Page 1

State-run Retirement Plans Nothing to Fear? PAGE 8

Vicki Gunvalson: The Self-Made ‘Real Housewife’ PAGE 12

New Data: FIAs May Outpace VAs by 2021 PAGE 34




Discover how one company is changing the face of the insurance industry.

One of the largest

UNTAPPED AND UNDERSERVED markets in the industry is WOMEN Take a look: Only 1 in 3 women own individual life insurance1 44% of women don’t have any life insurance at all1

42% of women are the primary breadwinners2

9.8 million women are single moms3

5 million women are stayat-home moms4

Women Empowering Financial Independence (WEFI) is empowering women in the insurance industry by helping them build their own businesses with their unique WEFI platform, which focuses on promoting financial literacy among women and girls. WEFI is committed to providing education that fosters a culture of continuous improvement in the communities they serve. Turn to PAGE 7 to meet the women who are building businesses — and breaking barriers — in a revolutionary way.

Visit www.WEFIDifference.com to become a part of the WEFI mission. LIMRA Life Insurance Ownership in Focus, U.S., Person-Level Trends, 2016 Center for American Progress, Breadwinning Mothers Are Increasing the U.S. Norm, 2016 United States Census Bureau, Housing Vacancies and Homeownership Historical Tables, Table FG5. One-Parent Unmarried Family Groups with Own Children under 18, By Labor Force Status of the Reference Person, 2016 4 United States Census Bureau, Housing Vacancies and Homeownership Historical Tables 1

2 3


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Rollover Business Revving Up To Roll Again By John Hilton

IRA rollovers are thriving once again. Here is how some advisors are helping clients get the most from their retirement funds.


8 S tate-run Retirement Plans Can Be ‘Complementary’ To Private Sector


28 Now Is The Time To Update Your Clients’ Buy-Sell Agreements

By Cassie Miller Researchers say advisors have nothing to fear from the prospect of state-run retirement plans.


12 The Self-Made, Real Housewife Of Orange County An interview with Vicki Gunvalson Vicki Gunvalson has been a reality TV star for 13 seasons on The Real Housewives Of Orange County. But her outsized persona on the show is nothing like her dedication to the clients she serves in her life insurance business. In this interview with Publisher Paul Feldman, Gunvalson discusses the differences between reality TV and her real life, as well as what she really thinks of fixed indexed annuities.

By John “Hutch” Hutchinson Even if your business-owner clients already have some sort of buy-sell agreement in place, their life insurance policies may be out of alignment.


34 F IAs Could Overtake VAs By 2021

By Susan Rupe Fixed indexed annuities had strong growth during the 2008 financial crash. Does their comeback foreshadow a future market downturn?


38 Getting Past The Minefield Of A Disability Claim By Arthur L. Fries Advising a client on a disability claim used to be simple — but not anymore.


42 Use Interest Rate Hikes As A Teachable Moment For Clients

By Susan Rupe Lee Bethel still uses the lessons learned from door-to-door book sales as he serves clients and grows his practice.


46 Cruise Ships: A Floating Playground Of Potential Friends By Bryce Sanders It can be easy and rewarding to make new friends at sea. Have a plan for how to meet them and a system to follow up when the voyage is over.

48 Why New Year’s Resolutions Don’t Stick


22 Learning The Art Of Sales In The School Literally Of Hard Knocks


InsuranceNewsNet Magazine » February 2019

By Andrew Lord Advisors can leverage the news of interest rate hikes as a touchpoint for client communications and an opportunity to promote financial literacy.

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50 The Fortune Is In The Follow-Up

By Bruce Lund A system to help you become relentless in your follow-up.


52 NAIFA: Advisors Make Great Political Advocates By Kevin Mayeux Even if you have never engaged in a political issue, your career training and experience will make you excel at advocacy.

54 M  DRT: Individual Policies Overcome The Hidden Barriers In Group DI Plans By David C. Blake Most clients — and some advisors — are unaware of the pitfalls and hidden barriers within their employer-offered plans.

56 LIMRA: Digital Model Plus Personal Touch: Just The Right Blend

WIRES 16 NewsWires 26 LifeWires

By Patrick Leary Becoming a digital advisor can help drive practice success. But don’t overlook the personal touch.

32 AnnuityWires 36 Health/Benefits Wires

40 AdvisorNews Wires 44 InBalance Wires


275 Grandview Avenue, Suite 100, Camp Hill, PA 17011 • 717.441.9357 www.InsuranceNewsNet.com PUBLISHER Paul Feldman SENIOR MULTIMEDIA DESIGNER Bernard Uhden EDITOR-IN-CHIEF Steven A. Morelli GRAPHIC DESIGNER Shawn McMillion MANAGING EDITOR Susan Rupe EXEC. ADMINISTRATIVE ASSISTANT Kelly Phillips SENIOR EDITOR John Hilton QUALITY MANAGER Sharon Brtalik ADVISORNEWS MANAGING EDITOR Cassie Miller MEDIA OPERATIONS MANAGER Ashley McHugh VP MARKETING Katie Frazier NATIONAL ACCOUNT MANAGER Tim Mader SENIOR CONTENT STRATEGIST Kristi Raynor NATIONAL ACCOUNT MANAGER Samantha Winters AD COPYWRITER John Muscarello NATIONAL ACCOUNT MANAGER David Shanks AD COPYWRITER James McAndrew BUSINESS DEVELOPMENT Steven Haines CREATIVE DIRECTOR Jacob Haas CORPORATE ACCOUNTANT Elizabeth Nady Copyright 2019 InsuranceNewsNet.com. 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 editor@insurancenewsnet.com, send your letter to 275 Grandview Ave., Suite 100, Camp Hill, PA 17011 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 115, or reprints@insurancenewsnet.com. Editorial Inquiries: You may e-mail editor@insurancenewsnet.com or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www.innmediakit.com or call 717.441.9357, Ext. 115, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 275 Grandview Ave., Suite 100, Camp Hill, PA 17011. Please allow four weeks for completion of changes. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein. Legal Disclaimer: This publication contains general financial information. It should not be relied upon as a substitute for professional financial or legal advice. We make every effort to offer accurate information, but errors may occur due to the nature of the subject matter and our interpretation of any laws and regulations involved. We provide this information as is, without warranties of any kind, either express or implied. InsuranceNewsNet shall not be liable regardless of the cause or duration for any errors, inaccuracies, omissions or other defects in, or untimeliness or inauthenticity of, the information published herein.

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Getting Some Horse Sense


hated horses. At first, horses meant little to me. They were in westerns and looked nice standing in fields. That was pretty much it. I was fine with that, but my wife had always wanted horses. So, horses galloped into our lives. If anyone in your immediate family ever had a horse, you know what I mean. Horses are a lifestyle, not a hobby. Shoveling mounds of horse dung and hanging around the barn to reduce expenses became a big part of my life. But I hated the horses. They rarely did what I wanted — they ran away when I went out to the field to get them and would not go where I wanted them to go. Really, they were 1,200-pound, four-legged, lethal, kicking machines with the reasoning of a toddler and the indifference of a cat.

The Magic Touch

That was why I thought I had witnessed a miracle when someone demonstrated Parelli natural horsemanship techniques. The guy looked at one side of the horse and it moved over. Then he looked at the other and the horse moved back. My first thought was: What kind of sorcery is this? Next I thought that he had basically brought us a trick pony. Then somebody from my wife’s riding club brought out a rearing, snorting brat of a horse that I recognized from the barn, and the trainer had that hellbeast calmly complying with tasks in front of our very eyes. That included getting on a trailer and that horse usually had to be medicated to go near anything with wheels on it. This was the Parelli method of natural horsemanship. You have seen a variant of natural horsemanship if you have seen the movie “The Horse Whisperer.” I used to make fun of the title by whispering to a horse, “Hey horse — what the hell is wrong with you?” I came to understand what natural horsemanship actually meant. And that understanding improved my relationship with others and myself. For example, the Parelli method teaches the difference in 6

leading and yanking. If you pull fast on a rope, whatever is on the other side is going to tense up. But if you stand away, give the horse some space and pull slowly on the rope, that horse is likely to follow along. Then turn around, walk out front like you know where you are going and don’t look back. Why? Because otherwise the horse is likely to think, “Why are you looking at me? Don’t you know where you’re going? We’re doomed!” I learned such things as how just the slow pressure of a knuckle into the side of the horse can direct it to move over. But more than that, I saw that horses were looking at me, trying to connect with what I wanted to do. I appreciated that although they were huge beasts capable, and sometimes pretty willing, to stomp the life out of a human, they were vulnerable prey animals who just wanted to feel safe and loved.

The Inner Horse

It is easy to see how that projects onto any relationship with people. Things go a lot better with guidance rather than commands. But it also goes for our relationship with ourselves. When we fail our New Year’s resolution, or any other commitment, what is our internal monologue? Probably something like, “Of course I failed. Why did I ever think I was going to go to the gym every day? I will never be one of those people.” The gym membership, new sneakers and workout gear felt pretty good but what didn’t work out was going to the

InsuranceNewsNet Magazine » February 2019

gym for an hour every day. Well, that was one big yank, from coach potato to gym rat in one shot. Your body becomes the horse telling your brain, “You can think you are going wherever you want but I am staying right here with my face down in the Cheesy Poofs.” Bob Davies’ article in the InBalance section, “Failed Your New Year’s Resolution?” offers a guide to breaking down ambitious goals into manageable bites. Davies starts with an exercise about workout goals that helps people understand that they cannot just magically begin to be a whole new person at the stroke of midnight Jan. 1. One of the methods in the Parelli system helps get a horse on a trailer, one of the most aggravating parts of having a horse. The horse has to be introduced and acclimated to the trailer, by slowing getting closer and closer to it and trying first a hoof, then a shoulder and eventually getting on altogether. It takes care and patience, just like you do. I grew to love horses but I was always uncomfortable with the notion of penning and riding them. I am happy leaving them to the fields and westerns. Learning the Parelli method helped my relationship with myself and others. Nevertheless, my wife and I would eventually divorce. Hey, some ponies you just have to let run. Steven A. Morelli Editor-in-Chief


A WOMAN’S PLACE is in the Insurance and Financial Industry

In an industry built and still dominated by men, Leticia Santiago is breaking the glass ceiling — with a sledgehammer. As the director of operations for Women Empowering Financial Independence (WEFI), Santiago is tapping into a market that has largely been underestimated, underappreciated and underserved — until now. Santiago describes how WEFI’s unique platform and higher purpose are driving the industry in an exciting, new — and decidedly feminine — direction. Describe WEFI, its vision and how it was developed. WEFI began as the vision of Nancy Ellis, president and founder of Life & Annuity Masters. Nancy, and her husband, David, have owned and operated the company for more than 15 years. As a female entrepreneur, Nancy saw an opportunity to empower women in the insurance industry by helping them build their own business using the WEFI platform, which focuses on promoting financial literacy among women and girls. Why do you think it’s important to empower women in this industry? Women as agents and advisors, as well as financial decision-makers, are populations that are highly undeveloped and largely ignored in our profession. WEFI gives women the opportunity to empower and mentor each other, and share experiences, and that makes for stronger businesses and communities. How can agents become part of WEFI? There are multiple ways an agent can be a part of WEFI’s mission. For example, WEFI is seeking experienced, licensed agents and advisors to become founding partners. Founding partners are WEFI ambassadors who recruit agents interested in living out the WEFI servant-leadership mission. WEFI also includes partner agents,

which range from seasoned and successful to brand-new to the business. These agents receive mentorship, guidance and all levels of training to help them grow their production.

the chance to participate with Forever Found’s program. So, we have women bringing awareness to this cause all across the country. And, they’re using the WEFI platform to do it.

What makes the WEFI platform unique? Our initiative demonstrates a strong passion for philanthropy, for which we seek to build partnerships with non-profit organizations across the nation aligned with our mission and vision to bring awareness to our mutual cause. And for WEFI partners and agents, it’s just as important as making a sale. For example, we have a partnership with a nonprofit organization, Forever Found, whose mission is prevention, rescue and restoration of child trafficking victims in the United States. We encourage our agents to become involved with our non-profit work. Think of it this way: WEFI has the potential to be in every city, state, county and town, and each of our representatives has

Describe how WEFI makes the communities in which its agents work stronger. We have created a foundation of women within our industry to empower women to become leaders, to bring financial literacy to communities across the nation, and to empower young girls and women to become financially independent. We make communities stronger by empowering networks of women to become better prepared for the future and the uncertainties life can bring. Why should an agent choose to be part of WEFI? WEFI’s tested marketing and networking playbook has proven to be a successful system, built from the 30 years of industry experience of the husbandand-wife team of Nancy and David Ellis. Partnering with our agents to help them to build their dream business, become financially independent and leave a lasting legacy is what we are all about. Agents are invited to learn more about the WEFI mission on a special podcast hosted by iPipeline with Operations Director Leticia Santiago and Founding Partner Toni Golden. To listen, visit www.WEFIDifference.com

If you’d like to learn how to become a part of the WEFI mission, empower women in the industry and make a difference in your community, call 833.536.5340 or visit www.WEFIDifference.com


State-run Retirement Plans Can Be ‘Complementary’ To Private Sector Researchers say advisors don’t have to fear the rising number of state-run plans. By Cassie Miller


or professionals in the financial services industry, the prospect of state-run or state-facilitated retirement plans may seem a little frightening, but researchers say advisors have nothing to fear from these increasingly common plans. In fact, they could be beneficial to the industry.

Raising Awareness

As Angela Antonelli, a research professor with Georgetown University’s Center for Retirement Initiatives points out, state-run plans are making Americans more aware of their retirement savings or lack thereof. “The state-facilitated retirement savings plans really came out of the reality that there is a retirement savings crisis and challenge that exists,” Antonelli said. “If you look at the data, at this point, most individuals and families do not have much saved for retirement.” The increasing popularity in these plans is due to this lack of savings and the shift from defined-benefit plans (pensions) to defined-contribution plans. The state-run plans are not so popular with the National Association of Insurance and Financial Advisors. NAIFA cites competition with private-market programs and disbelief of an access crisis as their main reasons for opposing staterun plans. NAIFA’s statement reads: “NAIFA understands the importance of retirement security and acknowledges that many Americans are not saving enough for retirement. However, NAIFA does not believe that a state-run plan that competes with private market plans is the answer. Availability and access to retirement savings options are not the 8

problem — there already exists a strong, vibrant private sector retirement plan market that offers diverse, affordable options to individuals and employers.” Antonelli disagrees. In contrast, she said that by shining a brighter light on the retirement savings gap, states are creating a path to savings, and possibly wealth, for Americans without which retirement would have been a struggle to achieve, if not impossible. To date, the enacted state-run plans have given 20 million Americans access to retirement savings plans. This means more people with wealth who will need the advice of a trusted professional, as well as continued education on savings, investments and financial literacy to protect their hard-earned assets. With more people seeking planning, Antonelli said about advisors, “It’s ultimately beneficial to them.”

Creating A National Conversation

Post-2008, bipartisan cooperation rapidly evaporated, and with it so did the potential for an auto-IRA program at the federal level. Citing this deterioration of bipartisan cooperation, Antonelli said the need for these state-run plans was apparent and necessary. “In the absence of the federal

InsuranceNewsNet Magazine » February 2019

government doing anything to really address the lack of retirement savings and the fact that it has gotten worse over time — and that trend is not a good one because many lack access to a way to save — the states have stepped up and said, ‘look, we’ve got to address this.’” But this isn’t a new problem. “This coverage gap of more than half of the private-sector workforce is one that has existed for more than 40 years,” Antonelli said. In fact, states across the nation have been exploring the possibility of state-run retirement plans for more than a decade because as individuals with inadequate or no retirement funds age, they rely more and more on public programs. As the number of people depending on those programs increases, it can be a serious drain on a state’s resources. Similar to how an advisor would advocate for their client’s best interest, states have jump-started a national dialogue about the ever-growing retirement savings gap. “If more states are enacting these programs, some would say that that might help to encourage and spur action at the national level,” Antonelli said. But Antonelli said she isn’t getting her hopes up about a national program taking center stage and replacing the state-run programs.


What States Are Doing In 2018 alone, 16 states and one city introduced legislation to tackle the growing issue of the retirement savings gap among private-sector workers. In six years, 40 states moved to consider, study or implement legislation, leading to the creation of state-run retirement savings programs. Of those 40 states, 11 have moved to establish retirement savings programs. Data from Georgetown University’s Center for Retirement Initiatives shows that several states and cities stated goals to pursue these programs in 2019. Only 28 percent of full-time workers without access to employer-sponsored plans report having any other retirement savings such as an individual retirement account or 401(k), according to a 2016 Pew Charitable Trusts survey of private-sector workers for small to midsize businesses. Statistics like this one explain the push for states to create state-run retirement programs.

Enacted Savings Programs

Already, 10 states and a city have enacted state-run retirement plans. Those include California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Oregon, Vermont, Washington and the city of Seattle.

Program Models

All of the 11 enacted programs follow one of these four models: Auto-IRA — According to the Internal Revenue Service, an auto-IRA is an automatic contribution arrangement (also known as automatic enrollment), which is a feature in a retirement plan that allows an employer to “enroll” an eligible employee in the employer's plan unless the employee affirmatively elects otherwise. Multiple Employer Plan — A MEP is a type of employee benefit plan that can be maintained as a single plan in which two or more unrelated employers participate. Marketplace — Think of this like the Affordable Care Act marketplace. Firms participating in the marketplace offer a minimum of two product options for the employee to choose from. Participation is voluntary. Voluntary Payroll Deduction IRA — The New York State Secure Choice Savings Program Board establishes default investment options for enrollees who fail to elect an investment option. This is structured as a Roth IRA and is an automatic enrollment program. New York is the only state currently using this model. Further details of each state’s plan such as contribution rates, administrative entities, fees and implementation timelines can be viewed at cri. georgetown.edu/states.

States Taking Action

With almost a dozen states embracing some sort of state-run plan, 15 other states are taking notice and studying the need for these plans or are proposing legislation. Those states include Wyoming, Colorado, New Mexico, Kansas, Iowa, Missouri, Wisconsin, Michigan, Tennessee, Georgia, Virginia, Pennsylvania, New Hampshire and Rhode Island. Fewer than 10 states have made no efforts to create a state retirement program. The accompanying map shows where each state stands on legislative action for state-run retirement plans. — Cassie Miller

“These proposals have been around for a long time and yet, nothing has happened,” she said. Sharing another similarity with advisors, Antonelli said the state-run savings plans highlight the importance of saving for retirement. “I think a lot of young people are skeptical about whether Social Security will even be around,” Antonelli said. “We need to take on the responsibility that has been put on us to save for our own retirement.”

Advisors, Familiarize Yourselves With The Policies

Before advisors jump to conclusions about what these plans are and aren’t, it’s best to study up on what steps your state has taken to put a retirement savings plan in place. These plans vary by state following one of four models. This means advisors need to be informed about retirement plan legislation being considered and advisors should be not just familiar with them, but knowledgeable on their state’s retirement plan laws.

Not Competition

The one thing that Antonelli made clear was that these state-run plans are not in any way competition for advisors or replacements for fine-tuned financial planning. “The state-facilitated plans are addressing a gap in the market that the private sector hasn’t addressed. What the state is doing really doesn’t compete with the private sector, it fills a gap,” Antonelli said. “There’s an increased understanding now that more folks have seen these programs, that they are, in fact, complementary.” Antonelli said these plans “operate as IRAs,” which means they could benefit from the same recommendations and oversights of a professional just as any other IRA would. If anything, Antonelli said these plans create opportunities for advisors. “Advisors and insurance agents want to be able to do more,” she said. “[These plans] push the private sector to do more, to do better.” AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@Adnewsfeedback . com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.

February 2019 » InsuranceNewsNet Magazine



By David Wilken, President, Life Global Atlantic Financial Group


onsumers like discounts — there’s no secret about that. And consumers shopping for insurance are no exception. Our recent survey revealed that nine out of 10 consumers (92 percent) would be motivated to maintain a specific weight level, and four out of five (81 percent) would be more likely to have an annual checkup, if offered a life insurance discount or incentive.1 So not only are discounts attractive to insurance shoppers, but discounts based on healthy behaviors are attractive as well. There is one catch: How those healthy behaviors are tracked and how the incentives are determined appear to make a difference. In direct contrast with the positive results of our survey, a separate survey2 recently reported that 59 percent of respondents said they weren’t willing to

wear a fitness tracker that reports to insurance companies, even if it meant potentially receiving a better premium. In that same survey, 77 percent of respondents said they were uncomfortable having their premiums fluctuate based on the results of their annual physical. While wearables are becoming increasingly popular, the data gathered by these devices is considered personal. Accessing that data can easily be seen as an invasion of privacy, and an insurance policy whose premiums fluctuate based on behaviors tracked by a wearable device does not appeal to many insurance shoppers.

THE GOOD NEWS: THERE IS ANOTHER WAY TO REWARD WELLNESS. It’s been 10 years since we introduced the original wellness rider — Wellness for Life® — and, to date, we’ve issued more than 50,000 of these riders. Wellness for Life gives owners of permanent policies discounts on insurance costs if they visit the doctor at least once every other year and manage their weight within a range determined at the time they purchase their policy. Going to the doctor at least once every two years qualifies them for level 1 Wellness for Life Rewards®. And if they maintain their weight within the range specified at policy issue, they move to level 2 and receive more rewards. No devices are required, and there are no fluctuating premiums — just discounts on the cost of insurance

How Wellness for Life® Works Wellness for Life® is a rider available on most new permanent life insurance policies, regardless of current health or weight. It’s available at no charge to everyone we underwrite on a permanent policy. Wellness for Life delivers two potential savings rewards: • The first reward is presented when a consumer has a physical exam from a doctor every two years. • Even more savings is offered when the consumer has a physical and maintains their weight within a range determined at policy issue.


OR LIFE INVASION? We’ve made it our New Year’s resolution to bring Wellness for Life to even more people. The Wellness for Life rider is now available at no charge on every eligible policy. that can add up significantly over time. We don’t collect, track or store any personal medical information. We simply ask the insured to verify they’ve been to the doctor every two years and have kept their weight within their personalized range (if they wish to qualify for level 2 rewards). Visit the doctor and send in the form — it’s that simple.

OUR NEW YEAR’S RESOLUTION — WELLNESS FOR EVERYONE While the movement to develop interactive insurance policies that rely on the use of wearables might be running into resistance, our goal is to remove barriers to behavior-based incentives. That’s why we’ve made it our New Year’s resolution to bring Wellness for Life to even more people. The Wellness for Life

rider is now available at no charge on every eligible policy. As other approaches add complexity, the Wellness for Life rider requires no wearables, and it delivers Wellness for Life Rewards in the form of discounts on the cost of insurance. It’s easy to understand and participation is simple. With Wellness for Life, consumers can give their policy values a boost in the same way taking certain actions can boost health and happiness — and it costs them nothing. •

To learn more about Wellness for Life, visit GlobalAtlanticLife.com/ wellness

1. The Global Atlantic Wellness Survey was completed by Echo Research using an online omnibus methodology among a random sample of the general U.S. adult population. A total of 1,003 interviews were completed between July 23 and 25, 2018. The overall margin of error for this sample size is +/- 3.1 percent at the 95 percent confidence level. 2. Survey conducted by True Blue Life Insurance (as reported on insurancenewsnet.com), “Survey Results Reveal People Over the Age of 24 Are Uncomfortable Sharing Fitbit or Apple Watch Data With Life Insurance Companies to Get Better Rates,” Nov. 20, 2018. Products and riders are issued by Accordia Life and Annuity Company, 215 10th Street, Des Moines, Iowa. Rider form number ULWFL-E14. Wellness for Life® rider availability varies by state. Products and riders are not available in New York. Global Atlantic Financial Group (Global Atlantic) is the marketing name for Global Atlantic Financial Group Limited and its subsidiaries, including Accordia Life and Annuity Company, Commonwealth Annuity and Life Insurance Company, Forethought Life Insurance Company, and Global Atlantic Re Limited. Each subsidiary is responsible for its own financial and contractual obligations.



How VICKI GUNVALSON balances a thriving life insurance business with being outrageous on The Real Housewives Of Orange County. 12

InsuranceNewsNet Magazine » February 2019



icki Wolfsmith was a 28-year-old single mother of two children, working as a self-taught bookkeeper for her father’s construction business outside Chicago. She described herself as a child of privilege who had few options in her life at that point. But when she talked with a friend about her life as an insurance agent, a door opened. She went through that door with nothing but tenacity and it led her all the way to becoming Vicki Gunvalson, the villainous vixen of The Real Housewives Of Orange County. In fact, she calls herself the OG of the OC because she is the only original cast member still on the show 13 years after its debut. And through it all, she has maintained a life insurance and retirement planning practice, Coto Insurance and Financial Services in Southern California. Gunvalson now has a staff of 12 in her office and about 30 agents in the field. Although her agency provides an array

At the time of our interview, the latest controversy from the show stemmed from Gunvalson’s accusation that fellow cast member Kelly Dodd was using cocaine. Not for the first time, rumors swirled that Gunvalson might be fired from the show, but then again, she has been stirring the pot for 13 seasons. In this conversation with Publisher Paul Feldman, Gunvalson revealed why she is so driven and how she deals with the Vicki haters of the world. FELDMAN: What got you into the business? GUNVALSON: I had a girlfriend sell me life insurance on my soon-to-be ex-husband and I asked her how much money she made on it. She told me $600 and I was floored because it took me two weeks to make $600 doing the accounting at my dad’s construction company. She said they were always hiring at Western & Southern Life in Elmhurst, Ill., and so I went over there.

money and in order for me to do that I needed to stay focused and do what I do best. So many people were just fine taking care of what they were doing. I was raised very privileged. My father was very successful. So I wanted that for my children and I wasn’t going to wait for a man to give it to me. Which is different than a lot of the women on the Housewives. A lot of the women have acquired their wealth from their men and there’s a cost for that. I want to control my own paycheck. I want to have full control of what I do and therefore I can go to bed at night knowing that I’m never going to be dependent upon a man ever. And I think that’s what my viewers have really liked about watching me, as I do own my own home and I do like nice trips and I do give back to my community and I have raised my kids with no college debt. So, it’s been a great example for people who do want to work hard. You can do it all. You can make dinner for your family every night. You can have everything —

I just stay focused on being true, being ethical, being a good advisor for retirement planning and doing the right thing. When you do the right thing, the right thing does you... of services, such as Medicare products, health and life insurance, she personally sells fixed indexed annuities. At 56, she is still driven even after building an agency and surviving the crazy life of a reality TV show. When we spoke with her, she was filling in for two employees at the height of health insurance open enrollment season and still made time for an interview. Her next step is franchising her practice to duplicate the practice. She finds it difficult to recruit people as driven as she is, but she is a rare person who can balance the demands of a network TV reality show, while serving clients, managing a growing business and doing all of that well.

They told me what I needed to do to get licensed. I did it and I became the first woman agent who was hitting the numbers out of the park every single month. I didn’t understand why these people weren’t working hard. They were satisfied with $40,000 a year in the early ’90s. I used to make $50,000 or $60,000. It was exciting that I didn’t have somebody telling me what my paycheck was going to be. I could take care of it myself and that’s what set me outside the realm of being a normal advisor. FELDMAN: What motivated you early on? GUNVALSON: I needed to make a lot of

you just have to learn to work for it, right? FELDMAN: How are you getting leads? Do you get leads from the show? GUNVALSON: No, I do sit-down dinners. I do a 10,000-piece mailer and from there I do a dinner and a presentation and I get leads. The Housewives show, depending upon on what episode we’re in, can be really good or it can be really bad. I just stay focused on being true, being ethical, being a good advisor for retirement planning and doing the right thing. When you do the right thing, the right thing does you — my father told me that a long, long time ago. And I like what I do and I’m really good at it.

February 2019 » InsuranceNewsNet Magazine



I stay focused and I’m not distracted by the Housewives or personal things. I don’t show up for work on that. I have a stack of clients right now, probably 50, that I have to get to right now because they’re waiting for me. And that makes it feel like a sense of responsibility and I’ve got to stay in focus. FELDMAN: How many seminars are you doing? GUNVALSON: We have done two or more per month for the past 13 years. FELDMAN: A lot of people would be surprised that, at your level of celebrity and business, you are doing seminars. GUNVALSON: I know, I know, but I do it because the fixed indexed annuity isn’t residual. So I have to work as hard every year as I did the previous year. FELDMAN: FIAs have had a bit of controversy about them. What do you think about that? GUNVALSON: We don’t have any controversy with fixed indexed annuities. When you design the right one and it’s an increasing one that helps with inflation, there is no controversy. It is what it is. You put the money in and it gives you an income stream. It’s just like a pension. When they take the word “annuity” out of their brain and put in the word “pension,” most people who retire understand that. I love what Tom Hegna says, “The happiest people in retirement are the ones who have income, not assets.” Bingo! That’s what I tell my clients. I have been telling them for 12 years that when you have income in retirement, increasing lifetime income, you will be happier than the person who own apartment buildings. It’s like a light bulb goes on when you tell them you’re going to give them lifetime guaranteed income. That they’ll never run out of money.

Kelly Dodd, Vicki Gunvalson, Meghan King Edmonds, Shannon Beador, Heather Dubrow at the “The Real Housewives of Orange County” Premiere Party and 10 Year Celebration, in Los Angeles. coming in because they need help with their retirement. We vet them out. And if we can see that they’re there for a free dinner or to meet me, then we ask them to leave or we escort them out. If they can’t afford a dinner, then they are not going to be a client of mine. FELDMAN: How much are you doing in annuities now? GUNVALSON: I’ll close about $15 million this year [2018]. And that’s work for six months — so that’s pretty good. I don’t work November to February and I don’t work when I’m filming. I have to work around my filming schedule. It’s a lot, so I’m stressed out all the time.

FELDMAN: Are you getting people in the door because you’re a celebrity and they just want to see you?

FELDMAN: Has the Real Housewives show helped you with business or has it hurt you?

GUNVALSON: I hope not. I hope they’re

GUNVALSON: It’s all based on how I’m


InsuranceNewsNet Magazine » February 2019

edited and what the last episode was. But I think for the most part it’s giving me brand recognition. And I know people know me from that, whether it’s good or bad. I think it’s good but I was successful before the show, so I don’t know where it would’ve been. FELDMAN: You have a huge audience of people who either love you or hate you from week to week. Some of it can be pretty awful. How do you deal with it? GUNVALSON: I don’t care about the haters because they’re behind a computer and they don’t bother me. If somebody hates me to my face, I’m going to ask, what did I do wrong? How did I hurt you? I am sorry, but for the people who watch me on a TV show thinking they know me, they don’t know me. They might not like a scene, but remember we’re doing everything on the TV show for sensationalism. It’s a TV

THE SELF-MADE, REAL HOUSEWIFE INTERVIEW show. It’s not 100 percent my real life. Yes, we sell my real life, but I may have not gone to dinner with Tamara last night unless we were filming. And I might not have asked Kelly a certain question about something unless we were filming. So the people who sit behind the computers and want to be mean, you know what happens to them? They get blocked and deleted. We don’t engage with them. So, on to the next nice one. We like the nice ones. We don’t like the mean ones. FELDMAN: We often hear that becoming a celebrity helps business, but that does not always seem to be the case for you. GUNVALSON: No, no, no. It could actually hurt in my business. Let’s say for

FELDMAN: It seems like the Vicki we’re talking to right now is so different from the public perception.

FELDMAN: How do you keep those two lives separate? It’s like having two different brains. GUNVALSON: It’s hard. Super, super hard. But I’m good at it. I’m good at my job. People can see through it. I’ve got pictures of my family in front of me. My Housewife show is not my life. What’s my life is God and my family. That’s what’s important to me. And once people sit with me and understand that the TV life is fabricated and sensationalized, they see that what we do here in this office has nothing to do with TV and has everything to do with them.


GUNVALSON: I know, because people don’t come to work with me and they don’t get it. FELDMAN: Does that bother you? GUNVALSON: It’s OK. In the very onset of my TV life, it bothered me. I thought they don’t know me and they’re judging me. But, you know what? I’ve been on the show 13 years and they obviously stay tuned with the show and with me, so I must be doing something right. I must be doing something right if I’m asked back by NBC and Bravo. They love me and support me and encourage me to be “Crazy Vicki” sometimes and that’s

Once people sit with me and understand that the TV life is fabricated and sensationalized, they see that what we do here in this office has nothing to do with TV... instance, I’m doing a shot of tequila and dancing on a bar, do you really want to be with an advisor like that? No. So, I hope my clients don’t watch me. I hope my clients don’t know anything about me and they go with me based on my work ethic and what I do and from other clients.


OK. I can do that knowing that I’m going to go back to work in the morning. FELDMAN: Are the producers provoking some of the action on the show? GUNVALSON: Absolutely. I mean, we’re not having fun if we’re sitting, having lunch and talking about, oh, it’s a pretty day outside. That doesn’t make the cut. What makes the cut is talking about somebody else, being sensationalized, our lifestyle, or something, right? So that’s what makes the difference. FELDMAN: Given all that, I can imagine somebody asking, why deal with the grief of doing the show? GUNVALSON: Why not? They pay me a lot of money and it’s a lot of fun. If anybody had the opportunity that I have, they’d be doing it. Absolutely they’d be doing it.

February 2019 » InsuranceNewsNet Magazine



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Economists See Recession Possible The U.S. has a 40 percent risk of experiencing a recession in the next two years. That’s the word from a Reuters poll of economists. The poll results indicate that economic momentum in the U.S. has peaked and a downturn may be approaching soon. The economists predicted the U.S. economy will slow in the coming quarters with annualized gross domestic product growth easing to 1.8 percent by mid-2020, about half the latest reported rate of 3.5 percent. The survey followed a rough period for global stock markets, which knocked the Standard & Poor’s 500 index down to an eight-month low in December.

asset-allocation models. Investors with at least $1 million in investable assets surveyed by CNBC in mid-November — when volatility was already high — said they expected to keep their allocations to cash, bonds and equities similar over the next 12 months.


The Federal Reserve raised interest rates four times in 2018, and President Donald Trump is not happy about it. Trump complained that the Fed was raising interest rates too quickly but added that U.S. companies were “the greatest in the world” and presented a “tremendous” buying opportunity for investors. U.S. stocks dropped sharply at the end of 2018 on concerns over weaker economic growth. Trump largely laid the blame for economic headwinds on the Fed, openly criticizing its chairman, Jerome Powell, whom he appointed. At one point in December, the president said “The only problem our economy has is the Fed.”


Even with the market volatility that struck in late 2018, wealthy Americans are not making major changes to DID YOU




Steady on!

Doug Boneparth, certified financial planner and president of Bone Fide Wealth, said client allocations have not changed substantially during the market downturn. However, he said the wealthy do have an advantage as a group, even if each client has a unique situation. “Everyone is different, but wealthy people have a greater asset base to work with, and the ability to handle volatility more than someone depending on that income,” Boneparth said. “They can afford to more aggressive.”


The U.S. labor market crushed it as 2018 came to a close. December showed the

QUOTABLE It’s really all about the global economy slowing down, and that’s directly linked to the trade dispute between the world’s largest economy and the world’s second-largest economy. — Jack Ablin, chief investment officer at Cresset Capital Management

highest monthly jobs gain in nearly two years, as non-farm private employers added 271,000 jobs. Mark Zandi, chief economist at Moody’s Analytics, said that businesses aggressively added workers while favorable December weather also helped Zandi boost the job market. He predicted that at the current pace of job growth, the current low unemployment rate will drop even further.

The increase in hiring came as the global markets continued to experience year-end turmoil. Wall Street suffered its worst year in a decade in 2018. The S&P 500 index finished the year with a loss of 6.2 percent. The Dow Jones Industrial Average declined 5.6 percent and the Nasdaq composite sank 12.2 percent.

House Speaker Nancy Pelosi, D-Calif., supports holding hearings on Medicare for all, her spokesman said, marking a major step forward for supporters of a single-payer health system. Source: The Hill

InsuranceNewsNet Magazine » February 2019

The Retirement Income Stor-E Explains How a Business Model Focused on Investing for Income Can Boost Client Retention During Down Markets


n life, our earliest paradigms are what shape our future experiences. For example, many in their 30s and 40s have a healthy respect for the potential dangers of investing in the stock market, since their earliest experiences with investing involved the bursting of the tech bubble and the housing David J. Scranton, CEO market debacle. and founder, Sound On the other Income Strategies LLC hand, those born before 1968, members of the Income Generation, first got serious about investing during the 1980s and 90s, in what was the best stock market in U.S. history. At that time, investors saw the Dow Jones shoot up from 700 to 11,000 by the end of the 90s. As a result, many investors and advisors became dangerously addicted to stock market investing. And, since many were participating in the market through workplace 401(k) plans that invested primarily in mutual funds, many began to mistakenly associate mutual funds with safety. Due to the tremendous growth they experienced at this time, many investors also developed the misconception that

30 years of experience as one of the nation’s most successful independent financial advisors to identify a better way for everyday investors to achieve the retirement they’ve always envisioned — investing for income. And, with the potential for a major stock market correction on the horizon, Scranton explains how making the shift to the Income Model™ ahead of retirement could make all the difference in your clients’ quality of life during retirement. The Retirement Income Stor-E:

• Identifies a safer and more effective way to help clients plan and save for retirement.

“growth” and “return” meant the same thing. And, as a result, their financial paradigm became focused on investing for growth. But the reality is that growth is just one component of return; income is the other.

TOTAL RETURN = INCOME + GROWTH Growth comes from capital appreciation, meaning it can be unpredictable. The problem with investing for growth (G) is that the “G” can easily turn into an “L” (loss) and leave retirees scrambling to cover expenses during retirement. Income, on the other hand, comes from interest and dividend payments and can be much more predictable, especially when you’re investing by contract (fixed-income investing). In The Retirement Income Stor-E, David J. Scranton taps into more than

• Explains how the Income Model™ can

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S P O N S O RED CO N T EN T Investment Advisory Services offered through Sound Income Strategies LLC, an SEC-Registered Investment Advisory Firm. Scranton Financial Group LLC and Sound Income Strategies LLC are associated entities.


The steady growth of self-directed retirement accounts, combined with the rollback of the Department of Labor fiduciary rule, has IRA rollovers thriving once again. BY JOHN HILTON 18

InsuranceNewsNet Magazine Âť February 2019



rock Jolly is advising a client who has several retirement plans from several different jobs, a situation he said is fairly common for his Virginia firm. “I think he’s got five or six different IRAs, 401(k)s from past work, that have sort of accumulated. What has happened, he admits, is he doesn’t pay a whole lot of attention to any of them because Jolly they’re all over the place,” said Jolly, a financial advisor with Veritas Financial in Vienna, Va. Devising a rollover strategy that dovetails with retirement goals is a long process that begins with simple steps. Jolly first wants to consolidate the man’s retirement plans. “Just simply consolidating and simplifying it adds value to the client to be able to see everything in one place,” explained Jolly, a Certified Financial Planner who holds Series 66 and Series 7 licenses. Being able to help clients coordinate a strategy among various retirement accounts is a service that pays for itself in the long run, Jolly said. Rollover dollars remain the Holy Grail of the financial advice world, and advisors are adapting in significant ways to land that business. As fiduciaries, advisors such as Jolly have little to worry about with regulations. Independent insurance agents, however, are back in selling mode after a worrisome few years waiting out federal attempts to make them quasi-fiduciaries. Now that the Department of Labor fiduciary rule is history, legal analysts say agents can sell products out of rollover dollars with few worries. The main issue is one that has been there since federal retirement plan legislation was enacted in 1974. If the prodAshton uct sale turns into ongoing advice, the agent could meet the fiduciary standard, explained Bruce Ashton, a partner with Drinker Biddle & Reath law firm. “Even if the agent somehow worked

IRA Rollover Market in Billions $385 $335

$317 $282



























2018E 2019E 2020E 2021E

Source: Money in Motion — Understanding the Dynamics of Rollovers, Roll-ins, and IRA Transfers, LIMRA Secure Retirement Institute, 2017, The IRA Investor Profile: Traditional IRA Investors’ Activity, 2007-2014, Investment Company Institute, and LIMRA Secure Retirement Institute analysis. Note: Rollover market size for years 2017 through 2021 are projections.

with the plan on a regular basis, the recommendation to an individual participant might or might not be considered a fiduciary recommendation based on facts and circumstances,” he added. The agent would have to be concerned with Internal Revenue Code prohibited transaction rules under this scenario, Ashton said, but only the IRS can enforce those rules. “The risk is slight of the individual making a claim for a violation of those prohibitions,” he said.

Then the market received some negative pressures — in particular, the Department of Labor fiduciary rule. The rule had a chilling effect across the industry. New forecasts are still good and call for a $466 billion rollover market in 2019. The intense interest in the market is a natural free-market marriage to Jolly. “Why do financial advisors focus so much on rollovers? Because that’s where the money is.”

Growth Will Continue

Holistic planning continues to evolve into rollover retirement planning conversations. Jolly often lists options and realities, and lets the client determine what they want to do. Take long-term care, for example. Insurers are constantly developing new LTCi riders that combine the planning value of a life insurance or annuity product with the need for long-term care protection. “What I say to clients all the time is ‘It doesn’t matter to me if you have a standalone long-term care policy, or a hybrid long-term care policy,’ or you strategically decided ‘Hey we’ve got enough money over here in this bucket to earmark this as our long-term care fund,’” Jolly said. “Doesn’t matter to me what you do, it just matters a lot that you’ve addressed it.” Because there is so much rollover money at stake, and consumers are better educated and have “numerous choices,” Thomas Rindahl said it is forcing financial advisors to prove their worth. “That is really where I think the industry

The baby boomers’ march toward retirement, along with ever-shrinking pensions, virtually ensures that IRA rollovers will continue growing no matter what happens with ongoing regulation efforts, analysts say. According to recently updated LIMRA Secure Retirement Institute data, the total traditional IRA rollover market will grow steadily in the next five years, exceeding $500 billion by 2021. “This is part of a very, very big market that we call ‘money in motion,’” said Jafor Iqbal, assistant vice president, LIMRA SRI. LIMRA adjusted its forecasts with its most-recent data, which Iqbal is coordinated with the Investment Company Institute. Just a few years ago, researchers predicted a soaring rollover market would hit $550 billion by 2018.

‘Numerous Choices’

February 2019 » InsuranceNewsNet Magazine



Pensions Going The Way Of Howdy Doody

American workers are in the latter stages of converting from a pension-based retirement system to a defined-contribution system, according to survey data from the Investment Company Institute. And with frequent job changes now the norm, more Americans are rolling over retirement accounts than ever before. The ICI survey, “The Role of IRAs in US Households’ Saving for Retirement, 2018,” found that 58 percent of traditional IRA-owning households, or 19 million households, indicated that their traditional IRAs contained rollovers from employersponsored retirement plans in 2018. Traditional IRA owners cited multiple reasons for rolling over their retirement accumulations, including avoiding leaving assets behind with a former employer (64 percent), preserving the tax treatment of the savings (60 percent), consolidating assets (54 percent) and having more investment options (54 percent). The right rollover strategy is a crucial part of solving the retirement crisis, advisor Brock Jolly said. And it will take a variety of products, competent advisors and educated consumers to make it work. “I think the biggest challenge compared to 40 years ago, 45 years ago, is people are living longer,” he said. “People just aren’t dying from things they used to die from. We’ve got a society where we retire earlier, live longer and save less.” Other key findings from the ICI survey: • One-third of U.S. households owned IRAs in 2018. More than eight in 10 IRA-owning households also had accumulations in employersponsored retirement plans. More than 60 percent of all households had either retirement plans through work or IRAs, or both. • More than one-quarter of U.S. households owned traditional IRAs in 2018. Traditional IRAs were the most common type of IRA owned, followed by Roth IRAs (owned by about 18 percent of households) and employer-sponsored IRAs (owned by 6 percent). • IRA-owning households cover a wide range of incomes. In 2018, the majority of IRA-owning households had incomes less than $100,000: 12 percent had incomes less than $35,000 and 40 percent had incomes between $35,000 and $99,999. • Most traditional IRA-owning households have a planned retirement strategy. Nearly two-thirds of traditional IRA-owning households indicated they have a strategy for managing income and assets in retirement. Typically, these strategies have many components, often including reviewing asset allocations, determining retirement expenses, developing a retirement income plan, setting aside emergency funds and determining when to take Social Security benefits. —John Hilton


InsuranceNewsNet Magazine » February 2019

as a whole has been changing the most,” said Rindahl, a financial planner with TruWest Wealth Management Services, based in Phoenix. “It’s no longer just being an investment jockey, so to Rindahl speak, but rather taking into account a holistic approach to someone’s financial plan.” That means Rindahl considers estate planning, long-term care insurance, cash flows and other important steps on the road to retirement. “Right now, when things are topsyturvy with the markets and knowing where to go, people do want to sit down and talk to somebody and get some sort of clear direction,” Rindahl said.

A Regulatory All-Clear

One reason consumers are better informed is the Department of Labor fiduciary rule. Although a federal Court of Appeals tossed the rule out last summer, it got enough publicity over the previous three years to make an impression on clients and prospects, Rindahl said. “We get more clients coming in saying ‘Are you a fiduciary?’ and ‘What does that even mean?’” he said. “So from that aspect, that really helps to have the conversation with current clients and prospects on what does being a fiduciary really mean.” The fiduciary rule drama, which began when the Obama administration introduced the rule in April 2015, is partly to blame for putting a chill on rollover business. Many advisories pulled back and reassessed their procedures for documenting and disclosing information to clients. New procedures and checklists were developed at Rindahl’s firm, but he remains comfortable doing rollover business. Annuities, in particular, were affected by the regulatory spotlight, Iqbal said. The use of qualified money for variable annuities dropped substantially. Overall, LIMRA reports that 60 percent of annuities are bought with IRA rollover dollars. Then Donald J. Trump was elected president and momentum turned against the DOL rule. Although parts of the rule

ROLLOVER BUSINESS REVVING UP TO ROLL AGAIN COVER STORY took effect, the administration and industry groups kept chipping away at it until the Fifth Circuit Court of Appeals tossed out the rule in March 2018. Sales picked up right away. Thirdquarter sales of variable annuities were up 25 percent year-over-year to $25 billion, according to LIMRA SRI data. Fixed indexed annuity sales were 28 percent higher than the third quarter 2017. Advisors remain concerned about sales standards being developed by the

advisor, LIMRA said. The top 15 companies are generally capturing about 60 percent of the rollover market, Iqbal said. Insurance companies are receiving just 12 percent of the available rollover business, he added. Most insurance companies, not having control over distribution outlets, face difficulties in capturing rollovers, LIMRA noted. Many have to rely on platforms or brokerage houses and their representatives to present insurance products like

charitable contribution.” Known as the QCD, it was in and out of the tax code as a temporary provision starting in 2006. But when Congress passed the Protecting Americans from Tax Hikes Act of 2015, it made the QCD permanent. That permitted tax filers to make a charitable contribution directly from an IRA. Contributions that do not qualify under QCD rules treat charitable IRA rollovers as distributions to the owner. It does not matter if the contribution is made directly

Funding of Retail Annuities (in Billions) Deferred VA: $79 Billion 45% of Retail Sales 57% Funded by IRA

Fixed-Rate Deferred: $32 Billion 18% of Retail Sales 41% Funded by IRA

Securities and Exchange Commission, as well as various state regulators. They just want to have the full range of products at their disposal, Jolly explained. “To me, the best financial plan is the one that provides the most flexibility,” he added. “And I think one of the challenges is that if a regulatory body says that you can or cannot do certain things, to me it immediately casts a shadow of doubt on the integrity of the advisor.”

Reputation A Key

Consumers choose advisors and companies to handle their rollovers based on a wide range of factors. Company reputation tops the list at 36 percent, according to a LIMRA survey of 1,034 people. The immediate need to consolidate accounts, and convenience, were other top reasons at 33 percent each. Interestingly, fees were not among the top motivators for people seeking a rollover advisor. “Companies that emphasize low fees to the exclusion of other aspects of their offerings may be limiting their potential,” the report authors write. “However, as the industry adopts more fee transparency, fees may become more important in rollover decisions.” Respondents mostly mentioned service-related reasons for choosing a rollover

Income (SPIA+DIA) Annuity: $12 Billion 6% of Retail Sales 55% Funded by IRA

Index Annuity: $54 Billion 31% of Retail Sales 63% Funded by IRA Source: US Individual Annuity Survey, LIMRA Secure Retirement Institute, 2017

annuities to potential rollover clients. “Other hurdles like little brand recognition, lack of strong products, lack of robust narratives around guaranteed income, and detachment from end consumers force insurance companies to accept a minor role in the growing rollover market,” LIMRA authors said.

High-Net-Worth Trend

Among the sought-after high-net-worth clients, advisors like Greg Hammond are using the evolving tax laws to encourage IRA charitable rollovers. “Transferring funds directly from an IRA to Hammond a public charity can provide several tax advantages while making an impact on a cause or organization you care about,” said Hammond, CEO of Hammond Iles Wealth Advisors in Wethersfield, Conn. The key is to line up the charitable rollover distribution with the age 70 ½ distribution required by law. While clients would pay taxes on those normal required minimum distributions, they avoid taxes on a charitable rollover up to $100,000. The IRS rule is known as the “qualified

from an IRA to a charity, or if a distribution is made to the IRA owner who then makes a charitable contribution. That amount is included in the gross income of the IRA owner in both cases. One caveat: the QCD rollover is only allowed from an IRA, not a 401(k). The Tax Cuts and Jobs Act passed in December 2017 is a further reason for high-net-worth clients to schedule charitable contributions via rollovers. The tax bill simplified filing by eliminating deductions and doubling the standard deduction. That means fewer charitable deductions are allowable and the tax benefits of such contributions is reduced. InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

Like this article or any other? Take advantage of our award-winning journalism, licensure and reprint options. Find out more at innreprints.com.

February 2019 » InsuranceNewsNet Magazine


the Fıeld

A Visit With Agents of Change

Learning The

Art Of Sales In The School (Literally) Of

HARD KNOCKS After four decades in financial services, LEE BETHEL still draws on the lessons learned from door-to-door sales.

By Susan Rupe


InsuranceNewsNet Magazine » February 2019



ee Bethel intended to become an orthodontist. But instead of attending dental school, he received an education in sales the old-school way – by knocking on at least 20,000 doors by the time he received his bachelor’s degree in biology from Morehouse College in Atlanta. Bethel, the president of Comprehensive Benefit Services in Alexandria, Va., has been in the insurance and financial services world since graduating from Morehouse in 1978. The National African-American Insurance Association honored him in 2018 with its Lifetime Achievement Award. But despite his long career and numerous professional designations, he still draws on the lessons he learned from his summers spent selling books door to door as a college student. To earn money for college, Bethel signed on with The Southwestern Company, the nation’s oldest door-todoor sales company. Now known as Southwestern Advantage, the company recruits and trains college students as independent contractors to sell Bibles and educational books directly to households. As part of their training, the students were required to read a number of books considered to be the classics of the sales library: Think And Grow Rich by Napoleon Hill, The Greatest Salesman In The World by Og Mandino and Acres Of Diamonds by Russell Conwell.

that we had to do what we had to do and be successful in 15 minutes, so you didn’t have much time to make an impression. I learned lessons in organization, in self-motivation.” But while Bethel was looking ahead to dental school, his uncle had a different idea for him to consider. Ted Tillman was the second African-American agent hired by New York Life. He had a busy practice in Philadelphia but no one in his family was interested in taking it over. “My uncle told me if I joined the business, by the time I would have finished orthodontist school, I would be further along financially,” he said. “So I finished college, earned my degree in biology and got ready to move to Philadelphia to work for my uncle.” But Bethel never got the opportunity to work for his uncle. While Bethel was at home in Oklahoma City preparing to move, Ted Tillman died of a heart attack. But Bethel followed through on his plan to move to Philadelphia and join his uncle’s insurance business. He moved in with his aunt and started his career at the New York Life general office where his uncle had worked.

Finding The Way

New York Life provided Bethel with training but he faced some challenges in starting out. “The challenge was I had no base in Philadelphia, I didn’t know anyone I

“You have 30 seconds to make an impression and get someone to let you in the door.” The readings provided a good foundation for a sales education, but the real education came when the students hit the streets to sell the books. “With door-to-door sales, you have to be quick or you get a door in your face,” recalled Bethel, who is now 62 “You have 30 seconds to make an impression and get someone to let you in the door.” He had doors slammed and dogs chasing after him, among the many things to deal with while selling books. “I learned how to handle rejection, knowing that it’s not personal,” he said. “I learned perseverance. We were taught

could sell to,” he said. “Also, other 22-yearolds, they don’t have any money. So I had to broaden my market to reach those who had more money.” He began studying for professional designations through The American College but he still needed help. “I didn’t know anything about the insurance business and I didn’t have my uncle to give me guidance. I needed to find someone for a mentor,” he said. Enter Lang Dixon. After Bethel started working at New York Life, someone from the company approached his aunt, Betty Tillman,

February 2019 » InsuranceNewsNet Magazine





MED SUPP t Booming Market t Year Round Sales s Great Persistency y Lasting Renewal Comp p Easy Product to Learn Dedicated Support Team


client base of small-business owners who have anywhere from two to 700 employees. The company focuses on 401(k) and 403(b) accounts as well as a full range of employee benefits, insurance, investments and wealth management services.

A Mentor’s Memory Lives On

CAAFP presented its first Lang Dixon Leadership and Excellence in Achieving Diversity (LEAD) award to Lee V. Bethel, CLU®, ChFC®,REBC®, RHU®, CAP®, AIF®, CPFA, CASL®, and Eugene Mitchell, MBA.

about entering the business as well. She took them up on the offer and worked for New York Life until she died in 2011. Betty Tillman met Dixon, an insurance professional who had been working with African-Americans who had been her late husband’s clients. Dixon offered to help her get started working with these clients and she did. While Betty Tillman was starting off in the insurance business, Bethel was at a crossroads and was thinking about

“He was always preaching that you had to learn more about your craft,” Bethel said. “He taught me the importance of education, be ethical, always tell the truth. If you don’t know something, say you don’t know but you’ll get back to them with the answer.” Bethel began to serve Morehouse graduates in the Washington, D.C. area. By 1985, he was spending more time there than than he was in Philadelphia. That prompted him to move to the Washington area permanently in 1987 and form Comprehensive Benefits Services. He helped companies set up employee benefits plans. “There were a lot of blackowned companies here and very few black people doing employee benefits, so I saw a need I could fill,” he said. “I went back to knocking on doors, although they were different doors than before.” With Bethel serving the Washington area and Dixon continuing to work with Philadelphia clients, they built a thriving practice. After Dixon’s death, Bethel decided to close the Philadelphia office although he continues to serve clients there. His current office is near the intersection of the Capital Beltway and Interstate 95, close to Washington and its suburbs and a relatively easy trip to Philadelphia. Comprehensive Benefit Services has a

“Sales will take care of themselves if the person is right. Do the right thing, have the right attitude, have ethics.” moving back to Oklahoma City. “My aunt suggested I talk with Lang and I did,” he said. “I left New York Life to work with him in 1982 and I continued working with him until his death in 1994.” Dixon was about 15 years older than Bethel and he was the mentor Bethel was looking for. “He had a high-end estate planning practice and I initially started off as the inside person,” Bethel said. “I did all the case preparation, prepared all the proposals, ordered the physicals, put the estate plans together. He did the fact-finding, I did the grunt work. Over a period of time, I started developing my own clientele. 24

InsuranceNewsNet Magazine » February 2019

Dixon’s memory lives on with Lang Dixon Day, a time of education and networking for African-Americans in the insurance and financial services business. The event is the work of The American College’s African-American Advisory Committee, which Bethel has chaired. Lang Dixon Day is in its 13th year and the most recent event attracted 550 attendees, Bethel said. Bethel understands his three daughters aren’t interested in joining the insurance business. So he is coming to terms with the fact that he needs to find someone to bring into the practice much as Dixon did with him. “I need to be Lang Dixon and find another Lee Bethel,” he said. In the meantime, Bethel is still employing many of the habits he learned when he knocked on doors as a college student. “It all gets back to not only being focused on sales but on the development of the person,” he said. “Sales will take care of themselves if the person is right. Do the right thing, have the right attitude, have ethics. Once the person knows you are not just out trying to sell them something, that you’re trying to advise them properly, you have a client.” Susan Rupe is managing editor for Insurance N ewsN et . She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan. Rupe@innfeedback.com. Follow her on Twitter @INNsusan.

Tell Us!

Do you know someone who would make a compelling profile story? Shoot us a quick email telling us who it is and why you think so. Send it to editor@insurancenewsnet.com, and put PROFILE in the subject line.




Life/Combo Products Picking Up Steam The life-combination market has grown to more than $4 billion

over the past 10 years, according to LIMRA. But still, five factors challenge life insurers’ ability to develop and market products that are profitable yet appealing to advisors and consumers, according to LIMRA and Ernst & Young researchers. Those factors are: consumer perception, product viability, regulatory and compliance challenges, operational friction and risk management. LIMRA forecasts continued robust growth in the life-combination market. “Our research shows consumers – especially younger consumers – like the idea of purchasing a product that can serve two purposes: mitigate the costs of long-term care services or offer a death benefit,” said Scott Kallenbach, LIMRA research director. related to the security of their care recipients,” he said. “If the family member is depending on the caregiver for their sustenance and something happens to that caregiver, now you don’t have just one problem - you have two problems.”


More than 43 million working-age Americans serve as unpaid family caregivers. Although so much of the financial services industry has focused its attention on those who need care, the people who provide care have their own needs. In particular, this group needs life insurance. Only 42 percent of caregivers own life insurance, LIMRA research found. Compounding the lack of insurance is the fact that many caregivers sacrificed their own opportunities to earn an income and access to employee benefits. One message that can resonate with caregivers, said LIMRA’s Jim Scanlon, is the possible “domino effect” that the lack of insurance or planning can have on a caregiver’s family. “It’s the importance of the caregiver’s own security because that is directly DID YOU





Sammons Financial Group is finalizing plans to build a new $60 million headquarters in Des Moi nes, Iowa, and will add 200 employees, according to a report. According to sources, the company is waiting to make an official announcement until the details are finalized. Company officials declined comment. According to the Des Moines Register newspaper, Sammons will initially build 200,000-square feet of new office space with plans for additions in the future. The company has pledged to add 200 new jobs to its existing base of 510 employees. Headquartered in Chicago, Sammons

QUOTABLE The days of just selling life insurance are coming to an end. Right now, clients want to have a more holistic conversation about financial well-being. — Ed Majkowski, Americas Insurance Sector and Advisory Leader at EY

is the parent company for Midland National Life in Sioux Falls, S.D.; North American Company for Life and Health Insurance in West Des Moines, Iowa, and Sammons Institutional Group, which sells retirement products.


Consumers may go online to get information about life insurance, but advice from an agent is still a big part of the insurance-buying process. That was the word from Deloitte’s annual Insurance Industry Outlook for 2019. “We found that consumers want to do self-directed research when they are interested in buying life insurance. And then, after they do the research and talk with family and friends, they still want to talk to an advisor,” said Gary Shaw, Deloitte vice chairman and U.S. leader for insurance. “We also found that 25 percent of consumers said they were interested in going direct and buying life insurance online, but only 10 percent actually do.”

Only 10% of those age 40 and younger has enough insurance to cover all of their dependents’ needs in the event of an early death. Source: New York Life

InsuranceNewsNet Magazine » February 2019


t s e g Lar


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Now Is The Time To Update Your Clients’ Buy-Sell Agreements Changes in the business environment over the past decade, combined with new life insurance products on the market, make this a good time to review older buy-sell agreements. By John “Hutch” Hutchinson


or decades, buy-sell agreements have paved the way for a natural life insurance sale. But there is no better time than now to bolster your clients’ buy-sell agreements using life insurance policies. Even if your business-owner clients already have some sort of buy-sell agreement in place, their life insurance policies may be out of alignment. Many businesses increased in value since 2009. The amount of life insurance death benefit originally purchased may no longer be sufficient to cover whatever value or formula is specified in the buy-sell agreement. And in many cases, business owners now plan to work longer than they had originally intended, because retirement accounts and real estate values took much of the last decade playing catch-up. Therefore, any term life insurance policies may be set to lapse before the insureds retire. 28

There are three reasons to revisit the insurance strategy backing their buy-sell agreement: Today’s mortality pricing and underwriting standards are more forgiving than ever before; attractive permanent insurance options and conversion privileges come standard with many of today’s term life insurance products; and the addition of “living benefits” built into many of today’s life insurance products can provide payouts for chronic/critical illness and injury — helping to fill one of the biggest gaps in most buy-sell agreements.

Four Possible Outcomes

Of course, many business owners resist the notion of getting any life insurance, much less the legal drafting of a buy-sell agreement. But entrepreneurs should understand the only four possible outcomes from having no agreement in place or having insufficient funding to buy out a deceased partner’s heirs. 1. The business assets are liquidated in a fire sale, since a substantial chunk of its enterprise value went down with the owner who died. 2. Surviving owners plead with the bank to place debt on the wounded company, so they can buy out the deceased owner’s heirs.

InsuranceNewsNet Magazine » February 2019

3. The deceased owner’s heirs accept a long-term note for their ownership and hope the company can float years of payments despite losing a key person. 4. The deceased owner’s heirs refuse to release their inherited ownership, and the surviving owners must perpetually share the company’s distributions with them. The heirs may have a legal right to examine the company’s records and even vote with their ownership interest. Regardless, the surviving owners have a fiduciary duty to their new co-owners, even if they can’t ever contribute to the company’s growth. Couldn’t a plain old term policy avert all four of those horrible outcomes when combined with a properly drafted agreement? Yes, but today’s life insurance policies can take things a step further by helping to protect against disability as well as death. Those same four grim outcomes are in play if an owner becomes too sick or hurt to work. Isn’t disability much more likely to occur than death? Of course — that’s why disability insurance is significantly more expensive than life insurance, and why many business owners will often opt to roll the dice rather than insure for the risk.


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Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender charges. One could lose money in these products. Guarantees are based on the claims-paying ability of the issuing insurance company. These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group and its affiliates have a financial interest in the sale of their products. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by

Securian Financial Group, Inc. securian.com 400 Robert Street North, St. Paul, MN 55101-2098 Š2019 Securian Financial Group, Inc. All rights reserved. F92674-2 1-2019 DOFU 1-2019 677704

Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. Securian Financial is the marketing name for Securian Financial Group, Inc., and its affiliates. Minnesota Life Insurance Company and Securian Life Insurance Company are affiliates of Securian Financial Group, Inc. Policy form numbers: ICC18-20153, 18-20153 and any state variations. For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.


What if their life insurance policy also had living benefit provisions in case they were too sick or hurt to work again? Will these living benefit provisions be as comprehensive as a true own-occupation disability policy? No. In fact, they may just advance a portion of the death benefit and only for the most severe health conditions. To be clear, I’m not saying that you should only recommend one of these hybrid life insurance policies over a true disability policy. Since a true disability buy-out policy will often have the most comprehensive definition of disability, you should always offer it as an option even if it costs more money than your client plans to spend. Then you’ve fulfilled your duty as an advisor offering them education on their options. If they decline a true disability policy, then at least a hybrid life insurance policy with living benefits is better than nothing to hedge against this serious risk.

What About Living Benefits?

Wouldn’t a disabled owner feel much better about accepting a note for his company equity if it came with a hefty down payment? Don’t most of your business-owner clients have that “I’ll 30

InsuranceNewsNet Magazine » February 2019

die with my boots on” mentality? If these living benefits came bolted onto a life insurance policy for a fraction of the cost, you will have done them, their partners and their family a great service by helping to shore up this gap in their buy-sell agreements. Some term life insurance policies even include these living benefits for a nominal increase in premium over the cheapest term policies. And these same term policies can be converted (without evidence of insurability) to a comparable permanent policy with the same life insurance company anytime throughout the policy’s term. The grid with this article compares the cheapest term insurance next to fairly inexpensive term insurance with solid conversion options, and the last column shows convertible term insurance with built-in living benefit protection. Most clients are happy to pay a little extra premium for a lot of extra protection. I’m not saying that term insurance is necessarily the best solution. However, we know that our business-owner clients usually think of insurance as a pure cost eroding their bottom line. That is, until we can educate them properly about the unique wealth-building characteristics of permanent insurance. Here are a few reasons to fund a buy-sell agreement using permanent life insurance. First of all, permanent policies often have more robust living benefit provisions than a comparable-sized term policy. Since disability is such a huge unfunded risk within most buy-sell agreements, this alone is a compelling reason to have at least part of the buyout amount funded by permanent life insurance. The other big unfunded liability found in most every buy-sell agreement is how to buy out retiring owners who don’t die or become disabled during their working years. Isn’t a normal retirement buyout the most likely scenario? There’s no way to insure per se for business owners who prosper throughout their working years and want to monetize their business equity come retirement age. However, there may be no better way for the remaining owners to grow their liquid reserves than with permanent life insurance. The last reason why permanent life insurance should make up some portion of the buy-sell agreement is cash flow management. Just look inside the major banking institutions where your business owners currently deposit their cash reserves. You’ll find that these big banks often invest billions of their own capital reserves into cash value life insurance. John “Hutch” Hutchinson is an independent insurance agent in San Clemente, Calif. He is founder of BankingTruths.com, an educational site for both consumers and advisors to learn how to structure life insurance to act as their own private bank. Hutch may be contacted at john.hutchinson@innfeedback.com.

NEXT MONTH: How to teach your business owner clients that permanent life insurance is not a black hole.

Life Insurance | Retirement | Employee Benefits

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C-32445 12/07/18



A Good Time For Annuities

Everyone loves a good comeback story, and annuities had one in 2018. Fixed indexed annuity sales, in particular, sold big, setting records with a 22 percent jump through the first three quarters of 2018. Total annuity sales for those quarters were $170 billion, which is 11 percent higher than prior year, according to the LIMRA Secure Retirement Institute. Fixed AnnuityAnnuity Variable Annuity Total Fixed AnnuityTotal Variable $265











$237 $236 $222 $220 $230


$147 $145 $140 $204


$237 $236 $220 $230$156 $158 $222 $141

$158 $147 $145$109$140 $141 $111 $133 $128 $82 $80 $117 $72 $111







$230 $133

$244 $243

$244 $204 $243

$117 $108

$146 $143

$146 $103 $105 $96 $143 $100 $98 $130





2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (est) (est) (est)

“One of the things we found is of the people who said they like annuities and plan to buy one some day, they are very fond of guaranteed income,” said Jafor Iqbal, assistant vice president, LIMRA SRI. “They think that guaranteed income in retirement is the most important thing you can do.” In addition, LIMRA research found that consumers most interested in buying an annuity are younger and still working. Even those who said they have not purchased an annuity did not hold negative views, in general. Forty-two percent of consumers who didn’t purchase were open to the idea of annuities. They said annuities are good products and would consider purchasing in the future. The top reason for not buying annuities for this group was that it wasn’t the right time (44 percent).

Not surprisingly, a draft annuity sales transaction model law by the National Association of Insurance Commissioners is satisfying neither side. An NAIC working group met several times this year around the country in trying to advance an annuity sales model — mostly without success due to a few thorny issues. The group recently opted to put what it has out for public comment, due by Feb. 15. The draft takes a pass on many controversial topics that arose during working group meetings in Kansas City (May 31-June 1), Boston (August) and Chicago (October). In fact, a drafting note explains that the rule will avoid even the

term “best interest” until it is further defined by the Securities and Exchange Commission and the Financial Industry Regulatory Authority. Many states have gone ahead with their own annuity sales rules, which contributes to the difficulty for working group members. New York, in particular, passed a tough rule that applies to annuities and life insurance sales, and all in-force policies. The model rule can be read here: bitly.com/naic-rule Comments may be made by email only to Jolie Matthews at jmatthews@naic.org.


— Chris Conklin, vice president of individual annuities at The Standard

for the U.S. life/annuity industry to stable from negative for 2019. When looking at the annuity market, Best outlined a number of factors leading to its outlook. » Individual annuity sales increased through third-quarter 2018, following three years of declines. » Best views the impact of the SEC’s proposed “best interest” legislation as likely to be limited given the industry’s progress in preparing for the changes previously proposed under the vacated U.S. Department of Labor’s fiduciary rule.


Two new players in the annuity market are teaming up to create what they call a “cutting-edge” new platform that will sell “guaranteed income” products not found “in 401(k) and other retirement plans.” BlackRock and Microsoft plan to launch an annuities-based, defined-benefit retirement system. “Together with BlackRock we will apply the power of the cloud and AI to introduce new solutions that address this important challenge and reimagine retirement planning,” Microsoft CEO Satya Nadella said in a news release. The two companies plan to sell these solutions via a technology-based distribution channel.

A.M. Best took a glimpse at the annuity market for 2019 and liked what it saw. Best revised its market segment outlook






2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (est) (est) (est) $103 $105 $100 $100

Source: LIMRA Secure Retirement Institute, U.S. Individual Annuities survey. Sales values in billions.


A resurgence in index annuities reminds us that they are a great choice for clients.

InsuranceNewsNet Magazine » February 2019

DPL Financial Partners and Security Benefit teamed up to offer a four-year version of Security Benefit’s Advanced Choice Fixed Annuity to RIAs nationwide. Source: Security Benefit


FIAs Could Overtake VAs By 2021 Cerulli research finds fixed indexed annuities are expected to rise to the top of the leaderboard over the next few years. What’s behind the prediction? By Susan Rupe


ixed indexed annuities are predicted to grow to 40 percent of annuity production by 2023, which would put them on track to exceed sales of variable annuities by the end of 2021. That was the word from a Cerulli study, which also predicted index-linked annuity sales will offer renewed opportunities for growth to carriers. FIA sales took a leap in the third quarter of 2018 over the prior year, LIMRA Secure Retirement Institute reported. But although FIA sales were 38 percent higher than the prior year, LIMRA SRI predicted slower growth in 2019 and 2020. Meanwhile, LIMRA SRI reported VA sales increased 25 percent in the third quarter compared with prior year results. What’s driving these numbers? The stock market, guarantees and new product development are among the factors, said Donnie Ethier, director of wealth management and consulting for Cerulli. “When you think about the annuities space, we’re 10 years out of the Great Recession of 2008 and we’ve been in a 10year bull market,” Ethier said. “In most corners of the financial industry, the dust has settled. However, in the annuities space, I wouldn’t say the dust has settled but you can still feel the impact of the recession. I think the best example of this is that in 2007 you had around 20 VA carriers that were competing with rather aggressive competitive guarantees and today you really only have 10 carriers and the top five of those carriers dominate sales.”

The Annuity Sales Pie

In 2010, traditional VAs made up about slightly less than two-thirds of all annuity sales while FIAs made up 17 percent, Ethier said. As of year-end 2017, traditional VAs dropped from 62 to 40 percent 34

Expectations of Sales Growth Over the Next Three Years by Product Types, 2018 Structured/Index-linked VAs FIAs without living benefits FIAs with living benefits Fixed annuities Fee-based FIAs In-plan annuities Fee-based VAs IOVAs Single premoum immediate annuities VAs with living benefits DIAs Specialty riders (e.g. long-term care)

58% 40%


7% 7%


19% 14%

33% 53%












7% 7%

7% 40%





Increase less than 10%



31% 10%


50% 53%



Increase 10% or more



69% 20%



Stay the same




Decrease less than 10%




Decrease 10% or more

Source: Cerulli Associates, The Cerulli Report – U.S. Annuity Markets 2018.

of the annuity market while FIA sales rose to 32 percent of the market. “So, FIA sales have nearly doubled while VA sales have come down by about a third,” he said. “We’re predicting that by year-end 2021, FIAs will make up greater market share of annuity sales than VA sales.” Ethier said that when Cerulli researchers asked annuity carriers what’s behind the rise in FIAs, they found two factors. 1. Less attractive VA guarantees. Because the VA market has come down, the result is a resurgence of the FIA market where companies are more active and more interested in product development. 2. As more insurance companies enter the FIA marketplace, the market is seeing more transparency, shorter surrender periods, and less complex cap rates and participation rates. FIAs are getting a new look from carriers who wouldn’t consider offering them five years ago, Ethier said. “The product development rate has been high and been encouraging,” he said. “We are seeing wealth managers and some of the larger broker-dealers and wirehouses starting to warm up to the concept of FIAs. They are almost driving the product activity and transparency by wanting levelized compensation or whatever it may be to increase that transparency factor which is driving sales.”

InsuranceNewsNet Magazine » February 2019

But, he added, that there is a very big difference between a broker/dealer home office approving a product and advisors implementing it into their practice. Some new FIA producers are coming into the marketplace, but the large majority of FIA sales are coming from prior annuity advocates, Ethier said. Big FIA producers remain loyal to FIAs and are taking advantage of new products. “At the end of the day, we have more people retiring and more people who need guaranteed income. The need hasn’t changed but the supply of the products that give those benefits has increased.”

An Omen Of A Future Crash?

FIAs had strong growth during the 2008 financial crash. Does their comeback foreshadow a future market downturn? It depends on your perspective, Ethier said. The overall annuity sales pie has become smaller, Ethier said. “Since 2010, the industry has lost sales, lost producers, lost benefits in that space,” he said. “There are fewer advisors selling annuities than there were eight years ago. But when you look at the details of that pie, you see the market share shifting in that smaller pie.” The overall annuity sales pie is getting smaller but FIAs are making up a larger portion of that shrinking pie. The FIA/VA sales shift shows a “bit of cause-and-effect debate,” he said. “Was it

FIAS COULD OVERTAKE VAS BY 2021 ANNUITY the bear market that propelled FIA sales as we came out of it? Or was it the recession that made VAs less attractive, which then by default made FIAs relatively more attractive?” Ethier said he believes that as FIA sales continued to pick up steam when the market moved from bear to bull, “you had more companies warm up to the idea of enriching what they already offered in the FIA space. And that’s essentially what propelled the industry.” Going back to 2010 when the Great Recession essentially was over, carriers had exited the VA space, reducing supply. And the VAs that remained in the marketplace were less attractive than they were in 2007, Ethier said. “Carriers saw their FIA sales increase as a result of what happened in the VA market,” he said. “Then you started to see new companies looking around and saying this is an opportunity.” From the carrier perspective, Ethier said, companies offering FIAs say that FIAs are easier to hedge in a down market. “FIAs are less profitable in an up market but in a volatile market — a bear

market — insurers believe they are more sustainable because they are easier to hedge.” All of those factors are driving activity toward FIAs, he said. “As you have new carriers entering the FIA space, everyone is simplifying them, making them a little more transparent. As that’s occurring, as a result, you have more B-Ds taking a look at them. That’s what’s driving sales.” But not everyone is enamored with annuities. The RIA channel is exploding in growth, Ethier said, but RIAs in general have not adopted annuities. “Our model shows that in 2017, the entire independent RIA channel did about $3 billion in total VA sales,” he said. “More than 13,000 RIAs in the U.S., and they did less than $3 billion in sales! In 2017, 87 percent of RIAs did not sell an annuity. Out of the largest chunk that did, 12-13 percent sold fewer than five contracts. But that being said, when RIAs do write an annuity, it’s double any other channel in terms of an average sale.” Ethier’s advice to advisors who sell

annuities is to focus on annuities as a retirement income solution over other products. “We asked advisors who don’t sell annuities why they don’t sell them,” he said. “The top two reasons are: annuities are too expensive, and my practice can build better retirement income solutions inhouse at a lower cost.” “I would point out that is a very easy thing to say when we are 10 years into a bull market. At the end of the day, those in-house solutions are not backed up with guarantees and those guarantees do come at a cost. I think a lot of advisors need to be reminded of the value proposition of annuities.” Susan Rupe is managing editor for Insurance N ewsN et . She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@ innfeedback.com. Follow her on Twitter @INNsusan.

February 2019 » InsuranceNewsNet Magazine




ACA Still In Place After Court Ruling The Affordable Care Act is still the law of the

land despite a federal judge’s ruling that the individual mandate is unconstitutional. U.S. District Court Judge Reed O'Connor ruled that because the mandate cannot be separated from the rest of the law, the rest of the law is also invalid. However, the judge also issued an order saying the ACA will remain in place during the appeal process. The attorneys general of 17 states filed a motion challenging O’Connor’s ruling and opening the way for an appeal. Meanwhile, the House of Representatives was expected to vote on intervening to defend the ACA in court against a GOP-led lawsuit, which Democrats hope will be a tough vote for many Republicans.


Americans shelled out more than $10,700 per person on health care in 2017. That’s a lot of cash, but the good news is that the rate of spending slowed to a pace not seen since 2013. The Centers for Medicare and Medicaid Services reported health care spending in 2017 grew at a rate of 3.9 percent. This was a slowdown after spending rose 4.8 percent in 2016 and 5.8 percent in 2015. Slower spending was seen on hospitals, medical services, private and public insurance and prescription drugs, federal health officials said. The exception was spending on Medicare, which remained flat for the year. Private health insurance saw the highest total spending, increasing 4.2 percent

to $1.2 trillion, in 2017. The lowest spending was on retail prescription drugs, which reached $333.4 billion in 2017, an increase of 0.4 percent.


Consumers began 2019 with higher pharmacy costs as more than three dozen pharmaceutical companies raised their prices on hundreds of drugs, including generic medicines, on Jan. 1.

increase A survey by Rx Savings Solutions found that dozens of drugs saw average price increases of about 6.3 percent as the new year began. The CEO of Rx Savings Solutions, Michael Rea, told The Wall Street Journal that the study's results indicated that price increases face little oversight, which is a key factor in rising costs.





With 8.5 million people signed up for health insurance for 2019 in the federal ACA marketplace, it is far from dead and remarkably resilient. — Larry Levitt, senior vice president, Kaiser Family Foundatio


A new rule requiring hospitals to post the prices they charge for procedures online took effect Jan. 1. The move toward price transparency is part of government efforts to encourage patients to become better educated decision makers in their own care and shop around for the best value for, say, a knee replacement. But some health care advocates warn the new requirement is not as straightforward as it appears and may be confusing to consumers. Almost no one pays the charges indicated on the price list, said Dr. Ira Nash, senior vice president and executive director of Northwell Health Physician Partners in New York. The real prices are the result of negotiations with insurance companies and those are not published, he added. In addition, patients still have to go back to their insurance company and find out what their bottom line — the patient responsibility — is going to be. That can depend on each patient’s co-pays, co-insurance and deductibles.

Opioid-related deaths among teens and young children have nearly tripled since 1999. Source: Association for Medicare Source: American The Journal of the American MedicalSupplement AssociationInsurance

InsuranceNewsNet Magazine » February 2019

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

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


Getting Past The Minefield Of A Disability Claim


Your clients must know how to answer a number of questions correctly if they are to take control of their disability claims. By Arthur L. Fries


f you sell disability insurance, you will likely have a client file a disability claim at some point. You will likely be the first person called and your client will expect timely and accurate advice. Advising on a disability claim used to be simple — but that was more than 25 years ago. Your client completed a simple one-page claim form and so did the attending physician. You might have secured the claim forms for the client and many claims were handled by a local claim office quickly with very little investigation. In those days you might have even had some clout with the local claim manager and would be able to get the claim paid even faster. Those days are long gone! Disability claim departments today 38

have staffed up with many additional personnel and the process has expanded beyond your wildest imagination. Claim forms for the claimant, the employer and the attending physician are multiple pages containing very detailed questions. Tax returns, procedure codes for the health care professionals (dentist, surgeons, etc.) and a host of other documents are now a routine part of the claim scenario. One mistake by the claimant, the employer or the attending physician can be the basis for a claim denial or termination. In most cases, when your client goes on claim, you will also lose the renewal commission. So in essence, any advice you provide will be for no compensation. And if you make a mistake in the way of advice, you become a target for an errors and omissions liability lawsuit. There is a way to limit your liability. Refer your client to someone who has a background selling disability insurance or previously worked in the claim department of an insurance company. These individuals are few and far between, but

InsuranceNewsNet Magazine » February 2019

they are out there and are willing to provide advice to your client from the very beginning of a claim so you do not have to be involved. In order for your client to have control of a disability claim, they must know the answers to the following questions. Not knowing the answers can make the difference between success and failure, and will affect the amount of money that will flow into your client’s bank account. Some of these questions relate to how they handle matters before filing a disability claim and some relate to what they do afterward. 1. If the client is a corporation, should the corporation deduct the disability premiums as a business expense? Will that influence the amount of tax-free benefits they receive? If premiums are paid by the corporation, can it prevent them from claiming “bad faith” if they are forced to sue the insurance company? Can they reverse the premium paying process where they do not take a business deduction and receive monthly benefits tax free? Will

GETTING PAST THE MINEFIELD OF A DISABILITY CLAIM HEALTH/BENEFITS the same apply to the “bad faith” issue? 2. If they are in a state that offers state disability benefits and they have paid to be covered for them, will these benefits be deducted from their personal disability benefits? How about Social Security disability benefits if eligible — will they be deducted? And what if they have an association group plan and a group plan where there is an employer/employee relationship — will there be any “offsets” (deduction of monthly benefits) by one plan or the other? Could they wind up with neither insurance company paying? 3. If they own a practice, should they sell the practice before or after they go on a total disability claim? 4. If they have a partial disability claim and they hire another professional associate, will the insurance company consider only the claimant’s earnings based on their production or will they consider the earnings of the office (less business expenses)? 5. Do they know whether their doctor or medical staff has taken a course related to the completion of disability claim forms (Attending Physician Statement)? Do they know the difference in contractual wording as it relates to partial/total disability between your client’s personal disability policy, group disability, association disability, state disability, Social Security disability or worker’s compensation? 6. Do they know why many insurance companies are now having them mail claim forms to post office box addresses and not street addresses? I always have my clients send the initial claim documents to the insurance company via FedEx or UPS. The airbill indicates that the package must be signed for. This way, we know the insurance company receives the documents. When documents are sent to a post office box, it is too easy for the insurance company to say they never received them. This delays the claim and holds up payment to the client. 7. Will only one Attending Physician Statement be required or will one be required for each of your client’s treating

One mistake by the claimant, the employer or the attending physician can be the basis for a claim denial or termination.

physician that they pay for, is a company representative required to attend this exam? If they want your client to be “tested” by a physical therapist for approximately three hours or more, are they permitted to do so? Does your client know how to get a copy of these reports?

physicians and will that have an influence over the control of the claim? Is there anything your client can do to cause the insurance company to accept only one Attending Physician’s Statement?

17. When the claim form asks “How many people do you employ and how many people do you supervise,” do they know why this question is asked? Do you know that most claimants are ill-prepared for this question and get it wrong?

8. Do they know how the insurance company uses your client’s social media to control the claim from their end? 9. When they get a new claim representative assigned to the existing disability claim, do they know if the new rep has read the entire file from the beginning? And if they have not, can that influence their thinking and approach to your client receiving their future benefits? 10. Should your client “build up” their practice for a higher potential sales figure before they claim total disability? 11. What’s the best way to transition from a partial disability claim to a total disability claim? 12. Is the definition of “total disability” based upon the client’s profession/occupation at the time they purchased a disability policy or at the time they claim disability? 13. When will an insurance company say that your client has a “dual occupation?” 14. If the disability policy is kept past age 65, there is usually a requirement that your client must be working “full time.” Do you know what “full time” means? Is it three days per week? Four days per week? 15. If the insurance company requests that your client be examined by a

16. If your client is seen at a field investigator’s residence, are they required to read and sign/date a document they hand them in response to questions that were asked of them?

18. Do they know how to interpret policy contractual language such as: pre-existing conditions, fraudulent misstatements, prudent man clauses, incontestability, rehab, presumption of disability, etc.? 19. Do they know the difference between a “pure” Your Occupation’s total disability definition, a “modified” Your Occupation definition and a definition that relates to the client’s “education, training, and experience?” 20. If offered a “buyout” of their disability policy, would they know if it is a fair offer? Is there any room to negotiate a higher figure, and how much higher? Your client must know the answers to these questions and many more that arise while they are applying for disability benefits or if they desire to keep their existing disability claim continuing. If they don’t know the answers, they are prejudicing their rights to collect on a legitimate disability claim. Control of a disability claim not only provides a much higher rate of success but reduces the anxiety that goes along with the pile of paperwork that was never imagined when the client purchased coverage from their trusted advisor. Arthur L. Fries is a disability claim consultant from Nipomo, Calif. Art may be contacted at art.fries@ innfeedback.com.

February 2019 » InsuranceNewsNet Magazine



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Single Retirees ISO Significant Advisors

Single retirees and pre-retirees represent an often-overlooked market for advisors, according to LIMRA. There are 7.6 million single pre-retiree and retiree households (55 and over) with assets of $100,000 or more. In total, the single pre-retiree and retiree market offers a $6 trillion opportunity. Single retirees face their own set of challenges. LIMRA data shows that single retirees feel less confident than married retirees. Less than two-thirds (64 percent) of single retirees are confident that they can live the lifestyle they want in retirement, compared with 71 percent of married ones. Running out of savings in a long retirement is another major concern. Four in 10 single retirees believe their savings won’t last if they live to age 90. Slightly more than one-third of married or partnered retirees feel the same way. Just 57 percent of single retirees feel their retirement lifestyle is how they pictured it, compared with nearly seven in 10 married retirees.

QUOTABLE Volatility has re-entered the market, and it looks like it's here to stay. — Ned Burke, chief executive, ALPS Advisors

Rounding out the top five causes of financial worry were college loans (76 percent), monthly rent payments (64 percent), lack of emergency savings (59 percent) and overall current financial situation (62 percent). More than two in five respondents said they would be more productive if they did not spend time worrying about their finances at work.


The holiday decorations are put away and most New Year’s resolutions are forgotten by now. But Americans went into 2019 with one big money worry – having enough money to cover an unexpected expense. Fidelity Investments annual Resolutions Study showed that three out of four Americans polled predict they will be better off financially this year than last. When it comes to their financial resolutions for 2019, 48 percent they plan to save more money, 29 percent resolve to pay down debt and 15 percent said they will cut their spending. Despite their resolutions, Americans said there are additional factors outside of their control that make them anxious about 2019. Half of respondents said unexpected expenses top their list of financial concerns going into 2019, closely followed by rising health care costs (47 percent) and the economy, including stock market volatility and rising interest rates (43 percent). DID YOU






A majority of workers (69 percent) are stressed over their finances, and their employers are paying the price for that stress. A John Hancock survey found that employee financial stress costs companies about $2,000 per worker. Most respondents (72 percent) admitted to worrying about personal finances while at work, with one-third doing so more than once per week. Slightly more than three-quarters of survey respondents cited lack of retirement savings as a leading factor affecting their stress, with nearly half reporting they worry about it "a great deal."

Advisors have a few financial worries of their own, a Smith Capital Investors survey showed. At the top of the list – inflation. Three-quarters of those polled said they are concerned about inflation in 2019. The economy and the Federal Reserve also are topics of concern. More than one-third said they are less confident in the economy than they were this time last year. Nearly one-third said they believed the Fed moved too quickly or aggressively on interest rate hikes. Despite their concerns, advisors said they are holding steady on their clients’ behalf, with 60 percent said they are not changing their clients’ fixed-income allocations for 2019. More than half of advisors said they currently favor short-duration fixed-income investments.

46% of retirees believe they built a sufficient retirement nest egg. Source: Transamerica Center for Retirement Studies Source: LIMRA

InsuranceNewsNet Magazine » February 2019

Use Interest Rate Hikes As Teachable Moment For Clients When interest rate increases hit the news, it can be an opportunity to communicate with clients and improve their financial confidence. • Andrew Lord


he Federal Reserve increased interest rates by 0.25 percent in late September and indicated an additional hike was to come later. Although the increases were featured prominently in national news, the average consumer may not fully understand the implications of interest rate hikes. Each consumer is affected differently by interest rates based on what assets they hold or plan to purchase after the increase. Consumers can benefit from the guidance of financial advisors to improve their understanding of the specific impacts interest rates may have on their short-term and long-term financial plans. Advisors can leverage the news of interest rate hikes as a touchpoint for client communications and an opportunity to promote financial literacy.

added value of a nutritionist or personal trainer, guidance from a financial advisor has inherent value to help consumers understand financial events such as interest rate hikes.

Communication Opportunities

Onboarding and retainment processes constantly present opportunities for client education. Strive to increase the number of times you communicate with clients to improve their overall financial literacy. Mention current financial news through your standard communication methods such as email blasts, newsletters and personal planning meetings. These opportunities let our clients know that we are aware of the news and that we will keep a

offer beyond your standard client relationships. For instance, we hold a series of classes, both in person and online, to inform the public and teach basic financial education. My clients and other learners can explore financial themes such as cybersecurity, Social Security and more to increase their financial confidence.

Touchpoint To Reevaluate Risk Tolerance

To improve confidence among your clients, emphasize that the portfolios you set up are built to withstand the effects of interest rate fluctuations, something 53 percent of the MDRT survey respondents indicated their advisor had done. Although balanced portfolio structures and frequent client communication are used to decrease the volume of calls and emails triggered by a financial news event, client concerns cannot be

Federal Reserve Interest Rates

3 2.5 2

Consumer Confidence In Financial Skills

A recent study conducted by the Million Dollar Round Table suggests that many Americans are overconfident in their financial skills. Eighty-five percent said they are somewhat or very confident in their financial skills, but only 55 percent of Americans without an advisor feel at least moderately comfortable explaining the implications of higher interest rates compared with 76 percent of Americans who have a financial advisor. This may indicate that consumers underestimate the value of an advisor as it relates to their financial literacy. It’s interesting that some consumers believe they don’t need professional guidance in this aspect of their life. They trust professionals in the medical field to provide expertise in applicable situations, yet they seem to view financial planning as an area of independence. Just like the 42

1.5 1 0.5 2014




Source: TradingEconomics.com | Federal Reserve

close eye on the impact an event such as interest rate hikes will have on their individual plans. Invite clients in as a group for semiannual market updates. Record the session for those who are unable to attend. This is a valuable chance to touch base on the current state of the economy and help clients understand how it translates to their plans. At these meetings, spend about 10 minutes to highlight select topics as a sort of “Economics 101” educational opportunity. A financial advisor can also take on the role of a community educator to promote financial literacy. Explore what you can

InsuranceNewsNet Magazine » February 2019

eliminated entirely. We must remind our clients to stick to their plans and avoid rash decisions that will have long-term consequences. Interest rate hikes are telling moments that reveal my clients’ underlying characteristics. I learn which of my clients are nervous investors and most likely to contact me after they hear news that concerns them. If you observe clients who display nervous tendencies, get ahead of misinformed actions and reevaluate their risk tolerance. Use the media coverage as an opportunity to continue these conversations and discuss how interest rates affect your clients’ plans.



Understand Your Clients, Think Long-Term

Semi-affluent clients. Depending on your clients’ characteristics, you may receive different responses and concerns when interest rates increase. For example, my semi-affluent clients who live below their means may recognize only the positive short-term benefits of an interest rate hike. When interest rates go up, they don’t see a disadvantage, because they can go out and buy certificates of deposit, treasuries or tax-free bonds and receive a reasonable rate of return. Our challenge is to educate these clients on how the increase in interest rates seems to be positive in this moment, but will negatively impact the overall economy. Identify the aspects of their financial

hikes may spur further action and cause them to seek out an advisor. If you serve clients in this demographic, be prepared for questions and get ahead of any concerns through proactive communication and tailored guidance. My practice established a debt management team to serve the needs of younger clients. These services can help you prospect with this age group, who also expressed in the MDRT study that they are more likely to work with an advisor the next time interest rates are increased.

Leverage Financial News

When the next interest rate increase occurs, advisors will have another opportunity to contact their clients and ensure they feel confident with their current

85% percent of Americans said they are somewhat or very confident in their financial skills, but only 55% without an advisor feel at least moderately comfortable explaining the implications of higher interest rates. plans that will be negatively affected in the long run to encourage clients to see the long-term perspective. Younger generations. It is also important to consider how clients in different age groups will respond to increased interest rates. According to the MDRT study, Americans ages 18-29 are more likely (42 percent) to state that higher interest rates will negatively affect their finances compared with Americans ages 29 and older. In fact, Americans ages 18-29 without a financial advisor are more likely (80 percent) than members of other generations to believe working with a financial advisor would increase their understanding of interest rate implications. Since topics such as student loans and mortgages are areas of concern for members of that age group, media coverage of interest rate


financial state. In fact, when all respondents were asked about actions they would take if the Federal Reserve raises interest rates again in the near future, 26 percent said they plan to talk with a financial advisor. Current financial events can also serve as a prospecting opportunity for those who may not have a financial advisor, but realize the need to have one when an interest rate hike occurs. Leverage current events to improve client education and promote financial literacy among consumers. Andrew Lord, CLU, ChFC, is the founding and managing partner of Essential Planning, a registered advisory firm in Portsmouth, N.H. He may be contacted at andrew.lord@ innfeedback.com.

February 2019 » InsuranceNewsNet Magazine




SUPP MED MED SUPP r Great Door Opener r High Demand Product t Seniors with Assets s Multiple Carrier Options s Turnkey Online Training g Live Agent Support


The Key To Your Child’s Success? A Dog Do you want your child to grow up to become

a CEO? A recent study suggests a puppy (or a kitten) might make them more likely to attain the corner office. According to a study by Kelton Research, 93 percent of C-suite executives said they grew up with some sort of a pet. More than three-quarters of those polled attribute their success to their childhood furry friend, with almost a quarter of them saying their first pet taught them more than their first internship did. Walking the dog is a great exercise in idea creation, as 77 percent of current C-suite executives admitted that they came up with a big business idea while walking their dogs. Overall, 62 percent of the corporate executives polled believe their childhood pets had a positive impact on their ability to build lasting relationships with their coworkers and clients. “retain plasticity” deep into middle age, Levine said, meaning that hearts still can change in desirable ways if we exercise.


If you’re middle-aged and neglected to exercise, it’s not too late to turn back the clock on your heart. Research shows that you still can take years off your heart by starting to work out in midlife, provided you exercise often enough. Dr. Benjamin Levine, a cardiologist at the University of Texas Southwestern Medical Center, had a group of sedentary middle-aged men and women start exercising four or five times a week. The exercisers completed at least one session a week of brief but strenuous intervals. They also did 30 minutes or longer of brisk walking or jogging. After two years of continuing these routines, the left ventricles in the exercisers’ heart muscles were stronger and less stiff than at the start of the study. Their hearts, in effect, became more youthful. These results suggest that our hearts can DID YOU




The human face changes with age, and Americans spend billions of dollars to combat those age-related effects. But what if you could take three years off your face by — making a face? A study published in JAMA Dermatology found that middle-aged women looked about three years younger after spending a few months doing facial exercises. Gary Sikorski is the developer of Happy Face Yoga, one of the longest-established facial-exercise programs. He developed a program of 32 facial exercises that would target most of the muscles in the face and neck. The exercises take about a half-hour a day and involve using fingers to provide light resistance while smirking, puckering or manipulating muscles in the cheeks, forehead or neck. After women in the study group spent 20 weeks performing the exercises, dermatologists said

QUOTABLE Monday can be thought of as the New Year's of the week — a time to refresh and put our past bad deeds behind us and try and do better in the coming week. — Joanna Cohen, director of the Johns Hopkins Bloomberg School of Public Health Institute for Global Tobacco Control

they found significant improvement in the women’s cheeks and found their overall facial appearance seemed more youthful than before they began the exercise program.


Americans aren’t getting any taller but they are packing on the pounds. The Centers for Disease Control reports that the average weight of American men rose about two pounds — to 198 — in the last decade. Women gained even more weight — six pounds — to nearly 171 pounds in the past 10 years. CDC records date to the early 1960s, when the average man was a little over 5 feet, 8 inches tall and weighed 166 pounds. Now, men are almost 1 inch taller and more than 30 pounds heavier. But today's average height of 5 feet, 9 inches is about a tenth of an inch shorter than 10 years ago. The average woman in the early 1960s was 5 feet, 3 inches and 140 pounds. Now, women are a half-inch taller and about 30 pounds heavier, on average. The average height is about the same as it was a decade earlier: 5 feet, 4 inches.

Danish researchers found those who play tennis, badminton or soccer tend to have longer lifespans than those who cycle, swim or jog. Source: The New York Times

InsuranceNewsNet Magazine » February 2019


Some of Queen Mary 2’s facilities include fifteen restaurants and bars, five swimming pools, a casino, a ballroom, a theatre, and the first planetarium at sea.

Cruise Ships: A Floating Playground Of Potential Friends Want to make new friends? Cruise ships offer surprising opportunities to meet people with whom you share a common interest.

crossings on its flagship Queen Mary 2. Because there aren’t any stops for seven days, the ship is the destination. It has a formal, British atmosphere. Everyone dresses for dinner.

access, but it is slow and expensive. As a result, you will meet people using oldschool techniques such as talking and writing notes.

By Bryce Sanders

Why Bother Cruising?

You could systematize the whole process to put yourself in front of other people, but that’s too much like work. The process should be casual and serendipitous, not forced. Here are 10 ways you can do it.


e get into ruts. We get comfortable with our routines, seeing the same people and eating at the same restaurants. A life that was once interesting and exciting has become boring and routine. It’s time to shake things up. It’s time to go on a cruise.

Choose The Right Cruise

Cruise lines have their own personalities. Disney is identified with family cruising. Carnival marketed itself as “the fun ships.” Princess has staked out romance because they started it all with the “Love Boat.” Do your research and make the right choice. If you love opera and only opera, a rock and roll revival cruise is not for you. Personally, my wife and I prefer Cunard, which operates transatlantic 46

There are many ways to take a vacation. You can fly to Hawaii and bask in the sun or fly to Europe and explore a capital city. But you aren’t going to make lots of new friends. But a cruise ship is a sealed environment. About 2,500 people are brought together for a week or so. Everyone then goes their separate ways, possibly to never see each other again. These characteristics, plus the luxurious surroundings, speed up the development of relationships. It’s easy to make friends. There’s no shortage of possibilities to meet people. If your ship holds 2,500 people and you meet 50 new people in a week, you would need to take the same trip with the same people for 50 weeks, almost a year, before you meet everyone!

A World Without Social Media

Don’t expect cell phones and texting to work at sea. Most ships do have internet

InsuranceNewsNet Magazine » February 2019

10 Ways To Meet New People

1. Meals – Part 1. Many ships have early and late dinner seatings. You are asked your preferences as part of the booking process. You are then assigned to a table. Tip: Ask to be seated at a large table. Chances are you’ll hit it off with someone. If this isn’t the case, immediately after dinner, ask the maître d’ to reassign you to another table. 2. Meals – Part 2. You’ll discover a casual dining, cafeteria-style service somewhere aboard the ship. Skip it. You can do that at home. Breakfast and lunch in the main dining room are usually open seating. Tip: Ask to be seated at a large table. It’s like playing poker. At each meal, you

CRUISE SHIPS: A FLOATING PLAYGROUND OF POTENTIAL FRIENDS INBALANCE are dealt a different hand of cards. With any luck, you’ll find a winner. If not, the next breakfast or lunch is a fresh deal. 3. Find a bar. Bars and cocktail lounges are abundant aboard ship. You’ll find the sports bar, the jazz club, the champagne bar and the cigar bar. Pick one and become a regular. Tip: The hour before dinner is pretty quiet aboard ship. Show up at your favorite bar, talk with the bartender and the people around you. Another strategy is to arrive early, grab the best four seats near a window and beckon another couple over when the place fills up. 4. Cocktail parties. The ship will have at least one big reception, the captain’s welcome-aboard cocktail party. Seating will be at a premium. Tip: Show up about 15 minutes early as the line forms. Once inside, immediately find a table. Nail it down. Chat with the people at your small table and the couples nearby. Couples arriving later will be looking for seats. Motion someone to come over. 5. Scotch/wine/gin tastings. The bars usually have organized tasting classes. The wine stewards will likely approach the serious wine fans in the dining room, telling them about organized tastings. Tip: If you are a serious fan, sign up for a class. It shouldn’t be difficult to find things to talk about with the people around you. 6. The sports bar. It’s not an “hour before dinner” activity; it’s whenever the game is on the big screen. Tip: If you’re a sports fan, just show up. You’ll make friends quickly. 7. Poolside. Any film with scenes of shipboard pools features people in tiny bathing suits, often throwing beach balls. That’s not reality. The decks are an open space. There’s lots of seating in the shade. Tip: Cruise the outdoor seating areas at different times of day. Find where you would be most comfortable. Chances are you will find like-minded people. 8. Talks, ship tours and lectures. In the United Kingdom, The Telegraph reported people spend more time watching cooking programs on TV than they actually spend cooking. Tip: Expect a behind-the-scenes kitchen tour and cooking classes. If that’s your interest, you’ll meet like-minded people. 9. The gym. If you work out regularly, you will have plenty of company. The gym is a structured environment. It’s likely you will see the same faces day after day. Tip: If you are a gym rat, chances are you have lots in common with this crowd. 10. Bar games. Karaoke isn’t dead. The British love pub quizzes. These and other activities should be available. It’s a shared experience. It brings down barriers. People are friendly. Tip: Check the ship’s program. Turn up at least once, early in your trip. Join in or watch the action. Because it’s usually crowded, you’ll meet people.

Make The Connection

After you’ve connected with a few folks who share similar interests with you, this is what you need to know. Your cabin number is key. When you meet someone interesting and are considering getting together later, give them your name and cabin number. You can write each other notes and slip them under the cabin door. Cabin parties. Invite your friends for drinks and canapes in your cabin before dinner. The purser’s office can usually arrange for a tray or two of canapes, at a reasonable price. Bringing your own wine onboard is usually permitted, providing it’s consumed only in your cabin. Your steward can get extra glasses. Private parties. Let’s say you are willing to spend a bit more. The ship has smaller function rooms. Ask if you can reserve one for an hour-long party. You pick up the drinks tab. The staff will likely provide chips and munchies, just as if you were sitting at the bar. Lunch. It’s usually open seating in the dining room. Speak with the maître d’. Let them know you will be bringing six of your new friends for lunch tomorrow at 1 p.m. Can they reserve a table? You pick up the drinks tab. Shore excursions. If ports are on the itinerary, suggest getting off the ship together and exploring the town. Another option is for all of you to book the same land tour. Everyone covers their own expenses. Contact information. Approach each new friend or couple you met. You had a great time. You have lots of shared interests. You would like to stay in touch. They will likely provide an e-mail address, phone number, mailing address or whatever you want. Provide the same information in return. This should be done privately because some of your new friends might not have bonded with other new people you’ve met. It can be easy and rewarding to meet people at sea. It helps to have a system to meet them and remain in touch. Bryce Sanders is president of Perceptive Business Solutions. He provides high-networth client acquisition training for the financial services industry. He is the author of the book, Captivating The Wealthy Investor. Bryce may be contacted at bryce.sanders@innfeedback.com.

ELIMINATE YOUR LIABILITY RE: DISABILITY CLAIM ADVICE Have YOUR clients call me for advice and ... a FREE BOOK that provides info relative to the ISSUES related to a disability claim. ART FRIES, Disability Claim Consultant. More articles, more testimonials and more money secured (1.7 billion +) than anyone else in the U.S.

ART FRIES, RHU 800-567-1911 friesart@hotmail.com www.afries.com February 2019 » InsuranceNewsNet Magazine



Failed Your New Year’s Resolution? You Are Not A Loser, Just Human When you get specific and hold yourself accountable, you have a greater likelihood of making those resolutions become reality. By Bob Davies


t’s a month into 2019 and the odds are good you are shaky on your New Year’s resolutions — if you have not shirked them altogether. Here is why New Year’s resolutions fail and a strategy to ensure that they stick. The most common resolutions I encounter from others are about weight loss, exercise and smoking. When I spoke at a top producers’ insurance conference, the attendees had an opportunity to share their goals. I expected to hear them promise to focus on areas of improving their practices. What did I hear instead? I’m committed to losing weight.” This gave me an opportunity to coach someone in front of the entire room. So I said, “What does that mean?” This 48

allowed me to introduce a concept that will dramatically affect the final outcome — “be specific.” I then taught the audience the concept of “precision probing.” One reason that commitments don’t turn into long-term habits and actions is because the commitment is not specific enough. The precision probing model solves this. It’s simple: who, what, when, where and then add the word “specifically.” So back to “I’m committed to losing weight.” “How much, specifically?” I asked. “I want to lose 40 pounds.” This is still a vague statement, so I asked “By when, specifically?” He gave me an answer: “Let’s say by the end of the year.” This brings up another problem with New Year’s resolutions: It’s the starting that stops most people. The end of the year is too far out. You need a very shortterm goal and you need to take a small step. So I asked, “What does this mean for this week?” He said he would like to lose one pound. This seems reasonable, so I asked, “How are you going to do this?”

InsuranceNewsNet Magazine » February 2019

He gave another vague response: “I’ll eat less and exercise more. “What the heck does that mean?” I said. So I focus on one thing, exercise. “What specifically will you do for exercise this week?” He said, “I’ll work out five times this week.” What does he mean by “work out?” I checked for reality. “How many times did you exercise last week?” I asked. The most common response I get back is “zero.” “How about the week before that?” Again, another zero, and before that zero, etc.

Unrealistic Commitments

This is a third major reason that New Year’s resolutions fall flat on their faces, unrealistic commitments. You can’t commit to work out five times when your history is zero followed by zero followed by zero!

FAILED YOUR NEW YEAR’S RESOLUTION? YOU ARE NOT A LOSER, JUST HUMAN INBALANCE Then I asked, “Would it be good if you For example, the flight or fight mechaworked out four times this week?” Most of nism will save your life if you see a bear. the time, the answer is “yes.” Then I asked The problem is when these protective if working out three times would be good instincts occur regardless of the truth and again I hear “yes!” and validity of the threat. For example, This person is making an unrealistic you are driving and someone cuts you off commitment and has just about a zero in traffic. You get the exact fight or flight chance of succeeding. You can almost response physiologically but it’s not a guarantee that there will be circumstanc- true threat. You are sitting in your car. es, obstacles, unscheduled priorities and Your life is not being threatened but you interruptions that all get in the way, pre- respond as if it were. venting people from doing what they said they would do. But there is hope. So, let’s say that they agree to a minimum-level commitment of working out two days this week. They’d like to work out four times but are only committing to and being held accountable 1. Specific goals. to two. They can go ahead and reset their baseline by working out four 2. Short-term focus with small steps or five times and then commit higher next week but they only have the and specific activities. behavioral credibility to commit to the lower level of two times. 3. Realistic commitments based on Now this brings up another key previously established behavior. component for successful New Year’s resolutions — take small, realistic steps. 4. You recognize the true competitor However, this is also doomed for — human nature — and you have an failure, unless … intervention. There must be an intervention to compensate for human nature. We are all genetically coded to avoid 5. You use behavioral contracting — the highest level of perceived pain specific declaration plus accountability. and seek comfort. We are genetAccountability equals the check-in with ically coded to see threats, to be an enforceable consequence (painful) negative. We are not coded to look in a meadow and appreciate the for nonperformance. beauty. We are coded instead to look in a meadow and see the lion that is barely visible. We are coded for survival. The key is to recognize that human Because we faced a scarcity of food as nature is the real competitor to your cavemen, we are coded to binge, to eat reaching your goals. You are genetically well beyond our nutritional needs and to coded to recognize the highest level of store the excess as fat. pain and avoid it for comfort. You are an This is not appropriate for avoidance machine! us today, but we still have Once you recognize this, you can work the primal instinct. In with it, rather than fighting it. Here’s fact, all of our evolu- what this means for your commitment tionary instincts are to exercise two times this week. to recognize what can You make the commitment, exercise hurt us and to com- two times. And you’re specific about pel avoidance. This is what exercise means. based on this no-lonSo this is specific. It’s also a shortger-appropriate human term commitment — the next seven survival instinct. days — and it is a small step with specific

Here is how to ensure New Year’s resolutions ARE KEPT:

actions. And it’s realistic. So why won’t you do it consistently? Because this is only half of a commitment. You haven’t acknowledged the other reason for failure, which is recognizing your true competition — human nature — and having an intervention. It’s called behavioral contracting. Behavioral contracting is making a specific declaration (such as exercise twice weekly) plus accountability. Accountability has two parts. The first part is the check-in. Someone outside of yourself checks in with you and verifies that you did what you said you would do. The second part is the consequence for nonperformance. There must be a painful consequence if you don’t do what you said you would do. This consequence must be more painful than the pain of the activity. Now you are tapping into human nature’s genetic coding of avoiding the highest level of perceived pain for the comfort. If the highest level of pain is the consequence, then you will be compelled to avoid. How do you avoid? By doing the activity you said you would do. Try it yourself. If you gave yourself a $1,000 fine if you didn’t do the activity you committed to do, I promise you that the pain of losing the $1,000 would far outweigh the perceived pain of performing that activity. The bottom line, you will still be an avoidance machine, but you will avoid the penalty by doing the action. Try this with just one New Year’s resolution for one week at a time and you will be happy with the result. Bob Davies of High Performance Training holds a master’s of education degree in psychology from Springfield College, and a bachelor’s degree in health from Rutgers University. Bob can be reached at Bob.Davies@innfeedback.com.

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February 2019 » InsuranceNewsNet Magazine



The Fortune Is In The Follow-Up A 10-touch system to increase your closing ratio by up to 80 percent. By Bruce Lund


ales are direct results of two things: attention and activity. The attention comes from marketing and gets your foot in the door. The activity is what closes the business and is often a direct result of the follow-up. Here’s what I know about business follow-up: An object at rest will stay at rest unless acted on by an outside force. In sales, you must be that force. How many millions of dollars in production are lost each year because of poor follow-up? Having trained individuals and corporations for the past decade, the one consistent thing salespeople come to us for is help with their follow-up. They may struggle with a lack of confidence or with not knowing how to overcome objections. They may need help in how to follow up with the right amount of frequency and not seem like a nuisance. We will break down our 10-touch follow-up system. But before we do that, let’s make sure to understand a few mindsets when it comes to following up. We call these help list (suspects) and fight club (prospects) follow-ups. 1. Help list follow-up = Get their attention (first meeting) 2. Fight club follow up = Keep their attention (7-15 touches to close) There are two types of follow-up mindset. The reason these categories are important to keep separated is because we go into each type of follow-up with a different mindset.

Help List Mindset

The purpose of the help list follow-up is to have the initial conversation and decide whether your products or services can help this person. We do this by running all of our suspects through an opportunity filter. 50

» Do they share our same beliefs about the service we offer? Here is an example of a belief statement: I believe everyone deserves peace of mind when it comes to protecting life’s most cherished people and possessions. » Do they want your services? Ask the right questions to create a want that will convert them into a motivated buyer. » Do they fit your opportunity filter (traits) of someone you want to do business with? For example, are they humble, coachable, grateful and professional? I look to do business with other people who are hungry, humble and coachable. Based on past experience, I’ve learned that when people aren’t aligned with our beliefs on the front end, then they almost always become a high-maintenance client. High-maintenance clients are transactional by nature and don’t value the service you provide. In every first meeting, interview them based on shared beliefs as much as they are interviewing you on your services.

Fight Club Mindset

Once someone fits my opportunity filter, then it’s game on. The fight club mindset is this. » Are you just as good as or better than anyone else in your industry? » Do you know your services help this person? » Are they going to use someone in your market? » Do you have shared beliefs about the services? Then it’s your duty as a sales professional to fight to earn their business. Now let’s take a look at some follow-up statistics. I’ve learned that 92 percent of salespeople don’t follow up more than

InsuranceNewsNet Magazine » February 2019

four times, according to research from NuGrowth Solutions. Dr. Brian Williams, a researcher, consultant and sales leader, writes that it takes more than five follow-ups to make a sale 80 percent of the time. Nearly 70 percent of salespeople don’t have a follow-up customer relationship management system, according to sales coach Tom Ferry.

Amateur vs. Professional Follow-Up

Most salespeople make two or three weak follow-up attempts before giving up. We call this amateur follow-up. An amateur follow-up sounds something like this: » “I was just calling to check in.” » “Can I answer any more questions?” » You were on my list of people to call today.” » “I woke up today thinking about you.” Which is just weird … We define a professional follow-up as a “touch with value” that articulates how you help solve their problem better than anyone else. Money changes hands when problems are solved and energy is exchanged. Your positive energy must be greater than their objections or hesitations. Professionals are persistent in their follow-up. They have the confidence because they know they can help the prospect. We believe in high-touch, high-frequency once someone is on our fight club. We perform seven to 15 touches over a 90day cycle to fight to earn the business. We also follow up within the first five minutes of someone calling us if we missed them. Motivated buyers do business with the first person they talk to 67 percent of the time, according to research from the National Association of Realtors. Most people are poor at follow-up because they either didn’t follow through on an initial promise or they don’t have anything of value to say. Therefore they don’t want to be “a nuisance.”


10-Touch Follow-Up

In today’s attention-deficit world, it can be incredibly difficult to keep people’s attention. We have a 10-touch follow-up system that helps with just that. 1. Email (Soft Touch) Send the prospect summary notes from the first meeting – the shorter the notes, the better. In this email, express excitement over the meeting, thank the prospect for their time and remind them of your shared beliefs. Highlight two or three issues (buzzwords) you know you can help the prospect with (problems, needs or wants). Let the prospect know you will send them additional information in the next 2-3 days. 2. Content-Specific Touch (Hard Touch) Send the prospect a value-add based on content for their situational problems, needs or wants that you have helped others with. Show that you are the expert and a student of your business by providing the prospect with expert materials. Some personal examples of this are an article or blog I wrote, a video I made or a book I’ve read. Many salespeople will send the prospect a card, but I believe in the “plus-one” approach such as a card plus content or a gift. » Personal Examples: Article (blog) I wrote. Video I made. Book I’ve read. » Many send a card but I believe in the “Plus-One” approach such as a card and content.

every day to help other people. If appropriate, share a testimonial with the prospect. Then set the next face-toface appointment.

your database only. If the answer is yes, but they aren’t as motivated to buy, move them into your “someday” category.

5. Face-to-Face Meeting (Hard Touch) At this meeting, you will rekindle the rapport and chemistry of the first meeting with the prospect. Remind the prospect of your shared beliefs, as well as their needs, wants or problems. The best time to close business is when you are face-to-face with the prospect, so this is a good time to ask for the commitment.

9 & 10. Repeat Top Strategies Look at the list above and ask yourself what touch(es) were most positively reciprocated by the prospect. Also understand that you probably had multiple other types of touches throughout the process, so by this point you are most likely closer to 15 total touches in the process in 90 days. A “soft” touch is less salesy and more relationship-building. A “hard” touch is more sales-related to show why you are an expert and to push the prospect to a buying decision. A recent study showed that people do business with those they trust and respect. The soft/hard touch

6. Social Consensus (Soft Touch) If you still have not closed at this point, then ask the prospect whether talking to

Sales is a game of probability and a mindset. someone like them might help ease their mind. Make a text introduction and have an advocate, promoter or new client set up a call with them. One important note here: Make sure this falls in compliance/regulations of your industry or company. However, there are almost always ways to perform this touch with permission.

3. Trigger Methodology (Soft Touch) Send the prospect a text of anything that makes you think of that person. It can be personal based on their interest (such as sports) or professional, based on something happening in the market.

7. Challenger Sale (Hard Touch) This is where you ask some questions. Have you noticed how hard we’ve worked to earn your business? Has anyone else worked this hard to earn your business? Based on our first conversation, I know we both believe the same things, so what is really stopping us from getting started? Be ready for the prospect’s objections or excuse. This is meant to close the business.

4. Proof of Concept (Hard Touch) Before your next meeting with the prospect, show proof of concept. Give examples of someone “just like them” that you are currently helping. This shows that you are the expert and are doing things

8. Move On or Move Out? Is it time to move on? Ask yourself if the prospect still fits your filter of someone you want to do business with. If the answer is yes, then keep them in your fight club. If the answer is no, move them into

combination does both of these. All touches should take place in a 90day cycle. The fortune is always in the follow-up. Sales is a game of probability and a mindset. The mindset for your follow-up process should be this. Some will believe in you. Some won’t. But, so what? We can’t lose something we never had in the first place. Therefore, it’s our obligation as sales professionals to fight to earn the business. I’d much rather lose a deal because I was aggressive than sit on the sidelines and lose to someone else. Confidence is the one thing that affects everything during the follow-up process. The 10-touch with value system is designed to increase your confidence to be relentless in your follow-up. Bruce Lund, Ph.D., has coached producers from all walks of life as a professor and sales trainer. He is the founder of 90-Day Sales Manager. Bruce may be contacted at bruce.lund@ innfeedback.com.

February 2019 » InsuranceNewsNet Magazine


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


Advisors Make Great Political Advocates The skills that make you good at building relationships with clients are the same skills that can help you build relationships with elected officials. By Kevin Mayeux


s an advisor, you protect your clients from myriad risks — from the risk that they might outlive their income to the risk that they might die too soon and leave their families without financial support. You also help them set and meet important goals and obtain coverage such as health, long-term care and disability insurance that mitigate the risk of illness or of an injury that might derail their financial well-being. But there is one category of risk you may not have considered: the risks posed by laws and regulations that threaten your business and clients. Fortunately, advisors can address these risks by engaging in political advocacy.

Advisors Are Natural Advocates

The skills that make great insurance and financial advisors often overlap those that make great political advocates. Even if you have never engaged in a political issue or spoken to an elected official, your career training and experience all but ensure you will be great at advocacy. 1. Building relationships. Successful advisors create long-lasting relationships with their clients. The most effective citizen advocates are those who build relationships with their elected officials. If insurance advisors and politicians have anything in common, it is their desire to make connections with those they serve. So, not only are you a strong relationship builder (by nature of your professional success), you are also dealing with people who want to establish 52

Your career training and experience all but ensure you will be great at advocacy. ties with you. Once you realize that a state legislator or a member of Congress is just another person you can serve and who is eager to receive your help, it makes the prospect of being politically involved much less intimidating. 2. Providing education. Advisors draw on their expertise to help clients understand financial risks and offer solutions to the problems those risks create. Government officials cannot be experts in every field impacted by the legislation and regulations they must consider. This can be particularly true when it comes to insurance and financial matters. Just like your clients, legislators are looking for information and solutions to problems. They, too, want your help! 3. Representing Main Street. Elected officials hear from corporate lobbyists on a near-daily basis. Yet they cannot remain in office if they do not understand and serve the voters from their home districts. Insurance advisors, especially NAIFA members, live in communities in every state across the country. They serve the interests of the families and small businesses in those communities every day of their professional lives. The overlap is obvious. When you advocate on behalf of your business or industry as a community-based insurance advisor, you also represent your clients. Who understands their insurance and financial needs better than you? There is no one who can explain how laws and

InsuranceNewsNet Magazine » February 2019

regulations impact Main Street America better than you. 4. Closing the deal. As an advisor, how many times have you faced a skeptical audience? How much of your time is spent overcoming your clients’ objections to the products and services you offer? You know how to make a good argument without being argumentative, and how to present complex ideas plainly and persuasively. The communications skills you have developed working with clients are the same ones you would use to effectively present advocacy positions to policymakers.

Getting Involved Is Easy

Legislators, whether state or federal, are far from inaccessible. They participate in community events, work with charitable causes and are present in their districts. They have staff members devoted to interacting with constituents. Many insurance advisors get to know elected officials by being active in their communities, schools, or religious organizations. Several NAIFA members I know even have members of state legislatures or Congress as clients. You can also connect with your legislators by working on their campaigns or attending political events. It is a relatively simple matter to set up meetings with them or their staff either in the home district or in Washington. NAIFA’s annual Congressional Conference, scheduled for May 14-15, offers a great opportunity to get involved. Experts and D.C. insiders provide training and inspiration to help you make the greatest advocacy impact. You can network and learn from hundreds of fellow advisors, including seasoned advocacy veterans, and meet with members of Congress in a low-stress, group setting. Every insurance and financial advisor needs to be a political advocate. You should do it because it is crucial to the success of our industry, your business and your clients. You should do it because it is a great source of personal satisfaction. And you should do it because you are good at it. Kevin Mayeux is CEO of NAIFA. Kevin may be contacted at kevin.mayeux@ innfeedback.com.

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Individual Policies Overcome Hidden Barriers In Group DI Plans Many clients assume their group policies meet all their coverage needs, when in reality their group coverage opens their long-term financial safety to risk.

in the technology industry, whose total income often includes non-salary sources and exceeds maximum monthly benefits.

Policy Portability

roup disability insurance plans often present a false sense of security and leave blind spots in clients’ financial strategies if they are not supplemented with individual insurance policies. Most clients — and some advisors — are unaware of the pitfalls and hidden barriers within their employer-offered plans. Here are some of the common hurdles and limitations of group coverage plans. Determine how your clients’ plans impact their financial goals and identify opportunities to leverage an individual policy to offset and safeguard clients’ income in the event of full or partial disability.

Portability is an important concern for employees with a high tendency for relocation such as doctors, bankers and lawyers, or for those who may not pass medical underwriting for a new policy. Group disability insurance policies typically are not portable and will not follow employees when they leave an employer. If clients are able to extend their coverage upon departure, they are met with a number of prohibitive restrictions and diluted terms of coverage including immediate and frequent rate increases, limited monthly benefits and provisions that offset coverage based on future employer benefits. They will also typically lose protection to work in their chosen field or perform their own specialty and will only be covered in the event of a total loss of income.

Determine Clients’ Benefit Under Group Plans

Elimination Periods And Special Conditions Limitations

By David C. Blake


Individual policies holistically consider all compensation sources to define insurable income. But most group policies only include monthly salary when calculating the payable benefit amount. Under this definition, non-salary income sources such as bonuses, revenue distributions and performance-based awards are not included. Payments can also be further reduced by taxes if the employer pays premiums on the employee’s behalf. Additionally, consider the maximum monthly benefit outlined in the plan. Most group disability insurance plans will pay employees a percentage of their income up to a maximum amount. If the maximum monthly benefit isn’t set high enough, your clients may not maintain an amount of coverage that will meet their monthly needs. This can be an issue for highly compensated professionals such as doctors, attorneys, investment bankers and those 54

The elimination period, or how long employees under a group policy need to wait before benefits kick in, can sometimes be a barrier to receiving coverage no matter how favorable the policy’s terms are. Most employer plans require 90-180 days of consecutive and continuous total disability before payments are made. Several common disabilities, such as knee injuries and heart attacks, have a shorter average recuperation time and allow employees to return to work before the waiting period ends, preventing a benefit payment. Group policies may limit coverage for certain special conditions or self-reported disabilities including chronic fatigue syndrome, musculoskeletal issues and environmental allergies like latex sensitivity in doctors, among others. Claims related to a current or pre-existing condition are likely to be limited to a short time frame of coverage or not covered at all.

InsuranceNewsNet Magazine » February 2019

Partial And Proportionate Losses

Another stark difference between individual and group disability insurance policies is the coverage for partial and proportionate loss of income following a disability. In a group policy, residual benefit payments are not usually guaranteed to be a proportionate benefit. Policies will either include a proportional or direct offset benefit that will lessen the policy payout. In the event of a reduced, partial loss of income, instead of a complete loss, the amount an employee is still able to earn will be deducted from the total amount of the monthly benefit. The remaining difference is paid by the policy. For example, if a client earning $240,000 per year ($20,000 per month) is covered by a group plan with a maximum monthly benefit of $10,000 and suffers a 50 percent loss of income, a direct offset definition will eliminate the opportunity to receive any benefit amount. This situation is common for high earners or in instances of low maximum monthly benefits. Many clients assume their group policies meet all their coverage needs, when in reality their group policies open their long-term financial safety to risk. Discuss multi-source income coverage, special conditions limitations, coverage waiting periods and coverage caps with your clients to ensure their needs are fully met. Individual policies are a necessary complement to group disability policies as they offer a solution to these issues and extend beyond group policy limitations. David C. Blake is the founder and principal of the InsMed Insurance Agency, an independent insurance firm that specializes in developing and offering disability insurance products to health care professionals across the country. David has been a member of MDRT for 18 years with nine consecutive Top of the Table recognitions, and is on the MDRT Foundation Board of Trustees. He may be contacted at david.blake@innfeedback.com.





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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.


Digital Model Plus Personal Touch: Just The Right Blend Technology allows for greater business efficiency and streamlined processing while allowing advisors to expand their personal sales capacity. By Patrick Leary


oday’s consumer is empowered, omnichannel and expecting more. The availability of digital applications and access to extensive information on the internet has fueled this new reality. It also has broadly impacted how consumers research and buy products and services, including financial services. As such, it is critical that today’s advisor establish and embrace a digital presence in the marketplace. There are many advantages to embracing a digital advisor model. Technology allows for greater business efficiency and streamlined processing. It allows advisors to expand their personal sales capacity. Prospecting through social selling can be increased on an exponential basis. Advisors can incorporate virtual meetings, text and other digital communications as part of their client engagement process. Is the concept of the digital advisor years away? Findings from “Harnessing Growth: The LIMRA-EY Experienced Financial Advisor Study” show that, in fact, the digital advisor has arrived. Digital tools have become essential to all types of advisors and survey results indicate continued adoption of these tools. Advisor websites, mobile communications, social selling strategies and cloud-based services (platforms or applications) are all well-established within advisor practices. While many digital solutions are available, what technology solutions are most effective to support and grow advisor practices? Almost eight in 10 advisors see digital solutions being most impactful for marketing, client acquisition and ongoing client engagement. Our study 56

shows that a full range of digital communications channels are being leveraged. However, they are not replacing existing approaches (such as in-person meetings), but instead are complementing them. This is important as clients value digital engagement, but still expect a personal touch. Our 2018 Insurance Barometer Study with Life Happens found that 73 percent of consumers would like to educate themselves about insurance on advisor’s website. Almost as many (70 percent) say that meeting with an advisor before buying life insurance is important to them.

Advisors are also beginning to leverage digital advice tools (such as robo-advisors) to support and grow their practices. Slightly fewer than 20 percent of the advisors in our study indicated that they are using digital advice tools. Although some view these platforms as a potential threat to personalized advice models, many advisors see an opportunity to leverage these tools in their practice models. These digital tools are being used in two ways: 1) to provide services directly to a targeted segment of clients, allowing the advisor to focus on other clients, and 2) To


of consumers would like to educate themselves about insurance on an advisor’s website. A hybrid digital-personal sales model can be most effective, aligning an advisor’s value proposition with client expectations.

Leveraging The Web For Success

Many advisors are leveraging a web presence to drive success as well. Currently, 63 percent of advisors have a personal website for their practice (based either on a template provided by their company or one designed specifically for the practice). A wide range of educational, transactional and interactive tools are available on advisor websites. But what features have the greatest impact on business growth? It is not so much the interactive capabilities (submitting applications for coverage, getting quotes and using needs analysis calculators) as it is the ability for website visitors to learn about products and services, advisors report. Providing this capability allows prospects to develop a basic understanding of advisor offerings that they can be comfortable with when discussing needs with their advisor.

InsuranceNewsNet Magazine » February 2019

provide an additional or alternative method of providing service to existing clients. Advisors of all types see digital solutions as an integral part of their practices moving forward. More than half of advisors plan to increase their use of virtual meetings in the future; almost as many plan to increase their use of text/ instant messaging, social networks and email communications. Recognizing the need for a personal touch, fewer than 10 percent plan to dial back their use of faceto-face meetings in the future. Becoming a digital advisor can help drive practice success. Advisors should adopt a digital mindset to align with expectations of today’s customer. However, a personal touch should not be overlooked to fully engage with today’s marketplace. Patrick Leary is corporate vice president, distribution research, LIMRA. He may be contacted at patrick. leary@innfeedback.com.

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Rollover Business Revving Up To Roll Again  

The steady growth of self-directed retirement accounts, combined with the rollback of the Department of Labor fiduciary rule, has IRA rollov...

Rollover Business Revving Up To Roll Again  

The steady growth of self-directed retirement accounts, combined with the rollback of the Department of Labor fiduciary rule, has IRA rollov...

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