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How technology is helping advisors live the lives of their dreams. PAGE 26

Life Insurance | BenefitAccess Rider

I don’t have a chronic illness, but I live with one every day. That’s my reason.

*See below for terms and conditions. Life insurance is issued by The Prudential Insurance Company of America, Pruco Life Insurance Company (except in NY and/or NJ) and Pruco Life Insurance Company of New Jersey (in NY and/or NJ). All are Prudential Financial companies located in Newark, NJ. All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. Policy guarantees and benefits are not backed by the broker/dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company. Each is solely responsible for its own financial condition and contractual obligations. The BenefitAccess Rider is available for an extra premium. Additional underwriting requirements and limits may also apply. Obtaining benefits under the terms of the rider will reduce and may eliminate the death benefit. Benefits paid under the BenefitAccess Rider are intended to be treated for federal tax purposes as accelerated life insurance death benefits under IRC §101(g)(1)(b). Tax laws related to the receipt of accelerated death benefits are complex and benefits may be taxable in certain circumstances. Receipt of benefits may affect eligibility for public assistance programs such as Medicaid. Accelerated benefits paid under the terms of the Terminal Illness portion of the rider are subject to a $150 processing fee ($100 in Florida). Clients should consult tax and legal advisors prior to initiating any claim. A licensed health care practitioner must certify that the insured is chronically or terminally ill to qualify for benefits. Chronic illness claims will require recertification by a licensed health care practitioner. Other terms and conditions may apply. This rider is not Long-Term Care (LTC) insurance and it is not intended to replace LTC. The rider may not cover all of the costs associated with chronic or terminal illness. The rider is a life insurance accelerated death benefit product, is generally not subject to health insurance requirements, and may not be available in all states. Accelerating the death benefit will reduce the death benefit on a dollar-for-dollar basis. Full acceleration will eliminate the death benefit and the policy will terminate. © 2014 Prudential Financial, Inc. and its related entities. FOR THE EDUCATION OF PRODUCERS/BROKERS ONLY. NOT FOR USE WITH THE PUBLIC. 0266196-00001-00


The majority of chronic illness caregivers are women. They’ve felt the emotional and financial toll and are determined to ensure their own freedom as they age. NOW YOU CAN HELP THEM USING LIFE INSURANCE. By adding the BenefitAccess Rider to permanent life insurance, your clients can have guaranteed death benefit protection plus the ability to accelerate up to 100% of the death benefit if they become chronically or terminally ill.* To explore tools and resources about life insurance with BenefitAccess, visit or call 844-606-7873.


The High Net Worth & Affluent Market Has A Distrust Of You & What You Do Before You Ever Get A Chance To Show Them How You Can Help Them...

Let Me Show You 4 Key Reasons Why Your Clients & Prospects Don't Trust You... By Greg Rollett

The general public and even high net worth individuals are unfamiliar with how your charts and graphs work and many see them as sales-y pieces that are used to manipulate them and scaring them into using your services.

Over the past few years it has become increasingly harder to establish trust with high net worth and affluent clientele you want on your roster. This is especially true when every advisor in your backyard is using the same song and dance, trying to impress the same prospects with the same bland, vanilla, lifeless tools, brochures and collateral. Who reads that stuff anyway? Ultimately no one is impressed or moved to take action. Trust is earned. It is manufactured. It is built by establishing who you are, telling your story through unique, Celebrity-Driven media you create and use, and the relationships you create through your marketing efforts. In talking with top producing advisors and high net worth business owners on my radio show, and in the Ambitious Advisor Program, I want to share with you 4 of the most eye-opening reasons that the prospects you are spending money to advertise to, are simply not paying attention to you, doing business with you or referring you (hint, it’s because they don’t trust you!). #1 They’ve Been Burned Before Whether it was the market crash in ’07 and ’08, their employer stripping away their benefits or plain bad advice, you are at an immediate disadvantage due to the baggage a prospect carries from advisors who got there before you ever crossed their path.

Greg Rollett, Best-Selling Author & Trust Marketing Expert This creates a huge trust barrier that you must overcome. And you won’t overcome it with the same mail house invitations to dinner seminars, flimsy 4x6 postcards or “me too” product-centric marketing and advertising that you saw another advisor use or that your IMO or FMO gave you. This just makes you look like the guys that steered them wrong in the first place. #2 They Don’t Know Or Understand What It Is That You Do How can someone trust you if they don’t understand what it is that you do? That is the case with most consumers. They don’t know the things you know. They are good at being an engineer, an account executive, a realtor or whatever profession they have worked in, in the trenches for their entire lives.

#3 They Don’t Know You From The Guy Down The Block You showed up, unannounced in the mailbox, on the radio, or in the sports section of their newspaper with an invitation to trek out of their home to a workshop with a room full of people they don’t know, to see a person they don’t know, to get sold something they don’t want. Why should they trust you enough to respond? Your core responsibility needs to be using media to establish a relationship with the folks you want on your client roster, so they instantly recognize you and your importance in their life. Do you leave an impression of who you are in your marketing, or are you selling the steak, or even worse, features of your complicated service or product? #4 No Proof That You Can Do What You Do There are 3 ways to try and sell someone something. You can tell them what you do. Someone else can tell them what you do. You can demonstrate what you. When you have a set of Trust Tools working for you in your business, you are able to display your Magic Powers and demonstrate your ability to help your prospect to reach their financial goals. Nothing builds trust faster than demonstration.


The Ambitious Advisor’s Top 5 Trust Building Tools Here are Greg Rollett’s top 5 tools he uses to help his clients, in the Ambitious Advisor Program, to develop unbreakable trust with prospects, clients and referrals.


Without these Trust Tools working for you, you are hoping, with your fingers crossed, hoping, wishing and praying that your phone will ring and your calendar will fill up. Today, I want to show you how to create Unbreakable Trust in your business, by creating the tools and the marketing machine you must have in your back pocket at all times if you desire to attract high net worth clients and put more assets under your trusting management. My name is Greg Rollett and I am the founder of the Ambitious Advisor, a unique Trust Based Marketing Program for financial advisors, as well as the co-author of the Best-Selling book, Celebrity Branding You. Today I want to demonstrate to you exactly how to get your market to Trust You.

I’ve just written a brand new report and filmed 2 extensive training videos for you. And I want to give them all to you today, for free. I am doing this to show you exactly how to counter the 4 points above and to help you establish Trust like no other advisor in your backyard. To claim your free report and training videos, go to or call 888-691-8843 today.

1) Monthly Print Newsletter. The most important trust building tool in your tool box, nothing creates lifetime clients and stimulates never ending referrals like a monthly print newsletter that shows up in the mailboxes of all your clients and prospects. 2) The Trust Box. This is the package that is sent to prospects to build trust before they ever come to meet you for an appointment. It shows up on their doorstep containing everything you want them to know about you, your story and your credibility helping others just like them. 3) Special Reports. This one sounds simple, but so many advisors get it wrong. They use canned reports developed by their brokerage house, FMO or IMO that do more harm than good. Use reports that solve specific problems, inject your personality and position you as a thought leader, not a product pusher. 4) DVDs. Putting videos on YouTube and hoping an affluent prospect sees it is as probable as finding the Loch Ness Monster the next time you are in Scotland. Instead, take your videos and get them directly into the hands of the people you want to see them. Show up like a Celebrity or don’t show up at all. 5) A Calendar. Every month, things on the calendar give you an opportunity to talk to your clients and prospects - from holidays to birthdays, anniversaries and seasonal events you need to be looking at a calendar to plan out your marketing to coincide with the conversations your market is having. Being topical and timely will develop a bond and trust with them and give your marketing a welcome feel when it comes in their mailbox or inbox.

To see these tools in action, Greg has put together a brand new report for you, The Trust Triangle. You can claim your free copy of The Trust Triangle at or by calling 888-691-8843.

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View and share the articles from this month’s issue

54 How Life Insurance Makes Millions for Retirement By Gonzalo Garcia and Elizabeth Michel By minimizing market losses using cash value life insurance along with an Individual Retirement Account and 401(k), your client can smooth the uncertain waters of market returns.


60 A  nnuities Provide Retirement Alpha Without Beta


12 T hird of Advisors Consider Leaving Because of Pressure From ACA


26 Your New Office

By Steven A. Morelli It’s time to stop worrying about technology and start loving it! Here are the stories of advisors who are putting technology to work for them, helping their sales to multiply while reducing their overhead.

By Susan Rupe A survey shows that advisors are spending more time enrolling people in health coverage and earning less money doing it.


By Curtis Cloke The current data on how extensively annuities are used in retirement plans tell us that the public has yet to be convinced of the cocktail of benefits associated with annuities.

68 A  ‘Critical’ Leg of the Retirement Table


16 How to Command and Conquer the Stage



52 How to Avoid Tax Disasters That Doom Finances

InsuranceNewsNet Magazine » November 2014

By Jim Pedigo Two available options allow 401(k) plan participants to convert a major part of their plan funds to defined benefit (lifetime income annuity) savings in their account.


40 The Tech Guide – Special Section From carriers to broker/dealers to third-party software providers, the industry’s savviest players are staying ahead of the future.

An interview with Bo Eason A great presentation requires three key ingredients: preparation, effort and audience engagement. Speaker, actor and former NFL standout Bo Eason, in the second part of his interview with InsuranceNewsNet Publisher Paul Feldman, describes how he takes command to create a compelling presentation.

64 Income Annuities Are Your Clients’ New Defined Benefit

By Louis S. Shuntich Whenever there is a transfer of any interest in a life insurance policy, the parties involved should determine if the transaction violates the transfer for value rule.

By Donald A. Hansen Clients need to be protected against the risk of living a longer – but not necessarily healthier – life.


74 Fine Wine: An Investment That Could Go Sour By Bryce Sanders When vintage wines bring high prices at auction, your client may be tempted to consider fine wine as an investment. Here’s why that’s a bad idea.


78 8 Quirky Closers That Save Sales By Dan Seidman Some creative language tips to get your prospects to sit up and pay attention to you.

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80 Father’s Words Carry Son Through a Career Slump By Susan Rupe An advisor recalls how his father’s encouragement kept him in the business at a crucial time in his life.

86 NAIFA: Why Are We Afraid to Ask for Referrals? By Connie Kadansky The four energy blocks that keep salespeople from asking for referrals.


82 SOCIETY OF FSP: I’ll See Your Acronym and Raise You Two By Richard M. Weber Just how many professional designations are there out there? And what do they all mean?

84 M  DRT: Looking Back at the Lessons Learned by a Young Advisor By Tyler Hirth It can be intimidating to launch a career in an established industry with equally experienced professionals when you are at a ripe young age.

88 L IMRA: Emerging Trends in Employee Benefits By Kimberly Landry As employers strive to do more with less, the benefits industry can help by developing solutions that are easier to administer and more flexible in terms of cost.

EVERY ISSUE 10 Editor’s Letter 24 NewsWires






50 LifeWires 58 AnnuityWires

66 HealthWires 72 FinancialWires

INSURANCENEWSNET.COM, INC. 355 North 21st Street, Suite 211, Camp Hill, PA 17011 tel: 866-707-6786 fax: 866-381-8630 PUBLISHER Paul Feldman EDITOR-IN-CHIEF Steven A. Morelli ASSISTANT EDITOR Susan Rupe VP FINANCES AND OPERATIONS David Kefford CREATIVE DIRECTOR Jake Haas PRODUCTION EDITOR Natasha Clague SENIOR GRAPHIC DESIGNER Carlos Centeno DIRECTOR OF MARKETING Katie Hyp DIRECTOR OF SALES Anne Groff TECHNOLOGY DIRECTOR Joaquin Tuazon


Copyright 2014 All rights reserved. Reproduction or use, without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail, send your letter to 355 North 21st Street, Suite 211, Camp Hill, PA 17011, Fax at 866-381-8630, or call 866-707-6786. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 866-707-6786, Ext. 115 or reprints@insurancenewsnet. com. Editorial Inquiries: You may e-mail or call 866-707-6786 ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to, or call 866-707-6786, Ext. 115 for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 355 N. 21st Street, Suite 211, Camp Hill, PA 17011. Please allow four weeks for completion of changes.

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

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November 2014 » InsuranceNewsNet Magazine



How Are Top Advisors Using Advanced Technology to Add Significant AUM and Protect Their Practice? In this interview with Matt Zagula, we look at his new AUM Mastery training and how smart financial advisors are using it to win the respect of wealthy clients and the right to manage all of their assets – annuities, life insurance and their managed money accounts (AUM).

ists who want to ravage us. The fees these TAAGS are able to charge can be up to 10x LESS than the average advisor. Fees this low are UN-workable for advisors like us to remain competitive and in business. Q: What’s the biggest myth about adding AUM to an advisor’s practice?

Q: Why did you create this training? ZAGULA: We created it for a few very good reasons. First, we saw advisors whom we worked with for years on the insurance side significantly struggle to incorporate AUM into their practice. We looked into the marketplace and there was nothing teaching a “how to” method that made sense to help them. Next, there is just a bloodbath of competition today. Our prioritized concern became: What can we do to help advisors show up bigger and better than their competition without their personal message being diluted by the various marketing organizations? Finally, and perhaps the most significant reason – the Technologically Advanced Asset Gathers (TAAGs). Look at this cover, it’s terrifying! The “Robo-Advisors” are here and they are well funded by Wall Street and Venture Capital-

ZAGULA: Well, I think the biggest roadblock for safe money advisors is the transition to a different process. You have advisors who are used to a product message and how they’re going to incorporate that into their process. And you have the wealth management world that is 100 percent process-driven. This created a big void in understanding how to successfully do both for the benefit of your client. Right in that space, to bridge between the safe money advisors’ fixed insurance business and the wealth management philosophy of process is where AUM Mastery sits. Q: What does AUM Mastery provide that advisors can’t get anywhere else? ZAGULA: I believe there are three critical components to an advisors success. They are: 1.) Be different – the marketplace has been saturated with a bunch of turn-key messages. These don’t work because the consumers cannot differentiate. Showing up like no

The Technology Behind Adding AUM Now! Electronic Shock and Awe

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To Learn More and Sign Up for Your FREE AUM Mastery InsuranceNewsNet Magazine » November 2014


one else matters! Our Electronic Shock and Awe is the first personalized URL (PURL) generator in our industry and we keep adapting it based on the feedback from the top advisors using it today. 2.) Fully understand the significance of harvesting information about the future. Our Money Tracker creates a database of future rollovers from 401K accounts and assets held outside your custody. Over time, this data can make your seminars, radio and other costly marketing obsolete. 3.) A forum to be heard so you can successfully shape the future of your practice. Our Money Tracker technology will save you valuable time and create a presence in the mind of your client as their personal watchdog and open up an opportunity for client-advisor dialogue. Q: What kind of tools do you offer uniquely through AUM Mastery? ZAGULA: When you come through AUM Mastery’s free training, advisors learn a very concise way on how to motivate the right type of client to move forward with you. We work with advisors to understand how to have the right kind of conversation and the process that is required to successfully add AUM to their practice. The biggest value is having full access to the exact process that top producers are using nationwide to close some of the biggest new accounts they’ve ever earned in assets under management. If advisors opt to move up to our Producers Club

level, they’ll have access to our exclusive business building tools, like our Electronic Shock and Awe and the Money Tracker, plus join an elite club of top producers, hear their trade secrets and how they are using these tools to build their practices faster than ever. Q: Why offer training of this caliber at no cost? ZAGULA: The free training resulted from the fact that there were so many advisors struggling, we wanted to create an easy-to-follow track so that you were able to sit in front of a client and have a real discussion about risk, a real discussion about what’s going on in the industry and the impact on them, without it being sales fluff. To me, the risk was less than the value of getting it to the good advisors who need it. Q: Is this a sales pitch in disguise? What’s the catch? ZAGULA: There’s no sales pitch in disguise here. I’ve never hidden the fact that my motivation has always been to work with the best producers and to help them grow their practice. One of the unique parts about this process is before anybody gets access to our special tools, they have a one-on-one strategy session call with me. We complete this analysis session to understand their situation and goals so I can then provide a clear, prioritized roadmap for improvements. If an advisor is looking to grow their business they can opt in at to coordinate their strategy session.

Actual email correspondence about Electronic Shock and Awe:

Hidden Levers

A step-by-step process for unlocking meaningful and motivating conversations about AUM

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Automatic electronic updates to clients on their 401k performance makes you look like a technology wizard November 2014 » InsuranceNewsNet Magazine



The Real Y in Technology’s ROI


ne of the revelations that I had while writing this month’s feature on technology was the confirmation that doing the difficult thing now pays off in multiples later. The article focuses on three advisors who have made significant changes in their practices through technology. In fact, one was able to eliminate a permanent office and go virtual. Steve Plewes now lives and works from his acre-and-a-half perch on the Chesapeake Bay. That seems miraculous, but technology itself is not magic. Plewes did what he did by making the right choices and bravely taking the next step. Plewes’ result surprised even a close friend of his, Brad Elman, who is also highlighted in the feature. At the core of these advisors’ success is a database management system, usually known as a client management system or an agency management system. Everything else connects to the database. But even bigger than that was the commitment and effort to go paperless. I first got involved in the insurance world with a property and casualty association 12 years ago when the big dream was going paperless. For many agents with 20 or 30 years in the business, you may as well have said they would someday strap on a jetpack and zoom over to meet a client. They just didn’t see it happening. Now, of course, it’s not unusual for agents and advisors to be paperless. A successful transition has two parts: building a system and then getting the old files into the database. There are other parts, of course, such as storage and security. But every piece of this is one step at a time. The most daunting step for many advisors is going through all those files, maybe many cabinets full of them, and getting them into the database. Ed Skelly, one of the advisors in the feature, is a bit of a techie and often speaks to colleagues about how to adopt technology. He said the transfer of files is often the biggest concern people ask about. “I relay how I did it,” Skelly said. “I hired my niece, who was between her freshman and sophomore years in college. I flew her in, and she lived with us for the sum10

This doesn’t just happen. mer. I set up a systematic plan for her to go through every paper file. For example, we did all our security files first because they were the easiest to tackle.” She organized the files and gave Skelly about 100 to review each day, deciding what to keep or discard. “It took me about an hour a night to go through those,” Skelly said. “I went downstairs in my basement, had the TV on. I went through, flip, flip, flip, boom, boom, boom, done. And it’s an hour a day for five, six weeks, eight weeks, versus stuck in an old paradigm that is going to bury you in more paperwork the longer you’re in it.” After two weeks, the security files were done; then the harder tasks of insurance and financial planning files came next. By the end of summer, the transfer was finished and Skelly had invested $5,000 in the pay and expenses for his niece. Bit by bit, it was done. The key for Skelly was coming up with the system and letting it work, both in the transition and in maintaining the operation. “If you design the process properly, then you’re inserted into the process only on the things that need your time and attention,” Skelly said. “You’ve already delegated everything else.” The biggest objection from many agents and advisors is that they don’t see the return on investment. But that is not a math problem. If an agency owner sits down and figures the expenses are X and they can’t

InsuranceNewsNet Magazine » November 2014

find the Y, the answer is not in the numbers. That’s the case with much of technology. The dividends from efficiency are difficult to predict. This month’s feature shows how three advisors reaped benefits during each step along the way. Skelly said he did not look at the cost as an expense but as an investment in a change he had to make. He didn’t want his practice to drown in paper anymore. In Plewes’ case, when he went paperless, he found he could be mobile by accessing files at any time and from any place. He put that together with all the other things he was doing online or with software and realized he was already untethered to a physical office. Then he cut the cord and moved his operation to a life on his terms. He is living his dream life. Now that’s a Y that you can’t find in any number. Steven A. Morelli Editor-in-Chief

P.S. Last month was the last column from The American College’s former president, Larry Barton. He had been handling the writing duties as the college transitioned to a new executive. Although we will miss his insight and wit, we wish him well in his endeavors. The college’s column is scheduled to resume next month.

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November 2014 » InsuranceNewsNet Magazine



Third of Advisors Consider Leaving Because of Pressure From ACA A  survey of independent health insurance advisors showed that the complexity of the health care law and the amount of consumer education required has led to greater time demands placed on them. By Susan Rupe


bout one-third of independent health insurance advisors are thinking about leaving the health insurance business completely, as they are spending more time enrolling people in health coverage and earning less money doing it. Meanwhile, 29 percent of health advisors said their business is worse off since the Affordable Care Act (ACA) took effect. But at the same time, 71 percent of health advisors responded to a survey, saying that compared to the same time frame in 2013, their business was doing the same or better at the end of the last ACA open enrollment period. Those were among the findings in the Broker Barometer Survey commissioned by the National Association of Health Underwriters (NAHU). McKinsey & Co. surveyed 1,000 NAHU members before the initial ACA open enrollment season in October 2013 and continuing through the end of the enrollment season in April 2014. The NAHU members were also interviewed during the months of July and August 2014. In the initial survey, which took place before the first open enrollment season began, NAHU members reported their concerns about the ACA. The top misgivings surrounding the ACA included the law’s potential impact on employer-sponsored health insurance, the complexity of the law and the amount of consumer education required because of it, and the time demands placed on advisors. But with the next open enrollment sea12

son almost here, a NAHU spokeswoman said she is getting more positive vibes from the membership. “Our members are feeling much better going into this open enrollment season,” said Kelly Loussedes, NAHU senior vice president of public relations. “They have armed themselves with resources, and they know what to expect this time around. They’re not feeling like the sky is falling.” As for the one-third of health advisors who are thinking about bailing, Loussedes said that NAHU’s membership numbers do not reflect an exodus from the business. “Our membership has remained level,” she said. “What we are seeing, though, is that many of our members are diversifying into areas such as property/casualty and life insurance.” One factor that may be leading to many health advisors leaving the business is demographics. Advisors who responded to the survey said they expect to see more of their counterparts leave the business or merge with other agents. Many who are nearing retirement age are deciding that it’s the right time to exit the business. In addition, few people are entering the business. NAHU is addressing this issue by forming a committee called the Vanguard Council, Loussedes said. “The majority of our members are in their late 40s, early 50s,” she said. “The Vanguard Council is made up of not just younger agents but also those who are creative innovators in the industry, regardless of age. Their mission is to get the younger demographic to want to become an agent.” The Vanguard Council is putting together a social media strategy as part of its effort to make sure the health advisor is not a dying breed. As the survey continued through open enrollment season, the answers given by the NAHU members showed that many of

InsuranceNewsNet Magazine » November 2014

their fears about the ACA had come true. Among the themes emerging in the enrollment period survey findings: » Advisors are required to do more work, but they have less time in which to do it. Survey respondents said they are spending more time educating clients about their coverage options and answering client questions than they did prior to the ACA’s enactment. Adding to the pressure on advisors is the fact that the individual enrollment cycle, which formerly extended throughout the year, is now compressed into three months. “There has been a 300 percent increase in time spent sharing information compared to the past – about three hours per enrolled life,” one respondent said. Loussedes said that the biggest surprise emerging from the survey results is the amount of time advisors said they must spend enrolling each client under the ACA. “[Advisors] knew with ACA they were going to have to spend more time on educating their clients,” she said. “But I think it’s astonishing the actual amount of time it is taking per client or per life. I think on average it was somewhere between two and three hours per life, where that was certainly not the case prior to ACA. Prior to ACA, it was about an hour per client.” » Some advisors are seeing a switch in their practice from serving the small group market to serving the individual market. Advisors who do see small groups move to the exchanges observe that these groups share common factors, including having low-wage employees, a small group

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size (less than 10 employees) and greater employee age (50 and older). “We see groups under 15, especially under 10 lives, deciding to throw in the towel on offering health benefits. I haven’t seen any above 30 or 40 switch,” according to one respondent. Loussedes said she saw this issue as especially significant for NAHU’s members. “That is of concern because lots of times these small groups are representing lowwage employees or folks who are over 50, and so I think that is a concern of ours, just seeing this exodus of a small group going into the individual market,” she said.

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» Advisors are evaluating the profitability of the individual market. They are also considering the best way to serve that market or whether to continue serving the individual market at all. “We will need to re-evaluate profitability of the individual segment and how brokers spend their time. Individual market commissions dropped by half last year, and it’s likely to continue,” another respondent reported. As the next ACA sign-up gets closer, advisors are expressing three major concerns: rate increases, advisor workload during open enrollment season, and the number of clients who will switch plans versus the number who will automatically renew their current plan. Of those advisors who said ACA is hurting their practice, more than half said they plan to make changes to their business in response. Those who plan to make changes said that focusing their practice on other market segments or offerings and investing in marketing were the top things they plan to do. Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Susan may be reached at

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November 2014 » InsuranceNewsNet Magazine


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InsuranceNewsNet Magazine » November 2014

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1954 Sentinel Insurance Company Advances as a Capital Stock Insurer

1960 Sentinel Surpasses Goal: $2 Million Assets

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2012 Sentinel Broadens Portfolio with Hospital Advantage Product and Exceeds $300 Million in Assets

2009 Medicare Supplement Added to Product Offerings 1962 Acquisition of Uinta National Insurance Company of Utah & United Reserve Life Company of Montana

2011 Innovative Personal Choice Fixed Annuity Expands Sentinel Product Line

When you get to work with a smaller company like Sentinel you get what is lacking in the overall marketplace. Sentinel answers the need for responsiveness, accountability and competitiveness of product. That’s grounds for saving time on getting quality business issued faster, for making the business more fun, and for building a profitable relationship. — Brad Tison of The Achievement Group, Des Moines, IA

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ou might have the greatest presentation, with the greatest facts ever assembled to support your position, but if you can’t engage the audience, you’re toast. People forget the facts, but they don’t forget the people they connected with or the stories they shared. Delivering a powerful presentation requires a lot of preparation and effort. You know that. But Bo Eason takes the rigor of a professional athlete and brings it to his prep work. When training for a vigorous season, an athlete puts in “invisible hours” that no one ever sees. When it’s game time, it’s full-on action from this former NFL standout. In the first installment of this two-part Bo Eason interview, we explored how to find and structure your unique story. But who wants to hear a story if it isn’t delivered in its fullest glory? Bo built a second career by telling his story and commanding massive audiences as he recalls his 16

InsuranceNewsNet Magazine » November 2014

football career that culminated in four seasons with the Houston Oilers and a brief stint with the San Francisco 49ers. He has performed his one-man play Runt of the Litter to critical acclaim in over 50 cities and all the way to Broadway. Bo applies this vast stage experience and knowledge to the training of professional speakers globally to improve their performance, presence and effectiveness. If you want to totally dominate your next presentation or are ready for a speaking makeover, do what Bo does. You are almost guaranteed the win. In part two of this series with Publisher Paul Feldman, Bo tells you how to deliver a commanding performance every time.

In Part 2,

Bo Eason

shows how to take your story to an audience so they never forget it – or you. November 2014  InsuranceNewsNet Magazine


INTERVIEW HOW TO COMMAND AND CONQUER THE STAGE FELDMAN: You’ve worked with thousands of speakers over the years. What things do you look at when assessing a speaker’s performance? EASON: The first thing I look at is the speaker’s connection to a person in the room. The biggest mistake speakers make is when they have a group of any size – 50, 100 or 1,000 – and they try to speak to the whole group. They cannot. Physiologically, it’s an impossibility to speak to a group. When you try to connect to everybody, you connect to nobody. When you connect to one person, you connect to all persons. If you’re sitting in the front row and I’m connected to you, I’m talking to you like we’re having a beer in a bar. The audience behind you, which may be 1,000 people, now puts themselves in your position. They think that I’m speaking only to them privately. That’s the magic of this thing. Often I’ll do a performance and there’ll be 400 people in the audience. I’m speaking to a person on the left and a person on the right. So I’m talking to two people. But people in the back row, who I didn’t even see, come up to me afterward and say, “You were only speaking to me. That was so cool. Thank you.” They thought it was a private conversation between me and them. That is the magic of performance. You have to be brave because it ain’t easy to feel vulnerable once you start connecting to a person. Emotions might come up or they might not come up, but you’re vulnerable in that situation. That’s why people don’t do it. They are vague, general, and disconnected and think they’re going to survive the day. You’re going to survive the day, yeah, but you’re not going to close the numbers that you should be closing. Intimacy is the reason people open their wallets. People have the connection. Now they trust. Now they give you their money. Let me give you this statistic. Eightyfour percent of high-wealth individuals, people who have a million dollars of investable assets, are right-brained. Right-brained individuals don’t know how to connect to information. They know how to connect to story and humanity. That’s it. If those are the clients you want, [remember that] they only understand story. They don’t understand numbers, percent18

ages, columns. So, why would you speak to them in that way? FELDMAN: What other mistakes do you look for? EASON: The second mistake is that speakers have their presentation memorized. Then they perform it by rote: “Hi. I’m Bo Eason and I’ve done this presentation 480 times and you’re gonna hear it again right now. So here we go. Blah, blah, blah, blah.” That’s not giving the audience anything. You must look at a person in the front row. You must connect to that person and tell them what you’re going to do. You have to tell them your story and you have to cocreate that relationship. That is magic. That’s where these high-wealth individuals decide that they’re going to work with you based on connection. Not based on information. But when many people give presentations, they look over the heads of the audience. They’re kind of general and saying it how they always say it. But notice something when you’re oneon-one with somebody, on a date or having a beer with a friend, and you’re telling them a story. It might be a story that they already know, but because it’s intimate and it’s one-on-one, you recreate the story with that person in real time right in front of each other. That is what you must do to an audience over and over and over again. You have to recreate the story. You have to recreate the whole vibe in there. You can’t just do what you did last week. It’s impossible. You see presenters do this all the time, and they’re boring. You don’t want to watch them, and you can tell they’re just going through the motions. You’re never going to buy from that person.

they don’t, you’ll correct it really quickly. It’s just like dating. You’re at a dance and you look over and there are six girls over there and you wanna go dance with one of them. One of them looks at you and then puts her head down and turns her back. You say, “OK, not that one.” Then you look at the one who is kind of inviting, a smile and the inviting eyes. You go to that one. You do the same thing with your audience. Then you look on the right. You look over to the other section of the audience and you find your energy will go to the right person and that’s how I find them. FELDMAN: When I saw you speak, I thought you were looking at me. It was probably somebody in front of me or behind me, but I felt like you were talking right to me. EASON: I learned that by performing on Broadway. There are these big old sections in Broadway theaters. There’s a big section on the left and there’s a big section on the right and there’s an aisle in between. You have to connect with a person on the left and then that whole section on the left thinks you’re speaking only to them.

FELDMAN: In picking out the audience member that you focus on, what do you look for? EASON: I go right to the good energy. The person who is smiling and nodding their head. I can tell. If somebody looks down when I make eye contact, I’ll know that person doesn’t like to be spoken to so I don’t choose them. Your energy, your human instincts will go right to the right person and if

InsuranceNewsNet Magazine » November 2014

You have to tell them your story and you have to cocreate that relationship. That is magic.


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INTERVIEW HOW TO COMMAND AND CONQUER THE STAGE did”. Now our stories are married and we have a connection forever. So, if I see you in 20 years and you’re a grandpa or you have eight kids, you say, “Bo, I remember when you talked about your dream and then I fulfilled my dream. Here it is.” We’ll always have that connection. If I were on stage last week and just gave you information, told you how to make money and told you how to do this and that, you would have forgotten that by now. You would have forgotten it on the plane ride home.

Once you surrender to the fact that we are predators and we are so powerful, it’s beyond measure. People can’t look away from you. Then you connect to a person on the right and that whole section on the right thinks that you’re talking only to them. That might be 400 people, but because you’re connecting to a single human being, their experience is that they’re the only person in the room. FELDMAN: That worked at your show, because I spoke with audience members and they felt that of all the speakers, you connected the best. The line of buyers after you spoke also confirmed it. EASON: It’s usually the case because of the story that gives us intimacy. It’s just like you and I now have a connection forever based on my story. It’s how you find yourself inside of the story and say, “I had a dream as a kid, like Bo 20

FELDMAN: One of your strategies to command a stage and an audience is to walk like a predator. I know how people initially respond to that, but tell us what it means to you?

EASON: We’ve been indoctrinated about this word “predator” in our media and they’ve given this moniker to the worst of our society. We think “predator” is a bad word. Like it’s someone who crosses boundaries and operates outside the law. I say that you should think of predators in the wild. Lions and tigers, cheetahs and leopards. Great white sharks and falcons, eagles. Think of a killer whale and then think of human beings. Naturally we’re predators and we’re the most dangerous predators of all. We’re the smartest. We’re the most evolved. We’re lethal. Predators are also very noble, honorable and trustworthy. When you see a predator you know what you get. When we go to the zoo and see the lion, even though he’s behind a cage, we have ultimate respect for that lion. We know what to expect from that lion. We know that he’s lethal. We know that he’s mighty. We know that he’s gorgeous.

InsuranceNewsNet Magazine » November 2014

Read Part 1 of the Bo Eason interview online at

You can’t take your eyes off the lion. You know he’s the king of the jungle. Well, you and I are no different than those predators. We have that same power that they have. We have that same danger, if you will. The way we walk naturally is like a predator. But we’ve been in this culture so long and we’ve heard how bad it is to be dangerous and to be a predator and to be powerful, that we’ve apologized for it. Now we’re walking around, men and women, trying to hide the very thing that is most powerful about us, which is our true nature, our natural disposition, to be a predator. I have a theory that the people who are most accepting of their own true primitive nature are the ones who are going to lead and succeed. The ones who are the furthest from their nature are going to fall behind because they are not loyal to their own natural disposition. They’re trying to be something that they’re not, and there’s a sense of inauthenticity when you smell that, when you feel that. Those people might have the leadership. They may have Washington, D.C., and Hollywood right now. They might have the media right now. They have the microphones for the moment, but they’re slowly but surely going to be replaced by us, the people who are in touch with their nature, who aren’t afraid of their own power. Everything politicians do is so programmed and unnatural that you can’t even listen to them anymore. They’re our so-called leaders, but why do they have no power? Why do they have no voice? Because everything they do is a manipulation. Everything they do is to get 50 percent of the polling numbers. You and I don’t have to worry about that. We’re not interested in 50 percent of some polling number. We’re interested in who we naturally are. Those are the people who are going to lead. Those are the people who are going to run every industry. When you see an elite athlete move, a firefighter charging into a burning building or a Navy SEAL charging a beachhead, I guarantee you cannot take your eyes off them. Well, I bring that notion to the stage because I don’t want anybody looking away from me while I’m on stage. I don’t want anybody to take a breath.



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INTERVIEW HOW TO COMMAND AND CONQUER I don’t want them to think about going to the bathroom. I don’t want them to think about anything. I just want them to keep their eyes on me because they know if they look away something bad could happen. Once you surrender to the fact that we are predators and we are so powerful, it’s beyond measure. People can’t look away from you. So, imagine what kind of power you would have in your life and in your business if people didn’t have the ability to look away from you. That’s powerful. I love this quote: “There’s only one way to command Mother Nature, and that’s by obeying her.” The only way you can command an audience is by obeying your natural instincts. We’re like these noble, honorable beasts, but we keep apologizing, saying, “No, no. Actually I’m just a really nice guy. Polite.” That gets you nowhere. FELDMAN: Can someone be a “predator” from behind a podium or when clicking through PowerPoint slides? I noticed you typically don’t use them when you present. EASON: That’s right. A performance coach, many years ago, told me, “You, as a human being, are 1,000 times more interesting than anything you can put up on that screen.” So, why would you waste the connective tissue that you as a human being naturally have by putting it up on some fake, phony light show? For human beings, the biggest attractions are other human beings. We’re looking at them all the time. Think about when you’re walking in the streets of New York or Paris or any big city. You can sit on a bench and you can just watch people all day because it’s so interesting how they move or why they move or why their hair’s that way. You can sit there all day doing it. It’s intoxicating because we are trained primitively to look at other human beings and find who is friend, who is foe, who is food, who is not, who we’re going to partner with, who we’re going to procreate with. That’s who we are. So, why would you give them a light show? It has no molecules and no human element to it. FELDMAN: I read somewhere that you have put in 20,000-plus hours of stage time, but yet you still prepare hours before you get up on the stage. Would 22

you share some of the things that you do when you arrive early? EASON: When most people do presentations, they walk in and they’ve never seen the stage. They’ve never been in the restaurant. They don’t know the structure of it. That makes you a visitor. If you’re giving a presentation, that is your home. If you’ve never been there before, you have to get in there hours or days before and mark your territory. I want to touch that wall. I want to touch the back wall. I want to put my hands on the chairs, the tables. I want my audience to feel like they are safe, they are at home and they are in good hands. So I mark my territory. I usually get rid of podiums. I hate podiums. I don’t want them anywhere near me. I clear the stage. I make that room mine so that I feel at home and I can risk it all. I can be anything I want to be up there, and the audience is going to follow me. Therefore, when your audience enters the room, they feel like they’re at home. I don’t want them to feel uncomfortable and cold, like I’m not hosting this.

With every great athlete … the only difference between the best in the world and the second best is that the best prepares.

FELDMAN: It seems like you prepare as you would for a football game. EASON: I think of presentations as athletic events. I always warm my voice up. I warm my body up. I would never enter an athletic event without a warm-up. So I move my body. I skip around. I start to get where I almost start to sweat. I’m moving around and making sounds and touching walls and really taking over the whole room because no one’s going to see me there. There might be an assistant there or some technical people there, but who cares? This is rehearsal. This is getting ready to present. It’s an athletic event. If you’re going to run the 100 meters in the Olympics, you’re not just going to enter the stadium and run the 100 meters. You’re going to have a proper warm-up. When your potential clients walk into

InsuranceNewsNet Magazine » November 2014

that room, they know they’re being taken care of. They know they’re in the presence of something great because you’re warmed up. You’re ready to go. It’s your room. You’re not starting the presentation cold. You’re already warmed up. Your voice is moving. Your molecules are moving. You’re athletic. The audience is going to keep their eyes on you, and therefore you’re going to close more of them. You’re going to make more money, and you’re going to help your clients more. Preparation is the key to everything. With every great athlete, every great performer that I’ve never known, the only difference between the best in the world and the second best is that the best prepares. They prepare more and they prepare more efficiently. That’s the only difference. Even the greatest, like Jerry Rice, who was a teammate. He prepared more than the rest of us, which makes him the greatest ever to play. Joe Montana prepared more than the rest of us. Warren Moon, who was my quarterback in Houston, prepared more than the other quarterbacks. That’s why he’s in the Hall of Fame. Every great performer who I’ve ever seen, whether in athletics or business or giving presentations, they prepare more than the amateurs. They prepare more than all the other pros. Preparation. Start making time for your prep work, for what you’re going to say, how you’re going to say it; get your body ready to say it, then say it. Then let it come out.

Read Part 1 of the Bo Eason interview online at



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Follow us on November 2014 » InsuranceNewsNet Magazine For producer use only



Middle Class Squeezed from Day Care to Health Care

Hack at JP Morgan Chase Hits 76M The credit card breach at Target during last year’s holiday shopping season? That was just the warmup. Those 57 million credit card numbers stolen from Home Depot? Small potatoes compared with the stunning cyberattack on JPMorgan Chase. The financial firm admitted that hackers stole customer information in a breach that affected 76 million households and 7 million businesses. The huge data breach was carried out as early as June, but not discovered until mid-August, said a JPMorgan spokesperson. Hackers stole customers’ names, addresses, phone numbers and email addresses from the company’s servers, but more sensitive information, such as bank account numbers, Social Security numbers and passwords were not involved, JPMorgan said. The JPMorgan data breach comes on the heels of other extensive security lapses at major corporations, including Target and Home Depot.


The Federal Reserve is looking at a new approach to setting interest rate expectations. Instead of having interest rate increases triggered when certain economic goal numbers are hit – for example, 6 Janet Yellen percent unemployment and 2 percent inflation – the central bank may do away with goal numbers for good. Chair Janet Yellen tipped her hand after the last Fed Open Market Committee meeting, and market participants believe the use of the unemployment and inflation targets is about to go away for good. Instead, the Fed is likely now to rely increasingly on the more nebulous “data dependent” terminology for when it will lift its target funds rate off the floor, and won’t wed itself to the specific targets first delineated in 2012. The central bank has resisted raising rates even though unemployment has fallen below the original 6.5 percent target, and as internal questions have been raised over whether risk assets like some areas DID YOU





of the stock market and high-yield bonds have become overpriced. Under the new approach, the Fed will not be dictated to by a specific data set or two but rather by the larger economic picture.


The nation’s largest retailer wants to be the place that consumers go for banking and health insurance. Wal-Mart is launching a mobile checking account for its customers that will eliminate some of the fees charged by banks. The nation’s largest retailer said that the GoBank checking account through Green Dot has no minimum balance requirements or overdraft fees. A monthly membership charge of $8.95 can also be waived if a direct deposit of $500 is made each month. The company said that credit bureau ratings and other scores traditionally used to determine eligibility are not part of the process. Wal-Mart already had been offering prepaid cards through Green Dot. A MasterCard debit card can be linked to the GoBank account, which can be set up with a starter kit that costs $2.95. Within days of announcing their entry into banking, Wal-Mart told CNN

OF NONTRADITIONAL FAMILIES are working with a financial professional despite the fact that 73% REPORT EXPERIENCING A FINANCIAL HARDSHIP of some kind as an adult.

Source: Allianz Life

InsuranceNewsNet Magazine » November 2014

QUOTABLE It’s open season now. — Steve Weisman of Bentley University, on the cyberattack on JPMorgan Chase that affected the data of 76 million households and 7 million businesses.

it had partnered with, placing agents in 2,700 stores to help customers pick a health insurance plan and to answer questions about their current plan. The agents will be available during the current open enrollment seasons for Medicare and coverage under the Affordable Care Act. Banking and health insurance are the latest moves that Wal-Mart has made in the non-retail arena. Wal-Mart announced earlier this fall that it has begun operating primary care clinics in South Carolina and Texas.


Banks are reaping bigger fees whenever customers overdraw their checking accounts or use ATMs that are not affiliated with their lender, a new survey shows. The average fee for using an out-of-network ATM climbed 5 percent over the past year to a new high of $4.35 per transaction, according to a survey released by Overdraft fees also surged, rising on average over the past 12 months to $32.74. That’s the 16th consecutive record high, the firm said. Checking account fees have been increasing as lenders adjust to federal banking laws and regulations enacted after the 2008 financial crisis. Among the changes: limits on when banks can charge overdraft fees on ATM and debit card transactions and a reduction in the fees that banks charge merchants for each customer who uses credit or debit cards for their purchases. Lenders have responded by hiking overdraft and ATM fees, as well as increasing how much money customers must maintain in the bank to avoid checking account fees.


The U.S. public pension gap has tripled to at least $2 trillion in less than a decade, Moody’s Investors Service said. In a report, Moody’s measured the unfunded liabilities for the 25 biggest public retirement systems between 2004 and 2012. The total future shortfall is more than half the size of the $3.7 trillion municipal bond market, which comprises all the outstanding debt issued by U.S. states and cities. The gap has widened even though average investment returns over about the same period were 7.45 percent. The reason? Blame the Great Recession. In fiscal years 2008 and 2009, at the depth of the economic downturn, the plans’ assets dropped nearly 22 percent cumulatively on average, Moody’s said. Other contributing factors include inadequate contributions from plan sponsors and the burden of an aging population across the country.


Photo credit: Reuters

Insurers and pension funds joined hundreds of corporations calling on world leaders gathering for the 2014 U.N. Climate Summit to attack the problem of climate Closing pledges at the 2014 change by making it U.N. Climate Summmit. more costly for businesses and ordinary people to pollute. The idea is that the world can’t hope to slow the heating of the planet until its cost is incorporated into the everyday activities that contribute to it, such as using gas- or coal-generated electricity, driving a car, shipping a package or flying around the globe. Business leaders representing trillions of dollars in revenue and retirement savings say they worry that global warming threatens the long-term value of their investments, and they want world leaders to adopt policies that would provide a financial incentive to people to clean up their act. That could include a tax on carbon emissions, a cap or some other mechanism. The California Public Employees’ Retirement System and other big asset holders such as Allianz, BlackRock and AXA Group called for a “meaningful” price on carbon emissions.

AIG Trial Opens in Federal Court Did AIG shareholders get a raw deal in its government bailout six years ago? That question is at the heart of a federal trial challenging the legality of the government’s rescue of AIG in the depth of the 2008 financial crisis. Maurice R. Greenberg, former AIG chief executive, argues that the answer is ‘’yes.’’ Greenberg sued the government on behalf of fellow shareholders and is seeking more than $40 billion in compensation. AIG contends it was singled out for punishment while Wall Street banks were treated excessively well, claiming that the 14 percent interest rate that the government charged AIG in the bailout repayment Maurice Greenberg was ‘’extortion,’’ compared with the 3 to 4 percent the major banks were charged. Meanwhile, the Justice Department contends that Greenberg and his fellow shareholders have a sense of entitlement that knows no bounds. AIG ultimately received a $182 billion lifeline from the government, which reaped a $22 billion profit on the deal. The drama is playing out in the U.S. Court of Federal Claims in Washington.


The ranks of the rich are expected to grow significantly in the next five years, and many of them will come from places not necessarily seen as wealthy. Credit Suisse estimates that an explosion of wealth in emerging nations will fuel a 50 percent growth in the number of millionaires across the globe by 2019. The total number of millionaires worldwide is expected to swell to 53 million from its current level of 35 million in the next five years. Where will these new millionaires come from? A large portion will continue to come from the U.S., France, Germany and the United Kingdom. But look for more millionaires coming out of China, whose millionaire population is expected to double. India, Brazil, Indonesia and Mexico also are projected to produce a large number of millionaires. The U.S. is home to the world’s largest population of millionaires – 14.2 million. It is expected to see its millionaire population grow to 19 million by 2019. DID YOU







The poverty rate in the U.S. has dropped for the first time in eight years, bringing a bit of encouraging news about the nation’s economy as President Barack Obama and Congress gear up for midterm elections. The U.S. Census Bureau said that the poverty rate in 2013 was 14.5 percent, down from 15 percent in 2012. The decrease in the poverty rate was attributed to the growth in employment by 2.8 million jobs. The median household income for families was $65,587 in 2013, and $31,178 for nonfamily households, which also was not statistically different from the 2012 levels. However, census officials said that income is 8 percent less than it was in 2007, the year before the United States entered the recession. Officials also say that the number of children under 18 in poverty declined from the previous year for the first time since 2000.


of Americans say they in the STOCK or BOND MARKETS in any way. Source: COUNTRY Financial Security Index

November 2014 » InsuranceNewsNet Magazine


Steve Plewes operates his practice remotely from his St. Michaels, Md., home on the Eastern Shore of the Chesapeake Bay.

How technology is helping advisors live the lives of their dreams. [ by Steven A. Morelli ]


InsuranceNewsNet Magazine Âť November 2014


ou might be trapped in a self-perpetuating conundrum. You might be an agent or advisor who wants to adopt more technology to increase efficiency to make sales. But you have to make time and lose sales in order to adopt technology and become more efficient. That is, if you don’t go broke in the meantime. Or insane. It’s all distressing enough to make you want to pick up the phone, call a prospect and get back to what you do best – selling. Maybe you already have a customer relationship management (CRM) system and the scars to prove it. It might function like a Ford Pinto wrapped in duct tape, with a bad oil habit and wobbly wheels that make every curve an adventure. But it’s working, kind of, and you don’t dare lift the hood to see what’s going on. Better to pick up the phone to chat with Bob, who’s got a grandkid on the way and a legacy to pass on, right? Hang up the phone. Time to deal with your technology distress disorder. The longer you let it go, the more terminal it will get. Take it from those who healed themselves and saw their sales multiply. In this article, you will even meet a guy who is living the life of his dreams because he was able to stop worrying and start loving technology. First, let’s take a look at what’s holding you back. The top three obstacles that financial professionals face in implementing technology are: » “Insufficient time/human resources to develop” (23 percent). » “Lack of IT resources” (17 percent). » “Justification of technology due to lack of ROI” (14 percent). These were results from a study called “Supporting Sales Success,” conducted by LIMRA from a survey conducted over the summer. The obstacles can be expressed as, “I don’t have time to mess around with this. Even if I could find someone to help me do this, is it worth it in the end?”

YOUR NEW OFFICE FEATURE Although the return on investment (ROI) obstacle is third in the survey, it is actually the first hurdle to consider before approaching the other two. What is the value of adopting and refining your back office system? If you see none, why even consider making the time or finding the resources? So, with the end in mind, we will go right to the advisor who built his dream life on a fortified back office foundation.

The Tech Trail to the Dream Life

Steve Plewes lives and works in St. Michaels, Md., a historic, quaint town on the Chesapeake Bay. It’s one of those preciously charming destinations that inspire tourists to fantasize living there year-round. Plewes is living that dream

“He lives in West Virginia, about two hours on the other side of Washington,” Plewes said. “I’m about two hours on the eastern side of Washington, so it’s a good central location for those local clients that we still have. It’s a fertile market, with a lot of government and corporate employees.” Plewes’ other employee is his wife, who had retired from a career that included a stint as the managing director of a financial planning firm that advises professional athletes. Besides financial planning, she now provides sophisticated tax expertise. Most of Plewes’ clients matured with him, spanning 10 years older and younger than he, so he does not have to develop new business to survive. In fact, many

“I’ve outsourced two of our insurance functions to other people, so I don’t actually have to do the work but I do get compensated for it.” on an acre and a half, right on the water. “I got a dozen crabs off the dock last weekend,” Plewes said. “We’ve been working toward this for quite a while. We’ve had a house here for at least 10 years now. I just moved here full time about 18 months ago.” His wealth management practice, Advisors Financial Group, is still “based” in Bethesda, Md., but there is not much “there” there. If that does not sound like an existential puzzle, then this sure will: It is a virtual office, even though it is staffed most of the week. These days, virtual is usually associated with something existing on the Internet instead of in real life. A virtual office is actually a physical space, but workers are rarely there. The office can provide various levels of service, from merely an address up, to an on-site assistant, office services and space. Plewes, 60, used to have a fully staffed office in Gaithersburg, Md. He now uses a Regus location in nearby Bethesda that he visits twice weekly, and one of his two full-time employees visits three times a week.

of those clients were retiring and leaving the area, so keeping his office fully staffed made less sense. He can keep in contact through email, Skype and traveling to meet his top-tier clients. “An office doesn’t necessarily get you that because, believe me, there are plenty of people [who] come into the office and think they’re working, but they don’t get a lot done and they’re certainly not seeing people,” Plewes said. “I think the goal is just to make sure you are in front of people, whether it’s Skype or it’s meeting for lunch.” Technology was the fulcrum that helped him lift the traditional office out of his practice. Technology also helped him focus more on advising and less on products. “I’m trying to keep us elevated into the wisdom end of the business and out of the administrative end,” Plewes said. “I outsource my financial planning functions to a woman in Oakland, Calif. We upload our data to her website. She does the planning and sends the file back securely. We massage it and present it to the client. So I don’t have to have her on staff.”

November 2014 » InsuranceNewsNet Magazine


FEATURE YOUR NEW OFFICE He does the same with insurance: “I’ve outsourced two of our insurance functions to other people, so I don’t actually have to do the work but I do get compensated [for] it.”

How Technology Set Him Free

To map out his future, Plewes had to take a closer look at his present. He recognized that a majority of his clients were no longer in the Washington, D.C., area, having transferred or retired. “So, we already had a virtual relationship with them, and that was really the key,” Plewes discovered. “Everything else flows from the relationship.”

Check out our Tech Guide Special Section and see how the industry’s savviest players are staying ahead of the future. » PAGE 40

allowed Plewes to plan trips that mix business with pleasure. “We typically take a week and go out to Arizona and visit a number of clients,” Plewes said. “Most of the clients insist that we stay at their house, and we have fun. We have a Florida rotation and we have a group up in Chicago. We try to make a couple of road trips a year.” If he needs to meet clients or prospects in an office setting on the road, or even near his home, he can book an office for an hour through a service like Regus. With the help of an advisor impact study, he was able to determine

“I don’t necessarily need and you don’t necessarily need to know that much about technology, as long as you know what you want it to do.” Then he looked at his office. “Virtually everything that we were doing was already Web based,” he said. “You could have all your office tools – Word, Outlook and PowerPoint and everything – on the cloud and not even need a server or even software on your computer anymore to be in business.” Many agency owners and advisors might be surprised to see how much tech they have adopted already, Plewes said. “They might be more virtual than they think in the sense that they have to log in someplace to get on their website for their broker/dealer or their insurance company to get insurance quotes,” he said. “They might actually be more on the cloud than they realize, because they have a physical office and a desk and a person sitting out there who does these things for them.” A major factor for Plewes in going virtual was that he had already done the hard part of going paperless and moving his database to the cloud. So he concluded that he did not need a server or an office manager or even an office. Disconnecting from a traditional office even 28

how often clients wanted to see him and in what setting. That’s all good for someone with an established book of business, but what about people new to the business or not at the paperless stage? Plewes suggested becoming a mobile advisor now and a virtual advisor later. If a practice is still staff-intensive and is not outsourcing, becoming a mobile advisor is still an option. “If they still wanted to have the flexibility to be connected wherever they were and have access to their files and database, they can get their clients’ information via iPad or any other PDA or laptop,” Plewes said in describing a mobile advisor who is still connected to the office. A virtual advisor would have severed that cord to an office base. “That would be someone who outsources a lot of the staff functions and doesn’t require a central place to hold those files, those computers or those people in a central place.”

Lifting Off to the Cloud

Plewes has been incorporating technology for a few decades. He learned the hard

InsuranceNewsNet Magazine » November 2014

way that there is no single answer that solves all problems. “When we first started all this technology stuff 20 years ago, we were looking for the Holy Grail, and I’m not sure it exists even today,” he said. The key to making it all work is to make sure the components all work together. Often, people will buy different systems to serve particular functions, but the overall system fails at the joints. At the heart of it all is the CRM system. Plewes uses Redtail, which is Web-based. “Any email we send, even through Outlook, will go into Redtail and into the client’s file,” Plewes said. “So anyone in the company that we grant access to can go in to see the email history and notes. Copytalk, which is a mobile dictation service, will go straight into the client’s file.” Plewes also has financial planning and management systems, such as MoneyGuidePro and Albridge, which integrate with the CRM system. “You can have your email, contact relationship management software, database dates, marketing, mass mailings and anything that you would want to do in one place,” Plewes said. “I can go right into an app on my iPad, and it takes me probably 15 seconds to go in and pull up a client’s file. I can see anything we’ve ever done for them – financial plans, transactions, paperwork, summaries. I can tell them who the beneficiaries are on their policies just by going into my virtual file cabinet and pulling their file out. It’s very powerful.” Someone looking at Plewes’ system might think he has a technological gift to put it all together. But he doesn’t. In fact, he said the fewer details you know, the better. “I don’t necessarily need and you don’t necessarily need to know that much about technology, as long as you know what you want it to do,” he said. “I would go so far as to say you shouldn’t be mired down in understanding how it works. You should be more focused on what [it can] do for you. So we have techies.” One of those techies is Ed Skelly, an advisor who used to work with Plewes and who helped him bring Redtail aboard. Skelly is a bit of a technology expert who has helped many colleagues incorporate their systems into their


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Ed Skelly reviews steps in a case with his operations manager, Michael Bui. Skelly, who has been a tech resource for many fellow advisors, says technology is only as good as the system it fits into.

practices. It is not just that he is good at tech; he lives it. “He goes through databases like people go through cars,” Plewes said. “He keeps trying the next new thing.”

The Techie Advisor

Skelly is president of the financial and insurance advisory practice Sterling Financial Partners in the Washington, D.C., area. He often speaks to advisor groups about adopting technology. He is a 50-year-old mix of advisor and techie, but he said advisors don’t need advisors who know tech – they need techies who know tech. “Go get a young person out of college, pay him a decent wage and have him do it for you,” Skelly said. “Then slowly work it. Learn about the database and slowly do some things. To go from zero to Mach 4 – that’s why a lot of people fail. They try to take on too much, get frustrated and then they have a paperweight, whether it be a computer or whatever.” An important lesson for advisors is 30

that no system will fit a practice perfectly. “If you talk to 10 people in this business, there are 10 different ways to do everything,” he said. “So it’s not like you’re a law firm and you have a standard billing system or an HVAC company and you deal with the same parts, the same labor rates and everything else.” Practices have different mixes of products, such as life insurance, health insurance, property and casualty, and financial planning. Few businesses are exactly alike. Consequently, it takes a bit of tailoring and finding software that will cooperate not only with the business but with other software, Skelly said. “We use Redtail, but it’s not ideal,” he said. “There’s no ideal database, but it’s our hub because it integrates with almost everything. I just changed to Microsoft Office 365, which gives us a cloud-based client host for Outlook, so we can use Outlook on a PC or phone or anything. It’s a pretty seamless operation for $20 a month.”

InsuranceNewsNet Magazine » November 2014

Not only does putting the business on the cloud improve access and efficiency, but it is safer for his operation. When his operations manager recently had a computer failure, he was up and running at another computer in four minutes. “That is huge. In the old days, when your computer goes down, you’re done. You can’t accept that anymore.”

What About Compliance?

Compliance used to be a significant hurdle with tech, particularly with cloud storage. But new systems have been built that have compliance baked in. “We used an electronic document management system called Cabinet Paperless when we went paperless in 2006,” Skelly said. “I’ve had two state audits and a B/D audit every year, but it’s all compliant with SEC and FINRA guidelines.” Skelly said Redtail was built after the rist of the Internet, so it has a system more attuned to the needs of compliance than older systems that were constantly

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“If you have somebody who you’ve had on staff for a lot of years but they’re not willing to embrace technology, then they’re going to be a bigger impediment to your success than the software program.” tweaked over the years. But that does not mean that an advisor should rule out using systems from older companies. Microsoft’s online software platform, for example, is compliant, Skelly said. In any case, he would not consider a system that is proprietary and doesn’t play well with others. Speaking of cooperating, one of the main factors in success with technology has more to do with people than

machines. If staff members haven’t fully adopted the system, then it does not matter how good it is. Aptitude is important, but attitude is crucial, Skelly said. “If you have somebody whom you’ve had on staff for a lot of years but they’re not willing to embrace technology, then they’re going to be a bigger impediment to your success than the software program.” Once ability and acceptance are in

place, then the testing process can start. “The first thing is you want to make sure that before you implement any kind of software within the office, you get buyin from those people who are going to be the backbone of using it,” Skelly said. “If you’ve got two or three staff, they should be involved in the analysis and the evaluation of what you’re buying.” When testing new tech, he will ask staff four things in their evaluation: [1] Can it work? [2] What do you think? [3] What are the problems? [4] What’s the implementation time? “Then they’ll come back and say, ‘You know, this would really make sense.’ Or, ‘This is great, but it only works this way,’” Skelly said. But before selecting and testing tech, closely examine the business’s needs. In

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InsuranceNewsNet Magazine » November 2014

YOUR NEW OFFICE FEATURE Skelly’s case, his practice had an issue with scheduling. One of the stumbles in his office’s process had to do with setting up meetings: “We looked at how much time and energy we spend answering the phone, going back and forth, the husband’s at work, the wife’s at home … You’ve got three days in delay, and this and that.” He saw they were playing tag with clients, so he went looking for an answer and settled on a program called TimeTrade. It allows the staff to include a link in email that clients can click on and bring up an Internet-based calendar where they preset available appointments. Clients can choose an appointment time based on their availability and whether it’s an initial appointment, a review appointment or a presentation appointment. Clients click on a button and schedule the meeting. The appointment pops into Outlook and Redtail and sends an email to the advisor. “So now, something that took forever – coordinating a time – can be done on

“So now, something that took forever – coordinating a time – can be done on the client’s side. But do you use that for every client? No. You have to know who’s sophisticated enough to do that.” the client’s side,” Skelly said. “So, I’ve outsourced that meeting scheduling time. But do you use that for every client? No. You have to know who’s sophisticated enough to do that.”

Putting It All Together

Technology works only as well as the rails it runs on. The staff and processes must be in place to make it all run on time and seamlessly. Skelly has a system that

parlays significant productivity from his two-person staff. Here’s Skelly’s process. » The prospect is on the phone. A client management worksheet is filled out with basic information, which goes into the CRM system, which indicates all the information required to start the process. Skelly does not have to type it in. He can dictate notes into the CRM system by using Copytalk or a mobile assistant for the




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FEATURE YOUR NEW OFFICE CRM system. Skelly can link the notes to an appointment, whatever you want to do. » An email is sent to the prospect with the initial meeting documentation. A mail merge is prepared for the prospect’s meeting agenda.

OBSTACLES Financial Professionals Face in

» Another checklist is filled out, describing what needs to happen before the prospect comes in.

Implementing Technology ALL Obstacles

» If the prospect is accepted as a client, then a client onboarding checklist is filled out. This is an abridged version of the initial process, which has nine steps. Skelly is responsible for five. Then the onboarding process has 20 steps, of which Skelly completes four. His staff is empowered to prod him if he becomes a bottleneck. “It’s usually the advisor who is holding things up,” Skelly said. Participants can open the system and check their tab to see what they have to do. They can sort by steps, and if several clients are at a particular spot, the staff member can take care of them efficiently.

Set It and Forget It? Forget It.

Although that sounds like a bulletproof process and technology, Skelly is constantly re-evaluating his systems and software. That way, he avoids becoming complacent and doesn’t miss out on savings. “It’s like anything,” Skelly said. “If you stop growing, you’re dead. And in our business, if you stop growing, not only does it pass by, but it passes by at warp speed. There are so many things that are bigger, better and cheaper.” For example, a few years ago Skelly looked at how much his small office was paying for phone service and whether there was something available for less money. “Now we’re talking on internet IP phones,” Skelly said. “I don’t pay Verizon anymore for the phone. That saved me $400 a month.” This is an example of an immediate return on investment, but ROI is not always easy to identify line by line. Nonetheless, Skelly has been able to leverage impressive achieve from an annual tech budget of about $20,000. How can he measure his return on the 34

InsuranceNewsNet Magazine » November 2014

TOP Obstacle

Lack of IT resources

63% 17%

Resistance/lack of buy-in from financial professionals

62% 12%

Cost of software

62% 10%

Insufficient time/ human resources to develop

60% 23%

Justification of technology due to lack of ROI

52% 14%

Resistance from legal and compliance

46% 8% Source: “Supporting Sales Success: Technology Tools Companies Offer Financial Professionals,” 2014, LIMRA

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Brad Elman shows clients insurance options on an iPad. He uses technology to access files wherever he is.

expense and the time? He can point to efficiency, for one. “It allows you to do more with less,” he said. “We do a whole lot more than the average person, and we do it with less staff. So, I have a baked-in savings in cost.” But the cha-ching! rings out from the bottom line. “I’m much more profitable than the average firm,” Skelly said. “We bring 40 percent to the bottom line. That’s after my salary, and that’s huge. And my technology budget is lower than that of others.” Skelly, who is a longtime Million Dollar Round Table member and has made Top of the Table four times, advocates a new way of looking at a practice’s success. “I know guys who make Top of the Table and they’ll say, ‘We’ve got $400 million in assets under management.’ And you find out that they’re not profitable because they have 20 staff members and a ton of work. They make less than I make. So are we measuring AUM or are we measuring profitability? I 36

think the conversation in our industry needs to be: How profitable are you?”

A New Kind of Bucket List

Another advisor Skelly helped with some technology questions was Brad Elman, founder of Nine Dots Benefits, an employee benefits practice in Palo Alto, in the heart of California’s Silicon Valley. Elman, 50, is also a Northwestern Mu-

InsuranceNewsNet Magazine » November 2014

tual representative and has to maintain two systems: one for his Northwestern Mutual business and the other for everything else. He uses SmartOffice for a database system, and he employs technology throughout his practice. Like Skelly, he uses Copytalk as a secure way to dictate notes. “They’ve got an app that’s fairly easy to use, so I hit the iPhone app, I hit the

“I’ll tape my case notes or my follow-up letter, and then it automatically uploads as a typed document … I can pull the notes up easily and come right back to it.”


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YOUR NEW OFFICE FEATURE The product would keep him in touch with people on a regular, but relevant basis. It’s not a newsletter, but more of a letter. “It’s easy to customize letters and include personalized details. So if I’ve got all my sailing enthusiasts in a particular bucket; I can create a special letter to them.” He was starting to bring that system on board, but the person heading that project just quit.

Making Real Time for Real Relationships

Brad Elman’s clients can log in to their accounts and review their coverage.

record button,” Elman said. “I’ll tape my case notes or my follow-up letter, and then it automatically uploads as a typed document into their secure system. Then it sends me an email with a link so I can download it again in a secure way to get back information. Then it gets uploaded into the database. So not only does it allow us to keep track of what’s happening on a day-to-day basis; it allows me to give instruction to my staff. And if a client doesn’t return my calls for three weeks and I’ve completely forgotten about what we talked about, I can pull the notes up easily and come right back [to] it.” But even though he is a more advanced user of office tech, Elman admits he does

not get as much value out of it as he could. That’s because he has a hard time holding on to staffers once they learn the systems. “Every time I’ve hired a young person and gotten them up to speed on it, I lose them to Google or Facebook or whatever,” Elman said. Elman plans to turn to more technology to overcome that problem. For example, he is looking at a product called Contactually. “That’s an email management system or a contact relationship management system that makes it very easy to create buckets to put people in,” Elman said. “So you’ve got your new prospect bucket, attorney bucket, referral bucket, and then you can do targeted campaigns to each of these buckets on a regular basis.”

“What’s really important is that you make time and take the opportunity to speak with people on the phone or face to face, to shake hands and hug and spend time over lunch.”

Even if advisors are ready to jump on the tech train, they worry that their older clients might not be on board. Plewes, the Maryland advisor, said he has heard that concern on occasion but considers that an outdated notion. “I’m 60 years old, and most of my clients are probably 10 years either side of me,” Plewes said. “What I find is, older people are actually way more active on things like Facebook and Instagram than younger people. Every grandma is texting, so it’s actually not the real question.” He sees it as more of a concern about putting distance between the advisor and the client. But that is up to the advisor. More time on Facebook, LinkedIn or email programs is not by itself connecting with clients. In fact, Plewes said, an over-reliance on these tools can contribute to call reluctance if the advisor is not following up by talking to clients. “What’s really important is that you make time and take the opportunity to speak with people on the phone or face to face, to shake hands and hug and spend time over lunch,” Plewes said. “If you use technology to be efficient, you will have free time to have deeper relationships. Being virtual is not about avoiding the client; it’s about engaging them. That’s the real answer.” Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He also was vice president of communications for an insurance agents’ association. Steve can be reached at

November 2014 » InsuranceNewsNet Magazine


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Technology Issue • Special Sponsored Section

Five-Year-Long Tech Overhaul is Latest Testament of Foresters Leadership


ince 1874, The Independent Order of Foresters (“Foresters™”)1 has sought to provide life insur­ ance to average, working Americans as part of their mission to make a difference for Foresters members and their communities. The organi­ zation proved their passion for social innovation early on, championing the rights of women, children and minorities like few others did at the time. Today, Foresters retains their tradition of innovation and adaptation for their members, their communities, and the insurance industry with the financial strength of their 14­year­running A.M. Best Rating of A (Excellent)2 and current Risk Based Capital (RBC) of 317% Foresters US Branch, as of June 30, 2014. Foresters latest venture to fulfill their mission is a compre­ hensive technology program which began five years ago, has made substantial progress, and continues to move forward. The program improves member ability to engage with Forest­ ers and in the Foresters purpose and has transformed the prod­ uct sales process for BGAs and agents.

Once again, it comes back to that original idea of making a difference for middle American families, a resolve which includes their BGA and agent partners. This new technol­ ogy program is designed to make it easier for BGAs and agents to conduct business, grow their businesses and beter serve their communities.

Foresters new technology program has made a difference for BGAs and agents with:

Non Medical process

Ease of doing business

Faster compensation

These benefits are made possible by a multitude of technological upgrades, including:

Compensation System Foresters added daily pay to their flexible compensation options (subject to upline approval). The commission statements are available to view on the agent portal, which is enhanced by the new operational data store that provides more timely reporting on pay­ ments and payouts.

New Business & Underwriting System By 2015 all U.S. new business will be processed through one configurable new business system capable of straight­ through processing and automated underwriting. The system uses a Java based ACORD compliant appli­ cation.

1. Foresters™ is the trade name and a trademark of The Independent Order of Foresters, a fraternal benefit society, 789 Don Mills Road, Toronto, ON Canada M3C 1T9; its subsidiaries are licensed to use this mark. 2. An “A” (Excellent) rating is assigned to companies that have a strong ability to meet their ongoing obligations to policyholders and have, on balance, excellent balance sheet strength, operating performance and business profile when compared to the standards established by A.M. Best Company. In assigning Foresters rating on July 2, 2014, A.M. Best stated that the rating outlook is “stable,” which means it is unlikely to change in the near future, assuming financial strength is maintained and operations grow.


InsuranceNewsNet Magazine » November 2014

Technology Issue • Special Sponsored Section


Voice Signature

In 2010 Foresters initiated a project to replace their CRM with a more industry­standard, flexible CRM that is de­ signed to support ACORD.

Agents and clients use Apptical3 to complete a person­ al health interview over the phone that includes a voice signature from both the client and the agent.

Mobile App

Apptical runs various searches during the interview, provides a point­of­sale decision on eligibility and sub­ mits the app to be processed.

In early 2014 Foresters introduced a mobile app allowing agents to see their business on mobile devices. It gives agents a quick and easy anytime/anywhere view of their pending, in­force and inactive business including new business requirements.

FileNexus To eliminate manual and paper­based processes, For­ esters implemented a repository solution that stores all artifacts, including Apptical voice recordings and cop­ ies of all inbound files and outbound print.

iGO® e-App Foresters is an iPipeline partner, providing a U.S. elec­ tronic application for non­med business. Agents can complete an electronic application and as­ sociated questionnaires, lock the application and ob­ tain electronic signatures, allowing for a completely paperless process. It can be used face­to­face with a tablet and iPad signature (non­med). iPipeline electronically submits the application data in an ACORD transaction.

Agent Portal Upgrades to agent portal will include dashboards, access to images, secure messaging and drill down reports. The next step includes planned phasing in certificate lists and certificate details, bank returns, cancellation, lapse, 2nd year renewal, persistency, placement, leader board, master production and commission /contract­ ing reports.

Other technology program initiatives that Foresters has implemented to support their mission and make themselves a stronger, more secure, efficient, and mod­ ern insurance carrier include: •


Enterprise Data Warehouse

Policy Admin

Mainframe Upgrade

Enterprise Service Bus



Operational Data Store

Learn how a partnership with Foresters can help you grow your business and better serve your community. Request the Foresters Sales e-Kit at: or call 866-280-6731, option 1

3. Copyright © 2014 All Rights Reserved. Apple, iPad, and all other brands are registered trademarks of their respective owners.

411671 US (10/14) November 2014 » InsuranceNewsNet Magazine 43

Technology Issue • Special Sponsored Section

First-of-its-Kind Plan Admin Buys Hours, Saves Commissions, Sharpens Competitive Edge


powerhouse in the COLI/BOLI territory has now gained a substantial foothold in the individual life space. The company, Andesa Services, is raising eyebrows with an innovative plan administration system. The benefits go well beyond optimized prospecting, sales, referrals and retention. They go to the very root of one’s businesses, restoring time and money lost to generating and mailing reports and sacrificing commission dollars to outsource plan administration. The ADASTAR Q+™ plan administration system was born when an insurance distributor wanted to replace their aging platform and turned to Andesa, a company with a long history of developing complex systems elsewhere in the industry. Andesa used profound industry understanding to zero in on specific business requirements and develop a highly effective, first-of-its-kind asset/liability management and recordkeeping support for distributors, plan sponsors, plan participants and carriers. The system provides several unique benefits, including: • Anytime access to plan administration tools so users can revise personal demographics, set contribution

QUICK TIP: Top 5 questions to ask a potential plan admin vendor. 1. 2. 3. 4. 5.

How accurate is your data? How do brokers access plan information? How do sponsors and participants use this system? What types of plans can you support? Where can I turn for ongoing support?

See what Andesa’s answers are at

DID YOU KNOW? All of Andesa’s systems are SAAE 16 compliant, backed up in their own private cloud. Learn more about the cloud with the free white paper, “The Cloud as a Life Insurance Policy Admin Solution,” at 44

InsuranceNewsNet Magazine » November 2014

allocations, change provisions, model what-if plan changes and generate accounting, plan and participant statements • Fully brandable sponsor portals, letting brokers and carriers present a seamless user interface to their clients • Instant, web-based delivery of scheduled, recurring and ad hoc reports • 24/7 access to full plan histories, including plan values and documentation as of any date Along with its “We were endorsed by u n p reced ented the American Bankers flexibility and acAssociation within five cess, Andesa’s plan months of starting as a admin system is incredibly easy to business. A huge part of adopt and implethat was Andesa.” ment, whether it’s a company’s first plan admin system, or a replacement of a service or system that is underperforming and overcosting. Just the second adopter had more than 600 plans they needed to convert within six months. “By the beginning of Q4, the conversion – which started in June – was significantly complete, and we were already servicing accounts,” said an executive at the brokerage. “Further,” he added, “we were endorsed by the American Bankers Association within five months of starting as a business. A huge part of that was Andesa truly teaming up with us.”


and view the Case Study “Quickly Deploying a New Plan Admin System” at

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Technology Issue • Special Sponsored Section

Tech Innovator’s Expansion Into Product Design Enables Agents to Sell in Their Sleep


ill Levinson, managing partner of Levinson & Associates, is a one-man technological force in the insurance industry, constantly integrating – and inventing – digital solutions to make agents’ lives easier. In this Q&A, Levinson discusses his latest innovation: a proprietary product called Lightning Issue Term™, which agents can literally sell in their sleep – online. Q: What inspired you to create Lightning Term? A: It’s an exact solution to the changes that are going on in our industry; agents and consumers are getting more comfortable using the internet. So I created a product that an agent can park on their website and social media and even email blast, and the consumer can just click on the link, run a quote, answer three health questions and get approved instantly. The policy gets mailed in 48 hours. The agent does literally nothing. Q: Are consumers comfortable buying insurance online? A: Today, many prefer to buy online. Twenty years ago, the normal way to buy a policy was having an agent show up at your house on a Tuesday at 8 p.m. Many people today don’t want that hassle, because they’re too busy or they don’t trust a stranger in their house. Q: What about agents who prefer to sell face-to-face? A: Lightning Term doesn’t mean a total change in how you sell. It’s an add-on. You can just add it to your website, and I don’t care what type of agent you are these days, you need to have an online presence. Q: What other benefits does the agent experience by selling Lightning Term? A: Because it’s a smaller face amount, the smaller policies will sell themselves online while you focus your attention on the larger ones. Also, it works as a lead generator; when someone runs a quote, and they want something more than the $100,000.00 max face amount, they’ll pick up the phone and call you. And it also just improves your overall branding and your online presence. Q: Tell me more about the product itself. A: It’s a 10-, 20-, and 30-year term, and there’s one rate

Bill L. Levinson

has been integral in many tech-related pilot programs and carrier technology committees. He’s responsible for launching the exclusive iGenius sales platform and has been featured in many national press releases.

regardless of smoker or nonsmoker or male or female. Plus, it comes with a free college scholarship for all policyowners. Q: How have you seen this product impact agents? A: The older generation is getting more comfortable with online marketing, using this as an easy introduction. Younger agents are excited to finally have something like this. Plus, P&C and health agents and agencies, who have never sold life insurance before, say it’s an easy way to expand their business. Q: What’s next? A: We’ve seen so much success in a very short time with Lightning Term, and we want to do the same with another big market in life right now, which is final expense. So we’re in the process of launching the first ever, zero-agent-involvement final expense product, including a free college scholarship and lead program.

Start selling in your sleep – it’s easy! Get your free link, and download Levinson’s white paper, “Using Social Networking to Increase Sales” at

1-800-375-2279 est. 1972

November 2014 » InsuranceNewsNet Magazine


Technology Issue • Special Sponsored Section

Embarrassing Client Encounter Inspires Industry’s Most User-Friendly Form Software


t was tax season, a time when integrating insurance and mutual fund sales into his accounting appointments was nearly impossible, but Ed Beggs was in all three businesses at once, so he had to find a way. The day he went to tear a triplicate form off its pad and in his hurrying, tore the sheets, his solution was to run to the photocopier and make multiple copies of his client’s insurance application. The lady he was serving, a longtime client, shamed him. She told Beggs she loved him like a son, but this was no way to do business. It just wasn’t professional. At that moment, the overextended financial advisor made it his personal mission to invent a better way. He did – and it’s called Laser App. When invented in 1995, Laser App’s first users were Beggs and his peers at his broker/dealer. Then, as Robert Powell, Laser App’s Vice President of Sales and Marketing puts it, “We’ve chased our customers. When I first started with Laser App in 2002, the broker/dealer space was taking off. A few years later it was the insurance space, and now the advisory space. We’ve chased our customers with what products we

add or what forms we add to our ever-growing library.” But Powell goes on to explain that it’s not these customers that they ultimately look to serve. “The customer isn’t necessarily the one who’s paying you.” What it really comes down to is Laser App continues to focus on the user who inspired it: the advisor – to eliminate inconveniences like Beggs’ and to make life easier. “The end user is who we really view as our customer. If we make him or her happy, then we can make everybody else happy.” That’s why Laser App has an unprecedented adoption rate by both consumers and advisors. The key to Laser App’s ease of use is that while it exists to save time and make for an easier process, it doesn’t aim to replace paperwork altogether. Laser App exists in a “sweet spot” of balance, prepopulating digital forms with product data, known client information, customized BGA information and more, that gets the form about halfway done and leaves the rest for the advisor and client to finish together. This “hybrid” process takes a fraction of the time that either fully-digital or fully-manual input would take, and so by design, it’s extremely user-friendly for an independent advisor.

“The end user is who we really view as our customer. If we make him or her happy, then we can make everybody else happy.”

By not allowing incomplete fields and using other prompts, Laser App virtually eliminates NIGO (Not In Good Order). Use the calculation formula below to see what Laser App could be worth to your business; then visit to end expensive NIGO losses.

Calculating Monthly NIGO Cost

T x N% 100


T= # of Transactions per month 46


C $20.00

N%= NIGO rate

InsuranceNewsNet Magazine » November 2014

= Monthly Cost $1,200.00

C= NIGO Cost per delayed/rejected transaction

Technology Issue • Special Sponsored Section

Laser App works well in the independent space also because it only does what it does best – forms. With nearly 100 integration partners, Laser App integrates easily with whatever CRM a BGA or IMO uses. This is just another factor that contributes to Laser App’s extraordinary adoption rate. Get started with Laser App today! Special offers for InsuranceNewsNet Magazine readers include:

• BGAs, get a 60-day license of Laser App Anywhere – it’s essentially a fully functional free trial for 2 months! Includes full use for up to 5 agents. • Carriers, we’ll waive the smart tool fee for your forms programming – a $999 value! Find out how to try Laser App and redeem these special offers at

Latest Technology, Fastest & Easiest Process Laser App continues to adapt to the latest technology, from its original version, to creating an interactive PDF version, to the modern version designed to be tablet- and mobile-friendly.

1995: The original software had a straightforward approach to entering data.

2008: The best technology of this time was the PDF, so Laser App redesigned with a PDF-based solution.

Did you know? • More than 7 million insurance and annuity forms were processed through Laser App in 2013. • Over 32,000 applications are available. • Most carriers pay far less to add their forms to Laser App’s library than to any other system. • Laser App has discovered that their users don’t like manuals, so they have a library of “help videos” on their integrations and host daily webinars. • Laser App sits on PCI compliant server architecture and is professionally hosted and geographically diversified in underground bunkers in two different cities.

Now: To fit the tablet age, Laser App now utilizes HTML5. As always, Laser App designs the interface to look just like a paper application so that it’s familiar to all users.

Try Laser App’s latest version at

• The system is FREE for any carrier, IMO or BGA to try out. November 2014 » InsuranceNewsNet Magazine





Quotes Done Right (QDR) is a web-based, one of its kind, term life insurance lead generator and consumer quoting tool and it’s broker-powered. Agencies can invite an already appointed Banner broker to setup a profile for a personalized version of QDR.


It’s your time to shine. Your personal QDR website address can be shared in advertisements, email messages, community newsletters or on social media networks. Use it to make connections with an affinity group or association.


QDR was created with the customer in mind. Life insurance doesn’t have to be complicated, or boring. It’s perfect for Gen X and Gen Y - but early tests conclude people of all ages like it.


We’re investing in opportunities to grow the life insurance industry. No one else has anything like it. Engage potential customers, interact with the applicant, drop an AppAssist ticket and increase your business. It’s that simple.

Legal & General America life insurance products are underwritten and issued by Banner Life Insurance Company, Urbana, MD and William Penn Life Insurance Company of New York, Garden City, NY. Banner products are distributed in 49 states and in DC. Banner does not solicit business in NY. Quotes Done Right is not yet available for William Penn. 14-349


InsuranceNewsNet Magazine » November 2014

LEARN MORE ABOUT QUOTES DONE RIGHT AT LGAMERICA.COM/QDR Scan this QR code to see our QDR video. Download the Tag app at

November 2014 Âť InsuranceNewsNet Magazine



Gradual Rise of Interest Rates Would Be Positive for Insurers

Millennials Need Life Insurance Millennials are too young and in too much debt to begin talking about life insurance, right? Not so fast, according to a study by Penn Mutual. The carrier’s research showed that many millennials are making a significant amount of money and doing a good job of saving it. But most are not thinking about life insurance, and if they are, it’s likely that they are not properly covered. Penn Mutual identified eight segments of consumers, and millennials fall into five of those segments. Each segment has different characteristics, but three particular segments present a huge opportunity for financial professionals. Up and Comers: This group, made up entirely of millennials, is optimistic and poised for success. Life Enthusiasts: More than three-quarters (76 percent) of this group is composed of millennials. This segment is passionate about all of the new things they’re experiencing in life – a marriage, a child or a new home. Traditionalists: While millennials constitute 18 percent of this group, it’s important to note that the members of this segment are planners and many of them already have coverage.


MetLife has launched MetLife Secure Flex Universal Life, which offers consumers a pair of guarantee provisions and strong cash value growth. The product’s built-in death benefit guarantee provides consumers guaranteed coverage regardless of policy performance up to a certain age, and as late as 90 depending on issue age. The product’s policyholders will also receive a guarantee of current policy charges at the end of the death benefit guarantee period – letting them know as soon as they purchase the policy exactly how much cash value will be needed to continue coverage after the death benefit guarantee period ends. The new product is part of the company’s continuing drive to strengthen its life insurance portfolio and follows its decision to reduce rates on its Guaranteed Level Term policy in August. Allianz Life has moved further into the survivorship market with the announcement of a fixed index universal life insurance policy that provides death benefits for two lives on one policy. The product, branded as Allianz Life DID YOU




Pro+ Survivor, is designed for consumers looking for affordable, flexible premium options and comes with chronic illness or terminal illness riders, the company said. The Phoenix Companies has added two term life insurance products – Phoenix Safe Harbor Term Life and Phoenix Safe Harbor Term Life Express – to its product offerings. Safe Harbor Term Life includes riders that can provide accelerated death benefits in case of chronic illness, critical illness or terminal illness, and a waiver of premium in case of unemployment. Term Life Express offers the same benefits but uses simplified issue underwriting, with immediate underwriting decisions available via a teleunderwriting service.


A federal appeals court has upheld a lower court’s ruling in favor of an insurance carrier that paid out $151,000 in death benefits through a retained asset account (RAA). Thomas W. Vander Luitgaren sued Sun

Allianz SE said board member OLIVER BAETE will take over as chief executive in May when current CEO Michael Diekmann steps down after more than a decade in charge. Source: Associated Press

InsuranceNewsNet Magazine » November 2014


As members of Generation Y mature, they are an emerging market for life insurance with 4 in 10 somewhat or very likely to buy. — Alison Salka, senior vice president, director of research for LIMRA

Life Assurance Company of Canada and its parent, Sun Life Financial, on the grounds that paying the benefits through such an account was an act of self-dealing in retirement plan assets. Vander Luitgaren, who became the beneficiary of the assets after the death of his brother, also claimed that the insurance carrier wasn’t acting in his best interest, and that the insurer was in violation of its fiduciary duties under the Employee Retirement Income Security Act. In its decision, the U.S. Court of Appeals for the First Circuit said the court had recently decided a similar case. In that case, an insurer, “acting in the place and stead of a plan administrator, properly discharges its duties under the Employee Retirement Income Security Act, when it pays a death benefit by establishing a retained asset account,” the court ruled.


What’s that on the roof of the National Life building in Montpelier, Vt.? Solar panels – and they’re going up at the edge of the city as well. National Life has begun construction of a 500-kilo- Solar panel installation on National Life’s main watt solar array at the edge building roof. of the city that is their company headquarters. Once the project goes online at the end of this year, the solar panels are expected to generate more than 15 percent of National Life’s electrical needs. Combined with an existing solar array on the roof of the National Life building, the solar project is expected to produce about 3 percent of the electricity used in the city of Montpelier every year.

November 2014 Âť InsuranceNewsNet Magazine



How to Avoid Tax Disasters That Doom Finances T  he transfer for value rule can lead to a tax that no one saw coming. By Louis S. Shuntich


e all know the tragic tale of the Titanic that ended in disaster when the great ocean liner hit an iceberg that no one saw. You might wonder what the sinking of a ship has to do with life insurance. The answer is that running into the transfer for value rule (the iceberg) can lead to disaster. Bathed in obscurity like the gloom of night, the rule looms, waiting to doom death proceeds to suffer income taxes. This is because the transfer for value rule specifies that if a life insurance policy (or any interest in that policy) is transferred for something of value (for example, money or property), a portion of the death benefit is subject to income tax. Fortunately, there are two classes of exceptions to the rule. The first involves transfers by gift to anyone. The second includes transfers to the insured, a partner of the insured, a partnership in which the insured is a partner, or a corporation in which the insured is an officer or shareholder. Unfortunately, as will be seen in some of the examples below, the applicability of the rule is not always obvious and can be a dangerous trap for the unwary.

(IRS) Reg. § 1.101-1(b), there does not have to be cash consideration or a formal transfer or assignment of ownership of the policy. An example of this would be when the owner of a life insurance contract names another person the beneficiary in exchange for any kind of valuable consideration. This could happen where an elderly policy owner names someone the beneficiary of their policy in exchange for the beneficiary’s promise to take care of the policy owner. In this example, because the death proceeds would be paid to the caregiver as a bargained-for consideration, the proceeds would be taxed on the amount minus the fair market value of the services rendered.

Sale of a policy

Cross-purchase buy and sell

In some situations, such as the sale of a policy, the application of the rule is obvious. For example, assume that A purchases a $100,000 policy on his life and later sells it to B for $10,000. Assume further that B names himself the beneficiary and pays $10,000 in premiums before A dies. This is clearly a transfer for value situation and results in B having to declare $80,000 of income ($100,000 death proceeds less the $20,000 B paid to purchase and maintain the policy).

Naming a beneficiary

In other situations, the rule is not as clear because, according to Internal Revenue Service 52

Going further, you should note that what makes this provision particularly hazardous is the sometimes highly obscure nature of a “valuable consideration.” For example, where a cross-purchase buy and sell agreement is used, the participants normally have to purchase multiple policies on each business owner’s life. The actual formula for the number of policies required is N x (N-1) where N is the number of business owners participating in the agreement. For example, if there are five corporate shareholders, under a cross-purchase agreement, the total number of policies they have to buy is 5 x (5-1) = 20 policies. As this

InsuranceNewsNet Magazine » November 2014

is a burdensome approach to fund a buy and sell arrangement, some have suggested that the participants need only establish a trust and have the trustee purchase a single policy on each participant’s life. The problem is that this approach probably violates the transfer for value rule. That is because when a participant dies, the participant’s interest in the policies on the other participants shifts to the survivors. For example, if A, B and C have such an arrangement and A dies, his interest in the policy on B goes to C and his interest in the policy on C goes to B. Viewing these shifts of interests in light of the transfer for value rule, each shift may be a transfer for value with the consideration being the mutuality of each participant forgoing their interest in the coverage on the others at their death. Fortunately, there is an exception to the transfer for value rule for partners of the insured. Consequently, this allows a single-policy-per-participant approach to work when the participants to the cross-purchase buy and sell agreement are in the same partnership. In addition, it can work for the shareholders of a corporation if they are also partners in a separate business.

Gift of a policy subject to a loan

Although there is an exception to the transfer for value rule for gifts of life insurance policies, it does not clearly apply

HOW TO AVOID TAX DISASTERS THAT DOOM FINANCES LIFE to situations where a loan on the policy exceeds the donor’s cost basis for the contract (for example, if the donor paid $15,000 in premiums on a policy with a cash value of $25,000 and a $20,000 outstanding loan). The reason is that the exception for gifts requires that the transferee’s basis be the greater of the transferor’s basis or the amount paid, which presumably would be the amount of the loan, according to IRS Reg. 1.1015-4, which covers part gift, part sale transactions. Consequently, the transferee’s basis would seem to be the $20,000 loan and not the transferor’s basis of $15,000. It should also be noted that the transferor would have to recognize income on the gift to the extent that the loan exceeded the transferor’s basis ($20,000 loan - $15,000 premiums paid = $5,000 income).

Starting or terminating split dollar arrangements

In split dollar life insurance arrangements, care must be taken that any shift of interests in the policy fits into one of

14-076-NAILBACentricAd-8x5.5.indd 1

the exceptions to the transfer for value rule. For example, if an existing policy is owned by a corporation and transferred to the insured to start an IRS Section 7872 type of interest-free loan arrangement, there will be no problem since transfers to the insured are exempt from the rule. Similarly, a transfer to the corporation by the insured to begin a split dollar endorsement arrangement (governed by Internal Revenue Code [IRC] Sections 61 and 83) would be exempt if the insured were an officer or shareholder of the corporation. Likewise, when the policy is formally transferred to the insured at the termination or rollout of the endorsement arrangement, there is no problem since transfers to the insured are exempt. On the other hand, a transfer to a third party will not be exempt, unless it is covered by one of the exceptions, such as where the transferee is a partner of the insured.

Selling a business

If a business that owns life insurance policies on key employees is sold and the

policies go along with the sale of other assets, it is probable that the policies will be deemed to have been transferred for value. Consequently, if they are retained by the new owner, the death proceeds will likely be subject to income tax to the extent that they exceed the prices paid for the policies and subsequent premiums paid by the new owner of the business. Whenever there is a transfer of any interest in a life insurance policy, the parties to the arrangement should determine if the transaction constitutes a violation of the transfer for value rule of IRC § 101(a) (2). Unfortunately, as can be seen from the rather obscure applicability of the rule to some transactions, like the Titanic and the iceberg, it can be a disaster waiting to happen for those who are less than vigilant. Louis S. Shuntich, J.D., LL.M., is director, Advanced Consulting Group, Nationwide Financial. Louis may be contacted at louis.

9/4/14 9:14 AM

November 2014 » InsuranceNewsNet Magazine



How Life Insurance Makes Millions for Retirement L  ife insurance can be part of a strategy to manage market declines and shore up your client’s retirement account balance. By Gonzalo Garcia and Elizabeth Michel


o you remember the last market decline? We are sure you do – it was the Great Recession of 2008. And it wasn’t only the U.S. stock market that “caught the flu.” It was an international pandemic of sharp stock market drops, depressed real estate values, currency fluctuations and collapsed business values. Do you know the year of the previous market decline – before the Great Recession? It was actually three years: 2000 through 2003. There have been five market declines in the past 30 years. On balance, that number doesn’t seem like a lot and shouldn’t make that big of a difference in a retirement portfolio – right? Well, don’t jump to that conclusion quite so fast. Maybe those down years aren’t so tragic in the accumulation phase. You can keep your money in the market and wait for the inevitable rebound. However, imagine the impact if you were in the distribution phase. Removing money from a 401(k) or an individual retirement account when the market is down means that those assets will not be working for you when the market rebounds. Those dollars are gone. They were spent. And now there is a double loss: the loss of that asset when distributed and then the loss of that asset working for you in a rebounding market. The performance of assets in the years following retirement makes a significant difference in the long-term stability and longevity of assets during retirement. Before retirement, assets may have endured market increases and decreases. Upon retirement, however, all those prior years no longer matter. In effect, it is like starting fresh with the assumption that there are 54

enough assets to make it through retirement. But a down market in those early years can strain a portfolio because it is “digging out” of a market drop at the same time withdrawals are being made. The combined effect in those early years can have a long-term lasting impact. Let’s look at some history showing that timing is, as they say, everything.

of overall planning to help meet and protect a retirement strategy. How?

Mid-1960s: Retirement Assets Eroded Early 1970s: Retirement Assets Eroded Early 1980s: Retirement Assets Grew Early 1990s: Retirement Assets Grew Early 2000s: Retirement Assets Eroded

» Life insurance cash values receive potential income tax-free tax treatment. Life insurance cash values grow tax free, and if properly accessed, they can be received tax free through withdrawals and loans. This offers a tax-free source of funds for retirement.

Retire in the early 1980s and take distributions, no problem – retirement assets grew! Retire in the early 2000s and take distributions, problem – retirement assets eroded. The Wall Street Journal recently wrote about this issue earlier this year in the article “How Much Stock to Own in Retirement.” The article noted that market losses, particularly when they occur early in retirement, can erode an individual’s overall portfolio and affect long-term retirement funds. What is the solution to this conundrum? Put assets into certificates of deposit? Nope. Inflation is a factor, and in the long term, there may be less money for retirement. Can advisors offer another way to provide security in retirement and protection for loved ones during working years? Where can individuals acquire a “strategic bucket of money” that they can access in retirement to protect their overall portfolio during down market years? It is well-established that diversification is a cornerstone in setting up a retirement portfolio. Traditionally, advisors look at different equity types, capitalization and types of fixed income. However, life insurance has a critical role in retirement planning – and that goes beyond the obvious. It’s a financial asset with unique attributes and tax treatment. It’s this unique set of characteristics that can make life insurance a cornerstone

InsuranceNewsNet Magazine » November 2014

» As you know, life insurance can help the family meet its goals. During working years, life insurance offers a death benefit that can protect a family and meet retirement funding goals even if the individual is not around to contribute.

» Life insurance can offer cash value accumulation with downside protection. Products such as indexed universal life insurance provide participation in part of a market’s upside, but protect downside risk. There is typically a floor through which the policy’s crediting rate cannot fall. As a result, there is participation in some of the indices’ upside, but risks can be tempered. It adds a stabilizing element. Other products, such as whole life, can offer a guaranteed return with no downside risk. Finally, some carriers’ general accounts are almost completely uncorrelated to the market (with investments that may include agriculture, timber and real estate) and thus offer terrific portfolio diversification. » And here is the best part. Cash value life insurance can do more than just provide a source of funding for retirement and protection for loved ones. By strategically timing loans and withdrawals from a cash value life insurance policy, an individual can avoid selling into, and locking in, losses in traditional retirement assets.

How? A Case Study

Marcus is 65 and has accumulated $1 million for his retirement in personal savings


November 2014 » InsuranceNewsNet Magazine







Beginning- of-Year Balance

Annual Withdrawal

Post- Withdrawal Balance

Hypothetical S&P 500 Return

End-ofYear Balance


Beginning- of-Year Balance

Annual Withdrawal

65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85

$1,000,000 793,663 532,109 634,013 698,474 583,475 479,791 485,357 550,348 456,714 470,051 490,303 446,656 496,169 505,735 458,611 453,159 504,582 421,066 458,036 417,605

($70,000) -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000 -70,000

$930,000 723,662 462,109 564,013 628,474 513,475 409,791 415,357 480,348 386,714 400,051 420,303 376,656 426,169 435,735 388,611 383,159 434,582 351,066 388,036 347,605

-14.66% -26.47% 37.20% 23.84% -7.16% -6.56% 18.44% 32.50% -4.92% 21.55% 22.56% 6.27% 31.73% 18.67% 5.25% 16.61% 31.69% -3.11% 30.47% 7.62% 10.08%

$793,662 532,109 634,013 698,474 583,475 479,791 485,357 550,348 456,714 470,051 490,303 446,656 496,169 505,735 458,611 453,159 504,582 421,066 458,036 417,605 382,643

65 1,000,000 ($70,000) 66 793,662 67 583,580 68 800,671 -70,000 69 904,863 -70,000 70 775,087 71 825,933 -70,000 72 895,327 -70,000 73 1,093,558 -70,000 74 973,199 75 1,182,923 -70,000 76 1,363,999 -70,000 77 1,375,133 -70,000 78 1,719,251 -70,000 79 1,957,166 -70,000 80 1,986,243 -70,000 81 2,234,531 -70,000 82 2,850,470 -70,000 83 2,693,998 84 3,5 14,859 -70,000 85 3,707,357 -70,000

Distributions are not taken from the 401(k) and IRA in the five down market years. They are taken from the policy.


Post- Withdrawal Balance

Hypothetical S&P 500 Return

End-ofYear Balance

930,000 793,662 583,580 730,671 834,863 775,087 755,933 825,327 1,023,558 973,199 1,112,923 1,293,999 1,305,133 1,649,251 1,887,166 1,916,243 2,164,531 2,780,470 2,693,998 3,444,859 3,637,357

-14.66% -26.47% 37.20% 23.84% -7.16% 6.56% 18.44% 32.50% -4.92% 21.55% 22.56% 6.2.7% 31.73% 18.67% 5.25% 16.61% 31.69% -3.11% 30.47% 7.62% 10.08%

793,662 583,580 800,671 904,863 775,087 825,933 895,327 1,093,558 973,199 1,182,923 1,363,999 1,375,133 1,719,251 1,957,166 1,986,243 2,234,531 2,850,470 2,693,998 3,514,859 3,707,357 4,004,003


1993 spread between an IRA, a 401(k) account and a cash value life insurance policy. His IRA and 401(k) were, and still are, invested in the stock market. He needs $100,000 a year in retirement to maintain his lifestyle. He anticipates taking $30,000 annually between Social Security and his company’s pension, and $70,000 annually from his personal savings. As his advisor, you counsel him that if the stock market is unstable in his early retirement, he may not have sufficient funds. Taking funds out of his IRA and 401(k) year over year will lock in his losses during down market years. You also suggest that to be conservative on his assessment of the market, he should look back to the 1970s and 1980s, when there was a mix of gains and losses. Since 1950, every 20-year period in the market has shown at least four years with losses in the S&P 500. Looking at what might happen between when your client retires at age 65 and when your client reaches age 85 if there are five years of losses, especially early in retirement, is conservative and crucial. When assessing the assets to draw down in retirement, you advise your client against drawing on the life insurance policy’s cash surrender values year in and year out, along with the IRA and the 401(k). 56

Instead, you advise him to access these policy values only in down market years to avoid selling into market losses. Here are the astonishing results using a $1 million balance, taking a $70,000 withdrawal per year and mirroring the S&P 500 from 1973 to 1993. (The 1973-1993 time period was selected because it represented a time frame with early losses to demonstrate the effect of these losses on a retirement portfolio.) By minimizing market losses with a combined approach using his cash value life insurance and his IRA and 401(k), Marcus is able to smooth the uncertain waters of market returns.

Without Life Insurance to Smooth Uncertain Waters

If Marcus does not have a cash value life insurance policy and takes $70,000 per year for 20 years from his IRA and 401(k), here is the result (chart 1).

With Life Insurance to Smooth Uncertain Waters

If Marcus has a cash value life insurance policy and does not take a distribution from his IRA and 401(k) in down market years – taking a distribution from his cash value life

InsuranceNewsNet Magazine » November 2014

insurance policy instead – here is the result (chart 2). The difference? $4,004,003 versus $382,643 at age 85. Taking out $350,000 (or 20 percent of distributions) from the life insurance policy in the five down market years creates a difference of $3,621,360. Yes, you read that correctly. Five years can make that big of a difference. Advise your clients to diversify – but include a cash value life insurance policy in that diversification model. This will allow your clients to avoid selling into a down market and can thus produce truly dramatic results! Gonzalo Garcia, CLU, is a partner with AgencyONE. He is responsible for business development at AgencyONE. He may be contacted at gonzalo. Elizabeth Michel, JD, is the chief marketing officer for AgencyONE. Liz has built a reputation creating successful marketing programs for life insurance transactions. She has held senior positions with large national brokerages including Crump and National Financial Partners. She also is a member of AALU. She may be contacted at liz.



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New Products Heating Up the Market Some new annuity products are heating up the market as the temperatures cool down. Here’s a list. Pacific Life has launched a new deferred income annuity the company says will help guarantee an income stream in the future. The launch of Pacific Secure Income comes on the heels of gains in the deferred income category and among fixed annuities generally, as market watchers expect interest rates to rise. Pacific Life said the new deferred income product would fill a niche within its suite of fixed annuity products. Guardian introduced Fixed Target Annuity, a new single-premium fixed deferred annuity with flexible renewal and withdrawal options. Guardian said the annuity has no “market value adjustments on withdrawals made before maturity,” which offers contract holders a clearer picture of the income streams they can expect the annuity to provide. The carrier said the annuity would help reduce volatility risk and add more stability to an investment portfolio for investors approaching or in retirement. State Life launched Indexed Annuity Care, the first and only fixed index annuity that can also provide benefits for long-term care (LTC) expenses. Consumers can pay a single premium to obtain Indexed Annuity State Life is a OneAmerica company Care, which in turn offers built-in leverage for qualifying LTC expenses. In addition, optional lifetime LTC insurance rider benefits can be added to the contract – with premiums that are guaranteed never to increase. Another product feature – joint benefits – is also available. Indexed Annuity Care can provide benefits to two spouses from a single policy.


The existing system of bringing new producers on board an annuity carrier is not always a slam-dunk. The problems are particularly acute in the independent agency system, according to a new report on insurance producer management from Aite Group. The problem is the technology that is used to make it all happen – or rather, the technology that’s often not used. Many carriers commonly use a manual, paper-based process when onboarding producers. That’s a problem because paper-based approaches traditionally have caused notin-good-order (NIGO) rates of more than 50 percent at those carriers, the study found. The researchers had some words specifically concerning sales of annuity products and the prospects for broker/dealers (BDs) versus brokerage general agencies (BGAs) in this market. In the past 10 years, BDs have become increasingly important distribution channels for annuities, they wrote. The problem the researchers identified is that reps at wirehouses and independent BDs often want to be paid electronically on the same or next day. They 58

also want automated processing for commission chargebacks or other exceptions. The top 20 carriers that sell annuities through the top 10 BDs can meet these requirements, the researchers said. Other carriers need to increase automation of their commission setup, calculation and reporting capabilities to become competitive, the Aite report said.

Read more about how advisors are using technology on PAGE 26.


Western & Southern Financial Group rolled out a fixed index annuity (FIA) that includes a Goldman, Sachs & Co. proprietary index option. The policy is Indextra, a single-premium FIA issued by Integrity Life Insurance, a subsidiary of Western & Southern Financial. The centerpiece of the policy is the GS Momentum Builder Multi-Asset Class Index, a proprietary index option that Goldman custom-designed for the product. Western & Southern believes the option will turn heads due to Goldman’s widespread recognition as a global financial services company

InsuranceNewsNet Magazine » November 2014

and to the differentiation that the exclusive index will bring. GS Momentum Builder is one of four “allocation options” in the new FIA. (The other three are more traditional FIA index options, such as the S&P 500 Index, 1-Year Point-toPoint; the S&P 500 Index, 1-Year Monthly Average; and a fixed account.) The Goldman option aims for broad diversification in index-linking via tracking of six asset classes that compose the index.


Is the U.S. in the midst of a fullblown retirement crisis? Not even close, according to the assessment of several retirement experts who testified before a Senate panel on modernizing the nation’s savings policy. Andrew Biggs Andrew Biggs, a resident scholar at the American Enterprise Institute, said the most advanced modeling research provided by the Social Security Administration shows a more optimistic picture than most news reports would have us believe. Claims by the Center for Retirement Research at Boston College that 53 percent of Americans are at risk of insufficient retirement income, and the National Institute on Retirement Security’s calculation that we face a $14 trillion retirement savings gap, are mistaken, Biggs said. Such studies “tend to underestimate the incomes that Americans will have in retirement, while overestimating how much Americans will need in order to maintain their preretirement standards of living,” he said. Biggs said the negative headlines about retirement account balances ignore “replacement rates,” a measure of retirement security. Replacement rates measure an individual’s retirement income as a percentage of that individual’s preretirement earnings, and financial advisors measure replacement rates relative to earnings just before retirement, he said.

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Words That Are Creating Buzz in the Annuity World Certain buzz words keep coming up in this year’s annuity discussions. We’ve compiled a list of those you are most likely to hear.

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Annuities Provide Retirement Alpha Without Beta Alpha

The amount of return received from an investment

T  he public has yet to be convinced about the value of an annuity-based strategy on retirement income planning. Here is how you can convert the skeptics.


Market risk

By Curtis Cloke


ore money for less risk.” If I had to express in a single statement the one thing all clients want when they entrust their hardearned money to us, I would choose that statement. My ability to navigate that trade-off as a retirement income advisor is my No. 1 measure of success. It defines the most important value I can return to my clients in exchange for their business, so whenever I consider various strategies for helping my clients structure their retirement income plan, that tenet is constantly on the top of my mind. The use of annuities in retirement planning is in a strange state today. Experts and academics in the field consider the use of annuities in retirement income plans to be of absolutely vital importance. However, the current data on how extensively annuities are used in retirement plans tell us that the public has yet to be convinced. Why is there a disconnect? I can tell you from my experience that annuities have a lot of negative stigmas attached to them. The most pervasive of those stigmas is that annuities are loaded with fees and therefore cannot provide competitive financial returns on investments. I can also tell you from my experience that this stigma is generally unsubstantiated by the evidence. In fact, an annuity can provide significant freedom from fee drag on financial performance, in addition to tax advantages. Annuities can blow the competition out of the water when all of the facts are laid bare. I call the powerful combination of benefits that annuities can deliver “retirement alpha without beta.” 60

Retirement Alpha Without Beta

This is a term I use to describe the cocktail of benefits that clients receive when they invest in annuities. The “without beta” part is the easiest to explain: When we talk about annuities, we are talking about life insurance products. These products provide, to varying degrees, contractually guaranteed income. Alpha can generally be described as the amount of return a person receives in excess of what they reasonably expect from an investment with a given amount of risk. Unlike a traditional investment, a major contribution an annuity can make toward alpha comes from its ability to generate mortality credits. Mortality credits are the financial returns that life insurance policyholders receive because of risk pooling. They come from the reallocation of premiums paid to members of the risk pool who live longer than others. There is no market risk, no beta whatsoever, in securing those returns. However, the discussion about the “retirement alpha” provided by annuities

InsuranceNewsNet Magazine » November 2014

should not be restricted only to the financial performance of the annuity itself. Alpha is contextual; it has to do with client expectations of performance given the amount of risk they take. In my experience, clients do not understand that the returns advertised by investment funds, of whatever risk class they want to invest in, are not the same returns they will actually see. This is known as the difference between nominal returns and real returns. Most financial professionals understand that there is a world of difference between nominal returns and real returns. One of my favorite resources on this topic is Thornburg Investment Management’s “A Study of Real Real Returns.” This publication summarizes an analysis of the performances of different asset indices (large-cap, small-cap, municipal bonds, etc.) over the past 30 years. It compares their nominal returns and the real real returns, which are nominal returns net of fees, taxes and inflation. As you can see, there is a huge difference between the rate advertised by investment funds (the nominal return) and the

When it comes to retirement, a little stability goes a long way. We are Athene. Our reputation of doing more for clients has made us a leader in xed annuities with over $58 billion in assets, 595,000 policyholders and the second-largest portfolio of xed-indexed annuity reserves in the U.S. Together with our acquired companies, we have been advising customers for more than 117 years.*

Athene © 2014

For more information on all Athene products call 1-800-255-5055 or visit Driven to do more.


For Producer Use Only. Not to be Used with the Offer or Sale of Annuities. * “Athene” refers to Athene Holding Ltd. together with its subsidiaries. Asset and policyholder information is stated on a consolidated basis for such entities, and total assets of $58.5 billion is management’s view for total assets; see reconciliation to 1Q Athene Holding Ltd. GAAP Financial Statements, set forth by AP Alternative Assets, L.P. at The most recent year-end audited nancial reports are also available there. Information relating to Athene’s ranking as the second-largest portfolio of xed-index annuity reserves in the U.S. was taken from the 2012 LIMRA U.S. Individual Annuity Yearbook, and includes such information relating to Athene Annuity & Life Assurance Company, Aviva Life and Annuity Company (now known as Athene Annuity and Life Company), Athene Annuity & Life Assurance Company of New York, and Aviva Life and Annuity Company of New York (now known as Athene Life Insurance Company of New York). 1023397_182724

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November 2014 » InsuranceNewsNet Magazine



Erosion of Total Returns Over 30 Years U.S. Large-Cap Stocks

in a Taxable Account, as of 12/31/2012

Real Real Return

Nominal Return



















(Dow Jones-UBS Commodity Index -2.54% & Dow Jones Future Price Index)


(S&P 500 Index)

International Stocks (MSCI EAFE Index)

U.S. Small-Cap Stocks (Russell 2000 Index)

Municipal Bonds (Barclays Muni Index)

Long-Term Gov Bonds (20-yr Treasuries)

Corporate Bonds (Barclays U.S .Corporate Index)

Intermediate Gov Bonds (5-yr Treasuries)

Real Estate/Single Family (U.S. Census Bureau Survey of Construction)

T-Bills Commodities










30-Year Average Annual Returns Real Real Return

Capital Gains Taxes

Dividend/Interest Income Taxes



Source: Thornburg Investment Management, “A Study of Real Real Returns,” July 2013

return investors will actually receive (the real real return). If you are going to convince clients of the legitimacy of an annuity as an investment, you must manage their expectations of the performance of the other investment options available to them. All clients understand the emotional benefits of having a guaranteed source of income for life. Most of them grasp the power of annuities in helping to mitigate their exposure to the most potent financial risks in retirement. However, until you educate them further, few of them are able to see that they are getting a competitive “bang for their buck” from annuities from an investment perspective. The only way to make an apples-to-apples comparison between annuities and index funds is to compare returns net of the effects of fees, taxes and inflation. After you do that, clients can see that annuities can compete not only against ultraconservative investments such as inflation-protected government bonds, but also investments with higher amounts of risk such as real estate and corporate bonds. These returns are not just possible when a client invests in an annuity – they are guaranteed. That is retirement alpha without beta. 62

Client Case Study

I illustrate the kind of economic benefits that annuities can provide with a case study based on a real set of clients I had (the names have been changed). Jack and Jill were a married couple approaching retirement. Jack was 63 years old and Jill was 62. They planned to retire together in three years. Their assets and income sources looked like the chart below. Jack and Jill had a desired monthly income in retirement of $11,285 with a 3 percent cost of living increase (COLA) per year. That left them with a monthly

ASSETS Joint Non-Qualified


Jack’s IRA/401(k)


Jill’s IRA


INCOME Jack’s Social Security


Jill’s Social Security


Jack’s Deferred $1,425/month Compensation (1% COLA/year) Jill’s Pension $4,858/month (3% COLA/year)

InsuranceNewsNet Magazine » November 2014

income gap (the difference between desired income and current income) of about $1,844 per month. In order to withdraw that much every month from the beginning of retirement until their respective life expectancies, they would have to draw down a total of $1,038,738 from their assets. I decided to sketch out a different strategy for them – a strategy based on annuities. I ran an analysis of a scenario where they invested in three tandem buckets of inflation-protected deferred income annuities (DIAs). It turned out that by doing so, they could guarantee themselves their desired level of income by purchasing only $422,299 in annuity contracts. Can you guess which strategy they decided upon? By using that strategy, I built in inflation protection and a no-fee-drag income investment option, while providing favorable tax-exclusion benefits. In short, I beat a traditional 5 percent assumed-rate systematic withdrawal investment plan (SWIP) strategy in 31 years by $400,000. This is retirement alpha without beta in action. Clients are smart. They know what they want when they walk into my office: more money for less risk in retirement. But they need my help in knowing how to go about getting it. My obligation to clients is to consider every strategy with an agnostic mindset. I have to shut out the populist hearsay and take a look “under the hood” at the math and science of those claims. When it comes to the use of annuities in retirement planning, the hearsay is not based in fact. Quite the contrary, it is the traditional investment classes that need to be scrutinized more by the public. When the problem is framed correctly and fair comparisons are made, annuities are not only competitive, they can destroy the competition when it comes to efficiency in retirement income planning. All thanks to the unique ability of annuities to leverage retirement alpha without beta. Curtis Cloke, CLTC, LUTCF, is an award-winning financial advisor and retirement income expert, trainer and speaker with over 25 years of experience in income distribution planning. Curtis may be contacted at

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November 2014 » InsuranceNewsNet Magazine Products and services offered through the Voya family of companies. © 2014 Voya Services Company. All rights reserved. CN0623-191311-0716



Income Annuities Are Your Clients’ New Defined Benefit T  he shortfall in retirement funding resulting from the move to 401(k) plans has prompted some to take a look at defined benefit alternatives, including guaranteed lifetime income annuities. By Jim Pedigo


ack in ancient China, employers (warlords and land barons) were generally more knowledgeable than their employees (serfs) in business and financial matters. These employers believed it was their responsibility to provide financial rewards to long-term loyal employees during their income-producing years as well as during their non-income-producing retirement years. This spawned the birth of defined benefits, also known as guaranteed lifetime income annuities. However, this employer’s traditional sense of responsibility to provide defined benefits began to change in the late 1980s. In 1985, if an employer promised $1,000 a month at retirement through a defined benefit plan, workers could rest assured they would receive $1,000 per month for the rest of their lives. As in ancient China, the employer took on the interest rate, life expectancy and market risk costs associated with accumulating sufficient assets to pay the promised income for life. However, toward the end of the 1980s, the economic realities of declining interest rates from previous double-digit highs, increasing life expectancy and greater market volatility (the October 1987 market implosion, for example) caused employers to become concerned about controlling the increasing expenses involved with funding defined benefit plans.

The Shift to 401(k) Plans – a Shift in Risk

The shift from defined benefit plans, in which employers took on long-term liabilities, to 401(k) plans, in which plan participants now take on those same liabilities, 64

is actually a major shift in risk. The plan participants are not only responsible for the contribution to their 401(k) accounts, but equally responsible for the amount of income they will have in retirement. Along with bearing the risk of contributing and distributing their participant account assets, they also have market and expense risk associated with their accounts. So the normal use of employer retirement income funding responsibility established centuries ago in China has now become the abnormal use of a generally inexperienced 401(k) plan participant to fund their own retirement income. During the late 1980s, many options were reviewed to help the employer manage the promised retirement income cost liability, which was being hammered by lower interest rates, increasing longevity and market volatility. The most touted answer among several options led to the rise of the 401(k) plan. The 401(k) almost, but not completely, eliminated employer fiduciary and cost liability by shifting the burden to the plan participant. Meanwhile, plan participants are doing a less

InsuranceNewsNet Magazine » November 2014

than acceptable job of funding their retirement income needs, according to the President’s Council of Economic Advisors 2012 report, “Supporting Retirement for American Families.” Neither employers nor lawmakers nor stockbrokers nor plan participants will claim they were the primary cause of the shift from defined benefit plans to 401(k) plans. However, with the possible exception of stockbrokers, who continue to make money, and employers, who believe they have eliminated most of their fiduciary liability, all of them now believe we need to return to defined benefits (a lifetime income annuity). But how? Currently, two available options allow 401(k) plan participants to convert a major part of their 401(k) account to defined benefit (lifetime income annuity) savings in their account. As we recently witnessed, the Treasury Department has developed a deferred income annuity (DIA) for 401(k) plans. This annuity addresses the issue of living too long, but lacks flexibility in several areas. Also available is a specially designed fixed index annuity (FIA) with living

INCOME ANNUITIES ARE YOUR CLIENTS’ NEW DEFINED BENEFIT ANNUITY income benefit rider. Once the FIA is added to the 401(k) plan, participants have the option to move a portion of their savings account balance to this annuity. The FIA is designed to provide more flexibility than the Treasury Department DIA. It can stand alone, or it can complement the longevity annuity if both options are selected by the plan participant. Some of the flexibility features of the FIA are: [1] Market-linked growth – with no risk to principal. [2] Access to cash value at all times, before or after income starts. [3] The income start date can begin any time after one year and age 55. [4] Account value access at death. [5] Spousal joint life income payments are available. [6] Participants can start contributing to the equity index annuity as early as age 25.

[7] FIA contributions are not limited to the Treasury DIA lesser amount of 25 percent of the plan participant’s account balance or $125,000. The 401(k) plan participants who elect both the Treasury DIA and the FIA will have come a long way back to the original intent of retirement income security in ancient China, by converting their 401(k) account to a defined benefit guaranteed lifetime income annuity.

Problem and Solution

However, who will educate the employer and the plan participants about the availability, features, and benefits of the Treasury DIA and the EIA guaranteed lifetime income annuities? Guarantees are considered the realm of the insurance advisor, who also may be licensed as a securities representative. Insurance advisors are normally trained in the guaranteed features and benefits available with fixed annuities and life insurance. So who better than the insurance advisor to educate the employers and 401(k) participants about the DIA

Helping your clients protect their income,

Now That’s a PLUS!

and FIA option available in their plan? Only 16 percent of 401(k) plans offer some kind of “paycheck for life,” according to a 2012 CNBC report. This leaves 84 percent of 401(k) plans with no type of future guaranteed lifetime income option (defined benefit) DIA or FIA for their plan participants. These 401(k) plan employers will want to make these two valuable benefits available as soon as possible, particularly when they see little or no additional cost from third-party administrators who specialize in administering these types of future guaranteed income options. Since the Treasury Department has jumped in to help plan participants, shouldn’t we as advisors do the same? Jim Pedigo, CLU, ChFC, CASL, is a retirement planning advisor with Financial Rate Watcher$ Inc. in Lake Mary, Fla. Jim may be contacted at jim.pedigo@

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November 2014 » InsuranceNewsNet Magazine



It’s the season for Medicare scams

More Insurers to Offer ACA Plans Consumers in most states will have more insurance options for 2015 under the Affordable Care Act (ACA). The U.S. Department of Health and Human Services (HHS) reported a net increase of 63 insurers joining the market in 44 states. The preliminary figures show 77 insurers entering for the first time, while 14 are dropping out. HHS Secretary Sylvia Mathews Burwell said greater competition will help keep premiums in check. There will be winners and losers among the states. Indiana will see a net gain of five insurers, while California faces a net loss of two.


Like a good neighbor, State Farm is … selling health insurance? The largest health insurer in Illinois is teaming up with the nation’s largest home and auto insurer to sell health care policies. Health Care Service, parent of Blue Cross and Blue Shield of Illinois and Blues plans in four other states, will bolster the number of insurance agents selling its products by about 20 percent under the deal, said Jeffrey Welch, the company’s divisional vice president of retail markets. State Farm, whose agents have long sold health policies in addition to home and auto policies, will exclusively sell Blue Cross and Blue Shield individual policies in Illinois, Montana, New Mexico, Oklahoma and Texas beginning Nov. 15, the start of open enrollment for coverage that begins in 2015. The pact should allow Blue Cross, which signed up 1.2 million people across five states in 2014, to beef up its enrollment figures even more as more Americans seek individual insurance coverage.


So much for “If you like the plan you have, you can keep it.” Thousands of consumers who were granted a reprieve to keep insurance plans that don’t meet the ACA’s standards have been told those plans will be discontinued DID YOU




Under the AFFORDABLE CARE ACT, hospitals will see a projected DROP OF



at the end of 2015. They will have to choose a new health policy, which may cost more, according to Kaiser Health News. Cancellations went out to customers in markets where insurers say the policies no longer make business sense. In some states, such as Maryland and Virginia, rules call for the plans’ discontinuations, but in many, federal rules allow the policies to continue into 2017. Insurers sending the notices to some customers include Anthem, one of the largest insurers in the country, CareFirst, Health Care Services, Kaiser Permanente and Humana. One reason behind the switch is that insurers determined they can make more money selling plans that comply with the ACA, often at higher premiums that may be subsidized by the government.


A record number of hospitals – 2,610 – are facing fines from Medicare for having too many patients return within a month for additional treatments, federal records show. Even though the nation’s readmission rate is dropping, Medicare’s average fines will be higher, with 39 hospitals receiving the largest penalty allowed, according to Kaiser Health News. This is the third year that hospitals are subject to readmission penalties from Medicare. The penalties were intended to force


Source: Centers for Disease Control Source: National Business Group on Health

InsuranceNewsNet Magazine » November 2014

in UNCOMPENSATED CARE COSTS in 2015 Source: U.S. Department of Health and Human Services

QUOTABLE The politicians in Washington do not want America to incur the full wrath and the pain and suffering of the premium increases right around election time. — Scott Stevens, president of NP Dodge Insurance, Omaha, Neb.

hospitals to pay attention to what happens to their patients after they leave. Around the country, many hospitals are replacing discharge plans, such as giving patients paper instructions, with more active efforts, such as ensuring that outside doctors monitor their recoveries. Before the program, some hospitals resisted such efforts because they weren’t paid for the services, and, in fact, benefited financially when a patient returned.


California voters are faced with the question of whether to give their state’s insurance commissioner the ability to regulate health care rates for small businesses and Calif. Insurance Commissioner individual health plans. The meaDave Jones sure, known as Proposition 45, is on the Nov. 4 election ballot. The results of the voting were not known at press time, but an agents’ association described the ballot initiative as “one of the biggest threats facing agents and the health insurance marketplace in years.” John J. Nelson, past president of the National Association of Health Underwriters, urged the public to vote “no” on the measure, adding “the idea of one politician having this kind of power over the way millions of us choose our health care is scary.” Opponents also include a coalition of hospitals, doctors and firefighters with major funding from health plans. They say Proposition 45 is a flawed initiative that would give too much power to the insurance commissioner. Supporters of the measure say Proposition 45 would bring protections to the roughly 6 million Californians who buy health insurance through individual and small group markets.

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A ‘Critical’ Leg of the Retirement Table L  ife expectancy nearly doubled over the 20th century, but the cost of surviving is increasing at an even faster rate. People are living longer but not necessarily healthier. By Donald A. Hansen


ou have probably read about critical illness insurance in trade publications, or maybe your insurance marketing organization has sent you marketing emails about it. But do you understand the importance of this coverage for your clients, and have you learned how to implement it into your product portfolio? If you are like most agents or advisors with whom I have spoken over the years, the answer is a resounding “No, but I would like to.” I want to help you understand the importance of and need for critical illness insurance and provide you with a foundation for implementing it into your protection portfolio. Most of the advisors I know do not feel 68

prepared to answer questions about critical illness insurance, let alone educate their clients on its importance. Considering how important this product is for certain clients, it is a subject that you and your clients must address. I believe that critical illness insurance is not a product that fits everyone’s needs. There are needs that critical illness insurance is not designed to meet. Critical illness insurance is designed to protect your client’s retirement portfolio during the asset accumulation stage of life. Clients who are in the process of building toward retirement must be made aware of this protection. The best path I have found in educating advisors on how to advise their clients about critical illness insurance is to use the following analogy: Imagine that you have a table in front of you. We are going to call this your client’s “retirement table.” (Not to be confused with the retirement income stool of Social Security: retirement, plans and savings.) Their goal is to have as much food as possible on their table at retirement. But they

InsuranceNewsNet Magazine » November 2014

Their goal is to have as much money as possible on the retirement table.

don’t have the luxury of implementing the “10-second rule” and so they can’t let that food/retirement touch the floor. So as with any table, we need to add legs for protection and stability. For the best stability and protection of your client’s retirement table, there are four legs on this table: life, health, disability and critical illness insurance. Each leg is as important to the table as the other three legs, and all four legs should be balanced. Imagine what your client’s retirement table would look like with one leg twice as long as the others. You should be prepared to advise your clients on each leg of protection for their table.

Life Insurance

The first leg of your client’s retirement table is life insurance. Although there are many reasons why life insurance coverage is important, it boils down to the beneficiary. People purchase life insurance to protect their beneficiary from the costs of dying, such as lost income, mortgages, debts, college funding, etc. Even if the

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life insurance policy were purchased for equity growth, that benefit normally has a designated purpose, such as a supplement to retirement benefits or funding a business succession plan. So what happens if your client doesn’t die, but came close to death and now faces a long recover y? W hat will their life insurance policy pay them? There are life policies available that can provide an accelerated death benefit. But if we accelerate the death benefit, what did we just do to the beneficiar y? So the question is: Do your clients have a better way of answering their need for money if they survive?

Disability Insurance

The third leg of your client’s retirement table is disability insurance. Disability insurance replaces up to a maximum of 60 percent of income upon diagnosis a nd cont i nued proof of an injury or accident. How many people have a tough time living on 100 percent of their income, let alone 60 percent? In addition, we normally see a 90-day elimination period on policies sold to clients. What many people also don’t realize is that disability insurance pays benefits in arrears. So in the case of a 90-day elimination period, the client would technically have to wait 120 days before receiving their first benefit. Most of the population would have to live off of friends, family or the federal government if they went three months without income, let alone four months, and then had only 60 percent of their income replaced thereafter. Don’t forget that your client’s spouse certainly will be missing work to help care for your ill client, and disability insurance doesn’t replace the well spouse’s income. The bottom line – your client’s paycheck is an important asset to cover, but even with the coverage, where will your clients go to get the money they need? Advisors who assist clients with investment planning know the answer to that question all too well. People will go to their savings first when they are in need of money. So what happens when your clients have to raid their principal? What if that money is also qualified money? The issue is, if they need the money, they have no other choice. So in an attempt to pay for surviving a life-altering diagnosis, clients sometimes can dodge bankruptcy, but they do so at the expense of their retirement. Even though they might have life, health

For the best stability and protection of your client’s retirement table, there are four legs on this table: life, health, disability and critical illness insurance.

Health Insurance

The second leg of your client’s retirement table is health insurance. Health insurance was designed to reimburse catastrophic medical expenses from doctors and hospitals based on usual, reasonable and customary charges within your client’s local network. The real challenge consumers have is to understand what health insurance does not cover. Unfortunately, consumers have been conditioned to approach health insurance from a “carrier should pay all costs” mentality. It’s like paying for auto insurance and expecting oil changes, replacement tires, routine car washes and the like to be covered in addition to having coverage for the catastrophic risks. Even with the current coverage mandated under the Affordable Care Act, the exclusions and limitations on health insurance reimbursements still are very significant and can lead to bankruptcy. With a life-altering diagnosis, these two legs of the table do not answer the need for protecting the retirement portfolio – the table still needs two additional legs. 70

InsuranceNewsNet Magazine » November 2014

and disability insurance, without the fourth leg to the table, clients are still at major risk of losing what they are working so hard to build – their retirement.

Critical Illness Insurance

The fourth leg of your client’s retirement table is critical illness insurance. Dr. Marius Barnard, renowned heart surgeon and creator of critical illness insurance, recognized that with life expectancy nearly doubling over the past 50 years due to medical advances, the cost of surviving is increasing at an even faster rate. People are living longer, but they are not necessarily healthier. That is why critical illness insurance was developed. It pays a tax-free, lump-sum amount to those who survive a life-altering medical event. However, it also pays a tax-free, lump-sum amount upon death from a covered condition or a complete return of premium if death occurs from any other reason. Imagine what a client could do with an infusion of $100,000! They could seek care from any doctor, they could afford to have their family travel with them, they could take a vacation or they could even put some of the benefit toward their retirement. Instead of postponing retirement by raiding their savings, they can put tax-free dollars into their savings to accelerate their retirement. The more options your clients have, the more control they have and the less stress they will feel. By the way, your clients are not limited to $100,000 and actually can have access to more than $1 million in critical illness benefit when the need is substantiated. We all have been touched by someone who was diagnosed with a life-altering condition. Whom do you know who has been diagnosed with a heart attack, cancer or a stroke? Would $100,000 of taxfree money have made a difference to them? Would it make a difference to your clients? Make sure you properly protect your client’s retirement table with a balanced approach to their insurance needs, and remember how important critical illness insurance is in protecting your client’s retirement. Donald A. Hansen is co-owner of The Ark Group, Omaha, Neb. He may be contacted at donald.

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King of Bonds Abruptly Abdicates He was known as “the bond king,” but he stepped down from his throne abruptly. William H. Gross, who helped build Pimco from scratch into a $2 trillion mutual fund over four decades, exited for a much smaller firm. Gross left his firm after learning that top executives at Pimco and Allianz, the insurer that owns it, had grown tired of his William H. Gross leadership and were weighing a change, The New York Times reported. Some executives were concerned that his increasingly erratic behavior – he wore sunglasses while speaking at a conference and wrote an investor letter that was mostly about his dead cat – was becoming a distraction. Gross was known for broadening the appeal of bond funds to smaller individual investors and making them a staple of pension plans and retirement accounts. He had helped make Pimco a powerhouse in virtually every market for bonds in the world. In the process, he became the face of the firm, appearing on numerous business television programs. The Securities and Exchange Commission has been investigating whether a $3.6 billion exchange-traded fund that Gross actively managed had inflated its performance numbers.


They haven’t yet resorted to hiding their money under the mattress, but Americans are worried more about protecting their wealth than they were five years ago. A Lincoln Financial Group survey showed that 58 percent of Americans said protecting their wealth is more important today than it was five years ago. How prepared are they to take up arms to protect that wealth? Not much, according to the survey. Only 15 percent of respondents said they felt “very prepared” to protect their wealth. A bright spot for advisors, though – people who work with a financial professional were 12-15 points more likely to say that it is important to protect their wealth. Score another one for comprehensive financial planning!


Another scary monster lurking in the financial closet goes by the name of Student Debt. And he is going after not only young adults but also those who are approaching retirement age. DID YOU




Americans age 50 and older make up one of the fastest-growing segments of the student debt market, according to government statistics. That over-50 segment accounts for 17 percent of the nation’s $1.2 trillion in student loan debt, a 30 percent increase since 2005, according to the Federal Reserve Bank of New York. A U.S. Government Accountability Office (GAO) study found that 82 percent of the balances remaining on student loans taken out by people who are now seniors are attributable to loans used to finance their own education, said Sen. Susan M. Collins, R-Maine. Compared with traditional college students in their 20s, older students have less time to pay back loans should they get into trouble, and older borrowers may be at particular risk of default, said William Leith, chief business operations officer for federal student aid at the U.S. Department of Education. Because student loans can’t be forgiven, lenders are free to garnish wages and Social Security payments should borrowers end up in default.

AND RETURN HOME-RELATED COSTSPUBLIC are the BIGGEST for THEHOME AVERAGE ON AN INITIAL OFFERINGEXPENSE was 20 percent thispeople year. The average in the day (or “pop”) 13 percent. 50 and older,increase accounting for first 40 PERCENT TO 45isPERCENT of their

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InsuranceNewsNet Magazine » November 2014

Financial firms don’t connect with millennials


For many folks, retirement planning means working until they drop. The reality is that most people don’t have that option. Health issues and the uncertainties of the employment scene are the main culprits. According to the Employee Benefit Research Institute, 47 percent of American retirees in a 2013 survey retired before they planned, mostly because of health or disability. Clients shouldn’t leave their retirement to “hopium,” said Kimberly Foss, president of Empyrion Wealth Management in Roseville, Calif., author of Wealthy by Design. “Hopium is a foolish hope. It allows people to ignore sometimes unexpected realities, such as unemployment. It keeps people from making a proper plan. If they do ignore it, it leads to financial ruin.” Joe Sicchitano, head of wealth planning for SunTrust Bank, said that helping clients to face their retirement realities is no different from helping children who are afraid of monsters in the closet: “The best solution is turn the light on, and see how big he is, how scary he is.”




As the aging population continues to grow, the number of younger family members of adult children shouldering the costs of elder spend more than care continues to grow as well. $10,000 a year Many adult children have made financial sacrifices to cover caregiving expenses, according to, a website for those responsible for the care of their parents. About half – 46 percent – spend more than $5,000 a year on caregiving expenses, 30 percent report spending more than $10,000 a year and 21 percent don’t know how much they spend. “What these numbers say is people spend a lot of money taking care of Mom and Dad,” said Andrew Cohen,’s chief executive officer. “People caring for aging parents tend to be adults in their 50s and 60s, and they are usually caring for parents in their 80s and 90s.” A PNC Bank survey found that 30 percent of non-retirees said they plan to work longer to afford taking care of a loved one. Among current caregivers, 30 percent spend more than 10 percent of their retirement savings caring for a loved one, while 23 percent dedicate half or more of their time caring for an adult relative.


Fine Wine: An Investment That Could Go Sour A  fter hearing stories about record prices paid for fine wines, your clients may believe wines should be part of their investment mix. Here is what you need to know if your clients want to look into wine. By Bryce Sanders


s fine wine really an alternative asset class deserving a place in your client’s portfolio? Probably not. But your client might be besotted by the idea of investing in fine wine.

Where Did Your Client Get the Idea?

Many well-to-do Americans are fine wine fans. Wine is considered a sophisticated beverage having possible health benefits. It turns up in movies. For example, in Casino Royale, James Bond (played by Daniel Craig) shares a bottle of Chateau Angelus, a red Bordeaux wine from France, aboard a high-speed train. Your client reads magazines like Wine Spectator with its 2.8 million readers. Your client discovers articles about enthusiastic collectors paying record prices for coveted wines at auctions. There’s even an index tracking auction results. So now your client wants to invest in wine.

When Does Wine Make a Good Investment?

Only certain wines are auction-worthy and coveted by collectors. These are primarily the First Growths of Bordeaux (eight wines, including Lafite Rothschild, Mouton Rothschild, Margaux, Latour, Haut Brion, Cheval Blanc, Ausone and Petrus) and a few red Burgundies (such as Domaine de la Romanee Conti, or DRC). Outside of France, vintage ports (from Portugal), certain Italian wines and some California cabernets are considered investment-quality. Other wines may get good press or be touted, but serious interest clusters around a small group. 74

Fine wines are in short supply. Those French chateaux in Bordeaux are legally limited in the amount of wine they can produce from their vineyards. Typically, those famous French first-growth chateaux make about 25,000 cases (300,000 bottles) a year. Think about the number of collectors, French restaurants and wine fans worldwide. There’s not that much fine wine to go around.

InsuranceNewsNet Magazine » November 2014

Scarcity grows every time a bottle is opened or accidentally dropped. The more time that passes, the fewer bottles remain, and prices tend to increase. Finally, consider vintages. Wine is an agricultural product subject to weather conditions. In Bordeaux, it’s illegal to irrigate the vines. Water either comes from rain or not at all. Although technology has greatly improved winemaking, some


Are you finally, completely fed up, disgusted, frustrated and mad at the burgeoning clutter and confusion, the “me-too” advertising, the mess of the financial marketplace?

Does it grind your gears that far less experienced, less expert advisors and simple salesmen masked as advisors are getting in your way, more and more, polluting the market, poisoning prospects, sending the costs of filling workshops through the roof? IT ISN’T GETTING EASIER, and you probably thought it would. As you became a highly experienced, expert professional delivering far more capable advice and service to your clients than others in your area and you logged years in practice in your community, you rightfully expected there to be a clear-cut differentiation gap between you and the others, and such a high level of referrals that new client needs would simply take care of themselves. It’s disappointing and frustrating that hasn’t happened. In fact, it’s getting tougher to attract good clients in an evermore cluttered environment. If you are spending more and getting less from advertising, from direct-mail, from workshops, there ARE ways to radically change the equation for the better, if you dare. THEN THERE’S THE ATTRACTION OF THE HIGHER CALIBER, WEALTHIER CLIENT (WHO WON’T SET FOOT IN A “WORKSHOP” FOR LOVE NOR MONEY). Maybe you’d hoped that, somehow, your experience and reputation would bring better and better clients to you – yet you seem stuck in a certain investable assets range. Again, there is a way to so clearly set yourself apart from and above all other advisors, and to present yourself in such a different and “sophisticated” way that the more affluent clients see you as THE right advisor. Some advisors may hate you for this. But the best clients come running to it like starving mice to a big hunk of aromatic cheese! My name is Nick Nanton, and I’m a 3X Emmy award winning documentary film producer, author of the book StorySelling™, and, in concert with an expert team, developer of an absolutely unique system for raising an advisor’s authority, credibility and celebrity to the UNASSAILABLE level required to operate in a competition-free zone and to attract a higher value client simply beyond the reach of most advisors. Instead of mud-wrestling with other advertising and workshopping advisors for the same clients, how’d you like to get better ones THEY CAN’T GET? Further, this very different system is available on an exclusive basis, to only one advisor per area. Its sophistication far surpasses any and all “marketing programs” being sold to advisors or provided to advisors by the companies they are affiliated with. And, bluntly, a pox on all that copycatting and look-alike, sound-alike stuff! As fast as you put money into it, it turns to dust because every Tom, Dick and Mary have it too. Aren’t you fed up with that? If we could (1) increase the value of each of your clients by 50% to 100% or more, (2) attract exceptionally affluent clients other advisors never get an opportunity to talk to, (3) reduce the number of workshops you need to conduct, and (4) at least double the number of quality client referrals you get, what would you do with all the liberated time and increased income? And, if you are working at transition to rainmaker for a group of younger advisors, this can be doubly or trebly valuable. You can lock out competitors and have amazed peers green with envy! – but more importantly, you can finally see the “prestige factor” work for you, as you’d expected it to all along. I have free information for you, provided confidentially. Exclusive areas will be reserved for advisors, so delay in investigating this could result in you being locked out by a competitor.

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FINANCIAL FINE WINE: AN INVESTMENT THAT COULD GO SOUR vintages are average, a few are poor and some are truly great. When chateau, scarcity and vintage are combined, certain wines become the prizes chased by billionaires. In April 2013, a 12-bottle case of Chateau Lafite Rothschild 1982 sold at auction in California for $41,175, which translates into $3,431 per bottle. Back in 1986, the same wine cost about $84 per bottle. That’s an increase of 40 times the initial cost. That’s why your client wants to invest in wine.

Why Wine Is Usually Not a Good Investment

People have been investing in wine for years. Typically a British fine wine drinker would buy two cases of a wine on release, wait about 10 years until the wine matured and then sell one case back to their wine merchant at twice the original price, effectively drinking the second case for free. If only life were that simple. Here are the issues facing the would-be wine investor: » Buying fine wine. It’s unlikely your local liquor store will stock the really highend wines from sought-after vintages, although specialty shops in major cities like New York, Chicago and Los Angeles should have access to them. Getting fine wines on their initial offering will be difficult because wines in short supply likely go to long-term customers first. You will probably seek to buy your fine wine at a specialty auction. » Selling wine. Alcohol is a regulated commodity in the United States. Adults may buy wine from licensed retailers or at auction; however, the auction route is usually the only avenue available to wine collectors seeking to sell bottles. Wine also sells on the Internet through dedicated websites. State laws add another level of complexity. » Auction commissions. Assume the cost of buying at auction is about 20 percent plus applicable sales tax. If the seller’s commission is similar, the wine investor needs to see appreciation of about 40 percent before entering profitable territory. » Provenance. The auction community takes the chain of ownership very seriously. 76

Although “buyer beware” is prevalent when you buy most items, it’s generally assumed the wine you buy from a reputable auction house is what they say it is. They will want to see receipts from where you bought the wine originally, such as a paid receipt from that auction house. » Condition. Wine is a living thing. Fine wine tends to improve with age. Proper storage is part of the equation. Fine wine is generally stored at 55 degrees in a dark area free of vibration. The condition of the bottle, including fill level, foil, cork and label condition, provides clues to how the wine was stored. Like chips on an antique plate, poor storage knocks down the auction value. » Physical storage. If you own wine for investment, it’s easier to not take delivery and let your wine merchant store it on your behalf or to rent a specialized wine storage unit set up for investors similar to you. Both incur storage costs. You are entrusting your wine to an intermediary who you hope remains in business. If they go broke, problems can develop. » Liquidity. The fine wine market is pretty thin. Prices stay high when supplies are limited and there’s plenty of demand. If a few wine investors needed to liquidate large positions suddenly, it could move the market sharply downwards. For this reason, it’s likely private sales are arranged in other parts of the world to cash out collectors at prices below posted market values. » No dividends. Holding wine as an investment is similar to buying a smallgrowth stock. You are expecting great things but, unlike large, established companies, neither your small-growth stock nor that fine wine is paying a dividend. Let’s assume you owned an established stock, such as a telecom company like Verizon, and it pays about a 4.25 percent dividend when it’s trading around $50 a share. Using the rule of 72, a 4.25 percent dividend reinvested and compounded doubles an investment in about 17 years. Wine pays no dividends.

Does Fine Wine Get Faked?

Absolutely! Almost any product from airplane parts to pharmaceuticals has been knocked off. China was in a love

InsuranceNewsNet Magazine » November 2014

affair with fine wine, specifically red Bordeaux, until recently. It’s not surprising that Chinese collectors, wanting only the best, focused on Chateau Lafite Rothschild. It has been estimated that 70 percent of all the Chateau Lafite Rothschild in China is fake. Older wines became hot in December 1985 when Christopher Forbes set a world record by paying about $157,000 for a bottle of 1787 Chateau Lafite believed to have been owned by Thomas Jefferson. Afterward, additional bottles turned up on the market, purchased by serious collectors seeking trophy wines. Unfortunately, many of these bottles turned out to be fraudulent. The book The Billionaire’s Vinegar by Benjamin Wallace chronicles the story. With the demand for older Bordeaux and Burgundies heating up, more bottles appeared on the market. Many were legitimate, many were not. Owners of prestigious chateaux in France would stop auctions beforehand because a wine listed for sale was not actually produced that year or was not bottled in the size listed. Auction houses found themselves in a difficult position. Suddenly collectors found they couldn’t sell their older wines through their favorite auction house despite the fact they bought them through the same auction house previously. Lawsuits developed. Auction houses were sued for selling counterfeit wines. Collectors were sued for consigning counterfeit wines from their collections. After the fact, it’s extremely difficult to prove you didn’t know something. Is fine wine an alternative asset class? In my opinion, no. The market is thinly traded, transaction costs are considerable, and you must own the right wines produced in the right years, stored perfectly and possessing impeccable provenance to win. Does fine wine have value? Yes. Is it an investment similar to stocks and bonds? No. Bryce Sanders is president of Perceptive Business Solutions in New Hope, Pa. He provides high-net-worth client acquisition training for the financial services industry. He is the author of “Captivating the Wealthy Investor. “ Bryce may be contacted at bryce.sanders@

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8 Quirky Closers That Save Sales e all have been driven crazy by prospects who start playing games when it comes time to close a deal. Wouldn’t it be helpful to have a pocketful of techniques to draw from that will save the sale? Some of these tactics might seem bizarre and unique, but they get people to stop playing around.

Here’s the question to help you discover which prospect is motivated by which approach: “What’s important to you about X?” For example: “What’s important to you about managing your money?” Here are two responses you might hear: “I want a solid return so my wife and I can take a cruise (good things/benefits).” “I lost 25 percent of my portfolio and need someone to give me better advice (there’s a load of pain).” If you don’t get a clear answer, dig deeper with “Tell me more about that.” You’ll soon find out whether you are working with a gain-based or pain-based decision-maker.

Here are my favorite creative language tips:

[3] Slap Your Prospect Into a Reality Check

H  ere are some language techniques that can get your prospects to stop playing games with you. By Dan Seidman


[1] Kiss Off Tough Prospects and Bring ’Em Back

You know that tough prospect? You ran the numbers and everything looked good. Now they refuse to answer your calls and emails. Get in front of them. Tell them you just want to say one sentence: “It seems like there’s no circumstance under which you would ever do business with me.” Resistant prospects disagree with everything. So they will disagree with your comment. Almost everyone to whom I’ve taught this reported their prospects said the same thing: “That’s not necessarily true.” Your response: “Really? So under what circumstance would we work together?” And they are back in the game! Because they will describe a scenario under which you would do business. It might be a long shot. But you have found a phrase that can revive a sale.

[2] Identify Whether Prospects Are Motivated by Pain or Gain

Do we offer benefits and good things, or do we discuss pain and problems we can solve? Guess what? Both gain and pain work. You just need to have the right conversation with the right prospect. 78

You’re with a prospect whose beliefs seem to make no sense. You’ve shown them how they can do significantly better with their buying decision. Yet their thinking is just off. Say this: “Can we pretend – for just a few minutes – that we’re absolutely the best friends in the world? Because I want to say some things that I wouldn’t dare say unless we were friends.” What would you say if someone asked you that question? You’d be intrigued! Your prospect will respond with something like “Yeah, go ahead.” Now you can go off on them. After all, friends tell it like it is. So you’ll fire off all the reasons they should buy from you, but you’ll lead with, “Are you out of your mind? This is a really bad decision. As your friend, I’d like to point out…” Then list your key selling points: higher return on investment, safety, recovery, eliminating bad products used in the past. Just unload. Get into the role. Be incredulous, gesture, show surprise. Then when you’re done, pause, smile and say, “Hey, thanks for letting me be your best friend for a few moments there.” Then shut up. Let them respond to reality.

[4] Save a Sale With Sarcasm

One objection prospects use to avoid talking about certain insurance products

InsuranceNewsNet Magazine » November 2014

involves saying something like, “We’re too old to buy an annuity.” Now, they knew how old they were when they ate that nice meal you bought them, when they accepted the numbers you ran for them, when they enjoyed cookies and coffee in your office. So that’s not a legitimate objection. Look at your prospects, smile and say, “We have sea turtles older than you as our clients.” Essentially what you’re saying is, “OK, quit playing games. We’re putting time into figuring this out, and you can’t bail on me for something as silly as this.” The smile is key to sounding playful, not critical. Then continue with your presentation. For this trick, I suggest you have a good, funny response for each of your top objections. Let people know you’re fun to be with even though you’re serious about improving their condition.

[5] Rip the Competition

Here’s a technique I call “gap questions.” You ask the prospect a question where the answer is embarrassing to your competition. To do this, you must know what your competitor doesn’t offer. Here’s an example. “When your current advisor did your quarterly review, did they point out some changes to make in order to slow down losses or expand returns?” The prospect has never had a quarterly review and awkwardly says, “Uh, we’ve never had a quarterly review.” You raise your eyebrows and reply, “Oh, that makes a big difference. We do quarterly reviews.” Even if you were taught to never attack your competition, this is a safe way to point out some flaws in your competitors’ offerings.

[6] Frame a Sale

People often think all financial products are the same. So use a metaphor to frame

8 QUIRKY CLOSERS THAT SAVE SALES BUSINESS how special your offering is. One of my favorite frames uses computers. “Remember typewriters? You’d bang away at those old mechanical things. Then the IBM Selectric came along to make letter-writing easier. Then the IBM PC, then the Apple MacBook. This product is the iPad Air of financial tools. It’s the latest, the best of the best – exactly what the world needs now.” You’ve given your prospect a highly credible statement they can easily relate to. It helps them see your offerings in a new light. Framing is a powerful tool. Come up with metaphors to match all your offerings, and be ready to use them.

[7] Reframe a Sale

Sometimes people’s ideas about the outcome of your offerings are a bit shortsighted. You begin to get comments like “Don’t want to change, don’t like to, don’t need to.” In situations like this, you want to reframe the situation or show prospects that their logical outcome is not quite accurate. My favorite reframe comes from a psychologist working with a woman who was

obsessed with cleaning her house. The doctor asked the woman to picture a perfect house, everything spotless and pristine. The doctor then said, “Realize that how clean this is means that you are totally alone. All the people you love are nowhere around.” Suddenly, clean equaled no loved ones – a powerful reframe. Your reframe is a logical conclusion that points to the wisdom of your solution. A touch of emotional context will help too: “Staying with your current advisor/investments is like keeping an old used car. Things are going wrong, and they’re gonna get worse.”

[8] Discourage a Prospect Into Buying

It’s early in a sales conversation, and you’d like to test how strongly a prospect feels about making a change. Try this: “Let me ask you something about what we’re discussing. What if you did nothing? I mean leave things the way they are. Don’t spend any money, don’t make any changes, don’t do anything?”

Updated for 2014

The last time a client of mine used this technique on a business executive, he received an amazing response. The prospect exploded, “Hell no! We are absolutely changing insurance.” He described a claim that was rejected for his son’s sports injury. The advisor and I both knew the claim would get covered eventually. But the experience was so frustrating, so toxic for this business owner that he ranted for five minutes, wrapping up with, “My wife and I are sick of calling the company, our broker, anyone who’d listen. We’re switching now.” That sale was closed quickly. Your ability to influence others comes from a combination of experience, coaching and mental agility. Put some of these advanced language skills into practice and see how they help you close more sales. Dan Seidman is the author of “The Secret Language of Influence.” He trains, keynotes and consults on language skills for sales professionals. Dan may be contacted at dan.seidman@

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November 2014 » InsuranceNewsNet Magazine



Father’s Words Carry Son Through a Career Slump


A  s part of InsuranceNewsNet’s occasional series of articles on what inspires advisors, a son recalls how his father passed along the same encouragement he received from his own mentor years earlier. By Susan Rupe


fter two years in the insurance business, Ed Parks Jr. was ready to throw in the towel for the sake of a steady paycheck. “I was 25, and I was having a hard time dealing with the fact that all my friends had regular jobs and they were getting regular paychecks. And here I was and I wasn’t employed in the traditional sense – I was a 1099 independent contractor – and sometimes I would go weeks without anything coming in,” he said. “I was comparing myself to all my friends and thinking that they had it so much better than I did.” Ed Jr. considered accepting a different job for the sake of getting paid regularly. But before he made the jump, he had a talk with someone who entered the insurance business 13 years before he did – his father, Ed Parks Sr. Did Ed Sr. try to talk his son out of making a career change? No. Instead, he gave his son the same words of advice that his regional manager had given him shortly after he started in the business in 1961. Ed Jr. said the advice was, “If you hang in there, give it time and stick with it, the renewals will come. My dad really carried me through a difficult time – those first two years were rough and I was under a lot of stress. He kept telling me, ‘If you stick with it, in a couple of years this will all be gone – trust me.’ ” Ed Jr. never planned to join his father’s business. After graduating from the University of Georgia, Ed Jr. had the notion of pursuing a career with the FBI or Secret Service. But with no military experience and no foreign language fluency, he 80

Ed Parks Jr. (left) enjoys some family time at home in Jacksonville, Fla., with his father, Ed Parks Sr., and his sister.

found he was not a candidate for a position with those organizations. After six months of living at home in Jacksonville, Fla., with no employment opportunities on the horizon, Ed Jr. said, his father came to him with a suggestion – get licensed and work for him. Ed Sr. had worked since 1961 for a company that is a household name today thanks to a feathered, raspy-voiced mascot. But back then, there was no “Aflac” and the iconic duck had not yet been hatched. So there was no brand recognition when Ed Sr. would call on prospects with the greeting, “Hello, I am Ed Parks with American Family Life Assurance Co. of Columbus, Ga.” and talk with them about buying cancer insurance. “No one had any idea then what you were talking about when you told them who you were with,” Ed Jr. chuckled. “So the usual response from people was ‘You are who with what?’ or ‘What’s that?’ Now it’s, ‘I love the duck.’” So Ed Jr. obtained his license. “But much to my surprise, my dad was not ready to turn me loose in his accounts. He said I needed to get my feet wet first, and he set up an interview for me with a local debit company owned by two brothers who were friends of his.”

InsuranceNewsNet Magazine » November 2014

Ed Jr. found himself selling debit life insurance, for which the agent visits the policyholder’s home on a weekly, biweekly or monthly basis to collect the premium. After Ed Jr. spent about a year collecting a few dollars per week from policyholders in some of the less desirable areas of Jacksonville, his father decided the time was right. Ed Sr. arranged for his company’s Northeast Florida regional manager to take Ed Jr. to lunch and explain the basics of selling cancer policies and accident plans in the workplace. Once Ed Jr. went to work for his dad, he discovered that the company’s agent training was minimal, to say the least. “Back then, when you got appointed with Aflac – well, American Family Life then – they sent you a box – one box – of supplies,” he recalled. “They sent you a box of brochures and applications and said, ‘Go get it.’ I was fortunate enough to have Dad, who had been in the business, give me some direction, and I made many sales calls with him to see how it was done. Of course he made it look easy. But it wasn’t.” “He’s not a reticent person,” Ed Sr. said of his son. “He has persistence and he’s outgoing. He picked it up right away, and I was proud of him.”

FATHER’S WORDS CARRY SON THROUGH A CAREER SLUMP INSPIRE Ed Jr. recalled one of his early sales calls with his father. “We went to the Jacksonville Electric Authority location where they had, I don’t know, 50 or 60 people, and he picked up 30 or 40 applications. I thought this was going to be a breeze, but it’s not when you do it on your own for the first several times. But it was a lot easier coming into it with someone who’s been in the business for a while.” The life insurance business had not been Ed Sr.’s first career either. He sold real estate for a number of years before that. Ed Sr. said he found the real estate business had a major drawback – no renewal income. “I could see that I had to sell a house to make a living,” he recalled. “I would sell one house, and then there was nothing coming in until I sold another one. And when that commission was gone, I’d sell another. I knew I didn’t have any future in that, so I got into the insurance business.” The early days of selling insurance – particularly through a company that had little name recognition – were challenging, Ed Sr. said. “It was disappointing at times, but fortunately I had confidence in Aflac and

knew the potential of it. You have to encourage people to stick with it and wait until the renewals build up. Fortunately I did that because I had no other place to go.” Eventually, Ed Sr. would qualify for 18 consecutive national conventions. He made it into the company’s first President’s Club and qualified for it each year until he retired in 1981. Ed Jr. jokes that it would take at least one moving van to carry away all the boxes of his father’s plaques and framed letters for his sales achievements. Ed Sr. is now 98. Ed Jr. is still appointed with Aflac but has branched out into the senior market, working mainly with Medicare Advantage plans and Medicare supplements. He plans to sell health insurance during this open enrollment season. Ed Jr. said working together over the span of about a decade has strengthened his bond with his father. “From the business standpoint and a personal standpoint, we became better friends after I finished college and we started working together,” Ed Jr. said. “We were out fishing in the boat just about every Friday afternoon during

the summer – or about nine months out of the year here.” Ed Sr. said he is not surprised that his son has had a successful 40-year career in the insurance business. “I had a lot of confidence in him, and I thought he would be a success in anything he did.” Looking back on the difficult early years in the insurance business, Ed Jr. said he is glad he took his father’s advice and didn’t give up: “I would gladly put up with those two years again in return for all the good years I had after that.” Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan. Do you have a story about who inspired you in your career? Please send it to and put “Inspiration” in the subject line. We will be selecting from submissions to feature in this space quarterly.

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November 2014 » InsuranceNewsNet Magazine


For more than 80 years, the Society of Financial Service Professionals has been helping individuals, families and businesses achieve financial security.


I’ll See Your Acronym and Raise You Two By Richard M. Weber


t is unclear exactly when the first professional designation was created. Hippocrates is credited with establishing medicine as a profession roughly 2,500 years ago, and medical schools issuing academic degrees and diplomas date back to the medieval Islamic world of more than 1,000 years ago. In the financial services arena, the first Chartered Life Underwriter (CLU) designations were awarded in 1928, a year after Dr. Solomon Huebner, professor at The Wharton School, founded The American College. The three men and one woman who first completed the program formed an alumni organization today known as the Society of Financial Service Professionals (FSP). Among the early adopters of designations were Fellows of the Society of Actuaries (FSA) in 1900, American Institute of Certified Public Accountants (CPA) in 1917, and American Institute for Chartered Property and Casualty Underwriters (CPCU) in 1943. The first Certified Financial Planner (CFP) certificants were designated in 1973. What I’ve always found intriguing about Dr. Huebner was his profound belief that “a man” (consider the era!) was obligated to ensure the financial security of his family whether or not he was there to see them through. Financial loss due to injury, illness or premature death was indemnified by life insurance, facilitated by those who sold it on the basis of human life value. It makes sense, then, that one of Dr. Huebner’s missions was to see the professionalization of the sale of life insurance – the one financial instrument that could see to completion the family’s economic viability. An outgrowth of an agent’s responsibility to make certain his client was “well covered” resulted in the sub82

stantial trust and confidence that many clients experienced in their long-term relationship with their agents. This went far beyond the transactional nature of simply acquiring life insurance products. Indeed, the essence of financial planning was born out of these relationships many years before it became an industry and a curriculum. In addition to the CLU designation signifying competence and professionalism in the sale of life insurance, it also conveyed to the prospective client that the agent was serious enough about her business to take 10 courses and pass 10 exams. It also showed that when the agent joined the Society, she was affirming her intention to treat the client in the same way that she would want to be treated in the same circumstances. The Society’s code of professional conduct requires that members “place the client’s interest above their own.” As The American College added the Chartered Financial Consultant (ChFC) program and master’s degrees in management and financial services, it became more common to see several sets of initials on the business cards of those practitioners who began to specialize and further professionalize their practices. Eligibility for Society membership now includes 20 rigorous designations and degrees in client-facing areas of professional focus. Chief among these credentials are CLU, ChFC, CFP, MSFS (Master of Science in Financial Services), J.D. (Juris Doctor), CPA, CASL (Chartered Advisor for Senior Living) and CEBS (Certified Employee Benefit Specialist). Also prominent are AEP (Accredited Estate Planner), CFA (Chartered Financial Analyst) and CIMA (Certified Investment Management Analyst) designations, along with MBA (Master of Business Administration) and Ph.D. degrees specialized in serving clients’ financial assessment and

InsuranceNewsNet Magazine » November 2014

consulting needs. But wait, there’s more! Somewhere between “several” designations and “too many to count,” there have emerged an astonishing number of designations, degrees and, in some cases, membership initials (such as MDRT, for Million Dollar Round Table) that have blossomed as the financial services industry expanded. (For a partial list derived from a recent Firm Element course: OK – here’s a quiz. Take out your bluebooks and No. 2 pencils and define the following financial designation acronyms (answers at the bottom of this article): RLP CSPG FIC LMNOP QKA An even larger and more intimidating list of designations and certifications probably exists for the medical community. The public no longer has any idea which designations/certifications are good, bad or just plain quackery! I would like to propose yet another designation that I believe will blow all the others away. You saw it on the quiz above. I refer to it as (wait for it) … LMNOP This should not be confused with either the HIJK or the EFG designation nor that of ABCD. And now that you know your ABCs, next time won’t you sing with me? Richard M. Weber, MBA, CLU, AEP, is immediate past president of the Society of Financial Service Professionals. He may be contacted at

Quiz Answers: RLP=Registered Life Planner; CSPG=Certified Specialist in Planned Giving; FIC=Fraternal Insurance Counselor; LMNOP=Now you know your ABCs!; QKA=Qualified 401(k) Administrator

P  laying the “designation game” requires more than just knowing your ABCs.





Gain access to MDRT’s best — in person at MDRT meetings or online.

Helping others through the MDRT Foundation, mentoring programs or volunteer leadership roles.



Get great ideas from fellow members, MDRT’s website, e-newsletters and Round the Table magazine.

Enjoy additional benefits by reaching new goals of Court and Top of the Table membership.

learn more v isit J O I N M D R T.O R G November 2014 » InsuranceNewsNet Magazine



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

Looking Back at the Lessons Learned by a Young Advisor E  stablishing strong client relationships and working with a mentor are two of the ways young advisors can turn their age into an advantage in a “mature” industry. By Tyler Hirth


t’s difficult as well as intimidating to launch a career in an established industry with equally experienced professionals when you are the ripe young age of 23. However, with the right mindset, knowledge and tools, it is possible to overcome the obstacles that cause 80 to 90 percent of financial professionals to fail within their first two years in the business. Here are tips on how you as a young advisor can get ahead in the industry – not just surviving your first two years, but thriving as well.

Seek the Right Setting for Your Work Style

Identifying the right type of career – whether corporate, independent or part of a small business – is crucial. I learned early on that the corporate financial life was not for me. While a fresh college graduate may not know exactly what their style is, it’s important to take the time to figure it out. That time may be spent in various internships or even a first job out of college. It’s worth the extra effort because you’ll be happier and achieve more success in a career that matches your work style. The first two years are the most crucial for new advisors to develop. After working hard to obtain your degree, you want to be part of the 10 to 20 percent who succeed.

How to Nail the First Meeting

You should give clients as much information as possible in your first meeting. Share with your clients your ideas about how you can plan together for their financial future. The first client meeting is where you can adjust the focus away from your young age and toward your 84

work experience, knowledge and tools. This also allows you the chance to sell your clients on your business capabilities. All financial advisors have the same set of tools available to them, which puts young advisors on the same playing field as seasoned professionals. At these meetings you also should highlight your strengths and show how you personalize your relationship with the client. For example, at each initial meeting, I am casual with my clients and learn personal details about them instead of focusing only on their financials. This lets them know I actually care about them as people, not just as clients. Throughout this conversation, you learn about your clients and identify their goals and problems. After these initial meetings, another personal touch would be drafting a letter containing the details of the conversation which reinforces everything you plan to do in the financial plan. In turn, discussing your own work experiences and personal interests gives the client the knowledge to make an informed decision on whether to continue working with you.

Turn Your Age Into an Advantage

Financial advisors are in this business for life. At a young age, you have the ability to develop long-term relationships with clients because you’ll be with them for the next 30 to 40 years. It’s important to turn your age into an asset, showing how a relationship can be developed and that you’ll always be there for your client. This is an overarching message that can help develop the relationship during a first meeting.

Choose the Right Mentor

Seek an older mentor to provide advice and help guide your professional development. Someone with more experience can teach younger protégés lessons that they learned over time and that can help any advisor get off on the right foot. It’s important to find a mentor early to help

InsuranceNewsNet Magazine » November 2014

you make it through the first two years. My mentor, whom I met at a networking event through Million Dollar Round Table (MDRT) in my third year in the business, reached out at just the right time – and before I made the mistake of leaving the financial industry altogether. With my mentor’s guidance, I was brought back to the reason I love being a financial advisor. It’s equally beneficial to “pay it forward” and become a mentor to someone else.

Stay at the Forefront of Industry Changes

Something that will help you not only stay afloat but also thrive at the top is staying at the forefront of any industry changes and adapting your business to those needs. The financial industry may soon see a huge push from the government to change to a more relationship-focused industry as a whole. We’ll soon be moving from a suitable sales standard to a fiduciary standard. Since you’ll be in this industry your whole life, knowing and adjusting your particular business style to predict future changes will give you an advantage over others. Overall, the greatest insight I could give any prospective financial advisor is to work on building as many relationships as you can. Relationships are the basis of each of these pieces of advice. Keeping relationships at the core of everything you do will help guide you to success in the financial industry. Tyler Hirth is an independent financial advisor with MetLife. He has been a member of MDRT for three years, is vice president of NAIFAMinneapolis and is Young Advisor Team chairman for NAIFA-Minnesota. Tyler may be contacted at



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November 2014 » InsuranceNewsNet Magazine



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Why Are We So Afraid To Ask For Referrals? C  hange your mindset about asking for referrals, and your practice will grow exponentially. By Connie Kadansky


quick Google search for “how to get referrals” yielded 57.6 million results. With such a large number of sources on how to get referrals, you probably are asking why we need another article on referrals. We need this information because it’s important to understand that most agents and financial advisors suffer from “Referral Aversion Sales Call Reluctance.” They fear that asking for referrals will offend their clients or jeopardize their relationship with them. What do you think about asking for and receiving referrals? Most satisfied clients are willing to provide you with the names of other people to call on. In fact, many will actively endorse you and your product or service if given the chance, and most expect to be asked for referrals. So why are we afraid to ask for them? We need to overcome Referral Aversion Sales Call Reluctance because it disables the bridge to the next sale. Every time you hesitate to ask for a referral, you increase the association between asking for a referral and the resulting unpleasant sensation. Soon a selfdestructive habit is born. Four energy blocks keep salespeople from asking for referrals: » Limited beliefs. This is the idea that clients will be offended if salespeople ask for referrals. » Perception. Salespeople believe they need to prove themselves to their clients before clients will feel comfortable referring them to others. » Assumptions. Salespeople expect their clients to get angry when they ask for 86

referrals. They may even fear that clients will throw them out of the office. » Their inner critic. Salespeople doubt that their clients will have anyone to refer to them. What is the negative thought that keeps you from asking for referrals? You need to deal with this question because your freedom from Referral Aversion Sales Call Reluctance lies in identifying the specific energy blocks that keep you from asking.

Shifting Your Mindset

Here are five tips to help shift your mindset about asking for and receiving more referrals: [1] Starting today, give at least three referrals a day in situations where there is no payoff for you other than creating goodwill. Place three quarters in a pile on your desk. Let this pile be your visual reminder of how many people you’ve helped. Every time you give a referral or share a resource to help someone else, remove one quarter from the pile. Your aim is to remove all three quarters every day. Do this five days a week over the next three months. Then notice how many genuine referrals come your way and how much more business you are closing. In fact, agents who struggle the most tend to be those who don’t give referrals or share resources. [2] Ask for the referral. It is naive to believe that just because you did a good job for someone, he will automatically refer

InsuranceNewsNet Magazine » November 2014

you to others. Most clients are not naturally inclined to refer “just because.” So in order to receive, we must ask. [3] Describe your ideal prospect. One of my clients typed up a sheet that reads: “When you hear people say ‘__________,’ please introduce them to me. For example, watch out for anyone who is expecting a baby, learned that his company is downsizing, sent their last kid off to college, etc.” How many of these can you come up with? Draft some conversations that are both serious and humorous. [4] Ask for referrals slowly, and give your clients time to consider and respond appropriately. Pace yourself and allow your clients to visualize the people they might refer to you. Ask them questions like, “Who do you know who is thinking about retirement?” Let the client scan his brain’s database and visualize people whose names he can give you. [5] Ask the client: “How many people do you know who would benefit from sitting down with me?” Most salespeople ask their clients whether they know anyone, which is a closed-ended question. When asked that question, the client’s brain automatically goes to “Yes, I do” or “No, I don’t.” Connie Kadansky, PCC, is a sales call reluctance coach and trainer. Connie may be contacted at connie.

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November 2014 » InsuranceNewsNet Magazine


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


Emerging Trends in Employee Benefits E  mployers are looking for simplification and reining in of costs where workplace benefits are concerned. By Kimberly Landry


he employee benefits industry has long played a vital role in the financial security of U.S. consumers through insurance benefits sold in the workplace. However, the benefits industry, like every other system, is not immune to change. LIMRA surveys have identified three emerging trends that are likely to have an impact on this market well into the future. Let’s take a look at each one.

Cost Control

The rising cost of benefits is becoming an urgent issue for many companies. Employers rate controlling the costs of health insurance, their overall benefits package and compensation as the top three critical issues that their companies are facing. Not surprisingly, medical costs are the primary driver behind employers’ concerns. As costs continue to rise, employers are searching for ways to reduce expenses. They are exploring a variety of benefit funding changes, although most are not expecting to shift all benefits to a voluntary basis. Some are also investigating private exchanges, hoping that increased competition will place downward pressure on prices. In addition, employers are looking at their benefit plan design as a way to keep expenses down. Among those employers considering plan design changes in the next two years, most of their intended changes involve cost reduction, such as reducing benefit levels, replacing current plans with less expensive ones and increasing cost-sharing for employees.

Simplified Administration

Going forward, the desire for simplification is likely to play a major role in many facets of employee benefit sales. Businesses are continuously trying to 88

accomplish more with less. This trend extends to human resource (HR) departments, where many HR professionals likely find that they have less time to manage increasingly complex benefits products. As a result, many employers express a strong desire for simplicity in their benefit plan design and administration. This preference is particularly evident when it comes to voluntary products. Companies looking to add a new voluntary benefit place a high importance on product features that simplify administration. These features include the benefit being guaranteed issue, requiring a minimum number of disclosure and enrollment forms, and allowing the same communication messages to be used for all employees. Employers also look for simplicity when selecting a voluntary enrollment technology system. They prefer a platform that is easy to use and navigate and that allows enrollment in all benefits through the same system. Employers place less importance on extra customizable features such as reporting capabilities or communication add-ons.

Streamlined Communication and Enrollment

Employers also prefer simplicity in their approach to communicating with employees about benefits, since they often have limited time available to devote to this task. LIMRA surveys show that a large majority (81 percent) of employers admit they always use the same benefit communication strategies for all employees, even though nearly half feel that, ideally, different communication methods should be used for different employee populations. In addition, 49 percent of employers limit benefit communications to open

InsuranceNewsNet Magazine » November 2014

enrollment periods rather than continuing the process throughout the year. Employers also seek to streamline the enrollment process by holding open enrollment for voluntary and employer-paid benefits at the same time. This practice presents particular challenges for voluntary and worksite carriers, compelling them to compete with medical benefits for employees’ already limited attention and wallet share. In addition, the majority of companies allow employees to self-enroll in voluntary benefits, even though this is not likely to be the best method for achieving high employee participation.

Implications Going Forward

To succeed in this challenging environment, benefits carriers will need to adapt to the changing needs of their customers. As employers strive to do more with less, the benefits industry can help by developing benefit solutions that are easier to administer and more flexible in terms of cost. They also can provide greater support to employers during the enrollment process, such as by helping create the content for benefits communications and providing more convenient enrollment methods. Above all, it is essential for carriers to maintain active lines of communication with their customers in order to track these evolving needs and provide customized solutions. Kimberly Landry is an analyst in Group Insurance Research for LIMRA. She is responsible for conducting research on employee benefits, with a specific focus on compensation of group insurance personnel and employer trends. Kimberly may be contacted at

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InsuranceNewsNet Magazine November 2014  

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