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Learn how you can train with this Living Legend INSIDE COVER

What Could You Learn from the Greatest Annuity Producer of All Time? “I took his class from February through April and wrote an additional $8 million by the end of the year. That’s the most I’ve ever sold in my 28 years in the business.” – Mike M. Are you ready to elevate your business!? Where you could learn from, train with and perfect the techniques used by arguably the biggest annuity producer that ever lived. Not to mention ... He has sold nearly $2 BILLION of fixed annuity premium without ever having spent a dime on marketing. He’s ready to share his almost 50 years of experience selling and multimillion-dollar commission secrets with you in person. You’ll learn how to:

» » »

Act and speak with high net worth clients Assert control from the first impression Acquire a minimum of 10 referrals from every client

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Master the fact-finding appointment Master closing strategies Never spend money on marketing again

“Since his mentoring program, I have tripled. Literally tripled. Sales this year are triple what they were before. The cases are huge compared to before.” – Pat S.

Flip to page 2 for an exclusive interview with this living legend. Then, go to to learn how to get started, download your pre-copy of the program and take your business to the very top of the industry.

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itting in his office behind his desk, David Polus is surrounded by walls covered with Insurance Agent of the Year and Top of the Table plaques dating back to 1971. Awards and trophies from every annuity and life insurance carrier seemingly clutter his office in Southfield, Mich. To state that this iconic veteran of 47 years in the financial services industry has mastered the art of the sale is to understate. A perennial multi-seven-figure commission income earner nicknamed “The Great Santini” by those who have gone through his training, David has acted as the mentor to the mentors in the industry. From an intellectual foundation, he is the pinnacle, perhaps even perfectly embodying what Robert N. McMurray described in his brilliant 1961 Harvard Business Review piece as “The Mystique of Super-Salesmanship.” He has led several traditional life insurance carriers in production, including Jackson National, Aviva, Aetna, Conseco, Old Mutual, Fidelity & Guaranty, New England Financial and John Hancock. David has also finished in the top 1 percent with multiple carriers simultaneously in any given year, including Allianz, Athene and National Western Life, to name a few. It is no surprise that in 1994 he was nominated by Life & Health Insurance Sales magazine to succeed Ben Feldman as “The Greatest Life Insurance Salesman.”

“Back in the early days of my career, the companies would pay me to train agents and advisors at 5:30 a.m.,” says Polus. “Why 5:30 a.m.? Because I was a producer, and my first appointments would begin every morning at 7:45 a.m. and continue until about 8 at night.” Legendary for his ability to communicate, teach and transfer his skills, he has been described by those who have gone through his training as a “genius” and a “savant.” One case study especially stands out: his protégé and 42-year-old partner, Craig Myers, who started working with him in 2000 upon graduating from college. “I would notice David drove a different luxury car to the office each day,” says

Craig. “A red Ferrari, a black Bentley, a silver Porsche 911, a black Ferrari, a white Rolls-Royce. Every night I would stay late so he would see I was willing to work hard. After a few months of begging him to mentor me, he finally agreed.” The relationship between David and Craig, however, started off with something more intense than some initial sales training. “I made him sign a contract that we would have a 60/40 split (60 percent to me and 40 percent to him) for the rest of our lives and that the first $1.5 million in commissions that year would go to me as a retainer for mentoring him,” said Polus. Laughing, Craig explained that he agreed, since he then knew he would be

David Polus “The Great Santini”

making at least $1.5 million in commissions that first year working with David. Fast forward 18 years and Craig is also driving luxury cars. “I did whatever he told me to do,” says Craig. “I never deviated. I knew if I could master even just one thing he did, I would become a big success.” Most unique to David, who has sold more than 20,000 policies and still sells fixed index annuities and life insurance to doctors, corporate executives, university professors and professional athletes, is his marketing strategy: referrals, only referrals and nothing but referrals. In this interview, The Great Santini tells more of his story and offers a proposition to anyone with “a burning desire to become successful.”


I’ve heard you say that the fixed annuity and life insurance business is arguably the most important business in the world. Could you elaborate? That is correct. I would argue that life insurance and annuity producers have the second-greatest calling, only after that of clergy, because they help us all get to heaven. Some would say physicians come next, but I believe our impact on society is even greater than theirs. If people no longer have their wealth, they will no longer care about their health. Life insurance is the ultimate safety net for Americans. As far as the fixed annuity is concerned, there is no other financial product in the world that can give someone a continuous, secure income for the rest of his or her life. You must truly be a zealot and believe this if you’re going to be a success in this business. You’ve mentored thousands of annuity and life insurance producers over your 47-year career in the industry. What is the biggest mistake you see the average salesman make? Time management: their inability to control their time for their work ethic and their inability to structure their given days to set aside the appropriate time to see more people. Even worse, they aren’t out there telling their story and telling people what they do. If I were to ask someone what they do and

they tell me they sell life insurance and annuities, the next logical question would be how many people they saw that week. When producers say they only had four appointments that week, how can they really expect to become successful and make a lot of money? What is the most important aspect of the sales process and why? It is 100 percent, no question, the factfinder. There is a very specific order and sequence of questioning that orients the prospect’s mind to want to buy what you are selling. An agent must know the right questions to ask. This is a skill level that must be learned and acquired. Some would argue that the close is the key, but that is absolutely not true. The sale is always, always made on the fact-finder. Many producers and advisors don’t consistently follow the same process or scripting. What do you say to that? The worst possible thing you can ever do is fly by the seat of your pants without a proven script or process. That’s why so few in this business ever become truly successful. Anybody of any consequence who has been successful will tell you that you must use a rehearsed, logical dialogue that a reasonable person can then understand. It would be like an actor winging his lines while shooting his movie scenes.

What’s the secret to asking for and acquiring referrals? That is impossible to answer in a sentence, but I would have to say it is directly requesting referrals in a manner that predispositions the client to actually want to give them to you. In my mentoring sessions, I actually spend an entire day on this topic alone. “What happens if they say that? What do you do when the client does this?” The laws of probability dictate that there are only so many things that can come up. After 47 years of selling billions of dollars of premium, I know them all and that is what I teach. I cannot name a single case where I did not acquire at least 10 referrals from the client. Who is the ideal financial professional who would benefit from mentoring with you? Anyone with a burning desire to be successful, anyone who no longer wishes to spend money on marketing or anyone who wishes to learn how to regularly work with the affluent and gain 10 referrals from every sale. If you’re willing to do a little work, the rest of it is easy. In short, prospecting does not have to cost you thousands of dollars. If you aspire to acquire referrals and unlock the secrets of working with affluent clients, David Polus is your answer.

Powered by and hosted at M&O Marketing, David’s Master’s Approach Program (M.A.P.) is available for those annuity and life insurance producers who dare to aspire to earn $1 million in commissionable income per year.


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Hall of Fame, Fall of Shame By John Hilton

The biggest sports stars are known for drawing large crowds inside the arena and living large outside it. Here are stories of how young athletes coped with sudden, massive wealth.



46 1 0 Ways You Can Take The Pain Out Of Disability Claims

10 NAIC Dodges Division In Annuity Sales Rule By John Hilton The National Association of Insurance Commissioners came up with a tentative framework for an annuity transactions model law.

By Lynne Christofferson Making a disability claim is a stressful time for your clients. Here is how you can support them.

50 Take On Taxes Now For Success In 2018


34 Determining The Ideal IUL Prospect By John Hutchinson What makes indexed universal life appealing as a piece of a broader balanced allocation strategy.

37 Fallacies In The Term/Perm Debate


10 How to Make Your Clients Retire Happy

An interview with Tom Hegna Tom Hegna is on a mission to help save retirement, and he wants you to warn clients of their retirement risks. Hegna, the industry’s leading retirement expert, tells Publisher Paul Feldman that advisors who are not talking about insurance to protect their clients’ retirement are not looking after their clients’ best interests.


InsuranceNewsNet Magazine » July 2018

By Erica Davis Busting some myths that have painted a pro-term and anti-perm life picture for the general public.


40 Is Bigger Better When It Comes To LIBR Pricing On Indexed Annuities? By Michael Jay Markey Jr. Fee-based annuities were supposed to be the answer to annuity sales in the post-fiduciary world, but many advisors find the products complicated.

By Craig Hawley Being proactive with your clients’ tax situation will save a lot of grief come filing time.

52 Why Robo-Advisors Will Enter The ‘Plateau Of Productivity’ By David Miller As robo-advisory technology matures and a new generation of investors emerges, it’s becoming apparent that automation won’t seize control of the investment world anytime soon.

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56 NAIFA: What Makes Advisors Great? By Kevin Mayeux Great advisors’ passion is expressed in their professionalism and their love for their clients.


58 MDRT: Community Programs Need Advisors’ Skills By Adam Solano Advisors who lead in their communities develop the skills to elevate their practices.

60 L IMRA: Wearable Technology Presents Opportunity For Insurers By Larry Hartshorn Information from sensor-based devices has the potential to change the way insurance companies do business.


54 What Financial Services Can Learn From Disney World By John Pojeta No follow-up call or email will ever be as important as the experience you deliver to clients.

EVERY ISSUE 8 Editor’s Letter 16 NewsWires

32 LifeWires 32 AnnuityWires

44 Health/Benefits Wires 48 AdvisorNews Wires

59 Advertiser Index 59 Marketplace


275 Grandview Ave., Suite 100, Camp Hill, PA 17011 tel: 717.441.9357 fax: 866.381.8630 PUBLISHER Paul Feldman EDITOR-IN-CHIEF Steven A. Morelli MANAGING EDITOR Susan Rupe SENIOR EDITOR John Hilton SENIOR WRITER Cyril Tuohy VP MARKETING Katie Frazier SENIOR CONTENT STRATEGIST Kristi Raynor


John Muscarello James McAndrew Jacob Haas Bernard Uhden Shawn McMillion Doug Cooper Sharon Brtalik


Joaquin Tuazon Ashley McHugh Tim Mader Samantha Winters David Shanks Elizabeth Nady

Copyright 2018 All rights reserved. Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited. How to Reach Us: You may e-mail, send your letter to 275 Grandview Ave., Suite 100, Camp Hill, PA 17011, fax 866.381.8630 or call 717.441.9357. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 717.441.9357, Ext. 115, or Editorial Inquiries: You may e-mail or call 717.441.9357, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to or call 717.441.9357, Ext. 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.


InsuranceNewsNet Magazine » July 2018

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Entrusted With Security


etirement was a rotund, self-satisfied guy in a suit, puffing an enormous cigar. Well, that’s what it looked like when I was in college. He was a former insurance public relations flack visiting the college; I was a journalism student regarding him with pure, youthful disdain. The man may as well have been curling his thumbs under suspenders decorated with dollar signs, snickering “nyah, nyah, nyaaaah,” as he spoke. And yes, he smoked the cigar indoors — this was The Old Days. But that was decades before I would work for an insurance association as a PR professional and would consider “flack” an unpardonable insult. Public relations didn’t look so bad after nearly two decades of being kicked around the newspaper business. I am starting to appreciate the satisfaction of a secure retirement. Back in the early 1980s, that retired PR guy probably enjoyed a pension along with Social Security. Now we are balancing on the one leg of Social Security, and we are all a little anxious about that one. In this month’s interview with Publisher Paul Feldman, Tom Hegna discusses all things retirement. Social Security planning was a particular area of focus in his discussion. It was the second of seven steps to retirement. “I just implore people to make an educated decision on the most important retirement decision of their lives, which I would argue is this Social Security start date,” Hegna says.

Ensuring Security

Hegna has made retirement his career since his days with a couple of major insurance mutuals. He argues that retirement security is the central duty of all agents and advisors. And who is to argue with that? After all, security is ultimately what we are seeking when we buy insurance products or invest. We want to be safe from the vicissitudes of life. Lovely word, right? Vicissitudes, meaning a change of fortune, usually for the worst. I read it in a speech that President 8

InsuranceNewsNet Magazine » July 2018

Franklin D. Roosevelt gave after signing Social Security into law in 1935. I stumbled across it as I was rooting around for information on the program. The context in which Roosevelt used the word might surprise some people who are prone to think that the program was designed to protect retirees against all risks. “We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life,” Roosevelt said. “But we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.” Also instructive was how he framed the problem: “The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure.” Doesn’t that sound familiar? Post-World War II was the glory era for pensions. Stay with a company long enough, you would enjoy another monthly check alongside your Social Security. Invest wisely and you can collect those checks while enjoying your favorite beach. There you have the three legs of the retirement security stool. With the demise of pensions, Americans are balancing on two legs — perhaps with a majority making do with only one. Hegna argues that advisors have a duty to help their clients recognize that they can create their own pension with annuities. Or at least to inform their clients about annuities. That security is the key to happiness. Hegna points out that quite a few studies have discovered that happy people are often those with a guaranteed income. Of course, those studies are often sponsored by financial and insurance companies, but it certainly stands to reason. Without that financial security, clients are left hanging onto their nest eggs, terrified of spending them down.

Speaking Of Fiduciary Responsibility

Social Security’s trustees set off alarms when they recently released their 2018

annual report, which said the fund will be depleted by 2034. But two key points seemed to be overlooked by the alarmists. One is that the program’s income would still cover 79 percent of benefits, declining to 74 percent over 75 years. The other is that this would happen absent any changes. Some would use this as an excuse to raise the retirement age, lower benefits or privatize the system. Although the ideas are worth discussing, they seem to be falling short of the U.S. government’s fiduciary duty to its citizens. We all paid into this system as an annuity, trusting the government to live up to its end of the bargain. Another idea is raising or eliminating the cap on taxable income for the Social Security tax. This year, any income above $128,700 is not taxed by Social Security. There is the argument that people above that level of income do not rely on Social Security so they should not have to pay more into it. Of course, that reasoning could apply to many government services. Wouldn’t we all pay if Social Security becomes an ineffectual hedge against retirement risk? Here is another part of that Roosevelt speech: “It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future Administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness.” Imagine how much deeper the 2008 crash would have been without Social Security. Everybody was touched in some way by the collapse, but older Americans would have been particularly vulnerable if their Social Security were some form of 401(k). How well have those funds ensured a secure retirement? Social Security is an American institution that has served us well for more than 80 years. Let’s not be the generation that breaks it.

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NAIC Dodges Division In Annuity Sales Rule The National Association of Insurance Commissioners came up with a tentative framework for an annuity transactions model law.

recommendation or sale, make a record of any recommendation and the grounds for the recommendation.” Previous versions of the draft did not apply documentation to recommendations, only sales.

By John Hilton

» Tabled sensitive sections of insurer supervision. On two points, the group could find no agreements: 1. supervision of third-party distributors, and 2. whether to ban sales incentives. The group still has work to do,


lthough the National Association of Insurance Commissioners’ annuity sales standard is not as onerous as the dreaded Department of Labor fiduciary rule, it could change the way agents do business. The NAIC Annuity Suitability Working Group met May 30-June 1 in Kansas City and bridged several differences in philosophy that separated conservative states — such as Iowa — from their New York/California colleagues. They parted with a tentative framework for an annuity transactions model law that might be taken up at the NAIC Summer Meeting Aug. 4-7 in Boston. The agreements came via a series of straw poll votes. As far as agents are concerned, the high points include: » Annuity sales language. The group opted for a standard offered by Iowa that Michael Humphreys of Tennessee referred to as “suitability plus,” as opposed to “best interest.” What it means: A suitable sale requires “reasonable competence, trustworthiness, fair dealing, diligence, care and skill by the producer.” Likewise, any recommendation “shall be made without placing the financial or other interests of the producer, or insurer where no producer is involved, ahead of the consumer’s interests as known from the consumer’s suitability information.” » Strengthened documentation requirements. The language reads: “A producer, or insurer where no producer is involved, shall at the time of 10

InsuranceNewsNet Magazine » July 2018

suitability working group could consider life insurance under its “charge.” “The NAIC is not supposed to be a dictatorship,” Regalbuto snapped. And then it was over. From there, the diverse working group managed 10 hours of respectful, if lengthy, discussions on the hottest of topics dividing them. Most interesting, the group favored best-interest principles in a package that does not mention the words “best interest.” Even the many industry representa-

“A general compensation disclosure is in our opinion worthless. It will be gamed from day one.” James Regalbuto, New York deputy superintendent for life insurance Chairman Dean Cameron reminded members, and might hold a conference call before the summer meeting. If a final draft comes together, it could be taken up by the larger NAIC committee then. NAIC model laws are sent to the states for adoption.

‘Not Supposed To Be A Dictatorship’

The two-day meeting kicked off acrimoniously when Cameron announced that life

tives in the audience were fine with it. “The substance of the language is what is important to us,” said Gary Sanders, vice president of government relations for the National Association of Insurance and Financial Advisors. The working group divide is represented by conservative Iowa and liberal New York. Yet, it seemed as though the more the members discussed the regulation, the shorter the gulf separating them became.

“The substance of the language is what is important to us.” Gary Sanders, vice president of government relations for the National Association of Insurance and Financial Advisors insurance would not be considered. James Regalbuto, deputy superintendent for life insurance in New York, was ready. The two men had a sharp exchange about whether the NAIC annuity

Both sides began with analogies. Iowa Insurance Commissioner Doug Ommen spoke of a doctor advising on a treatment. He or she will outline what the risks are and the range of possible outcomes, but

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I agree and understand what New York is saying that the agent needs to be operating in the clients’ best interest. I firmly believe that many of them are. NAIC Chairman Dean Cameron it is the patient who makes the decision. The annuity sales standard should be simple, Regalbuto countered and then asked, “Would you go ahead and do this if you knew as much as the person who is making this recommendation?” That briefly drew the ire of Cameron, a former insurance agent, who said suitability regs are followed “95 percent of the time, maybe higher.” “We are regulators who proceed based on facts, based on data, based on evidence,” Cameron continued. “If we don’t have the evidence, if we don’t have the data to back up what we’re doing, then we have a problem.” Gradually, other states came off the fence. “I can’t think of an instance in Tennessee where the suitability standard prevented us from having an enforcement case go forward,” said Lorrie Brouse, deputy insurance commissioner and general counsel for Tennessee. The suitability standard has been “very effective” in Ohio, said Michelle Rafeld, state assistant director of fraud, enforcement and licensing. But a tougher standard is needed to fight the worst cases, she added. Forcing agents to explain “how is this in the best interest of the consumer?” is the final regulatory piece, Rafeld said. “These can be very elaborate fraud schemes that go on for years.” The big picture is creating a model law for annuity sales that will pass not only the full NAIC, but also be adopted by state legislatures, Cameron noted. When 12

InsuranceNewsNet Magazine » July 2018

the discussion subsided, some liberal states were moved. “I’m kind of buying into the idea of adopting best interest but not calling it ‘best interest,’” said Jodi Lerner, attorney for the California Insurance Department.

largest IMOs would have qualified. With that in mind, many industry observers questioned how the NAIC could make insurers responsible for third-party producers. The intent with the model language was not to require a “monitoring and auditing” of third parties, Ommen said. That wasn’t good enough for the group’s liberal wing. “It needs to be clear that they are responsible for the third party that they are contracting with,” Lerner said. “So they need to be on top of it.” The issue was quickly tabled. Lerner then pushed California language to ban incentives. “If you’re going to move to a best-interest standard, prizes based on targeted sales goals shouldn’t be a part of that,” she said. The language proposed by California made it unclear whether an agent could accept any compensation if participating in a sales goal, Cameron said. The proposal was confusing, Lerner agreed.

“I can’t think of an instance in Tennessee where the suitability standard prevented us from having an enforcement case go forward.” Lorrie Brouse, Tennessee deputy insurance commissioner/general counsel

Third-Party Producers

The group had brief discussions on oversight of third-party producers, as well as the status of controversial incentives such as trips and other rewards. No votes were taken on either topic. The former issue is a big one in light of the Department of Labor fiduciary rule’s treatment of independent marketing organizations. The DOL rule made insurance companies, banks, registered investment advisors and broker-dealers as “financial institutions” on the hook for liability. That left IMOs out in the cold. A later exemption created by the DOL did little to improve their situation, as only the

A ban on incentives could return as part of the “prohibited practices” section, others suggested. While the comment period is over for the annuity sales model, an official said this week that the NAIC does not refuse comments at any time. 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@

A Simple, Affordable, Secure Opportunity By David Wilken, President – Life Global Atlantic Financial Group


s a company that can trace its heritage to the early days of IUL, we’ve been at the forefront of product design and evolution from the start. Today, the portion of the marketplace focusing on guaranteed death benefits is undergoing a shift toward providing more options and flexibility for policy owners. Some background will be helpful. The early days of IUL saw products that could best be described as “current assumption,” which provided a death benefit that was guaranteed as long as there was sufficient cash value in the policy. Indexed crediting strategies were basic, with annual pointto-point using the S&P 500® Index as the primary offering. The mid-2000s witnessed a proliferation of “no-lapse guarantee” products that provided a guaranteed death benefit to age 121 as long as a minimum no-lapse premium was paid. In exchange for this guaranteed death benefit to age 121, policy owners sacrificed cash value growth and flexibility. Both current assumption and no-lapse guarantee products filled a need in the market. Unfortunately, over time, both have revealed shortcomings in addressing all the needs of policyholders. A current assumption

IUL may not provide the duration of death benefit guarantee that the client needs and is willing to pay for, and a no-lapse guarantee IUL might lack the flexibility and options the client wants. Therein lies the opportunity. Combining the best features of both products into a simple, affordable and secure indexed universal life insurance policy that is truly client/policy owner-centric is what consumers need. SIMPLE SOLUTION Global Atlantic’s new Lifetime Foundation ELITE IUL may offer the solution your clients are looking for. It provides a simple and straightforward IUL

Lifetime Foundation ELITE also addresses one of the challenges faced with no-lapse guarantee IULs — the risk of mortality drag. Many no-lapse guarantee products are illustrated on a pay-to-121 basis. How many clients truly believe they will be in a situation, financially, to pay premiums to age 121? Even if they can, do they still want to allocate dollars to fund a life insurance policy that they purchased decades ago? Unfortunately, most no-lapse guarantee products were not designed to accumulate cash value in the later years. Therefore, options are limited — stop paying premiums, or adjust the policy if the client still wants to maintain the coverage.

How many clients truly believe they will be in a situation, financially, to pay premiums to age 121? Even if they can, do they still want to allocate dollars to fund a life insurance policy that they purchased decades ago? to bridge the gap between flexibility and options on the one hand and strong death benefit guarantees on the other — because now you can do both. Lifetime Foundation ELITE extends death benefit guarantees beyond most life expectancy IUL products on the market by providing a death benefit guarantee to the earlier of age 90 or 40 years,* based on risk class. By extending the death benefit guarantee to age 90, the risk of outliving the guarantee can be diminished significantly. This alleviates a concern that is often associated with current assumption IULs.

Lifetime Foundation ELITE solves this problem by eliminating mortality charges after age 90** on a current nonguaranteed basis. This design alleviates policy owners’ risk that increasing mortality charges will impact their ability to sustain coverage. The market for death benefit-focused IUL products is constantly evolving. Products that offer flexibility and guarantees will provide opportunities for carriers to open the door to new sales. • For more information, please visit

* Guarantee periods vary by age and underwriting class. ** For issue ages up to age 75. Product and riders availability vary by state. Lifetime Foundation Elite is issued by and all policy benefits are the responsibility of Accordia Life and Annuity Company, 215 10th Street, Des Moines, Iowa. Accordia Life is a subsidiary of Global Atlantic Financial Group Limited. Policy forms ICC17-IULC-C18, IULC-C18. Endorsement forms ICC17-IULPTP-K17, IULPTP-K17, ICC17-IULMCS-K17, IULMCS-K17, ICC17-IULFLX-K17, IULFLX-K17 and ICC16-LCCABR2-I16 or LCCABR2-I16, ICC13-LTABR-E14 or LTABR-E14, ULWFL-E14. 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 and Forethought Life Insurance Company. Each subsidiary is responsible for its own financial and contractual obligations.



How TOM HEGNA wants you to rescue your clients

See Tom LIVE at the 2018 InsuranceNewsNet Super Conference, Sept. 26–28 in Chicago! Visit for more information. 14

InsuranceNewsNet Magazine » July 2018



hat are you doing to save retirement? Not enough if you aren’t actively warning clients about their retirement risks. If you have been to an insurance or financial conference over the past several years, you have heard Tom Hegna deliver that message. He is a popular speaker and author of several books, including his well-known Pay Checks and Play Checks and Don’t Worry, Retire Happy. It is not just Hegna’s theory. He first worked for MetLife and then for New York Life, where he developed not only a respect for the retirement protection value of insurance but also the best ways to convey those messages to clients. In this interview, he sketches out some compelling strategies to help clients understand the power of insurance. Hegna also brings a middle-American everyman perspective to the subject because of his background. He grew up in a small Minnesota town and then attended North Dakota State University on an Army ROTC scholarship. He did six years active military duty and 16½ years in the Army Reserve before he retired as a lieutenant colonel in 2006. He is loudly clanging the bell on the retirement crisis and saying that agents and advisors who are not talking about insurance to protect clients’ retirement are not looking after clients’ best interests. In this interview with Publisher Paul Feldman, Hegna reveals seven steps to a happy retirement. FELDMAN: How did you become a leading retirement expert? HEGNA: I was in the insurance industry for almost 25 years. I was with MetLife for eight years. I was an agent, a manager, and a national marketing manager for their variable life product. I then went to New York Life. I started out as an annuity wholesaler and worked my way up to be a senior executive officer of the company. And while I was there I was kind of in charge of their retirement income push. New York Life was the first company to really focus on income annuities, and that was my mission and my job. So I trained every New York Life agent, manager and wholesaler. And if you look, New York Life still has about a 40 percent market share,

which is unbelievable in the income annuity market. So I learned a lot doing that, right? I had to study a lot. I had to read the research of Dr. David Babbel, Moshe Milevski, Menahem Yaari and Nobel Prize winner Dr. Robert C. Merton. I learned a lot about the math and science behind these income annuities. You cannot retire optimally without using an annuity. That’s one of the things I found out. It takes out the No. 1 risk in retirement, which is longevity. So I took that knowledge and I went out on my own in about 2011. And I wrote my first book Pay Checks and Play Checks. It was a big hit. Since then I’ve written three other books, and I’ve had a PBS TV special called Don’t Worry, Retire Happy! that’s played in 72 million homes in the U.S. and Canada. I also did the main platform at MDRT, Top of the Table, NAIFA, NAFA and GAMA. So I became known as the retirement income guru or expert in the insurance industry. FELDMAN: What do you see wrong with retirement today? HEGNA: There are people who think retirement is about the stock market, asset allocation, real estate or rebalancing the portfolio. And none of that is true. A successful retirement has two simple components. One, increasing income for the rest of your life. And two, risk management. Taking key retirement risks off the table. Like market risk, sequence of returns risk, long-term care risk and inflation. It’s about really having a base level of guaranteed lifetime income. That’s what a successful retirement looks like. I see the insurance industry has kind of caught onto it and they’ve adopted a lot of this guaranteed income. But on the financial planning side of it, these fiduciaries are really not fiduciaries because they’re not using annuities. It doesn’t make sense because you can’t do what’s in the best interest of the client if you’re not taking longevity and long-term care risk off the table — not using life insurance to efficiently transfer wealth.

Retirement is not just about asset allocation and low fees and no commissions. That has nothing to do with a successful retirement. So that’s what I think a lot of people are doing wrong in our business. FELDMAN: What can an advisor do to help educate their clients better on that? HEGNA: First of all, advisors need to be educated. They need to learn how to retire optimally. My book, Don’t Worry, Retire Happy! lists seven simple steps to a happy retirement. And it’s based on math and science. When I go around the country speaking, I’m not giving my opinion. I’m sharing the math and science behind a successful retirement. Now let me be clear — there’s a difference between an optimal retirement and the best retirement. With the whole fiduciary thing, they said you’ve got to do what’s in the best interest. Well, that kind of got shortened down to consumers as, what’s the best? The fact is that nobody knows what’s going to be the best. I don’t know what’s going to be the best. You don’t know what’s going to be the best. Nobody knows what’s going to be the best. So, what math and science do whenever there are many variables and they don’t know what the best solution is, they come up with the optimal solution. The optimal solution simply means this will be the best more often than anything else will be the best, and it will never be the worst. That’s what optimal means, and all I can really do is teach people the optimal way to retire. I don’t know whether it will be the best, but it is the optimal. It will be the best more often than anybody else’s best solution. That’s what I do. And so they’ve got to learn, you know, they’ve really got to learn the math and science. It’s not just about stocks and mutual funds and money management. It’s about risk management too. FELDMAN: What are the “Seven Steps to Optimal Retirement?” July 2018 » InsuranceNewsNet Magazine


INTERVIEW HOW TO MAKE YOUR CLIENTS RETIRE HAPPY HEGNA: The first step is simple, you’ve got to have a plan. I always ask how can you get anywhere if you don’t have a road map or a plan of how to get there? And with that I say you’ve got to work with a financial professional. Retirement is not a do-it-yourself project. I do a lot of public seminars. About 80 percent of my talks now are for the general public.

HEGNA: Step 2 is to understand and maximize Social Security benefits. For most people Social Security is the largest retirement asset they have, and yet these people are spending more time planning their summer vacation than learning how to maximize their Social Security benefits. In a nutshell, let’s say you have a married couple. The breadwinner is the one who should delay taking Social Security.

would argue is this Social Security start date. Step 3 is to consider a hybrid retirement. Too many people are trying to retire too early. They haven’t saved enough money. If we can get these clients to work just a couple of extra years, even part time, we can increase their success in retirement significantly. They can have increased

A successful retirement has two simple components. One, increasing income for the rest of your life. And two, risk management. Taking key retirement risks off the table. And I say things like this: “I’m willing to bet you don’t do your own dental work in your garage with your drill set, and retirement’s way more important than getting your teeth fixed. And I don’t think you ought to be doing your retirement planning by yourself either. You really need a competent financial advisor to help guide you through all the paths.” I even say that I use a financial advisor. I wouldn’t have to. I could write all my own products. But I don’t because you know what? I don’t stay up to date with the latest rider and the latest products from this company or that company. FELDMAN: It’s so simple, yet most people never have a plan for one of the most important parts of their lives. What is the next step? 16

InsuranceNewsNet Magazine » July 2018

Let’s say the husband made more money in his career. Well, the wife can take her benefit at 62. I’ve got no problem with that. But the husband should wait until 70 because his check covers both lives and when he dies, she gets his benefit. If he took his early, he locks her into lower survival benefits. Because the breadwinner’s check covers both lives in general, the breadwinner should delay. There are some exceptions to that. If they’re both in very bad health or if they’re investing that money and they think they can do better, I’m actually OK with that. I’m just not OK with everybody taking it at 62 because their buddy at the coffee shop told them to take it at age 62. I just implore people to make an educated decision on the most important retirement decision of their lives, which I

earnings, increased savings, increased Social Security benefits, and we can keep them from tapping into their portfolios for a few years. Step 4 is to have a plan to protect themselves against inflation, because with inflation over 40 years at 4 percent, their purchasing power will be cut by more than 50 percent. And in 30 years it will be cut by more than two thirds. So I always tell people you don’t just need to plan income to age 100 and beyond, you need to plan on increasing income to age 100 and beyond. That’s where stocks, mutual funds and managed money fit — because you can build a portfolio that goes up if we get inflation. But I also tell people you can protect yourself against inflation without using

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INTERVIEW HOW TO MAKE YOUR CLIENTS RETIRE HAPPY any risk products. I’ve already bought guaranteed lifetime income that will kick in when I turn age 60, but I’ve bought even more that kicks in when I turn age 65. I bought even more that kicks in when I turn age 70. I’ve bought even more that kicks in when I turn age 75. I’ve got 11 income annuities, and I’ll probably have 30 before I shut this thing down because I’ve learned a lot about retirement. I’ve learned that retirement is not about the stock market. It’s not about real estate. It’s all about having increasing income for the rest of your life and risk management.

They studied the happiest people in retirement. You know what they found? People who were surrounded by their friends and family and had guaranteed paychecks every single month.

FELDMAN: Laddering is a perfect strategy to utilize multiple products that are designed to do different things. What is Step 5? HEGNA: Step 5 is people need to secure more guaranteed lifetime income. Time magazine has a quote: “Securing at least a base level of lifetime income should be every retiree’s priority at least if they want to live happily ever after.” And I will tell you, that lines up exactly with what the Ph.D.s who study retirement say — that as a minimum you should be covering your basic living expenses in retirement with guaranteed lifetime income. Now there are three sources of guaranteed lifetime income. The first is Social Security. Social Security is a lifetime income annuity. It’s a guaranteed paycheck for life. The second source is a pension. But what is a pension? A pension is a lifetime income annuity. It’s a guaranteed paycheck for life. Social Security counts and pensions count, but whatever you’re short you know what you’re supposed to do? You’re supposed to go find an insurance company and buy a lifetime income annuity. Not only are you going to be more successful in retirement by doing that, you’re going to be happier. The Wall Street Journal had a headline that read, “Secret to a happier retirement is friends, neighbors and a fixed annuity.” They studied the happiest people in retirement. You know what they found? People surrounded by their friends, surrounded by their families, who had 18

InsuranceNewsNet Magazine » July 2018

guaranteed paychecks every single month. I challenge people and say hey, who are your happiest friends in retirement? Is it retired military? Retired government? Retired teacher? Retired professor? It’s people with pensions. Study after study after study show that people with pensions are much happier in retirement than are people who don’t have pensions. Understand that happiness in retirement is tied almost 100 percent to guaranteed lifetime income, not assets. Assets make people miserable in retirement. Think about the most visible friends you know. They’re loaded. They’ve got assets out the wazoo, but they’re losing money in oil. They’re losing money in gas. They’re losing money in Bitcoin. They’re losing money in Facebook. Now they’re losing money in Amazon. These people are miserable. There was a white paper written by Towers Watson. Your readers can google “Towers Watson and retirement happiness” to read it. They studied all retirees — old retirees, young retirees, rich retirees, poor retirees. You know what they found? All retirees were happier if they had guaranteed lifetime income. But you’re not only going to be happier in retirement, you’re also likely to live longer.

A lot of people follow me on Facebook and LinkedIn. I recently posted a University of Chicago study that Freakonomics picked up and pushed out through social media. It studied people who bought lifetime income annuities versus people who didn’t. You know what they found? The people who bought the lifetime income annuities lived longer than the people who didn’t. When I was a senior executive officer for a company, I asked the actuary to tell me the actual experience of our life expectancy in our annuity book of business versus our actual experience in the life book of business. You know what was found? The annuity book of business lived a lot longer than the life book of business. This is nothing new. In high school or college you probably had to read a book called Sense and Sensibility. It was written by Jane Austen in 1811. Do you know what Jane Austen wrote in the book Sense and Sensibility back in 1811? She wrote, “If you observe, people always live forever when there’s an annuity to be paid. An annuity is a very serious business; it comes over and over every year, and there is no getting rid of it.” FELDMAN: That’s amazing. Quite a history.

HOW TO MAKE YOUR CLIENTS RETIRE HAPPY INTERVIEW HEGNA: Then Step 6, you’ve got to have a plan for long-term care. No retirement plan is complete without a plan for longterm care. When I’m doing seminars I say my guess is that in this room this is the No. 1 thing that has not been taken care of that can wipe out your entire life’s work. And then I talk to them about the three phases of retirement: the go-go years, the slow-go years, and the no-go years. The go-go years are those fun years of retirement maybe between 60 and 80 when you’re playing golf, going on cruises and you’re line dancing. Every day is happy hour somewhere. That’s the go-go years. But that’s followed by the slow-go years. You can still do everything from the go-go years, but you just don’t want to anymore. In fact, you don’t want to go downtown after 4:30 because you can’t see when it’s dark out. That’s the slow-go years. Then the slow-go years are followed by the no-go years. The no-go years are those years when you’re probably not leaving the building until you’re leaving the building, if you know what I’m talking about. The go-go years are all about income. Not assets, income. That’s why 100 percent of my purchases are going for income in my go-go years. The slow-go years, that’s all about longterm care. And what I tell people is any plan is better than no plan. So I hope they buy long-term care insurance. But if they don’t, I hope they buy a life insurance policy with a long-term care rider or an annuity with a long-term care rider. Then the no-go years are all about life insurance. People say retirement is not about life insurance. I say life insurance has everything to do with retirement. It’s the life insurance you bring into retirement that gives you the license to spend your money. FELDMAN: That is an underappreciated aspect of life insurance in planning — how it affects the other assets. HEGNA: It is why so many people are not enjoying their retirement. In the back of their mind they think they have to leave some money to their kids. “Oh, we’ve got to leave some money to Johnny and Susie” — so they’re denying

themselves a retirement in order to leave money to their kids. I tell people all the time, don’t leave any money to your kids. Spend all of your money. Leave them life insurance. I use me as an example. So we’ve got four kids and one day we’re sitting around saying how much should we leave the kids. I said if we bought a $1 million secondto-die life insurance policy, named the four kids as beneficiaries, when we’re both gone they’ll get a million bucks tax-free. That’s $250,000 apiece tax-free. Let’s start there. You know what the total cost of that $1 million policy was? $150,000. So think about this: For 15 cents on the dollar, we get to transfer a million bucks tax-free to our kids. Who gets to spend all the rest of the money? We do. So I tell people I don’t want you to leave your kids any money. Spend your money, but leave life insurance because you can do that for pennies on the dollar. Step 7 is to use your home equity wisely. For most people their house is one of the largest assets they have, and there are basically three ways to use their home equity wisely. They can sell the home and downsize and move to Arizona. But here’s what I tell people. If you’re single, when you sell that home you can capture up to $250,000 tax-free in capital gains. If you’re married, you can capture up to $500,000 tax-free in capital gains, and that can certainly help with retirement. You can take a loan against the equity or you can do a reverse mortgage. Now let me tell you where I come down on reverse mortgages. I am not for reverse mortgages, but I am not against reverse mortgages. They are a tool that can be used in retirement. But here’s my best professional advice: Be very, very, very careful and work with a reverse mortgage expert. But having said that, what I will share with your readers is that in the past two or three years there have been tremendous changes in the reverse mortgage market, and you’re going to read many more positive articles by very respected sources. FELDMAN: What are some other life insurance strategies advisors are

taking advantage of? HEGNA: I wrap up my talks with the most efficient way to pass wealth to your children, grandchildren and charities, and that’s with life insurance. I give an example of a lady who was going to leave a hundred thousand of her “just in case” money. She had it down at the bank. She had her six grandchildren as beneficiaries. She said, “When I die, they’re each going to get a little over $16,000.” I said, “Why did you leave it in the bank? Why didn’t you put it in a life insurance policy? You can still get the money out if you need it, but when you die each of the grandkids gets $36,000 instead of $16,000. Don’t leave your grandchildren money, leave them life insurance.” I give an example of charitable giving. There’s this very generous couple. They tithe to their church. They give to their university. They saved up $50,000 they wanted to give to charity. But when we started talking about it, they each want to give $50,000. How do you give $100,000 to charity when all you saved up was $50,000? You put it in a life insurance policy. It immediately creates $100,000 of gifting power. You want to leave more money to charity? Don’t leave them money. Leave them life insurance. And the last example I use is protecting Social Security benefits. Imagine a case where the husband gets $2,000 a month in Social Security and the wife gets $1,000 a month. Well, what happens when he dies? She gets his. What happens to hers? It’s gone. So her income goes down, but what happens to her taxes? They go up because they were filing jointly. Now she has to file single. So her income went down. Her taxes went up. What could have protected her from this? Life insurance. Remember, people over the age of 60 buy a lot more life insurance than people under the age of 60. So don’t think once you’re in retirement you don’t need life insurance. NEXT MONTH: Tom Hegna delves deeper into retirement risks every advisor should know. July 2018 » InsuranceNewsNet Magazine


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t’s hard to be an agent or advisor in this industry and not know Rick and Gail Broom. Thanks to their marketing smarts and in-the-field insight, the two made quite a name for themselves as they rapidly transformed a small direct-mail printing operation into one of the industry’s most successful and trusted marketing names — Resource Solutions. If you weren’t among their network of multimillion-dollar producers, studying their bulletproof seminar systems or utilizing their incredibly successful mailers, you probably knew them and their magnetic personalities from industry conferences, shows and boot camps they hosted. Until they retired in 2015 — They. Were. Everywhere. And they were cherished because after one conversation, you knew they believed money and success are just by-products of doing the right thing. It’s a mantra that created numerous ecstatic clients for Resource Solutions. It’s a mantra that made disappointed ones virtually nonexistent. On the rare occasion an error had been made — like when the post office delivered mailings to the wrong ZIP code — Rick would usually already have a solution in

Rick and Gail had unfinished business. While known today for being the conference circuit’s most charming couple, before founding Resource Solutions, Rick spent years specializing in promotional products. To him, the right personalized tchotchke could act like a business card and advertisement — on steroids. And from where he sat, companies servicing this industry never seemed to get it

“Money and Success are Just ByProducts of Doing the Right Thing.” play, long before anyone even realized something went wrong. They embodied the accountability of an Eagle Scout. And they carried it with them everywhere. So, when the two retired in 2015, many noticed right away and were instantly at a loss. Including Rick and Gail. During their brief hiatus, the two did it all. They explored the Hawaiian Islands, tanned in the Bahamas, toured across the country, enjoyed boating down the Florida Coast and through the Keys. They even developed a townhome community. But something wasn’t quite right. Something was missing.

right. And that bugged him from day one. Before selling Resource Solutions in 2015, he nearly expanded the company’s realm into the promotional side. In fact, one of his questions during the sales process was whether the potential buyer had any interest in the idea. To his dismay, they declined. Maybe it was the rejection. Maybe he saw the industry was underserved. Or maybe he just knew that with his contacts, experience and know-how, he could do it better than anyone else. Then, just like that, Rick and Gail came back for an encore, launching PROmotion Marketing LLC. A move that’s about to light up the industry.

After all, the two are already intimately familiar with an agent’s needs and wants. Add the same unique twists and innovation that helped catapult Resource Solutions to the forefront of the industry, and you have a recipe for tchotchke success! Only this time, they’re bringing you their expertise and customized advice when it comes to thousands of promotional products. There’s nobody in the space who knows how to help agents and advisors stand out better. Looking for a camera-equipped, autoleveling, remote control drone? No problem. A custom-logoed health and wellness kit to hand out to retirement-income prospects at seminars? Piece of cake. They even have key- and bracelet-shaped USB flash drives, preloaded with emergency contact forms in the unfortunate event that level of information is needed. While they may carry virtually anything you can print on, Rick and Gail are there to make sure that your own promotional goals are met. In fact, their entire company is staffed with long-time industry veterans, each sharing the same belief in putting the agent or advisor’s needs first and foremost. So, the next time you’re thinking about a promotional product, look no further than PROmotion Marketing LLC. Rick’s advice: While their site contains virtually every type of promotional product imaginable, and you’re free to purchase online, the experts at PROmotion would love to chat about your goals, your business and your plans so they can best point you to the most effective products, guaranteed to help you stand out from the crowd and put your best foot forward. More information on PROmotion marketing can be found by visiting their website,, or calling them directly at 727.626.2700.



Jobs Market Hits Tipping Point The American economy has never expe-

rienced this before: There are more job openings than there are people to fill them. There are 6.7 million job openings but only 6.4 million available workers to fill them, according to the Bureau of Labor Statistics. April marked the second month in a row that there were more vacancies than available hires, and that’s something that has not happened before this year. But all is not rosy within that stunning jobs report. Employers have been complaining about a skills mismatch, or the inability to find workers with the right training for the positions available. In addition, workers are finding their wages are not increasing in proportion to the demand for labor. Average hourly earnings rose 2.7 percent annualized in May, up one-tenth of a point from April. Another factor entering in to the low unemployment numbers is that an aging workforce is leading a surge in the number of people falling out of the workforce. The number of those counted as not in the labor force is now at a record 95.9 million, a 21 percent rise over the past decade.


If it seems there are fewer babies around, the latest population statistics back up that observation. Women in the United States gave birth last year at the lowest rate in 30 years. And that continued low birth rate could weigh on economic growth for decades to come. The Centers for Disease Control and Prevention’s National Center for Health Statistics said that the number of U.S. babies born last year fell 2 percent from 2016 to 3.85 million, also a 30year low. Births have fallen for three straight years. The fertility rate is 60.2 births per 1,000 women ages 15 through 44, a 3 percent drop from 2016. DID YOU




What does that have to do with the economy? The vast baby boom generation is retiring, and fewer young people are replacing them in the workforce. Economic growth is generally driven by population growth and worker efficiency, and both of those factors have slowed in the U.S. over the past 10 years. An aging society also holds back growth because fewer people are buying homes and cars or making other costly purchases. Savings generally rise as people age and prepare for retirement. And as elderly people live longer, they also slow their spending while in retirement.

— President Donald Trump, announcing his “American Patients First” plan

Yet Americans don’t trust financial corporations to protect their data, the survey showed. Advisors need to get aggressive about educating their clients on the real-life dangers of data theft, he added, and the sooner the better, said Robert Siciliano, CEO of in Boston. Another big key in securing client trust on data security issues is to be more open and transparent, other security experts say.


A bipartisan group of lawmakers wants to delay the Affordable Care Act’s health insurance tax again, this time until 2021. It would be the third such delay of the tax.


Americans have little confidence their data can be protected from thieves, an American Institute of CPAs survey found. Eighty percent of Americans say ID theft is “likely” to cost them financially sometime in the next year. Cybercrime cost U.S. consumers $19.4 billion in 2017, the AICPA reports. Evidence is beginning to mount that the financial sector is increasingly a target of data thieves.

27% of millennials have more than $100,000 saved for retirement. Source: J.D. Power

InsuranceNewsNet Magazine » July 2018

Whoever those middlemen were — a lot of people never even figured it out — they’re rich. They won’t be so rich any more.

Insurers lost about $8 billion in 2014 under the law, which jumped to $11 billion the following year. The provision was suspended in 2017, in place for 2018, but then delayed again for 2019. The federal government, meanwhile, lost $14 billion in revenue in 2017 due to the delay. The Joint Committee on Taxation estimates delaying the tax will cost the government more than $31 billion over 10 years. The conservative Heritage Foundation has said the tax increases ACA exchange premiums by up to 3 percent.

Your success is at the heart of what we do Our adaptable, consultative approach means we care about your success, so you get relevant life insurance, annuities and wealth management solutions, and support for your practice and your clients.

For financial professional use only. Not for use with the general public. F91522 5-2018 DOFU 5-2018 485889

by John Hilton

How young athletes can cope with sudden, massive wealth


t is hard to imagine a world-class athlete more prepared for NBA riches than Adonal Foyle. His adoptive parents were both professors at Colgate University, where the erudite Foyle would graduate magna cum laude with a degree in history. Picked eighth overall in the 1997 draft, Foyle had a “financial team” to negotiate his first contract. Still, the money came into Foyle’s life with the force of a hurricane. “Complete fear about what I was going to do,” recalled Foyle, who played 12 years


InsuranceNewsNet Magazine » July 2018

in the NBA. “Even though we had a plan, we had talked about what we would do, and I’d get my financial team together and stuff like that, even with all of that, it was just that ‘Oh, my god’ moment of, like, ‘This is a big deal. I gotta manage this; I gotta do something.’” In the NBA, as in most sports, players are not paid until their season starts. That means getting drafted in June, but not collecting a paycheck until November. And that first check is usually a whopper. “That shock, for me, was very important, because it signified a few things, which

was, one, ‘Holy cow,’ from an athletic perspective and from an achievement perspective,” said Foyle, who pocketed more than $63 million for his career. NBA salaries increased roughly 70 percent in the last four years. Salaries in other sports are rising as well, creating instant millionaires of young athletes often incapable of handling the responsibility. That’s where a financial advisor, an accountant and a life coach can help the high-net-worth athlete client at least get started out on track. “The natural instinct of a young person that comes into money is to want to go and spend some of that money,” said Foyle, who has written three books on athletes and money. “Because you’ve never had it. So, that natural instinct has to be curbed and it has to be controlled.”

Dan Honda/Contra Costa Times/ZUMA Press/Newscom

HALL OF FAME, FALL OF SHAME COVER STORY ABCs, the athlete understands that now they have to think of themselves as a business.” Some simple concepts can go a long way to helping the athlete CEO avoid becoming another bankrupt magazine cover story subject, he said. For example, Goldstein advises clients to set up one account for regularly budgeted expenses and a second account for their vast income. “That will help them not get into situations where they are tapping into their money to buy the homes, to pay for their entourage, to have all their family members grab at them,” he said. “And it just enables them to have hopefully peace of mind and control over what they’re doing.”

‘The Earlier, The Better’

Based in New York and Florida, the Archer Financial Group represents about 200 athletes, along with some celebrities and entertainers. Tom Archer is a former baseball player and a current scout for the Chicago White Sox. It is always an advantage to get the athlete as early as possible — the earlier, the better — before they get drafted and Everett Collection/Newscom

considering himself the CEO of his many different investments and business interests is shared by Steven Goldstein, who heads the Sports and Entertainment practice at Grassi & Co. in New York City. “The minimum salary in the NFL is now $480,000,” Goldstein said. “There are a lot of businesses that start off in their first year that don’t come close to making $480,000 a year.” Goldstein developed the CEO Athlete program, which focuses on the “ABCs” of the high-netAdonal Foyle hired a strong financial team to help the worth athlete: accounting, high-net-worth athlete client get started out on the budgeting and cash flow. right foot. “We could take it and make it much more comMaking Connections plex, depending on the level of sophisAfter retiring in 2010, Foyle spent two sea- tication or income that the athlete has,” sons as director of player development for Goldstein said. “But what we’ve discovthe Orlando Magic. The role put him in ered is that keeping it simple through the close contact with the needs of the players as they adjusted to life as highly paid Renowned for his flamboyant professionals. lifestyle outside the ring, Sugar Although he was used to talking finanRay Robinson said that by 1965 cial planning with teammates and sharing he was broke, having spent all of the $4 million in earnings he his advisors with them, Foyle recalled made inside and out of the ring counseling a Magic player that he could during his career. not reach. “So I started to figure out how to break down finance to a person who had never had interactions at that level with this level of finance,” he said. “I started talking about where you grow up, how people view money, the psychology of money, the sociology of money.” That led Foyle to write his first book, Why Players Go Broke: An NBA Player’s Advice for Keeping Your Wealth. He followed up with two more books on athletes and finance. Few players have 10-year careers, and Foyle noted that the average NBA career is 4.7 years. For a lot of players, that means one contract. “You should see it as, ‘If this is the last contract, what could I put away for a rainy day?’” Foyle explained. “And really, those should be the constraints.” Foyle’s most recent book is titled The Athlete CEO. The concept of an athlete

July 2018 » InsuranceNewsNet Magazine



Getting The Most Out Of Life (Insurance)

“A lot of guys will go out and buy a life insurance policy and they’ll own it personally,” he said. “By owning it personally, if you buy a $10 million life insurance policy, upon death it’s in your estate. So now you’ve just inflated your estate by $10 million.” A better move is to put that $10 million policy into an irrevocable life insurance trust. That is just one example of how financial planning can save a high-networth client a lot of money, Archer said. Another Archer strategy is to “pack money.” For example, using a chunk of money to take advantage of the life insurance tax-deferred growth element, Archer said. “Let’s say a guy’s making $3 million or $4 million a year and we’re going to pack $250,000 a year into an insurance plan,” he said. “We’ll do that with the lowest death benefit that we can get and build the cash value as high as we can. And we’ll use special-access-type trusts to keep it out of the estate while still allowing them to be able to take it as retirement income.” All of the responsible planning is good backup for those players who want to take risks. Archer likes to prepare as though his clients will take risks. “You should do that, you know, if you’re young,” he said, “but this way, you’ll know that you have this foundation base of guarantees.” Sometimes, though, a player looking at a bad deal needs to be told it is a bad deal. Archer, who grew up in the South Bronx, is able to deliver that message effectively. “If a deal’s a loser, I’ll tell them straight 26

InsuranceNewsNet Magazine » July 2018

Basilio to regain the middleweight crown and become the first boxer to win a divisional world championship five times. After going 85-0 as an amateur, Robinson fought 200 professional bouts. He won 173 of those, with most of his losses coming in the 1960s as he desperately tried to recapture the spotlight. Robinson drove a flamingo-pink Cadillac and traveled with a team that included, at various times, a barber, voice coach, masseuse and dwarf Rollie Fingers racked up over $4.5 million in debt, filing for bankruptcy in 1989. His poor mascot and a man investments included two Egyptian Arabian who whistled while horses, wind turbines, an apartment-flipping the boxer trained. scam and a pistachio farm. When Robinson first traveled to out, ‘All I can tell you is that I wouldn’t put Paris, a steward referred to his companmy money into this deal,’” Archer said. ions as his “entourage,” he wrote in his autobiography. Despite initially balking at the term, Robinson came to use it himself when referring to his team. SUGAR RAY ROBINSON Robinson kept fighting because he alThe biggest boxing stars are known for ready had financial problems. After his drawing large crowds in the ring and liv- boxing career ended, he launched an ening large outside of it. Sugar Ray Robinson tertainment career that foundered. set the standard early. Robinson was broke by 1965, he wrote Born Walker Smith Jr., Robinson won in his book, having spent all of the $4 mil91 consecutive fights around the world lion he made inside and out of the ring. A during his heyday from 1943 to 1951. month after his last fight in 1965, Robinson In a 2002 survey by The Ring magazine, was honored with “Sugar Ray Robinson Robinson was named the best fighter of Night” at Madison Square Garden, where the previous 80 years. he was honored with a massive trophy. And he traveled with an entourage “When he went back to his apartment befitting a king, Archer said. In fact, in New York, he didn’t even have a table to Robinson is credited with originating the put it on,” Archer said. “And so you hear modern-day sports superstar “entourage.” those kind of things and you say to your“He had a cook that traveled with him, self, ‘Holy mackerel.’” and he had a jester that traveled with him to make him laugh,” Archer said. “And I ROLLIE FINGERS mean he had everything.” When Rollie Fingers played Major Things were good while Robinson was League Baseball, he stood out on evwinning boxing titles and fighting for ery field that he played. The 71-year-old large purses. In 1958, he defeated Carmen Fingers still sports the famous handlebar SMI/Newscom

before they get married, Archer said. Many athletes want complete financial management, said Archer, adding that “we’ll only do what we’re asked to do.” The whole package starts with a will, trusts for asset protection and other documents to give the player some long-term wealth stability, he said. “I like to make sure my guys are buttoned up and there’s nothing left to chance,” Archer said. Then the firm tackles estate planning and tax implications. A key is to properly acquire assets in a way that doesn’t unnecessarily inflate the player’s estate, Archer explained.



LIVAN HERNANDEZ Livan Hernandez grew up very poor in the Villa Clara Province of Cuba. Highlevel athleticism would be his ticket out of the suffocating communism of the Fidel Castro regime. Livan and his half-brother Orlando Hernandez would both have long careers in the major leagues. First, they had to escape the island. As Livan’s pitching talents blossomed, so did his plans to defect. After meeting recruiter Joe Cubas in Venezuela in 1994, the two planned an escape through Mexico.

50 different creditors. Hernandez listed garden-variety debts associated with overspending and living a certain lifestyle. He owed credit card companies such as Chase and Bank of America, as well as an unpaid $220,000 loan from a Miami businessman. Likewise, he owed unpaid child support and a back tax bill to the Internal Revenue Service. But a certain amount of financial naïveté seems to have played a role in Hernandez’s money problems. In 2010, Hernandez signed a cheap deal with the Washington Nationals and enjoyed a career renaissance. According to The Washington Post, Hernandez handed Washington Nationals’ general Despite earning more than $53 million during his manager Mike Rizzo a 15-year career, Livan Hernandez declared owing up note in a hotel lobby in to $1 million to as many as 50 creditors. the middle of the 2010 season. About a year later, Hernandez gave up his The note had a number on it: $1 million. job as an official Cuban athlete and defect- “I play for this,” Hernandez told Rizzo, ed to the United States. Orlando would who promptly agreed and signed him to defect two years later. the contract for the 2011 season. Livan Hernandez debuted with the “Livan’s agent wanted to kill him,” Rizzo Florida Marlins in 1996 and became a star told the Post the following year. “That was one year later. In 1997, Hernandez went the best contract I ever ‘negotiated.’” 4-0 in the postseason, winning both the National League Championship Series and World Series MVP awards. His career floundered a bit after he left BABE RUTH the Marlins in 1999. But Hernandez would George Herman Ruth had a lot of bad play 17 seasons with 10 teams, earning a financial habits. He spent too much, he spot on the National League All-Star team spent frivolously and he fumbled away his in 2004 and 2005. earnings power to some degree. Hernandez officially retired in March But the Babe was shrewd in one import2014, and his financial difficulties soon ant aspect: The annuities he bought proappeared. Despite earning about $53 mil- tected him for life. That purchase proved lion over his career, Hernandez filed for to be one of the best decisions Ruth ever Chapter 13 bankruptcy in June 2017. He made, once the Great Depression wiped declared owing up to $1 million to about out savings and earnings power across the WALTER MICHOT/KRT/Newscom

mustache that draws attention wherever he goes. Fingers starred for three teams during his 17-year career. Beginning with the team that signed him out of high school, Fingers reached the pros with the Oakland Athletics in 1968. After starting a handful of games, he moved to the bullpen and in 1992 ended up as the second reliever ever elected to the Baseball Hall of Fame. In eight years in Oakland, Fingers was a key cog on three straight World Series-winning teams (1972-74). After four seasons with the San Diego Padres, Fingers hit his career apex in 1981 with the Milwaukee Brewers. He won both the American League Cy Young and MVP awards that year. Fingers would finish his career in 1985 with 341 career saves, the most in MLB history at the time. However, hints of financial trouble can be traced to his final stop in baseball. In January 2007, Sports Illustrated reported that Fingers owed Wisconsin more than $1.4 million in back taxes dating to 1981. Fingers eventually settled that claim, but he was already well down the road to financial ruin. In 1989, he filed for bankruptcy protection in San Diego – claiming debts of $4.2 million against a net worth of $50,000. Records showed Fingers owed money to 108 different creditors, from florists to travel agents to auto dealers. According to various news reports from the time, Fingers’ financial woes were caused not so much by profligate spending as poor investment choices. He poured millions into Hawaii timeshares, pistachio farms, wind turbines and raising Middle Eastern race horses. Fingers’ wife, Suzie, has said her husband was naïve and too trusting when it came to investing.


July 2018 » InsuranceNewsNet Magazine



JT Vintage/ZUMA Press/Newscom

Walsh, became concerned that his client was spending money just as quickly as he made it. So Walsh set Ruth up with Heilmann, who sold the Babe a deferred annuity through Equitable Life Insurance Company (now AXA Equitable). Ruth continued to buy annuities through the end of the decade. Walsh set it up so the Babe could withdraw the money as income when his career wound down. By the time of the first withdrawal in 1934, the country was deep in economic despair. But the Ruths were not. News reports peg the Babe’s annual annuity payments at $17,500, or more than $290,000 in today’s dollars. The retirement years were difficult for Ruth, as biographers have noted. He never found a second career, and longed for a managerial offer that never came. Babe lived out his life fishing, golfing and bowling his days away. Money is one worry he didn’t have. Thanks to a shrewd investment in annuities, Ruth provided well for his wife Claire and daughters Dorothy and Julia. Ruth was so impressed with his annuities that before died of cancer in 1948, he made arrangements for an annuity to give Claire a source of guaranteed income for the remainder of her life.

Retired amid the Great Depression, but thanks to annuities Babe Ruth bought early in his career, he was able to continue living a life of luxury until he died.

country. The annuities Ruth purchased from a competing ballplayer early in his career guaranteed him an annual income for life of about $300,000 in today’s dollars. Many consider the Babe the best player in baseball history, and he took his last swing more than 80 years ago. The 6-foot2, 215-pound Ruth (who frequently played much heavier) swatted 714 home runs. At his 1935 retirement, the next closest player had 378. Babe so dominated the game that he spawned the adjective “Ruthian” to describe mind-defying feats. Off the field, Ruth lived just as large. He crashed cars, charged into the 28

InsuranceNewsNet Magazine » July 2018

stands to fight hecklers, was subjected to paternity suits and suspended by the commissioner for leading an offseason barnstorming team. According to newspaper reports from the time, Ruth bought his first annuity in 1923 from Harry Heilmann, a star outfielder for the Detroit Tigers who sold insurance on the side. Ruth would ultimately fare better than his colleague. Heilmann’s insurance business went belly-up during the early years of the Depression. “I may take risks in life, but I will never risk my money,” Ruth is alleged to have said. Ruth’s business manager, Christy

HAKEEM OLAJUWON As a practicing Muslim, Olajuwon faced an additional hurdle to achieving second-career financial success: It is against his faith to charge interest to anyone. Still, that did not stop the Nigerian basketball superstar from investing heavily in land. Olajuwon played nearly his entire NBA career for the Houston Rockets and began buying up land in that area early on. There was the 1,500 acres of ranchland he bought in 2001. Then the 1,250 acres of undeveloped land he closed on in 2007. Along the way, news accounts popped up of the handsome profits Olajuwon was turning on properties. In 2005, he sold 17.3 acres of land just north of downtown Houston to the city’s transportation agency for $15 million. Olajuwon reportedly paid roughly $2 million for the land some six years earlier. Of course, it was Olajuwon’s success on the court that gave him the financial

HALL OF FAME, FALL OF SHAME COVER STORY before the era of monster contracts. His top salary was reportedly $350,000 — very good money, but a pittance compared with the $20 million a player of his ability would earn today. Still, he had money to invest and he chose the restaurant business. Bridgeman started with five Milwaukeearea Wendy’s, where he insisted on doing every job as needed. Relying on his leadership skills — he once served as president of the NBA Players Association — Bridgeman instilled team concepts that fueled skyrocketing sales. “Failure was not an option,” he told Fortune. Bridgeman kept adding restaurants and was once one of the largest franchise owners in the country before selling out in 2016 to become a Coca-Cola bottler. Today, he is the CEO of Heartland Coca-Cola, which serves parts of Kansas, Missouri and Illinois.

Spencer D. Cook “Ai Wire Photo Service”/Newscom

Hakeem Olajuwon has earned more than $100 million from buying and selling high-end properties in the Houston area.

resources to become a land baron. The first overall selection in the 1984 NBA draft, the 7-footer played 16 years in Houston before adding a final season in Toronto. Olajuwon finished his career 13th all-time in points, 14th in rebounds and ninth in steals. He is the all-time leader in blocked shots with 3,830. He was elected to the NBA Hall of Fame in 2008. JUNIOR BRIDGEMAN Once traded (with others) for Kareem Abdul-Jabbar, Junior Bridgeman found a home in Milwaukee. While never a star, Bridgeman had enough impact during his 10 years with the Bucks that the team retired his No. 2 jersey. More importantly, he became a part of the Milwaukee community. That made Bridgeman’s transition to a second-career life in business a lot easier. After he starred at the University of Louisville, the Los Angeles Lakers drafted Bridgeman eighth overall in the 1975 NBA draft. Immediately dealt to Milwaukee with three others, Bridgeman averaged nearly 15 points a game over the ensuing nine years as the Bucks made several playoff trips. After two years with the Los Angeles Clippers, Bridgeman returned to Milwaukee for a final season before retiring. In a Fortune magazine interview, Bridgeman recalled questioning former

Bucks owner Jim Fitzgerald about entering the business world. “If you get involved with business, you only have two problems,” Fitzgerald said. “People and money.” Son of a steel worker, Bridgeman played

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at

Junior Bridgeman started with five Milwaukee-area Wendy’s franchises, which helped make Bridgeman Foods America’s second-largest Wendy’s franchise owner.

July 2018 » InsuranceNewsNet Magazine


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UL Drags Down 1Q Life Insurance Sales Low interest rates, principle-based reserving and discontinued products took

their toll on fixed universal life sales that even surging indexed universal life sales couldn’t overcome in the first quarter, LIMRA reported. Overall first-quarter individual life insurance sales fell 2 percent compared with the year-ago period as fixed universal life sales collapsed. Fixed UL sales plunged 19 percent in the first quarter compared with the year-ago period. Despite the fixed UL drag, IUL continued to shine with first-quarter sales rising 8 percent compared with the year-ago period, LIMRA reported. It marked the sixth consecutive quarter for IUL growth.


First-quarter earnings numbers from life companies reveal more negatives than positives, with long-term care leading the way, analysts said. “Results remained disappointing, and while some issues were temporary, other factors such as long-term care exposures are likely to remain a concern for years to come,” wrote Morgan Stanley analyst Nigel Dally, in a research note. With respect to the negatives, the analysts pointed to: »C  oncern over long-term care and reserves. »T  he tepid pace of buybacks. »M  arket volatility dragging down investment results. » Asset flows remaining weak. But there was good news as well. Dally and his team pointed out two encouraging trends:





» Interest rates continued to rise. » Regulatory risks ebbed as the Fifth Circuit Court of Appeals killed the Labor Department’s fiduciary rule.


Two life insurers made news by acquiring the life divisions from other carriers. Kansas City Life announced it will acquire all of the issued and outstanding stock of Grange Life Insurance Co. from Grange Mutual The transaction is anticipated to close at the end of the third quarter. Following the acquisition, Grange Life personnel will continue to service existing policyholders and will assist in distributing Grange Life and Kansas City Life products. MassMutual said it will sell 85.1 percent of MassMutual Japan, Ma ssMut ua l International’s wholly owned life insurance and wealth management affiliate, to Nippon Life. In addition, MassMutual and Nippon Life said they are entering into a strategic cooperation agreement for exploring partnership opportunities.

QUOTABLE Whole life being down is somewhat surprising. We’re seeing dividends declining at some major writers and that could have an impact. — Ashley Durham, assistant research director, LIMRA, on first-quarter life insurance sales


Finding the magic “customer-centric” formula has proven elusive for insurers across the board. While their premium count remained high, insurers could afford to err on the side of caution. Those days are dwindling, and insurance marketing departments are trying to be bold with new marketing initiatives that make use of technology and other advances. That was the word during the recent LIMRA Marketing Conference, which included a session on “Managing Customer Experience.” The industry is long overdue to adopt some of the customer-friendly tools that are improving the shopping experience for virtually everything that we buy, said Todd Silverhart of LIMRA. LIMRA surveys show that 83 percent of insurers have “customer-experience initiatives,” or multiple efforts designed to improve the relationship to the customer. Among all businesses, respondents cited Amazon for being most in tune with its customers’ needs, Silverhart said.

Susan Neely, president and CEO of the American Beverage Association, was named president and CEO of the American Council of Life Insurers.

InsuranceNewsNet Magazine » July 2018

Source: ACLI

Easy To Do Business With

The 800lb. Gorilla Has


Allianz Life Pro+ Elite


Fixed Index Universal Life Insurance Policy Issued by Allianz Life Insurance Company of North America

LifePro can help add a powerful, versatile tool to your clients’ overall financial strategy with protection for today, and flexibility for the future. Elite protection: Allianz Life Pro+ Elite not only provides a death benefit that’s generally incometax-free to beneficiaries - but also gives clients additional term coverage they can afford today with the ability to convert to permanent coverage down the road with the optional Supplemental Term Rider.1 Elite accumulation potential: Potentially enhance tax-deferred accumulation potential with an interest bonus opportunity starting in year 1 to further help increase accumulation potential. Elite flexibility: Your clients can access any cash value accumulation income-tax-free loans or withdrawals2 to potentially supplement retirement income, college funding, and much more. Elite partnership: You can increase your ability to help clients by leveraging the experience of LifePro’s back-office support.

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Rider is available at policy issue at an additional cost and is based on the amount of the additional term coverage. A maximum cumulative conversion amount may apply. Policy loans and withdrawals will reduce the available cash value and death benefit and may cause the policy to lapse, or affect guarantees against lapse. In the event of a lapse, withdrawals in excess of premiums paid and outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. Additional premium payments may be required to keep the policy in force. Tax laws are subject to change and clients should consult a tax professional. Guarantees are backed by the financial strength and claims-paying ability of the issuing company.


Determining The Ideal IUL Prospect It is the blurring of lines between investments and insurance that makes indexed universal life so attractive to certain types of prospects.

» Tax-sheltered growth and tax-exempt distributions.

By John Hutchinson

» Protection against premature death (and possibly even severe illness or injury).

» Annual opportunities for doubledigit growth without risk of market losses. 34

InsuranceNewsNet Magazine » July 2018

I believe it would be quite difficult — not to mention inefficient — to synthesize this same combination of benefits by cobbling together a medley of other financial products. So who are the ideal prospects for IUL? Here are the types of people I’ve found to be enamored of IUL after they are properly educated about it.

Fiscally Responsible Families

The traditional paradigm of having affluent families maximize their retirement plans while struggling to pay off low-interest mortgage

Mutual Funds/ETFs•

•VUL •IUL uncapped •IUL with caps



’m often asked the question, “Who is the ideal candidate for indexed universal life and why?” The world is full of opinions about letting investments be investments and that insurance should be strictly insurance and how IUL blurs these lines. However, it is the blurring between investments and insurance that makes IUL so attractive to certain types of people. The fact that it’s possible to stay closer to the risk profile of a savings account with the opportunity to earn returns closer to the stock market is what makes IUL appealing as a piece of a broader balanced allocation strategy. After all, who wouldn’t want the following benefits of IUL?

» Guaranteed access to your equity without age restrictions.

debt needs to be reexamined. From a taxdeduction standpoint, this combination of behaviors is often like having one foot on the gas and the other foot on the brake. You’re eagerly maximizing one deduction, while aggressively trying to eliminate another. I could understand this mentality when interest rates were

•Whole Life

• CD • Savings Account

RISK (This infographic is meant to be conceptual in nature and does not represent any exact quantifications of the financial products mentioned.)




high, but the low hurdle rate of today’s mortgages may make it worthwhile to maintain this ongoing stream of payments while growing a bigger prudent reserve fund. This is especially true if the vehicle’s long-term average growth rate doesn’t start with a decimal point, is sheltered from income tax and can be accessed without penalties before age 59 ½. Don’t today’s families have just as many financial goals before retirement as they do during retirement? If your client exhausts every precious drop of cash flow while aggressively paying down their mortgage and maxing out their 401(k) plans, won’t their liquidity profile look like that of someone living paycheck to paycheck? I understand how lackluster savings accounts create a lost opportunity cost, but IUL gives your clients the unique ability to harness the power of taxsheltered growth while staying flush with liquidity and simultaneously protecting their family against catastrophic situations. The best advice I could give to fiscally responsible families is to save money where they can safely send those dollars on a ride up the compound interest curve, without sacrificing access and control of their capital. What’s interesting is that the major banks park more capital into performance-based life insurance policies (on the lives of their key executives) than they do into real estate, even though they have branches all over. That’s why our company’s tag line is “Don’t do what banks say … do what they do.” Your clients also can reengineer permanent life insurance to act as their own private family bank.


Creating your clients’ own bank with a properly designed insurance policy can create unique financial opportunities that wouldn’t otherwise exist. What if your client wanted to partake in a capital-intensive business opportunity or pounce on a timely real estate deal? These opportunities would normally be available only to cash-rich investors, but IUL’s equity can be converted to cold, hard cash when these opportunities arise (without having to sacrifice growth while the client waits).


Entrepreneurs often develop a love affair with IUL after they understand the many things it can do for them. One of the features that make IUL so appealing is its completely flexible premium structure. Whole life insurance and term insurance have rigid premium schedules that can cause a policy to lapse if not strictly adhered to. With IUL, as long as you have positive cash surrender value, no mandatory premiums will be due. Liquidity is the life-blood of an entrepreneur’s main wealth-building vehicle - their business. We find that entrepreneurs often keep large amounts of cash in nonperforming savings accounts simply because it must reside safely onhand. Remember that earlier in this article, I wrote that the biggest banks in America are diverting billions of their institutional reserves from low-yielding accounts into permanent life insurance policies on the lives of their key executives? This big institutional thinking can easily be replicated by small and midsized business owners. IUL’s protection component is arguably more important


for a local small business than it is for a Fortune 500 company. Losing an owner or a key employee can often mean the downfall of a small business, whereas it’s merely a speed bump for a huge corporation. A properly structured IUL policy not only pays a tax-free death benefit, but also may provide certain “living benefits” if an owner or key employee becomes too sick or injured to keep working. These provisions may provide just enough taxfree cash to keep a business afloat long enough to get its bearings after losing one of its key people. Not only that, but a company-owned policy can also simultaneously act as a supplemental retirement plan to recruit and retain these high-earning employees who need more than a 401(k) match to excite them. The policies owned by banks themselves are often tied to these types of “golden-handcuff” plans that simultaneously protect their human capital.

What Role Does IUL Play In Retirement?

Your clients may not need life insurance in retirement, but they certainly may want some. Here’s why. I have found that the majority of Americans are over-allocated to the same stocks and mutual funds that lost half of their value not once, but twice from 2000 to 2010. Now, I’m not saying your clients need to pull everything out of the market, but imagine that a portion of their retirement assets could still earn decent returns in good years but be immune from catastrophic declines. Your clients could feasibly draw funds strictly from their IUL policy cash value in these periods July 2018 » InsuranceNewsNet Magazine




Historical Marginal Tax Brackets For Highest And Lowest Income Earners

Marginal Tax Rate


— Lowest — Highest

80 70 60 50 40 30 20 10 0 1910




instead of redeeming a large number of shares from their stocks and mutual funds while they’re depressed in value. This capacity to let a traditional portfolio heal is reason enough for your clients to start diversifying some of their retirement dollars toward IUL. What about taxes in retirement? Can you think of a few reasons tax rates may go up in the future - for everyone? How about 21 trillion reasons and counting? If all your clients’ assets are in taxable investments or tax-deferred retirement plans, how much control of their tax situation will they have in retirement? What if, with the stroke of a pen, Congress raises tax rates on everyone to make up for the $21 trillion deficit? Is it coincidental that the amount of our national debt seems to track the amount of money that Americans hold in qualified retirement plans? Take a look at how erratic our tax policy has been in the past. Thankfully though, there always has been a sizable spread between the more reasonable lower tax brackets and the extremely penal higher brackets. Amassing a sizable cash value balance inside an IUL policy by retirement could help your clients effectively toggle their tax situation from year to year as tax policy changes. As long as your clients can keep just some amount of their death benefit 36

InsuranceNewsNet Magazine » July 2018





in force (even if they bleed it down for income during retirement), then all of IUL’s tax-exempt distributions during their lifetime become permanently forgiven once that death claim is paid to any beneficiary. So if tax rates suddenly become parabolic and your clients’ total taxable retirement income creeps into the unfavorable brackets, they could easily tighten the spigot from their individual retirement account or 401(k) account and supplement by taking tax-exempt income from their IUL policy so that they never reach those higher brackets. In the most extreme cases of future tax hikes, your clients could completely scale back their taxable retirement withdrawals and aggressively pull from a heavily funded IUL policy. Once tax policy stabilizes or the pendulum swings back the other way, clients could then pull from their retirement plan assets to make their IUL whole again. IUL has substantial utility when you think outside the box and don’t put IUL in the small corner that many financial pundits do. Are there costs? Of course, but are the costs worth the unique benefits and planning possibilities that IUL provides? Ultimately you can be the judge of that, but we’ve found that the cost/benefit trade-off of a properly structured policy can be attractive once clients are





properly educated. So, who are the ideal candidates for IUL? » Anyone who is concerned with the very real retirement risks of both violent volatility and massive tax hikes. » People who need or want to keep excess liquidity safely on hand for long periods of time. » Families or businesses that would be negatively impacted by someone who can no longer work because of death, chronic illness or severe injury. It is unclear as to who exactly penned this fitting quote, but it applies perfectly to the divide between the reality and perception of IUL. “There is a principle which is a bar against all information, which is proof against all arguments, and which cannot fail to keep a man in everlasting ignorance — that principle is contempt prior to investigation.” — Unknown. John “Hutch” Hutchinson is an independent insurance agent and registered investment advisor in San Clemente, Calif. He is founder of, an educational site for both consumers and advisors. He may be contacted at john.


Fallacies In The Term/Perm Debate Taking a new look at the life insurance needs analysis in the context of popular misconceptions. By Erica Davis


here are several semi-famous authors and media personalities who push their financial advice to the masses, often while misrepresenting themselves as life insurance experts. These self-proclaimed life insurance pundits are painting a pro-term and anti-whole life picture for the general public. However, as with any major financial decision, it is always best for prospects and clients to be informed of the available options along with their pros and cons. Let’s clear up a few common life insurance fallacies that have been fed to the general public over the past few decades, and how you can debunk them.

Fallacy No.1: Term life insurance is the best.

Term life insurance is not a one-size-fits-all solution. It is named term insurance for a reason — it is only meant to be used for a short term. It certainly may work well for many scenarios, such as paying off a mortgage or other debts, covering key persons in a business, or protecting incomes when budgets are tight during the client’s early working and child-rearing years. Conduct a thorough needs analysis for your clients to determine which life insurance plan, or combination of plans, is a good fit for their situations and goals. Compare the process to a doctor visit. If you show up and ask for medicine and the doctor hands you a generic prescription without asking any questions, you’d probably stop going to that doctor. You’d expect the doctor to ask questions about your symptoms, thus enabling the doctor to analyze your specific needs and prescribe the most effective medication for you.

Fallacy No.2: Whole life insurance is a rip-off.

It is true that whole life insurance premiums are higher than term premiums,

especially for large amounts of coverage. However, like many shopping decisions, clients get what they pay for, and they often increase certain risks when they choose the less expensive option. Clients must understand that eventually the term plan will run its course and end. Whole life coverage provides guarantees, living benefits, cash value buildup and nonforfeiture options. It allows the owner to make changes later, should they decide to discontinue paying ongoing premiums. Explain to clients that buying life insurance is a lot like choosing a new car. Do they need an economy compact car or a luxury vehicle? The luxury option has higher value and those who understand that fact are willing to pay more for something they will trust to last.

Fallacy No.3: Fewer than 1 percent of term insurance policies actually result in a death claim payout.

I spent hours searching for data to support this statistic of fewer than 1 percent. After having no luck finding the information online, I contacted LIMRA. Their representative said that they believe this original statement was made at the University of Pennsylvania in the 1960s and that there is not a current published statistic that supports that statement. But I still wanted empirical evidence so that I could bust this myth, so I decided to dig deeper in a different manner. I examined the life insurance block of business that went off the books over the past 30 years at my company. Here are my findings regarding the rate of death claims paid based on policy count per type of life insurance: Term life at 3.4 percent; universal life at 11.8 percent; traditional whole life at 15.3 percent; and single premium whole life had the highest rate of death claims at an impressive rate of 63.9 percent. One could glean from these figures that permanent life insurance is significantly more likely to pay out a death benefit — but this does not mean that term insurance is a bad idea.

A New Look At Life Insurance Needs Analysis

There’s a plethora of needs analysis tools available for life insurance planning, ranging from fancy software programs to basic one-page forms with a few fill-in-the-blanks. These tools typically group all life insurance needs together to determine one grand total. Instead, they should be breaking out the needs into two specific categories: short-term and long-term needs. This approach could help to ensure that the proper types and amounts of coverage are provided for the two categories of needs. The short-term category should include expenses such as income replacement, mortgages and other debt, children’s college education needs, and an emergency fund. Eventually, the client’s debts will be paid off, the client’s children will become adults and a fair amount will have been saved for the client’s retirement. At that point, they can ditch the term coverage. The long-term needs category should include funeral expenses, funds to cover anticipated estate taxes, and financial legacies for heirs and/or charities. A strategy to consider is to start with a large term policy, with plans to convert it to a smaller permanent policy later (as long as there is a conversion option provided on the term plan). Make the client aware that when converting from term to permanent later, the rates for the permanent plan will be based on an older age, resulting in a much higher premium. Locking in permanent coverage at a younger age also locks in lower rates. The cost of waiting is an opportunity cost that clients must seriously consider. Regardless of the type of insurance required, it is our duty to conduct thorough needs analyses to determine the best solutions for each and every client. Erica Davis, FLMI, ARA, AAPA, ACS, is a senior marketing specialist at United Life. She has served the insurance industry in various marketing, educational and agency support capacities for more than 18 years. Erica may be contacted at erica.

July 2018 » InsuranceNewsNet Magazine



FIA Sales Bust Out Of 2018 Gate

Fixed indexed annuity sales came back from the almost-dead in the first quarter, with the second-strongest first quarter in a decade, LIMRA reported. First-quarter FIA sales were up 11 percent to $14.5 billion compared with first quarter 2017 and up 4 percent since last quarter. But the rest of the annuity market was not as strong, leading to a level quarter. Overall, annuity sales were $51.8 billion — about even with first-quarter 2017 results. Total fixed annuities remained flat in the first quarter, totaling $27.2 billion. Fixed annuities have outperformed variable annuity sales seven out of the last eight quarters. LIMRA expects overall fixed annuity sales to increase 10-15 percent in 2018.


The first-quarter FIA sales figures weren’t the only annuity numbers on the rise that quarter. The products paid a bit more in the first quarter than they did last year. The increases were slight but they were increases nonetheless. Here is a breakdown, according to Wink’s Sales & Market Report. » The indexed annuity commission received by the agent averaged 6.26 percent of premium for the first quarter of 2018; an increase of 0.13 percent as compared with last quarter. In the first quarter of 2017, average indexed annuity commissions were 6.2 percent. » The fixed annuity commission received by the agent averaged 4.18 percent of premium for the first quarter of 2018, up 0.13 percent compared with last quarter. In the first quarter of 2017, average fixed annuity agent commission was 3.9 percent.

» Average agent commission on a multi-year guaranteed annuity was 2.29 percent of premium for the first quarter of 2018, down 0.11 percent compared with last quarter. In the first quarter of 2017, average MYGA agent commission was 2.3 percent.


Annuities with cash refunds are running hot. Nearly half — 47.6 percent — of income annuity quotes from advisors in the first quarter were for annuities with a cash refund death benefit (aka return of premium), compared with 40

Give me that

RETURN of PREMIUM! percent in the first quarter of last year, according to the Cannex index of annuity queries. The cash refund payout on a single premium immediate annuity or deferred income annuity is the refund to the


KNOW First-quarter VA sales declined for the



17th consecutive quarter.

InsuranceNewsNet Magazine » July 2018

Source: LIMRA


Thereto arethe 11 companies offering Due DOL fiduciary QLAC (qualifying longevity annuity rule being vacated in April contract) While this is 2018 andproducts. the expectation afor small and new part of the DIA positive economic market, wewe expect see an uptick factors, havetorevised our in salesannuity in 2016. forecast and 2018

now expect a 5-10 percent increase in annuity sales growth. — Todd Giesing, LIMRA

beneficiary of any unpaid premium so that there is no loss in the event of an early death. If the annuitant received $30,000 worth of payments on a $100,000 income annuity and then passes away, the beneficiary gets a cash refund of $70,000. Cash refunds aren’t the only types of death benefits offered with income annuities, but they are the most common type of query by far, Cannex reported.


New variable annuities require new terminology. So structured and buffered VAs have a new name in the LIMRA universe: registered indexed-linked annuities. The new terminology was adopted following the introduction of annuities marketed as buffered and indexed-linked Structured over the past few years, and Buffered said Todd Giesing, Variable annuity research direcAnnuities tor for LIMRA Secure Retirement Institute. re Indexed-linked indexgeids t ered link annuities will be includannuit ies ed ed in overall VA sales numbers, he said. Indexedlinked annuities use indexes as a measuring stick with which to credit contract holders, hence the phrase “indexed-linked.” The product category has grown quickly. Sales rose 25 percent last year to $9.2 billion compared with 2016 as consumers seem comfortable with sharing the risk of market losses in exchange for a higher potential return.

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Is Bigger Better When It Comes To LIBR Pricing On Indexed Annuities? The complexity of lifetime income benefit rider pricing creates the illusion of a better product. By Michael Jay Markey Jr.


ere are two life lessons that relate to the subject of complexity in lifetime income benefit rider pricing. Lesson one, be where your feet are. We too often live as though there’s a tomorrow, but tomorrow is not guaranteed. Lesson two, things aren’t always what they seem. The complexity of LIBR pricing, specifically on fixed indexed annuities, creates an environment where the insurer is incentivized to charge in excess of the actuarial cost and repurpose this revenue to purchase higher crediting rates. Thus, it creates the illusion of a better product. I had an epiphany regarding this issue recently: Find the net present value of the LIBR 40

InsuranceNewsNet Magazine » July 2018

cash flows on a product that charges the actual cost of the benefit. Then we can reverse engineer the excess cost (profit) of a LIBR with higher fees. From here, we can determine if it’s possible to bump up the budget for interest credits by charging more for a LIBR. Spoiler alert: An increase in LIBR cost of just 0.10 percent can result in triple the LIBR revenue to the insurer. Examining the cost of a LIBR is to examine the cost of an FIA, or the pricing of an FIA (they are one and the same). The first leg in my FIA cap pricing journey started about six months ago when I was listening to a quarterly investors’ earnings call for a publicly traded insurer we use. An investment banker asked how this insurer priced their LIBR. He inquired whether they profit from it. What do you mean “if they profit from it”? Why would he ask this if it wasn’t possible (which it is) and if it wasn’t something other insurers are doing? As I thought this, the CFO answered that their LIBR fee is set at the actuarial

equivalent. Surely others were doing the same. Was this unique? To answer this, you should instead ask what would motivate an insurer, other than profit, to profit from ancillary product benefits? It’s a counterpunch to the Department of Labor’s fiduciary rule. What better way to say a product is more consumer-friendly than to give it better interest potential? Surely an FIA crediting 5 percent symbolizes the client getting a bigger piece of the pie. Are things always as they appear? Could a contract with a LIBR fee calculated against the income account value of just more than 10 basis points create an aggregate fee of two to three times that of a contract with a LIBR fee calculated against the account value? As a financial professional, have you ever told your clients, “Little changes, over many years, can result in big results”? Of course, you have! Yet, this fact is ignored in the construction of the financial products. Simply put, an insurer can charge more for a LIBR than it costs them to


Annual LIBR Fee

Annual LIBR Fee on AV vs IAV










10 11 12 13 14 15 16 17 18 19 20 21 22 23 Contract Year

0.90% of AV

1.0% of IAV

Cumulative LIBR Fee AV vs IAV 35000

Cumulative LIBR Fee

30000 25000 20000 15000 10000 5000 0









9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Contract Year

0.90% of AV create it. They can take these funds and use them to buy higher caps. People like higher caps because higher caps symbolize more money. How do we determine the cost of a LIBR? What is the cost? Let’s get more basic. What’s the purpose of insurance? To transfer the risk from an individual to an insurer. In the case of a LIBR, the risk

1.0% of IAV

being transferred is longevity — outliving one’s money. The principal risk to the insurer is being contractually obligated to continue income payments after the FIA account value is reduced to zero. Here’s the kicker. All else equal, wouldn’t an FIA with a cap of 5 percent carry an account value north of zero longer than an FIA with a cap of 2.25 percent?

If the account value is likely to be positive longer, then isn’t the risk to the insurer lower, and de facto, the cost to provide the LIBR benefits lower as well? Yet, I can find FIAs with higher than average caps with higher than average LIBR fees. Some carriers assume lower lapse ratios than others. This is a pricing strategy. For example, if a carrier assumes the July 2018 » InsuranceNewsNet Magazine



2.25% FIA Cap vs 6.0% FIA Cap 140000

Account Balance

120000 100000 80000 60000 40000 20000 0









9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Contract Year Thing 1

same lapse ratio on an FIA with a LIBR as it does on an FIA without a LIBR, despite FIAs with LIBRs historically having lower lapse ratios, then this frees up pricing.

unimportant for Thing 1, Thing 2 will have an income account value of a bit more than $147,000 when the income phases begin. Based on these assumptions, we can determine the total revenues (future cash flows) generated by each LIBR pricing method for Thing 1 and Thing 2. The difference in raw cash flow is somewhat misleading though, since Thing 1 charges much less in later years than does Thing 2. A dollar in 10 years is worth less than a dollar today. To account for this, we’ll need to calculate the net present value of these future cash flows for both Thing 1 and Thing 2. In this calculation, we’ll use a discount rate of 4 percent. The second leg in this journey happened about a month ago when I was attending a home office meeting. I asked the carrier’s head actuary, in general, how much does each 1 percent of cap (using an annual S&P 500 index) cost in terms of budget? Although actuaries don’t particularly like the term, he said in general each 25 bps of cap costs the insurer about 10 bps. Looking at other

products, this doesn’t seem to be outlandish. In other words, Thing 2, with a 5 percent cap, needs to have about 1.1 percent more budget than Thing 1. We can find the budget in an FIA by looking at the fixed rate option. The fixed rate option is the amount the insurer spends on options. FIAs are efficiently priced, meaning the insurer isn’t meaningfully more profitable when a consumer chooses one interest crediting option over another. The fixed interest rate levels the playing field when comparing one product with another. The cap rates between different insurers can vary widely, but then so should the fixed interest rate option. If not, then they’re messing with other assumptions, levers, or IE pricing mechanisms. This is possible, but as mentioned earlier in this article, just a 10 bps greater LIBR charge can result in two to three times the revenue. I found one product with a 1 percent fixed rate that had nearly the same annual point-to-point cap using the S&P 500

Difference in LIBR Fees Reinvested

Two Examples

Cumulative Balance

Moving forward, 35000 for simplicity, here are two examples I will call Thing 1 and Thing 2. Thing 1 is a real product. It is offered 30000I mentioned in the story by the insurer above. Thing 1 has an annual point-topoint cap25000 using the S&P 500 of 2.25 percent. Its LIBR fee is 0.90 percent of the account value. Thing 20000 2 is not a real product. It’s more of a conglomeration of other FIAs currently available. 15000 We’ll assume a 5 percent cap using the same index as Thing 1. Thing 2, however, will have a LIBR fee 10000based on the income acof 1 percent count value. Both Thing 1 and Thing 2 will use 5000 an initial deposit of $100,000 using a 60-year-old man and an approximate annual lifetime 0 income of $7,300 starting in the fifth contract year. Although,



Thing 2





InsuranceNewsNet Magazine » July 2018




9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Contract Year

Thing 1

Thing 2


Difference in LIBR Fees Reinvested 35000

Cumulative Balance

30000 25000 20000 15000 10000 5000 0









9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Contract Year

Difference In LIBR Fee as one with a 2.60 percent fixed rate. Yes, the first insurer could be offering artificially higher cap rates with the intent of decreasing them later, but compellingly, the LIBR was a percentage of the income account value and it was mandatory. My article serves as an explanation that this mathematically is possible. It does not conclude or assert that any carrier is doing this. It illustrates, given the legislative environment created by the Department of Labor fiduciary rule compounded with the complexity of pricing levers, that this could be done and it would be decades before it was actually noticed.

Aggregate Cash Flows

Next, we need to determine the aggregate cash flows derived from Thing 1’s and Thing 2’s LIBRs. I used the same Excel spreadsheet I’ve previously used to discuss the effect of different cap rates on FIAs. It uses the S&P 500 annual returns (without dividends) from Jan. 1 to Dec. 31 each year from 1975 to 2016. Thing 1’s account value, on average,

Cumulative Difference Reinvested at 4% CAGR

was depleted in the 21st contract year. So I took the average account balance for each maximum rolling period available and multiplied this amount by the LIBR fee. In total, over the 21 years, the aggregate LIBR fee was $12,881. Thing 2’s account value, on average, was depleted in the 23rd contract year. Using the same method as before, the aggregate LIBR fee for Thing 2 was $33,148. Using a discount rate of 4 percent, the net present value of the LIBR cash flows for Thing 1 is $4,757. Thing 1’s LIBR charge was 0.90 percent. In today’s dollars, Thing 1 receives $528 per 10 bps of LIBR cost (4,757 divided by 9). Again, we’re assuming Thing 1’s LIBR costs to be the actuarial equivalent. This should represent the cost for this benefit. Using the same discount rate, the NPV of the LIBR cash flow for Thing 2 is $11,361. Using $528 of revenue per 10 bps of LIBR true costs, the cost for Thing 2’s LIBR is 2.15 percent. That’s 125 additional bps. If 10 bps buys 25 bps of caps, then the excess LIBR cost could account for up to 3 percent greater cap.

This mathematically explains the difference. Yes, higher LIBR fees can be used to buy higher caps. I am not claiming one pricing strategy is superior to another. In fact, the pricing strategy of a LIBR has nothing to do with LIBR payments because the LIBR fees do not impact LIBR payments. I would not have thought 10 more bps on the income value was that much greater than on the account value. I haven’t named any insurers because I’m proving it’s mathematically possible to divert greater LIBR fees to buy higher caps. I cannot prove, undeniably, this is what is being done. And I haven’t found an insurer to discuss this “on the record.” You’ve seen the math. You be the judge. Michael Jay Markey Jr. is a co-founder and owner of Legacy Financial Network, Kentwood, Mich., and is the author of Fireproof Your Retirement. He may be contacted at

July 2018 » InsuranceNewsNet Magazine



Americans Hold On To Health Care The Trump administration may be doing its darndest to dismantle the Affordable

Care Act, but it can’t seem to pry health insurance loose from many Americans who obtained coverage under the law, a government survey said. After nearly a full year of Trump, the uninsured rate was 9.1 percent for 2017, almost the same as toward the end of the Obama administration, according to the Centers for Disease Control and Prevention. That works out to a little more than 29 million people uninsured. But the CDC survey raised some questions about potential problems in the future. The rate of uninsured increased sharply among middle-income adults, mostly as a result of hefty premium increases for those who aren’t eligible for subsidized coverage. The uninsured rate also was high in states that did not expand Medicaid under the ACA. And the survey showed high-deductible health insurance continues its hold on the marketplace, with nearly 44 percent of Americans now in plans that require individuals to pay at least $1,300 of medical bills each year, or $2,600 for family coverage.

uninsured american



While Congress remains deadlocked over health care, states are taking the matter of high drug costs into their own hands. Massachusetts submitted a waiver to the Centers for Medicare & Medicaid Services that asks permission to exclude certain drugs from its Medicaid program, MassHealth. Arizona’s Medicaid director Thomas Betlach asked CMS for greater decision-making power in which drugs Medicaid covers. Maryland passed a law last year that allowed the state’s attorney general to sue drugmakers who hike prices without proper explanation. A judge struck down the law in April. DID YOU




The list of mergers in the health care world keeps on growing. In the latest deal, Anthem announced it will acquire Aspire Health, the nation’s largest nonhospice, community-based palliative care provider. Aspire provides services under contracts with more than 20 health plans to consumers in 25 states. Financial terms of the deal were not disclosed. The acquisition is expected to be completed in the third quarter of this year.


With the repeal of the individual mandate and the failure of Congress to enact stabilization legislation, we are expecting premiums to go up substantially. Kris Haltmeyer, a vice president at the Blue Cross Blue Shield Association, on individual health insurance premiums for 2019


American adults are suffering from an epidemic of loneliness, according to a major health insurer’s survey of the phenomenon. Cigna’s national survey exploring the impact of loneliness in the U.S. showed that most Americans scored a 43 or higher on the UCLA Loneliness Scale,

46% of Americans

report feeling alone a 20-part questionnaire designed to measure feelings of loneliness and social isolation. Nearly half of Americans reported sometimes or always feeling alone (46 percent) or left out (47 percent). Slightly more than half of Americans (53 percent) have meaningful in-person social interactions, such as having an extended conversation with a friend or spending quality time with family, on a daily basis. Generation Z (adults ages 18-22) is the loneliest generation and claims to be in worse health than older generations.

About 500,000 more Americans bought Medicare Supplement insurance in 2017 than in 2016. Source: American Association for Medicare Supplement Insurance

InsuranceNewsNet Magazine » July 2018

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Call 1-888-900-1962 to learn more about SecureCare today. Please keep in mind that the primary reason to purchase a life insurance product is the death benefi t. Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. Agreements may be subject to additional costs and restrictions. Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements. SecureCare may not be available in all states. Product features, including limitations and exclusions, may vary by state. 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 affi liates, have a fi nancial interest in the sale of their products. The Acceleration for Long-Term Care Agreement is a tax qualifi ed long-term care agreement that covers care such as nursing care, home and community based care, and informal care as defi ned in the agreement. This agreement provides

for the payment of a monthly benefi t for qualifi ed long-term care services. This agreement is intended to provide federally tax qualifi ed long-term care insurance benefi ts under Section 7702B of the Internal Revenue Code, as amended. However, due to uncertainty in the tax law, benefi ts paid under this agreement may be taxable. Please ensure that your clients consult a tax advisor regarding long-term care benefi t payments, or when taking a loan or withdrawal from a life insurance contract. The death proceeds will be reduced by a long-term care or terminal illness benefi t payment under this policy. POLICY FORM NUMBERS: ICC17-20103, 17-20103 and any state variations; ICC1720111, 17-20111 and any state variations INSURANCE PRODUCTS ARE ISSUED BY MINNESOTA LIFE INSURANCE COMPANY or 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 fi nancial obligations under the policies or contracts it issues. Securian Financial is the marketing name for Securian Financial Group, Inc., and its affi liates.

Securian Financial Group, Inc.

400 Robert Street North, St. Paul, MN 55101-2098 ©2018 Securian Financial Group, Inc. All rights reserved. F87549-27 2-2018 DOFU 2-2018 ICC18-371558

For fi nancial professional use only. Not for use with the public. This material may not be reproduced in any form where it is accessible to the general public.


10 Ways You Can Take The Pain Out Of Disability Claims Clients who are injured or ill depend on you to smooth the way when the time comes to file a claim. By Lynn Christofferson


aking a disability claim can be a stressful event for your client. They may call on you for your support. These 10 things can help you be prepared for those calls.

1. Listen, Ask Questions And Take Copious Notes

Ask the nature of the accident or illness and the onset date (this is important). Most policies have a 90-day elimination period. Even if the 90 days have not passed, advise the client to file now if there is any chance they won’t return to full-time work making the same money they were making previously, before the 90 days are up. Let your client know it’s best to file a claim via email, not phone. Every step of the claims process should be documented. This initial notification must include the information noted previously and a contact number. Include the client’s name and policy number in the email subject line.

2. Prepare For The Phone Interview

The next step after the notification is the 46

InsuranceNewsNet Magazine » July 2018

telephone interview. Advise your client to focus on what they are no longer able to do, not what they think they might be able to do. It can be difficult for clients to describe themselves as disabled, but they are disabled for now, so they must be in that mindset. Clients often torpedo their own claims by being reluctant to be seen as complaining. Encourage them to complain. They need to accurately describe how they are feeling and not put a positive spin on it.

3. Create A Record

The interview and the requested documentation to follow are similar to the underwriting process. Advise your client to obtain the email address of the claims analyst during that call. After that call, and any phone call, suggest your client send an email that states something like, “Thank you for your time today. You asked me to send you X, and you committed to do Y.” Creating this record is important.

4. And Keep More Records

I suggest clients keep a diary of sorts, recording every exchange with anyone regarding their claim. This would include exchanges with you and with their medical providers. If anything about the claim is contested, this log of information can be important.

5. Get Ready For A Letter

After the telephone interview, the client will receive a long and wordy letter from the insurance company. Let them know to expect this. It’s the analyst’s job to quote contract language and ask for a whole bunch of stuff.

6. Get Out Those Tax Returns

In that letter, your client will be requested to provide three years of complete tax returns, not including the year the onset date occurred, and year-to-date income information. This is a good thing. The analyst will use this information to benchmark your client’s highest or average income. This benchmarked income number will be used to calculate a residual loss if and when the claim is not a total disability. The reason why this is a good thing is if your client has been ill for some time prior to filing a claim, it’s likely their income has gone down. It’s to their advantage to provide this historical income documentation to show how much they were earning before they became ill or injured.

7. Explain The Accumulation And Elimination Period

Suggest that as part of your client’s diary, they document any day or half-day they didn’t work because of their accident or

illness. It could be a day off for diagnostic testing or a day they didn’t work because they weren’t feeling up to speed. Explain to your client how the accumulation period works so they can see why this information is important to record. If the policy has a 90-day elimination period, the client typically has a sixmonth accumulation period. That means they can use any day from the onset day for the next six months to accumulate the 90 days they need to satisfy their elimination period. The 90 days do not need to be consecutive.

8. Don’t Use The Mail

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9. Medical Records Needed

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When your client sends anything to the insurance company, don’t send it through the mail. Email it, fax it or send it via an overnight delivery service with an indirect signature required. As in the underwriting process, your client’s medical records will be ordered. Advise your client that it’s important to return the HIPAA release to their analyst promptly. Missing medical records seems to be the top reason claims determination is delayed.

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10. Do The Right Kind Of Follow-Up

I would advise you to limit your involvement in the claim to nonmedical issues such as following up on medical records, working with a CPA to prepare financial records, etc. Those are things we are qualified to help with. Remember — if you do get involved in claims and things go wrong, you can be called to provide legal statements, so keep good notes of conversations you had with anyone regarding the claim and do the same kinds of follow-up emails as mentioned previously. It’s always rewarding to help a client navigate the disability claim to a positive outcome. Lynn Christofferson joined the insurance industry in 1987 with New England Life, now known as MetLife/ Brighthouse, to work as a personal producer, and in 1991 moved to Guardian to become a disability income supervisor. In 2008, she joined Truluma as a disability income specialist. Lynn may be contacted at

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NEWSWIRES More 401(k) Millionaires Than Ever

More Americans are millionaires, thanks to their 401(k) accounts. The number of Fidelity 401(k) plans with a balance of $1 million or more jumped to a record 157,000 in the first quarter, up from 108,000 a year earlier. About three in 10 savers increased their contribution rate over the last year, Fidelity found. The average 401(k) contribution rate is now 8.6 percent as of the first quarter. This is the highest percentage in almost 10 years and up from 8.4 percent last year — not including the employer contribution. Average retirement savings balances are now in the six figures, according to Fidelity. The average 401(k) balance is $102,900, down slightly from the previous quarter but still up year over year, while the average individual retirement account balance is $105,100 as of the first quarter. More employees are putting enough away to get the company match, Fidelity said. This is particularly true of millennials, who know they will not be eligible for pensions or other types of guaranteed benefits many current retirees enjoy.


With interest rates rising, bank certificates of deposit are surging ahead of bonds as the object of investors’ flirtation. In March, after the Federal Reserve hiked interest rates by 0.25 percent, banks, especially online financial institutions, started to inch their CD rates up toward 3 percent. Compare that to terms as recent as 2015, when CD rates stood below 1 percent. With CD rates on the rise, investment professionals say they’re seeing more long-term investors turning away from fixed-income instruments. Experts say that CDs offer several “pros” to investors, including certainty and a guaranteed income source. The “cons” of CDs include low yields, penalties and lost return potential. DID YOU





The percentage of older people with debt has been creeping up in the past 10 years, particularly among those age 75 and older, according to research. This is troublesome because debt could place more financial strain on a population that lives on a fixed income and has little opportunity to increase their cash flow. The Employee Benefit Research Institute released a new analysis of Federal Reserve figures showing that nearly half of retirees ages 75 and up now have some loans outstanding. That’s up from 25 percent in 1992. The most significant debt increases have come among lower-income seniors. The median debt owed by people 75 and up is still a fairly modest $20,900. But despite that modest amount, the people in this age group aren’t working, so they don’t have many opportunities to boost their incomes. Debts for older retirees primarily consist of mortgages, although some people might be turning increasingly to credit cards to

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Saving for retirement is a marathon, not a sprint. — Jeanne Thompson, a senior vice president of Fidelity Investments

make ends meet, said Craig Copeland, EBRI senior research associate. Student loans account for a tiny fraction of debt for people older than 65, but student debt has become a growing problem for people in the 55-64 age range, he said.


“Oh won’t you stay-ay-ay just a little bit longer?” is the song employers need to sing to their workers, according to LIMRA. Encouraging employees to delay retirement not only improves their financial security in retirement but it also keeps experienced and productive employees on the job. LIMRA Secure Retirement Institute research shows that if employers start using incentives, more workers are likely to stay on the job. Working longer can have significant financial benefits. Retirement delays of as few as three to six months have the same impact on standards of living in retirement as saving an additional 1 percentage point of income over 30 years, LIMRA SRI researchers said. Workers could be persuaded to stay a little longer if employers provide certain incentives, such as flexible hours, parttime or consulting-based employment, flexible location, and financial rewards. LIMRA SRI finds that on average, workers who receive all of their desired incentives say they would work an additional 14 years.

More than half of Generation X consumers are concerned about not being able to have a comfortable retirement, just a third of baby boomers. Source: LIMRAcompared with Source: CNBC

InsuranceNewsNet Magazine » July 2018

Source: LIMRA

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Take On Taxes Now For Success In 2018 Now is the time to get up to speed with the new tax law so you can position your clients’ finances for the 2018 tax season. • Craig Hawley


lthough Washington politics have been anything but usual, and gridlock over many key issues is causing headaches on both sides of the aisle, the decisive passage of the Tax Reform and Jobs Act late last year is seen as the most dramatic tax reform package in nearly three decades. It’s important to understand these new regulations and take on taxes now to give clients the best chance for success in 2018 and beyond.

Think Reform — And Beyond

According to Jefferson National’s 2018 Advisor Authority study of more than 1,700 registered investment advisors, feebased advisors and individual investors nationwide, roughly eight in 10 (79 percent) of RIAs and fee-based advisors said that the majority of their clients will benefit from these reforms. But only slightly more than half (56 percent) of investors agree. Investors’ outlook on tax reform varies considerably based on their net worth. Although less than half (49 percent) of mass affluent investors (with investable assets of $100,000 to $500,000) expect to see any rewards, nearly three-fourths (74 percent) of ultra-high-net-worth investors (with investable assets of $5 million or more) are confident they will benefit. These reforms are expected to simplify the tax code, and many will see benefits from it. Yet taxes continue to be the single biggest investment expense clients will face, especially high-net-worth clients. Taxes can still be as much as 40 percent or more of clients’ earnings every single year, when federal and state taxes are combined. Under these new provisions, taxes will continue to impact portfolios, while everything from the state your clients call home to their stake in the American dream of homeownership could have a very different impact on their tax bill this 50

InsuranceNewsNet Magazine » July 2018

year versus last year.

Proactive Strategies Clear Up Complexity

As the study shows, RIAs and fee-based advisors are taking action to clear up the complexity and develop proactive strategies to help clients at every income level and stage of life. A majority of taxpayers will be in a new and lower bracket. But for clients in the accumulation phase, especially the high earners, taxes remain a top concern — and one of their biggest investing expenses. Likewise, retirees will still benefit from tax-efficient investing strategies and tax-efficient withdrawal strategies to maximize income. Start preparing clients with greater tax diversification, using a range of different taxable accounts and tax-deferred vehicles, to control not only how much clients pay in taxes but also when they pay those taxes. Lawmakers backed off a controversial proposal to lower the amount that investors can contribute to tax-deferred retirement accounts, and it still makes sense for most to defer where they can, to increase returns without increasing risk, so they can preserve and grow their wealth. This means maxing out 401(k)s to take advantage of any employer match, leveraging traditional individual retirement accounts and Roth IRAs, and ensuring that clients over 50 make catch-up contributions. Keep in mind that the new provisions have eliminated allowances for the recharacterization of Roth conversions, which had allowed investors to undo part or all of that conversion and remove the related tax bill. For tax-inefficient assets that generate ordinary income and short-term gains — such as fixed-income, commodities, real estate investment trusts, liquid alts and actively traded strategies — use “asset location” in a tax-deferred qualified plan

Come me, b at ro. or a low-cost investment-only variable annuity to preserve all of the upside without the drag of taxes. Then as you begin to plan for changes to your clients’ 2018 tax returns, consider the following:

Form 1040, Line 40: Standard Deduction And Personal Exemption

A wide range of taxpayers will likely be impacted by an increase in the standard deduction, along with elimination of the personal exemption and many itemized deductions. For single filers, the standard deduction for individuals rises from $6,350 to $12,000; for married couples filing jointly, the standard deduction increases from $12,700 to $24,000. Congress also retained the additional standard deduction for those over 65, including $1,600 for individuals and $1,300 for each partner of a married couple, providing an additional boost for many retirees. But at the same time, the personal exemption of $4,050 per person has been eliminated entirely.

Schedule A: Itemized Deductions

Itemized deductions allowed taxpayers, if qualified, to reduce their taxable income. According to IRS data, roughly 30 percent of taxpayers have been itemizing deductions in recent years. But this could decline to less than 10 percent as millions more are likely to take the standard deduction instead. As a result, more advisors will use timing strategies — grouping deductions together to maximize the benefit of itemizing in certain years, taking the standard deductions in other years. Of the many changes, the elimination of tax preparation fees and investment advisory fees is important to note. The itemized deduction for investment advice that costs more than 2 percent of adjusted gross income is no longer available to clients under the new provision. This is a topic you may want to address with your clients to ensure that they continue to understand the value of holistic unbiased


advice. Meanwhile, changes to the deduction of mortgage interest and state and local taxes may have the biggest impact on many of your clients.

Schedule A, Lines 10–11: Mortgage Interest

Historically, the cost of owning a home was made more affordable by the deductibility of mortgage interest and real estate taxes. Now, for any mortgage incurred after Dec. 15, 2017, the interest deduction on a qualified residence will be limited to $750,000 ($375,000 for married filing separately) — reduced from $1 million ($500,000 for married filing separately). Interest is still deductible for a second home; however, the $750,000 limit is applied to the first and second home in the aggregate. Also note that interest paid on home equity loans will no longer

amount increases to $109,400, up from $86,200 for joint filers. It increases to $70,300, up from $55,400 for single filers and $43,100 for married filing separate. The phase-out thresholds are increased to $1 million, up from $164,100 for joint filers, and increased to $500,000 up from $123,100 for single filers and $82,020 for married filing separately.

Form 1040, Line 52: Child Tax Credit

A positive change for most clients with dependent children is the increase in the child tax credit and the income levels at which it applies. Although the loss of the personal exemption will impact families with children, the new child tax credit may help alleviate the loss. Under the new tax law, the child tax credit is doubled from $1,000 to $2,000

For clients in the accumulation phase, especially the high earner, taxes remain a top concern — and one of their biggest investing expenses. be deductible unless proceeds are used for specific purposes such as to buy, build or improve a main home or second home.

Schedule A, Lines 5–6: State and Local Taxes

Many consider this to be one of the most controversial provisions in the new tax law. Some have gone so far as to suggest that the loss of the SALT deduction will drive wealthy clients out of high-tax states such as California and New York. The aggregate amount of all state and local property, income and sales taxes that are deductible per year will be $10,000 (individual or married filing jointly) and $5,000 (married filing separately). Previously, this deduction was not subject to limitation.

Form 1040, Line 45: Alternative Minimum Tax

Although it was originally intended for high-income households, the AMT began to affect an increasing number of taxpayers in recent years. However, exemption amounts and the phase-out thresholds are now increased under the new reforms, making it less likely for the AMT to be triggered. The exemption

for each child under the age of 17 claimed as a dependent. The credit will phase out for high earners, but this now begins at $400,000 (joint filers) under the new reforms versus $100,000 (joint filers) last year.

Form 1099-Q: 529 Plans

The new tax law expands the use of 529 plans to now cover the cost of elementary and secondary education, including public, private and religious school expenses. Up to $10,000 per year per student can be distributed tax-free and penalty-free. Previously, 529 plan assets could only be withdrawn tax- and penalty-free for qualifying college expenses.

Schedule D: Investment Income

Tax rates for long-term capital gains and qualified dividends do not change and continue to use prior income thresholds. As a result, they no longer line up with a client’s ordinary income bracket. Shortterm capital gains are still considered ordinary income and now follow the new ordinary income tax brackets. The 3.8 percent surtax on investment income to fund the Affordable Care Act

remains unchanged. Ultimately, you should continue to help clients structure tax-efficient portfolios, remain sensitive to taxes during rebalancing and use asset location with tax-deferred vehicles.

Form 706: Estate and Gift Tax

One significant change for high-net-worth clients is that new reforms essentially double the amounts that can be transferred free of the federal estate and gift tax and the generation-skipping transfer tax. The exemption amount increases to $11.2 million per person and $22.4 million per couple, up from $5.49 million per person and $10.98 million per couple. The annual gift exclusion amount also increases to $15,000 per gift per recipient, while the basis step-up rules remain unchanged. The higher exemption will provide a greater opportunity to increase basis in inherited property. As a result, clients may want to gift cash or high-basis property during their lifetime, while low-basis property may be better suited for transfer at death so that it receives a step-up in basis. Other beneficial techniques include the use of irrevocable trusts, family limited partnerships and grantor-retained annuity trusts.

Take On Taxes Now

Year-over-year, taxes continue to be top of mind for investors. When asked what macro issue would most adversely impact their portfolio over the next 12 months, investors this year rated taxes No. 1, tying with global instability. When asked to identify their biggest financial concern over the next 12 months, investors rated taxes second, tied with protecting assets. You can differentiate your firm and create more value for your clients by demonstrating your expertise in tax planning. In fact, six in 10 RIAs and fee-based advisors said that tax reform will provide them with the opportunity to expand their services and generate more business related to tax planning. Take on taxes now to ensure success in 2018 for your clients — and your practice. Craig Hawley is head of Jefferson National, Nationwide’s advisory solutions business. Craig may be contacted at

July 2018 » InsuranceNewsNet Magazine


And that’s as far as we go...

Why Robo-Advisors Will Enter The ‘Plateau Of Productivity’ The industry must find ways to integrate robo-advisory technology with the human elements clients want in their advisors. • David Miller


ith the rise of financial apps such as Betterment and Acorns, much of the hype around robo-advisors and related technologies is well deserved. Robo-advisory apps make aspects of investing more accessible, more seamless and less costly. But as robo-advisory technology matures and a new generation of investors emerge, it’s becoming apparent that automation won’t seize control of the investment world anytime soon. The majority of the 210 new billionaires that emerged in the past few years said they prefer to have family offices manage their finances, a recent Bloomberg study found. Although you might not think this says anything about the rest of us, this preference is actually reflective of 52

InsuranceNewsNet Magazine » July 2018

most investors. Whether their portfolios are big or small, most investors prefer hands-on, white-glove, personalized advisory services. But can they afford it? Although many people use robo-advisors simply out of cost and convenience, the productivity of these apps, services and software will eventually plateau out. We have seen spectacular growth and progress in robo-advisory technology, but as its productivity levels off, the industry will need to find ways to integrate it with the human elements that clients want in their advisories.

The Effects Of A Down Market

Robo-advisors came into existence only after the 2008 financial crisis, a fact that is often overlooked by advocates of this technology. To understand the quality of any advisor, robo or human, it’s necessary

to see the advice they give in a bear market. We’ve been on a bull run for just shy of 10 years now and it’s easy even for computers to advise under that market trend. However, when the market inevitably falls again, robo-advisors will find themselves tested under extreme circumstances. Human instinct is to sell when a dramatic price drop approaches, but traditional wisdom tells us this is generally a poor approach leading to massive losses. Technology is equally fallible and without the perspective of a seasoned advisor, it will be incredibly difficult for roboadvisors to properly advise during negative conditions. All of this is not to say that robos cannot perform during a down market, but their abilities won’t be fully understood until they face one. The likely pairing of human and robo-advisors will come when the two find a way to offer cohesive advice during less than ideal economic circumstances.


Robos Are Limited In Emotional Intelligence

One of the most important things to recognize about robo-advisory apps is that they merely provide a bare-bones service. They can only execute trades, manage portfolio allocation and perform other basic, narrow activities. But when it comes to investing, clients and advisories are starting to place more emphasis on emotional quotient, or EQ. EQ focuses on helping clients manage their emotional state, discover their emotional strengths and weaknesses, and ease through turbulent financial periods. There’s no denying that there are certain tasks that robo-advisors perform

well. However, helping a client develop and manage their EQ is not one of them. Although there has been some progress in financial apps — for example, some budgeting apps send out a message when the user spends too much on fast food — for now, robo-advisors aren’t sophisticated enough to help clients manage their emotional state on a daily basis. Even as the functionality and intelligence of robo-advisories progress, they will likely become more of a supplement to helping clients manage their EQ, not a full-fledged replacement for a financial professional.

Demographics Favor Human Advisors

Much has been made of the “greatest wealth transfer in history,” as the baby

boomer generation passes down their savings, assets and accumulated wealth to millennials (and, to a lesser extent, Generation X). We often have a stereotype of millennials being distrustful of legacy financial institutions, and we assume that they prefer to interact with a smartphone instead of a human being. However, this story is changing drastically. As millennials mature, they’re realizing that no single app can handle investments, taxes and estate planning on an individualized basis. Moreover, many investors and clients age 40 and older are reluctant to turn their entire financial lives over to robo-advisors. And as financial advisories

dollars may sound like a lot of money (and it certainly is), traditional whiteglove, family office services normally have been out of reach for even those individuals. Most investors have had to choose between paying exorbitant fees for a family office (assuming they even meet the minimum investment requirements) or handing their investments over to a mutual fund or robo-advisory service. But innovation and technology are changing all that, and a new segment of democratized family office services is beginning to slowly (but steadily) emerge. Family offices are recognizing that by integrating robo-advisory intelligence and technology, they can offer white-glove advisory services at a more affordable rate. Family offices can leverage roboadvisors in areas like automation of portfolio allocation and trade execution, while also providing clients with human consultation and empathy, which is especially important during times of market turbulence or when a client is There’s no making a big financial decision. denying that there Robo-advisor technology has are certain tasks that done much to lower the barriers robo-advisors perform well. to entry for many financial services. But the robo-advisor also However, helping a client is hitting its ceiling as a digital develop and manage their EQ assistant, as it’s only capable of (emotional quotient) is not carrying out basic tasks and auone of them. tomating certain aspects of the investing process. As human advisories integrate EQ into their begin integrating more services under services, and as the family office model one roof and coaching clients in EQ, becomes accessible, robo-advisors will the value-added proposition for robo- supplement the work human advisors advisors isn’t as strong as it once was. do, not replace it. If there’s one thing that’s true about the millennial financial consumer and David Miller, CFP, is CEO the rewired investor, it’s that they have of PeachCap. Miller is a progressive thought a DIY mentality. In the future, it will be leader in the financial seradvisories that enhance and enable in- vices industry, where he vestors, equipping them to make better has been an integral connector in helping decisions on their own. Robo-advisors the industry bridge generational disconnect. He may be contacted at david.miller@ will still participate in this process, but will work in concert with, and not in replacement of, human advisors.

The Family Office Is Democratizing The U.S. will gain about 1,700 new millionaires each day between now and 2020, according to Bloomberg and Boston Consulting Group. Although a million

Like this article or any other? Take advantage of our awardwinning journalism, licensure and reprint options. Find out more at

July 2018 » InsuranceNewsNet Magazine



What Financial Services Can Learn From Disney World Drip marketing is no substitute for delivering a great sales experience. By John Pojeta


think I’ve had something wrong about sales for a long time. I followed the classic wisdom of playing the numbers when it came to cold leads. If I met with 40 qualified opportunities (prospects that fit my ideal prospect profile), I might close eight. For the remaining 32, I would follow up with a drip marketing campaign and hope that someday in the future they would think of me and reach back out. The concept of a drip system — using emails or webinars and perhaps a phone call from time to time — to re-engage prospects who didn’t convert is fine in theory. But I also believe that it can become a sales crutch. When we have faith in our drip marketing, we may be tempted not to push as hard during the sale. Or we may avoid the more difficult conversations because we know in the back of our minds that we have a system in place to 54

InsuranceNewsNet Magazine » July 2018

continue marketing to this prospect. We should not abandon drip marketing. Instead, we should enter a sales conversation with the mindset that it is a unique self-contained opportunity. If we don’t deliver a great sales experience, that’s it. We missed our shot. I say this because it reframes the moment we should be trying to build for our prospects. Think of it this way: When you visit Disney World, the big bet is on the experience you have while you are in the park. Disney has an incredible marketing team. They continue to market to guests after they’ve left the park. But no follow-up call or email will ever be as powerful as the memories that were built in the park itself. If you had a memorable adventure at Disney World, follow-up marketing may give you the idea to go back; but if your time there was lackluster, no amount of drip marketing is likely to convince you to book another trip to see Mickey Mouse. Prospects either remember the experience fondly or they don’t. It’s that black and white. Sales in the financial services world are

not so different. If a decision-maker takes a meeting with you, they have already done something out of the ordinary. Your high-value prospects already work with someone in your field, and the prospects may not even believe that they need a new solution. But for one meeting, they committed to hearing what you have to say. They’re stepping into your park and are giving you the chance to be memorable. Here’s how to build a memorable sales experience that is unique to you, and here are the factors that set you apart from your competition. » Hone your message to make it more compelling. The average sales pitch drifts toward a mediocre average. Develop a story about who you are and who you help that rises above simple service promises and speaks to your prospects in a way that engages their emotions. » Be bold. Part of creating a memorable sales experience is talking and behaving in a way that your competitors don’t. That doesn’t mean being obnoxious, but it can

WHAT FINANCIAL SERVICES CAN LEARN FROM DISNEY WORLD BUSINESS mean disagreeing with a prospect, standing up for yourself if you aren’t treated as a peer, and embracing difficult conversations instead of shying away from them. » Challenge the way your prospect thinks. Many prospects have well-developed perspectives. But if you can make them see something differently, you lay the groundwork for something memorable. Yes, you and the prospects will be uncomfortable for part of that discussion, but if you present your ideas well, your prospects will see you not as a salesperson but as an innovator with worthwhile insights. » Be creative with the experience you craft. You don’t need to bring a costumed character to a meeting to stand out. For example, one of our clients mails his prospects copies of his book before his appointment-setters make a call. His prospects remember that he sent them a gift and they take the meeting — perhaps out of an innate sense that a gift warrants reciprocity of some sort. Find places where you can go beyond the status quo to stand out

to your prospects. » Stop talking so much and ask more questions. Then stay quiet except to ask more questions. We have a desire to keep talking and fill the silence when we should be fully attentive to what the prospect has to say. » Finish strong. Part of creating a memorable sales experience is ending on a positive note. This means knowing when to end a meeting and step away, and it also means respecting and keeping time commitments. Build a strong exit into your sales process so that you can withdraw at the right moment instead of overstaying your welcome. As you reimagine your sales experience, know that you don’t have to innovate at every twist and turn. Being memorable is not about doing everything differently. Instead, it’s about making a few key choices that stand out to your prospects. To return to our Disney World example, in the book The Power of Moments,

the authors tell the story of polling guests throughout their day. When they asked guests at the end of every hour how they rated the last hour, they saw responses like 6.5 out of 10, or seven out of 10. When they switched to asking patrons at the end of the day, they got responses like nine out of 10 or 10 out of 10. It turned out that guests used a high point during the day and the final moment of the day to assess how they felt about the whole experience. So, go and build a high point for your prospects and deliver a sales experience that leaves you and your message echoing in their minds and that leads to the next step, whether it’s the next appointment or a signed check. John Pojeta is the vice president of business development at The PT Services Group. He previously owned and operated an Ameriprise Financial Services franchise for 16 years. John may be contacted at

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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.

What Makes Advisors Great?


hat makes a great insurance and financial advisor? Expertise in the products and services they provide as well as the laws and regulations that govern them is certainly at the top of the job description. Advisors need to be assertive yet personable, frank yet reassuring. They must be honest and trustworthy, and they are top-notch communicators. Making strong connections with clients, understanding the needs of those they serve and building lasting relationships are all crucial to advisor success. Team-management, organizational, marketing and sales skills cannot be neglected either. Traits, tricks and best practices that bring success in these areas are often learned or perfected with training provided by mentors, companies and professional associations.

The Trait All Successful Advisors Share

Still, there is another more innate quality that I find nearly universal among advisors. I am fortunate to claim a number of advisors among my very close friends. I have had opportunities to meet and engage in meaningful conversations with hundreds of others. The one trait shared by every successful advisor is a nearly consuming passion for what they do and those they serve. They love their jobs and they love their clients. The passion is expressed in their professionalism: the way they seek out training and education, contribute to their communities, connect with peers through their membership in professional associations like NAIFA, and always look out for their clients’ best interests. Our industry recently won a significant legal victory when the U.S. Court of Appeals for the Fifth Circuit ruled in favor 56

InsuranceNewsNet Magazine » July 2018

Susan Rupe, InsuranceNewsNet

By Kevin Mayeux

rule placed on advisors and their clients, as well as the harmful barriers it put between advisors and consumers. The 1,000page regulation was a case of a regulatory agency attacking a gnat with a sledgehammer. If it were simply a matter of saying advisors must work in their clients’ best interests, we would have had no concerns. The great advisors I know have Diane Boyle, NAIFA vice president of federal governmade working in their ment relations, talks with Congressman Darin LaHood, clients’ best interests a R-Ill., about federal tax reform legislation. career-long pursuit. of NAIFA, the American Council of Life The case of the DOL rule demonstrates Insurers and several of our industry coa- why political advocacy is so important lition partners to vacate the Department to the insurance and financial services of Labor’s fiduciary rule. industry. Great advisors recognize this Throughout the debate on the DOL fact early in their careers, and they get rule, our opponents tried to paint us as involved. arguing that advisors should not have It should not be surprising that the to work in their clients’ best interests. passion advisors have for their profession Nothing could be further from the truth! and their clients naturally extends to adThe advisors I know are dedicated to vocating on behalf of their industry and working as hard as they can to ensure consumers. When advisors experience that their clients thrive. They want to see just how much laws and regulations can that everyone has access to personalized impact their ability to advance their caadvice. reers and serve their clients, political inOur opposition to the DOL rule was volvement becomes a necessity. based entirely on the undue burdens the My friend Keith Gillies, NAIFA’s Susan Rupe, InsuranceNewsNet

A key attribute is their recognition of the value of political advocacy and their willingness to get involved.

More than 850 NAIFA members traveled to Washington to attend the policy briefing and congressional meetings.

president and a 38-year veteran of the industry, said, “Lawmakers and regulators make decisions every day that determine whether my clients succeed and whether I can keep doing a job that I love. I’ve always considered it part of my job description as an advisor to be politically active and involved.”

NAIFA’s 2018 Congressional Conference

In May, more than 850 insurance and financial advisors joined me in meetings with representatives and senators in Washington as part of the annual NAIFA Congressional Conference. These advisors told lawmakers how they serve clients — from families to small businesses — in their communities across the U.S. They emphasized how important it is that they

“Lawmakers and regulators make decisions every day that determine whether my clients succeed and whether I can keep doing a job that I love.” be allowed to help people identify and reach their financial goals — whether the goal is preparing for a comfortable retirement, providing their children with a college education or offering their employees’ health insurance and other benefits. Although politically engaged advisors support their industry and protect their own businesses, they are also adding value for their clients. Advocating that laws and regulations not have harmful effects on consumers is another way that advisors work in their clients’ best interests. It is a service that truly great advisors are happy to provide. Kevin Mayeux, CAE, is CEO of NAIFA. Contact him at

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invited, so inquire today by visiting or by calling 855.220.WISE (9473)! July 2018 » InsuranceNewsNet Magazine



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

Community Programs Need Advisors’ Skills Advisors are in a good position to take the skills that make them successful in business and use them to better the communities in which they live. By Adam Solano


lthough we advisors lead busy lives, it is important to go beyond our practices and into our communities to learn valuable leadership lessons. Time and availability are the largest barriers for extracurricular involvement. However, advisors who effectively manage their time have more capacity to engage with the community than they may realize. Seek servant leadership opportunities that align with your passions, such as running for a political office, volunteering at shelters, coaching a local sports team or helping out at schools. Advisors who lead in their practice and in their community will develop new and stronger relationships, enhance their leadership skills and elevate their careers.

Translate Prospecting Skills Into Community-Based Networking

Use the prospecting skills you’ve developed as an advisor to build a servant leadership presence within a community. Successful prospecting does not always take place in an office. Similarly, you should meet the members of the community where they are to listen to their thoughts and learn their needs. A more approachable environment will allow all parties to be heard and understood. When you reach out to community members or prospects, you may be vulnerable to rejection, so you will need to rise above any negativity and prepare for objections to your professional or community goals. Ethical advisors treat every prospect equally — no matter who has potential to become a client. Likewise, servant leaders act in the interests of their community 58

InsuranceNewsNet Magazine » July 2018

with a degree of uncertainty about the result. For example, a servant leader can pursue a political position despite the unpredictable election results. Focus on the improvements you can make within your community. Even if you do not convert a prospect to a client or win every vote, each interaction is a way to earn recognition and promote your purpose.

3. Meet others where they are and listen to them. 4. Be who you are and not who others want you to be. 5. Rise above the collective silliness and negativity. 6. Be prepared and thoughtful. 7. Do things others aren’t willing to do. 8. Have fun in the process. 9. Always do the next right thing.

Serve Your Clients And Community With Strong Leadership

Professional networks such as the Million Dollar Round Table can provide financial advisors with the inspiration and encouragement to maintain a successful practice and simultaneously engage in community outreach. Many associations offer members the opportunity to volunteer and donate to charitable causes through established programs like the MDRT Foundation. Through these networks, you can learn from other advisors’ successes and use community outreach as motivation for greater leadership in your professional life. Although it can be difficult to balance a professional, public and personal life, it is essential for advisors to become involved in their communities and put their leadership skills into practice. Servant leadership is a perpetual effort in which actions may end, but their impact is ongoing. This circular motion enables you to make a difference in your community and satisfy any greater purposes you may strive to fulfill. After you become a community leader, you can use the same skills to become a leader within your practice and earn the respect and trust of your clients.

Advisors often look to mentors, other professionals or motivational speakers for best practices to apply to their professional and personal lives. Leading advisors should take advice and adapt it to their unique goals. Differentiate your practice and do not confine yourself to a certain set of clients or an outdated procedure. Translate this concept into your community outreach efforts and explore all opportunities to serve a diverse set of people within the community. Find a unique opportunity or a gap that you can work to fill through servant leadership. Similar to how advisors prepare for client meetings and research ahead of time, serve your community in a meaningful and deliberate way. Put your community’s needs above your own and strive to make an impact – just as you prioritize your clients’ best interests.

Reflect Back On Leadership Experiences

A good leader takes the opportunity to reflect back on past experiences and apply relevant lessons in their personal, professional and public lives. For example, one day, I journaled about the nine lessons I learned from my political campaign that I can apply to my practice. 1. We have more capacity to serve others than we think. 2. Follow your purpose without knowing the outcome.

Adam Solano, LACP, CRPC, is past president of NAIFAChicago and NAIFA-Illinois. He is a 21-year member of the Million Dollar Round Table and a 13-time Court of the Table qualifier. In 2015, he was featured on MDRT’s main platform in a session titled “MDRT Speaks.” Adam may be contacted at







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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.

Wearable Technology Presents Opportunity For Insurers It is now possible for a wealth of information to be at an insurer’s fingertips, equipping advisors with a better understanding of potential client needs than ever before. By Larry Hartshorn


earable devices (those worn by consumers as accessories or implants) have been of interest to more than a handful of industries in recent years. The opportunities and possible uses so far seem positive and limitless. What does this mean for the insurance industry and where is this technology taking it? Some life and health insurers are building on positive brand perception through the promotion of healthier lifestyles by way of these wearables. What can we learn from those endeavors? Information from sensor-based devices, such as a fitness tracker worn as a bracelet, has the potential to change the way insurance companies do business. Knowing things about a policyholder — such as their daily activity levels, sleep patterns and heart rates — is extremely valuable to an insurer. They can provide insight to these companies in a way that has never been seen before. Whether these numbers are from a potential or a current client, this information presents an opportunity for increased engagement for those in both operational and client-facing roles. It is now possible for a wealth of information to be at an insurer’s fingertips, equipping advisors with an increased understanding of potential client needs better than ever before. Having more detailed and personal information about a customer contributes to long-standing relationships over time and allows for more customization of products that can be offered. It is also very telling when looking at user 60

InsuranceNewsNet Magazine » July 2018

habits. Is the person trusting and willing to use the device, or more hesitant? Do they show loyalty by sticking to the prescribed process or quit halfway through? In addition to increased customer engagement, there is also an opportunity for enhanced underwriting with the data provided by wearable devices. The results would not only lend to a quicker underwriting decision, but perhaps increased access for individuals who have preexisting conditions. For example, a diabetic who now has a record of well-controlled glucose levels, thanks to data gathered by an implanted glucose monitor, might receive higher coverage not previously available under average risk factors. Reduced costs to the insurer are also ultimately a result of this monitoring of various health measurements. Wearable devices used in conjunction with a proven wellness program (boosted with consumer-friendly incentives) result in heathier clients and policyholders, and therefore claim numbers should decrease over time. As this technology becomes more prevalent, more people will have greater ability to manage even chronic diseases, which in turn provides real value to both the insured and the insurer. We also must consider the challenges that come with the adoption of wellness programs backed by wearables. First, sustaining policyholder engagement in these programs is the biggest and most critical hurdle to overcome. Second, there are two sides to this data collection relationship that may deal with trust issues — the consumer trusting the insurer with their data, and the insurer trusting the consumer to not cheat the system. Finally, cost-effectiveness of these programs can be difficult to ascertain for the first three to five years, making it difficult to justify the initial outlay. Companies will need to be persistent, prepared and patient when incorporating these types of programs. There is still more experimentation and growth potential for wearable technology

in the realm of insurance, but there are a few lessons learned thus far to keep in mind when considering wellness and incentive programs with wearables. » Relatively short programs work best. Efficiency begins to fall off with anything longer than eight to 12 weeks. » Engagement works better with group policies than with individual policies. Group activity can bring with it the appeal of either teamwork or competition. » Wellness programs in Asia are still a new concept and therefore may need more time to become as popular as in the U.S. and South Africa. » Customers from the U.S. are most likely to embrace wearables as they relate to health insurance. As the need for data increases, so will the types of technologies used to collect it. Wearable devices present a large opportunity for life and health insurers who find the right mix of engagement. Patient adopters of wearables will be taken to a place where ultra-customized, fast and profitable sales are the norm. Larry Hartshorn is corporate vice president and director, international research, for LIMRA and LOMA. He previously was Aetna’s executive director for Greater China. Larry may be contacted at

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InsuranceNewsNet Magazine - July 2018  

How young athletes can come with sudden, massive wealth...

InsuranceNewsNet Magazine - July 2018  

How young athletes can come with sudden, massive wealth...