financial burden of staying well, it has an outsized impact on the health of the team and their workplace.
It’s no secret that health care costs in the U.S. are high. And health care expenses are almost always unexpected. With Bankrate reporting that 57% of Americans are unable to afford a $1,000 emergency expense and KFF reporting the average annual deductible is close to $2,000 for individual coverage, an unexpected expense can cause the average employee a world of difficulty.
Employers have traditionally offered solutions such as HSAs to address this. And many employees turn to credit cards and financing available through their health care provider’s office. But these options don’t work for everyone, and they
impact on their credit score. So, whether an employee is hit with their entire deductible in one bill or needs to plan how to manage copayments for ongoing outpatient care, HPAs empower them to turn those expenses into a manageable repayment plan. The result: Employers can help keep their employees financially well while supporting their physical and emotional health.
So far, 2023 has been stressful for even the most successful companies. Although the worst of the Great Resignation may be behind us, turnover continues in the tightest labor market in the past 30 years. And the ever-present specter of a recession makes many businesspeople uneasy. One potential way to help: Find economical ways to invest in employee satisfaction.
If employers can assist their workers with maintaining good health by offering financial wellness benefits such as HPAs, the chances of those workers having a positive perception of their workplace increase. This, in turn, boosts the likelihood of their long-term commitment to the organization.
Healthier and happier employees are less likely to experience the financial stress that often comes with paying for care and are more likely to be present and productive on the job.
HPAs provide a stable financial floor that empowers employees to seek early treatment for health issues. And when employers make out-of-pocket costs more manageable with the HPA line of credit and flexible, interest-free repayment options, employees are more likely to follow through on the treatment plan their provider prescribes. The results are improved employee retention and fewer absences.
often saddle employees with unnecessary interest payments.
For example, only employees enrolled in a high-deductible health plan can contribute money to HSAs — and their HSAs are only helpful to the extent they’ve been able to save funds. Medical credit cards and installment loans often pitched at providers’ offices can carry high interest rates or springing interest that kicks in if you don’t repay the balance during a promotional interest-free period.
However, health payment accounts allow employees to repay at their own pace with no interest or fees and no
One of the best ways to do this is to help your employer clients sponsor an HPA so employees can access care across the benefits portfolio. This might enable an employee to go in for a dental cleaning, new glasses or an appointment with a therapist. Employees who use their benefits are more aware of the value their employer offers in their benefits package and are more likely to stay in their job. In a 2023 study of 68 employer groups across 11,000 employees, there was 30% less turnover among those who actively used their HPA card than among their colleagues who didn’t activate or use the card.
Cultivating a healthy workforce is critical in today’s economic environment. HPAs are a new way to help employees more equitably access all the value in their benefits package, reducing risks and lowering costs along
Chris Labrecque is the chief customer officer at Paytient. He may be contacted at chris.labrecque.innfeedback.com.
Americans feel a significant amount of confi dence in various areas of their lives. But it’s their finances that keep them up at night, according to Northwestern Mutual’s 2023 Planning and Progress Study. More than one-third of those surveyed said that financial uncertainty keeps them up at night at least monthly.
When asked to rate how strongly they feel about the current state of various areas of their lives, 79% said they feel strongly or very strongly about their friendships; three-quarters said the same about their mental health (75%) and physical health (74%); and 7 in 10 (69%) said the same about their job stability. However, only slightly more than half of the people surveyed (57%) said they feel strongly or very strongly about the current state of their finances. This is a relative weakness compared to other parts of their lives.
In addition, the survey noted that consumers who work with a financial advisor and those who identify themselves as disciplined financial planners are more likely to report greater feelings of strength about the current state of various aspects of their lives, both personal and professional, than those who do not.
More than half of pre-retiree investors are worried about the long-term viability of Social Security, with more than 1 in 4 fearing the benefit will run out of funds in their lifetime, according to Nationwide’s eighth annual Advisor Authority survey. In addition, 26% of those surveyed believe that Social Security will run out of funds after they have entered retirement.
But it’s not all doom and gloom in pre-retirees’ minds. Nearly half (46%) of them have a strategy in place that incorporates annuities in their retirement plans to guarantee income and prevent them from outliving their savings.
CFP Board research found that 71% of investors have little to no level of trust in the financial planning advice received from social media. But artificial intelligence scored better among investors, with 51% saying they have little to no level of trust in the advice received from generative AI tools, including ChatGPT or Google Bard.
The 401(k) plan is becoming nonnegotiable for those looking for work, and 3 in 4 would refuse a new job if it did not offer one, according to a recent study. The top must-have benefit was health insurance, followed by a 401(k) plan, life insurance and disability income insurance, according to Charles Schwab’s 2023 401(k) Participant Study.
Other highly sought benefits include health savings accounts (HSAs) and flexible HSAs, the survey found.
The Consumer Omnibus Research: Retirement Report by Voya Financial also pointed out the growing importance of employer-sponsored plans. According to the Voya report, 71% of employed Americans are more likely to stay with their current employer if they are offered an employer-sponsored retirement savings plan (e.g., 401(k), 403(b), 457). This is up from 60% in October 2022 and is also significantly higher for those workers who have a managed account (85%) than those who do not (64%).
45% of Gen Z and 39% of millennials believe they will not get a dime of the Social Security benefits they have earned.
Source: Nationwide Retirement Institute
The research also found that nearly 1 in 3 investors (31%) report feeling comfortable implementing financial planning advice from a generative AI tool without verifying it with another source.
But investors aren’t ready to give up the human touch. Investors said they have more confidence in advice from both generative AI and social media after they’ve vetted that advice with a financial planner.
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Clients find Social Security confusing. Here are some case studies that can help them make the best decisions on maximizing benefits. •
Security office that she may not qualify for survivor benefits because her income is too high.
of the deceased worker’s basic amount) if the deceased started taking benefits before reaching full retirement age.
Komal MotwaniSocial Security regulations and claiming strategies can be complex and can vary from client to client.
Clients frequently turn to their advisors with questions on Social Security benefits and how to maximize them. Here are some case studies based on real-life events that may help you provide some insights and educate clients based on their individual situations.
Lynn, a successful real estate agent, just turned 63. Her full retirement age is 66 years and 10 months. Her husband recently died, and she is in a higher tax bracket than he was. Lynn asked her financial professional for advice on Social Security survivor benefits.
Lynn was informed by the Social
Here are Social Security’s survivor benefits rules:
1. A surviving spouse can collect 100% of the late spouse’s benefit if the survivor has reached full retirement age. However, the curveball is that the amount will be lower if the deceased spouse claimed benefits before they reached full retirement age. Survivor benefits are frozen in time at the date of the worker’s death. So, they are worth 100% of what the deceased worker received at that time.
2. Technically, a qualified widow or widower qualifies for survivor benefits if they are at least 60 years old and had been married to the deceased for at least nine months. However, the amount will be reduced (71.5% to 99%
3. If you are younger than full retirement age and earn more than the yearly earning limits, benefits may be further reduced. One dollar is deducted from your benefit payments for every $2 you earn above the annual limit.
Based on points 2 and 3, even though Lynn meets the marriage requirement, her benefits may be reduced substantially based on her higher income. If she starts to collect her survivor benefits at age 62, the benefits will be further reduced to begin with, as she has not reached her full retirement age (Point 2).
I concur with the Social Security office analysis. However, if and when she plans to retire or if she reaches full retirement age at that time, it will be prudent to reevaluate her circumstances and review her benefits. She plans to continue to work
for the foreseeable future. She may still qualify for survivor benefits or receive her own benefits (whichever is the higher of the two) at the time of her retirement or when she reaches her full retirement age, whichever comes first.
Although we are not experts on Social Security, we try to educate clients on such matters and encourage them to schedule a meeting with a Social Security officer to receive accurate information on a caseby-case basis. A participant can transfer all or part of their qualified retirement plan benefits to a former spouse without being liable for income taxes on the transfer if the transfer is made pursuant to a qualified domestic relations order.
John (age 65) and Jasmine Smith (age 68). John has a normal retirement age of 66 years and six months. He plans to continue working until his full retirement age. At that time, he will begin to claim his own Social Security benefit, although he enrolled in Medicare this year. His wife, Jasmine, started claiming Social Security early, at age 62.
John and Jasmine wanted to understand the ramifications or changes that will occur to Jasmine’s Social Security when John files for his own Social Security at his normal retirement age. Can Jasmine switch to spousal benefits and receive half of John’s income?
Because Jasmine filed for Social Security early, her benefits may be reduced permanently. When John files for his benefits, Jasmine’s total monthly payment (spousal benefits) will be less than half of her spouse’s primary benefit amount at full retirement age. Jasmine can claim spousal benefits only if her current spouse has filed for his own benefits.
If John were to claim his Social Security retirement benefits early, this would not affect Jasmine if she waited until her full retirement age to claim her spousal benefits (she can collect the full benefit amount). This is because dependents’ benefits are based on the primary benefit amount, which is based on earnings at full retirement age.
In this case, whether John claimed benefits early doesn’t really have an impact on
Here are some other things to know about how the Social Security Administration calculates retirement benefits.
1. The Social Security Administration gathers data on up to 35 of your highest-earning years, stopping at age 60.
2. The Social Security Administration indexes those earnings for inflation so that income you earned in, say, 1993 is revised to reflect what that income is in today’s dollars.
3. After that, Social Security applies a somewhat-complex formula to determine your primary insurance amount, which is the benefit payment you would receive if you wait until you reach full retirement age.
4. You’re also eligible for cost-of-living benefit increases starting the year you turn 62, even if you don’t take your benefits until later.
5. The Social Security Administration decreases your benefit if you retire before your full retirement age, and it increases your benefit if you delay retirement until after your full retirement age (up to age 70).
Source: NerdWallet
the amount Jasmine can collect; spousal benefits are half of the primary amount if she waited until full retirement age to claim benefits. Because she claimed her own benefits early, the spousal benefits also may be reduced. Remember, you only get the higher of the two benefits — your own benefits or half of spousal benefits. We still recommend clients speak with a Social Security officer to gather more information.
Recently, in a client meeting I was asked an interesting question: At what age or income level will the Social Security and Medicare taxes or withholdings cease?
The current tax rate for Social Security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total.
Only the Social Security tax has a wage base limit. The wage base limit is the maximum wage that’s subject to the tax for that year. For earnings in 2023, this base is $160,200. The maximum amount of Social Security tax an employee will have withheld from their paycheck in 2023 will be $9,932 ($160,200 x 6.2%).
There’s no wage base limit for Medicare tax. All covered wages are subject to Medicare tax. Workers who earn more than $200,000 are also subject to a 0.9% additional Medicare tax.
Now, how are the Social Security benefits calculated?
The amount your client gets from Social Security benefits every month depends on two factors: 1) the amount of their lifetime earnings and 2) their age at retirement. In essence, the more they earn and the longer they wait to claim benefits, the bigger the monthly check they will receive. The maximum amount someone can receive in 2023 is $4,555 per month if retiring at age 70.
Komal Motwani, CFP, is a senior investment analyst with Yanni & Associates Investment Advisors in Wexford, Pa. She has more than 10 years of experience in the field of investments and financial planning. She may be contacted at komal.motwani@ innfeedback.com.
Just like contestants on the iconic game show Jeopardy!, the insurance industry finds itself facing an array of questions about a concept that holds immense potential: blockchain. A game of intellectual curiosity is unfolding. Like contestants seeking the right questions, insurance carriers, advisors and consumers are navigating the uncharted waters of this transformative technology.
Picture Jeopardy! contestants standing before a board of answers, pondering the correct questions that could unlock the doors to a more efficient and transparent insurance industry. The insurance realm continues to grapple with uncertainties surrounding this innovative technology. With each round of discussion about the potential, the application, and the impact of blockchain, the cenral question remains: “What is blockchain?”
Blockchain, a peer-to-peer distributed ledger technology, establishes trust through transparent and efficient data sharing. Blockchain digital databases efficiently disseminate copies of data preserved in blocks to all participants across public or private networks.
When data records in blocks are validated, the blockchain establishes an environment of trust. This business process enables like-minded partners to enter into new business engagements without protracted relationship building. Peers are democratizing data in such a manner as you remove the likelihood of corruption through accountability,
transparency and chronology. As a result, high-fidelity relationships among parties are forged at a faster rate since the system of blockchain can hold everyone accountable.
Imagine a digital time stamp propelling through a sequence of events, much like the rapid-fire questions and answers in a game of Jeopardy! In Jeopardy!, contestants must respond quickly and accurately to a series of questions, just as a blockchain time stamp records events with speed and precision.
Blockchain-influenced projects move faster along a timeline, similar to how contestants in Jeopardy! must think on their feet. Participants working on a blockchain leverage their wisdom and strategy, just as Jeopardy! contestants apply their knowledge to answer questions.
Efficiencies are revealed as workers are freed to focus on strategic aspects of their work rather than mundane tasks. Streamlining processes in a blockchain-driven environment is akin to the skills required to play a round in Jeopardy!
In Jeopardy, trust among the host, the contestants and the audience is assumed. In the blockchain world, trust among parties is established through the technology’s inherent transparency and accountability features.
Efficiencies in blockchain have already manifested themselves in various industries, including the insurance space, where trust, accuracy and speed have become paramount.
• Streamlined Advisor Onboarding: Enhances identity verification and advisor contracting experiences.
• Underwriting Automations (Powered by AI): Speeds up decision-making processes in underwriting and deal making.
• Quicker Claims Adjudication: Accelerates claims resolution and enables cross-border functionality.
• Faster Payment Processing: Ensures timely remittance of producer commissions and client settlements.
While financial data predominates the blockchain, its flexibility is much greater. Diverse information like property records, underwriting automations, detailed medical history data, and even weather data can all be stored in the blockchain, much like how Jeopardy! questions cover a wide range of topics. Essentially, information about any asset that can be moved, exchanged, stored or transacted upon.
Bitcoin stands as a global example of blockchain’s distributed ledger technology (DLT), captivating the world’s attention with its decentralized nature. Yet, as we pivot toward mass enterprise adoption, the evolution of global blockchain for the insurance industry is more likely to unfold on permissioned private blockchains. In these controlled environments, central authorities offer the assurance and
It can bring trust, efficiency, and speed that are essential for the evolution of the insurance industry. What is the final question?
structure that corporate enterprises crave, fostering a greater willingness to embrace blockchain in their operations.
Allianz, a pioneering player in this arena, has set a significant precedent by adopting a private permissioned blockchain. Leveraging MSA (Microservices Architecture), Allianz uses three smart contracts to automate settlements.
“Hundreds of millions of euros worth of cross-border auto claims representing tens of thousands of claims across 25 countries in Europe,” reveals Bob Crozier, chief architect, head of blockchain for Allianz Technology. These are the numbers effecting change across the organization and the global auto claims landscape.
“It is the largest production deployment of blockchain in the insurance industry, with over 3 million transactions settled since the go-live date in May of 2021,” said Crozier. Allianz’s success with the technology is a true testament to the potential of blockchain DLT. It empowers reconciliation, validation and audit of claims data, revolutionizing cross-border motor insurance claims between Allianz Germany and Allianz Italy.
The result? Teams efficiently oversee inter-company workflows, expediting the claims process, reducing manual filing and billing, and substantially reducing errors while eliminating pending duties and obligations.
Allianz’s internal controlled model serves as an example of how to create operational success by applying the best attributes of blockchain.
Web 3.0 is poised to revolutionize blockchain technology by introducing the concept of fractional ownership, igniting a profound shift in the ownership economy. In this new landscape, the Fourth Industrial Revolution unfolds as it fractionalizes ownership of blockchain-based projects, democratizing access and enabling individuals to own and influence projects that were once the domain of enterprises. This transformative process, rooted in disintermediation, is fostering trust among participants and fueling personal adoption rates, paving the way for a connected, trusted, high-fidelity Web 3.0 experience.
Fractional ownership redefined Web 3.0 signals an internet of value. The very essence of ownership is being redefined.
Akin to a game of Jeopardy!, where contestants individually contribute to the growth and progress of the game, just as individuals take fractional ownership in blockchain projects. These projects, like Jeopardy! questions, are collectively tackled by like-minded participants and hold monetary value. As projects fractionalize ownership, individuals gain more direct control, thereby reinforcing trust among participants.
This paradigm shift allows individuals to monetize their contributions, creating a mutually beneficial relationship where value provided by each person is recognized and rewarded, similar to how Jeopardy! contestants are. Collaboration as a community of blockchain participants optimizes ownership rewards, opens doors to diverse working contracts, and transforms the way enterprises engage with individuals, offering innovative approaches to participation in blockchain projects as well as more traditional employment structures.
As the digital revolution unfolds, it extends a personal invitation to the everyday stakeholder, propelling us into an era of deeper connections, lasting relationships, and, above all, trusted experiences. Web 3.0, powered by fractional ownership, is a testament to the transformative potential of blockchain in reshaping our digital experiences and workflows.
Disintermediation via blockchain signifies the elimination of intermediaries or middlemen in various transactions and processes using blockchain technology. Removing middle parties or parts through the blockchain’s automation nature parallels the concept of fractional ownership.
Fractionalizing ownership allows more individuals to become direct stakeholders in blockchain projects. In the insurance industry, this means that instead of relying on traditional intermediaries like brokers or underwriters, fractional ownership can enable a new, empowered workforce within the industry.
Allianz’s journey to success in the ICS (International Claim System) case is an example of solutions to real-world business problems for insurance carriers. When asked about disintermediation of roles in this transformation, Crozier stated that “this product was built to disintermediate the re-work, data errors and leakage which leads to more people working.” While blockchain projects with this mutual goal in mind create a transparent ecosystem where trust is inherent, and the apparent need for intermediaries diminishes, they optimize collaboration and create a more effective workforce.
In a smart contract blockchain, computer code acts as the intermediary. “Smart contracts” are written as computer code in an “if…then…” format: if the conditions are fulfilled, then the outcome will automatically occur. Selfexecuting smart contract design automates and facilitates various processes. Participants who understand can interact with the code once the workforce has been empowered to understand it. This transformation encourages workers in the insurance industry to elevate their skills, drive meaningful impacts for their carriers and enjoy a more fulfilling work experience.
In essence, fractional ownership, combined with blockchain’s transparency and automation, can revolutionize industries like insurance, improve strategic business posture, disintermediate monotony and grow a novel, more confident workforce. Carriers, advisors and even curious consumers are buzzing with ideas about how blockchain can reshape the landscape.
Sue Kuraja has been in the financial services industry for 20 years, with more than 15 years of experience in business development, scaling insurance and financial services product distribution. She is an avid researcher of emerging trends in the tech space and their ability to modernize the insurance industry. Sue is dedicated to transforming the insurance industry and growing tech-ed knowledge within the broader insurance marketplace. She may be contacted at sue.kuraja@innfeedback.com
Read parts 1 and 2 of this series at insurancenewsnet.com/topics/magazine
Research shows the key attributes consumers value when selecting a professional to guide them with their financial needs.
By Erin BowlerAquestion for financial advisors: How do you become the financial professional consumers want?
People consider multiple factors when choosing to work (or stay) with a financial professional. Advisors, therefore, must understand clients’ ex pectations to win their business. Recent LIMRA research on consumer sentiment identifies key attributes they value as well as the role of holistic financial services.
Clients deem trustworthiness (66%), experience (60%), expertise (50%) and communication skills (48%) as the most important qualities in a financial profes sional. Only 1 in 3 consumers say person al characteristics like age, race or gender are essential, but of those who do empha size personal traits, they almost exclu sively value an advisor’s personality (92%).
Consumers also value a holistic ap proach to financial advice. LIMRA research suggests advisors who help their clients address more areas of their financial vulnerabilities instead of using a sales approach are more likely to be successful. Consumers could view a sales-only method as reactionary instead proactive. Clients already working with a financial professional especially value a holistic approach to finances (45%).
Our study found clients who worked with their financial planners longer or who perceived their advisor as being older say their financial professional takes a holistic approach to financial services. In addition, clients are more likely to recommend their financial professional when they provide comprehensive financial planning. This indicates advisors should provide clients with a wide
array of services and products.
As mentioned previously, while few clients are concerned about a financial professional’s personal characteristics, all things being equal, there are some trends to note. A financial professional’s age is the second highest-ranked personal characteristic that consumers value (67%). Consumers with an age preference lean toward professionals in the 3549 age range (34%) and 50-64 age range
would prefer to work with a financial professional with an ethnic or cultural background similar to theirs. Black and Hispanic consumers express this at higher rates (36% and 30%, respectively).
Yet an unspoken ingredient for a successful client-advisor relationship is time. Building trust with clients and providing products and services tailored to a client’s needs do not happen overnight but are cultivated over time.
(18%). With age comes the assumption of experience and expertise. Clients might want the same financial professional long term, so they would prefer someone in their prime working years.
Regarding gender, about 1 in 5 adults prefer to work with a financial professional of the same gender because they believe the advisor can better relate to them. Clients also assume certain skills associated with that gender: Female financial professionals are thought to have better soft skills (communication, agreeableness, understanding), while male financial professionals are perceived as having sharper hard skills (knowledge, efficiency and experience). However, 8 in 10 consumers (84%) have no preference for gender.
One in four consumers say they
Therefore, advisors should be aware that they are playing the long game with many of their clientele.
Consumers have a lot to consider when choosing a financial professional. For financial advisors to be successful, they should prioritize building client relationships around trustworthiness, provide a breadth of financial products and services, understand the consumers’ needs, and become a vital source for guiding clients through every step of the financial journey.
Erin Bowler is senior research analyst, distribution research, LIMRA and LOMA. She may be contacted at erin.bowler@ innfeedback.com.
Every advisor should add this powerful tool to their financial planning toolbox.
By Andrew RinnExecutive retention is now at an inflection point as businesses seek to reward and recruit highly valuable employees. Recent economic events have accelerated businesses’ need to hold on to their best talent, while other competitive factors have put strains on the traditional employer-employee relationship. Modern qualified plan arrangements still provide a financial connection between employers and employees, but today’s marketplace demands something much different to attract and retain highly valued employees.
The advisor who understands this dynamic and takes the necessary steps to meet the demand can help provide a unique value-add for their business-owner client. And having a firm grasp on the world of nonqualified arrangements is key. A mountain of research supports the wisdom of this foresight. A recent survey has shown an uptick in nonqualified plans being used by companies to keep their compensation and benefits competitive.
Although there is no formal definition, a loan regime split-dollar life insurance plan, called split dollar, is not subject to most of the participation, vesting and reporting requirements of the Employee Retirement Income Security Act. Please note that these plans are not typically used to replace tax-qualified plans such as 401(k)s and profit-sharing arrangements, but they selectively offer additional employer-sponsored incentives for high-ranking executives.
Retaining the right to select certain key employees adds to the sense of exclusivity that many executives seek in return for their services. In fact,
exclusivity is a prerequisite for these plans. The loan regime split-dollar life insurance strategy offers an attractive value-add that both a company and its key employees can benefit from.
Split-dollar arrangements are a type of nonqualified agreement between two parties to allocate the rights and responsibilities of a life insurance policy. Although no single strategy fits all situations, this nonqualified type of plan is particularly effective at providing valuable life insurance protection for key employees while securing cost recovery for a business.
Employers and their tax advisors must be aware that split dollar is classified as a welfare benefit plan under ERISA. There are no participation, vesting or funding requirements, but there are limited reporting, administration and fiduciary obligations. Compared to the rigorous protections and procedures of qualified plans, split dollar can be an attractive option.
Regulations create two mutually exclusive regimes for split-dollar life insurance nonqualified executive benefits:
1. The policyowner provides economic benefits to the non-owner.
2. The non-owner makes loans to the owner.
In this case, an insured employee is the owner and a business is the non-owner of the policy. The business pays the premium on behalf of the executive, with each payment treated as a loan subject to an adequate rate of interest.
Under the loan regime split dollar, the insured employee-owner collaterally assigns the policy to the employer to secure eventual reimbursement of the premium advances. This is an important selling point for a business seeking cost recovery. However, a business may not take a tax deduction for the annual premium. Although this may seem obvious, it remains a point worth highlighting, as each premium is categorized as a loan of which the business
is the eventual beneficiary rather than deductible compensation.
Employee tax advantages are key
Alhough they seem complicated, the key to understanding loan-based split-dollar arrangements is to know that as the actual legal owner of the policy, the employee is not taxed on the equity buildup in the policy. Compare that to an endorsement split-dollar treatment, where a transfer of a policy to the employee is fully taxable with no offset for basis.
Most executives are not especially motivated by the “reward” of additional taxable income. However, these same employees are very interested in obtaining access to supplemental income with no additional income tax burden. Adding a nonqualified benefit such as loan split dollar on top of a current qualified plan provides a tax diversification scenario that most executives rarely enjoy from their employers.
A loan split-dollar arrangement can offer a “best of both worlds” scenario in the nonqualified executive benefits arena. A key employee can receive supplemental retirement income and death benefit protection in a tax-efficient manner, while the employer enjoys cost reimbursement for loaned premium dollars.
With minimal ERISA requirements, this flexible strategy offers lower costs and less complexity to an employer who wants to retain a key employee in the competitive employee benefits marketplace. Every advisor should add this powerful tool to their financial planning toolbox.
CFP, CLU, ChFC,Andrew Rinn, JD,
is assistant vice president of advanced sales strategy at Sammons Financial Group. He has been a NAIFA member since 2018, and he is president-elect of the Society of Financial Service Professionals.
Arecent survey by the Employee Benefit Research Institute found that nearly 4 in 10 Americans fear retirement could be forever out of reach. This number is up nearly 10% from just a year ago. With Social Security insolvency knocking at our door, the need for financial security has probably never been so critical.
At Finseca, our mission is spelled out right in our name: FINancial SECurity for A ll. And it’s why we continue to draw attention to how important it is that elected officials and regulators get it right when it comes to the goal of consumer protection. We must work together to ensure that public policy advances rather than hinders access to the planning and planners that can help the millions of Americans who are concerned about retirement and their financial futures.
As many of you know, New York state’s Regulation 187 — as the data shows — has been incredibly problematic for consumers looking for access to financial security and more choices in the planning process. And it’s because of what has happened in the Empire State that Finseca has been actively engaged with lawmakers in any state that is considering a similar proposal.
For example, when California State Sen. Bill Dodd, with the backing of the California Department of Insurance, introduced Senate Bill 263, which included a standard far more onerous than New York’s, we knew we had to immediately get involved.
As introduced, the original proposal would have:
» Eliminated all forms of noncash compensation, including health and retirement benefits.
» Created a list of 15 factors that must
be collected from the consumer. If the financial professional is not able to collect the information or the consumer does not provide it, a recommendation cannot be issued.
» Required multiple disclosure requirements over the course of the process, and would have set an incredibly high threshold to recommend a product replacement.
» Potentially made it impossible for a commission-based sale, in effect limiting the number of consumers who would have had access to financial advice from a professional.
Courtesy of a strong coalition led by the Association of California Life & Health Insurance Carriers with the help of Finseca, the American Council of Life Insurers, the National Association of Insurance and Financial Advisors, the Insured Retirement Institute, the National Association for Fixed Annuities, the Federation of Americans for Consumer Choice, and the Independent Insurance Agents and Brokers of America, we were able to take the legislation as introduced and align it more closely with the National Association of Insurance Commissioners’ best interest for annuities standard, which protects consumers while ensuring access to advice is not hindered. It’s a standard that has been adopted in 40 states.
In addition to this, Finseca also led the effort to clean up text in the California Insurance Code (dating back to 2003) that would have excused “non-resident direct response providers” from completing any of the life insurance training that was iterated in the legislation. Finseca firmly
believes that if someone is offering financial advice to consumers, they should be held to the same consumer protection standards as are all producers in the profession. We’re pleased to report this correction has been made.
In the coming weeks, we believe Dodd’s bill (SB 263) will make California the 41st state to adopt a best interest for annuity standard.
In addition to the very troubling personal beliefs of nearly 4 in 10 Americans, there are 60 million American households that have no or not enough life insurance. That means millions don’t even have the benefit of the protection of a true financial security plan. Then, couple this with the roughly $12 trillion protection gap, and our work should be squarely focused on ensuring consumers have more access and more rather than fewer choices.
We can all agree that putting consumers’ true best interest first is a laudable goal and one we should — and can — achieve. We’ve seen it at the congressional level just recently with SECURE 2.0, and we continue to see it with the adoption of the NAIC model. A path forward like that will ensure middle-income savers have access to the financial advice and tools — including life insurance, investments and annuities — they need for true financial security.
Melissa Bova is vice president for state affairs at Finseca. She may be contacted at melissa.bova@ innfeedback.com.
By James Lee
The financial planning profession is in good hands.
That was my main takeaway from my recent participation in the FPA NexGen Gathering event in Denver this August. Not only was there a vibrant energy that was palpable among the attendees, but these professionals understand and embrace the incredible potential of the profession and the impact we can collectively have on society.
Financial planning is a helping profession. And the attendees exemplified this core tenet in their passion to learn how to help their clients. Just as important, they shared the challenges and successes they experienced to help one another.
While walking the hallways, you could sense the camaraderie and the genuine curiosity expressed through the many discussions. Many in attendance and the broader FPA NexGen community are newer to the profession. Everyone took a different path early in their career journeys to get to where they are today — as the profession’s future.
It’s easy to hear the term “NexGen” and automatically conjure up images of
students sitting in college financial planning classes or young interns assisting with client needs in your practice. But NexGen is more than that. It’s a movement to create a welcoming, supportive community for anyone new to the profession, whether a student, young professional or career changer. In fact, the leaders of FPA NexGen gathered earlier this year to clearly define and articulate the purpose of the community and what they endeavor to do — and be — for the profession.
The FPA NexGen purpose statement is:
Whether you’re a student, career changer, or early-career professional, FPA NexGen supports your career development while connecting you to an inclusive community of professionals and elevating your standing in financial planning.
The next generation of financial planners has so much to offer, and we — as more seasoned professionals — can have a direct, positive impact on elevating their standing within this growing and dynamic profession. By taking time to engage in mutually beneficial ways, we can share our knowledge and experiences. This helps next-generation professionals develop their competencies. At the same time, their unique perspectives and new ideas can offer insight into new approaches for your business to keep you
relevant in this evolving landscape.
As you consider what you can do to engage and support next-generation financial planners, consider the following:
• Encourage involvement: If you know a new professional in your office or meet them at conferences and events, urge them to become more active. Please encourage them to join an association or attend events. Share with them the immense value of being active in the community.
• Be a mentor: Whether through formal mentorship programs or more informal outreach, spend time nurturing the growth and development of new professionals. Your guidance and encouragement will make an impact in their lives — and yours.
• Provide empowerment: If you employ next-generation professionals, ensure they are directly involved with more seasoned planners in your practice. The collaboration they’ll experience will help them learn valuable skills, develop critical problem-solving and spur creativity.
• Offer job shadowing: Provide opportunities for next-generation planners to shadow more experienced colleagues. The hands-on learning experiences and exposure to various client situations will offer critical insight that will serve them well in their work.
• Provide feedback: Whenever possible, help next-generation planners refine their skills by providing actionable and meaningful critiques. Using your experience and being sympathetic to the ebbs and flows they are experiencing early in their career will help them become more well-rounded financial planners.
The future of financial planning is bright, and those entering the profession today will play a critical role in advancing the profession tomorrow. By taking the necessary steps to support and encourage the next generation, we will position them, our clients and the profession for greater success in the years ahead.
James Lee, CFP, CRPC, AIF, is the 2023 president of the Financial Planning Association and president of Lee Investment Management in Saratoga Springs, N.Y. He may be contacted at james.lee@ innfeedback.com.
NexGen is a movement to welcome and support anyone who is new to the profession.
While you navigate a changing financial landscape, your MDRT membership continues to provide you with personalized content, key updates on the latest trends and engaging member gatherings at every step of your career journey.
The MDRT Executive Committee is dedicated to accelerating your growth and providing access to resources and benefits that help you further your greatest personal and professional interests. Learn more at mdrt.org
2024 MDRT Executive Committee, from left: John F. Nichols, MSM, CLU, Second Vice President; Carol Kheng, ChFC, First Vice President; Gregory B. Gagne, ChFC, President; Peggy Tsai, RFP, CCFP, Immediate Past President; Clay Gillespie, CFP, CLU, Secretary The Premier Association of Financial Professionals®