InsuranceNewsNet Magazine • October 2022

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THIS MONTH: THE SENIOR HEALTH & BENEFITS ISSUE Life • Health/Benefits Annuities • Financial Services OCTOBER 2022

’s older y a d o t g in v r e How s nt from e r e f if d is s t n clie nts. e r a p ir e h t g servin PAGE 14

Who wants to be a millionaire? — with Tom Hegna PAGE 8 New Feature — Unbundled, untied and unmutualized: The road to fiduciary PAGE 42

How benefits support mental health in the workplace PAGE 34

Life • Health/Benefits Annuities • Financial Services OCTOBER 2022

Is your IMO for sale? More IMOs are cashing out, while some make big bets on the future

Read the full story on page 6

Is your IMO for sale? Read the full story on page 6

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34 How benefits support mental health in the workplace

Not your parents’ senior market

By Sharon Scanlon Workers are looking to their employers for help with their mental, physical and financial well-being.

By Susan Rupe


A new generation of older clients is open to new ways of working with their advisors.


By John Hilton and Susan Rupe The perils of LTC insurance, the return of the DOL fiduciary rule, and Medicare drug price negotiations.


38 Structured outcome products return to the fore

20 I n the right room — with Joyce Yoo By Ayo Mseka Joyce Yoo has taken her experience as a child of immigrants to help her clients achieve their dreams.


26 Private placement life insurance: A way to preserve wealth


8 Who wants to be a millionaire? — with Tom Hegna Tom Hegna is a master salesman whose most important advice to advisors and agents is “don’t sell.” In this interview with Publisher Paul Feldman, Hegna describes his newest ideas for serving the next generation of future millionaires.

By Michael Malloy PPLI is a tool for wealthy families to achieve tax-free investment growth and asset protection.

Paul Feldman John Forcucci Susan Rupe John Hilton Susan Chieca


40 10 steps to social selling success

By Susan Rupe The art of leveraging your social network to find the right prospects, build trusted relationships and ultimately achieve sales goals.


30 W hy advisors historically underuse RILAs in planning By David Hanzlik RILAs strike a balance between risk and return that makes them the perfect product for 2022.


By Mike Loukas Structured outcome products may add a layer of predictability to an investor’s portfolio outcome.

42 U nbundled, untied and unmutualized: The road to fiduciary





4W hat’s in the news at INN


By Richard M. Weber A look at the chain of events that resulted in advisors becoming more vulnerable to claims of negligence and bad faith.

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717.441.9357 Jacob Haas Shawn McMillion Lori Fogle Megan Kofmehl Sorayah Talarek


Ashley McHugh Sarah Allewelt Brian Henderson Dominic Colardo Sapana Shah

Copyright 2022 Insurance & Financial Media Network. All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail, 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 Editorial Inquiries: You may e-mail or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to or 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 inauthenticity of, the information published herein. Address Corrections: Update your address at

October 2022 » InsuranceNewsNet Magazine



Keeping our readers IN the Know


n our effort to keep our readers informed about all the big issues of the day, we’re adding a new section called IN the Know to starting this month. This new section allows our editorial team to broaden our coverage in the magazine, tackling some of the big issues of the day that we can’t accommodate easily in the magazine’s current scope and layout. IN the Know launches this month with an in-depth piece on the history and current state of the fiduciary rule. The October feature will begin a series on the history of and need for fiduciary relationships. One of the biggest trends in the sale of life insurance is the increasing demand for standards of care. Should all life insurance advisors be held to a fiduciary standard? Or is a suitability standard still acceptable? And how did we get to this point? Richard M. Weber, founder of The Ethical Edge — as well as a 25-year life insurance advisor, a 20-year member of Million Dollar Round Table and a former adjunct professor of ethics at The American College — provides an in-depth look at the issue. This type of in-depth look at an important issue of the day is what our readers can expect to find in our new IN the Know section, on page 42.

Can we learn something from insurtech?

Investment in insurance technology firms has been sliding and is down sharply in Q1. But even funding in Q2, which increased in comparison to Q1 and totaled $2.41 billion, was down 50% compared to the same quarter a year earlier. While pundits have many opinions about why the funding has dropped, it’s clear that the insurance industry is a tough market for the technology startups to crack. Even the more promising companies have a long road to profitability and face the same current economic headwinds as all other companies, making the startup journey more challenging. More consolidation and acquisitions are sure to come, as is the folding of some of these 2

companies. But at the end of the day, we’re likely to see the technology that is now on the cutting edge become standard across the industry. Why? Because many of these technologies promise better risk management, lower pricing and faster, easier service for the consumer. Those all are good things. Some insurtechs, such as Lemonade, Bright Health, Hippo and Policygenius, are seen as holding a lot of promise. Metromile was one of the pioneers of usage-based insurance based on its telematics-driven pricing. Metromile was recently snapped up by Lemonade to strengthen Lemonade’s insured base and to break into new states. One difference between traditional insurers and Lemonade, for example, is most insurers have about 4% of their insured base using telematics. Lemonade, on the other hand, claims a very high percentage of its auto policyholders use telematics. This means Lemonade has very accurate information on its policyholders’ driving habits and risk. Traditional insurers often find that even those who sign up to use telematics drop out quickly. This is one illustration of the differences between insurance companies and insurtechs — those who are going with insurtech companies are willing to accept new parameters and risk assessment requirements.

InsuranceNewsNet Magazine » October 2022

This may be because many of those using insurtech may skew younger and have less fear of both the technological implications and the possibility that the data will be used against them in some way. Social media usage has steeled them against data collection concerns. In addition to having a better bond with younger consumers, insurtechs also are being creative in building their insured base. Lemonade, for example, is creating additional lines of insurance intended to attract new customers. Pet insurance is one area where the company is angling to attract new — especially young — customers who not only are not a current Lemonade customer but also may not have insurance of any kind. Lemonade’s game, of course, is to attract the pet owner to sign up for their first insurance policy and then eventually upsell them on the normal policies life will demand as they age into families, homes and other aspects of life that demand coverage and protection. So Lemonade is adopting powerful client adoption strategies as well as attracting younger consumers. Some may see insurtechs as being on the ropes in the short term, but don’t count them out. They are certain to impact the industry significantly. John Forcucci Editor-in-chief


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What’s in the news on The perils of LTC insurance, the return of the DOL Fiduciary rule, and Medicare drug price negotiations.

[Editor’s Note: These are some of the major stories to which we are devoting ongoing coverage on]

Where did LTC insurance go wrong? by John Hilton The tale of long-term care insurance is a story full of flags that went red — at least two, in particular. Jesse Slome frames the two problems as logical assumptions that did not go as the industry had planned. As a result, the struggles with LTCi policy blocks continue, with insurers seeking controversial rate hikes one after another. Slome is the executive director of the American Association for Long-Term Care Insurance. The two assumptions are the changing dynamics of long-term care and the policy lapse rates. LTCi began as nursing home care insurance in the 1970s and “was a very simple product,” Slome recalled. “You priced it. You sold it to elderly people. And if they went into a nursing home, you would pay benefits.” As time went on, however, people began turning to home health care and various assisted living options. Insurers responded in kind, adding “bells and whistles” to LTCi products to cover these alternatives, Slome said. And the products proved very popular. Insurers sold 500,000-plus policies each year from the mid-1990s through the early 2000s. Over time, however, the trends worked against insurance companies. People lived longer. Quality of care and options increased as seniors looked to long-term care as a life extension. They did let their policies lapse at rates anywhere close to what actuaries had predicted. Industry lapse rates averaged roughly 4% a year from the principal amount, Slome explained. Lapse rates actually settled at around 1%. That difference might not seem like a big deal in the abstract, but it is a very big deal in reality. 4

Once people bought this, they started to grow older. They started to see their health change. They started to see other people who were needing it. And they did not drop the coverage.” – Jesse Slome ‘They did not drop’

“Once people bought this, they started to grow older,” Slome said. “They started to see their health change. They started to see other people who were needing it. And they did not drop the coverage.” Consider the simple math: for example, let’s say Genworth sells 100,000 policies. At a 4% average lapse rate, after 20 years, 80% of those policies are gone. The industry average is to pay claims on about onethird of active polices, so Genworth pays claims on about 7,000 policies. Using the same example with a 1% lapse rate leaves Genworth with 80,000 active policies after 20 years. Now they can expect claims from 25,000 to 30,000 policyholders. As a result, Genworth needed premium adjustments — and lots of them. Data from just one state — Virginia — shows Genworth sought 17 rate hikes

InsuranceNewsNet Magazine » October 2022

from regulators from 2016 to 2022. And Genworth is not alone. John Hancock Life Insurance Co. sought 13 rate hikes during the same time frame, and MetLife Insurance Co. or Metropolitan Life Insurance Co. also requested 17 rate hikes. The Virginia State Corporation Commission, the state’s regulatory authority, reports 149 approved rate hikes for LTCi in the state since 2014. Another 35 rate increase requests are pending as of late August. LTC Go Wrong? InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback. com. Follow him on Twitter @INNJohnH.


Fiduciary rule likely to return, experts say By John Hilton The yearslong wrangling over regulation of financial product sales with retirement dollars is likely coming down to one point: the initial contact with clients. Virtually the only thing left for the U.S. Department of Labor to do with its fiduciary definition rewrite is to essentially make all first-time advice fiduciary, analysts agreed during a recent webinar. If it happens, that change would be significant and basically would return the DOL to its initial 2016 fiduciary rule, said Brad Campbell, partner at Faegre Drinker law firm. As it stands, the DOL’s package known as the investment advice rule makes rollover advice fiduciary. “Once the rollover occurs, DOL is taking the position that fiduciary starts with the initial conversation,” Campbell said. “That’s a pretty aggressive reinterpretation of what they historically had said, which frankly, was the opposite, that most rollovers were not fiduciary.” The investment advice rule has two main

parts: a new prohibited transaction exemption allowing advisors to provide conflicted advice for commissions and a reinstatement of the “five-part test” from 1975 to determine what constitutes investment advice. With the latter change, the DOL nudged advisors closer to a blanket fiduciary rule. Still, the department carefully noted that “truly one-time advice, perhaps like recommending a fixed annuity, would not be fiduciary advice,” Campbell explained. With the Biden administration back in place at the DOL, work quickly began to do more tinkering with the regulation of financial product sales. The DOL’s Spring 2021 Regulatory Agenda confirmed that it will rewrite the definition of fiduciary. The Employee Benefits Security Administration was expected to issue the notice of rulemaking in the spring, analysts had predicted. But that deadline came and went. Meanwhile, the industry is fully immersed in doing business under the investment advice rules that took full effect in July. “So, most of the industry is now already

complying with a standard that ... is pretty far down the road,” said Campbell, former assistant secretary of labor in the Bush administration. “Yet the DOL still says it’s not enough and wants to again change the rules on us.” Complicating things further, the DOL faces two lawsuits seeking to toss out the investment advice rule. The Federation of Americans for Consumer Choice and the American Securities Association filed separate lawsuits in February in Texas and Florida, respectively. Fiduciary likely to return

‘Unprecedented’ health care provisions in Inflation Reduction Act By Susan Rupe The Inflation Reduction Act will impact everything from energy to health care — and is good news for those who are on Medicare or who rely on enhanced tax credits to pay for health insurance. The $430 billion climate, health care and tax overhaul, which passed in August, also provides tax credits for clean energy, invests in climate initiatives, boosts funding for the IRS and enacts a 1% excise tax on stock buybacks. The health care provisions in the Inflation Reduction Act are “unprecedented,” especially regarding the ability of Medicare to negotiate drug prices. That was the word from Larry Levitt, vice president for health policy with KFF, during a recent webinar. The bill makes major changes to Medicare as well as extends the enhanced tax credits that enable Americans to buy health insurance through the Affordable Care Act exchanges. Those enhanced tax credits were due to expire at the end of this

year, leaving an estimated 3 million people without coverage. The ability for Medicare to negotiate prices with drug manufacturers “is the most major improvement in Medicare benefits since the ACA was enacted,” said Tricia Newman, KFF senior vice president and executive director of The Program on Medicare Policy. “We come face to face with the costs of our prescription drugs every time we go to the pharmacy,” she said. “Everybody knows somebody who is struggling to pay for their medications.” Although the bill empowers the Secretary of Health and Human Services to negotiate drug prices, only certain drugs qualify, said Juliette Cubanski, deputy director of The Program on Medicare Policy. Qualifying drugs are high-spending brands and biologics without generic or biosimilar equivalents that are nine years or more (for small-molecule drugs or 13 years or more (for biologicals) from Food and Drug Administration approvals (with

some exceptions). The American Rescue Plan Act of 2021, enacted as COVID-19 continued to ravage the nation, increased the premium tax credits for purchasing ACA insurance coverage and extended those credits to more people. This enabled more people to purchase health insurance, swelling the ranks of those covered under the exchanges to a record of 14.2 million. The Inflation Reduction Act continues those subsidies through 2025. It also prevents premium hikes that enrollees would have faced had ARPA expired. Unprecedented inflation reduction 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 Follow her on Twitter @INNsusan.

October 2022 » InsuranceNewsNet Magazine


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Is your IMO for sale? More IMOs are cashing out, while some make big bets on the future

Over the past two decades, the fixed annuity industry has boomed, and the IMO business has boomed along with it. This growth has attracted private equity funds who are eager to buy in. It’s not surprising that more and more IMOs are taking the opportunity to cash in their chips, and many financial professionals expect this trend to continue. “I’ve never seen anything quite like it,” says Jake Boike of Retirement Resources, referring to the spike in acquisitions of IMOs in the past several years. “I stopped counting, but I’d bet it’s over 100?” Boike and his brother DJ joined their father Dave in the family business, and together they have built a very successful independent financial services firm that has thrived for over 30 years. But a few

Caleb, Ben & Jonah Collier


years ago, their IMO was acquired. “It was a bit surprising to me at the time, but it really shouldn’t have been” says Boike.

Are my IMOs best 10 years ahead of them or behind them? Harvesting vs. investing “The way I see it now,” says Boike, “these IMOs are generally in one of two modes — investment mode, or harvest mode. ‘Investment mode’ means they are planting seeds that will pay off in the future. ‘Harvest mode’ is more about taking your gains from past investments. When our IMO sold, I realized we needed to find a new partner that was in ‘investment mode’ and planning for the long term.” Caleb Collier first switched IMOs several years ago for similar reasons. “My dad had been in the business for 20 years by the time my brothers and I joined him.” Collier recalls that he and his brothers began to sense a shift from their IMO

The individual experiences shared may not represent those of all financial professionals.

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over the years. “We noticed more turnover at our IMO. They weren’t attracting and retaining talent on their team like they used to. We were in our 20’s at the time. And I remember looking at our IMO and asking ourselves, are my IMOs best 10 years ahead of them or behind them?” Collier understands why so many IMOs have decided to sell their businesses in the past few years. “I don’t blame any IMOs that have sold, or that sell in the coming years. Financial professionals are expecting more and more from their IMOs. Unless an IMO is committed to investing heavily into their business, it might be better to cash out during this window.”

Patrick Kelly, co-founder and CEO of Signal Advisors

A ‘get rich slow’ scheme Patrick Kelly is co-founder and CEO of Signal Advisors, which bills itself as “the first technologyenabled IMO.” Signal has become one of the fastest growing IMOs, but Kelly started his career as an advisor. “When I left Northwestern Mutual to become an independent advisor, I met some ‘old guard’ IMOs who were definitely in ‘harvest mode’ — just coasting off of their past successes,” says Kelly. “But I was lucky enough to partner with an IMO that was in a major investment cycle when I joined them. It was clear to me, at the time, that their best 10 years were still ahead of them,” says Kelly. Kelly believes that companies like Signal will stand out in the coming years, especially in contrast to the IMOs who are taking chips off the table. “The next decade will belong to IMOs willing to do what my first IMO started to do over 15 years ago — be absolutely obsessed with finding a better way, obsessed with empowering financial professionals, and invest every dollar they have towards making that obsession a reality.”

Signal Advisors has raised over $50 million of venture capital in the past few years from investors like Dan Gilbert (Rocket Mortgage founder, and owner of the NBAs Cleveland Cavaliers). “Having patient capital that takes a 20year view is so important. When you hear about ‘private equity’, that tends to be a whole different beast — shorter time horizons, and more about financial engineering than business building and innovating. Private equity doesn’t work for our long-term approach,” says Kelly. “At Signal, we like to say we have a “get rich slow scheme,” laughs Kelly.

Short-term vs. long-term thinking When Boike thinks about the current IMO landscape, he likens it to real estate investing. “It’s not so different from investing in a house or a rental property,” says Boike. “If you plan to own it for 20 years, it’s worth making some big investments — new kitchen, new bath, maybe even get behind those walls and update the plumbing and electrical. But if you plan to sell it soon, it’s probably just getting a fresh coat of paint and maybe some landscaping for curb appeal,” says Boike. “Both approaches can make economic sense, but it’s pretty clear which of those people I’d want as my landlord!” Boike exclaims. Boike predicts we will see more and more acquisitions in the coming years, as more IMOs decide to either double-down or cash out. “The IMOs who are making long-term investments will attract more financial professionals, and I don’t blame the others for cashing out.”

Jake, David, and DJ Boike

For financial professional use only, not for use with consumers. SA2403682-8/22



Who want$ to be a millionaire? An interview with Tom Hegna by Paul Feldman, publisher


InsuranceNewsNet Magazine » October 2022



om Hegna has spent his decadeslong career helping advisors and their clients create successful retirement plans, teaching them how to have income they’ll never outlive, how to reduce retirement risks, and successfully pass on wealth. His passion for these topics is obvious — and contagious. His books, videos and personal appearances have reached millions, and his retirement wisdom may be more important today — in the face of economic turbulence — than in many past decades. His successful books, including Don’t Worry, Retire Happy! and Paychecks and Playchecks: Retirement Solutions for Life, have helped educate countless individuals as they plan for retirement, and his PBS special Don’t Worry, Retire Happy! has been seen in over 80 million homes. Tom has passed on his knowledge to countless advisors and agents both as a preeminent speaker who is always in demand on the main stages across the financial services industry, and through countless videos. He is a master at making complex financial challenges simple and presenting actionable advice in a friendly, conversational manner that takes the sting out of what can be stressful financial issues. Tom is a master salesman whose most important advice to advisors and agents is “don’t sell.” His results speak for themselves. Paul Feldman: Tom, you and I attended this year’s NAIFA Apex Event, where you were talking about some new ideas you’ve been working on. Can you tell us a little bit about that? Tom Hegna: I’ve spent my entire career focused on baby boomers, those either in retirement or near retirement, and how to mitigate risks in retirement, how to have income that you’ll never outlive and what’s the most efficient way to pass on wealth. But recently I created a presentation for generations X, Y, Z titled “How to Become a Millionaire.” I did this because there are a lot of advisors out there that need a road map for how to talk to younger clients. Younger clients may not be ready for an annuity yet or long-term care insurance, but they’re on their path to building wealth. So, I came up with some simple

ways that I believe most Americans can become millionaires. Feldman: That’s very powerful. What gave you the idea for this approach?

those. But I wanted to get them to have a goal in their mind: They could become a millionaire. Feldman: That sounds pretty straightforward. Is there more to it? How does an advisor explain this to a client?

Hegna: When I was just starting out as an advisor, I’d go to a party or to my kids’ basketball game or baseball game and Hegna: When I sit down with clients, people would ask me, “So, Tom, what do I say, “Look, there are three phases of you do?” And my answer was, “I create wealth. The first phase is building wealth, millionaires. You tell me how many mil- which I call, ‘Who wants to be a millionlion you want and I’m going to show you aire?’ The second phase is protecting your exactly what you need to do to get there.” wealth. Once you have wealth, you want That was my little elevator speech. I didn’t to protect it. That’s, ‘Who wants to stay say, “I sold insurance.” I didn’t say, “I’m a a millionaire?’ And then the third phase financial advisor.” I said, “I help create mil- is distributing wealth. That’s ‘How to live lionaires.” And that’s what I do. and give like a millionaire.’” And when they expressed interest, I And as I had said, I spent my entire would then run a life insurance illustra- career on phases two and three, helping tion and solve it for a million dollars at age 65. For example, I ran one for a 25-yearold female to have a million dollars at age 65. The premium is about $7,700 a year, so that means she’s going to have to put in a little more than $600 a month into a life insurance policy. If she does that, when Tom Hegna’s book, Paychecks and Playchecks, has helped countless she’s 65, she’ll have a individuals plan for retirement. million dollars. Well, not everybody’s going to put their money in life insurance. We all people protect their wealth and distribknow that. Nor probably should they. But ute their wealth. But I wanted to help that was something I could run in an illus- the younger people build wealth. There tration to show them how it could be done. are three things you need to do to build So they’d say, “Wow, this is possible.” wealth. Number one, you need to want to Next, I would teach them about the time make more money. Number two, you need value of money. I’d say, “Now, if you could to spend less or spend wiser. get 6% on an investment, you’d have to put That’s the hard part for most people, beabout $500 a month away to hit your tar- cause they all want to look like a millionget. But if you can get 9%, you only have aire. They want to drive a fancy car, they to put away about $250 a month. If you want to stay at Sandals, and they want to could get 12%, you’d only need to put away do all this expensive stuff. But that’s really a $100 away a month. And within 40 years, not wise when you’re building wealth. And you’re going to have a million dollars.” then number three, you want to put your That got us into a conversation where money into appreciating assets. Most peothey see that I’m on their team. I’m try- ple put their money into depreciating asing to help them become wealthy. I don’t sets: cars, boats, Jet Skis, handbags, shoes, push products, because I didn’t really care clothes, iPhones, iPads. Those are all deif they wanted to invest in mutual funds preciating assets. They go down in value or stocks or life insurance or whatever. every single day. And while we all need to It’s probably going to be a combination of put some of our money into depreciating October 2022 » InsuranceNewsNet Magazine


INTERVIEW WHO WANTS TO BE A MILLIONAIRE? — WITH TOM HEGNA assets, you do not want to have the majority of your money going there. You want to have the majority of your money going into appreciating assets: investments, stocks, commodities, real estate — things that typically go up over time. So, the dirty little secret is that everybody is going to make millions of dollars over their lifetime. For example, even somebody making $50,000 a year over 40 years is going to make about $3.7 million. Over 50 years, they’d make about $5.6 million. But if I could get them up to $100,000 a year, they’re going to make between $7.8 million and $11.2 million. And if I could get them up to $250,000 annually, they’re going to make over $18 million, or $28 million over 50 years. And the more money you make, the easier it is to save a million dollars. When it comes to total economic wealth, there are two components. Number one is human capital and number two is financial capital. And the big mistake that most advisors make is they’re only looking at their financial capital. “What are your investments? Where’s your 401(k)?” With younger people, you want to look at their human capital — their potential future earnings. Young people have tremendous human capital. The reason most people don’t become millionaires isn’t because they don’t make enough money, however. The reason most people don’t become millionaires is they spend too much of the money that they make. I believe most Americans could be millionaires, except for two things. Number one, they spend too much money on their cars, and number two, they get divorced. Let me give you an example. Last year, I wanted to buy a new truck. I could buy a brand-new Ford F-150 pickup that was about $65,000, or I could buy a pickup that was two years old with 13,000 miles on it for $30,000. Now that’s a difference of $35,000. Well, if you know me, I went with a two-year-old pickup. Now, if I take that $35,000 difference and I invest that at 6% interest, in 30 years that’d be worth over $200,000. In 40 years, it would be worth almost $400,000, and in 50 years, it would be worth almost $700,000. If I could get 8%, it’d be worth $382,000, $849,000 or $1.8 million. Now that’s just the impact of one vehicle. My wife and I have been married for almost 40 years. We have four kids. I bet we’ve had 15 to 20 vehicles between us 10

and the kids. Think of how many millions of dollars that would be if you just bought used, instead of buying new, every time you bought a car, and invested the difference. Gary Vaynerchuk says people lose because they want things fast when life is long. Some millennials say to me: “Yeah, but Tom, it’s YOLO. You only live once. We’ve got to get out there and live.” And I say, “No! Joe Jordan says it’s YOYO. You’re on your own, baby.” And the only one who will take care of your older self is your younger self. And I think that’s the message that we really want to take

Feldman: You’ve talked about inflation. How will the rising inflation rate we’re experiencing now impact the future of, say, $1 million? Hegna: In 20 years, a million dollars isn’t going to be what it is today, but here’s what I tell people. You’ve got to get your first million in order to get your second million. And the first million is the hardest to get. Once you get your first million, the second and third and fourth can come quicker, because now you can have your money making money. It’s not just you

Tom Hegna is a popular speaker for industry organizations such as Million Dollar Round Table.

to young people: The only person that will take care of your older self is your younger self. Be good to your older self. Feldman: How do you help somebody make more money, and possibly increase their annual pay? Is there any advice you give them? Hegna: The Japanese have a thing called ikigai. Ikigai is where four circles intersect. Number one, what are you good at doing? Number two, what do you love to do? Number three, what does the world need? And number four, what can you get paid to do? And I always use myself as an example because I think I found my ikigai. I love doing what I’m doing, I think I’m pretty good at helping people with retirement income, the world needs it, and I get paid to do it. So, I’m getting paid to do the things that I’m good at, I love, and the world needs. And so, that’s really ikigai. So many people hate their job, hate their co-workers, they don’t like to go in to work. They’ll never become wealthy doing that because you can’t make a lot of money doing something that you hate to do.

InsuranceNewsNet Magazine » October 2022

making money. Your money can make money, so you can have multiple income streams eventually. But you’ve got to get some money before you can have those multiple income streams. One thing I talk about is the “rule of 72.” That’s how fast money can double. Just divide whatever percentage you’re earning into the number 72, and it’ll tell you how many years it will take for your money to double. If you’re earning 10%, you divide that into 72. That means every 7.2 years, your money will double. When I was with a client, I’d say, “OK, you’ve got $50,000 now. In 7.2 years, you can have $100,000. Then in another 7.2 years, you’ll have $200,000. Then you’ll have $400,000, $800,000, $1.6 million, $3.2 million.” And I would say those words so they could actually think, “Oh man, maybe I can become a millionaire.” If a client can understand how money works and how compounding works, they have a much better chance of becoming wealthy. Feldman: An advisor might say, “Oh, I don’t want to work with somebody who’s young because there’s just not enough money in it for me.” Should

WHO WANTS TO BE A MILLIONAIRE? — WITH TOM HEGNA INTERVIEW advisors work with younger clients who may have human capital but little or no financial capital? Hegna: The reason you want to talk to younger people is that while they don’t have a lot of financial capital now, they’re going to have a lot of financial capital in the future — and you want to be there helping them. And if you build a relationship with them when they don’t have any money, they’re going to trust you when they have money. I had this family when I was an advisor and they were just poor as could be. They lived out in Apache Junction [Arizona] in a trailer house, a single-wide. I treated them with respect. Well, guess what? They won $1 million in the lottery. Who do you think they called? They called me because I treated them with respect when they didn’t have money, so they knew I’d be nice and treat them with respect when they did have money. I did not prejudge people. I’d have people say, “Oh, I’m not going to that neighborhood. That’s a bunch of trailer parks.” Do you know how many annuities I wrote in trailer parks? There were people who had $500,000 in an account, a CD or a tax-free bond — and they were living in a trailer home. I did not prejudge people, and that was very good for my business. Feldman: What impact do you think inflation is having on people currently close to retirement age? Hegna: Well, it’s really going to hurt people in retirement. What I tell people is you can’t just have income in retirement. You’ve got to set up increasing income in retirement. For example, I have 11 annuities. I have some that start at age 60, some that start at age 62, some that start at age 65, some that start at age 70. I’m guaranteed to have increasing income for the rest of my life. Another approach is to cover the basic living expenses with guaranteed income, but then optimize the rest of the portfolio to protect against inflation. You invest some in stocks, real estate, commodities, things that go up in times of inflation. Feldman: What do you think about the market right now? Hegna: It’s very, very scary. In the past, the Fed would come in and they would print money or you’d have Congress that

would spend money. Well, I don’t think the Fed’s going to be printing any money, and they’re not going to be lowering interest rates for a while. I think this market has quite a ways to go down. Feldman: You have described life insurance as “a woman’s issue.” What do you mean by that? Hegna: Well, number one, I think the numbers are about 75% of married women end up as widows. Because women live longer, they’re the beneficiaries of life insurance policies somewhere between 70% and 80% of the time. So, I tell women, “You’re going to live with the consequences, good or bad, of how much life insurance your spouse is carrying.” Now, am I saying it’s not important for women to have life insurance? I’m not saying that. About 50% of all women own zero life insurance, at a time now when over 50% of women are the breadwinners of their home. So, women need a lot more life insurance. But the fact is they’re more likely to be the beneficiary than the husband is to be the beneficiary. We need to talk to women about making sure that their spouse or their partner has adequate life insurance. Feldman: You also talk about life insurance as a tax issue. What do you mean by that? Hegna: Well, if you look at the history of the U.S. marginal tax rate, it has not been a very level number. During most of your parents’ lives, it was 70%. Well, where are we now? We’re in the high 30s. Is it unreasonable that taxes are going to go up to 45%, 50%, 55%, 60%? I think it’s highly likely that taxes are going to go up that high. Life insurance, as a death benefit, goes tax-free to heirs. That’s important. It goes tax-free to the kids, and you can even have it set up to be free of income tax and estate tax if it’s set up properly with an irrevocable life insurance trust and everything. There aren’t a bunch of assets out there that can do that. Another nice thing about life insurance is you can take money out prior to age 59½ with no penalty. It’s like a Swiss Army knife. Most people are significantly underinsured. You really need to have at least $1 million of life insurance for every $50,000 of income. It’s the low-interest-rate environment that

has caused people to be underinsured. When interest rates were 10%, they’d say, “You need 10 times your salary or seven times your salary.” When interest rates are at 1% or 2%, you really need 20 or 25 times your salary. Feldman: In this environment, what would you recommend for someone who is a retiree right now, or somebody who is really close to retirement? Hegna: The formula hasn’t changed. Retirees should cover their basic living expenses with guaranteed income. So Social Security counts because it’s a lifetime income annuity. Pensions count because they’re a lifetime income annuity. But whatever a retiree is short between their normal living expenses, and retirement funds plus any other guaranteed income, that’s where the annuity fits in. You want to have guaranteed income to cover those basic living expenses. And then you can invest the rest of your money as you see fit. We saw during COVID how important it is to have guaranteed lifetime income. People say, “Oh, I buy dividend-paying stocks.” I buy dividend-paying stocks, too, but they’re not guaranteed lifetime income. During COVID, over 700 companies slashed or eliminated their dividends. People say, “Oh, I do real estate. That’s my deal.” Well, I like real estate, too, but it’s not guaranteed lifetime income. During COVID, renters didn’t have to pay rent and landlords couldn’t evict them. It’s not guaranteed lifetime income. I’m very firm. The research is clear. You should cover your basic living expenses with guaranteed lifetime income, and then you can invest the rest of your money. Feldman: What’s the best sales advice you’ve given in the past six months? Hegna: I tell people, “Stop trying to sell. Focus on helping your clients. Ask them what keeps them up at night, what are their concerns?” If you ask the right questions, they’re going to tell you exactly what you need to do. They’re going to literally say, “This is exactly what I need.” Stop pushing products. Focus on solving problems and helping people retire the right way. Get on their side of the table instead of your side of the table. That’s the best advice I can give.

October 2022 » InsuranceNewsNet Magazine



Insurance TV commercials continue to draw interest

You can be forgiven if you are among those who grow weary of the incessant auto insurance commercials on broadcast and streaming channels that featured colorful and memorable characters like emus, geckos, Mayhem Men, Jake from State Farm, the Farmers Insurance professor, and, of course, Flo, the Progressive cashier. Three or four of the top 10 brands across all of TV advertising are insurance brands, said Tyler Bobin, a senior analyst at, which measures the brand and business impact of TV and streaming advertising. He acknowledged that some of the ads are over the top, but they are ads in which viewers “immediately recognize the people and characters in the ads and the company they represent.” iSpot’s latest analysis of how insurance brands covered TV in the first half of 2022 found that out of the 50 most-seen insurance ads, a Liberty Mutual spot ranked as the most likable, followed closely by Farmers Insurance, featuring the irrepressible museum curator played by actor J.K. Simmons, and, of course, one with the Geico gecko. Like most successful ads, they win with funny vignettes, earworm jingles and repetitive slogans.


CVS is looking for a primary care provider to acquire or invest in by the end of the year. During the company’s second-quarter earnings call, CEO Karen Lynch said CVS is looking to enhance its presence in primary care, provider enablement and home health. This comes as CVS had shown interest in acquiring concierge primary health company One Medical, but Amazon wound up buying it for nearly $3.9 billion. CVS is more than just a place where people buy prescriptions or health and beauty products. The company’s health care reach includes its owner health insurer, Aetna, and pharmacy benefits manager Caremark. CVS rival Walgreens also is deepening its presence in primary care and home health. The company invested $5.2 billion in primary care company VillageMD last year, boosting its stake in the company as





it looks to open hundreds of new clinics across the U.S.


Forget going over the river and through the woods to visit Grandma. Today, it’s more likely that you and Grandma live in the same house. The number of households with two or more adult generations has quadrupled over the past five decades, according to a Pew Research Center report based on census data from 1971 to 2021. Such households now represent an estimated 18% of the U.S. population. Pew found that finances are the top reason families are doubling up and that’s partially due to ballooning student debt and housing costs. Caregiving also plays a role in the decision to move in together. Multigenerational living has grown the fastest among adults ages 25 to 34, with 25% of young adults living in a multigenerational


We shouldn’t be panicked about the level of household debt right now, but we should be concerned about it. — Katherine Lucas McKay, associate director at the Aspen Institute Financial Security Program.

household. That’s up from just 9% five decades ago.


Credit card balances helped fuel much of the surge, increasing by $46 billion between the first two quarters of the year. Mortgage debt also increased during the second quarter, and student loan debt rose slightly during the same time period. Over the past year, credit card debt has jumped by $100 billion, or 13%, the biggest percentage increase in more than 20 years. Despite the increase in credit card debt, Americans continue to apply for plastic, the New York Fed said. Americans opened 233 million new credit card accounts during the second quarter, the most since 2008.

Top 10 Brands By Impressions Rank 1 2 3 4 5 6 7 8 9 10

Brand Liberty Mutual Progressive GEICO Allstate State Farm USAA Farmers Insurance Northwestern Mutual UnitedHealthcare CarShield

Hawaii is the state with the highest life expectancy at birth – 80.7 years.

InsuranceNewsNet Magazine » October 2022

Source: Centers for Disease Control and Prevention

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dam Hyers has been serving the Medicare market for so long that now he is beginning to work with the children of his original clients. And this new generation of older clients does not want to work with him in the same way as their parents did. Hyers is owner of Hyers and Associates in Columbus, Ohio, a firm he founded 20 years ago. But he started serving the senior market several years prior to that. During his 25 years or so in business, he has seen some stereotypes about working with seniors fall by Adam Hyers the wayside. For example, forget about the conventional wisdom that older consumers don’t want to do business online and only want to meet with their advisors in the office or “across the kitchen table.” “Many older clients are on Facebook because that’s where they’re going to see what the kids and the grandkids are up to and see the pictures of people in their family having vacations and doing other things. So there’s absolutely no question that older clients are more comfortable online than they were a decade ago,” he said. “And then many of them are in different types of online groups where they’re gathering information and learning about Medicare products.”

strong ratings. After you’ve earned someone’s trust, you might ask them to write a review somewhere, and you can post those reviews on your website.” Hyers relies on internet marketing to reach these online-savvy seniors. “I attribute some of our success to writing articles, posting content or creating advertising that touch on some of the things that people in this age group are looking for,” he said. “It might be dental and vision coverage to go with a Medicare Supplement or Medicare Advantage plan, or perhaps it’s about a higher annuity rate. Maybe it’s about something aimed at seniors, such as Silver Sneakers. I listen to and gather information from the conversations I have with people and try to find the themes that come up most often, and then touch on those themes when we add content online.” The increase in automation regarding Medicare plans and related products also has been a big change Hyers said he has seen over the years. He believes clients see that change as being more convenient for them, while the advisor sees increased online tools as adding more efficiency to their work. Hyers said he has many out-of-state clients who enroll in coverage through his website. They can select a dental or a vision policy or a prescription drug plan in addition to enrolling in a Medicare plan. The difficulty in holding in-person client meetings during COVID-19 lockdowns led to many clients becoming more comfortable with meeting online and per-

going away. So we have to work more electronically and online. This allows us to be more productive.” Another big change Hyers said he has seen in the market is the increasing number of choices consumers have in selecting Medicare products. “I don’t want to say that all these choices are making consumers tough shoppers, but I do believe they are becoming more informed shoppers,” he said. “They have specific needs and specific requests. So you want to make sure that you’ve got a whole quiver full of arrows; otherwise, that business may go somewhere else.

Dominate your ZIP code

Medicare open enrollment for 2023 begins Oct. 15 and runs through Dec. 7. As the U.S. population continues to age, the size of the senior market keeps getting bigger. The number of Medicare beneficiaries is projected to grow from around 63 million in 2020 to more than 93 million in 2060, according to KFF research. Jesse Slome is director of the American Association for Medicare Supplement Insurance and has spent a big portion of his career in tracking trends and statistics for that market segment. He has seen enrollment in Medicare Jesse Slome Advantage plans rocket from 6 million in 2005 to 26 million in 2022. Medicare Supplement enrollment

Medicare Drug Plan Spending Up Spending on prescription drugs for the Medicare Part D program has grown, according to latest data reported by the January 2022 Congressional Budget Office report. Older clients may select an advisor based on a referral from a friend or relative, but Hyers said he has found many of his clients also go online to research an advisor before they agree to do business. “They will check with the Better Business Bureau or Google ratings to see what kind of reviews an advisor has,” he said. “That’s why it has been so important for us to build trust online by having good reviews,

forming tasks online, Hyers said. “I also think people now realize how much time [in-person meetings] take up,” he said. “Seniors can be and are often just as busy as we are. They have things to do and places to go. When they’re ready to enroll, they want to get it done and then move on to their next project. “And I also think the days of being the Medicare agent on the road all week are

also is on the rise — from 9.7 million enrollees in 2010 to 14.6 million in 2022. One of the biggest challenges Slome said he sees for advisors who want to serve the senior market is the competition they face from what he calls “mega marketers,” Medicare Advantage companies that flood the TV airwaves and magazine advertising pages with celebrities endorsing their products.

October 2022 » InsuranceNewsNet Magazine



Medicare Advantage Enrollment From 2005 to 2020 24M


17M 11M 6M The number of Americans in a Medicare Advantage plan increased to 26 million in 2022. That’s roughly 42% of all Medicare enrollees. The Congressional Budget Office predicts the share will rise to about 51% by 2030. How does an individual advisor compete with the likes of Joe Namath or Jimmie “J.J.” Walker? By “dominating their ZIP code,” Slome said. “It’s by establishing yourself as the local go-to person for Medicare plan information and ultimately, solutions,” he said. “I believe that the future for Medicare agents and brokers is communicating and educating seniors to the fact that Medicare is a national program, but the available options are local,” Slome said. “A consumer can call all the call centers and all the toll-free numbers they want, but they should speak to a local Medicare specialist.” Just as Hyers found his clients are spending more time online researching their options, Slome advised those who want to serve the senior market to develop

a strong online presence. “It’s important for advisors to create a good LinkedIn profile because prospects will look you up online,” he said. “Today, we don’t just go out to eat at a restaurant; we go online and find which restaurant has the most stars or the best ratings and we eat there. So it’s important that advisors also have good ratings and good comments online as well.” After creating a strong online profile, an advisor can take several other steps toward dominating their ZIP code, Slome said. Some of those methods can be as old-fashioned as putting a magnetic sign on their car advertising their services. Conducting seminars in public libraries or community centers will work for someone whose market is in a smaller community. Slome said some advisors he knows will

From $74 billion in 2009 to $120 billion in 2018 Through the 1980s and early 1990s, 5% to 6% of all spending on health care services and supplies was on prescription drugs obtained in the retail market (pharmacies or by mail order). By 2018, that share was 10%. 16

InsuranceNewsNet Magazine » October 2022

contact employers in their community and offer what their health care options are to come in once a year to explain to workers who are turning 65 or who are about to retire. Advisors won’t get every consumer who wants to enroll in coverage, Slome said. “There’s a certain group of consumers who will call a number they see advertised, and they will do whatever the person on the other end of the phone tells them to do,” he said. “But there certainly is a segment of the population who will see the advertising and say, ‘I think I can do better. I want to talk to someone.’”

Educate yourself and your clients

Sandy Salcido’s advice to those who want to succeed in working with seniors can be summed up in one word: education. Salcido owns Take Action Insurance Services in Rancho Cucamonga, Calif., and has specialized in Sandy Salcido the senior market since 2010. She was inspired to serve that market segment after caring for her mother-in-law, who was on Medicare when she was diagnosed with amyotrophic lateral sclerosis and ultimately died from the disease.


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October 2022 » InsuranceNewsNet Magazine



Medicare Supplement Enrollment 14.3M






11.2M 9.7M



Source: American Association for Medicare Supplement Insurance, January 2022

“We didn’t know anything about Medicare at the time,” she said. “We didn’t know anything about ALS. And so we had a hands-on experience and learned about that. After she died, I wanted to learn more about Medicare because at the time, my parents were 65 years old, and I wanted to educate myself so that I could help them.” In addition to educating themselves about Medicare, Salcido said, advisors also should educate their clients on the options available to help them make the best decisions. She also has seen older clients becoming more comfortable with doing business online. “That’s been the biggest change I’ve noticed in the past 12 years,” she said. “Someone who was turning 65 years old 12 years ago didn’t have the technical savvy that someone turning 65 today has. We are having more Zoom meetings and communicating more by text than ever before.” That technical savvy can be a two-edged sword, she added. “Clients are bombarded with messages about different products, and sometimes they can be pulled into something that’s wrong for them.” Salcido said she can’t protect people 18

from being lured by an advertising message, but she can educate them to make an informed choice. “I want my clients to be educated,” she said. “I tell them, if you see something interesting out there, come talk to me about it, and we can check into it and see if it’s the right thing for you.”

Help clients live their best lives

Serving older clients means discussing long-term care and other issues in addition to Medicare. And it’s about more than selling them something, sa id Lori Guba sh, national sales direcLori Gubash tor for long-term care and Medicare with The Krause Agency, an independent marketing organization based in DePere, Wis. “Don’t go in telling your client what they need, but instead, ask them what they need to live their best life in retirement,” she said. Asking questions is one way to determine what a client envisions for their later

InsuranceNewsNet Magazine » October 2022

years and how you can help them meet that vision, Gubash said. “Ask questions such as, if you were to need care, what would you want that to look like? Do you want to stay in the home you live in now, or do you want to move to another community? Where do your children live, and do you want to live close to them?” Gubash said she never leads a client meeting with a discussion on policies or products. “I just listen,” she said. “You have to engage that person and not treat them like a number or as just another sale.” The COVID-19 pandemic “made people stand up and take notice” of the prospect of their own need for care, Gubash said. “It scared a lot of people out of their belief that the need for care isn’t something that will happen to them. People are looking at their longevity differently, and they want to mitigate their risk.” When a consumer begins thinking about their long-term care risk, Gubash said, the first person they turn to is an advisor, and the first thing they want to know is what they can afford. One of the trends she is seeing in longterm care insurance is that more carriers are offering coverage for short-term care — care that extends for 364 days or less — and that coverage does not require medical underwriting. She also is seeing more life insurance and annuity products that have an LTC or a critical illness benefit, and those products are appealing to those who haven’t quite reached senior citizen status yet. “Saying you’re too young to consider long-term care is not an option anymore,” she said. Above all, Gubash said, advisors should listen to their clients’ concerns and questions instead of jumping in with possible solutions. “If you’re out there using scare tactics or spreadsheeting someone, your client will end up with ‘analysis paralysis,’ and they will put off making a decision indefinitely.” 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 Follow her on Twitter @INNsusan.

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the Fıeld

A Visit With Agents of Change

In the

right room

Joyce Yoo focuses on helping clients realize their dreams and credits a study group of top professionals with helping her find success. By Ayo Mseka


InsuranceNewsNet Magazine » October 2022



fter 13 years in the financial services industry, Joyce Yoo said the longer she is in the business, “the more I realize that I really love helping people who care about their families and the causes that drive them. It is the best feeling to see a client realize their dreams because of the good planning that we put in place. Many times, if we didn’t help them, I’m not sure how the client would have been able to achieve the outcomes we were able to accomplish together. So, it really inspires me every day.” Yoo is an executive partner of Wisely Financial Strategies & Insurance Solutions, a financial services firm based in San Francisco, and an agent with New York Life’s Greater San Francisco General Office. She said her background also has influenced her career in financial services. “I serve a lot of immigrant families — both Asian and other ethnic groups,” said Yoo. “As a child of immigrants myself, I can uniquely understand some of the struggles that immigrant families face. There are underlying characteristics of most immigrant families because we all have to struggle to learn to live with our culture in America and navigate the challenges of coming here for the love of our families and the sake of opportunity and growth. When you help immigrants, you are helping people rooted in the care of their families and communities. I find it a privilege to serve them.” The clients whom Yoo helps realize their dreams are typically individuals with high incomes, wealthy business owners, large estates and large corporations. “As you might imagine,” she said, “these clients have a range of advanced financial, legal and taxation needs, and we partner with their trusted professionals to create plans that meet those needs through a macro perspective, and with micro-execution.”

Building her practice

With her emphasis on helping clients achieve their goals, it is no surprise that Yoo gets most of her clients through referrals and by word of mouth. “Most of my current client acquisitions are from referrals, but what surprised me is that the second way I have been acquiring clients is through people contacting me directly,” she said. Yoo thinks one reason clients have been reaching out to her firm directly is that the

firm has been good about celebrating its accomplishments. “Over the past several years, I have been honored to receive and be nominated for some prestigious industry awards. As we get honored in this way, we make it a point to celebrate these ‘wins’ with the people who made it happen — our clients, friends and family,” she said. “We send out announcements in the mail and post on social media, and I think this has really helped people around us to celebrate with us and see our firm as a great place to bring their needs.” Like many organizations, Yoo’s firm has had to make some changes in the way it interacts with its clients because of the pandemic. “I think my business practice has changed similar to how many practices probably have evolved,” she said. “We are running 99% of meetings via Zoom and phone. “The only clients I have met in person are those who are hearing impaired. What I have been amazed by is how even my elderly clients have adapted to the way we

age of 40. She is also a member of Million Dollar Round Table’s Top of the Table and has achieved recognition as part of New York Life’s Chairman’s, President’s and Executive Councils. Yoo attributes this high level of success to several factors. First, she is constantly studying and learning. “I am definitely a student of the craft,” she said. “I am always keeping up to date, learning about laws that are changing, what’s going on with the economy and new trends in financial planning. Then I really take a step back and think about how those things will affect my clients and who I need to reach out to as a result. When I do reach out on these matters, it really brings a lot of value to my clients.” Another reason for her rise to the top is her ability to keep her calendar filled with client meetings. “I know that this may sound very rudimentary, but I believe keeping your calendar full has a lot to do with several factors. I think creating an environment

As a child of immigrants, Joyce Yoo understands some of the struggles immigrant families face.

are doing business. Some have had slight trouble with Zoom or DocuSign, but for the most part, I think people both young and old are really enjoying not having to travel for meetings. I have to say, it has helped me tremendously, as well. No one is more than five minutes late to an appointment, and Zoom helps me be more efficient with my downtime.”

A recipe for success

As her firm has prospered, Yoo has received numerous accolades and awards. She is a past recipient of Advisor Today’s Four Under Forty Award, which recognizes advisors who have achieved excellence in their profession by or before the

of trust and credibility can sometimes be taken for granted. Our office does this by reaching out to clients to simply touch base and let them know about news that may be pertinent to them. As long as we are having client meetings, the business comes naturally.” Her organizational skills have also helped her. At the start of her career, she said, there was so much going on that she didn’t know how to put everything together — whether it was the client process or business operations. Now, the company has a system under which it keeps tabs on every task. Even if there are several client meetings in a day, the system notes everything that it needs from those meetings so

October 2022 » InsuranceNewsNet Magazine


the Fıeld

A Visit With Agents of Change

that it knows exactly what it needs to do for those clients. “We do our best not to let anything fall through the cracks,” Yoo said. Something else that has helped Yoo move ahead is her belief in continuous self-improvement. “I think the sign of a good financial advisor or planner is that they are adaptable to whatever situation that they are in. From my experience, when looking at the trajectory of the people that are successful around me, they have typically been people that are really willing to continually grow and learn in the field that they’re in,” she said. There is a saying that goes like this, she added: “If you are the smartest person in the room, you are in the wrong room.” Yoo said she believes in that saying because the study group she is in is full of New York Life’s top financial professionals. “I don’t know how I got into that study group, because I was not in that category when I

Yoo said what she loves most about her practice is helping clients achieve their dreams.

first started, but with their help and guidance, I continue to have successes along the way,” she said. Yoo’s study group, the Think Tank Study Group, has been around for a long time. It has a lot of high-performing people with amazing businesses, she said. She loves how diverse the members are and thinks that contributes to the group members’ ability to help each other. “The oldest person is in his 80s; so, there are lots of different personalities, business styles and perspectives, and I really enjoy that,” she added. Also, every member has a similar dedication and desire to bring value to the group. “When we meet annually, we take time out of our business, so out of respect for each other, we really try to bring our best ideas so that we can all benefit,” she said. In addition to helping her enhance her knowledge, the group has provided friendship. “A lot of times people say that this business can be very lonely. I feel 22

very honored and blessed to be able to call my colleagues friends. Knowing that you have someone to talk to who truly understands your struggles or successes is a true gift,” she said. When Yoo is not serving her clients, improving her knowledge or participating in her study group, her favorite thing to do is to hang out with her friends and family. Often, she said, it’s just grabbing a meal or going to someone’s home to catch up. She also likes going to museums or hiking in scenic areas. She used to like to travel, but she thinks that the pandemic has really taught her how to enjoy staying in place.

How to move ahead

For financial professionals wishing to move ahead, Yoo advised, “It doesn’t matter if you have been in the business for just a short time or a long time. I think all of us are still trying to create business opportunities within our target audiences. What I have learned is that in order to get those clients, advisors need to learn what their needs are and how to address those needs. That way, when you meet people you want to work with, they can see that you can provide value and they are compelled to work with you.” She also has learned that some people want to get to the next level of success but aren’t willing to put in the work to get there. “I am a firm believer that we need to do the things that are uncomfortable in order to be successful, and that is a hard thing to learn and to constantly do,” she said. “But if you really want to continually improve and get to the next level, you have to be willing to do the things that other people aren’t doing. I learned from two really great advisors that you can never be comfortable, because that means you aren’t challenging yourself to see what you are actually capable of achieving.” 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

InsuranceNewsNet Magazine » October 2022

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit. Product features and availability may vary by state. Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods. Policyholders could lose money in this product. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its 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. 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 under the policies or contracts it issues. Securian Financial is the marketing name for Securian Financial Group, Inc., and its subsidiaries. Minnesota Life Insurance Company and Securian Life Insurance Company are subsidiaries of Securian Financial Group, Inc. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.




Insurance products issued by Minnesota Life Insurance Company


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October 2022 » InsuranceNewsNet Magazine


LIFEWIRES » 43% of middle-income

Will money woes impact life insurance sales? Many middle-income Americans are stressed about

consumers do not own life insurance.

» 1 in 5 Americans would

face financial hardship within a month of the death of a primary breadwinner.

inflation and their finances. Those worries are transSource: LIMRA lating into anxieties about insurance, including life insurance, according to a panel at a recent webinar. Six percent of middle-income consumers have reduced, canceled or put off buying needed life insurance due to economic conditions, and another 6% said they would reduce, cancel or put off buying needed insurance if economic conditions persist, said Alison Salka, senior vice president and head of research at LIMRA. Although the pandemic is less of a concern to them than it was in previous months, 61% of those surveyed are extremely worried or very worried about the economy, and 70% said that inflation is a major concern. This is up from 65% in January of this year. Thirty-five percent are feeling stressed about their household finances, 32% about work/career issues (for those who are employed), and 25% about their personal health/well-being. Middle-income consumers also have worries related to their personal relationships and personal, day-to-day demands, as well as to caregiving for their children and/or older relatives.


Insurance fraud costs the U.S. economy a record $308.6 billion annually, and the rising price of fraud penalizes every living American an equivalent of $932.63 a year, or $3,750 for the average family. That’s according to a new comprehensive study by the Coalition Against Insurance Fraud, the first of its kind in more than 25 years. In the eight categories of insurance studied, life insurance led the pack, contributing $74.7 billion to the overall annual fraud total, followed by Medicare and Medicaid ($68.7 billion), property and casualty ($45 billion), and health care, premium and workers compensation fraud, with about $36 billion each. The coalition called for carriers to commit to new and more resources to combat insurance fraud and for the formation of a new task force to focus on fraud in each specific insurance line. DID YOU





Consumers took a fresh look at individual life combination products in 2021, leading to a sales rebound, LIMRA reported. Total new premium for individual life combination products increased 22% to $4.3 billion compared with prior year results, and down slightly from the $4.8 billion in premium generated in 2019. Combination products represented 20% of total life insurance premium in 2021. LIMRA research shows there were nearly 559,000 policies sold in 2021, up 37% compared with 2020 results. What led to this rebound? A LIMRA official said much of it can be attributed to a law passed in Washington state. “Sales rebounded significantly in 2021 due to the introduction of the Washington Cares Act, which propelled sales in long-term care extension and acceleration sales,” said Karen Terry, LIMRA assistant vice president, insurance research.

QUOTABLE We are professional worriers on behalf of our clients, wanting them to be safe with no unexpected surprises.” — John Resnick, principal of The Resnick Group, Naples, Fla.

The act, signed into law in 2019, established a state-sponsored long-term care benefit program funded by a 0.58% payroll tax, which was set to begin on Jan. 1, 2022. Workers in the state could apply for an exemption from the payroll tax if they owned private LTC coverage on or before Nov. 1, 2021.


Prudential Financial has no plans to exit the life insurance business anytime soon, but it will move forward with caution, president and CEO Charles Lowrey said. Lowrey lauded the potential in the life insurance business during a recent earnings call with industry analysts. With the final question of the session, Lowrey was asked if Prudential might consider shedding its life segment. “We still think there’s a significant potential for growth in the life industry,” Lowrey said. “You have a $12 trillion life insurance gap. You have increasing sales, as shown by last year’s industry, with sales being the best they have been in about two decades.” From a business mix perspective, Lowrey added, the life business continues to be a “really helpful component” in balancing longevity with mortality. “It’s a business that we would like to remain in, but we’ll do so very, very carefully as we go forward.”

Five percent of life insurers say high maintenance and staffing cost hinder customer experience.

InsuranceNewsNet Magazine » October 2022

Source: Equisoft

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Introducing Prestige Indexed 10 Pay, a whole life policy … that’s indexed


hio National recently launched an innovative indexed whole life policy called Prestige Indexed 10 Pay. Karl Kreunen, vice president, life product marketing, explains why it’s like nothing the industry has seen before. INN: What is Prestige Indexed 10 Pay? KK: Prestige Indexed 10 Pay is a marriage between a traditional whole life policy and an indexed universal life policy. It’s the only contract of its type on the market. INN: What needs does it fill that were unmet before? KK: Like any whole life policy, the Prestige Indexed 10 Pay provides a guaranteed death benefit, a guaranteed premium rate and a guaranteed cash value. But unlike other whole life policies, the cash account is not tied to a dividend scale. Instead, like an IUL, the non-guaranteed growth in cash value is linked to an equity index. We believe that this can provide more upside growth potential than other whole life policies, which is especially valuable in this low-interest-rate environment. INN: So the policy provides the protection of a whole life contract and the growth potential of an indexbased cash account. Who is the target market? KK: For those who have a need for life insurance, there are several. First, it’s for people who are approaching retirement and looking to take some risk out of their portfolio. In lieu of more aggressive equity accounts, an indexed-linked product — one with a floor and a cap — offers an opportunity to protect assets without giving up all of the growth potential. Second, it’s for anybody who could use tax-deferred cash for any purpose down the road — for instance, to help fund a child or grandchild’s college education. Or the cash value could be used to supplement retirement income when equity assets are in a down year, allowing those assets more time to regrow. It’s also ideal for anyone who doesn’t want to pay the premium upfront or for too long. With just 10 years of payments at a fixed rate that cannot change, it’s an attractive option for anyone who wants a guarantee on how long the payment will last. INN: Is there a choice for how premiums are invested or allocated? KK: Yes. Clients can select among four different indexed accounts and one fixed account. Three of the indexed accounts are capped. They are the S&P 500, the Russell 2000 and the EURO STOXX 50, all capped. The fourth indexed option is an uncapped S&P 500 account that comes with an index spread or “hurdle” rate, meaning in any year that the account surpasses the hurdle, the policyholder keeps everything.

For all of these options, there is a floor. So even if the index loses value, the policy’s value will never post negative indexlinked returns. There is no risk of losing cash value because the market went down significantly, but keep in mind that the cash value can still be reduced through policy charges. The fixed account option earns a steadier, more predictable interest rate that can’t go below the percentage specified in the policy contract. INN: Is there flexibility in how clients can access the cash value? KK: Yes. You can take a simple withdrawal, which is taxfree up to the amount of the premiums paid into the policy, or you can take a loan. We offer two kinds of loans. The standard loan has a 1 percent net cost on the basis in the first 10 years of the policy and 0 percent after that. Alternatively, our indexed loan allows the policy owner to leave the loan amount in the index, with a variable interest rate charged on the loan amount. INN: What about riders and other options? KK: There are several. Perhaps the most important one is the Accelerated Benefit Rider. It can accelerate part of the death benefit to get cash out when a policyholder needs help with a chronic illness or terminal illness. There is no charge for this rider, just a one-time fee if and when it’s exercised. We also offer a Children’s Term Rider, so you can easily cover any children in your household; a Guaranteed Purchase option that allows you to buy additional coverage at a fixed price; and a Single Premium Rider for transfers from another life insurance policy via a tax-free 1035 exchange. INN: That’s great. But what else should readers know? KK: This is a new evolution in the insurance industry that’s going to be very attractive for clients who want both the guarantees of whole life and higher growth potential in their cash account. INN: Finally, for those who aren’t familiar with Ohio National, what might make it the right choice? KK: For more than a century, we’ve consistently focused on low-cost, high-quality products that are designed with our customers in mind. The Prestige Indexed 10 Pay is an exciting and truly innovative addition to our product lineup.

To learn more about how the brand-new Prestige Indexed 10 Pay can benefit your clients, scan the QR code.


Private placement life insurance: A way to preserve wealth PPLI is a tool for wealthy families to achieve tax-free investment growth and protection. By Michael Malloy


ike the caterpillar turns into a butterfly, the recharacterizing of assets inside a private placement life insurance policy becomes transformational as well. Once assets are placed inside the PPLI asset structure, these assets take on the six principles of expanded worldwide planning: privacy, asset protection, succession planning, tax shield, compliance simplification and trust substitute. A recent Bloomberg article states, “Athletes, celebrities, and family offices are embracing private placement life insurance, or PPLI, as a way to preserve wealth for their heirs. It’s a strategy that’s perfectly legal and has existed for decades.” So why is it not more commonly used? Advisors tend to use the tools that they are familiar with. PPLI is not taught in law schools, so attorneys and other tax advisors must find it in the midst of their practices. PPLI is also not well known by most insurance agents. To truly appreciate what PPLI can accomplish for wealthy clients, you first must forget everything you currently know about life insurance. Yes, PPLI is life insurance, but it is radically different in both cost and benefits. 26

Within a PPLI structure

All cash value growth grows tax-deferred and is paid out as a tax-free death benefit. No income taxes or capital gains tax is due. Clients have the ability to access the cash value through tax-free loans, while their assets are protected and private. PPLI also offers limited reporting, the ability to avoid estate taxes and no surrender charges. An outstanding singular feature that catapults PPLI above any other life insurance policy is that all asset classes can be placed in a policy, including: » Real estate/physical assets. » Hedge funds/alternative asset classes. » Private equity. » Intellectual property. » Art. » Yachts and private jets. » Alternative currency denominations. For many multinational clients, expanded worldwide planning using PPLI is a streamlined asset structure for wealthy clients throughout the world. It is a welldesigned asset structure that is implemented successfully to achieve the aims of privacy, asset protection and tax reduction. It is a type of financial architecture that uses laws, concepts and ideas and blends them with the family dynamic and country-specific challenges of each individual client.

InsuranceNewsNet Magazine » October 2022

Cost benefits

Depending on the assets inside the policy, the total fees for a PPLI are 1%-2% of the asset value within the policy. The cost of insurance charges is institutionally priced at the wholesale reinsurance company rates. The death benefit is insured with these same reinsurance companies — companies such as Swiss Re and Munich Re with trillions of dollars in assets. To be eligible for a PPLI policy, one must generally be what the Securities and Exchange Commission terms a qualified purchaser, having not less than $5 million of investments. Most companies’ minimum premiums are also $5 million.


Expanded worldwide planning (EWP) gives privacy and compliance with tax laws. It also enhances protection from data breach and strengthens family security. EWP allows for a tax-compliant system that still respects basic rights of privacy. EWP addresses the concerns of law firms and international planners about some aspects of the common reporting standard related to their clients’ privacy. EWP assists with families’ privacy and welfare by protecting their financial records and keeping them in compliance with tax regulations.

Asset protection

EWP protects assets with segregated account legislation by using the benefits


How private placement life insurance works Privately placed life insurance is generally structured as a variable universal life insurance policy, meaning: • Premiums are flexible. Policyholders can pay as much or as little premium as they like, whenever they like.

• The cost of insurance is deducted from the cash value in the policy subaccounts each month or each year.

• To keep the policy in force, the owner must pay enough premium to maintain enough cash value to cover the cost of insurance.

• If the cash value reaches zero, the policy will lapse.

The typical PPLI candidate or family has: • A high net worth • The ability to fund $1 million or more in annual premiums for at least several years — $3 million to $5 million is typical • A desire for hedge fund or alternative investment exposure • Highly tax-inefficient investments • High state and local income taxes in addition to federal. (Advisors should be alert to the effect of any state premium taxes on the strategy.) • A desire to shelter assets from creditors

of life insurance. This structure uses asset protection laws in the jurisdiction of residence to shield these assets from creditors’ claims. A trust with its own asset protection provisions still can receive additional protection with the policy.

Succession planning

Source: Maxime Croll, ValuePenguin

contract are considered tax-deferred in most jurisdictions throughout the world. Likewise, PPLI policies that are properly constructed shield the assets from all taxes. In most cases, upon the death of the insured, benefits are paid as a tax-free death benefit.

EWP includes transfers of assets without forced heirship rules directly to beneficiaries using a controlled and orderly plan. This element of EWP provides a wealth holder a method to enact an estate plan according to their wishes without complying with forced heirship rules in the home country. This plan must be coordinated with all the aspects of a properly structured PPLI policy together with other elements of a wealth owner’s financial and legal planning.

Compliance simplifier

Tax shield

EWP creates a viable structure under specific insurance regulations for civil law jurisdictions. It also creates a new role for commercial trust companies. In most

EWP adds tax deferral, income, estate tax benefits and dynasty tax planning opportunities. Assets held in a life insurance

EWP adds ease of reporting to tax authorities and administration of assets as well as including commercial substance to structures. In addition, the insurance company is considered the beneficial owner of the assets. This approach greatly simplifies reporting obligations to tax authorities because assets in the policy are held in segregated accounts and can be spread over multiple jurisdictions worldwide.

Trust substitute

civil law jurisdictions, trusts are poorly acknowledged and trust law is not well developed. As a result, companies with foreign trusts in these civil law jurisdictions face obstacles. A PPLI asset structure is arguably the most efficient structure available today for wealthy families who want a conservative and efficient structure to integrate tax-free investment growth, wealth transfer and asset protection. Michael Malloy, CLU, TEP, RFC, is founder of Advanced Financial Solutions, New York. He may be contacted at michael.malloy@

Like this article or any other?

Take advantage of our award-winning journalism, licensure and reprint options. Find out more at

October 2022 » InsuranceNewsNet Magazine



MYGAs drive strong 2Q sales, Wink reports

Total second-quarter sales for all deferred annuities were $72.8 billion, an increase of 21.9% when compared with the previous quarter and an increase of more than 12.8% when compared with the same period last year, according to Wink’s Sales & Market Report. Sales were powered by an 80% increase in multiyear guaranteed annuities, while variable product sales were down again. All deferred annuities include the variable annuity, structured annuity, indexed annuity, traditional fixed annuity and Multi-year guaranteed annuity (MYGA) product lines. MYGA sales in the second quarter were $26.2 billion. Sales were up more than 79.9% when compared with the previous quarter and up 81.8% when compared with the same period last year. MYGAs have a fixed rate that is guaranteed for more than one year. “Given the most recent rate environment, I project that we can count on next quarter’s MYGA sales being significant as well,” said Sheryl Moore, CEO of both Wink Inc. and Moore Market Intelligence. Meanwhile, variable annuity sales in the second quarter were $15.9 billion, down 13.9% as compared with the previous quarter and down more than 30.8% as compared with the same period last year.


Registered index-linked annuities have been burning up sales charts for a few years now. But regulators are not convinced the index-linked products are true variable annuities, as they have been classified. The index-linked products do not fit into Model 250, which includes the VA nonforfeiture rules that determine how much money a contract holder can get back if they give up the annuity. The new index-linked annuities do not fit Model 250 because their daily values are not based on the value of units of a separate account. Rather, the daily values are based on formulas set forth in the contract. A National Association of Insurance Commissioners’ subgroup developed an DID YOU




actuarial guideline for technical changes to values that would bring the products in line with traditional VAs. The subgroup is on its fifth exposure and nearing completion on the rule updates.


An ex-broker who allegedly scammed federal employees into purchasing variable annuities will pay the price for the bad advice. The U.S. District Court for the Northern District of Georgia awarded the SEC a final judgment against Jonathan Dax Cooke, accused of fraudulently persuading hundreds of current and former federal employees to liquidate their Thrift Savings Plan accounts in order to purchase variable annuities.

QUOTABLE Most millennials and Gen-Xers are planning at least one major life change in the next two years.” — Tim Gerend, executive vice president and chief distribution officer, Northwestern Mutual

The variable annuities charged significantly higher fees and provided Cooke with substantial commissions. The three other individual defendants named in the litigation settled before trial.


Global Atlantic Financial Group struck a deal with Equitable Financial Life Insurance Co. to reinsure a portion of its group retirement annuities. The business Global Atlantic will reinsure is worth $10 billion in general account and separate account value. Under the terms of the agreement, Equitable will transfer approximately $3 billion in general account assets under management to Global Atlantic subsidiary First Allmerica Financial Life Insurance Co. Equitable will retain servicing and administration of the policies and separate account funds, which will be ceded on a modified coinsurance basis. The deal is expected to close during the fourth quarter, subject to satisfaction or waiver of customary closing conditions, including receipt of regulatory approvals.

Second-quarter overall annuity sales through banks grew 48% and sales through full-service national broker dealers were up 55% for the quarter.

InsuranceNewsNet Magazine » October 2022

Source: LIMRA

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Why advisors historically underuse RILAs in planning Although increased market volatility has spiked a rise in registered index-linked annuity sales, RILAs are complex products that are still relatively new. By David Hanzlik


ntroduced to the market in 2010, registered index-linked annuities are long-term savings products that limit risk exposure and provide tax-deferred growth potential. RILAs are often viewed as a mix between a fixed indexed annuity and a variable annuity because they have greater

risk exposure and the greatest potential for growth of any risk-managed product. Although increased market volatility driven by global events such as the pandemic has spiked a rise in the market share of RILAs, they are complex and still relatively new, representing only about a quarter of overall annuity sales. Further education of advisors by wholesalers on RILAs will ensure that concerns about costs and other misconceptions are cleared up and that advisors can provide their clients with the best tools possible to set them up for success. Another factor that historically has limited the growth of RILAs is how new

RILA 2Q sales were up 5% to $10.5 billion. In the first half of 2022, RILA sales were $20.1 billion, 5% higher than in the prior year. (SOURCE: LIMRA’s U.S. Individual Annuity Sales Survey)

growth potential than a fixed indexed annuity but lower potential return and risk than a variable annuity. RILAs are a great asset to any retirement portfolio because they offer flexibility through customizable 30

they are. Most financial advisors are over the age of 50. For these advisors, RILAs have existed for only a small portion of their career. Sticking to the tried-and-true methods when advising a client on how to

InsuranceNewsNet Magazine » October 2022

invest their money is understandable. But especially in times of financial insecurity, not providing investors with a complete picture of the products available has limited the growth of RILAs and general awareness of their benefits. Annuities provide the financial stability that many Americans so desperately need by allowing tax-deferred growth and offering the option to have a guaranteed source of income in retirement. But there is a wide range of annuity products available, each with its own unique characteristics. Fixed indexed annuities present the lowest risk to investors but are usually overlooked due to the low growth potential that comes with this level of exposure. At the other end of the spectrum are variable annuities, which, in these volatile times, offer a level of risk many investors do not have the financial security to afford. RILAs strike a balance between risk and return that makes them the perfect product for 2022. While still underused products, RILAs have dramatically increased in popularity over the past two years. According to the Secure Retirement Institute, total 2020 sales of RILAs were estimated to be at $24.1 billion (as of December 2020, final figures pending), up 38.5% over 2019 sales of $17.4 billion. Sales in 2019 were up 55% from 2018, and the forecast indicates continued growth in the area.


Expected sales growth

As more people become aware of the benefits of RILAs and understand why they are so attractive during times of volatility, there is an expectation that the growth in sales will continue. In fact, LIMRA expects RILA sales to grow as much as 50% this year, and the RILA market, which now makes up one-fourth of all variable annuities sold, to expand through 2025. CUNA Mutual Group was the third organization to offer RILAs in 2013, and in recent years, they have started to become a major driver of growth for the organization. In March, we had our best month ever of annuities sales, and RILAs now represent 90% of CUNA Mutual Group’s 2021 deposits and 70% of our assets under management. Another reason for the continued growth in RILA sales and annuities overall is the increase in average life expectancy. People need their savings to stretch further and last longer to accommodate an extended retirement often filled with rising health care costs. What’s more, a decline in defined benefit plans has left

people without the safety nets that they have grown accustomed to. The combination of growth potential and risk protections that RILAs offer is ideal for many who are grappling with the financial issues that come with aging, such as the fear of outliving their retirement savings. Since the market uncertainty is likely to continue in the coming years, there must be an industry shift in the narrative, not

LIMRA expects RILA sales to grow as much as 50% this year. just around RILAS but also around annuities as a whole. For many, a guaranteed income product is a key pillar in a sustainable retirement plan. People in general are not good at thinking beyond the short term, and when you take that into consideration, along with the current uncertainty of international affairs, rising inflation and the drastic shift away from defined benefit plans, it’s clear that not enough people are thinking

beyond immediate accumulation. To combat the gap between need and preparedness, the advisor industry could benefit from an industrywide, legislation-savvy consortium of experts who understand products and regulation and can advocate for constructive solutions. Despite the resistance from some advisors, RILAs will continue to increase in popularity in the coming years. Recently introduced legislation that would make it easier for Americans to understand and access them could further accelerate their rise. It is up to the industry to communicate their benefits to all advisors, especially younger ones, who might be more open to expanding their offerings and educating Americans on the benefits of guaranteed income in retirement. This will ensure that people have the knowledge and access they need to build a secure financial future. David Hanzlik is vice president of annuity and retirement solutions at CUNA Mutual Group. He may be contacted at

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Annuities and Rider issued under form series ICC17 BASE-IDX, ICC17 IDX-10-5, ICC17 IDX-10-7, ICC17 IDX-10-10, ICC18 E-PTPC, ICC18 E-MPTP, ICC18 E-PTPR, ICC18 E-MPTP-A (Patent Pending), ICC16 R-MVA, ICC18 R-WSC, ICC17 BASEIDX-B, ICC17 IDX-11-10, ICC17 R-LIBR-FCP, ICC17 R-LIBR-FSP, ICC17 R-LIBR-W-FCP, ICC17 R-LIBR-W-FSP and state variations thereof. Availability may vary by state. LIBR with Wellbeing Benefit not available in California or Delaware. This material is for informational purposes only, and is not a recommendation to buy, sell, hold or rollover any asset. It does not take into account the specific financial circumstances, investment objectives, risk tolerance, or need of any specific person. In providing this information American Equity Investment Life Insurance Company is not acting as your fiduciary as defined by the Department of Labor. American Equity does not offer legal, investment or tax advice or make recommendations regarding insurance or investment products. Please consult a qualified professional. Guarantees are based on the financial strength and claims paying ability of American Equity and are not guaranteed by any bank or insured by the FDIC. Other retirement options may also support similar goals. ¹Participation rate is set at issue and subject to change. 2 Bonus available on IncomeShield 10 1st year premiums. Each year after the 1st contract year, you become vested in a percentage of the bonus, until 100% vested at the end of the 10th contract year. Vested amounts of the bonus are the amounts not forfeited as a result of an early withdrawal or surrender. Bonus, surrender charges, and vesting schedules may vary by state. See brochure and INVESTMENT LIFE INSURANCE COMPANY disclosure for details. 3 9 year surrender charge in California. 6000 Westown Pkwy, West Des Moines, IA 50266 TM



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October 2022 » ● InsuranceNewsNet Magazine 31 Call us at 888-221-1234

HEALTH/BENEFITSWIRES Increase in U.S. Health Care Plan Costs from 2021 to 2022

Employer health care costs expected to jump in 2023 Employers are expected to dig deeper into

Plan Cost*



Change from 2021 to 2022

Employer Cost




Employee Premiums from Paychecks




Total Plan Cost




their pockets to cover their employees’ health care in 2023, according to Aon. The average costs that U.S. employers will pay for their employees’ health care is projected to increase 6.5% to more than $13,800 per employee in 2023. This projection is more than double the 3% increase to health care budgets that employers experienced from 2021 to 2022, but is significantly below the 9.1% inflation figure reported through the Consumer Price Index. Aon said this jump reflects the trend of workers postponing or skipping many medical procedures during the first year of the COVID-19 pandemic. Employers have seen the medical claims experience return to more typical levels of growth and anticipate inflation will put more pressure on costs next year. Meanwhile, workers also ponied up more for health care in 2022 than they did in 2021, although not as much. Aon said. The amount of premiums deducted from employee paychecks was about 0.6% more in 2022 than it was in 2021. But workers were on the hook for a higher percentage of out-of-pocket costs between 2021 and 2022. Employee out-of-pocket costs rose an average 5.2% from 2021 to 2022 — from an average of $1,798 in 2021 to an average of $1,892 in 2022.


The rate of uninsured Americans is declining, and that’s largely because of the Affordable Care Act and the expansion of Medicaid in many states. But having health insurance doesn’t always mean the care you need will be covered, KFF found. KFF analyzed data on claims denials and appeals on ACA marketplace plans for 2020 and found in-network claims are denied about 18% of the time. About 16% of denials were because the claim was for an excluded service. Ten percent were denied due to a lack of preauthorization or referral. Only about 2% were denied based on lack of medical necessity. Most denials — 72% — were classified as “all other reasons” without a specific reason. Nationwide, some insurers deny claims at rates of less than 1%, while others are as high as 80%, KFF said. DID YOU





Cancer toppled musculoskeletal conditions as the top driver of large companies’ health care costs, according to the Business Group on Health’s 2023 Large Employers’ Health Care Strateg y and Plan Design Survey. The top three conditions fueling health care costs remained the same from last year – cardiovascular disease, cancer and musculoskeletal conditions. However, 13% of employers said they have seen more late-stage cancers, and another 44% anticipate seeing such an increase in the future, likely due to pandemic-related delays in care. Another survey finding revealed that nearly all large employers (99%) said they were concerned about prescription drug

QUOTABLE Counties with larger non-Hispanic Black populations tend to have fewer participating insurance carriers.” — Maanasa Kona, assistant research professor, Georgetown University McCourt School of Public Policy

trends. In 2021, prescription drugs accounted for a median of 21% of employers’ health care costs, with more than half of pharmacy spending going to specialty medications.


The Affordable Care Act’s navigator program saw a record funding boost for the 2023 open enrollment period. The U.S. Department of Health and Human Services is sending $98.9 million in grant funding to 59 navigator organizations for the upcoming open enrollment period. The funding will enable navigator organizations to retain staff and add to the more than 1,500 existing navigators, HHS said. This marks the single largest navigator funding award provided to date and continues historic levels of funding under the Biden administration. The administration previously gave $80 million to the program, quadrupling the number of navigators for the 2022 open en rol l ment period.

Amazon will close its Amazon Care telehealth unit at the end of the year.

InsuranceNewsNet Magazine » October 2022

Source: The Wall Street Journal


How benefits support mental health in the workplace Brokers can help employers provide the types of benefits that improve workers’ mental and financial well-being. By Sharon Scanlon


he COVID-19 pandemic presented many challenges for businesses and employees, but those challenges have also brought opportunities. In fact, many employees have reevaluated what is important in life, including taking a closer look at their finances, careers and mental well-being. Research shows that employed Americans are taking the lessons learned

during the past two years to prioritize mental well-being. In fact, data from the 2021 U.S. Employee Perspectives on Mental Well-being in the Workplace study from Lincoln Financial Group found that 64% of full-time employed U.S. adults would choose a company with a less stressful work environment over a 10% higher salary. And nearly two-thirds of employees said they left a job in the past or would like to leave their current job because it is not good for their mental well-being. Workplace wellness benefits can address this need for well-being support as well as help employers retain their people. More and more, employees are turning to their employers for support and

64% of full-time employed U.S. adults would choose a company with a less stressful work environment over a 10% higher salary. 34

InsuranceNewsNet Magazine » October 2022

resources, giving companies the opportunity to showcase the efforts they have made to protect their employees’ mental and financial well-being.

Impact of stress on mental health, well-being and financial goals

Lincoln Financial Group’s 2021 Retirement Power study found that those who have felt stressed say it has affected their performance at work, as well as their ability to improve personal finances and set longterm goals. The study also found that of those individuals who have experienced stress, 32% say that stress has impacted their physical health and 42% say it has impacted their mental health. Stress levels can even negatively impact key retirement outcomes. The same study showed that highly stressed participants have lower contributions, fewer plan assets and less confidence than those who are not as stressed. But it’s not all bad news, and employers can help ease some of this stress by


Strongly agree It is more important than ever that employers provide resources and tools to help employees with their financial health It is more important than ever that employers provide resources and tools to help employees with their physical health It is more important than ever that employers provide resources and tools to help employees with their mental health

Somewhat agree







62% agree

67% agree

70% agree

Source: Lincoln Financial, Monthly Consumer Sentiment Tracker, February 2021

offering resources that support their employees’ well-being. Finances can be a tremendous source of stress for employees. Financial wellness benefits offered in the workplace give employers a significant opportunity to improve employees’ financial health. Offering additional resources, such as retirement plan options, also can lead to an increase in employee satisfaction and retention, a common concern among employers as record numbers of workers reevaluate their jobs in today’s post-pandemic environment.

Ease employee stress with group benefits

Employees are looking to their employers for guidance on how to break the cycle of stress and improve mental health. And many employees say it’s more important than ever for employers to help them with their mental, physical and financial well-being. In fact, the 2021 U.S. Employee Perspectives on Mental Wellbeing in the Workplace study shows that 47% of employees said they would choose a company that is more committed to a worker’s mental well-being, and 48% said that it is very important for employers to help their employees improve mental well-being. This presents a tremendous opportunity for employers to expand their benefit offerings to provide additional support to employees. And according to the 2022 Workplace Benefits Survey, employers are doing just that. The survey found

that two-thirds (67%) of workers are offered wellness resources through their employer and 33% are offered employee assistance programs. Insurance coverages offered at the workplace — such as disability, accident or critical illness insurance — can help protect income and savings, leading to less financial stress. Without the right protections in place, an accident or illness can derail retirement savings, disrupt someone’s ability to provide for their family, and increase stress and anxiety. Offering wellness resources, along with a well-rounded benefits package, sends a clear and deliberate message that employers care about their employees — both inside and outside of the office.

Educate employees to make informed decisions

Offering these resources is just the first step. It’s equally important for employers to communicate how the tools and resources offered can help employees improve their mental health. Education is crucial — in fact, the 2022 Workplace Benefits Survey found that 54% of workers say they would enroll in more benefits if they understood those benefits better. Supplemental insurance coverages offered at the workplace — such as disability, life, accident or critical illness — offer income protections that can help ease some of the anxiety that comes with an unexpected life event. Without the right protections in place, an accident or illness can derail retirement savings


and disrupt someone’s ability to provide, leading to increased stress and anxiety. The need for additional education on benefits affects all generations of the workforce. The Lincoln Financial survey found that close to half (48%) of employees think it is easier to do their taxes each year than to figure out what benefits to choose. And when we look at millennials and Generation Z, the youngest generations in the workforce, even more of those young workers agree that taxes are easier to figure out. Offering more dynamic education on workplace benefits could help move the needle on these numbers. Employees do not need to be convinced of the importance of financial wellness benefits. What they need is access to resources that can help them make informed decisions and achieve their long-term objectives.

Looking ahead

Offering these benefits is an important step. But for these products to provide the support employees need — they must actually use these benefits. Usage rates of some wellness resources remain low. Only 14% of employees report using employee assistance programs, 12% say they are using physical wellness programs and 9% are using mental health/mindfulness services, according to the 2022 Workplace Benefits Survey. But that’s no reason to discredit the value of these benefits. The same survey found 3 in 4 employees reported seeing a positive impact on their mental (74%) and physical (77%) health as a result of the wellness programs offered by their employer. Our current environment provides a unique opportunity for benefits brokers and employers to offer further education on the wellness resources offered and to showcase the efforts they have made to ease employee stress. All of this will lead to a healthier, more productive and more engaged workforce. Sharon Scanlon is the senior vice president of customer experience, producer solutions and retirement plan services operations at Lincoln Financial Group, and she serves as chief marketing officer for workplace solutions. Sharon may be contacted at

October 2022 » InsuranceNewsNet Magazine


Financial facts and figures powered by

Inflation slams Black America

Inflation is hitting Black households harder than white households, according to a study published by the Federal Reserve Bank of Minneapolis. For example, if prices paid by white households increase by 7% over a year, calculations by researchers suggest that one may expect them to increase by 7.5% for Black families.

Black vs. White America

The median wealth of a white household is $188, 200, which is 7.8 times more than the average Black household at $24,100. Two years ago, the homeownership rate for white Americans was about 73% compared to 42% for Black Americans. SOURCE: Brookings Institute

The research implies that “when evaluating trade-offs between inflation and unemployment, one ought to keep in mind that the costs of inflation may be borne disproportionately by the more disadvantaged group.” With the prices of gas, food and other items, the authors concluded that necessities such as groceries, electricity and wireless phone service make up a larger share of Black families’ budgets. The study said that Black households are also spending a more significant portion of their income on goods and services with prices that change more often.

Inflation might entice retirees back to work

The great resignation has been a buzzword for the past two years, along with the exit of a higher-than-normal number of retirement-age Americans from the workforce. What would it take for some of those retirees to go back to the office or shop? Nearly one-third (31%) said inflation’s toll

on their retirement savings would motivate them to return to employment .

A Harris Poll found 14% of current retirees stated they are open to or actively looking for work. However, the study found that 43% of retirees said their age could be a barrier to getting a new job. In addition, 41% of retirees would look for a job if they could have a flexible work schedule, and 35% would do so if they could work remotely full time. These findings come at a time when there are nearly two job openings per unemployed person in the U.S., according to the latest data from the U.S. Bureau of Labor Statistics.

Having kids comes with a high price tag

The cost of raising a child is going up, and inflation is to blame. A recent analysis by the Brookings Institution found that the cost of raising a child has risen upward of $300,000 due to soaring inflation.

A married, middle-income couple with a child born in 2015 will spend an estimated 36

InsuranceNewsNet Magazine » October 2022

Up to 4 million Americans are out of work because of long COVID-19. SOURCE: Federal Reserve Bank of Minneapolis

Millennials’ average debt tops $100K If millennials look as though they can’t stand up straight, it’s probably because they are weighed down with debt. The average millennial in the U.S. owes $117,000, according to the Real Estate Witch Millennial Debt Survey. This

staggering amount of debt is preventing many of them from saving for major adult milestones, while also creating an opportunity for financial advisors. The survey reports that nearly threefourths of millennials (72%) have some form of non-mortgage debt. The most common type of debt is credit card debt , with 67% of millennials carry-

ing a balance. Of those who have credit card debt, the average amount owed is $5,349. And nearly half of millennials with debt (48%) say they have student loans, with the average respondent owing $126,993. About 63% of millennials believe it will take one to five years for them to pay off their debt, while nearly 1 in 10 thinks it will take more than 10 years. Approximately 1 in 16 (6%) does not think they’ll ever pay off their debt.

$310,605 from birth until the child turns 17, according to Brookings. Meanwhile, LendingTree researchers estimated that basic costs for raising a child in the U.S. equal $20,152 annually, according to data collected in 2021, and those numbers are unsurprisingly also trending upward. This doesn’t count expenses for “extras,” such as summer camp, birthday parties or sports.

Buy/Sell DI + Key Person DI = Buy/Sell PLUS

Most business owners are

Disability • Life • Medical • Contingency

key to their daily business. Put 2 and 2 together and it’s easy to come up with the Buy/Sell PLUS plan. For over 30 years, we have been designing specialty insurance products. We will when others won’t.

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May 2020 » InsuranceNewsNet Magazine



Structured outcome products return to the fore Structured outcome products offer a measure of tangible equity risk management in the face of a market meltdown. • Mike Loukas


ith the stock market selloff deepening, volatility spiking and major indices falling into bear market territory, advisors and their clients are looking for ways to help shelter their equity portfolios from the storm. One place they’re seeking risk protection is in the options market, as evidenced by the recent surge in options trading. In first-quarter 2022, according to Cboe, total volume across its four options exchanges was 830.3 million contracts. Average daily volume reached a record 13.4 million contracts traded. When extreme market volatility


occurs, a spike in investor use of options and other derivatives typically has followed. It appears to be a reflexive reaction to market conditions — in this case, macro-driven turbulence — and may be viewed as an indication of forward-looking sentiment. In many cases, including recently, advisors and retail investors have used options as a form of risk mitigation, or hedge, for equity portfolios. The use of options certainly can be one of the most available and effective ways to hedge to protect a portfolio from drawdowns. Conversely, options also are commonly used to place directional bets on where the market is headed. However, the former is the approach that is most often implemented by insurance companies and other institutional investors, which comprise the largest segment of options users.

InsuranceNewsNet Magazine » October 2022

Structured outcome products

Historically, there have been myriad ways to use exchange-traded funds to hedge to protect a portfolio’s equity sleeve. Some of those traditional strategies have evolved into next-generation strategy solutions such as structured outcome products, which seek to offer equity correlated performance with a downside buffer to partially offset market losses. As one might expect, this type of philosophy has seen a surge in interest from investors. And for good reason. It offers a measure of tangible equity risk management in the face of a market meltdown. When used as intended, structured outcome products may add a layer of predictability to an investor’s portfolio outcome. They offer synthetic equity exposure that seeks to deliver a predicted investment outcome over a 12-month period, also referred to as the investment period.


Structured outcome products come in variations as well. For example, although most structured outcome products seek to provide a downside buffer to help offset initial equity losses, one structured outcome ETF series also seeks to offer uncapped upside participation (which is limited to a percentage of the overall upside return) in the large-cap U.S. equity markets. This is especially appealing for advisors who believe that equity markets are closer to a bottom than a top, or that equities could experience a sharp snapback, as seen in the months following Q1 and Q2 2020. With their turnkey structure, structured outcome products enable an advisor to construct a portfolio that has a customized risk tolerance — something clients are asking for amid market volatility and a continued low-yield environment. For clients who want equity exposure to compensate for a lack of yield in their portfolio or still seek and need the benefits of equity appreciation in retirement, structured outcome products can help provide a more conservative risk profile while still allowing participation in the potential growth of equity markets.

Monthly issuance

In a typical structured outcome series, a 365-day investment period will conclude on the last trading day of the 12th month, with a new investment period beginning on the first trading day of the subsequent month. In practice, this means that each month, as an option period ends at the option expiration date, the fund managers will “reset” the option strategy in that monthly series for another year. Existing investors who wish to participate in the new investment period simply do nothing. The fund’s portfolio managers take care of the rest. Many advisors “ladder” monthly ETFs to try to create a blended downside buffer and upside capture. These ETFs are designed to relieve advisors or investors of having to trade the equity portion of a client portfolio tactically. The best way to use a structured product is to invest on the first day of the ETF’s investment period and stay in it for 365 days to reap the full benefits of the predicted outcome. In fact, using these strategies in other ways, such as tactically

Structured outcome ETFs How do they work?

Structured outcome ETFs provide investors with exposure to S&P 500 total returns, with two key differences: » Downside is reduced through a buffer reducing the first 10% losses. » Upside is reduced, with the fund only participating in about 80% of all S&P 500 gains. » Outcome periods are clearly defined and last one year, so returns have to be analyzed for one-year periods. trading them, can sometimes defeat the core purpose of the investment approach entirely. In addition, because they are issued monthly, these ETFs provide advisors with some flexibility to tiptoe into equities and invest as market conditions change, as they bring on new clients or as existing clients come into cash. In the event an investor purchases shares after the date on which the options were entered into or sells shares prior to the expiration of the options, the buffer that the fund seeks to provide may not be available and there may be limited to no upside potential. The fund does not provide principal protection, and an investor may experience significant losses on their investment, including the loss of the entire investment. Advisors also use structured outcome ETFs to “toggle” a client’s 60/40 portfolio mix. Because these are equity products but with a buffered risk profile, advisors can increase a portfolio’s equity exposure equity exposure without increasing its overall risk profile. This may be especially effective for clients who need continued growth, for example, in

retirement, but don’t want to carry the increased risk of equities. By their nature, structured outcome products are designed to relieve investors of having a market outlook. As today’s markets remind us, equity returns are not linear; they’re very lumpy. We don’t know when drawdowns will occur or when upside moves will gain momentum. The intent of structured outcome products is to pursue a smoother equity investing experience by buffering downside moves while still providing upside participation. How much upside participation an investor can achieve and whether a strategy is capped or uncapped will differ by product. Mike Loukas is CEO of TrueMark Investments. He may be contacted at mike.

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October 2022 » InsuranceNewsNet Magazine



10 steps to social selling success Authenticity and knowing your audience are key to successfully using social media to drive your practice. By Susan Rupe


he key to successfully using social media to drive your business? Be yourself! Being authentic online is the most important way to develop relationships and build trust, said Katie Yun, director of social media with Nationwide. Yun presented a webinar for the National Association for Fixed Annuities on using social media to create business opportunities. “Being authentic to yourself and your personal brand is critical to your success on social media,” Yun said. “Don’t think about being what your clients want to see — just be you.” Your digital identity should be the same as your in-person identity, she said. “Authenticity is the key. Who you are in person should be the same person you are in your social profile. Don’t try to emulate being an influencer. Be you — that will take you a lot further.” 40

But before doing anything on any social networks, Yun advised, check with your firm’s social media policy and make sure you stay in compliance. At its core, social selling is the art of leveraging your social network to find the right prospects, build trusted relationships and ultimately achieve sales goals, Yun said. Social media has become a major way for advisors to gain new clients and for prospects to learn more about an advisor before they decide to contact them. She provided some statistics: » 92% of advisors who use social media for business say it has helped them gain new clients. » Prospects are seven times less likely to call an advisor if that advisor does not have a complete social media profile. » 87% of prospects research advisors on social media before agreeing to a first call or meeting. » Advisors have an average asset gain of $1.4 million in one year because of social media.

InsuranceNewsNet Magazine » October 2022

With social media tools available to advisors, “no one should be cold-calling anymore,” Yun said. “Selling techniques have changed, and so has the selling environment,” she said. LinkedIn is one social media platform that allows you to find decision-makers and provides you with their information, Yun said. “The key is to use social media such as LinkedIn for research,” she said. “Maybe that person went to the same college you attended. Alumni networks on LinkedIn are huge. Maybe that person lives in a city where you’ve been. Find that piece of commonality you can use to your advantage and establish trust.”

The social selling opportunity

Nearly three-quarters of advisors (78%) who use social media outsell their peers who don’t, Yun said. But the same percentage of sales professionals also said they don’t believe they are proficient in social selling. “So there’s a gap,” she said. LinkedIn created a social selling index that provides a gauge of what someone’s LinkedIn profile looks like and assigns a score based on your profile and your engagement on the site. The score includes four components:

10 STEPS TO SOCIAL SELLING SUCCESS BUSINESS » How well you establish your professional brand. Is your profile (including your photo) up to date? Have you listed your complete employment/professional history? Have you listed your educational background? » Finding the right people. It’s about networking and building relationships. Are you connecting with decision-makers from different types of companies? » Engage with insights. How active are you on the platform? Are you posting information? » Build relationships. Are you liking, commenting on and sharing others’ posts?

media presence. Do you want to be more humorous or more serious? 3. Select the appropriate social platform to start; don’t try to master all of them right away. Pick a platform that makes the most sense to you. Decide how often you want to post; once or twice a week is good to start.

Algorithm ‘need to knows’

Much of the content we see on social media is controlled by algorithms, or what Yun called “the behind-the-scenes part of social media.” She gave the following pointers on how to use algorithms to your advantage: » All social networks are prioritizing friends and family over business posts.

4. Be compliant. You know what you are and aren’t allowed to do.

» Algorithms prioritize posts that receive quick likes and comments.

5. Build your network. Think about how you want to do this and what platform you want to use to build that network. Invite friends and family to like and join. Send connection requests to current clients.

» Recycling old content will be suppressed. If you post content on multiple platforms, make sure you tailor that content to each platform instead of copying and pasting it from one platform to another.

LinkedIn Social Selling Index

“Show people you are paying attention to what they are sharing,” Yun advised. “Provide relevant, value-add content that will help others in their business and with their day.”

What’s your strategy?

Yun outlined a 10-step strategy for using social media: 1. Define your audience. Think about your target market. Who you want to reach will play a big part in determining what social media platform you will use. Millennials are more likely to use Instagram or TikTok. Generation X is more likely to use Facebook or LinkedIn. 2. Determine your personal brand. Identify the voice, esthetics and overall feel you want people to get from your social

6. Listen. Pay attention to what people are talking about. Listen to the conversations happening on social media, and use that information to your advantage. 7. Engage. Be active on the platform. Like, comment and share. Be a source of validation. 8. Be authentic. Being authentic to yourself and your personal brand is critical to success. 9. Prospect. Use social media tools to prospect. Use the information found on social media to your advantage. 10. Don’t pitch. Use social media as a relationship-building platform. Don’t go in heavy with a sales pitch right away.

» Experiment with hashtags. » Native video content is dominating all platforms. When you upload the video from your own computer or phone, that content will get the most reach or visibility on any social media platform. 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 Follow her on Twitter @INNsusan.

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October 2022 » InsuranceNewsNet Magazine


the Know

In-depth discussions with industry experts

UNbundled, UNtied & UNmutualized:


What’s behind the increasing standards of care in the sale of life insurance. By Richard M. Weber


ne of the biggest trends in the sale of life insurance is the increasing demand for standards of care. Should all life insurance advisors be held to a fiduciary standard? Or is a suitability standard still acceptable? And how did we get to this point? Let’s take a look at the chain of events that resulted in advisors becoming more vulnerable to claims of negligence and bad faith. Baby boomers will remember the popular “Father Knows Best” TV series that debuted in 1954. In the series, “Father” was a life insurance agent. Robert Young, the actor who portrayed “Father,” Jim Anderson, on TV gave voice to The American College’s founder Solomon Huebner’s admonition that a life insurance agent should be viewed as a professional, in the same way as a lawyer, accountant, engineer or clergyman. And that’s how Jim Anderson appeared to millions of mid-1950s viewers. The satisfaction rating of life insurance agents has been in decline ever since. When you follow the “Game of Life Insurance” path from the first U.S. life insurer, formed in 1759, through the proliferation of proprietary indices used since 2021 to enhance the appearance of indexed universal life policy illustrations, readers 42

can begin to see a pattern of movements forward — and backward — of the issues that increasingly put insurance agents in peril of complaints and lawsuits about their sales actions and activities. Largely evolving from the 1905-06 New York Armstrong Investigation, the industry had settled into selling life insurance to millions of Americans through industrial insurance (so-called debits involving the weekly payment of premiums with nickels and dimes) as well as through local, insurer-operated life insurance agencies. Those drawn to the industry for a career in insurance sales were vetted, completed a “Project 100,” and if accepted, received product and sales training from the agency — selling only for that insurer. The fictional Jim Anderson was a graduate of the process, as was I when I first entered the industry in 1967 as a senior in college. In general, there was a strong ethic around prospecting, selling, servicing and compensation, the latter largely supported by compensation in the form of a “55 and nine 5s” commission structure, encouraging post-sale service by the agent who sold the policy. By the late 1980s, there were more than 2,000 life insurance companies in the U.S, but barely 10 years later, the number of carriers had declined to slightly fewer than 750, most often reduced

InsuranceNewsNet Magazine » October 2022

through carrier acquisition or absorption of blocks of in-force policies.

Unbundled: A new development

1978 ushered in the most dramatic paradigm shift the industry had experienced in more than 200 years: the development of unbundled life insurance products. Featuring “transparent” elements of expenses and credits, these current assumption life products (almost immediately renamed universal life) allowed the customer to “pay what you want, when you want.” In the marketplace, this quickly transformed to “pay as little as you want, as infrequently as you want.” In reflection, this paradigm shift occurred almost exclusively because of two external elements in the late ’70s and early ’80s. There were high interest rates because of an unprecedented level of inflation. This was the period with the introduction of a personal computer and printer that could display the extremely low calculated “premiums” one could pay when a 14% crediting rate was projected over a lifetime (yet, only momentarily sustained). Before the UL Pandora’s box was opened with current assumption designs, whole life policies — with their guaranteed premiums on cash values, and death benefits — didn’t require a policy illustration to


convince the customer to buy. UL, on the other hand, was sold almost exclusively via a printed policy illustration that took, for example, the current crediting rate of 14% and used that rate to calculate the resulting cash value accumulations and the premiums to sustain the policy — to age 95 or 100. Few agents (and still fewer customers) recognized the fatal flaw of policy illustrations: Instead of sustaining for the next 40-60 years of average life expectancy, the current crediting rate would almost immediately begin falling (declining to the typical 4% guaranteed rate by the early 2000s). Regulators would later require the term “premium” be used to describe the illustrated contribution to support the policy out of fear that agents would otherwise call it an “investment.” Billions of dollars were disgorged by the industry through class action lawsuits in the early to mid 1990s, in large part due to the industry’s failure to understand and communicate how the policies really worked.

Undone: Policies lapsed or were replaced

Roughly five years after UL was introduced, the percentage of new whole life policies in the marketplace had plunged from mid40% (the rest was term insurance) to 18%, and UL had escalated to achieve whole life’s former status as the biggest “seller” of lifetime death benefit products. Although this unprecedented level of disintermediation could have made sense to many consumers who weren’t interested in paying any more for their life insurance than they had to, declining crediting rates would cause many (if not most) policies to lapse or be replaced — due to projected policy failure long before life expectancy.

Untied: Training and supervision suffered

In part because of UL’s much lower profit margins as compared to those of the industry’s mainstay whole life products, prominent carriers as early as 1981 began withdrawing from the decades-old system of “tied agents” and local insurance agencies. The unintended consequences of untying would have an enormous impact on “ethics” in the sale of life insurance. Training — and especially local supervision — were often the first benefits to be lost as more and more carriers divested themselves of

History of Life Insurance Miscellany Art borrows from life

Robert Young’s own life insurance agent was Frank Nathan, who suggested to his client that Jim Anderson’s career should be that of a life insurance agent. It was reasoned that it would be more natural for him to be seen around the house dispensing fatherly wisdom during “business hours.”

An unsustainable trend

Among the first to offer extremely high crediting rates, Kentucky Central Life’s 14% crediting rate effectively beat the competition. Of course, 14% couldn’t be sustained as current interest began declining throughout the 1980s, and the carrier slid into insolvency in 1993.

Recipe for failure

A supportable rate of 14% in 1980 needed to be reduced to 10% by 1985 and 7-8% by 1990, and policies purchased in the initial high-rate period were generally only crediting their guaranteed rate of 4% by the early 2000s. If the “premium” was never adjusted, the policy would fail decades before average life expectancy.

A first?

Anecdotally, Protective Life was the first such carrier to divest itself of tied agents beginning in 1981.

Failures explode

In “Insurer Failures GAO-92-44” from the Government Accounting Office, insolvencies of small regional insurers, which averaged just five per year from 1975 to 1982, more than tripled to 18 per year through 1988 and exploded to 47 in 1989 and 27 in 1990. Most were thinly capitalized insurers. That all changed in the 1990s, when insolvencies included some of the largest national insurers selling primarily low-margin, interest-sensitive products.

Jarring lapses

“Twenty-nine percent of permanent insurance policyholders lapse within just 3 years of first purchasing the policies; within 10 years, 57 percent have lapsed. In particular, nearly 88 percent of universal life policies, a popular type of permanent insurance, do not terminate with a death benefit claim,” according to “Lapse-Based Insurance” (Daniel Gottlieb and Kent Smetters, Olin Business School, Washington University in St. Louis and Wharton School, University of Pennsylvania, June 6, 2016. Updated and published in American Economic Review in 2021).

the “agency system.” The process of untying product “manufacturing” from distribution was accelerated in the late 1990s by such carriers as Transamerica, Pacific Life and Franklin Life.

Unexpected: String of carrier failures

While there had been at least one notable carrier failure in the 1980s, many in the industry were shocked to learn of the July 1991 failure of Mutual Benefit Life, which was founded in 1845. This failure followed the failure of the less-traditional Executive Life just a few months earlier. The dominos continued to fall as the industry experienced the failures in 1994 of Confederation

Life, Monarch and Kentucky Central. Where did the agents go? The new industry of general brokerage agencies was greatly enhanced by agents (now independent brokers) seeking a “home” for sales support, access to multiple insurers, and especially high, negotiated commissions. Some distressed carriers were able to avoid the pain and notoriety of failure by being acquired by other companies. The largest of those occurred when The Equitable became AXA in 1991 (not a good year for the industry). Mergers included MassMutual absorbing Connecticut Mutual; the merger of Home Life with Phoenix Mutual; MetLife acquiring The New England

October 2022 » InsuranceNewsNet Magazine


the Know and, later, GenAmerica (which included General American Life); Prudential’s reinsurance treaty with The Hartford; and MassMutual’s acquisition of the inforce policies (and many career agents) of MetLife’s U.S. individual life operations. On the “plus” side of all of this, the existence of state-run guarantee associations ensured that death claims (and annuity payments) were able to continue, even in the face of unprecedented financial stress on some life insurance carriers.

Unmutualized: Transformation to publicly owned

In this saga of the devolution of the life insurance industry, the other shoe was dropped when life insurance companies that dated back 150 years or more shed their identities and operating procedures as mutual companies and transformed themselves into publicly owned companies. Some of the biggest (remaining) names in the industry joined the trend: Prudential, MetLife, SunLife of Canada, John Hancock, Union Mutual, Phoenix and Principal all began focusing on the needs of the

In-depth discussions with industry experts shareholder above the exclusive needs of the policy holder — the intended focus of mutual carriers. Other demutualizations ended in the outright disappearance of several carriers, including Central Life, Royal Maccabees and Provident Mutual. When I became a life insurance agent in 1967, I was told that “mutual” was the way God intended life insurance! Something valuable has been lost in the ensuing years. The transformation from death benefits to “§7702 Plan” sales illustrations promising tax-free income far in excess of earlier contributions to “the plan” is just one more way the life insurance industry of Solomon Huebner’s era has strayed from the primary duty to protect widows and orphans from economic ruin. Add premium financing to the proposals promising “free life insurance” and, we assume, free retirement income. The result is potentially disastrous for the clients.

Understanding: Unrealizable promises

With the preceding narrative as context, it is not difficult to draw some important and

The Game of Life Insurance Follow the road from the industry’s infancy up to the modern day and the historical positive, negative and neutral influences on it. 1759 • Presbyterian Ministers — first life insurance company incorporated in the U.S.

1926 • American College founded. 44

1928 • Society of CLU founded.

InsuranceNewsNet Magazine » October 2022

1979 • CLU Society Code of Professional Responsibility. 1979 • Universal Life introduced — the first new type of life insurance in 100 years.

1980s • Rampant replacement — primary carriers and reinsurance companies begin to retreat from guaranteed premium select and ultimate annual renewable term insurance (or its graded premium whole life equivalent.)

1976 • ACLI — American life insurers form their own advocacy group. 1974 • ERISA — set minimum standards for most voluntarily established retirement and health plans.

1871 • NAIC — Life insurance regulators join forces.

1905-06 • Armstrong Investigation — the New York State Legislature initiated an investigation of the life insurance companies operating in that state.

informative inferences. Products transformed from guarantees to unrealizable promises in the late 1970s. Also during this time, the method of selling those products became largely based on policy projections that were inherently unable to measure the effect of the subsequent rise and fall of in-force crediting rates for UL, variable universal life and IUL. Acknowledging that life insurance companies needed to stay profitable, they managed this by divorcing their tied agents, leaving those agents to join brokerage operations that were often unskilled in the training and supervision the industry previously provided to maintain high standards of market conduct. Carriers demutualized or were absorbed into bigger companies (or simply failed). In the face of still-falling interest rates, the remaining carriers devised newer and more complex methods of attracting customers. Compensation methods changed as well, often allowing a broker to be paid all the compensation they would ever receive for the sale of a policy “heaped” in the very year in which it was sold (disincentivizing

1954 • Father Knows Best — This TV sitcom introduced Americans to “Jim Anderson,” father, husband and life insurance agent. 1933 • Securities Act of 1933 — requires that investors receive financial information about securities being offered for public sale.

1940 • Investment Advisor Act of 1940 — defines the role and responsibilities of an investment advisor.

1981 • Protective Life begins untying agents.

1980s • Carrier failures.

1990s • Class action lawsuits — insurers faced legal action over what policyholders claimed were misleading sales practices.

1996 • Guaranteed UL introduced.


policy service by the broker after the sale) and at commission levels “above street.” As far as it went, one could say that the industry stayed flexible and largely managed to survive a very stressful 40 or more years of economic change. Unfortunately for those of us who have “seen it all,” much has been lost, and those losses have been particularly hard on clients. In an academic paper first published in 2016 and then updated in 2021, research conducted by professors Daniel Gottlieb and Kent Smetters of Washington University and The Wharton School at the University of Pennsylvania observed that nearly 88% of all UL policies ultimately would not sustain to the point of paying a death claim. In those instances, any “gain” realized in the surrender of a policy would sacrifice the long-touted promise of tax-free accumulation and distribution of life insurance cash values. Meanwhile, any gains would become immediately subject to ordinary income taxes — never mind the loss of the “inevitable gain of the life insurance policy

held until death” — when a policy doesn’t fulfill that original intention. The lifetime relationships pursued by the Greatest Generation’s Jim Anderson have today become largely transactional and “what have you done for me lately?” And in an often-used metaphor, the chickens are coming home to roost with an increase in civil and even class action lawsuits against agents and carriers. As can be seen from the “Game of Life Insurance” timeline below, there are times of progress in the pursuit of client best interest and suitable sales — but also times where those aspirations are in decline. The efforts of The Society of Financial Service Professionals, the Certified Financial Planning Board, the New York State Department of Financial Services, the Department of Labor, the Securities and Exchange Commission and the Financial Industry Regulatory Authority have attempted to emphasize serving a client’s best interest and only recommending suitable products — those two standards sometimes positioned as a “fiduciary” duty.

2010 • DoddFrank.

1980s • AIDS and viaticals — Some terminally ill policyholders are permitted to sell their life insurance policies to a third party.

1986 • Variable life products first become available.

2008 • Rule 151A — requires registration of indexed annuities.

Richard M. Weber, MBA, CLU, AEP (Distinguished), is founder and president of The Ethical Edge, Pleasant Hill, Calif. He is a 25-year life insurance advisor, a 20year member of Million Dollar Round Table and served as adjunct professor of ethics at The American College. He may be contacted at

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2010 • IMSA collapses.


2015 • DOL — Department of Labor proposes fiduciary rule.

2008 • CFP establishes Fiduciary Standard of Conduct for its members.

2015 • AG49. 2018 • AG49A.

2018 • DOL vacates fiduciary rule.

2019 • SEC Reg “BI.” 2019 • CFP Fiduciary.

2003 • Premium Financing — New York State determines that a premium finance agreement is not an insurance contract. 2003 • Split Dollar rules — establish how split dollar arrangements may be taxed.

1995 • Illustration Regulation — NAIC adopted regulations regarding how UL products are illustrated.

1996 • Insurance Marketplace Standards Association established.

When taken in the context of the 115 years since the start of the modern life insurance industry, there is progress. Regulators regulate, but rules easily can be bypassed without a commonly agreed-upon ethos. The financial services industry’s awkward and tenuous move away from caveat emptor and toward fiduciary standards of care is a natural reaction to the issues reviewed herein. Let’s hope the efforts of these entities will prevail. Our clients are counting on us.

1999 • STOLI — stranger owned life insurance is illegal. 1999 • Demutualizations — a number of mutual insurance companies became stock companies.

2020 • NY 187 — New York State adopts best interest rule.



2021 • NY 187 — New York rule overturned by appeals court.

2021 • 40 years of declining interest rates. 2022 • Proprietary indices.

1999 • Glass-Steagall revoked — eliminated restrictions against affiliations between commercial and investment banks. October 2022 » InsuranceNewsNet Magazine



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

Financially empower your female clients Advisors often misunderstand women’s approach to making financial decisions. By Elke Rubach


argeting female prospects is not just a marketing opportunity — it’s an opportunity to expand your business with more inclusivity and do what’s right. The way in which women make financial decisions is frequently misunderstood by or unknown to financial professionals. This can lead women to be hesitant to continue working with advisors. By changing your approach and personalizing your services and processes to meet your female clients’ specific needs, you can grow your clientele and create trusting, long-term relationships.

Tailoring your approach

According to a 2019 survey, 60% of women who were married or with a partner stated their financial planner treated their spouse or partner as the decision-maker. Not feeling acknowledged by their advisor can be a deterrent for many women seeking to cultivate a trusting relationship. Additionally,

clients, it’s critical to speak to them as business professionals. Remain aware of their culture and background, and work to respect it. And from the beginning, be sure to provide advice to both partners individually. Keep in mind that your responsibility to clients and their families includes taking a step back to guide them through the process. Although it may feel comfortable to assume general needs or concerns, be careful not to offer advice based on any assumptions — take the time to listen and ask questions about their needs. Depending on their answers and their specific goals, proceed with planning. Don’t start with solutions or by reverse-engineering a sale of a product. Cash flow planning, insurance and asset management all are important, but they need to be part of the plan.

Crafting the financial plan

Building a plan should be based on the client’s wants and goals — then, you can work toward finding the right solution. First look for the “what,” then figure out the “how.” Don’t assume your client’s insurance needs, or whether they know how to invest and run the numbers. Instead, ask about their style, their risk tolerWhen clients become ance and their risk capacity. comfortable with you, they Asking questions to help gain a may open up and potentially more well-rounded understandbecome more vulnerable. ing of their financial background is beneficial as well. What is Be careful not to discuss to them? What have their fears or flaws with other important they tried? What worked? What parties. didn’t? You’ll also want to dive deep into their spending habits. 87% of women said they cannot find a The entire plan must be customized. financial advisor to connect with, accord- It’s important to let your clients guide the ing to a 2015 survey. conversation and to facilitate an environBecause the financial advising profes- ment where they feel comfortable asking sion still views women as a niche market, questions. Keep in mind that most clients advisors may be unaware of how to con- are interested in the journey just as much nect with their female clients or how to as they are interested in the destination. tailor advice for their female clients’ needs. When you do share a strategy with your When you begin to work with female clients, don’t make recommendations 46

InsuranceNewsNet Magazine » October 2022

without explaining the reasoning behind them. This can lead clients to lose interest in your business, as they might not feel your services can provide the support they need. Leverage the plan and math behind it to support any recommendations you make, especially about products. If you help clients with various intricate financial tools — such as sorting out wills, creating tax plans, and advising about insurance and investments — they will love and appreciate you. Finally, be strict about confidentiality. When clients become comfortable with you, they may open up and potentially become more vulnerable. Be careful not to discuss their fears or flaws with other parties. These are some suggestions, and you must learn how to read your client. Needs and goals change naturally at every step of a female client’s career — even at the beginning, when they might not be deemed a “profitable” client by others. So you will likely be on track to have a very long-term, loyal relationship. Remember, you hold the key that gives meaning to their years of work and sacrifice in the name of breaking the glass ceiling. Take the necessary steps to educate and uplift the women you’re serving. In a nutshell, make sure they know you truly care. Elke Rubach, LLM, CFP, CLU, a five-year MDRT member, speaks about wealth management, estate planning and philanthropy. She may be contacted at

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


Will our money last through retirement? Four suggestions to help extend income for the length of the post-employment years. By Ike S. Trotter


oday, many of our most recognized celebrities are hitting life’s “milestone” birthday of age 65 and joining the ranks of “senior citizens.” Just to name a few, Vanna White of “Wheel of Fortune” just turned 65. Donny Osmond, practically a toddler when he performed and sang on “The Andy Williams Show,” will turn 65 this month. Add another year and you include Tom Hanks, Bill Gates and Joe Montana, who are turning 66 this year.



At this age, they are now eligible for full retirement age benefits with their Social Security income. And how is it possible that Ron Howard, who played Opie on “The Andy Griffith Show,” is now age 68? October is National Retirement Security Month, making it the perfect time for financial professionals to review retirement planning strategies for both themselves and their clients. In my experience, I’ve found a few basic keys to ensure that we and our clients don’t outlive our retirement savings. All this leads to the real crux of retirement planning today, and that is having enough income. However, the most important aspect of retirement planning deals with a key longevity question, which is how long must this income last? Today, you can surf the web and find thousands of internet platforms offering

calculators that can estimate how long you will live. I recently answered questions through two of these programs, the first being through Northwestern Mutual life at their website Through a series of questions, it calculated I could live to age 93. The second was a website on exercise and longevity called life-expectancy-calculator, which estimated I would live to age 94. While I like what these programs have estimated for me, the larger, unanswerable question from this exercise could be will I have enough money at my retirement to last a lifetime? And when we are looking out for our clients’ interests, it is important that we consider the same question on their behalf.



essential income and discretionary income. Understanding the differences between the two is essential. » Be careful about retirement withdrawals. Particularly for plans such as individual retirement accounts or employer-sponsored 401(k) programs, this means not withdrawing too high a percentage of income. A withdrawal percentage of 4% or even 3% provides a better chance of your account lasting over a lifetime. Even if your holdings can achieve a 5% or 6% overall yield on assets, it is wise to build a backlog of extra earnings that can accumulate and be available to offset the damaging effects of inflation. » Consider delaying your retirement income. A good example would be your


None of us has the exact answer, but we are seeing trends that potentially illustrate needing retirement income for years and years. One of the most incredible statistics is that for every American worker retiring at age 65 today, there is now a 50/50 chance of their making it to age 90! And with a life span stretching over several decades at retirement age, it is possible they and we would come up short on cash. So, what can be done? What must happen to generate enough income to support our golden years, which may stretch longer than our childhood? A tough question for sure, but here are four suggestions that may help extend income a bit further in retirement: » Probably most important is creating a retirement budget. Transitioning from active income to retirement income is not easy. Critical to this is discerning between


Social Security. For every year you delay claiming benefits past normal retirement age, your monthly benefit can increase by some 8%. And if you can delay beginning Social Security from age 66 to age 70, your potential monthly income stream can grow by some 32% more. » Finally, consider annuitizing a portion of your retirement assets into an income stream. In addition to guaranteeing a lifetime income, the potential for a larger payout is enhanced because both principal and interest are being distributed. Ike S. Trotter, CLU, ChFC, operates the Ike Trotter Agency in Greenville, Miss. He may be contacted at

October 2022 » InsuranceNewsNet Magazine


More than 850 financial services companies in more than 70 countries turn to LIMRA first to help them build their businesses and improve their performance.


Consumer concern shifts from COVID-19 to the economy Consumer Actions With Spending Actions with Spending Due to Consumer Economic Conditions Due to Economic Conditions

Confidence in life insurers and agents remains high. By Jennifer Douglas


or nearly two years, consumer concerns about COVID-19 and the economy went hand in hand. However, the two concerns diverged more recently as fears about the virus waned this year and the flailing economy took center stage. LIMRA’s quarterly Consumer Sentiment in the Time of COVID-19 study found only 29% of Americans expressed a high level of concern about COVID-19 in July 2022, down from 50% just six months earlier. In contrast, 63% of consumers said they were highly concerned about the economy. This is 13 percentage points higher than at the beginning of the year. Only 15% of adults have a favorable opinion of the economy today, the lowest sentiment we’ve captured during the pandemic. Understandably, people with high levels of stress over their household finances (74%) and those anticipating increased financial stress this year (85%) expressed the most concern about the economy. With inflation at its highest level since 1982, virtually every American is concerned about it to some degree. Inflation appears to be a prime driver behind the anticipation of increased financial stress. Nearly 9 in 10 people who expect their financial stress will increase (further) in 2022 say inflation is a major concern. In recent months, a majority of Americans have taken action in response to the current economic climate. Nearly 9 in 10 adults took favorable actions — steps that are likely to improve their financial stability and security — such as being more budget conscious, saving or investing more, and taking steps to increase their income. In an effort to make ends meet, however, nearly 3 in 5 adults have taken “unfavorable actions” that can be more detrimental in nature, such as saving less, increasing one’s 48

60% 62%

Cut back on dining out/entertainment

58% 59%

Change shopping habits (e.g., scale back, buy generic) 47% 49%

Drive less 39%

Put off a major purchase 33%

Cut back on subscriptions or memberships 28%

Change or cancel vacation plans Have taken action in recent months

Other LIMRA research shows that people who own life insurance feel more financially secure. Two-thirds (68%) of life insurance owners report that they feel financially secure, as compared to 47% of non-owners. Although consumers in the current study are making some difficult choices with their finances, very few (only 1%) say they’ll be likely to reduce or cancel their life insurance coverage or put off buying coverage they feel they need (2%) if economic conditions don’t

InsuranceNewsNet Magazine » October 2022



Source: LIMRA

Likely to take/continue taking action in 2022 if economic conditions persist

debt, cutting back on retirement contributions or skipping medical care. Most consumers have made changes to their spending in recent months. The most common include cutting back on dining out or entertainment, changing their shopping habits, and driving less. Other changes, such as putting off a major purchase, canceling subscriptions or memberships, and changing or canceling vacation plans are likely to increase if economic conditions don’t improve. Household finances top the list of what’s causing stress today, followed closely by work. Both have reached or surpassed their pre-pandemic levels. Half of adults expect their level of financial stress to remain about the same over the next six months, while a quarter expect it to worsen and a quarter expect it to improve.

Consumer confidence in carriers and agents remains high


improve this year. At the same time, very few adults say poor economic conditions would motivate them to buy life insurance in an effort to reduce their risk (1%). Levels of confidence in various segments of the financial services industry have dipped since January, but are similar to where they were before the pandemic, in January 2020. Nearly 1 in 3 Americans has “quite a bit” or an “extreme amount” of confidence in insurance companies today, and nearly 9 in 10 have at least “some” confidence. Consumer confidence in insurance agents and brokers accelerated during the pandemic and remains higher than levels consumers felt at any time since the 2008 Great Recession. Confidence in financial advisors also improved significantly during the pandemic and is well above pre-Great Recession levels. Given consumer confidence in our industry, the current economic uncertainty provides the perfect opportunity for life insurance carriers and advisors to educate consumers about the importance of life insurance and the financial security it can provide for today and for generations to come. Jennifer Douglas is research director, member benefits quality and performance, LIMRA. Jennifer may be contacted at

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