InsuranceNewsNet Magazine | May 2024

That was then ; this is now

Aggressive recommendations previously made on indexed universal life were likely to cause disappointment. Where do IUL illustrations stand today?

PAGE 14

A man on a mission: with Foresters’ Matt Berman PAGE 8

RILAs: Supporting client goals in retirement

PAGE 30

Empowering new hires in the digital transition

PAGE 42

Securing clients’ financial future

How can you equip your clients to survive impending tax changes unscathed?

Delaware Life provides critical insights and strategies to secure your clients’ financial future and grow your business on PAGE 6.

Protect your clients by:

• Leveraging the powerful benefits of tax deferral and nonqualified deferred annuities.

• Seizing the opportunities presented by a few positive changes.

• Anticipating the end of the Tax Cuts and Jobs Act provisions.

• Tackling potential tax changes with expert tips.

Find guidance for navigating Tax Armageddon on PAGE 6.

Then visit https://links.delawarelife.com/INNTLS to see how fixed index annuities can offer a critical advantage against potential tax changes, so your clients come out on top.

PLUS 7 & 10 ANICO Strategy Indexed Annuity PLUS 7 & 10 Financial Growth: Strategies tied to key indices with flexible premium options. Future Security: Lifetime income rider with fixed rate options. Fund Protection: Shielded from market falls with 0% floor, accumulation is tax-deferred. Visit lad.americannational.com for more information or to run a quote.

THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S). American National and its agents do not guarantee the performance of any indexed strategies. The Declared Rate Strategy earns interest at an interest rate we declare at the beginning of each Contract Year and is guaranteed for one year. When a person buys this annuity the person is not buying an ownership interest in any stock or index. Indexed strategies earn interest related to the performance of an Index. Whether an indexed strategy earns interest or not and how much interest is earned is dependent on a number of factors: index performance, participation rate, cap and segment term. The performance of the index cannot be predicted over any given period of time. Past history of the Index is no guarantee of future performance. There is not one particular interest crediting strategy that will deliver the most interest under all economic conditions. All Segment Terms are not available in all states. Availability of strategies and Segment Terms subject to change monthly. Form Series FPIA19; LIR19 (Forms may vary by state; Idaho forms ICC19 Form FPIA19, ICC19 Form LIR19). See the contract form for complete details. Neither American National Insurance Company nor its agents offer tax or legal advice. Clients should consult their tax and legal advisors. American National Insurance Company, Galveston, Texas. For Agent Use Only; Not for Distribution or Use with Consumers.

The Virtual Advisor: How to Use Digital Tools to Better Serve Your Clients

Colleen Bell, President, Innovation and Experience, Cambridge Investment Research, Inc.

In a world where everyone lives on their digital devices, offering virtual services has become not only the norm but an expectation, even in traditionally high-touch industries like financial services. However, executing digital incorporation in our industry requires balancing the client convenience of virtual interactions without losing the personal touch clients expect. The key to striking an equilibrium is making sure the client experience ultimately comes first, with a secondary goal of using the right digital tools to make the relationship more efficient for both the client and advisor.

A Client-First Experience with Virtual Meetings

With lives that are busier and more demanding than ever before, convenience is paramount to a successful client relationship. We have seen virtual meetings work for schools, businesses, and services of all kinds, and incorporating the option to have virtual meetings is a key feature of a client-first approach. This digital option eliminates the need for clients to take time out of their day to travel, while still providing a face-to-face experience. Of course, there will still be clients who prefer on-site meetings, and you should explore each client’s preferences to ensure they will work with your business model.

This digital integration can also help immensely with client retention and business growth. If a client needs to relocate, advisors can continue to provide services by hosting meetings virtually. In addition, advisors are no longer limited by location when it comes to taking on new business. This can be especially beneficial in the case of succession planning, allowing advisors to seamlessly transition regardless of where a successor resides.

Thoughtful Integration of Artificial Intelligence

The goal of integrating digital tools is to provide a better client experience at a lower cost and personnel output. While technology is normally associated with a less personal experience, there are ways to integrate it to make customer relationships even more personal. By using AI to carry out back-office tasks, financial professionals can create more time to actually serve their clients. One great example of this is AI’s ability to assist with routine customer interactions, like scheduling and administrative questions. If used correctly, AI can improve the overall client experience by responding almost immediately to inquiries and effectively reduce a financial professional’s overhead. This creates more time to spend advising clients, building relationships, and providing a white-glove experience.

In addition to giving time back to advisors, AI tools can also facilitate a deeper dive into a client’s history and current needs, helping advisors be more proactive with future plans. New AI tools can help financial professionals better anticipate the needs of clients, and provide more thorough, personalized planning services.

Peace of Mind with Cybersecurity

Trust is a significant facet of the advisor/client relationship. Financial professionals are not only entrusted with managing their clients’ money and providing financial advice, but they are also tasked with safeguarding a great deal of the client’s personal information from malicious actors. In our increasingly virtual world, investments in cybersecurity technology are a necessity, and should be viewed as a direct investment into the relationships financial professionals have with their clients. This inherently client-focused

investment reflects an advisor’s commitment to serving their clients effectively, safely, and securely. Financial professionals can also differentiate their services by providing cybersecurity training and guidance to their clients to protect them from fraud.

Digital Integration

The focus of digital integration should be to drive associate engagement and financial professional satisfaction while discovering new ways to meet the needs of clients. At Cambridge, we use digital integration to support the personalization required by our diverse community of financial professionals. This emphasis on flexibility is core to our service story, and we are actively making investments to leverage new technology in all aspects of what we do and the services we offer.

Cambridge does not force a “fixed” technology stack onto our advisor firms; instead, we support the flexibility needed to allow them to control their own business models and serve their clients according to their own strengths and style of operation. We have made choices to leverage and curate a technology stack that allows us to offer a customized experience on both the firm and individual level. Digital integration is an always-evolving process, but we are rolling out solutions today that will advance the businesses of financial advisors for years to come.

Find more insights to help grow your business, visit https://www. joincambridge.com/insights.

INTERVIEW

8 A man on a mission

Foresters Financial is on a mission to enrich the lives of middle-market families. Matt Berman, Foresters CEO, discusses the fraternal organization’s history and looks into its future.

FEATURE

IUL illustrations: That was then; this is now

By Richard M. Weber

A look at where indexed universal life illustrations stand today.

IN THE FIELD

20 Standing on the shoulders of giants

By Rayne Morgan

Bryan Simms is at the forefront of an effort to revive one of the nation’s oldest Blackowned carriers.

LIFE

34 Navigating the changing benefits landscape

By Heather Deichler

Many workers are confused about their benefits beyond traditional medical plans. ADVISORNEWS

38 Saving for college can impact your clients’ retirement

By Carol Bogosian

26 The importance of life insurance in long-term care planning

By Milorad Markovic

Hybrid life insurance is one alternative to pay for long-term care.

ANNUITY

30 RILAs: Supporting client goals in retirement

By Susan Rupe

Structured annuities with income benefits increase the likelihood of retirees having assets left at age 100.

An advisor can help clients achieve these two competing financial goals. BUSINESS

40 8 critical steps to drive sales

By Casey Cunningham

The words that transform salespeople into sales powerhouses.

IN THE KNOW

42 Navigating the digital transition: Empowering new hires

By Ken Leibow

Rapidly evolving technology poses a special challenge when onboarding new employees.

Navigating the complex terrain of IUL illustrations

In the labyrinthian world of personal finance and insurance, indexed universal life insurance stands out as a particularly intricate product. Known for their flexibility and potential for cash value growth linked to stock market indices, IUL policies have gained popularity as a multifaceted financial tool. However, these policies are often accompanied by the potential for misunderstanding, particularly regarding the illustrations commonly used to explain their benefits

IUL policies offer a unique blend of life insurance coverage and investment potential, with the cash value of the policy tied to the performance of a stock market index, such as the S&P 500. Unlike traditional whole life policies, IUL policies provide the opportunity for higher returns due to this market linkage, while also offering a degree of protection against market downturns through a guaranteed minimum interest rate. This dual promise of security and growth is what attracts many individuals to IUL insurance.

Overly optimistic illustrations

The heart of the issue lies in the illustrations used to depict the potential growth of an IUL policy’s cash value. These illustrations often project future values based on historical market performance or assumed

interest rates. However, the inherent volatility of the stock market means that past performance is not a reliable indicator of future results. Illustrations that show an uninterrupted upward trajectory can give a false sense of security and lead to overly optimistic expectations.

Also, these illustrations may not adequately account for the impact of fees, which can significantly erode the policy’s cash value over time. The cost of insurance, administrative fees and potential charges for additional riders can diminish the returns depicted by illustrations. When these costs are not transparently conveyed, policyholders may be caught off guard by the lower-than-expected growth of their cash value.

The responsibility of insurance agents

Agents bear the responsibility of ensuring that clients fully understand the complexities and risks associated with IUL policies. This includes providing a balanced view of the potential returns, highlighting the uncertainties of market-linked growth, and clearly explaining the impact of fees and charges.

It’s crucial to resist the temptation to use overly optimistic illustrations as a sales tool. Instead, agents should present a range of scenarios, including worst-case

projections, to give clients a more comprehensive understanding of the potential outcomes. This approach promotes informed decision-making and sets realistic expectations, reducing the likelihood of future dissatisfaction.

Navigating the way forward

To best serve individuals considering an IUL policy, it is essential that agents and advisors approach these products with a critical eye. Prospective policyholders should:

Provide clarity: Provide detailed explanations of the illustrations and the assumptions behind them.

Deliver a solid understanding of fees: Provide a breakdown of all charges associated with the policy and their impact on potential returns.

Consider the long term: Explain that IUL policies are complex financial instruments best suited for long-term financial planning.

For insurance agents, the path forward involves a commitment to transparency and education. By providing clients with a balanced and clear explanation of IUL policies, agents can build trust and ensure that their clients are making informed decisions based on realistic expectations.

IUL policies offer a powerful combination of life insurance protection and investment potential. However, the illustrations commonly used to explain their benefits must be approached with caution. Insurance agents have an important role to play in ensuring that these illustrations do not lead to overstated expectations. By providing transparency and promoting informed decision-making, agents ensure the true potential of IUL policies can be realized without falling into the trap of overpromising.

John Forcucci Editor-in-chief

$1.6T in US home value uninsured

One in 13 American homeowners does not have home insurance coverage, the equivalent of $1.6 trillion in uninsured home value, according to a new report by the Consumer Federation of America.

The top 5 states with the highest percentages of uninsured homeowners

1

2

4

5

Source: Consumer Federation of America

The most likely homeowners to go uninsured were Hispanic and African American households, seniors, lower income-earners, and those living in Miami and Houston — two cities extremely vulnerable to climate change.

CFA’s top finding is that in 2021, 6.1 million homeowners lacked homeowners insurance coverage. That’s equivalent to 7.4% of homeowners, or one in 13 homeowners across the United States.

Of the $1.6 trillion in home value that is without coverage, $339 billion is owned by Hispanic households and $206 billion is owned by Black households. Additionally, homes built before 2000 were almost twice as likely to be uninsured than homes built in the past two decades, while 35% of manufactured homes were uninsured.

FEELINGS OF FINANCIAL INSECURITY HIT RECORD HIGH

Even though Americans have a more optimistic view of the direction of the U.S. economy than they did a year ago, their feelings of financial insecurity have hit a record high, according to Northwestern Mutual’s 2024 Planning & Progress Study.

More than half (54%) of U.S. adults believe the country will enter a recession this year. Although this number represents a majority of adults, it’s still a big drop from the two-thirds (67%) who predicted a recession last year, the survey pointed out. These more positive economic expectations were seen across generations.

At the same time, Americans’ feelings of personal financial insecurity are on the rise. One-third (33%) of adults said that they don’t feel financially secure.

DID YOU KNOW

QUOTABLE

After a global pandemic, market volatility and now persistent inflation, financial shock fatigue is setting in.

—

Andy Jones, Northwestern Mutual Managing Director

varied significantly across regions, with half of insurers still expecting the U.S. to enter a recession in the next two to three years. However, a higher proportion of insurers overseas don’t see the U.S. economy entering recession in the next five years, compared with just 7% of respondents from the Americas.

This represents a jump from 27% who said the same last year, and it is the highest level of insecurity recorded in the study’s history.

GOLDMAN SACHS FINDS ‘CAUTIOUS OPTIMISM’

It has been a tough couple of years for asset managers and insurance companies, and some have struggled just to stay even. But things might be changing, and the storm clouds could be parting. A major survey by Goldman Sachs of 359 CIOs and CFOs, representing more than $13 trillion in global balance sheet assets, indicated some “cautious optimism” and positivity for a change

The 13th annual Goldman Sachs Asset Management Global Insurance Survey found respondents eager to put last year in the rearview mirror. A drop in bank lending, escalating geopolitical tensions, and the impending elections generated enormous uncertainty in global markets.

But by the fall, the U.S. Federal Reserve paused its interest rate hikes, which resulted in a moderation of the tightening cycle, and even began talking about cutting rates.

Expectations for a recession in the U.S.

WHAT’S BOOSTING THE U.S. ECONOMY?

Immigration is boosting the U.S. economy and has been “really underestimated,” said Joyce Chang, chair of global research at JPMorgan. Chang’s remarks came as the Federal Reserve raised its U.S. gross domestic product growth projection to 2.1% for 2024 — up from the 1.4% the Fed predicted in December.

“We are still seeing the phenomena around the globe that services inflation is still well above where it was before the pandemic, so we’re looking at 3% for core Consumer Price Index, but I think one thing that was really underestimated in the U.S. was the immigration story,” Chang told CNBC.

“The U.S. population is almost 6 million higher than it was two years ago or so, and so that has accounted for a lot of the increase in consumption, when you see the very low unemployment numbers as well.”

The number of workers aged 75 and older is expected to nearly double in the next decade.

Source: U.S. Bureau of Labor Statistics

Tax Armageddon Is Coming, but You and Your Clients Can Come Out on Top

By Deborah A. Miner, JD, CFP®, CLU®, ChFC®, RICP®

It’s easy to be distracted by all that is going on both in the financial world and elsewhere. But amid these distractions, it’s crucial not to overlook the looming deadline for tax changes. And if you’ve been wondering about the potential impact of these tax changes, you’re not alone.

We’ve coined the term “Tax Armageddon” to emphasize the importance of this information for you and your clients. Barring legislative intervention, the Tax Cuts and Jobs Act (TCJA) of 2017 is due to sunset in 2025. While this might not be a widely discussed topic yet, preparing for these changes is critical. Luckily, the combination of the value of tax deferral and one of the best times in history to buy an annuity creates a win-win situation for all. By highlighting the benefits of tax-deferred solutions — such as nonqualified deferred annuities — you can help your clients secure their financial future while also growing your business.

Talking to Your Clients About Tax Deferral

As a financial professional, you know the value of tax deferral but your clients might need a refresher. Here’s a quick pitch you can use to help them understand how they can benefit from tax-deferred savings vehicles like nonqualified deferred annuities.

Tax deferral helps your clients keep more of their money working for them. A nonqualified deferred annuity can:

» Allow them to delay paying taxes on their earnings.

» Provide more control over their income and the ability to take advantage of the benefits of compounding.

» Potentially help them avoid “stealth” taxes such as the taxation of Social Security benefits, the income-related monthly adjustment amount surtax on Medicare Parts B and D premiums, the net investment income tax, and other income thresholds that can eat into their retirement savings.

While these features are beneficial at any time, they will become even more important if and when TCJA expires.

Preparing for the TCJA Sunset

As TCJA’s expiration looms, it’s essential to anticipate how its changes could impact your clients’ tax bill. If the act sunsets, tax rates will revert to their 2017 levels, potentially leading to higher taxes for many individuals. The following consequences should be considered in helping clients mitigate their tax burden.

Standard deduction cut in half: If TCJA sunsets in 2025, income tax rates will revert to the 2017 rates and generally less generous thresholds in 2026. But that’s not the only provision that will impact taxes owed. TCJA doubled the then-current standard deduction. If the act sunsets in 2025, the standard deduction will be cut in half. In 2024, it’s $29,200 for married couples filing jointly and $14,600 for single filers.

Return of personal exemptions: TCJA also eliminated the personal exemption. If the act sunsets, the personal exemption will return and will be indexed for the intervening years. Generally, the personal exemption could be claimed for each taxpayer and each person claimed as a dependent. Unfortunately, deductions for personal exemptions were subject to a phaseout, and a return of this could adversely affect high-income earners. Specifically, the exemptions phased out by 2% for every $2,500 of adjusted gross income (AGI) over the threshold (every $1,250 for those married filing separately). Any resulting reduction would apply to all personal exemptions.

Reinstatement of the limitation on itemized deductions: TCJA eliminated the overall limitation on itemized deductions — often called the Pease limitation.

If the act sunsets, the Pease limitation on itemized deductions will return in 2026. The beginning threshold of the phaseout range in 2017 was the same as for the personal exemption, but it worked a little differently. For every dollar of AGI over the specified threshold, 3% of that amount would be subtracted from the taxpayer’s itemized deductions. In addition, there was no ending threshold since the number of itemized deductions is unlimited, as opposed to the personal exemption being a set amount.

Keep in mind that increasing deductions — that is, using tax-saving strategies such as charitable deductions — still makes sense when and if the Pease limitation on itemized deductions returns in 2026. In any case, the more deductions the better. Managing your clients’ income and tax brackets can play a critical role in minimizing taxes paid.

AMT impact on more taxpayers: An important provision for clients that will sunset, and one often forgotten, is the alternative minimum tax (AMT). Briefly, the AMT requires certain taxpayers to compute their income tax liability twice, once under the ordinary individual income tax rules and again under AMT rules that allow fewer tax preferences, and then pay whichever is highest.

Since TCJA, the AMT has only affected ultra-high-income earners due to increased exemptions and phaseout thresholds. For instance, the phaseout thresholds increased to $500,000 for single filers and $1,000,000 for married couples filing joint returns. And these amounts continue

to be indexed for inflation — for example, the phaseout of the exemption for married couples filing jointly in 2024 is $1,218,700-$1,751,900. Without any new legislation, the 2017 exemption amounts and phaseout limits will return in 2026, although they will be indexed for the intervening years.

According to the Tax Policy Center Briefing Book, the AMT affected approximately 5.1 million taxpayers in 2017. The book estimates that after TCJA’s passage, the number of taxpayers fell to just 200,000 in 2018 and would remain constant through 2025. Barring legislation, it will affect 6.7 million in 2026 and rise to 7.6 million by 2030. It is estimated that the AMT will affect about 50% of taxpayers with $200,000 in income. How many of these will be among your clients?

Reduction of estate and gift tax exemption: In addition to the income tax changes, TCJA doubled the then-current estate and gift tax exemption from $5,000,000 to $10,000,000 beginning in 2018, subject to indexing. The estate and gift tax amount for 2024 is $13,610,000 per person and $27,220,000 per married couple. If there is no legislation, the estate and gift tax exemption will revert to $5,000,000, indexed for intervening years since 2011 – most likely it will be around $6,000,000 or $7,000,000.

Possibly the Only Welcome Changes

The sunset of TCJA carries significant implications for tax planning strategies and your clients. Among the few favorable changes is the elimination of the state and local tax (SALT) cap. In addition to the Pease limitation, TCJA made several other changes to itemized deductions, most of which were not considered taxpayer friendly. The most notorious was the $10,000 limitation for SALT deductions. Since 2017, numerous efforts have been made to increase the SALT cap, but none made it into law. The cap on the SALT deduction will go away in 2026 if no new tax legislation is passed.

Some welcome changes:

Source: TCJA, Secs. 11042, 11023, 11043, 11044

5 Tips to Tackle Potential Tax Changes

With myriad changes on the horizon, now is the time to make yourself invaluable to your clients. Here are some top tips to consider.

1. Accelerate income: If income taxes are going up, then clients may want to consider ways to accelerate income. They can consider executing Roth conversions, selling capital assets with large gains, and exercising stock options in 2024 and 2025.

2. Diversify taxes: Remember the importance of tax diversification when looking at retirement solutions. Clients need taxable, tax-deferred and tax-free buckets of income to manage their income tax brackets in retirement.

3. Gift assets: If income from certain income-producing assets is not needed for current or future living expenses, then consider gifting such assets to family members in lower income tax brackets.

4. Gather a team: For clients who may have a taxable estate, start working with estate planning attorneys now.

5. Flexibility is key: Ensure that your clients’ retirement solutions offer flexibility. For example, Delaware Life’s nonqualified deferred annuities offer:

• Income control. Your clients can decide when to take or forgo distributions.

• The ability to delay the choice of single or joint income until income is needed.

• The ability to delay taxation until income is taken, when they may be in a lower tax bracket.

To learn more about how fixed index annuities can be the perfect weapon to help your clients get a leg up on tax changes, scan the code or visit https://links.delawarelife.com/INNTLS.

For complete information regarding the Tax Cuts and Jobs Act, please visit https://bit.ly/tcja2024

Annuities are long-term investment vehicles designed for retirement purposes. Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force.

Customers buying an annuity to fund an IRA or qualified retirement plan should do so for reasons other than tax deferral. IRAs and qualified plans – such as 401(k)s and 403(b)s – are already tax-deferred. Therefore, an annuity should be used only to fund an IRA or qualified plan to benefit from the annuity’s features other than tax deferral.

Delaware Life Insurance Company (Zionsville, IN) is authorized to transact business in all states (except New York), the District of Columbia, Puerto Rico and the U.S. Virgin Islands, and is a member of Group One Thousand One LLC (Group1001).

This information is for informational purposes only and should not be relied on for tax or legal purposes. Financial professionals and their clients should not rely on this information as applicable to their particular situation.

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Matt Berman says he’s in a unique position as president and CEO of Foresters Financial, a 150-year-old fraternal organization with a mission to enrich the lives of middle-market families.

interview with Paul Feldman, publisher

Matt Berman said that while Foresters Financial looks economically like a mutual, the difference is that “we are operating with mission, with purpose. Our North Star is simply enriching the lives of middle-market families.”

While most fraternal organizations have a religious or cultural denomination, Berman says “Foresters is unique in that we are nondenominational.” He credits “the foresight of our founders thinking about this charter to enrich the well-being of middle-market families in their communities” a century and a half ago.

Prior to serving in his current position, Berman is credited with heading the transformation of Foresters’ distribution channels, product portfolio, operations and underwriting. His achievements also include new agent-intermediated and direct-to-consumer sales partnerships, diversifying the product portfolio and a commitment to enhancing the digital customer journey. He has championed a culture of well-being by introducing firstin-market products and member benefits protecting individuals living with diabetes.

In this interview with InsuranceNewsNet Publisher Paul Feldman, Berman describes how Foresters is committed to building a better future, starting with protecting the financial futures of its members and their families.

Paul Feldman: You were recently named CEO and president of Foresters Financial. You were previously the president of their U.S. division. How do your responsibilities change compared to your previous position?

Matt Berman: In my former role, I was president of the U.S. and the Canada divisions. And so, my line of sight was laser focused on the profitability of those two divisions. In this new role, the mandate is much broader.

We have a business in the U.K., so my line of sight now expands across our global footprint, and I have all of the additional functional areas — whether it’s human resources, legal, finance — that now fall under my mandate. Now I’m in this seat and engaging with our board of directors, engaging with all our stakeholders around the globe — it has been a big step forward.

Feldman: You’ve had an illustrious career in insurance. Tell us a little bit about your background.

Matt Berman: I’ve been fortunate to have seen the insurance business from both the property and casualty sector as well as the life and savings sector. Before coming to Foresters, I spent 10 years at AXA, which is now Equitable. And those were amazing years — the experience I had, the things I learned. In many ways, it was a Ph.D. in the life insurance sector, and it was an incredible journey. Prior to that, I spent most of my years on the property and casualty side, both on the principal side of

differentiates us is that we are operating with mission, with purpose. There are fraternals in our ecosystem that have an affiliation to either religion or maybe cultural heritage. Foresters is unique in that we are nondenominational. We don’t have a religious affiliation we don’t have an affiliation to any cultural heritage.

Our North Star is simply enriching the lives of middle-market families. And that nexus of well-being has been part of our charter for 150 years. What that means, more practically speaking, is that a portion of our earnings goes back to our members, and it goes back to our members in the form of benefits.

Our ability to collaborate, to work well together and be resourceful has given us a lot of wind in our sails. But in terms of more practical or, let’s say, business-focused priorities, we continue to invest in technology.

the business — more focused on the underwriting and on the intermediary side. In those years in the property and casualty sector, I was focused on large commercial risk, looking at professional liability, directors and officers, liability errors, and admissions liability — the totality of all of it. It has given me some fantastic perspective on the movement of capital, the value of underwriting. And I think it showed me the immense gravity that we have as an industry to not only buoy financial markets but provide a social good to our customers and our clients.

Feldman: Foresters is a fraternal company. Tell us a little bit about what makes that different.

Matt Berman: In the life insurance sector, you have stock companies and you have the mutuals. I think the delineation is very clear. On the mutual side, the policyholders own the entity; on the stock side, you have shareholders. In many ways, we look economically like a mutual, but what

Now, those benefits could be scholarship opportunities, granting opportunities. We have invested in wellness platforms. When you think about the importance of purpose to social well-being, these are elements to our organization, elements within our DNA that have been alive and authentic for a century and a half.

We will be a fraternal for another 150 years. I find our structure to be unique. I am forever fascinated by the foresight of our founders’ thinking about this charter to enrich the well-being of middle-market families in their communities. As I’m sure you’ve seen, many organizations — not necessarily life and savings or property and casualty insurers, but organizations around corporate North America — are embracing this concept of social responsibility and purpose. I laugh a little bit because I feel like folks have gotten newfound religion on this topic of purpose. Purpose has been in our DNA for 150 years.

Not only does the structure enable financial strength, but it also allows me and

“In any given year, you see us supporting granting; we’re out in the field with advisors and members building playgrounds. And that sense of well-being is powerful.”

my executive team and all of our employees to think equally about the long term and the short term. We’re not handcuffed to Wall Street or analysts thinking about “Hey, where do earnings per share land this quarter?” Sometimes you have to plant the seed for something that may not be immediate, and we can do that inside of our construct. But I think what makes us even more unique inside of this fraternal framework is our ability to earmark a portion of our earnings, bring it back to our membership and make sure that it’s complementary to the products and offerings we provide.

I’m a big believer that at our core, what differentiates us in this fraternal world is that we were founded on volunteerism. In any given year, you see us supporting granting; we’re out in the field with advisors and members building playgrounds. And that sense of well-being is powerful.

We’ve invested in these engagement platforms. We partnered with a Swiss insurtech, dacadoo, and our members are eligible to participate in this custom-designed engagement platform that allows individuals to engage in healthy activities, engage in volunteerism. There’s a reward system based on that platform. But I think the hurdle for us is whether a policyholder will see their life insurance company as their health advisor. I think that’s still a mindset hurdle. We should promote these wellness platforms because it’s a win-win for all stakeholders. But it may not seem so intuitive at the customer level. For us, it’s easier because it has been in our DNA; it’s

in our mission to support well-being. But the industry as a whole has a way to go.

Feldman: One of the things that I noticed on your website, through your communications and certainly in this conversation, is the use of “members” rather than “policyholders.” Policyholder feels like a number to me. A member seems like something I’m a part of. I know that you do a lot of things, from scholarships to all kinds of funding. What are some of the things that members get through Foresters?

Matt Berman: You mentioned the scholarship opportunities, the granting opportunities. Granting is big. It allows individuals to accumulate grant dollars so they can do good work in their community. Our granting platform allows members to promote a range of activities. We’re really proud of that. We have a partnership with an organization, LawAssure, which provides assistance on all sorts of areas around building a will, estate planning — again, services that are complementary to what we do as a life insurance organization.

With our partnership with Dacadoo, members can immediately, on registration, download an app that has been custom designed between Foresters and Dacadoo to allow our members to manage their well-being in a fun, engaging way. That covers so many dimensions — nutrition, exercise or, again, back to our

core volunteerism. And members can accumulate reward points on a number of items on the app.

Feldman: You have a 150-year history. What are you seeing right now? What does your future look like?

Matt Berman: I am positive we’ll be around for another 150 years. Focusing on our future is front and center. My guiding compass has always been sticking to the fundamentals. I take a lot of pride in the culture that we’ve built. It’s the aggregate of generations of leaders and individuals contributing to our experiences collectively.

Our ability to collaborate, to work well together and be resourceful has given us a lot of wind in our sails. But in terms of more practical or, let’s say, business-focused priorities, we continue to invest in technology. Technology is a key enabler for all of our stakeholders, whether that’s our employees, our advisors or our members. We continue to focus on data to make sure that we can deliver accurate, precise decisions for our future members and do it in a way that’s seamless.

Finally, we’re making sure that we have state-of-the-art products in terms of driving value for our members and investing in our advisors. The advisor is critical in our world. There’s certainly a place for direct-to-consumer opportunities, and we’ve invested in direct-to-consumer opportunities. The lion’s share of business sold inside the life and savings sector will be intermediated because everyone’s needs are different. And the advisor is so critical to making what we do a reality.

Feldman: So how are you investing in advisors?

Matt Berman: We want to make sure that they have the best technology. We are looking to make their experiences with us turnkey. We’ve made a footprint in our specific sector through nonmedical underwriting. A portion of our business can be underwritten without blood or fluid. And we must ensure that we have the best data to make the best possible decisions. An advantage for the advisor and for our end customer is that the experience can be very transactional — as opposed to applying for life insurance, working with

a paramedic to get blood and fluid, and going through the underwriting process that could take up to 30 days.

The life insurance sector hasn’t been known as the bellwether of customer experience, but that’s not to say we can’t be. No one wakes up in the morning thinking that “Hey, I want to go out and explore all of my options around protection or supplemental retirement savings.” It’s usually initiated by an advisor. And for that reason, it’s important that the advisor has the best technology, they can enjoy the best experience and they can get paid quickly. And that is just so important to make sure that they’re driving the best possible outcomes for their clients.

Feldman: Tell me a bit about the products Foresters Financial offers.

Matt Berman: I’ll start with the U.K. That’s an investments business, and we manage and sell child trust funds. So think about tax-advantaged growth for children. In North America, we are a life insurance business. We have a Canadian division; we have a U.S. division. Within both those divisions, we have a full suite of life insurance offerings. We offer universal life in the U.S., not in Canada. We have a suite of term products, and that’s really where we’re hyperfocused right now. Our big product is our par (participating) whole life product both in the U.S. and Canada. For an organization like ours, we have a strong durable balance sheet. We can provide those products; we can price them effectively. We’ve designed them innovatively, and they compete with the big mutuals. And what makes us a bit unique is that we have this offering inside of independent distribution, both in the U.S. and Canada. The trending from all the industry data suggests that there is more interest with par whole life. It’s one of those products that offers an immense amount of stability in a world that feels more complex with every passing year.

Feldman: In the U.S., you distribute mostly through independent distribution. Is that correct?

Matt Berman: That’s right. We had a career captive sales force, but we sold that when we divested a number of assets. We

had an asset manager, a broker-dealer and a career sales force that was attached to the broker-dealer. They were selling asset management products as well as life insurance products. But for the good of the entire organization, we wanted to stick within our core capabilities. We felt that some of those businesses were better partnered and aligned with businesses that were strictly in the asset management sector. Our distribution today, both in the U.S. and Canada, is independent distribution.

Feldman: What are some of the challenges you’re seeing in distribution? There have been a lot of mergers and acquisitions. How does that affect you at the carrier level?

Matt Berman: I would say that we have not seen any big shifts in behavior. We’re certainly vigilant. We’ve been tracking all that’s been happening with the privateequity-fueled consolidation that you’re seeing. There have been a number of players that have been very active over the past five years. We maintain excellent relationships with those distribution organizations at the top of the house.

What I see happening inside those consolidations is that they’re looking to drive scale through a better allocation of resources. We keep our eyes on it. We want to make sure that the partnership is durable, that it’s working. But yes, it certainly could pose some challenges down the road, but nothing is without its challenges.

Feldman: Everything is easier because you don’t have hundreds of different distributors all funneling into you.

Matt Berman: We are connecting at so many touch points. We certainly have relationships at the top of the house, so to speak, to make sure that our strategy aligns with theirs and we can support them and they can support us. But cascading down into the partner level and then looking at the advisors, we’re engaged with everybody in that value chain. You have to be. I think that’s where, as a life insurance company supporting these organizations with a number of advisors that roll up into these organizations, that scalability can be very beneficial for us.

Feldman: There has been a lot of talk about this declining agent force. Are you seeing that on your side? People are aging out of the business. I don’t know that we’re bringing enough people into the business.

Matt Berman: It is a great question. We definitely saw a surge during COVID-19. I think the urgency of life insurance during the pandemic spiked interest in our market. A lot of individuals came into this marketplace as a second career, perhaps being displaced given the challenges of the pandemic on the economy at the outset. That has plateaued, but we’re still seeing incredible interest — individuals looking for that second career or individuals looking to find perhaps an opportunity that’s financially and socially rewarding. We’re seeing good momentum on appointments, and those degrees of interest are coming into our sector where they’re needed most to begin addressing the protection gap.

Feldman: What type of technology investments are you making? Where do you see artificial intelligence playing a role?

Matt Berman: That has been the question of the day, right? We’ve been investing in AI for quite some time. At this point, you may classify it as fundamental. We’ve invested in technology that allows us to expedite what I will call transactions that don’t necessarily require emotional intelligence. You could also make the case that underwriting has spent a fair amount of time investing in rudimentary AI to accelerate that life cycle in the risk assessment process.

In many ways, you could say that the industry as a whole — and certainly our organization — has invested in those technologies. In terms of where generative AI would play out, I see more opportunities in our operations ecosystem.

The customer requires emotional intelligence in the transaction. I would never want to make AI a substitute for emotional intelligence. But to the degree that there are transactions that are easily supported by self-service and internal transactions that are invisible to the customer, we will continue to invest. But I don’t want to sacrifice the moments where our customers need us most.

The importance of longevity literacy—and managing the risks—in retirement

We polled financial professionals and retirement investors to provide new information and uncover new insights on retirement planning opportunities related to longevity risk.

See the survey stats:1

1/3 (32%) NEARLY

of investors surveyed may be under-predicting their potential longevity.

RISK: Retirement savers may be vulnerable to outliving their assets.

INVESTORS AGE

55 to 59

Are more likely to underpredict life expectancy than those age 60+.

In addition, those who consider themselves in poor health are more likely to under-predict their life expectancy.

RISK: These factors make longevity a unique challenge to pre-retirement planning.

>40% of investors surveyed rely on the age of a parent at death to project their life expectancy.

RISK: The vast majority of people are over or underpredicting their longevity.

87 YEARS

Average life expectancy predicted by investors surveyed

90-93 YEARS

Life expectancy routinely predicted by most financial professionals who predict one

RISK: One third of financial professionals surveyed report 25% or more of their clients would be at risk of outliving their assets if they live to age 90.

Longer lives reinforce the need for reliable lifetime income. Many investors are interested in guaranteed† income products to insure against longevity risk.

60%

of investors surveyed believe it is valuable for retirees to pay for essential expenses with income that is guaranteed for life.‡

>80%

55%

of investors surveyed are interested in an annuity that provides guaranteed lifetime income.

This far outpaces the current ownership rates of annuities. Many economists believe insuring against longevity risk by purchasing an annuity is an optimal but underused approach.2

Learn more at jackson.com/researchcenter or call your financial professional.

59%

of investors surveyed viewed a financial product that provided a lifetime income stream at least somewhat valuable.

of financial professionals surveyed, who recommend annuities that provide guaranteed lifetime income say less than half the clients they suggest them to purchase one.

What are annuities?

Annuities are long-term, tax-deferred vehicles designed for retirement. Variable annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an except to the tax is met. Add-on living benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity and may be subject to conditions and limitations.

† Guarantees are backed by the claims-paying ability of the issuing insurance company.

‡ There is no guarantee that a variable annuity will provide sufficient supplemental retirement income.

1 Jackson’s study on addressing longevity risk, conducted in partnership with Greenwald & Associates and the Center for Retirement Research at Boston College, surveyed 1,009 investors between 55 and 84 years of age and at least shared financial decision-making responsibilities in their household. Of the respondents, 109 had assets of between $100,000 and $199,999, and 900 had assets of at least $200,000. Additionally, 400 financial professionals with three or more years of experience at a firm with at least 75 clients and $30 million in assets under management were surveyed. Surveys were conducted online from June 12 to July 7, 2023.

2 Hallie Davis et. al., Global Financial Literacy Excellence Center, “Examining the Barrier to Annuity Ownership for Older Americans,” October 6, 2021.

Greenwald & Associates and the Center for Retirement Research at Boston College are not affiliated with Jackson National Life Distributors LLC.

That was then ; this is now

Aggressive recommendations previously made on indexed universal life were likely to cause disappointment.

Where do IUL illustrations stand today?

BY RICHARD M. WEBER

My July 2013 feature article for InsuranceNewsNet Magazine, “Illustrated Promises; Unmet Expectations,” addressed a problem in which insurance regulations that were approved in the mid-1990s were resulting in illustration outcomes that were

unlikely to occur and likely to cause disappointment. Further, policy illustrations continued to be used to project future values, a purpose regulators and the Society of Actuaries had long refuted.

By 2013, policy illustrations were again coming under regulatory scrutiny as the National Association of Insurance Commissioners was beginning to address indexed universal life, a relatively new product that was quickly becoming a best-seller among the different forms of universal life insurance. IUL was a very different variation of UL that hadn’t even existed when the current illustration regulation was finalized in 1995. When nonguaranteed bonuses were included, illustration net crediting rates of 8% or 9% were not uncommon — deployed as constant (but nonguaranteed) accumulation assumptions over many decades.

IUL is the most recent generation of UL insurance products to come along since UL was introduced in 1978. Variable universal life — a security — became popular in the late 1980s, and then along came guaranteed universal life during the latter part of the 1990s.

Right on time for the decennary evolution of UL products, IUL began to gain traction in the recovery from the Great Recession. IUL intends to be a nonsecurity blend of earlier iterations of UL and VUL, with all the advantages

of flexible premiums and none of the potential disadvantages of volatile subaccount values that could produce negative forces on cash value accumulation. What makes IUL both attractive and challenging to illustrate is that there is no “earned interest rate underlying the disciplined current scale” to serve as a maximum (but also persistent) projection rate when producing an IUL illustration. IUL defies conventional wisdom when it comes to developing an appropriate policy illustration rate, especially when following the Goldilocks Rule — not too high, not too low, but just right. Consider the following recent situations involving complex life insurance products, compounded by aggressive recommendations for implementation.

1. IUL and premium financing for retirement income

Fifty-seven-year-old Victor K’s longtime trusted financial planner had an important idea to share with him: a wealth generation plan. And it was such a valuable planning concept that the planner went ahead and initiated a similar plan for himself. The essence of the presentation — primarily drawn from a policy illustration — included:

» Apply for an IUL policy in the amount of $5 million.

» Use a 1035 exchange of an existing $1 million par whole life policy with $300,000 of surrender value plus pay premiums of $320,000 a year for 10 years, but arrange premium financing to pay all those premiums.

» In Year 11, repay the $3.5 million bank-financed premium loan (and accumulated interest) out of policy cash values.

» Sit back and collect $200,000 a year of tax-free income for the rest of his life beginning at age 70 — with policy withdrawals and loans as far as age 120, or however long he lived.

Read the full July 2013 article at https://bit.ly/weber2013

» He would still have $4.5 million of net death benefit at an average life expectancy (89) or $70 million if he lived to 120.

But in fact, assuming the policy can redeem the third-party premium financing (and replace it with an internal policy loan), there was less than a 50% probability the plan would be viable after even the first retirement cash flow. There was less than a 10% probability of success well before average life expectancy.

2. IUL for retirement income

Seventy-year-old physician Gregory J’s new financial planner suggested Greg use his professional practice’s profit-sharing plan to buy a $5 million IUL policy and then sell the policy 10 years later from the profit-sharing plan to Greg’s irrevocable life insurance trust.

» A total of $2 million in premiums was to be paid by the retirement plan, prefunding all future premiums and illustrating $100,000 annual tax-free income beginning at age 65 — with policy withdrawals and loans for as long as his wife lived, up to age 100 — under a spousal withdrawal provision of the ILIT.

» However, the client funded only $1.5 million of the intended funding, and the agent neglected to drop the death benefit from $6.5 million to $1.5 million in Year 8 as originally illustrated.

As a result , there was only a 27% probability the plan would be viable to age 100.

3. IUL and premium financing for retirement income

Fifty-two-year-old physician Jennifer R. had a $3 million 20-pay whole life policy with a $110,000 annual premium that began to strain Jennifer’s budget.

» She asked her long-time insurance agent (who sold the original policy) to see if she could reduce her premium obligation. He responded with a proposal to exchange the whole life’s $500,000 cash value for a premium-financed IUL policy illustrating $260,000 annual tax-free income beginning at age 65 — with policy withdrawals and loans as long as she lived, up to age 100.

But in fact , when we reduced the longterm cap expectation to 7% from 9% to expand on that possibility, the first failure occurred at age 84, and there was a 91% probability the plan would not be viable to age 100.

What do these insurance cases have in common?

For at least the past 10 years, high-end life insurance sales have been less about protecting a family, business or charity from financial loss due to the insured’s premature death, and more about accumulating large amounts of cash values from which to withdraw and borrow substantial income tax-free cash flow from the policy at and during retirement.

For an even longer period of time, high net worth individuals have been encouraged to borrow the substantial upfront

buyer, but the policy illustration misleads sellers and buyers into believing cash value accumulation occurs with a constant rate of return. It does not. Cash value at the end of a segment year can be less than it was the prior year, depending on the charge side of the ledger.

To be fair, in the cases I cited earlier, there was no evidence the licensed agent intended to defraud the client. But these cases highlight negligence in using a policy illustration as the exclusive means of understanding — and selling — a concept that ultimately caused great harm and financial loss to the client and likely to the advisors. All three of these life insurance cases are currently being litigated.

The primary reason market-based policies fail to deliver on illustrated promises is that the dollar sequence of return risk

Section 1: Illustrated Policy Benefits

premiums with which to fund those socalled retirement benefits. At the same time, lenders have steadily reduced their minimum personal financial criteria for making such policy loans. Placing large life insurance policies into retirement plans is another form of premium financing.

We still hear the rallying cry supporting IUL: “Zero is your hero!” Except it isn’t. IUL policies have some attractive long-term attributes for the right type of

cannot be evaluated with the tools currently made available to agents and their clients. But appropriate tools do exist. As a form of statistical analysis, Monte Carlo assessment can provide an understanding of the degree to which policy illustrations continue to fail expectations.

What is Monte Carlo?

Assuming an otherwise identical set of illustration details such as an assumed

premium, death benefit, age/gender/class, etc., Monte Carlo analysis applies 1,000 or more unique randomization scenarios to the buyer’s assumed asset allocation/index of choice (i.e., the methodology by which the policy accumulates long-term value).

Of course, over the life of the insured, policy credits must exceed policy debits for the policy to sustain and become a death benefit. As a result of this randomization process, Monte Carlo analysis estimates the probability of success among those many scenarios of returns for the buyer to access entirely new insights into the policy being reviewed.

Life insurance companies have long used Monte Carlo to estimate their longterm profits in a number of design scenarios for new policies, but agents have been on their own in using similar technology with their prospects and clients.

Monte Carlo analysis, when properly applied, is the only method to form an unbiased outcome expectation that cannot be manipulated.

The question for the client that makes this process so useful is “What is your minimum acceptable probability of success?” Most prospects will indicate something between 80% and 90%; after all, it is life insurance! By the way, if a potential buyer’s minimum threshold is 100% certainty, they probably should look at a policy style with more underlying guarantees!

Section 1 is a typical summary of an actual, current sales illustration: paying a premium of $25,000 a year for 20 years, and the following year expecting to withdraw and borrow $78,280 for  another 20 years. To put it more simply, that’s a total of $500,000 into the policy and $1,565,600 out of the policy, for an ostensible long-term 6% after-tax equivalent rate of return (since there is no tax) on premiums and cash flows, plus an illustrated net death benefit of $243,000 at age 89 (average life expectancy).

That’s a very attractive projected outcome. Unfortunately, it’s predicated on the assumption of a constant 6.3% (illustrated) crediting rate every year for the next 76 years. Since that is not a realistic assumption (neither in the magnitude of the return nor in its expected duration) it is much more useful to instead determine the probability of successfully achieving these premiums, withdrawal and

AGENTS AND BROKERS PRINCIPLES OF ETHICAL MARKET CONDUCT

Each insurance agent and broker subscribing to these principles commits themselves in all matters affecting the sale of individually sold life and annuity products:

1.

I will conduct business according to high standards of honesty and fairness and render that service to my clients which, in the same circumstances, I would apply to or demand for myself.

2.

I will provide competent and customer-focused sales and service and will maintain a level of professional competence through a lifetime commitment to professional growth and continuing education.

3.

I acknowledge the different constituents whom I serve: insurance companies and the wider insurance industry, my clients, my client’s advisers, my community, and my family — and I will ethically resolve any conflicts that might arise between those relationships.

4.

I will communicate fully and effectively so that clients receive appropriate recommendations that balance the natural inclination to maximize benefits, tempered by their unique tolerance — or lack of tolerance — for risk.

5.

I will deliver to my client a statement of business processes, methods of compensation, and other disclosures appropriate to an open and professional business relationship.

Agents

ultimate death benefit results — using an asset allocation similar to the chosen index — with its guaranteed floor of 0% and current cap.

As can be seen in Section 2 , a Monte Carlo analysis using the prospect’s asset allocation mapped to an appropriate index suggests there is only a 4% probability

to age 100. The overwhelming number of hypothetical observations will lapse prior even to average life expectancy, with half of all anticipated failures occurring by illustration age 78.

Four percent is a pretty low likelihood with its 960 projected failures out of 1,000 hypothetical trials between now

to the question “What’s your minimum acceptable probability of success for this purchase of insurance?”

Assuming the prospect comes up with the typical 90% response, we can provide a reasonable expectation for this proposal in Section 3: There is currently a very high probability the prospect can count

Life Insurance Sustainability Analytics

the plan can successfully pay out the expected payments of $78,280 from ages 65 through 84 and maintain the policy until death. In fact, only 40 of the 1,000 hypothetical variations in this analysis sustain

and age 84 — and we assume it would undoubtedly be unacceptable if the client had this information.

Nonetheless, the other part of the process must seek the prospect’s response

As a result of this randomization process, Monte Carlo analysis estimates the probability of success among those many scenarios of returns for the buyer to access entirely new insights into the policy being reviewed.

on cash flow at retirement in the amount of approximately $53,000 per year for 20 years for a projected after-tax return of 4.5%. Periodic reassessment should warn of any failure possibilities well in advance.

What is your standard of care obligation?

Licensed insurance agents have among the lowest state-imposed obligations to standards of care in the financial services industry. By contrast, approximately 14,800 Registered Investment Advisory firms and their more than 350,000 investment advisory representatives have statutory-imposed fiduciary duties to their clients. Fiduciary duties to their clients are membership-imposed

on 100,000 CFP professionals, while 640,000 registered representatives (this number includes an overlap with IARs) have a standard of obligation to their broker-dealers and are bound to the equal care obligations of Reg-BI.

In addition to their obligations under the Employee Retirement Income Security Act, the Department of Labor is considering a rule requiring licensed insurance agents to act as fiduciaries when selling annuities to IRAs. And, finally, about 20,500 New York State insurance agents selling life and annuity products to residents of New York are now required under New York’s Regulation 187 to work only in the client’s best interest and to make only recommendations that are suitable to their prospective clients.

By and large, licensed agents in the other 49 states are not required to act with higher standards of care due to legislation, regulation or membership.

Research from Stanford Law Review looked at the career paths of former registered representatives who, because of their own actions and penalties from the Financial Industry Regulatory Authority, were no longer allowed to sell securities. Where did those reps go? They mostly went into the life insurance business. Why? Because they could, with much easier qualifying exams and substantially lower standards of care.

It is unclear whether the higher standard of care applicable to, for example, an IAR or a registered representative does or does not automatically carry over as a duty to activities additionally pursued with a client as a licensed insurance agent. We know the duty is all-inclusive as it applies to CFP professionals in the process of providing financial advice. And by definition, the duty applies to insurance activities with New York residents regardless of an advisor’s other credentials or designations.

The extent of that duty is not yet resolved. For example, a California agent who is also an IAR providing financial advice and investment services and life insurance products to a client either 1) has no elevated duty on the life insurance portion of their insurance work, because California does not impose a best interest/suitability rule for life insurance on its licensed insurance agents, or 2) does have such a duty because their overall

Best interest standards do not mean imposing on clients what we think is in their best interest. Subsequent disappointment can lead to client harm and then lawsuits.

client obligations as an IAR or a registered representative supersede the lower state-imposed insurance standard.

When the law is not clear — or it is ambiguous or different between states — beware of unintended consequences. In the most extreme example, it’s up to a jury to decide!

Alternatively …

I suggest financial advisors assume they will be held to the highest duty applicable to their various designations and licensure, and provide advice and ongoing management to their clients as appropriate to the various products — including insurance — they have chosen to represent.

The way most of us were trained to sell insurance products was to become knowledgeable and share our expertise with the client, implying that because of our knowledge and experience, we can tell you what’s in your best interest.

But it can’t work that way any longer. Best interest standards do not mean imposing on clients what we think is in their best interest. Subsequent disappointment can lead to client harm and then lawsuits. The evolving standard of care is to make certain that clients have the opportunity to choose products they perceive are suitable to their circumstances and are in their best interest, and best practices suggest providing written recommendations to help them along the way (protecting ourselves later on).

Securities, banking, retirement planning and financial advice are largely regulated at the federal level. However, consider the vast difference in the required client standard of care for licensed agents between New York and California

in the sale of life insurance. Standard of care regulation at the state level leaves even the most professional life insurance agents wondering how to meet their cross-state obligations. But the high standard is not impossible, nor does it have to be onerous. It just takes a commitment to focus on the client with skill, diligence, prudence, knowledge and client loyalty.

I am always reminded of the professional pledge of the Society of Financial Service Professionals:

“In all my professional relationships, I pledge myself to the following rule of ethical conduct: I shall, in the light of all conditions surrounding those I serve, which I shall make every conscientious effort to ascertain and understand, render that service which, in the same circumstances, I would apply to myself.”

Richard M. Weber, MBA, CLU, AEP (Distinguished), is a 57-year veteran of the life insurance industry, having been a successful agent, a home office executive, a software designer, author of four books and more than 400 published articles, and an educator. He is the co-creator of Certified Insurance Fiduciary, an online program for advisors wanting to enhance the scope of their advisory services. He may be contacted at richard.weber@innfeedback.com.

BRYAN SIMMS

is at the forefront of an effort to revive one of the nation’s oldest Black-owned carriers.

By Rayne Morgan

In the 1900s, as countless African Americans found themselves barred from life insurance coverage, Black-owned carriers like Mammoth Life and Accident Insurance Co. emerged with a mission to help people of color get the insurance products they need.

Over a century later, the historical Mammoth name has been revived under the helm of Bryan Simms and Paul Ford, two men of color who saw the need for the original company’s vision to continue today.

Mammoth Life & Reinsurance Co. was founded in 2021, carrying the same mission as its namesake but now equipped

Many others followed over the years.

It’s a history MLRC’s founders know well.

“There were about 38 to 50 of these Black-owned insurance companies that existed and came up, all with a similar origin story — faith-based institutions partnered with captains of industry who were former slaves,” Simms explained.

Such businesses flourished at first, but most dwindled by the 1990s. Today, there are only two Black-owned insurance companies still doing business in the U.S.

One of those businesses is Atlanta Life, the final remnant of the Black-owned businesses that were created in the peak years of the early 20th century.

The other is the new Mammoth Life, picking up the mantle of the original company.

“We did all the research in the world and found a historical society that owned the trademark for what was Mammoth Life and Accident Company, founded in 1915 by former slaves for the purpose of

with new technology, carried forward by its access to the largest network of agents of color in America and employing a strategy of targeted community outreach through trusted centers of influence.

“We’re not trying to become the newest brand on the market that can stand by itself,” Simms, MLRC president, said. “We realize we must stand on the shoulders of giants in order to achieve gigantic work.”

Unchanged historical bias

Discrimination through restrictive underwriting requirements has long barred African Americans and other people of color from accessing even basic life insurance in the United States.

Research from LIMRA indicates that as of 2023, more than 100 million Americans are still underinsured — the majority of whom are people of color.

The same challenge existed as early as the 1800s, leading to the first Blackowned insurance firms being created.

creating financial services products for communities of color,” Simms said.

The trademark owners were happy to let Simms and Ford use the Mammoth title. While MLRC’s name differs from the original company, it is “based on and inspired by that great historical brand.”

A personal passion

The challenges facing underserved communities of color in terms of insurance coverage and financial well-being are personal for MLRC’s founders. This is why Simms, whose background is in investment banking, is “wildly passionate” about the positive impact Mammoth can have.

Simms earned an undergraduate degree at Duke University and an MBA at the University of Virginia.

Upon graduating, he launched a 25-year career in Wall Street, working for companies such as J.P. Morgan and Lazard. He even had the opportunity to work directly for Vernon Jordan, an African American

businessman and his personal “hero,” from whom he learned much.

But after amassing decades of experience and insight, Simms found he was more interested in how his work could make a meaningful difference.

“I left investment banking a little over 10 years ago because I knew I was built for something different,” he said. “Not necessarily as altruistic as the Mammoth mission, but just built for different.”

This led him to meet Ford, who had “developed the very first platform to use big data and data analytics tools like regression analysis to help traditional carriers better understand mortality and morbidity risk.

“This platform that we had, we could layer on top of any traditional carrier and help them understand the risk that they’re taking, which hopefully expands the box, the kind of risk they’ll take,” Simms noted.

Equipped with this innovative technology and a drive to create positive change, the two set out to create a “brand-new model for an insurance carrier.”

Years later, Mammoth Life was formed.

Technological solutions

Using old underwriting mechanics and technology with built-in biases is the primary downfall of the many long-established insurance providers that still struggle to tap into underserved markets, according to Simms.

“My partner and I have more than a decade of experience working with other carriers that tell us exactly what I’m stating,” he said. “It’s not that they don’t have intention — they just have a legacy infrastructure that moves like the Titanic.”

But Mammoth is different. They’ve expanded the data sets used in underwriting to make them more inclusive, using 5,000 instead of the five data sets that most traditional carriers use.

“You can imagine that what was blackand-white TV now went to 5K really quickly,” Simms said.

As a result, some traditional “knockout classes of risk” are no longer automatically disqualified.

Simms used the example of diabetes, which predominantly affects Brown and Black Americans but automatically disqualifies many from standard life insurance products.

the Fıeld A Visit With Agents of Change

“The majority of our employees may or may not be Black. The majority of our customers may or may not be Black. Our mission is much broader than that. It starts with folks that look like us, but it doesn’t end there by any means.”

“That’s not the right way, from our perspective, to look at it, because if you have a diabetic who is taking medication, is sticking to protocols, has A1C levels in a healthy range, there’s no difference between their mortality risk and somebody who doesn’t have that diabetic concern.”

This is how Mammoth Life intends to overcome preexisting bias and help more Americans qualify for life insurance.

Community-based solutions

The company also seeks to tackle two major shortcomings Simms believes are driving the insurance racial gap: trust and education.

“We are aimed at helping carriers identify communities that have not been underwritten properly, to point to opportunities for them to underwrite better and then to address the trust gap and the education gap,” Simms said.

Their strategy includes partnering with faith-based organizations and employing the most agents of color in the U.S. They believe this will help build trust among underserved communities, which will

also help to address the education gap.

“That trust gap can be conquered quickly because we have the ability, through data science and analytics, to match consumers with agents who can actually relate to them.”

For instance, the company currently partners with an organization representing 3,000 independent Black financial professionals in the United States. However, Simms emphasized that MLRC’s mission is not to help only African Americans.

“We are not insular,” he said. “The majority of our employees may or may not be Black. The majority of our customers may or may not be Black. Our mission is much broader than that. It starts with folks that look like us, but it doesn’t end there by any means.”

A commercial mission rooted in altruistic principles

Simms revealed his larger vision for MLRC: compressing the racial wealth and inequality gap in America.

To this end, they will reinvest in projects such as affordable housing,

education, banking and infrastructure in marginalized communities. The company has also created a private equity vehicle solely focused on making seed investments in underrepresented founders, who often lack access to capital.

“We plan on using Mammoth as a vehicle to create a pot of money that will invest in underrepresented founders,” Simms said. “This is not a charity fund, but we will support entrepreneurs of color and women and promote minority entrepreneurship.”

This derivative mission is one that Simms has “a lot of passion for.”

“We have an opportunity to create a substantial business that has an incredible amount of cash flow in it that can be put to real good use in terms of compressing this wealth inequality gap,” he said.

Rayne Morgan is a content marketing manager with PolicyAdvisor.com and a freelance journalist and copywriter. You can reach her at rayne.morgan@ innfeedback.com.

NAIC tackles accelerated underwriting again

State insurance regulators got back to work on accelerated underwriting and set a goal to adopt guidance when the National Association of Insurance Commissioners has its summer meeting in August.

Wisconsin Insurance Commissioner Nathan Houdek outlined a schedule whereby a small drafting group from the Accelerated Underwriting Working Group will work on successive drafts over the next four months. If successful, the result will be completion of two documents: the draft Regulatory Guidance and Considerations document and the  draft Referral to the Market Conduct Examination Guidelines Working Group.

Accelerated underwriting is more than a decade old, with the earliest programs having been brought to market in 2012. Still, the idea remained more fantasy than reality for many years. Then the COVID-19 pandemic hit.

Accelerated underwriting face amounts rapidly increased during the onset of COVID-19 in order to meet the demand for socially distant underwriting options. Those options remained in place and even continued to grow after the pandemic, Munich Re found in a 2022 survey of life insurers.

INSURERS WANT TO BETTER MEET TECH, TALENT CHALLENGES

Life insurers know that technology is one of their biggest challenges to capitalizing on the enormous market appetite for life insurance and annuities. And they don’t feel ready to meet that challenge. New survey data from LIMRA and Boston Consulting Group revealed that insurance executives are falling short of their own goals from a technological standpoint. Insurers are no doubt feeling overwhelmed by the rapid growth and changes with technology, said Bryan Hodgens, corporate vice president, distribution and annuities, member benefits, for LIMRA and LOMA. Artificial intelligence is one area of massive potential that many insurers are tapping into, he added.

In addition, life insurers need a strong talent base. Insurers face a twofold problem in turning over talent in the industry. For starters, the perception of an insurance

career isn’t great in comparison to other industries. In “desirability,” a career in insurance ranked ninth on a scale where a 10 is least desirable, the LIMRA-BCG survey found. Second, the need to drive technology change and growth means different skill sets are needed. Insurers needed digital-focused people with creativity and critical thinking skills — in other words, the kind of skills most other industries are seeking.

1/3 OF CONSUMERS UNAWARE OF TAX BENEFITS

Nearly a third of Americans do not realize that they can save on taxes through life insurance, according to a study from Assurance IQ. Experts suggest this can be a missed opportunity to save money, especially at a time when most consumers are looking to save.

Assurance IQ’s study found 30% of consumers “believe they would owe taxes on

Never buy an insurance product you do not understand, and don’t buy your insurance online.

— Patricia De Fonte, Estate Planning with Heart

a death benefit,” while 36% were unsure whether they would owe taxes or not.

“Many Americans are stretched thin financially, which makes financial and insurance literacy critical,” said Tim Hoolihan, life insurance sales manager at Assurance IQ. “If you mistakenly believe your family will pay income tax on a life insurance death benefit, you might end up paying for more coverage than you need.”

THE STANDARD CLOSES DEAL WITH ELEVANCE

The Standard completed its acquisition of Elevance Health’s group life and disability insurance business. The agreement includes a 10-year distribution partnership whereby The Standard’s products and services will be made available to Elevance Health customers.

The combined life and disability benefits businesses will operate under The Standard brand and include the Elevance Health Life & Disability employees and operations. The distribution agreement partners The Standard’s sales team with Elevance Health’s medical sales team, working with Elevance Health customers for group life, short-term and long-term disability, accidental death and dismemberment insurance, and paid family leave and absence management services. Only

Put your client’s retirement income dollars on the right path

Set yourself apart from the competition by providing your clients a guaranteed income for life with Kansas City Life Insurance Company’s Lifetime Income Rider that:

• Offers 7.2% guaranteed increase to Lifetime Income Amount for the first 10 rider years if no withdrawals in years 1 – 10.

• Provides a secure, guaranteed retirement income stream for life.

• Helps clients grow their retirement savings with a competitive fixed interest rate.

• Protects the value of a fixed annuity during market turmoil.

• Allows clients the ability to maintain the flexibility and control of their deferred annuity contract even after they start receiving income.

The Lifetime Income Rider provides guaranteed income for life and is an optional benefit available on all of Kansas City Life’s fixed annuity portfolio.

For information about a career with Kansas City Life Insurance Company, call Dwane Turnage, Vice President, Marketing, 855-277-2090, or visit join.kclife.com .

The importance of life insurance in long-term care planning

Hybrid life insurance is becoming a popular alternative to pay for long-term care.

By Milorad Markovic

Have you ever had a client say, “I will use my assets if a potential long-term care need arises” or “I don’t have a plan if my parents need care”? These statements should be recognized as a need for further discussion and education around the importance of long-term care planning.

It’s up to you as an advisor to educate clients on the need for long-term care planning.

Clients who do not have long-term care coverage risk using their personal resources, exposing their families to financial burden and even impacting the wealth of future generations. Most importantly, putting LTC planning in place allows for options and choices regarding care that clients most prefer — including care in their home.

I have invested my time and resources into understanding LTC because I have seen the negative impact firsthand. As an immigrant from Serbia, my natural market is first-generation immigrants starting their lives over in the U.S. This group in particular experiences a crisis when it

comes to long-term care. This generation of immigrants has risked everything to start a life in the U.S.; however, by investing in their present, they may have failed to invest in their future.

Immigrant families face a great challenge to care for their older generation because they have not saved and planned enough for their retirement and longterm care. This is the reason I encourage all of you to invest time with your clients to talk about LTC when they are in the “accumulation” phase of their financial planning, because as the population ages, this financial crisis continues to cycle through generations.

There is too much at risk when a client does not plan for their long-term care because the enormous cost of care continues to rise.

How will they pay for care?

If an individual has a long-term care claim during their retirement but does not have a long-term care plan, how will they fund the rest of their life?

First, they will dip into their personal resources. Many people end up leveraging their bank accounts and annuities, then their pension, 401(k) and individual retirement accounts.

What happens if that individual does not have all these assets? What if they

run out of money? Where will they go if they cannot pay for a nursing home? They could be put into a critical financial state leading to debt, bankruptcy and financial burden on their family. This is the fastest way to deplete all of your assets, leave nothing behind and even take resources away from the family, causing a break in potential generational wealth.

People who are healthy and in their working years tend to ignore the need to invest and plan for long-term care because it’s not top of mind and does not benefit them in the present. This is a dangerous pretense, because our population is aging and creating a greater need for long-term care.

The good news is that the path to financial stability is simple and protects against the risk of long-term care needs. Funding for long-term care expenses can come from a variety of sources such as traditional long-term care insurance policies or personal resources (pensions, 401(k)s, IRAs, annuities and bank accounts).

How life insurance can provide funding

Newer ways of funding long-term care include hybrid life insurance policies and life insurance policies with an LTC rider.

Traditional LTCi is designed to help fund long-term care costs and is a reliable way to supplement other sources of

funding care. However, there are fewer LTCi choices in the marketplace and individual policies can be costly while the premiums are not guaranteed. This path is typically used with an additional source of funds. The return on the dollars spent for these premiums cannot be recouped unless the policyholder absolutely needs care and is able to trigger the policy’s benefits. This is the “use it or lose it” nature of the product.

A hybrid life insurance policy has become a more popular way to fund longterm care. Hybrid life insurance links a life insurance policy with a long-term care policy. This is a great example of combining two resources to complement one another.

Hybrid life is more focused on long-term care benefits than on life insurance benefits. If someone owns a substantial amount of permanent life insurance but they don’t have any LTC benefits, a hybrid life policy can be a valuable solution to pay for care.

On the other hand, individuals who only own a term insurance policy might be better off buying a permanent life insurance policy with an LTC rider.

In some instances, a hybrid life insurance policy can provide a larger pool of money in longer claim situations. However, a permanent life insurance policy with an LTC rider can provide a higher monthly payout, which puts more money in the claimant’s hands sooner. Looking at the average long-term claim period, permanent life insurance with an LTC rider can be an advantage for claims that only last two to three years.

insurance policy, they can take a policy loan to pay for the premium, if the policy has sufficient cash value. This option is not available with a hybrid life policy.

The hybrid life policy has a smaller death benefit that will basically return premiums to the policyholder’s beneficiaries if the policyholder does not use their LTC benefits. If they don’t use your policy for LTC benefits, or only a small amount of LTC benefits are used, the permanent life insurance policy with LTC rider will pay beneficiaries a significant death benefit much higher than just a return of premiums.

How an LTC rider works

Let’s assume your client purchases a whole life policy with an LTC rider with an initial death benefit of $500,000. Most LTC riders allow for acceleration of at least 95% of the death benefit toward LTC, which would equate to a $475,000 pool of LTC benefit to accelerate over the life of the policy.

Some whole life insurance policies can have an increasing pool of LTC benefits based on the dividends increasing the death benefit over time. For the monthly benefit, the policyholder chooses either a 2% or 4% monthly benefit of the total pool of LTC benefit. So, a 4% monthly benefit on a $475,000 LTC pool translates to a $19,000 monthly benefit. Whatever amount is not used toward LTC benefit would pay out in death benefit.

An LTC rider on a permanent life policy provides a guaranteed death benefit and tax advantages, but very few understand the benefits of this rider.

An LTC rider on a permanent life policy provides a guaranteed death benefit and tax advantages, but very few understand the benefits of this rider. Life insurance policies with an LTC rider can help clients address multiple protection needs with one product.

A permanent life insurance policy with an LTC rider is often the best solution for clients who only own term insurance. An LTC rider can be added to either a universal life or whole life policy. This type of policy could help provide your client with the ultimate financial confidence. This product provides more flexibility because it not only has a strong LTC benefit, but it also has a potential for cash value and death benefit.

For example, not only will most permanent life policies with LTC riders waive premiums when a policyholder is on claim, but if your client loses their job a few years after purchasing their life

When someone applies for a permanent life policy, they can choose to add the LTC rider for a small additional premium. At that time, they can specify the portion of the face amount that’s available for acceleration (basic LTC pool). Keep in mind that each LTC payment your client receives will reduce the death benefit by the same amount.

The rider can provide an indemnitytype benefit or reimbursement. The indemnity type means your client is not required to submit bills and receipts each month in order to receive monthly benefit payments. With the reimbursement type, your client will need to continually submit receipts to get reimbursed for care received.

Now that you understand the ways to build the best LTC policy structure for your clients, you must take action. Advisors face a significant challenge as their clients continue to get older and live longer.

The need for long-term care planning is a critical and often overlooked aspect of financial planning.

Many individuals, especially those in the accumulation phase, face a significant risk by not addressing LTC needs. This oversight can have severe consequences for their financial well-being, their families and even generational wealth.

However, there are innovative solutions that offer a unique combination of benefits. Long-term care planning should be a fundamental part of a client’s financial strategy. By exploring the options available and educating clients about the risks they face without proper LTC planning, financial advisors can play a crucial role in securing their clients’ financial future and safeguarding generational wealth.

Milorad Markovic is

director of

life and disability insurance brokerage with Hunken Ewing Financial Group in Chicago. Contact him at milorad.markovic@ innfeedback.com.

ANNUITY WIRES

Athene takes commanding lead in annuity sales

Athene ended 2021 with a respectable ninth-place finish, with $8.9 billion in total annuity sales. Fastforward two years, and Athene towers over the competition.

4

5

Source: LIMRA

Athene sold $35.5 billion worth of annuities for the year, 44% more than second-place MassMutual, which sold $24.6 billion. Propelled by $286.6 billion in fixed annuity sales, total annuity sales reached a record-high $385.4 billion, jumping 23% year over year, according to LIMRA’s U.S. Individual Annuity Sales Survey.

“For the second consecutive year, annuity sales have surpassed previously held records, largely due to broader engagement with independent distribution,” said Bryan Hodgens, head of LIMRA research. “Rising interest rates have made annuities very attractive to a larger group of investors who are served by independent advisors and broker-dealers.” In the fourth quarter, total annuity sales were $115.7 billion, a 29% increase from the fourth quarter of 2022 and 23% higher than the record set in the first quarter of 2023.

I

think most [lottery winners] are probably better off taking the

consider the provider’s investment portfolio, size relative to the annuity contract, level of capital and surplus, liability exposure, and availability of state government guaranty associations

According to provisions in the SECURE 2.0 Act, the DOL must review IB 95-1 and was to recommend updates to Congress by the end of 2023.

STATE REGULATORS CONSIDER ‘GUIDELINE’ TO BEST-INTEREST RULE

State insurance regulators say guidance is needed to clarify its best-interest annuity sales model after reviews turned up “deficiencies” in producer monitoring.

Iowa Insurance Commissioner Doug Ommen announced the findings during the National Association of Insurance Commissioners’ spring meeting in Phoenix.

In February 2020, the NAIC adopted a best-interest standard requiring the following four obligations: care, disclosure, conflict of interest and documentation. To date, 45 states have adopted the model standard.

But ongoing reviews of the new rules “disclosed several ways in which companies’ safe harbor implementation is failing to rise to the level of monitoring the relevant conduct of the financial professional,

including inadequate board onboarding of new broker-dealers to sell for the insurer,” Ommen said, referring to the issues as “systematic deficiencies.”

NEW DOL REPORT COULD TARGET ANNUITIES IN PRT DEALS, OFFICIALS SAY

A forthcoming Department of Labor report could pave the way for regulators to tighten the rules on group annuity contracts by pension plans in pension risk transfer transactions.

The DOL report to Congress is expected to recommend changes to Interpretative Bulletin 95-1.

Issued by the DOL in 1995, IB-95 lays out the fiduciary standards for selecting an annuity provider for a pension risk transfer. Under the rule, pensions must

That review has suddenly become very important, as the PRT market is expected to remain red hot for the near term. A 2023 midyear report by Aon showed 289 pension risk transfer transactions, totaling $22.4 billion in premiums.

RGA LANDS $700B REINSURANCE DEAL WITH JAPAN POST

Reinsurance Group of America recently inked a major deal with Japan Post Insurance for an RGA affiliate to reinsure an approximately 700 billion JPY in-force block of individual life annuities through coinsurance. “This transaction marks a significant milestone in the Asia-Pacific longevity market as a firstof-its-kind coinsurance transaction in Japan,” said Gaston Nossiter, senior vice president, head of Asia Pacific, Global Financial Solutions, RGA. “This is one of a number of recent asset-intensive transactions that RGA has completed, demonstrating our deep expertise and strong position in the Japanese and Asia Pacific markets.”

Additional terms of the transaction are not being disclosed.

Nossiter

As

...

RILAs: Supporting client goals in retirement

New research shows that structured annuities with income benefits increase the likelihood of retirees having assets left at age 100.

By Susan Rupe

This is the year of “peak 65,” with a record 4.1 million Americans poised to turn 65 in 2024 and every year through 2027. As Americans in this record surge hit retirement age, they and their advisors must navigate four core risks that will impact their retirement portfolios through the decumulation phase: longevity, inflation, volatility and emotions.

A new study shows that using structured annuities with income benefits on the portfolio’s efficient frontier substantially increases the likelihood that clients will have assets left at age 100.

Wade A. Pfau, professor at The American College, along with Equitable, conducted research on how to improve the efficient frontier, enhance risk-adjusted returns and help advisors — and their clients — make the most of assets through their retirement. The research

found that replacing part of the bond allocation in the retirement portfolio with each of the eight different structures of a registered index-linked annuity and including a living benefit can contribute to meeting a client’s retirement spending goals, while preserving assets for a legacy.

The results of the research are published in the paper “Supporting client goals in retirement: The role of structured annuities with living benefits.”

Investment managers have tended to view risk pooling as unnecessary because the stock market can be expected to perform well over time, the research report said. However, once distributions begin, any downward volatility in the early years of retirement can disproportionately hurt a retirement spending plan’s

sustainability. Longevity risk means retirees do not know just how long their assets will need to last. Investment managers may not fully appreciate the impact of these risks.

Today, the value provided by risk pooling is becoming better understood as retirement income planning has emerged as a distinct field within financial services. This is happening as traditional sources of risk pooling, such as company pensions and Social Security, play a reduced role and retirees look for ways to transform their 401(k) savings into sustainable lifetime spending.

Traditional stock and bond investments offer a distribution of future investment outcomes that follows a bell curve and may not provide the best potential trade-offs between risk and return, the

“For advisors, the appeal of RILAs is for clients who want to stay invested in the market but also want to have guaranteed income, so they have a consistent, reliable income in retirement.”

Pete Golden, managing director, individual retirement at Equitable

a record number of Americans hit retirement age, they and their advisors must navigate four core risks that will impact their retirement portfolios through the decumulation phase

research found. Financial products that use options to create structured returns offer the potential to produce a more attractive range of investment returns and can be treated as asset classes available for the asset allocation decision. This can also help with achieving annual resets during the distribution phase and avoid the depletion of annuity asset values.

The protected lifetime income covered by the asset base used within a variable annuity with structured return segments helps reduce pressure for distributions from the unprotected part of the asset base. More of the spending early on comes from the annuity and less is from the rest of the unprotected investments. The risk pooling from the annuity helps support a disproportionate portion of the spending, which lays a foundation for other investment assets to grow. The structured returns provide an opportunity for annual resets to increase protected spending and provide more potential to prolong the account values of annuities during retirement. This reduces sequence risk for the unprotected assets and increases their sustainability when used as part of an overall retirement income strategy.

Using a guaranteed lifetime withdrawal benefit with a portion of retirement assets can help clients raise success rates, meet more of their lifetime spending goals and even have a positive impact on legacy values. This analysis demonstrated the potential value of a variable annuity to layer in insurance for meeting retirement spending goals.

The research also compared these findings with other annuity approaches, such as traditional variable annuities that allocate to investment subaccounts, and fixed indexed annuities. Compared to traditional variable annuities with living benefits, the structured segment approach explored in the research allows for lower fees and competitive performance. Compared to fixed indexed annuities, these structured segments provide a stronger chance that assets will remain over time and that the guaranteed income will grow.

Pfau said his research saw that a RILA with dual direction segments “is an interesting structure that competes very well against bonds and actually contributes a lot to a retirement plan in terms of those

metrics that we’re looking at, such as meeting spending needs and preserving assets for legacy.”

Dual direction segments provide 100% participation in market gains up to the cap, but they offer a different exposure to downside risk. The owner remains exposed to any losses beyond the segment buffer. But instead of being credited with 0% when a negative price return occurs at a value less extreme than the buffer, this segment provides a positive price return at the opposite value of the index loss.

For example, if the price return is -5%, then the annuity credits a 5% return, and if the price return is -9%, then the annuity offers a 9% price return. This annuity offers segment buffers of 10% and 15%. Since it provides gains for small market losses, less upside potential should be expected with positive market performance.

down, you need to deal with a lot of the different things that clients also deal with as they go to the place where they pull money out of their portfolio,” said Pete Golden, managing director, individual retirement at Equitable.

“We see these guaranteed lifetime income products being positioned by individuals who are five years out from retirement or as they’re hitting that retirement zone, where they want a guaranteed income in retirement that complements Social Security, pensions or whatever forms of retirement income they have. A product like RILAs can provide another source of income for an individual.”

Golden said RILAs with income guarantees provide clients with buffered investment options and market upside.

“For advisors, the appeal of RILAs is for clients who want to stay invested in

Relationship between underlying price returns and annuity returns

In this case, the cap with a 10% segment buffer is 15% (instead of 18% with the standard segment), and the cap with a 15% segment buffer is 11% (instead of 15% with the standard segment). The graphic above illustrates how the structured returns for these dual direction segments are determined relative to the underlying index price return.

What advisors need to tell

clients

How does an advisor guide their clients to the right guaranteed income solution?

“When you help clients transition from accumulating assets to drawing them

the market but also want to have guaranteed income so they have a consistent, reliable income in retirement. We see a lot of advisors looking at RILAs with income strategy to help clients achieve their goals.”

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

Walmart slows down health center plans

The nation’s largest retailer had big plans to establish a chain of health center superstores but is now pushing those plans back.

Walmart launched Walmart Health in 2019 and grew it to 48 locations in five states by the end of last year. The discount retail giant said it had planned to have more than 75 health centers in operation by the end of 2024. But now the company is walking back that projection, saying it plans to hit that target next year, and blamed “significant pressure on construction resources” for the delay.

The medical centers are geared for patients with no or poor insurance coverage in underserved areas, and they are located next to or inside Walmart Supercenters. They offer a range of services, including primary and urgent care, labs, X-rays and diagnostics, dental, optical, hearing, and behavioral health and counseling in one facility.

Along with its health centers, Walmart has made a number of other plays in the health care space, including partnering with an insurer and health system on care coordination in Florida. The company also brokers Medicare Advantage plans and offers co-branded MA plans with UnitedHealth.

WORKERS SEE FINANCIAL WELLNESS BENEFITS AS A MUST-HAVE

Employees are looking beyond traditional workplace benefits such as health insurance and looking to financial wellness benefits as “must-have” employer-based offerings. That’s the word from a Vestwell survey, which found:

» 85% of respondents expect their employer to offer retirement benefits

» 73% believe it’s important to have a 529 education savings account in their workplace benefits package.

In response to the demand for wellness benefits, Fidelity recently introduced a benefit aimed at addressing the growing pressures of student debt — Student Debt Retirement. The benefit, made possible through the passage of SECURE 2.0, allows employers to use money already

allocated for retirement plans to help employees save for retirement while paying down student debt.

COMMONWEALTH FUND LOOKS AT EMPLOYER-BASED COVERAGE

Half the U.S. population — 157 million people — rely on employer-sponsored health insurance. The Commonwealth Fund is creating a national task force to examine the changes needed to improve employees’ access to timely, affordable health care coverage

The task force aims to build consensus on market incentives and regulatory changes needed to enhance health coverage in the workplace, ensure access to affordable health care, and improve population health and care delivery.

Questions the task force will consider include:

» What is the landscape of employer coverage in 2024? What do we know about employer premium contributions and terms of coverage and about how

QUOTABLE

Long-term care could end up bankrupting states because of the large numbers of baby boomers needing care and the demands on Medicaid to pay for that care.

consumers are faring by industry, firm size and region?

» What are employers’ current purchasing practices, and what challenges do employers face in ensuring employees can get affordable coverage that allows access to timely, affordable, high-quality care?

» What are the range and type of policy proposals that might improve the affordability or quality of employer health insurance?

HSA OWNERS TAKING DISTRIBUTIONS BUT NOT INVESTING

Average health savings account contributions are well below the maximum allowed, even though most HSA owners are taking distributions from their accounts, and few are investing in them. That was among the findings in a new research report by the Employee Benefit Research Institute.

But even though workers reported spending more on health care in 2022 than in previous years, average HSA balances increased, rising from $4,318 in 2021 to $4,607 in 2022.

Since the establishment of EBRI’s HSA Database, average account balances have generally trended upward. End-of-year balances increased in 2022 to $4,607, the highest they’ve been since 2010, but average balances are still modest.

The average hourly rate for a home health aide in 2023 was $30.62, an increase of 5.2% over the prior year.

Source: illumifin

— Steve Cain, director and national sales leader with LTCi Partners

Navigating the changing benefits landscape

An education gap about benefits outside of traditional medical plans leaves many workers confused.

By Heather Deichler

Which is easier: completing your annual income tax return or choosing the right workplace benefits?

A recent Lincoln Financial Group Consumer Sentiment Tracker revealed twice as many individuals found it easier to prepare their taxes than those who found it easy to select their benefits.

This may be surprising, but it is due, in part, to an education gap when it comes to benefits outside of traditional medical plans. Because of this gap, employees struggle to navigate decisions about wellness and supplemental health benefits.

Yet most individuals who take advantage of wellness programs are satisfied with the benefits they have selected, the Sentiment Tracker found. And there is an impactful solution to simplifying the benefits enrollment process — modernizing how benefits are explained to today’s employees. In addition, employers must understand what employees expect and desire from their workplace benefits.

Barriers to benefit enrollment and engagement

The barrier to benefits enrollment lies in employees’ understanding and knowledge of the products and solutions that are offered. The Sentiment Tracker showed

that 54% of workers said they would enroll in more benefits if they better understood how those benefits could support their personal goals. Employees may fail to fully use the benefits offered to them, leading to missed opportunities for financial security, health and overall wellness. We also know there is a need for improved educational resources and user experience systems, as half of individuals note it is easier to file taxes than to enroll in benefits.

Another Sentiment Tracker finding highlighting the need for benefit enrollment education is that 63% of workers take comfort in the familiar and prefer to keep benefit selections the same year after year — considering new benefit selection only when absolutely necessary. Additionally, some employees struggle to weigh the cost versus value of benefits (26%), are unsure how different benefits work together (23%) and need help prioritizing benefits (21%). This demonstrates the need for an improved user experience and education on how benefits can be beneficial.

For example, wellness programs are gaining popularity in the workforce, with

2 in 3 employees offered at least one program, yet only half of those offered these programs actually use the resources available. Of the half who take advantage of at least one wellness resource at work, very few engage in multiple resources available. Despite the low engagement with wellness programs, 60% of employees who engage with multiple wellness benefits or have seen significant positive impact are very satisfied.

Breaking down barriers to simplify benefits

Employers should focus on spotlighting the wellness programs offered — and showcasing examples of how they can add value — to transform the programs from an overlooked offering into a valuable tool that may positively impact employees’ lives. Gamification can be an effective strategy to incentivize participation by turning wellness activities into engaging and rewarding experiences and fostering an organization’s culture. Providing engaging education tactics will lay the foundation for promoting wellness

On average, 60% find it easy to navigate open enrollment, but it varies by generation

NAVIGATING THE BENEFITS LANDSCAPE HEALTH/BENEFITS

programs and benefit offerings.

When asked to envision an ideal benefits education program, employees expressed a strong interest in a blend of self-service tools with consultive resources — mirroring the approach of tax preparation companies. This blend of services allows employees to better grasp how benefits offered can work best for their needs through consultations and live chats, interactive technology, self-guided learning tools and more. Taking this approach,

a strong preference for improvements to core benefit offerings, emphasizing stability and reliability.

While retirement benefits remain a consistent priority across generations, millennials and Gen X place a significant emphasis on financial wellness, putting this on par with health insurance. These two generations are likely more established in their careers, focused on building and protecting their wealth. Gen Z, on the other hand, leans more toward prioritizing mental and physical wellness,

of respondents would enroll in more benefits if they understood them better

reflecting their values and advocacy for overall well-being. Baby boomers place a greater emphasis on supplemental health, such as short-term disability and accident insurance, which is likely to protect their savings against an unforeseen accident.

In today’s workplaces, including employee benefits, the spotlight is on what Generation Z and millennials expect. As these generations continue to represent a growing percentage of today’s workforce, we can already see how they are driving changes to fit their unique needs and priorities when it comes to workplace benefits. And with overall employer satisfaction highly correlated to the benefits offered to employees, it’s pertinent to address how benefits play a part in employee and workplace satisfaction.

There is a shift away from traditional benefit packages, as seen by the preferences of younger generations, to new, innovative benefit offerings. When asked, 41% of today’s workforce reported a desire for new and innovative benefits solutions, with Gen Z, millennials and Generation X skewing the numbers higher. On the other hand, 43% of baby boomers show

Employers should account for the generational makeup of their organization when crafting a benefits package to better understand the unique preferences and priorities.

The road ahead

The employee benefits landscape is evolving as younger generations in a digital era enter the workforce. Employers should tailor benefits programs to meet the diverse needs of different generations and actively promote wellness resources to bridge the gap between offerings and utilization. By understanding and addressing dynamic benefits expectations and the knowledge barriers employees face, employers can foster a more engaged and satisfied diverse workforce.

Heather Deichler is senior vice president of product and underwriting for Lincoln Financial Group Protection business. Contact her at heather.deichler@innfeedback.com.

Source: Lincoln Financial Group

1 in 3 young investors want to

switch advisors

More than one-third of millennial investors (36%) plan to switch advisors within the next year, according to new research from J.D. Power. Craig Martin, executive managing director and global head of wealth and lending intelligence at J.D. Power, said the issue boils down to a lack of quality engagement between advisors and this particular demographic of clients.

A possible reason for this flight could be that 70% of affluent young investors already have a secondary investment firm to fall back on, according to the survey.

The top two reasons respondents gave for shopping for a new advisor were recommendations from friends or relatives and the desire for more or better products, services, resources or tools.

However, Martin suggested the reason many want to switch has more to do with advisors failing to adequately connect with and convey value to their younger clientele.

3 steps to help women alleviate financial stress

A Fidelity study found that stress levels remain consistently high among women, no matter their total household income. But taking financial action can help reduce that stress, and Fidelity recommended women take three steps to accomplish that.

1. Save for emergencies: Financial stress levels drastically decrease with each additional month of emergency savings set aside.

2. Save for retirement: Small increases in retirement savings can lead to big results when it comes to women’s financial stress.

3. Think ahead: Taking the time to outline financial goals and needs for the next few months can lead to less financial stress.

While women have made valuable progress in building confidence, more work is still needed to help them address the persistent confidence gap, the survey said.

Many have no plan to discuss wealth transfer

Wealth transfer isn’t talked about in many families, with 35% of Americans saying they don’t plan to discuss it, according to research from Edward Jones. The study revealed that nearly half of all Americans (48%) plan to leave an inheritance, with 45% of those planning to leave it to only their children and 36% planning to leave it to both their children and their grandchildren. It is estimated that baby boomers and

Black Americans optimistic despite financial stress

Although Black consumers frequently report financial stress, expectations that their financial health will improve far exceed those of consumers from other demographic groups, according to a survey by Achieve. When Achieve surveyed Black Americans to understand the key financial pain points and goals they are facing, it found that inflation and debt make it difficult for many of them to achieve their financial goals

Striving Amid Strain

76% of Black consumers reported living paycheck to paycheck.

43% said they struggle to make ends meet.

33% said their household income has decreased over the past year.

56% said they expected their income to increase over the coming year.

But the optimism is fueled by several factors. The vast majority of Black Americans surveyed, 75%, said they have no plans to leave their current job in the next year, which suggests many may be expecting a wage increase, a promotion or at least stability within their existing job. In addition, about 56% expect their income to increase in the year ahead, adding to a sense of optimism in affording a cost of living that doesn’t shift year over year.

the silent generation will pass down a combined $84.4 trillion in assets through 2045. This makes it critical for older generations to discuss transfer of wealth with their families, the survey said. So why aren’t people talking about this with their families? Amy Theisen, senior strategist, estate and legacy at Edward Jones, said the wealth transfer discussion is inherently emotional and may be uncomfortable for some, while others assume there’s no need to have such a conversation because children/receivers of inheritance already know their plans.

Source: Achieve

Feel like your messages to agents and advisors are vanishing into the inbox black hole?

Financial professionals are swamped with emails vying for their time, attention, and business.

Make sure your message gets the attention it deserves by leveraging this overlooked strategy:

Saving for college can impact your clients’ retirement

Many families find these two financial goals are in conflict. How an advisor can help.

• Carol Bogosian

Sending a child or other loved one to college and looking forward to a comfortable retirement are two keystones of the American dream. However, the cost burden on American families to realize these dreams is becoming more challenging. Despite this, a relatively small portion of Americans work with a financial professional.

Increasing burdens of retirement funding and college tuition

Historically, most Americans didn’t have to worry too much about saving for retirement. Until the 1980s, the option for a defined benefit pension was the norm for American workers. But these types of retirement plans are quickly becoming a thing of the past. As of March 2022,

only 15% of private industry employees had access to a defined benefit plan, according to the U.S. Bureau of Labor Statistics. That percentage will shrink further as more companies transition to defined contribution plans, which place the obligation of saving for retirement on employees.

While Americans take on the responsibility of saving for retirement, the cost of a college education is growing rapidly. From 2010 to 2020, annual college tuition in the U.S. increased at a rate of 12% per year, well above the average rate of inflation, according to the Education Data Initiative. Additionally, the U.S. Department of Education rolled out changes to the free application for federal student aid. While many families will benefit from the changes, some will see their aid decrease. Families with multiple college students, students with divorced parents, and those with small businesses or farms could qualify for less

financial aid, according to Money

The resource gap

A Society of Actuaries Research Institute report, “Financial Perspectives on Aging and Retirement Across the Generations,” revealed that only about a third of millennials, Generation X and younger baby boomers worked with a financial planner in 2020. Additionally, focus group interviews conducted by the SOA in 2023 found that while financial advisors and retirement plan providers can be effective in educating 35-to-45-year-old clients about saving for retirement, most people in this age group do not work with these professionals.

The focus group also revealed that instead of financial planners, many Americans in this age group rely on friends, family, coworkers and social media. Younger savers, who are busy with jobs and families, often lack the time and energy to search for a trusted financial

professional. However, competing financial goals demand prioritization, and building financial literacy with a professional can provide guidance.

Uncovering the challenges of competing goals

Savings goals don’t exist in a vacuum — many Americans are saving for more than one thing at a time, such as retirement and college tuition. Identifying potential challenges families face can help financial professionals pinpoint the kind of advice and support clients may need to achieve their goals.

The SOA surveyed Americans who are actively saving for both their retirement and a loved one’s college education to find out the following:

1. How families pay for college and retirement.

2. The impacts of having dual savings goals.

3. What trade-offs and sacrifices families make to save for both.

A snapshot of these dual savers shows that 93% of respondents are saving for their own children’s college education, and 66% of baby boomer respondents

(aged 58-76) are saving for their grandchildren’s education. Many respondents are also saving for the education of other family members or friends. On average, they save about $3,000 a year for college and have less than $200,000 saved for retirement.

In addition to retirement and college tuition, 92% of respondents also reported saving for a general savings/emergency fund. Other popular savings goals include:

• Vacation/travel (87%).

• Purchasing a home/property (68%).

• Large appliances (63%).

Financial and lifestyle compromises

Forty percent of respondents said they will have to take out a loan to help pay for someone else’s college education due to saving for both college and retirement. Twenty-eight percent said they will have to take on other kinds of debt as a result, and 16% said they’ve had to borrow from family or friends.

Respondents also reported that saving for both college and retirement had a significant impact on their lifestyles. About two-fifths (39%) reported having worked

longer hours to achieve their dual savings goals, and 26% have taken on additional jobs. Other sacrifices include:

• Downsizing homes (14%).

• Selling belongings (11%).

• Going without medical care (9%).

Retirement and college trade-offs

A deeper dive into other findings of the survey reveals that the dual savings goals have significant effects on retirement plans, with more than half of all respondents (58%) who are of working age or retired saying they delayed retirement significantly or moderately. Furthermore, 41% of dual savers have used retirement funds to pay for the college education of a relative, risking a tax penalty for early withdrawals.

Having dual savings goals also impacts students’ college experience. Forty-nine percent of college fund beneficiaries report a medium to large impact on their college experience. Forty percent had to choose in-state or public colleges over out-of-state or private ones, and 35% say collegegoers will have to choose a twoyear community college over a four-year institution. About 12% of dual savers report their college fund beneficiaries will have to postpone going to college due to their dual-savings goals.

This research indicates that saving for retirement and college impacts the plans for both. College plans become limited by the financial constraints of saving for multiple goals, and retirement plans are likely to be delayed and savings decreased. In addition, people’s daily lives are affected by the lifestyle or career changes made to accommodate these savings goals.

Professional financial planners could provide support for many of these savers, helping them prioritize objectives and attain financial literacy. Enabling people to strike a balance between funding a college education and ensuring retirement security is key to realizing both.

Carol Bogosian, ASA, is president of CAB Consulting, and an associate of the Society of Actuaries. Contact her at carol.bogosian@ innfeedback.com.

8 critical steps to drive sales

The three important words that transform salespeople into sales powerhouses.

By Casey Cunningham

Imagine achieving a 388% increase in weekly prospect meetings.

Picture securing an 88% surge in new prospects in just four weeks. Now envision maintaining this high level of success month after month and year after year — even during a tough economic climate.

These remarkable success rates are not only possible, but they can also be easily attained through mastering a proven eight-step sales methodology. Like all professionals, salespeople need the right training to internalize these steps. However, companies overlook training all too often. According to research cited by Zippia, one-quarter of sales professionals believe they lack the instruction they need. For that reason, here are some guidelines to help sales leaders start upskilling their teams.

Remember three important words

What should sales leaders remember first? Most of them would be surprised to learn that the secret to enabling their team’s success starts with each sales representative internalizing the three most powerful

words for success: “I am responsible.”

“I am responsible for my attitude, my performance, my success.”

It may seem too simple, but it works. This approach consistently delivers the kind of remarkable success metrics described at the start of this article. When you can get salespeople to recognize that they alone own the results they deliver, you can help them win — and win big.

This can even transform underperforming sales reps into sales powerhouses.

Step 1: Own your mindset

Owning your mindset is the most critical step. You can’t shift your behavior without shifting your mindset. That’s why it’s important to focus first on believing in yourself and your ability — regardless of any outside obstacles. If you think you’re not capable or you’re average, you will be. Salespeople must make long-term commitments to themselves and internalize the belief they can win. Only then can real, long-term transformation begin. Case in point: An insurance sales leader reported that after his salespeople were taught to “own their mindset,” they immediately acknowledged they had poor self-images. The concept of “I am responsible,” of individual accountability, became a game changer for them. They gained the mindset they needed to learn and grow.

Step 2: Create your flight plan

After you own where you’re going, you need a plan to get there. What is your objective? What do you want to achieve?

If you’ve ever encountered a pilot’s approach to planning successful flights, you can draw a close analogy to how sales professionals should go about planning for successful prospect meetings. Pilots would never fly a plane without proper training — or without knowing where they’re going.

In the same way, salespeople must develop a detailed plan before they actually “take off” to understand what a successful “flight” looks like. Flight planning requires salespeople to prepare for meetings — understand where they’re going, how they will get there, what “passengers” they’re taking and what goal they want to reach.

Step 3: Build the relationship

It’s an unfortunate reality that most salespeople go into a relationship to make a sale — not to build trust. Yet building trust is the most important aspect of forging a strong relationship that enables easier, long-term sales.

Gaining trust begins by communicating in a way that aligns with your customer’s communication style and demonstrates sincere interest in them, their challenges and their opportunities.

Show you care by asking enough questions and being an active listener. And remember the three most powerful words in active listening: “Tell me more.”

Step 4: Set the stage

When you set the stage, it initiates a process abbreviated as OAPCC that delivers great sales closings:

• Opening a meeting with purpose sets the stage for success.

• Asking powerful questions uncovers gaps and goals to build trust.

• Presenting your value proposition enables a sales win within a shorter sales cycle.

• Confirming what you’ve heard ensures your presentation is on point.

• Closing by asking for the business becomes easier with the OAPCC process.

A successful opening also includes “managing the game clock” — confirming your prospect’s available time. Clarify the meeting objective, and set expectations with a clear agenda. This approach sets the stage for Step 5.

Step 5: Reveal the need

Step 5 focuses on asking questions in ways that clarify the prospect’s needs, uncovering the “why” behind the “how” and the “what.” Does the prospect need to increase, improve, expand or reduce something? Ask questions that deliver real insight and confirm upfront whether your company can address these needs.

Here is an effective way to ask insightful questions. Do your research to understand what issues are critical to your prospect. Then use that data to develop engaging questions that are relevant. The trust this creates makes prospects more willing to share the in-depth information you require for Step 6.

Step 6: Qualify your opportunity

Qualifying ensures the value of your solution is significantly greater than the prospect’s investment. If you can’t demonstrate that value, it’s better to walk away than to risk your personal reputation.

First, your goal is to confirm you’re working with the right decision-maker, clarify their timing and determine the available funds. In short, you’re building a “success bridge” — qualifying the opportunity with enough clarity to demonstrate that your company will stand out in delivering what your prospect seeks.

Step 7: Present your value

If you’ve accomplished steps 1-6 successfully, Step 7 is much more streamlined. Because you spent additional time building trust and qualifying the opportunity, the time to present your value should be short — and your closing should be even shorter. Why? Because your prospect is already sold, and they’re ready to start. This is also a moment to build trust.

At the same time you’re presenting to the prospect’s need, you should ask questions to double-check that you’re on the right path. This extra degree of confirmation reinforces that you have your prospect’s best interests at heart and that they can trust you to help them meet their objective.

Step 8: Solidify your strategy

This final step ensures you’re strategizing your business to replicate success. It’s a critical step that establishes the discipline of learning, refining and repeating what works.

Evaluate your performance and your strategy. Focus on business development — review where you are and where you’re going. Make it a habit to debrief after every sales call to enable consistent learning and growth. Ongoing introspection helps you build on your success and defines what skills you need to improve or reinforce.

These eight steps are the building blocks that develop confident salespeople capable of delivering remarkable results sales call after sales call. They’re designed to deliver long-term repeat clients for life. And they all depend on three powerful words: “I am responsible.”

It’s not just about the conversions from the email journey, but it’s also about engagement with our brand. This resulted in some of the highest opens and click-through rates we’ve ever seen.

INN is like an easy button for my marketing!

Casey Cunningham is CEO and founder of XINNIX: The Academy of Excellence. Contact her at casey.cunningham@innfeedback.com. Let

Connect with our team of experts today to see how we can help you expand your reach and maximize your budget.

the Know

INavigating the digital transition: Empowering new hires

Keeping pace with rapidly evolving technology is a special challenge, especially when onboarding new employees.

By Ken Leibow

n the rapidly evolving landscape of the insurance industry, keeping pace with technological advancements poses a significant challenge, especially when it comes to onboarding new employees. As companies grapple with the daunting task of training staff without a standard operating procedure manual, this question arises: How can organizations ensure that newly hired individuals, from receptionists to seasoned professionals, swiftly adapt to complex tech ecosystems?

I had the opportunity to reach out to Angie Hughes, who is a managing partner at Producers XL.

Leibow: How does a brokerage general agency keep staff and, more importantly, newly hired staff, up on all the tech going on in the insurance industry?

Hughes: This can certainly pose a challenge, as who would want to apply for a position that simply states. ‘We can’t train you fast enough or give you a standard operating procedure manual, but come join our team as it’s sure to be one heck of a ride!’

We recently hired someone to be our receptionist after the employee who had that job for almost 30 years decided to

retire. (How many agencies see that kind of tenure?) Replacing our long-term receptionist is no easy task because, as we like to say, she has all the keys and knows where all the skeletons are! Meaning, how do you take 30 years of experience with life insurance case management, policyholder service work and many other duties and bring a new employee up to speed in a couple of months? Technology, that’s how.

Leibow: How often does technology come into play?

Hughes: We use tech daily, if not by the minute, from vendors like Ipipeline and  Stratecision for quoting and forms, and we also use some proprietary tech for drop ticket term life, and search and save tech for Medicare sales. We also have tech for licensing and contracting for the purpose of getting the correct contracting to various insurance companies to get agents and advisors appointed.

Leibow: What’s the most effective way to teach a new hire?

Hughes: Tech is fantastic but takes time to learn. The best way to get success for new hires is the “wash, rinse, repeat” method, which simply means do it often

and you’ll create muscle memory on the steps to achieve the goal. That’s not so easy when having to engage with all the various product lines such as life insurance, Medicare, long-term care and so on. Some of this requires going into each carrier’s website and using their site resources. Quite frankly, the agents must learn those as well because most carriers are no longer supplying paper commission statements, but instead, you go grab them from your respective carrier as you are paid.

Tech is key but also a pain point. Start slow but run the race fast with efficiency and accuracy and you will finish the race a success!

AI must be in an organization’s DNA

I recently read the book “DNAI: Enable Sustained AI Success by Splicing AI Into Your Organization’s DNA,” written by my good friend Kartik Sakthivel, who is the chief information officer at LIMRA. He told me that success among carriers around technology and skills needed for their teams with their trading partners across the ecosystem is usually predicated on organizational culture and underlying business processes, and then secondarily around an organization’s technology footprint. Here are more of his insights.

Hughes

Sakthivel

The People / Process / Technology Framework is highly popular across industries to maximize efficiency of their processes, ensuring the right tools are available for enabling organizational processes and that the people enabling this work can seamlessly interact with these tools, operating within the bounds of these defined processes. The reason that these best practices are developed around the PPT framework is simply because this framework is ubiquitous and commonplace across organizations regardless of industry. Firms look at most strategic programs through the lens of people, process and technology, a practice that has yielded success over many decades. Especially important in the AI age, the PPT framework can greatly assist in ensuring organizational success regardless of what type of digital transformations organizations are undertaking.

There are few key things carriers should consider in implementing the PPT, writes Sakthivel.

1. Industry domain knowledge (people): Several mature and established industries struggle with attracting and retaining talent. With an aging existing workforce, companies seek to attract employees from different industries and sectors into their industry.

Not having been exposed to the new industries that they are entering, new employees enter these organizations with fresh ideas and innovative thinking but lack the industry technical knowledge to put these innovative ideas into practice. This causes these individuals to drop out of that industry, leading to retention challenges. These retention challenges, in turn, result in companies seeking to bring in talent from outside the industry, in an infinitely repeating closed loop. Industry education via LOMA educational programs is a wonderful opportunity for the industry to invest in developing industry domain knowledge.

2. Knowledge sharing across the enterprise (people): Most companies across established industries have traditionally been operating in digital silos. Even within a specific line of business, opportunities to share and apply best practices have historically been limited. These limitations are often self-imposed, exacerbated by disparate systems, distinct processes and a

general reluctance to change when dealing with cross-functional departments.

A fundamental facet of enabling an enterprise technology strategy is to effectively traverse horizontally across your organizational value chain. It will therefore be important to share information and best practices within a line of business, and just as important to share across lines of business. Within large organizations with multiple lines of business, one line of business could greatly benefit in learning from another line of business. One line of business in an organization might have experienced challenges and growing pains that could inform strategies for the departmental digital strategy of another line of business.

Groups that are further ahead in their implementations might have developed a robust set of best practices that can be effectively applied in a turnkey manner within the same organization due to enterprise-level similarities. Without an intentional approach to facilitate knowledge sharing across an organization or be these opportunities might go unnoticed, underleveraged and undercapitalized. Taken in aggregate, not being able to freely disseminate information across a company can be detrimental to the company’s operational efficiencies and mitigate achievement of scope and scale economies.

3. Documented, repeatable technology provider selection processes (process): There often is no standard and repeatable process on how firms select technology providers. Regardless of whether a company chooses to pursue the “build” model and simply use a technology provider, or if they pursue a partnership with a full-service technology provider, the choice of selecting a specific provider is not a repeatable process that an organization can follow.

Although firms tend to heed the guidance of their external consultants, reinsurers or technology partners, understanding what makes a specific technology provider stand out versus others, will be important going forward.

4. Standard IT-supported technology stack (technology): Most organizations, regardless of size, could have an onerous number of platforms and technologies. Not only do companies struggle with managing technical debt and legacy

systems, but most companies’ IT providers also contend with a measurable number of non-IT-owned, -built, -supported or -governed platforms that business users have developed and maintain.

These “IT cottage industries” not only pose an operational and potential cybersecurity risk, but they also stand contrary to the cause of standardization and establishment of repeatable processes with predictable outcomes.

Departments such as data analytics and data science seek to prove the efficacy of their hypotheses and models by building tools and by experimentation. This experimentation often leads to these groups developing niche products, sometimes using unsupported platforms and technology, and institutionalizing these platforms within their departments. As organizations develop their enterprise technology road maps, it will be incumbent upon the chief information officer, the chief technology officer, the chief information security officer and the chief enterprise architect of these firms to publish and govern the technology stack that is supported by the firm’s IT group.

It’s a symbiotic relationship

In summing up, navigating the digital transformation within the insurance sector requires a nuanced understanding of the symbiotic relationship between people, processes and technology. The journey toward technological adaptability and efficiency isn’t only about implementing the latest tools but also about cultivating an environment where continuous learning, knowledge sharing and process optimization thrive.

By embracing the people/process/technology framework, organizations can not only enhance their operational effectiveness but also create a dynamic workspace that attracts and retains the best talent. The future of insurance is undeniably digital, and those who invest in empowering their workforce through these three pivotal pillars will lead the charge toward a more resilient, innovative and successful industry.

Ken Leibow is founder and CEO of InsurTech Express. Contact him at ken.leibow@innfeedback.com.

The power of a united voice

Industry associations and state regulators joined together to oppose legislation that would have made it more difficult to sell life insurance and annuities.

By Melissa Bova

In 2023, California introduced legislation that would have established a standard for life insurance and annuity sales that would have gone further than a similar, very problematic, standard in New York (Reg. 187). The introduction of this legislation would have been the potential beginning of a patchwork of laws and regulations in different states across the country that would have created different standards for producers, depending on the client’s location, and hindered access to advice and products.

The bill, as introduced, would have:

» Eliminated all forms of non-cash compensation, including health and retirement benefits.

» Created a required list of 15 factors that must be collected from the consumer, and if the financial advisor was not able to collect the information or the consumer did not provide it, the advisor could not issue a recommendation.

» Held a financial professional to a higher standard of care than a client who purchases a product directly from a carrier.

» Required multiple disclosure requirements over the course of the process and would set an incredibly high threshold to recommend a product replacement.

» Potentially made it impossible to make a commission-based sale.

A coalition led by the Association of California Life & Health Insurance Carriers, which consisted of Finseca, the American Council of Life Insurers, the National Association of Insurance and Financial Advisors, the Insured Retirement Institute, the National Association for Fixed Annuities, the Federation of Americans for Consumer Choice, and the Independent Insurance Agents and Brokers of America, united in strong opposition to the introduced legislation.

Thanks to the work of this coalition, the legislation was amended throughout a yearlong legislative process to align with the National Association of Insurance Commissioners’ Best Interest Standard for Annuities. Gov. Gavin Newsom recently signed SB 263, and California joined 44 other states in adopting the NAIC standard. Let’s take a

look at why that is so important.

Where the NAIC comes in

More than 80 years ago, Congress gave states the responsibility to regulate insurance, and insurance regulators from across the country have been working together and convening under the NAIC umbrella to consistently prioritize the interests of consumers when regulating all facets of insurance.

NAIC is made up of regulators from every state, reflecting a broad political spectrum, and its work requires bipartisan support to ensure policies can be implemented broadly in individual states around the country. That is why the work the NAIC did in developing the Suitability in Annuity in Transactions Model Regulation (No. 275) is such a big deal.

In response to the 2016 proposed fiduciary rule from the federal government, a rule that was struck down by the U.S. Court of Appeals for the Fifth Circuit, the NAIC began work on a best-interest standard that would apply to annuities. This work took time and much debate, yet the NAIC remained steadfast in its commitment to formulating a standard consistent with the Securities and Exchange Commission’s Reg. BI. This standard preserves consumer choice by accommodating both fee-based and commission-based products while upholding a rigorous level of consumer protection.

Model regulations are generally rare within the NAIC because they need broad support for passage. This is why the NAIC more commonly develops model bulletins or guidance as opposed to model regulation.

Model regulations are generally rare within the NAIC because they need broad support for passage. This is why the NAIC more commonly develops model bulletins or guidance as opposed to model regulation. In the case of a model regulation, the regulation must first receive a majority vote of the task force or working group where it was initially developed. The regulation then must receive at least two-thirds support from its parent (letter) committee. Upon achieving that vote, the regulation must go before the plenary committee — which comprises the full NAIC membership — where it must also receive a two-thirds vote. This process tends to take years from beginning to end, and after that work, Model

Regulation 275 was adopted in 2020 with only one opposing vote.

Then it’s up to the states

The work for a model regulation doesn’t end at the NAIC, though. Even though the NAIC may overwhelmingly adopt a regulation, it is up to each state to go through the process of adopting the model regulation in some form in their jurisdiction. This process varies, as each state tends to have its own process for adoption. Some states may be able to go through a regulatory adoption. Other states are required to introduce legislation and go through the entire legislative process. Still others have to introduce legislation, pass legislation and then go through a

know an original when we

regulatory adoption process afterward. These processes allow for input, changes and replacement of language — similar to any other issue.

This is exactly why the NAIC Best Interest Standard for Annuities and its adoption are so extraordinary. They demonstrate the commitment of the NAIC, individuals, state regulators and the industry to creating a standard that protects consumers while preserving access to advice. The standard has been consistently adopted in 45 states and allows for reciprocity and compliance across all states that have adopted it.

The work that happened in California is a great example of how, when the industry and regulators join forces, achieving FINancial SECurity for A ll becomes attainable.

Melissa Bova is vice president, state affairs, Finseca. Contact her at melissa.bova@ innfeedback.com.

5 growth opportunities for the life insurance industry

Executives cite profitable growth as the industry’s biggest challenge.

By Bryan Hodgens

When C-suite executives in the life insurance industry were asked about the most important challenge on their minds, profitable growth was on top in 2023, followed closely by talent management. When the same study was conducted in 2019, change management was what kept executives up at night. By 2021, as companies were forced to meet customers’ changing needs due to the pandemic, executives’ focus shifted to technology.

A third of executives (33%) said their company’s greatest internal challenge was profitable growth, which has been in the top three for the past three studies. Executives surveyed said digital automation, data science and data analytics were the top technologies needed to ensure their companies’ success over the next five years.

The report, “What’s on the Minds of Life Insurance Executives 2023,” released in October 2023, highlights five ways to address growth and other key challenges. Here are five opportunities to promote growth in the industry.

1. Personalizing the journey: The customer experience — and the critical capabilities that enable it — will help drive growth. Almost three-quarters of those surveyed (74%) said data science and data analytics are crucial to success. More than 6 in 10 (66%) view customer service technologies as critical to business success going forward.

2. Helping advisors help clients: To be effective, insurers must focus on improving tools and offering insights to help advisors build and maintain customer relationships. The survey revealed that 60% of executives see helping advisors as

a top distribution challenge. Insurers can help advisors by providing tools for lead generation, financial planning and automation to make it easier to reach clients and prospects.

3. Modernizing technology front to back: Technology modernization is table stakes for long-term success; however, leaders do not believe their companies are prepared to address it. Although insurers are investing in technology across the value chain — including data science and analytics — only 27% of executives consider their companies prepared for the challenge of modernization.

4. Partnering to accelerate innovation: Insurers are actively partnering with other companies to achieve their key strategic goals. Some recent examples include Ameritas and Ethos working together to enable simplified digital product sales, John Hancock and Vitality collaborating to offer rewards for healthy choices and tools that customers can use to improve their overall well-being, and Pacific Life Insurance and Appian joining forces to intelligently source data to resolve claims quickly and minimize cost.

5. Attracting and retaining talent: Talent management is a leading challenge, and rapid industry changes require insurers to plan and act now to build the workforce of the future. To meet customers’

changing needs, insurers will want to hire and retain more employees with digital skills. They can take action by:

• Reassessing the hiring process and job requirements.

• Developing programs to reskill and upskill talent.

• Building ecosystems of shared, temporary talent.

• Building a strategy and infrastructure for remote work.

New annualized life insurance premium has had modest growth year over year, setting a record for each of the past three years. There has also been a strong uptick in the number of policies sold. LIMRA’s consumer sentiment data suggests that more people started feeling more confident in the economy and their own financial outlook in 2024. This may have prompted consumers to address their life insurance needs. As more people seek the financial protection life insurance can provide, insurers must be ready with technology and solutions to meet the growing demand.

Bryan Hodgens is head of LIMRA research. Contact him at bryan.hodgens@innfeedback.com.

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.

Beyond docs and dentists: DI is essential for young professionals

Disability insurance isn’t only for those with high-risk professions.

By Suzanne Carawan

Disability insurance is often overlooked by financial planners serving young professionals outside the medical and dental fields. While traditionally associated with high-risk professions, such as doctors and dentists, DI is equally critical for a broader spectrum of professionals, including engineers, law and MBA students, and others with advanced degrees. Providing coverage early in professionals’ careers is not just advisable but imperative, serving as a crucial component in their financial portfolios.

It is one that was never introduced to me until mid-career, when insurability is more difficult, and one that would have served me well coming out of my MBA and into the workforce. When I think back to all of the global travel I’ve done throughout my career, having children, working through different illnesses and accidents, I never knew that I could have had the safety net DI. I was only introduced to this recently while attending the International DI Society’s annual conference.

For professions like medicine and dentistry, where the physical demands of the job and the risk of injury are higher, DI has long been considered a staple in financial planning. However, other professions, such as engineering and business administration, come with their own risks that make DI equally essential.

Consider the case of engineers. These professionals often work in dynamic environments, whether it’s on construction sites, in laboratories or even in office settings where ergonomic issues can arise. The risk of injury, whether from a workplace accident or a repetitive strain injury, is significant. In such cases, DI provides a vital safety net, ensuring that engineers can maintain their financial stability even if they’re unable to work due to injury or illness.

Similarly, law and MBA students and professionals face unique risks that make DI indispensable. Pursuing an advanced degree often requires a significant investment of time and money. Many law and MBA students take out loans to finance their education, with the expectation that their increased earning potential after graduation will enable them to repay those loans. However, if an unforeseen disability were to derail their career plans, they could find themselves unable to meet their financial obligations. DI mitigates this risk, providing law and MBA students with peace of mind knowing that they’re protected against the unexpected.

Offer it early

Offering these professionals DI early in their careers is essential for several reasons. First, DI tends to be more affordable when purchased at a younger age, as premiums are based on factors such as age, health and occupation. By securing coverage early, professionals can lock in lower premiums, ensuring that they have adequate protection in place without breaking the bank.

Purchasing DI early allows professionals to take advantage of the underwriting process, which evaluates their health and medical history to determine their eligibility for coverage. While individuals in their 20s and 30s are generally healthier and less likely to have preexisting conditions, they’re more likely to be approved for coverage and to qualify for preferred rates. Waiting until later in life to purchase DI could result in higher premiums or even denial of coverage if health issues arise.

Additionally, having DI early in their careers provides professionals with financial security and peace of mind. Starting a career can be an exciting yet uncertain time, with many unknowns lying ahead. Knowing that they’re protected against the financial consequences of a disabling injury or illness allows professionals to focus on building their careers and pursuing their goals without worrying about what would happen if they were unable to work.

Incorporating DI into their financial portfolios early also sets a solid foundation for long-term financial planning. Just as individuals invest in retirement savings and other forms of insurance to protect their financial future, DI is a critical piece of the puzzle. It ensures that professionals have a safety net in place to protect their income and financial security, even in the face of unexpected challenges.

Most people don’t seek out DI, so it’s critical that the advisor bring up the topic and address it early and often. When an advisor said to me, “Your biggest asset is your brain,” everything clicked for me and I went through the grueling process to get coverage. Knowing that I could have done this 20 years ago with a lot less stress is one of those life lessons that I put in the “that would have been good to know” category.

I am incredibly grateful that I have never had an illness or accident that has kept me out of the workforce, but I also know that I left it all to chance. When you invest in yourself and work hard in school and in your career, eliminating risk should be part of your mindset. Not having DI in place left me exposed for far too long.

Make sure that you discuss DI as a critical component of financial planning for early-career professionals beyond the realms of medicine and dentistry. From engineers to law and MBA students (think about all those HENRYs out there) and beyond, individuals with advanced degrees face unique risks that make DI essential. Offering this insurance early in their careers provides professionals with peace of mind, financial security and a solid foundation for long-term financial planning.

Alerting your clients to the importance of DI and partnering with specialists who can get them coverage must be imperative.

Suzanne Carawan, MPH, MBA, is NAIFA’s vice president of membership. Contact her at suzanne.carawan@ innfeedback.com.

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.

Digital tools transform the way we serve our clients

Technology eliminates many administrative chores, allowing advisors to focus on enhancing client experiences.

By Terri Krueger

Financial advising requires the highest quality of analytics to determine the best outcomes for our clients. Whether it’s helping with tax planning or finding the right insurance policy or managing investments, our goal is to work efficiently and provide solutions that leave our clients feeling confident. We must have the right tools to help clients explore their options so they can achieve their desired results.

The digitalization of financial planning tools marks a new era of easy access and dependable financial insights. As digital transformation propels the world forward, financial advisors must adapt to dynamic technological trends that continue to enhance the industry.

Finance in the digital age

Advisors must be vigilant in enhancing their digital capabilities — such as artificial intelligence and machine learning — to refine their financial ecosystems. Embedding technology into a practice as a support system instead of a replacement ensures advisors’ capabilities to strengthen clients’ trust. In a 2022 MDRT study, 75% of American clients said it would be important for advisors to use cybersecurity tools but only 35% said their advisors use such tools. Advisors can reshape the narrative by highlighting how digital innovations aid financial services while reassuring clients that financial advisors are still a necessity.

Between building trust with clients, providing high-quality results and growing your client base, it can be difficult to maintain a balance. Digital tools can address these concerns by improving communication and streamlining

processes. For example, advisors must monitor all client information regarding investment accounts, documents, etc., while staying up to date with any client changes and communications. This is often managed through piles of paperwork or multiple spreadsheets that take time to develop. Customer relationship management software is an example of a digital tool that tracks and stores client data, preferences and activity to streamline work. In essence, CRM technology eliminates many administrative chores, allowing advisors to focus on enhancing client experiences.

Integrating digital tools

Finding digital tools is easy, but determining their usefulness is more difficult. A reliable strategy for discovering new growth opportunities is to seek perspectives from other advisors and to leverage networks such as MDRT. This approach led me to find Holistiplan, a comprehensive tax planning software program that offers a series of benefits that saved time and allowed my quality of work to improve. For example, it provides an instant scenario analysis to demonstrate the value of a Roth IRA conversion, all within a comprehensive view. If the analysis isn’t as in-depth as you need it to be, there’s a team of people behind the scenes that can

provide deeper insights, see if more information is needed or determine whether the client qualifies for the conversion.

Our clients are not just a priority; they are the heart and soul of our business. Investing in digital tools reduces time spent on tedious administrative work and repositions your focus toward other areas, such as honing personal skills and crafting innovative strategies. When used correctly, this will help gain and retain clientele for continued business growth.

The future of financial advising is intertwined with the relentless development of digital progress. By capitalizing on the transformative power of digital tools, advisors can reach new levels of efficiency, efficacy and client satisfaction. In this new world, advisors must be bold enough to acquire and adopt these capabilities to make their work easier and provide more value to our clients.

Terri E. Krueger, ChFC, is an independent financial advisor and 10-year and Lifetime MDRT member with three Court of the Table qualifications and two Top of the Table qualifications. She opened her practice, Krueger Advisors in Syracuse, N.Y., in November 2018. Contact her at terri. krueger@innfeedback.com.

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

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