Page 1

September 2017

LIMRA data shows that the life insurance market has stabilized since the 2000s, but companies and advisors are proceeding with caution. PAGE 26

September 2017

LIFE INSURANCE 2017 Sellers’ Guide to

The good news is that life insurance ownership has increased. The not so good news is that Americans are underinsured in a worsening trend. Find out how to help correct that with new market insights from LIMRA.

Who’s Buying Life Insurance Now? PAGE 2

What Tremendous Means Today PAGE 6

PLUS: Health Care Reform Could Still Be Alive While DOL Rule Could Be Dead PAGE 10 10X Your Online Marketing PAGE 14 2017 Sellers’ Guide to Life Insurance PAGE 25


5 RIA leaders  speak out on what  Advisors want now  PAGE 73 

We passed the $2 billion mark, but we didn’t do it alone. It was the 350+ Advisors affiliated with Brookstone who all played a part in this milestone. Our all-inclusive platform has consistently provided the tools and resources needed for Advisors to grow their practices. The focus has always been on giving Advisors what they need – risk-based models that provide competitive returns, cutting-edge technology, comprehensive training, and one of the lowest fee schedules in the industry. Our growth is a true testament to our Advisors’ trust and belief in Brookstone. Advisors have been able to leverage our industry-leading platform to propel their businesses beyond expectations, and we have been honored to be their RIA partner.

To us, we are still in the bottom of the 1st inning with more game-changing moments ahead. To every Brookstone Advisor who helped us get here, thank you!


WHAT ADVISORS WANT NOW! You learn a lot after over a decade in business and $2 billion in assets under management. For Brookstone Capital Management, one big theme to their success has been that service still matters. We asked five leaders from Brookstone to share their thoughts on what it means to provide world-class service and what really matters to Advisors.

BONUS COVERAGE! Hear from Brookstone leadership on what Advisors want now. TURN TO PAGE 73

Dean Zayed Chief Executive Officer

“Personally, I am committed to providing the gold standard of service in the RIA space. The way I see it, Brookstone has 40+ employees who are on-call to help Advisors grow. Each and every employee has the singular goal of doing whatever it takes to satisfy the needs and concerns of our Advisors. The Ritz-Carlton defined high level service in the hotel industry and my goal is for Brookstone to reach that same pinnacle of service in our industry.”

Darryl Ronconi Chief Operating Officer “Even though our focus is on Advisors, we know there is a client on the end of every interaction. We want to make sure we are providing our Advisors with the necessary resources to service those clients. Our Advisors have access to some of the best software and technology in the industry, and we are always evaluating new service partners to add even more value. In addition, the creation of a turn-key service model has given Advisors a necessity — immediate access to our team to service their everyday needs.”

Derek Gubala National Director of Business Development “Advisors and strategic partners all want the same thing. They want to build a relationship with a firm that is responsive, service centric, and focused on mutually beneficial growth. We have become the preferred RIA partner for many FMOs/IMOs because they value our team and trust we are committed to doing what is in the best interest for Advisors.”

Mark DiOrio Chief Investment Officer “Our investment platform was built with every level of Advisor in mind. My pledge to Advisors is to give them any tool needed for success. That can come in the form of our in-house managed model portfolios or taking the time to help them build a customized solution for clients. Rolling up my sleeves and working with Advisors to give them that personalized service will always be the most valuable use of time.”

Matt Lovett Chief Compliance Officer


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How Learning Basic Concepts in Childhood Can Lead to Lifetime Financial Health By Barry Stowe, Chairman and Chief Executive Officer, North American Business Unit of Prudential plc


2015, the first baby boomers celebrated their 65th birthdays, kicking off a new era in American history — the retirement boom. Yet only 54 percent of boomers have retirement savings, and a mere 23 percent believe they will have enough money to last through their retirement.1 Even more alarming, a report from Standard & Poor’s found that just one in three adults worldwide shows even a basic understanding of financial concepts at all, with the U.S. ranking No. 14 in literacy among firstworld countries.2 These statistics suggest that people lack practical financial knowledge, a pressing social issue that I believe can be changed by providing the resources and education people need in order to make better financial decisions throughout their lives. It’s clear that learning about money is something most people aren’t exposed to, and yet so many need this information to achieve financial health throughout their lives.

Cha-Ching character Prudence and Barry Stowe (center) ring the Closing Bell with colleagues at the New York Stock Exchange (NYSE) on April 25, 2017 to announce the launch of the Jackson Charitable Foundation.

percent of children surveyed are bored, scared or confused when adults talk about money.3 Additionally, the report reveals that parents have their own obstacles to saving; with emerHOW DID WE GET HERE? gencies, college tuition, vacations, large purchases Research suggests that the lack of understanding and retirement to put money away for, only 54 about money begins in childhood. Jackson Nation- percent of parents surveyed are saving for their al Life Insurance Company (Jackson) recently part- retirement.4 The nationwide absence of financial knowlnered with Junior Achievement USA, a nonprofit dedicated to giving young people the knowledge edge is a huge detriment to our country today, yet it’s not for a lack of interest in the subject. The Junior Achievement survey showed that 67 percent The pursuit of financial independence and of parents believe children freedom is a lifelong journey. The steps we should start learning the take to build financial knowledge as young basics of personal finance adults, in middle age and even after we between the ages of 5 and 8.5 Jackson also found in a leave the workforce are just as important recent survey that nearly 70 as those we take as children. percent of adults are either somewhat or very interestand skills they need to own their economic suc- ed in furthering their financial and investing cesses and plan for their futures, to conduct finan- education.6 It’s clear we all have an opportunity to make an cial literacy surveys of kids ages 7-10 and parents of kids ages 7-10. The results revealed that 41 impact on the overall level of financial education in

10,000 Steps

the U.S., and that responsibility begins in childhood. In April 2017, as a sign of the next evolution of the company’s investment in the community, Jackson announced the establishment of the Jackson Charitable Foundation. The foundation’s mission is to advance financial knowledge on a national scale, making substantial, measurable progress in helping Americans manage, protect and improve their personal finances. Jackson believes financial knowledge can be enhanced by providing the inspiration, resources and education that people need to make better financial decisions. The foundation’s first initiative is Cha-Ching™ Money Smart Kids, designed to help kids ages 7-12 develop the basic concepts of good money habits early in life, which in turn will enable them to reach their personal financial goals in the future. The storylines in Cha-Ching explain the four key constructs of money — Earn, Save, Spend and Donate — through three-minute music videos that include memorable characters and engaging songs. This approach is brought to us by our counterparts at Prudential Asia, a fellow subsidiary of Jackson’s parent company, Prudential plc, where Cha-Ching has been credited with creating a


Boomer Expectations for Retirement 2017. Insured Retirement Institute. 2017.


Junior Achievement-Jackson Parents’ Financial Literacy Survey. Question 6. April 2017.


Two in Three Adults Worldwide Are Financially Illiterate. Standard & Poor’s. November 2015.


Junior Achievement-Jackson Parents’ Financial Literacy Survey. Question 3. April 2017.


Junior Achievement-Jackson Children’s Financial Literacy Survey. Question 5. April 2017.


2017 Jackson Investor Education Survey. Question 13. March 2017.

I’m With the Band Originally friends from music class at school, a group of students formed the band Cha-Ching to share the importance of being smart with your money. Bobby, Charity, Justin, Pepper, Prudence and Zul teach children across the country how to Earn, Save, Spend and Donate through real-life money situations.

marked improvement in the financial knowledge of children across the region. Through the launch of Cha-Ching, Jackson has been very fortunate to develop relationships with two national organizations, Discovery Education and Junior Achievement USA, both of which are committed to helping us deliver this innovative program directly to classrooms across the country. Our partnership with Discovery Education, the leading provider of digital content and professional development for K-12 classrooms, will help us reach its network of approximately 50 million students worldwide through a co-branded website offering a variety of resources that include specialized materials for use both in the classroom and at home. Junior Achievement USA will add Cha-Ching into its existing third-grade classroom program, which is delivered by volunteers to approximately 450,000 students each year. We’ve already begun a pilot program, and by 2018 the program will be in all third-grade classrooms across the country where Junior Achievement has a presence. We are tremendously excited about these partnerships, and the opportunities they provide us to move quickly to get Cha-Ching directly to students. We also look forward to expanding our collaborations, working with industry partners, nonprofit organizations, government agencies and our associates to reach even more children and families. Together, we have the power to change how Americans, both young and old, approach their financial futures and plan for their lives. We’re excited to be a part of this movement. PR2876 07/17

The Jackson Charitable Foundation believes: 1. Personal finance skills should be taught from a young age. 2. Strong personal finance knowledge allows people to live fuller, more selfdirected lives. 3. When Americans have solid personal finance skills, everyone wins. 4. Planning for the future begins with a goals-oriented savings plan. 5. Financial planning is highly personal and should be tailored to an individual’s values, goals and dreams.

The Jackson Charitable Foundation is committed to: 1. Encouraging all Americans to achieve their personal finance dreams. 2. Working with best-in-class partners to improve financial knowledge offerings. 3. Removing barriers and inspiring Americans to take a personal role in planning for their financial futures.


For more information on the Jackson Charitable Foundation, visit

CHARITABLE FOUNDATION About Jackson Charitable Foundation The Jackson Charitable Foundation, the charitable-giving arm of Jackson, is a 501(c)(3) private operating foundation. Its mission is to provide educational programming to increase the financial knowledge of Americans. The Foundation works with Jackson associates and world-class partners to provide economic opportunities that build strong communities. Follow the Jackson Charitable Foundation at and on Twitter at @JacksonFdn. Jackson® is the marketing name for Jackson National Life Insurance Company® (Home Office: Lansing, Michigan) and Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York). This advertisement was paid for by Jackson.


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26 Signs of Life

By Steven A. Morelli LIMRA data shows that the life insurance market has stabilized since the economic tumult of the 2000s, but companies and advisors are cautiously stepping ahead.

37 Life Insurance Thought Leadership Section Respected minds share their leading thoughts on trending products, cutting-edge technology and unique sales techniques.


10 Health Care Reform Could Still Be Alive While DOL Rule Could Be Dead


54 How Asking the Right Questions Resulted in a Big Case

By Susan Rupe and John Hilton Congress could move forward on health care reform this fall, while the fiduciary rule could see its demise.

By Phil Bodine It’s not about the close; it’s about the open. Here is how 90 percent of sales are made in the opening interview.

66 Is It Time for Safety-Seeking Clients to Look at Fixed Annuities? By Chris Conklin A look at how fixed annuities stack up against bond mutual funds.


70 H  ow Much Critical Illness Coverage Is Enough for Workers? By Carlos Bello The cost of a critical illness is a moving target, but the relationship between medical problems and financial problems is hard to ignore.

56 The Right Life Insurance for Each Stage of the Business Cycle By Louis S. Shuntich Most businesses move through four phases as they grow and mature. Here is how to keep the owner’s life insurance coverage serving their needs as they lead their business through the seasons.


14 1 0X Your Online Marketing

An interview with Jeremiah Desmarais Digital marketing is transforming the way advisors do business. But how do you get started? Jeremiah Desmarais has helped more than 100,000 agents see results in the digital marketing space. Jeremiah tells Publisher Paul Feldman how you can use digital marketing to see spectacular sales results.



62 D  OL Rule Leads to New Annuity Tools

InsuranceNewsNet Magazine » September 2017

By Cyril Tuohy How DOL rule changes and compliance tools will affect how advisors market and sell.

74 Five Financial Risks That Communicate Urgency By Dave Vick Here are five reasons clients should consider moving their money now, no matter how the market is performing.

78 A Retirement Portfolio for Clients Who Can’t Retire By Brian O’Connell There are myriad challenges in planning for working retirees — challenges that go beyond simply creating an investment portfolio.

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84 NAIFA: The Business Case for Having a Culturally Diverse Workforce

Bad Leads... Are They Wasting Your Time?

By Ayo Mseka and Aamir Chalisa Having a culturally diverse workforce allows you to serve your marketplace and community better.

Bill L. Levinson


et’s face it…. 99% of the leads on your desk are practically useless. They’re unqualified, uninterested, and sometimes even angry you dialed their number. You have a closer relationship with their voicemail than you do with the lead itself. It’s an unfortunate state of affairs that’s so common that many agents have either given up or accepted it as the new normal. The downhill ride seems to start with how leads are generated in the first place. Most agents are led to believe that they’ll be receiving only “qualified” prospects; when in fact the consumers are simply incentivized to receive a quote (gift cards, discounts or other perks). Sometimes, the people you’re contacting don’t even realize they requested a quote at all! That’s because, in many cases, names are sold to several companies in various industries. It shouldn’t be this way. And it doesn’t have to be. Some agents have taken the time to educate themselves by researching these so-called marketing companies and how they are generating leads. Some even figured out how to get rid of those bad leads altogether. At Levinson & Associates, for example, all active agents can access our exclusive turn-key telesales platform, supplying them with sellable, real-time, and prequalified leads from people who requested assistance. Agents using our telesales platform close as many as 21% of the leads they contact! If you, like many agents, are fed up with your current marketing options, consider switching to a more reliable lead source. You shouldn’t have to speak to someone who has no interest in speaking with you, simply because they were offered a gift card. • Bill L. Levinson is the managing partner of Levinson & Associates, a national life and annuity IMO since 1972 found online at

86 MDRT: Steering Your Clients Toward Permanent Life


By Kerry Wallingford Life insurance has many nuances, and some advisors are not confident in conveying its value.

80 8 Simple Ways to Get More (And Better) Client Referrals By George Diaz How to break through the deadlock when you want referrals but clients are reluctant to give them.


88 L IMRA: Turn Those Clichés Around and Grow Your Practice By Eric Sondergeld Here are three examples of how flipping the assumptions about life insurance can lead to greater sales opportunities.

82 THE AMERICAN COLLEGE: ‘Passing the Hat’ Is No Substitute for Planning By Jocelyn Wright Too many are depending on crowdfunding to pay for final expenses.

EVERY ISSUE 8 Editor’s Letter 24 NewsWires

36 LifeWires 60 AnnuityWires

68 Health/Benefits Wires 72 AdvisorNews Wires


275 Grandview Avenue, Suite 100, Camp Hill, PA 17011 tel: 866-707-6786 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 AD COPYWRITER John Muscarello AD COPYWRITER James McAndrew CREATIVE DIRECTOR Jacob Haas SENIOR MULTIMEDIA DESIGNER Bernard Uhden GRAPHIC DESIGNER Shawn McMillion


Copyright 2017 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 Avenue, Suite 100, Camp Hill, PA 17011, fax 866-381-8630 or call 866-7076786. Reprints: Copyright permission can be obtained through InsuranceNewsNet at 866-707-6786, ext. 115, or Editorial Inquiries: You may e-mail or call 866-707-6786, ext. 117. Advertising Inquiries: To access InsuranceNewsNet Magazine’s online media kit, go to www. or call 866-707-6786, ext. 115, for a sales representative. Postmaster: Send address changes to InsuranceNewsNet Magazine, 275 Grandview Avenue, 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.





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Looking for the Light Switch


nner peace is really annoying me. It’s more the absence of it. And the radiance of those who appear to have it. OK, you found peace, fantastic for you, but must you gloat by glowing? Yes, yes, I know I am not supposed to “mind read” people and compare my happiness and theirs side-by-side. I realize what I think they are experiencing is my projection of inadequacy and dissatisfaction. See? I really need this inner peace thing. I’ve been reading about meditation, watching videos describing how to do it and listening to podcasts outlining its virtues. I have even tried it. I use a meditation app narrated by a guy who guides with a soothing, charming British accent. So, the first thing I have to do is put aside my envy of his diction. At least I am learning not to push aside that thought like the shower curtain when the hot water runs out. I let it go, like a balloon, and watch it float away. And that actually works. The more often I exercise this gentle guidance of my thoughts, the tighter control I have on my mind. I am reminded of this endeavor because of an interview we did with Tracey Jones, daughter of insurance sales legend Charlie “Tremendous” Jones. She is featured in our Life Insurance Awareness Month pullout inserted in this month’s magTracey Jones azine. The discussion was so intriguing we decided to run a far longer version online. I urge you to read it. Tracey has much wisdom to pass along. In that longer version, we delved into the seven characteristics of leadership, but another part of our discussion got me thinking. She mentioned the three defining traits that separate youth from adulthood: self-awareness, self-discipline and self-restraint. Tracey listed them because 8

she is noticing a decided lack of these traits in many adults today. I think I am about halfway on one of those. And I don’t think I am alone in that. Everywhere we look, we’re seeing a lack of these three virtues. Certainly, the political climate has been missing them for some time now. It’s like we’re electing people to go to Washington for a long run of Kabuki theater. It’s not doing that counts, but the illusion that they are doing. (Editors John Hilton and Susan Rupe very ably cover the latest on health care reform, or anti-reform, or something like that, in the InFront column.) CEOs behaving badly is a whole genre unto itself now. Recently, we witnessed the downfall of Travis Kalanick, who ran Uber as if it were a rogue fraternity. (And we can’t unsee the video of him shimmying between two women in the back seat of a Kalanick car before he scolds the Uber driver for being a whiny loser. If you haven’t seen it, don’t.) Then we had the fraud trial of Martin “Pharma Bro” Shkreli, who had raised the price of an AIDS drug from $13.50 to $750 overnight. But we will always remember him for the most detestable Shkreli smirk known to man.

InsuranceNewsNet Magazine » September 2017

Wilhelm Hofmann, a University of Chicago researcher, discovered the seemingly contradictory finding that controlling oneself leads to happiness. He has made a lifetime’s work out of studying impulses and control. He has consistently found that giving into impulse and not developing self-control leads to a dissatisfying life, even as a person satisfies all impulses. It’s a wisdom as old as humankind that helping others helps ourselves on every level. We strengthen the community and our personal health. But we can’t give ourselves when we have no contact with who we are. If we don’t know our gifts, how do we know what we offer others? Obviously, this is where the self-awareness part steps in. The simple act of sitting quietly, letting go of your thoughts and waiting for silence is refreshingly clarifying. In that clarity, we see what’s actually important to us. At least, I think that’s what happens. I’m not one of those beaming with the light of the universe. I’m still trying to sit for 10 minutes without feeling self-conscious and itchy. But, I’ve seen a glimmer of this and enjoyed brief passages of an untangled mind. You don’t have to meditate to get some sense of this. Practice observing your emotions as a thing upon you, like a shirt, rather than in you. You are not angry — you feel angry. After a while, you might see it doesn’t have to grip you if you don’t want it. Once we’re comfortable in our own presence, we can be present for someone else. That’s the ultimate goal. Tracey put it best when she said, “None of us is strong enough to do it on our own. Not even my father, not me, not you, not Jesus, not Gandhi, not Martin Luther, not anybody.” Now just grant me the strength to get out of bed when the alarm goes off. Steven A. Morelli Editor-In-Chief

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Health Care Reform Could Still Be Alive While DOL Rule Could Be Dead Health care reform may not be dead in Congress after all, and there could be some good news for the industry on the fiduciary rule front.

By Susan Rupe and John Hilton


iguring out what’s next on health care reform will be among the issues Congress is expected to address when it returns from its summer recess. After the Senate failed multiple times to pass a repeal of the Affordable Care Act (ACA), Washington’s attention is turning toward stabilizing the marketplace until lawmakers can figure out which direction they want to go on health care reform. That attempt at market stabilization is becoming a bipartisan effort — something Washington has not seen on health care reform in recent years. Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander, R-Tenn., and ranking

Lamar Alexander, R-Tenn.

help health insurers make their final decisions on what they will charge in premiums for 2018. Senate Republican leaders — including Majority Leader Mitch McConnell, R-Ky., — have made it clear that they are ready to move on from health care reform after a series of failed votes over the summer. But they are leaving the door open to any ACA bill that has enough votes to pass. Republicans want more flexible 1332 waivers. The waivers were part of the ACA, and they allow states to make changes in the law’s requirements, including the individual mandate, the employer mandate, the premium tax credit, cost-sharing subsidies and essential health benefits. Democrats want to continue the government’s cost-sharing reduction payments to health insurers. These payments are made to compensate insurers for the cost of offering silver-level plans to low-income enrollees. The Congressional Budget Office estimates the cost of these payments at $7 billion in fiscal year 2017, rising to $10 billion in 2018 and $16 billion by 2027. President Donald Trump has suggested he might stop the payments as a way to pressure Congress to take another stab at ACA repeal and replace. The Senate HELP Committee will hold hearings this month on how to stabilize the law. The hearings will include testimony from Democratic and Republican senators, as well as insurance commissioners, patients, governors, insurance companies and health care experts, according to Alexander.

Patty Murray, D-Wash. Democrat Patty Murray of Washington are the latest to take up the cause of market stabilization. The goal is to come up with a stabilization plan in time to 10

House Announces Proposal

The bipartisan efforts also are underway in the House of Representatives, where congressmen from both sides of the aisle announced their five-point proposal to shore up the health insurance

InsuranceNewsNet Magazine » September 2017

marketplace. Those five points include the following: » Ensure funding for cost-sharing reduction payments to insurers. » Repeal the medical device tax. » Change the employer mandate to require companies with at least 500 employees — instead of 50 employees — to offer insurance coverage. » Create a stability fund for states to hold down premiums or limit insurer losses. » Give states more flexibility, including the ability to form agreements to sell insurance across state lines. The proposal is not in bill form at this point. Meanwhile, the nation’s governors are jumping into the controversy over the cost-sharing payments, urging Trump to continue making the payments before more insurers abandon the marketplace. And the attorneys general of 17 Democratic states joined in a federal lawsuit to keep Trump from blocking the payments.

CMS Has Concerns, Too

Congress is not the only government body looking at stabilizing the health insurance market. Stabilizing the individual health insurance marketplace and making it easier for consumers to enroll in coverage are priorities for the Centers for Medicare & Medicaid Services (CMS), its director told an agents’ group recently. Dean Mohs directs the CMS’ agent/ broker strategy for the federally facilitated marketplace. He spoke at the 2017 Agent Summit sponsored by Health Agents for America (HAFA). CMS has taken some steps to provide some flexibility in the enrollment process and attempt to attract more young and

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Dean Mohs speaking at the 2017 HAFA Agent Summit healthy enrollees, Mohs said. However, one step that agents say will make their work more challenging is that open enrollment for 2018 has been shortened to 45 days — from Nov. 1 to Dec.15. Mohs told HAFA members that the Trump administration is willing to work with the private sector on health care reform. “Agents and brokers,” he said, “are important stakeholders in the success of health care enrollment.”

Fiduciary Rule Update

After a year of disappointments, the financial services industry began receiving good news this summer in its epic battle against the Department of Labor (DOL) fiduciary rule. Just when the fight seemed all but lost, the Trump administration came through with a plan to study the economic and legal impacts of the rule. With Labor Secretary Alexander Acosta finally in charge

of the department, the DOL began talking about a delay in the impending Jan. 1, 2018, effective date for phase two of the rule. Portions of the fiduciary rule went into effect June 9, requiring agents and advisors to act as fiduciaries, make no misleading statements, and accept only “reasonable” compensation. It’s the remaining aspects of the rule covered by the new RFI — the exemptions. In a Feb. 3 memorandum, Trump ordered the DOL to study the rule, an order that took weeks to execute given the difficulty getting a labor secretary in place. One delay scenario has the DOL pushing the phase two effective date back one year, and giving financial services a year beyond that to comply. That would change the effective date from Jan. 1, 2018, to Jan. 1, 2020. Bradford P. Campbell, counsel at Drinker Biddle & Reath, agreed the timeline seems plausible. “I think that is a reasonable time to gather the data and do the review work that the president has ordered,” Campbell said during a recent webcast. “A year is sort of the minimum that you would need to be able to do all that work.” As for potential changes during the delay, Campbell said the Best Interest Contract Exemption (BICE) is likely to be weakened. It requires significant disclosures, and a signed contract with the client. That contract forms the basis of

“I think that is a reasonable time to gather the data and do the review work that the president has ordered. A year is sort of the minimum that you would need to be able to do all that work.” – Bradford Campbell


InsuranceNewsNet Magazine » September 2017

litigation liability. Removing the class-action lawsuit from the BICE is a good possibility, Campbell said, basing his opinion on statements the DOL has made so far. If the class-action right isn’t scratched, it will cause problems in the courts, he predicted.

Appeals Court Hope

From day one, litigation formed a prominent plank in the industry strategy to fight the DOL rule. It has also been perhaps the least successful — until now. After a string of losses at the federal court level, plaintiffs were pleased by a July 31 hearing before the 5th U.S. Circuit Court of Appeals. The hearing — featuring several plaintiffs from lawsuits consolidated out of the Northern District Court — included skepticism from the bench over the DOL’s authority to regulate individual retirement accounts. The appeals court, which has a reputation for narrowly defining federal powers, can throw out the rule if it chooses. The so-called Harkin amendment in the Dodd-Frank Act of 2010 gives it reason to do so, said Eugene Scalia, plaintiffs’ attorney. Initiated by former Sen. Tom Harkin, D-Iowa, the amendment bars the SEC from regulating fixed indexed annuities as securities, as it tried to do with Rule 151A. The court can also send the rule back to a lower court, or affirm the previous ruling. A ruling could come by late September or early October, said Erin M. Sweeney, a lawyer with Miller & Chevalier in Washington, D.C., who attended the hearing. “It was a very unusual hearing,” she said. “Every single thing was openly hostile to the Department of Labor’s view.” Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at

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hat does digital marketing even mean? Is it one of those phrases thrown around to make consultants money? Is it like synergizing paradigms for maximum results or something like that?

Well, Jeremiah Desmarais says he knows what you are talking about because he has helped actual insurance agents and financial advisors 10X their businesses using digital marketing and has seen skeptics become believers. He has real-world examples, such as an insurance agent who generated 324 leads in 10 days with $10,000 in commission in 24 hours using one email, and a retirement planner who filled his Social Security seminar for $20.19 using Facebook. These are just a couple of ways advisors were able to generate business using simple techniques. Jeremiah has been in the insurance marketing trenches for more than a decade, helping boost revenue for organizations such as Norvax/GoHealth, Applied Systems, UnitedHealthcare, Aetna, Humana, Allstate, the United Nations and more than 100,000 agents in 51 countries. He also has honed his message on the speaking circuit and recently boiled down the lessons into a book called Shift: 201 Proven Methods to Sell More Insurance and Financial Services Online Now. In this interview with Publisher Paul Feldman, Jeremiah talks about what digital marketing actually means, and how agents and advisors can use it today to boost their business. FELDMAN: How is digital marketing transforming the way agents and advisors are doing business today? DESMARAIS: Digital marketing has

proven to be the next way to interact and engage with prospects and clients. Gone are the days when we actually had to travel to meet people. Ten years ago, if somebody had said, “I can show you how you could possibly save an extra $100,000 for retirement. Just click on the link that I just sent you in your inbox and I’ll show it to you right now,” people would have said, “No, I have to meet over a kitchen table.” Digital marketing has allowed advisors and agents to have more time freedom, which I think is really important with the amount of chaos and confusion that exists in all of our lives today. It also has allowed people to have more time to be in control and really work on their business. FELDMAN: Do you have examples of how digital marketing helped advisors free up time to focus on their business? DESMARAIS: I’ll tell you a quick story. One of my clients was an individual advisor who had a successful agency, but he didn’t have a lot of time. After working with him for three months, we implemented two digital marketing strategies. One had to do with prequalifying leads over the internet, and the other one had to do with generating more leads over

quit her job and now they work together. So that is a great testimony to how digital marketing can empower advisors today. FELDMAN: Are internet leads different from traditional leads, and do they need to be worked differently? DESMARAIS: Absolutely. Most financial advisors are used to leads that come from either a seminar where the person has been indoctrinated for an hour and got to meet and know and like the person, or from referrals. We know with seminar leads, you might get maybe 30 percent of buying units to visit your office. We also know that referrals typically have anywhere from an 80 to 90 percent close ratio. But when you get to internet leads, you can have as low as a 5 percent, even a 3 percent, conversion ratio depending on the type of lead. That’s where you get into the world of the different kinds of leads. FELDMAN: What are the different types of online leads you are referring to? DESMARAIS: The most common lead today is called a shared lead. It’s the lowest-cost lead. You can typically get them for around $10 to $20 a lead.

Gone are the days when we actually had to travel to meet people. the internet as opposed to just relying on newspaper ads, which is what he was doing before. When I followed up with him about 90 days after he implemented all of this, we were doing a Skype call and he said, “Hey, I want you to meet somebody,” and he pulled his wife into the video. And I said, “Who’s this?” He said, “This is my wife, and I just want to tell you that because of the techniques and the training that I went through, my wife was able to quit her job and we now have more free time and we have more revenue.” He added $100,000 in income — in extra income that year after just 90 days of implementation. His wife was able to

These are leads you can buy from lead aggregators that basically spend millions a year on SEO, and buying traffic and affiliate networks. So these lead companies will go out and find people who have prospects who they are already marketing other products and services to, and they’ll say, “Can you put my offer for a free life insurance quote in front of your audience?” And they might pay that person $2 to $5 for every qualified person and then they’ll sell that information to an agent for about $10 or more. The problem with a shared lead is that a lead generated in this method is usually shared among

September 2017 » InsuranceNewsNet Magazine


INTERVIEW 10X YOUR ONLINE MARKETING multiple agents, so then it becomes a race to contact that lead. There are lots of tools out there such as autodialers that can actually be quite fast, but you have to be sitting on the phone. Then even if you are one of the agents who is the first to get there, typically the person is going to be bombarded by other calls at the same time. A lot of consumers end up getting frustrated and never end up buying, which is why the conversion ratios are so low on those shared leads. The second tier of lead is called the exclusive lead. These leads will be charged usually at two to three X premium price over a shared lead. I use exclusive leads, but not all exclusive leads are truly exclusive. That’s because consumers may not have visited only one website. They may have put their information on one

ready to speak to an agent right away?” And if that person says yes, they put that person on hold and they transfer the call over to you. Those leads obviously come with a much higher cost but also a higher conversation ratio. FELDMAN: How effective is social media for leads? DESMARAIS: The best leads are actually the ones that you generate on your own, which is why we’re seeing so much success using two tools, specifically, Facebook and LinkedIn. Facebook allows you to target potential investors by age, demographic, region, interests, hobbies, and how much money they have, the type of credit cards they own. It’s almost a little bit scary the amount of data that Facebook has.

small Facebook ad in a very small area, and we targeted maybe about 20,000 people. The client was able to reduce his cost from $220 to $26 per attendee showing up to his seminar, and that’s unbelievable. So digital marketing is not only transforming the way leads are generated but it’s also enhancing the way that seminar marketing can be done. Advisors who do love to do seminars and want people to be indoctrinated in their philosophy can significantly reduce their cost-per-attendee by using that methodology. FELDMAN: How are people advertising on Facebook to promote their seminars? DESMARAIS: The ad is quite straightforward. It’s funny because the more creative the ad, the less it converts.

The best leads are actually the ones that you generate on your own, which is why we’re seeing so much success using two tools, specifically, Facebook and LinkedIn. website, and you bought that information at a premium price because you don’t want it to be shared among their other clients. But that person could’ve gone to three or four other websites shopping around for an insurance quote. So your truly exclusive lead is actually a shared lead. Although they do have a little bit of a higher conversion, most people today don’t believe in the value of an exclusive lead unless you get to the next level, which is a live transfer. Live transfer leads are not offered by all companies, but live transfers are where somebody has generated an interest. A call center has made a call on your behalf, qualified the person and asked, “Are you 16

They also integrate with the three major data aggregators — Equifax, Epsilon, TransUnion. So they know everything about your credit, and these are all things that you can target. If you only want people who have large homes, who have at least $500,000 of investable assets, have good-paying jobs and they love to golf, well you can put an ad directly in front of them. And what’s really fascinating for me to watch right now is how two models can work together: seminars and digital marketing. Traditionally, seminars have a of about $200 per attendee or buying unit. We worked with a client to create a

InsuranceNewsNet Magazine » September 2017

First, they’re identifying their target area. So Facebook has a page called Business on where you can go and set up a free account. They really try to make it much easier than it used to be in order to help people spend more money with them. Then you decide what kind of ad this is going to be. Usually you want to make this an ad where you get people to go to a page. That ad is usually straightforward. It says “free financial planning workshop” or “free tax preparation workshop.” Don’t write in too much of a direct response model. That may work for direct mail but doesn’t really work well for Facebook. What works well for Facebook is

September 2017 Âť InsuranceNewsNet Magazine


INTERVIEW 10X YOUR ONLINE MARKETING ads that are just very straightforward. I can actually read one here. FELDMAN: OK, let’s hear this Facebook ad. DESMARAIS: The ad is very straightforward. It might have a picture of you as the one who’s presenting. In some areas, it has an icon of a money bag or the image is the actual location. If you’re doing your seminar at a restaurant, you have that

have the dates, and they can opt to sign up for either of the seminars. The one metric on Facebook that is important for people to know is the drop-off. In direct mail, you get maybe a 30 percent drop-off from the people who sign up. So if you have 100 people who sign up for the seminar, maybe 30 people won’t show. In Facebook, because it’s a digital environment, people don’t have a lot invested in the commitment. All they did was a couple of clicks. Typically, you might

planning, Social Security planning or whatever it might be. FELDMAN: Tell us what a pixel is and how it works. DESMARAIS: A pixel is just a small piece of code on your landing page that tracks who that person is and where they logged in from. For example, if I click on a Facebook ad and go to a page, I not only have been pixilated — tracked by Facebook

... what’s going to make a lot of advisors and media companies in our space very successful over the next five to 10 years is being able to own the pixels of the preretirees and the retirees. image right there. So: Free financial planning workshop, Houston, Texas, July 27 through 29. People click on that ad and it goes to a landing page. So that’s really how they’re using Facebook. The beauty of Facebook is that with all the tools, you can get so granular in the types of people that you focus on. You can show it just to women; you can show it just to men; you can show a certain look of an ad to somebody who is affluent and a certain look of an ad to somebody who might have less money but might be a good Social Security or Medicare lead for you. Then those ads lead to a landing page, which is very, very simple. It has a headline that gives a benefit of the seminar and underneath is a video, usually of the advisor talking briefly about what people are going learn at the seminar. This is important so that people feel like they’re building a relationship with a real human being who is going to help them, and that this not going to be some big corporate production. And then at the bottom you 18

see a drop-off of about 50 percent. Some people might say, “Well, that’s worse,” but actually it isn’t. In a typical direct mail scenario, you don’t have the prospect’s email address, but with Facebook you do. And we can follow all the people who clicked on your ad all over the internet. We’ve gotten their pixel, which is the new currency in media ownership. It allows us to track that person all over the internet. With the email addresses of the people who didn’t show up, you can drip on them and invite them to, let’s say, a virtual workshop. That’s where you actually jump on GoToMeeting and teach the same thing you did live. Or you can put them in an automated funnel where people get three short videos that are really your presentation broken down into three parts that you release to them over time. And you nurture them that way and then at the end, you offer a chance for them to get a strategy session over the phone for their tax planning, financial

InsuranceNewsNet Magazine » September 2017

that I engaged with that ad — but when I get to the landing page, there’s a piece of code that goes back to my Facebook ad that says Jeremiah clicked on this landing page, so we’re gonna add him to the people who are more interested in that landing page. The other piece of code you have on there is a small pixel from Google, which works with the Google display network. The Google display network is a network of millions of websites willing to accept ads that Google approves. I don’t need to see what the ad is, I just know that Google will choose the most-likely-to-click ads and put them on my website. Typically, you’re always logging in from the same mobile device or the same computer. So now that you’ve been tagged, that little pixel is going to follow you wherever you go. If you have ever been to a website and then you went to another website where you saw an ad to go back to website A, that’s an example of how a pixel works. Because you visited that website, they said, “I’m going to show you ads to help


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September 2017 » InsuranceNewsNet Magazine


INTERVIEW 10X YOUR ONLINE MARKETING you come back to my website and hopefully buy something.” In this case, it gets you to come back to my website either to come to my next seminar, download my eBook or get some other form of value-added incentive to give me your information. This is really futuristic stuff. But I see that what’s going to make a lot of advisors and media companies in our space very successful over the next five to 10 years is being able to own the pixels of the preretirees and the retirees. Imagine if you had a million people you’ve targeted on the internet, which is very easy to do, and it doesn’t take more than a couple of months or maybe even

So they come to the page where they can choose an 11 a.m. or a 3 p.m. webinar and sign up for it. The automated webinar platform will email them their personalized link. We’ll send them reminder emails to show up, and we’ll track whether that person has actually showed up. And assuming you have a good call to action in the webinar — to get on the phone to book an appointment — you will see these regularly occurring leads coming into your office because you’ll have a virtual presentation running up to seven days a week. What I love about them as well is when people do not show up for the webinar, an

In my book, I have a whole chart on how to structure that webinar so that you get the highest engagement. One of my FMO clients used it, and they had an incredible revenue-per-attendee. Using automated webinars is how they grew their business 611 percent in 90 days. FELDMAN: When doing an automated webinar, do you recommend using your usual seminar or presentation or do you modify it for the format? DESMARAIS: It’s typically the same. You do lose a few of the techniques to get people to engage when the webinar is not live. For example, in the live seminar you

LinkedIn is probably the biggest blue ocean for agents today because it’s so underutilized ... we’re seeing advisors today generate anywhere from one to 10 meetings a week with different scripting approaches. a year depending on how aggressive your marketing is. FELDMAN: Not only does it re-engage people but it gives you credibility because you can be advertising in The New York Times or USA Today. In your book, Shift, you talk a lot about automated webinars. What are they and how are you seeing them best being utilized? DESMARAIS: Automated webinars are webinars or presentations that you’ve recorded and that people can play back. What’s really clever about them is that people can sign up to see your webinar go live at specific times of the day, specific days or every day, even three times a day. And when people sign up for them, they feel as if it’s a live experience. 20

email will remind those people to come back for a replay or rebroadcast. And these tools typically take maybe one to two hours to set up. Some of them will actually do the setup for you, and all you have to do is upload your video and a lot of the content is already done. A lot of the follow-up emails are already written, and all you have to do is go in and customize them a bit. What’s nice is you don’t have to show up to do any of the webinars live because you did them once, but they perform for you forever. And then you can send traffic to it through your email list. You also could joint-venture with an attorney or a tax preparation professional and offer this as a value-added webinar to their audience, so they email it to their people. You could send LinkedIn connections and Facebook traffic to the webinar.

InsuranceNewsNet Magazine » September 2017

can ask people to shout out questions, and that gives a good back-and-forth with the presenter and creates more dynamics. On recording the webinar, we typically recommend people take the core teaching deck they usually use, with maybe a little more strength in the closing offer so that people are motivated to take action. You also can use scarcity, by offering consulting for only five people who are on the webinar, for example. Another technique I like to use is to tell people that at the end of the webinar they’re going to get a special gift if they stick around until the end. And then you can give them something like a free guide or retirement cheat sheet or something of that nature. FELDMAN: How about LinkedIn?

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INTERVIEW 10X YOUR ONLINE MARKETING DESMARAIS: LinkedIn is probably the biggest blue ocean for agents today because it’s so underutilized. Most agents use it as a resume, but it’s a powerful lead-generating tool. With just 20 minutes a day of constantly connecting with ideal prospects, we’re seeing advisors today generate anywhere from one to 10 meetings a week with different scripting approaches. Simply because nobody else is out there doing it. FELDMAN: What are some things agents and advisors can do right now to build business? DESMARAIS: Just start with email. You already have it, you don’t have to buy anything, you don’t have to learn anything; and it’s mostly free to use. Get an easy win for you. Once you’ve got that easy win, tackle something that might stretch you a little bit more. FELDMAN: I know they’re in your book, but would you give us a couple of tips on writing a really great email? DESMARAIS: It all starts with the subject line. Have a compelling subject line that makes people want to open. There are two different philosophies and techniques that work. Recently, there was a study done by BuzzSumo that analyzed something like 10 million subject lines in business-to-business settings. So this would be, let’s say, commercial lines or executive benefits or voluntary benefits. Going into a corporation, telling them what’s in the email is usually more effective. When you’re going to consumers, you can be more creative. A good subject line can be as simple as “quick question” written in lowercase, because that looks like it was written by a human being and not a marketer. Another one is “Can you help me?” And that one is asking for a referral to the right person inside of a company if you want to sell them a certain type of policy. So it all starts with the subject line. Once they get inside the email, you only have three seconds or less to get their attention. So the first line in the email will have to get to the point. One of the scripts that’s worked the best is telling people why you’re reaching out to them. So, for example, if I’m reaching out to affluent executives who work 22

in the San Diego area, I would open my email with “I work with affluent executives who work in San Diego to help them protect their wealth and assets.” Or if you’re going after certain job titles, you can say, “I work with other CEOs in the San Diego area leveraging little-known ways to protect their assets

you’ve done already works for other people who are just like them. You may want to enter a line in there that’s something like “Here are a few of my recent success stories. I helped a CEO of a Silicon Valley company save X amount and preserve $500,000 tax-free when he gets into retirement.”

A good subject line can be as simple as “quick question” written in lower case, because that looks like it was written by a human being and not a marketer. from taxes” and so on and so forth. You want to get to the point right away and always try to find points of commonality in the first sentence. In this case, I told them I work with CEOs, so that’s one point of commonalty. No. 2, I’ve told them I work with other people in their city, so I’m not some call center or some national firm. I’m an actual human being. The third thing you want to do is give them proof points. If this is a cold email and they’ve never met you before, you have to prove what

But you don’t need to be so needy all the time. You can almost take it away from people. You can say, “Obviously, Paul, I don’t know if you’re a good fit for what I do, but would it be worth getting on the phone for 15 minutes and seeing if there might be a good fit?” So do a soft takeaway because one thing affluent people do not like is having things taken away from them. Well, that’s actually all of us, right? FELDMAN: Yes, the fear of missing out certainly motivates people.

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Who Will Head the Fed? Federal Reserve Chair Janet Yellen’s term ends in February, and speculation is already out there regarding who will take her place. Although President Donald Trump hasn’t ruled out giving Yellen another four years, some Fed watchers believe the new president wants to bring in new blood to lead the institution. So who might be next to lead the world’s central bank? Here’s a short list of possible candidates whose names are floating around Washington. Gary Cohn, Trump’s senior economic advisor, worked at Goldman Sachs Group for more than 25 years, including a decade as president. Kevin Warsh, a Fed governor from 2006 to 2011, vv drew on his Wall Street experience at Morgan Stanley to play a key behind-the-scenes role in efforts to quell the financial crisis. John Taylor, a professor at Stanford University, is best known for the monetary policy rule he developed in 1993 that links changes in interest rates by the Fed to the state of the economy and inflation. Jerome Powell is currently serving as Fed governor and is the only Republican on the Board of Governors. until at least December, but is expecting the central bank to start rolling off its massive balance sheet in September.


The Dow Jones industrial average hit another peak, breaking the 22,000 mark for the first time. Apple stock propelled the Dow to this record high after posting second-quarter results that vastly surpassed expectations. It took the Dow more than five months to surge to 22,000 from its previous record high of 21,000. Investors have been keeping a close eye on U.S. economic data as they look for clues on when the Federal Reserve will further tighten monetary policy. Wall Street is largely expecting the Fed to hold off on raising interest rates again DID YOU




St udent loa n debt continues to skyrocket, increasing 256 percent from 2004 to 2015, according to a ValuePenguin analysis. Outstanding college loan balances at the end of the first quarter of 2017 totaled $1.34 trillion, according to the Federal Reserve Bank of New York. That’s an increase of $34 billion from the end of 2016. The average outstanding balance is $26,700. But don’t be fooled by that average balance — about 2 million graduates are dealing with loans totaling more than $100,000.

34% of entrepreneurs do not have a retirement savings plan. Source: Mantra

InsuranceNewsNet Magazine » September 2017


We don’t have an investing problem. We have a saving problem. — David Blanchett, director of retirement research at Morningstar Investment Management

Student loan debt is spread out unequally throughout the nation. College grads in New Hampshire had the highest average debt at $36,101, followed by graduates in Pennsylvania, Connecticut, Delaware and Rhode Island. Utah students had the lowest average debt at $18,873.


If it seems as though we’re smiling more than usual, it could be because Americans report being more financially content than they’ve been in more than 10 years. Investment gains, a strong job market and low inflation have driven financial happiness to its highest level since hitting a high at the end of 2006. That’s according to the American Institute of CPA’s Personal Financial Satisfaction Index. The index is a combination of two opposing groups of data: “pleasure” indicators that measure the growth of assets and opportunities, and “pain” points that measure their erosion. The latest reading showed a minor increase on the pleasure side (1.4) and a big dip on the pain side (6.2) arising from a reduction in inflationary pressures. But here’s the buzzkill: consumer debt continues to rise. The Federal Reserve issued new data showing that total household debt stands at $12.73 trillion. Of that, roughly $1 trillion is credit card debt, which marks the highest amount since 2008 just before the onset of the Great Recession.

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Who’s Buying Now?

The good news is that the life insurance market has stabilized since the economic crash of 2008. In a survey around that time, LIMRA discovered that policy ownership had dropped for the first time since World War II. In a recent ownership study, the numbers are improving. But the new challenge is that Americans are increasingly underinsured. In these pages, we present LIMRA data on what today’s consumers look like and what they value.


87 million



households owning life insurance

average coverage per insured household


trillion estimated market value


48% $200k $12 trillion $340 billion

Almost 1/2 of all households (over 60 million) have a life insurance gap. Average life insurance need per household. Current sales potential of the underinsured market. New life insurance need entering the market each year.

CURRENT POTENTIAL AT HALF OF MARKET VALUE The $12 trillion coverage gap is almost half the size of the $26 trillion total insured market value. Source: 2016 Life Insurance Ownership in Focus, LIMRA

$38 trillion total market need September 2017



FUTURE PURCHASE INTENTIONS • The percentage of households saying they “need more” coverage declined by 18% since 2010. Yet, average income replacement ratios have declined by 6 months during this period. • The percentage of households that are “likely to buy” in the next year increased by 80%. This huge increase suggests that many households are interested in adding to their coverage. 42%







1998 2004

32% 23%



2008 2016 Need more life insurance

Likely to buy in the next 12 months (Very likely and fairly likely to buy)


Consumers Are More Likely to Buy Life Insurance if ...

Trust sales representative Sales rep recommended to me Sales rep reviews/analyzes needs Meet face-to-face Presented as part of a financial plan Can buy at place of work Whole process done on internet Mail offer Rep wants me to buy at first meeting 0%








Reasons Consumers Don’t Buy (More) Life Insurance...

Other financial priorities Can’t afford it Put money in other financial products Difficult to decide how much to buy Difficult to know what type to buy Do not need life insurance Have enough insurance to meet my needs To avoid high-pressure sales tactics Worry about making the wrong decision Just haven’t gotten around to it Not received info related to my needs Unpleasant to think about dying No one has approached me 0%


September 2017








Source: 2016 Life Insurance Ownership in Focus, LIMRA


TRADITIONAL MARKETS Traditional life coverage segments will continue to grow (e.g., married couples and parents). Multiperson households will grow by 1.2 million per year. Ownership rates are increasing among couples under age 45 with children, yet they are buying lower amounts of coverage.

Ownership rates and coverage adequacy are decreasing among households with members age 45 and older.

GROWTH MARKETS These are interesting trends, indicating the next generation of American households may have higher ownership rates. This segment represents the leading edge of the millennial generation. The individual life ownership rate increased 48% among households under age 35. Their group life ownership has also grown (7%).

The Western region is the only geographic market where ownership rates grew for both individual and group life.

MARKETING & COMMUNICATIONS Build trust – the importance of trust cannot be overstated. • Trust has the greatest influence on a life sale. • Its importance has increased over time.

Efforts have not gone unnoticed. • Attitudinal data suggest consumers are more open to industry influences than they were in 2010. • This is a welcome sign, indicating that recession-era concerns have subsided.

Source: 2016 Life Insurance Ownership in Focus, LIMRA

Leverage open mindsets by making more impressions. • Marketing themes should emphasize coverage adequacy. • Promoting benchmarks that consumers can use to gauge their coverage adequacy against peer groups may be useful. September 2017


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INDIVIDUAL LIFE MARKET Market opportunity in lower-income households. • A drop in the group life ownership rate among households earning under $35,000 creates a need for basic policies. • This is the only income category where the individual life ownership rate is increasing.

Focus on coverage adequacy.

Adjust to changing consumer preferences.

• Mean coverage levels are declining for all households, including married couples with children.

• Large increase in the willingness of insureds to review coverage needs more frequently.

• Increasing coverage adequacy among these households is a significant market opportunity.


Since 1976, households owning only group life have increased by 68 percent.

• Consumers want agents to revisit insurance needs face-to-face. • More open to specific coverage recommendations, especially when presented in the context of a broader financial plan.

This means higher basic coverage and optional supplemental plans and encouraging participants to increase coverage when the opportunity is available.

DISTRIBUTION CHANNELS • Those more likely to buy if the whole process can be done online grew 68%. • Those more likely to buy at the work site grew 27%. • Those more likely to buy via direct mail offer grew 53%.

Most households that own individual life buy face-to-face, but preferences are continually evolving. Source: 2016 Life Insurance Ownership in Focus, LIMRA

September 2017



What Tremendous Means Today Tracey Jones is taking the inspirational message from her father, the insurance sales legend Charlie “Tremendous” Jones, to a new generation.


ome people used to say that in order to sell life insurance well, you had to get religion. If that’s true, Charlie “Tremendous” Jones was a giant of the pulpit. He spoke not as if his life depended on it but as if yours did. He wanted to shake up his listeners to ensure they understood what he had to say. Even if it involved actually shaking people. He had developed a small, regional Mutual of New York office in Central New York that averaged $100 million a year in sales in the late 1950s. He was making $150,000 annually when the average yearly wage in the United States was about $4,700.


September 2017

Then he moved on to motivational speaking, writing and book publishing. His best-known book was Life Is Tremendous, which has sold more than 4 million copies. When Jones was in his natural element onstage, he couldn’t be ignored. He was funny, loud, animated and in your face. He was not shy. Some of his later appearances can be found on YouTube. Tracey Jones grew up next to the towering personality of her dad but never really knew him as a fleshed-out human being until closer to the end of his life in 2008, when he died of lung cancer. She returned home after a career as an Air Force officer, Gulf War veteran and corporate manager. She helped manage her father’s book-publishing business in Mechanicsburg, Pa., just as the most difficult years hit the industry. Tracey has since developed her own speaking career, helping companies meet their goals in challenging times. All along the way, she has seen that not only has her father’s wisdom held up, but it is needed now more than ever. She has expanded on her father’s Seven

2017 SELLERS’ GUIDE TO LIFE INSURANCE Laws of Leadership in her newest book, A Message to Millennials. She is pursuing a doctorate in leadership and is active in a prison ministry. In this interview with InsuranceNewsNet, Tracey talks about what her father’s message means today. INN: Why did you revisit your father’s work? JONES: A Message to Millennials is his vintage wisdom and my update on it for the millennial generation. But, of course, it’s for everybody. Truth is timeless and universal. Whether you have a scientific or a theological bent, we all are here for one another in this community. And we’re here to take care of one another, to serve one another and to propel each other to greater things. So, I took my father’s Seven Laws of Leadership and added the Seven Functions of Followership. This really put a good spin on his laws, emphasizing that we are all here to pour ourselves into other people and make the world a better place than when we entered it. I think that’s why my father loved life insurance so much — because he always felt it was a great way to give people security and for them to take care of the things that were most important to them, even when they’re not there. Insurance really is about thinking of somebody other than yourself.

JONES: The problem I see going on is we’re starting to retract and divide. Technology has us split off from each other, and we don’t need each other as much. We simply can go to our virtual devices and get all the chemical stimulation we need for our brain as far as video games, power, prestige, lust, selfies, self-esteem – you name it. Although we are more interconnected, virtual reality is not a reality. And, hey, I’m all about technology and artificial intelligence and robots doing stuff better than we can. But human resources is all about us as individuals just being there for one another. And you can’t get there without others. So that’s where I look at some of the timeless truths that my father espoused, and I look at some of the legacy founders. I think we have what C.S. Lewis called “chronological snobbery.” In other words, if it didn’t come out on the best-seller list in the past five months, it’s useless. When I hear young people say, “Well, that’s from 50 or 100 years ago,” I say, “If

“Just because you have the internet now and you’re born in this generation ... we’re still individuals at the core.”

INN: Why is now a good time for this book? September 2017


2017 SELLERS’ GUIDE TO LIFE INSURANCE you think about the greats who started it all, who built our civilizations, who penned the epic pieces — if you think they’re somehow obsolete or not as smart as you, you don’t even know what you don’t know.” Just because you have the internet now and you’re born in this generation and you can code and you can have these huge conglomerates like Google and everything, we’re still individuals at the core. And that’s how we have to address one another. I think if we can get back to that and put reading back in vogue and make self-awareness and mind renewal cool again, we will be well on our way to making Earth a better place. INN: Let’s get to the Seven Laws of Leadership. The first one is Get Excited About Your Work. Why is that No. 1?

If you transplant your crappy, invasive attitude into your dream job, guess what? You’re going to strangle out your dream job.

JONES: I’ve been on top nationally syndicated radio shows the past two weeks, talking about the book, and people have said, “Seriously, isn’t that kind of an antiquated idea?” It’s not. Your attitude is what makes the job. The job doesn’t make your attitude. We have this so reversed. We aren’t stepping up and accepting ownership. We expect to always be extrinsically motivated from the outside in, whereas really great lives are lived from the inside out. Getting married doesn’t make you a good spouse or life partner — it’s what you put into the relationship. You bring it. Not, “Well, I’m not going to do it if somebody doesn’t give me this or that.” That’s incredibly selfish, and that’s 8

September 2017

what I’m scared of. Getting excited about your work means if you want a better job, you must do a better job and you’ll have a better job. Everybody thinks the grass is always greener somewhere else. But if you transplant your crappy, invasive attitude into your dream job, guess what? You’re going to strangle out your dream job. It’s you. It’s not your job. It’s like George Costanza [from Seinfeld] when he breaks up with his girlfriend and says, “It’s not you, it’s me.” It’s always you. And if you change your thinking, you’re going to change your problems. INN: How do people know that they have invested enough of themselves and it is time to move on?

JONES: Of course, this doesn’t mean that every job is going to change into your dream job. But I tell people that when you leave a job, make sure that the only reason you leave a job is because you have outgrown your role, and there’s no place for you to go. But don’t leave because you’re unhappy, you have a crappy attitude, you think your boss is tough or abusive when your boss is just trying to get you to do the right thing, or you think it’s going to be better somewhere else. Because that’s not going to be the case. It’s helping people grow in self-awareness, self-discipline and self-restraint, which, in psychology, are the three defining things that separate youth from adulthood. What scares me is when I see adults who are incredibly

2017 SELLERS’ GUIDE TO LIFE INSURANCE unself-aware, unself-disciplined and unself-restrained. Because they’re reverting to a childhood state. There’s a lot of that going on. They can improve, but they almost have to go back and pass through the psychological gates that they missed earlier in life. A lot of adults are in this kind of delayed adolescence. “I don’t want to go to work. I don’t want to be responsible. I don’t want to be financially liable for the kids I fathered.” It’s like, wait, what? You’re in adulthood now. That’s part of what goes on with being a productive member of society. It’s not about you anymore. It’s about you pouring your life into others. So we have to get back to that. INN: Many of us have some degree of what you described. If people recognize that in themselves and that they have this work to do, what should they do next? How do they overcome the inertia to get moving toward real change? JONES: Well, you hit the nail on the head. Do you have the ambition to self-actualize and realize, “I have some areas to work on”?

There have been people who have told you things in your life at different stages and you’ve thought, “Wrong. You’re wrong.” But then you had an epiphany. How did that happen? If people reach the point where they finally say, “Oh my goodness, there’s more that I can do to alleviate my suffering,” then I probably would have them get a coach or a mentor. I’d put them on a healthy reading program. I’d sit down and have them look at all the negative influences in their life and fumigate the fleas that are biting them. Those fleas are the negative people, the negative habits, the negative talk, the negative TV, the negative media. I haven’t watched the news in three years, one month and 28 days, and I’m so much better for it. I went back to start on my doctorate two years ago, and that forced me to be very disciplined in what I spend my time listening to, doing and at. What happens when you don’t alleviate the non-value-added things in your life? It’s just like when these prisoners come out after they’ve been locked up for 20 years. They’re out a week, and they either overdose and die or they’re back in prison — because they go back to the same filthy, toxic habitat.

Find out the Seven Laws of Leadership by reading the rest of the interview when you visit

September 2017


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LIMRA data shows that the life insurance market has stabilized since the economic tumult of the 2000s, but this Life Insurance Awareness Month finds companies and advisors cautiously stepping ahead.


InsuranceNewsNet Magazine Âť September 2017



you remember when an instant photo involved a bit of whirring, kerchunking and the spitting out of a thin packet of chemicals, you will have some sense of the dynamics behind LIMRA’s latest round of buyer behavior and ownership data. The maker of that camera was Polaroid, a prime example of how rapid displacement in the economy is changing a way of life for longtime employees. Kimberly Harding saw Polaroid crumble from its status as a “juggernaut of innovation” to a victim of innovation. As an insurance agent and financial advisor just north of the company’s hometown of Boston, Harding knew families that lost the many layers of protection they had built up after decades working for Polaroid. That trend means more families are losing group life insurance, among other things. Although the percentage of households with individual life insurance held steady at 44 percent in the study, “Life Insurance Ownership in Focus”, those with group life coverage dropped to 46 percent in 2016, down from 49 percent in 2010. In the case of Polaroid, Harding was able to help its employees after the company declared bankruptcy in 2001 but before the company closed much of its operations in 2008. “Thankfully, we were able to get them insurance before they lost their job at Polaroid,” Harding said. “So the only coverage they had was what they had with us. We had other clients who were uninsurable and were dependent on that coverage and lost that. So, think about that. They lost their pension. They lost every benefit that they had had. They lost their stock. They lost everything. Then on top of it, they lost

Bill Porter, of Suwanee, Ga., has been working with his daughter, Cindi, to transition the business for the next generation of clients.

their life insurance. So how does that affect a family? It’s pretty significant.” That financial disruption radiated throughout the 2000s, erupting with the economic crash of 2008, Kim Harding, of Woburn, which shook the usually Mass., conducts a survivor solid insurance industry. needs analysis so clients can Jim Scanlon, senior refully appreciate how much life search director at LIMRA, insurance they need. said the crashes of the 2000s led to the first drop in household ownership of life insurance, indexed annuities business shifted emphadetected by a 2010 survey. But the latest sis to indexed universal life. That movestudy found a silver lining in that bad news, ment has helped propel IULs to record because the industry saw insurance own- sales, the one bright spot besides whole life ership grow 5.6 percent since 2010 and re- for the industry. coup the losses by 2016. Voya is one of those companies making “That really does speak volumes about that shift. In fact, the company decided last the life insurance industry,” Scanlon said. year to stop selling term life and focus on “The financial crisis wasn’t simply an eco- IUL. In the first quarter of 2017, Voya’s IUL nomic recession. It was a true crisis with- sales increased 24 percent over 2016’s first in the financial industry. People were very quarter, according to the company. concerned that it was going to shake con“We have shifted our direction toward sumer confidence in a number of financial indexed universal life,” said Chad Tope, institutions. But the comeback in owner- Voya president of annuities and individual ship volume shows that there is true con- life distribution. “We are no longer in the sumer demand for this product.” term business. Primarily, it’s the expense That silver lining still has a whole lot drag you get with term. You have to drive of black cloud around it, though. Fewer the scale where expenses are high, and that households have both individual and group wasn’t the market we wanted to play in.” life insurance. The percentage of houseSmaller companies also are turning to holds owning both types of coverage has IULs to avoid some of the issues with FIAs been dropping since 1984, when 43 per- in the DOL rule. Even though the rule is cent of households with life insurance had likely to undergo significant changes, comgroup and individual. By 2016, that overlap panies have already started recalibrating slumped to 29 percent. their approaches. Along with the drop in dual ownership, Paul Garofoli, vice president of National the level of coverage overall also declined. Western Life, said the ever-changing prosThe dual-owner households had the high- pects on the DOL rule make an already difest number of income replacement years, ficult compliance challenge harder. 3.6. But even in the dual-owner group, “Trying to comply is basically trying to the years declined by 1.2 years since change the tires of a moving car,” Garofoli 2010. said. Garofoli is responsible for working with Shifting Market Shifts Products marketing organizations, which have been The declining trend already was mak- all too happy to have an alternative to FIAs ing life difficult for insurance compa- that had a similar marketing message. nies, when along came the Department “I’m seeing agencies that I’ve been trying of Labor’s (DOL’s) new fiduciary regu- to persuade to evangelize, if I can use that lation. The rule affects primarily an- metaphor,” he said, “and now they’ve found nuities sold with money coming from religion.” retirement accounts, but it caused Another growth area for National Westcompanies to reevaluate their overall ern — and across the industry — is accelerbusiness. ated benefit riders. An indirect effect was that many They are an attractive option for Amercompanies with a significant fixed icans who are realizing that they are more September 2017 » InsuranceNewsNet Magazine


FEATURE SIGNS OF LIFE likely to live long and encounter disability than die young. “The potential for somebody over their life span to have either a temporary disability or permanent disability requiring home health care or facility care is in excess of 60 percent,” Garofoli said. “The older you get, the more likely this is.”

Life Insurance Ownership Volume Is Growing The number of U.S. households owning life insurance (87.2 million) grew by 4.9 million over the past six years.

U.S. Households (millions)


Owns Any Life





69.2 60.5

60 40

52.9 43.8 38.0



52.6 50.7

53.3 51.3

58.2 56.0

57.6 51.7

57.3 54.8


20 0 1960








Ownership Rate Is Holding Steady The overall ownership rate remains at 70%. The increase in ownership volume is linked to U.S. population growth. This population grew by 7 million households between 2010 and 2016. Owns Group Life

Owns Individual Life

Owns Any Life

Percentage Owning Life Insurance


Family Protecting Families

Bill Porter is a principal at Aileron Investment Advisors north of Atlanta and has 28

Owns Individual Life 87.4

Distribution, Demographics

The rise of longterm-care riders and other accelerated benefit riders coincides with an aging Paul Garofoli baby boomer population with ever-increasing longevity and fewer resources than their parents had in facing their later years. That is one of many demographic shifts that have carriers and advisors rethinking their markets and approach. According to Scanlon of LIMRA, although the U.S. population is expanding, it is diversifying in ways that make it difficult to reach consumers with an effective life insurance message. A key shift is the growth of single-person households. But another trend, growing cultural diversity, is also adding opportunity. Voya and other large insurers are betting on a multicultural strategy to keep up with that growing diversity. Smaller companies like National Western don’t have the same kind of market coverage to select segments. They are focusing on recruiting and developing the fewer agents who remain in the field. “The LIMRA data revealed that there is a big insurance gap,” Garofoli said. “The reality of our world is that the number of agents is decreasing while the number of people who need our products and services is increasing. So not only is there an insurance gap, there’s really a delivery gap as well.” One of the advisors Garofoli works with is doing his part in growing the next generation of advisors who value life insurance. This advisor’s partner grew up with an appreciation for the business because she is his daughter.

Owns Group Life


InsuranceNewsNet Magazine » September 2017









78% 70%




62% 54%




55% 53%











40% 30% 1960






Source: Life Insurance Ownership in Focus, U.S. Household Trends, LIMRA, 2016


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As your clients’ personal situations change (e.g., marriage, birth of a child or job promotion), so will their life insurance needs. They should weigh any associated costs before making a purchase. Life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as sex, health and age, and has additional charges for riders that customize a policy to ft their individual needs. Indexed universal life insurance policies are not stock market investments, do not directly participate in any stock or equity investments, and do not receive dividend or capital gains participation. Past index performance is no indication of future crediting rates. Also, be aware that interest-crediting fuctuations can lead to the need for additional premium in your policy. Protections and guarantees are subject to the claims-paying ability of the issuing insurance company. The Nationwide Indexed Interest Multiplier (Multiplier) is available on two of the six Nationwide indexed interest strategies in the Nationwide YourLife IUL Accumulator. The Multiplier increases the indexed interest rate by 15%; for example, 5.00% interest rate x 1.15 Multiplier = 5.75%. Indexed interest strategies with the Multiplier may have lower participation and/or cap rates than indexed interest strategies without it. The Nationwide YourLife IUL Accumulator also includes the Nationwide IUL Rewards Program conditional credit of 0.20% in policy year 16 and onward. To receive the Nationwide IUL Rewards Program beneft, premium payments must meet or exceed a test of the net accumulated premium (premium paid minus any amounts taken as loans or partial surrenders) at the start of policy year 16; earlier for issue ages 51 and older. The additional 0.20% interest is applied each year from then on as long as the policy is in force. The credit will be added to the fxed interest rate strategy’s accumulated value. Life insurance products are underwritten by Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company, Columbus, Ohio. Nationwide, the Nationwide N and Eagle, Nationwide YourLife, Nationwide IUL Rewards Program, and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company. © 2017 Nationwide. NFV-1197AO (04/17) September 2017 » InsuranceNewsNet Magazine




Average Coverage Is Declining The mean amount of coverage owned ($295K) and the income replacement ratio have decreased over the past 12 years. This indicates many households are underinsured.




Individual Life Insurance Years of Replacement Coverage++ $350,000

3.5 3.0


$300,000 $250,000





1.5 1.0




Average Total Coverage* (dollars)

Any Life Insurance Group Life Insurance Income Replacement Ratio (years)

44 years in the business. Because the firm has focused on pre- and current retirees, he finds many of his longtime clients are dying off. Often when clients pass, if an advisor has not had much recent presence with the family, the next generation will walk away from their parents’ advisors. But Porter has insurance against that — his daughter, Cindi. She is a certified financial planner and picks Jim Scanlon up with the next generation even before they see the need to talk to an advisor. “Let’s face it, none of us is getting out of here alive,” Porter said. “All of our clients are going to pass on at some point, and many of them have. After all, we deal with retirees and preretirees. But we don’t want to meet their kids for the first time after Mom and Dad have passed away.” Not only is there an incentive for Porter’s agency to bring the next generation on board, but his clients who are parents also recognize when their kids need help. “Many of our clients will say to us, ‘Could you possibly talk to Jimmy and his wife, Mary Lou? They really need some help,’” said Porter, who has taught courses on estate planning and taxation. “A lot of it is done long distance because the kids don’t always live in the same city as their parents anymore. And when you can generate leads from parents to their adult kids, that’s a whole lot more of a weight for the kids on the other end.” After generations in business, Porter’s agency can rely on self-perpetuating referral business. But that does not mean that advising and selling are getting easier. Just as LIMRA pointed out that older people are becoming more likely to live alone, Porter said younger people also are changing how they set up house. “The younger generation right now is delaying marriage,” Porter said. “Lots of them are not even thinking about it until they’re in their 30s, which really has put a little bit of a damper on life sales.” Student debt and other factors might be delaying marriage, Porter said. But he also noticed another trend that could explain

0.0 2004



++Ratio of total coverage to annual household income. **Coverage in 2016 dollars. Winsorized means.

Market Opportunity Is >$12 Trillion

• Almost half of all U.S. households have a life insurance need gap = 60 million households (based on LIMRA’s Life Insurance Need Model). • The average gap = $200,000, which projects to total market need of $12 trillion. • Market need will grow by 2.8 percent annually. • This means over $300 billion of new life insurance need enters the market each year.

InsuranceNewsNet Magazine » September 2017

Source: Life Insurance Ownership in Focus, U.S. Household Trends, LIMRA, 2016


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FEATURE SIGNS OF LIFE the hesitancy — and also could indicate opportunity. “More times than not, the millennials are less risk-takers than the moms and dads are,” Porter said. “They’re starting to save a little bit better than the generation before them. I think it’s a great opportunity as a group of people to go talk to for the products that we have. I think they’d be very open to it.” But the longer they wait to obtain coverage, the more insurability issues they will run into. That’s another reason Porter said it is important to start Chad Tope the conversation with the succeeding generations earlier. Because he and his daughter have equities licenses, they can have a conversation about investing that can include insurance as part of the package. “And if you have to sort of legitimize the conversation about insurance, that’s part of your job,” Porter said. “It is to make sure that they’re having a serious, cover-all-thebases conversation about what’s going on.”

Making the Big Ask

Once the subject of life insurance is broached, then there is the issue of adequate coverage. There isn’t one metric for it. Some start with expected expenses, and others use a rule of thumb based on salary — maybe as much as 10 times annual salary. LIMRA recommends about 5.5 years of income replacement, which the association calls a very conservative number. The reasoning is that a family would need seven years of income replacement at 75 percent. But even given that conservative goal, LIMRA found that half of American households — 60 million families — have a coverage gap of $200,000 on average. That gap totals $12 trillion. Americans have about $26 trillion in coverage right now. Harding, the advisor from the Boston area, and her husband, Ben, work as fee-based planners at Harding Financial and Insurance. Financial advisors might be reluctant to recommend the higherthan-expected coverage that people actually need. But Harding said it is a natural part of the fact-finding process. 32

WHAT MOTIVATES BUYERS? Snail mail works — that’s one of the surprising results from LIMRA’s latest “Buyer-Non-Buyer Study.” Consumers said direct mail made the strongest impression on their need for life insurance. Attracting 23 percent of the respondents, it was well ahead of No. 2, calling or visiting a financial professional, which was cited by 15 percent of respondents. That was followed closely by speaking with a friend, colleague or relative at 14 percent, and it dropped off to 10 percent for No. 4, which was email. The survey also showed a gap between the number of consumers who recognize their need for life insurance and those who go get it. Over a 24-month period, 25 percent of the households saw that they needed life insurance, but only 15 percent actually shopped for it. Of those, 11 percent obtained quotes and 7 percent bought coverage. Even in the second phase of the sales funnel, only 26 percent talked to a financial professional. But when they did, it was effective, because 82 percent said they found it helpful. They were more likely to make it to the third phase, the quote. About 60 percent of the consumers obtained two or three quotes, and 25 percent got one.

Sense Need for Life Insurance (25%)

Seriously Shop (15%)

About two-thirds of the people who obtained a quote ended up buying something in stage four. Sixty-three percent reported buying term insurance. Thirtyfive percent reported buying permanent life insurance. The rest didn’t remember exactly what they purchased.

Evaluate Quotes (11%)

Purchase Coverage (7%)

The list of reasons consumers did not buy is a familiar one: "I already have enough life insurance," "I have other financial priorities right now," "I can't afford life insurance," "I prefer to put my money in other financial products." The reasons are well-known to experienced advisors accustomed to dealing with consumer objections. “Absolutely, the quality of the salesperson makes the difference,” said Jim Scanlon, LIMRA senior research director. “Agents are still very effective at retaining people through the process.” Steven A. Morelli

InsuranceNewsNet Magazine » September 2017


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• Build strong relationships and trust right away. • Properly identify prospects’ concerns and how to address them. • Leave them hungry for more! PLUS — You’ll receive free appointment letter templates to send to your prospects so you can seal the deal.

DON’T M ISS OUT ON TH IS OP P ORTU N ITY! Go to or call 800.380.5040 today! September 2017 » InsuranceNewsNet Magazine


FEATURE SIGNS OF LIFE “Early in my career,” Harding said, “I would hear [agents] ask, ‘How much can you comfortably set aside to handle this life insurance problem?’ I never ask that because they have no idea. They’re going to tell you what they want to spend, not what they should be spending.” Instead, she leads clients through a survivor needs analysis. “I walk them through what they want to have happen in the event they pass away,” she said. “Frankly, I tell them to ignore any coverage they have. Let’s figure out what that number is. Work coverage — I ignore that. They can’t be dependent on that in the event that they lose it and then lose their insurability.” Harding adds up the final expenses, eliminating the mortgage and other debts, education fund, child care expenses, and emergency fund, and then replace income. When she totals the immediate and ongoing needs, clients have a better sense of why they need a significant amount of coverage. “They’re not as floored as if I didn’t do that analysis,” Harding said. “If I just did the simple ‘Here’s how much you make and let’s multiply it,’ then they would be floored. I explain, ‘We’re not making anybody rich here. We’re just making sure that your family can get by — period.’ ” As a result, clients don’t reject the number, because it is more a realization than a recommendation. And because the number is a part of a greater holistic assessment of the client’s financial condition, an advisor would be in the prime position to know if the client could afford the coverage. “You’re not going to let them dictate what amount of coverage and what the price is going to be and what they’re willing to spend,” Harding said. “You’re going to find the dollars to make sure their family is protected.” The recommendation is often a mix of term and permanent insurance. A greater proportion of term is suggested for younger people because of a larger need and fewer dollars to spend. “But I also believe that every single plan should have something permanent,” she said. “At this stage of my career, I’m losing a lot of clients who are in their 60s and 70s. People think when they’re in retirement they don’t have a need for income replacement, but they do. They have Social Security, and that Social Security of that deceased spouse is gone forever.” 34

Life Insurance Shopping Information Sources Life insurance shoppers generally use two information sources. The most common sources are online resources and information received in the mail. In-person meetings with an agent or advisor are the third most common source of information used but are rated the most helpful resource, by a wide margin (21 points).

Information Sources I reviewed information I received through the mail

Percentage Used

Users Who Found Source “Very Helpful”



I used at least one online source for information



I met in person with at least one financial professional



I spoke by phone with at least one company directly



I spoke with friends and family members



I watched/listened to information on TV/radio



I read information in newspapers and magazines



I attended a seminar or meeting on life insurance



Source: Buyer-Nonbuyer Study, LIMRA, 2016

And it isn’t just that people are forgetting they have income to recoup, but they also are more likely to carry debt far longer these days. “We’re finding people are having mortgages longer than they had anticipated because they took a home equity loan or they helped with education,” she said. “There are more debts that people have forever. So I believe there is a permanent need for everybody.”

Repaying It Forward

Porter carries a debt himself. He acquired it early in his career, and he has been trying to pay it off ever since. He will sometimes encounter people who have a vague wariness of insurance that they can’t seem to overcome. Often, it is a result of an anecdote or a headline. “But if you grill the person, they don’t really know,” Porter said. “It’s ‘Oh, I’ve just heard some things about life insurance.’” The temptation for an advisor may be to back off and allow clients to reconsider at a later date. But Porter has a reason that he is not likely to let the issue go. “It was my first year in the business, which was 1973, somewhere in there,” Porter recalled. “I’d been talking to a couple I didn’t know well. And the husband asked me about life insurance. So I got him some quotes, showed them to him and he said, ‘Well, yeah, I’ll think about that.’”

InsuranceNewsNet Magazine » September 2017

Porter was still tentative at that stage of his career, so he didn’t want to bother the husband and let time pass. The man died soon after. “Mary came knocking on the door one Saturday morning. She said, ‘When John died, I know he had been talking to you about life insurance. Bill, tell me what I’ve got,’” Porter said, and paused as he was recalling the episode. “It’s kind of breaking me up right now, just telling the story,” he said. “I had to tell her, ‘He didn’t make a decision. So there is none.’ And I remember her slamming the door and leaving.” Porter didn’t have a problem ever again with telling anyone else that they needed life insurance. “That was devastating to me. It was real life, real kids,” Porter said. “And so, when all’s said and done, we’re on a mission out there. A lot of times, it just seems like we’re making a living. But we’re also making other people’s lives work, even when they don’t make it.” Steven A. Morelli is editorin-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. Steve may be reached at

September 2017 Âť InsuranceNewsNet Magazine



Growing Hispanic Market Is Advisor Opportunity

14% in 2000

24.6% in 2017

Hispanics ages 0 to 17

Looking to build your book of business? Take a look at this group: Hispanics are the fastest-growing young demographic in the U.S., and they have the longest life expectancy at birth. Hispanics also continue to have less life insurance coverage than the average American, according to a study by the National Center for Health Statistics. In 2015, nearly a quarter (24.6 percent) of the population ages 0 to 17 years old was Hispanic, an increase from 17.1 percent in 2000, as that age segment grew fastest. During 1975-2015, average life expectancy at birth in the U.S. rose from 68.8 years to 76.3 years for men and from 76.6 years to 81.2 years for women. In 2015, Hispanic men had a life expectancy at birth, on average, of 79.3 years and Hispanic women had an expectancy of 84.3 years. Life expectancy at birth was 7.5 years longer for Hispanic men than for non-Hispanic black men, and 6.2 years longer for Hispanic women than for non-Hispanic black women.


When new actuarial guidelines on indexed universal life (IUL) illustrations took effect in 2015 and early 2016, rate projections dropped – but only slightly, according to Milliman. During the first nine months of last year, post-guideline illustrated rates ranged from 5.02 percent to 7.75 percent, with an average of 6.69 percent and a median of 6.86 percent, the survey found. Pre-guideline illustrated rates ranged from 5.60 percent to 8.50 percent, with an average rate of 7.38 percent and a median rate of 7.65 percent. “The majority of IUL participants reported they have made adjustments to illustrations based on AG 49, but few participants have made changes to their product designs due to AG 49,” the Milliman report said. On Sept. 1, 2015, the first phase of Actuarial Guideline 49, or AG 49, took effect, establishing benchmark crediting rates and index value ceilings used in IUL policy illustrations.






Another regulatory snag has hit the planned sale of Genworth to a China-based company. Genworth announced in October that it had agreed to be acquired for about $2.7 billion by China Oceanwide, a privately held financial company based in Beijing. The deal was expected to be completed by the middle of this year. The two companies need approval from various U.S. and foreign regulators before the sale can be approved. That includes a review by the Committee on Foreign Investment in the United States (CFIUS), a federal government committee that reviews transactions resulting in control of a U.S. business by a foreign entity. Genworth and Oceanwide said they have re-filed a joint notice with CFIUS to provide the committee with more time to review the transaction. It is the second time that the companies have re-filed the notice with CFIUS.

Prudential will put its U.S. individual life, annuity and investment advisory operations in one individual solutions unit. Source: Prudential

InsuranceNewsNet Magazine » September 2017


A lack of clarity from Washington, D.C., on certain regulatory matters is putting significant pressure on sales of certain types of products in the near term. — Tim Zawacki, senior insurance research analyst of S&P Global Market Intelligence


Exactly what information is used in life insurance underwriting, and where does that info come from? That’s what New York state regulators want to know. The New York State Department of Financial Services (DFS) wants insurers operating in that state to reveal whether they rely on external data sources to underwrite life insurance coverage. DFS wants to know whether insurance companies are using credit scores, purchasing habits, affiliations, home ownership records and even education levels as external data points in their underwriting procedures. Insurers want to harness that data to be able to issue policies faster and at prices that reflect the risk companies bear when issuing a life policy. Simplified underwriting, which avoids invasive blood and urine samples, allows insurers to issue life insurance policies in a few seconds. In recent years, some insurers have begun to address underwriting risk by taking advantage of consumer databases — including the data in plan ratings, a technique called “price optimization.” Critics say this practice could result in discriminatory rates, and unearthing credit histories to help set an insurance premium could even run afoul of the Fair Credit Reporting Act.

Special Sponsored Section

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INSIDE The Allianz Playbook for a Diversified FIUL Allocation Option Lineup Featuring Allianz Life Insurance Company PAGE 38 GWG Life Finds the Solution to “Failure to Plan” In Your Clients’ Life Insurance Policies By Chris Orestis of GWG Life PAGE 40 Appealing to Women as Clients and Financial Professionals Featuring OneAmerica PAGE 42

John Hancock Vitality Expands the Reach of Life Insurance with Apple Watch® Featuring John Hancock PAGE 47 Whole Life Insurance. A Flexible Financial Instrument. Featuring The Guardian Life Insurance Company PAGE 48 ‘Quintant Approach’ Wraps Families in Safety and Creates Legions of Highly Successful Agents Featuring Family First Life PAGE 50

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September 2017 » InsuranceNewsNet Magazine


The Life Insurance Issue • Special Sponsored Section

The Allianz Playbook for a Diversified FIUL Allocation Option Lineup


llianz Life Insurance Company of North America (Allianz) offers innovative fixed index universal life (FIUL) insurance products that offer clients death benefit protection, flexibility and tax advantages. FIUL provides the opportunity to earn cash value based on indexed interest utilizing a variety of crediting methods and allocation options. So Allianz is simplifying its playbook to educate clients about the benefits and choices that come with FIUL and about how diversifying among a variety of index allocation options may help smooth out market volatility. Allianz client materials use a baseball analogy to highlight these ideas. The theme conveys that while it would be great if there were one option to always count on for “home runs,”

Jason Wellmann

Janelle Walter

Todd Petit

no single index or crediting method produces the best results in all market conditions. A diversified lineup of allocation options can help clients achieve the results they need — like baseball players with different skills and attributes who work together to achieve their goal.

Swing for the Fences, or Aim for Consistency?

To accommodate the challenges of a dynamic economic environment, it’s important to consider balancing growth with stability. That means a client’s FIUL lineup should consider the external index and the crediting method that determines how much interest could potentially be received in a given year—both pieces of the allocation option. “No one crediting method is right for everyone, and no one method is likely to be the best choice for all years. Each crediting method reacts differently to different economic environments,” says Todd Petit, assistant vice president, Actuarial Product Development, Allianz. “Most important, some methods have higher accumulation potential, with more risk of getting a zero percent interest credit. Understanding your client’s goals and risk tolerance is important in determining which crediting method may work the best for them.” Petit notes that while the monthly sum with a cap may have the potential to capture high index returns up to a cap, it is also the crediting method that has historically credited the most zeroes. Contrast that with a trigger method, he suggests, which is an annual point-to-point crediting method that will credit the trigger interest rate in any year that the index is flat or positive. This type of crediting method


InsuranceNewsNet Magazine » September 2017

may not credit a zero as often; however, it also may not be able to capture as high of an index return if the market is significantly positive. “There are crediting methods that fall in between these as well,” says Petit. “The annual sum and the monthly average are good examples of middle-of-the-road crediting methods.”

The Power of Diversification

When the financial crisis was just beginning in the third quarter of 2008, well-known equity benchmarks were 25 percent down from their all-time highs. Equities tumbled, as did interest rates. What index would have been the home-run hitter? Looking back, annual point-to-point with an index that moved away from volatile equities toward bonds would have been the best allocation option. “It is far easier for one index to have a poor year than it is for several uncorrelated indexes to all have a bad year together. Consistent, steady index returns can be an important part of the long-term success of a fixed index universal life policy,” says Jason Wellmann, SVP, Life Distribution, Allianz. “Unlike other financial vehicles that may have minimal or no charges being deducted regularly, a life insurance policy has monthly charges to cover the costs of the valuable life insurance protection. Because charges are being taken out each month, the need for consistent interest credits becomes even greater.” Even the most seasoned market analysts don’t know the economic outlook of a year from now or which allocation option will be most effective. Clients can hope for homers from a single source, or they can create a team that can work together and may achieve a more consistent return. “Diversification among allocation options helps smooth out the highs and lows. So instead of chasing each year’s highest-earning index allocation, it may be more effective to have consistent performers with the potential for stable, steady index credits,” says Wellmann. Consider that just three years after the start of the financial crisis, amid the fears of global recession in early 2011, a wellknown equity benchmark was up again, but increases were minimal. Interest rates fell sharply, helping bond returns. In that case, an allocation option with annual sum crediting and smaller equity returns combined with bond returns would have offered the best option. “A financial professional also needs to consider the index used with an allocation option,” says Petit. “For fixed index universal life insurance policies today, there are large cap, small cap, international, bond, and a blend of index options available. Just as the crediting method itself can vary in different economic environments, so can the underlying index. As an alternative to indexed interest, your client also has the option of allocating all or part of their cash value to a fixed interest account.”

The Life Insurance Issue • Special Sponsored Section

“Remember, diversification does not ensure that your clients will earn an interest credit every year, but it may help provide more consistent returns by spreading out the interest potential and volatility of the policy over different economic cycles,” adds Wellmann.

Innovative Index Allocation Allows for Stronger Teams

“Allianz is a leader in the indexed annuity and life insurance marketplace. We’re known for our ability to innovate in our index allocation designs. But the innovations must help solve the concerns our clients are facing, and not just be innovation for innovation’s sake. Allianz has had a rich history of pioneering new allocation options,” says Wellmann. And Petit noted some recent index allocation designs that “were born from true consumer need, helping our customers achieve their financial goals in changing economic conditions”: • 2005 – The monthly sum crediting method was built to work well in a steady-growth, low-volatility market and in response to demand for access to higher accumulation potential than an annual point-to-point can provide. • 2008 – Allianz was the first to develop an index allocation that automatically allocated to various sectors such as different U.S. equity sectors, international growth, and stabilizing bond performance in response to the increasing need for diversification. • 2013 – Allianz was the first volatility-controlled index was created to help protect against volatile markets, providing consistent accumulation potential and a new way to dynamically diversify an allocation in response to the extremely low interest-rate environment that year.

Ensuring a Smooth Pitch

According to Janelle Walter, senior director, Life Insurance Distribution Marketing at Allianz Life. “It is important for us to make materials and sales concepts available for the field that can help make their conversations with their clients easier. We have always believed that education and transparency are key to building the trust of our clients and financial professionals. That is why we make so much of our content available for client use. We want them to have as much education at their fingertips as possible before purchasing a product.”

Going to the Ballgame to Simplify the Message

“Our new piece, Score the Benefits of a Diversified Lineup, helps the client make an educated decision on which allocation options may be appropriate for their particular situation. We integrate analogies and stories that resonate with clients into our materials. In this particular piece, we use the baseball analogy as an effective way to describe the importance of diversification in a way that can be easier for the client to understand,” says Walter.

A diversification calculator is also part of the offering, to assist financial professionals with helping clients determine which index allocation(s) may be appropriate. The calculator shows the hypothetical performance of Allianz FIUL allocation options and market indexes. “It takes into account both the current and the minimum guaranteed caps and rates, and shows what the 10-year annualized return would have been for each allocation option and each raw index,” says Walter. “This is another tool to help the financial professional explain the importance of allocation diversification in an FIUL policy. With the calculator, they will easily be able to see that there is no clear pattern, and that no index allocation option performs the best in all market environments.” Another component of the Allianz education package to use with clients is a three-minute video to convey the importance of diversification within an FIA or FIUL policy. Walter notes it is easily viewed on a mobile device or shared on the business website of a financial professional, and is a great conversation starter. “We make it easy for the financial professional to share our content with their clients. For example, with our diversification video, all they need to do is click “share” and a pre-populated email will pop up where they can send a link to the video to their clients,” says Walter. In addition to video, Allianz creates campaigns that deliver content in many different formats such as printed materials, social media messaging, and other digital tools. According to Walter, varied delivery helps accommodate differences in learning styles and allows consumers to review content when it’s convenient for them in the format they most prefer.

Hitting Fundamentals for Better Understanding and Engagement

The Score the Benefits of a Diversified Lineup education series from Allianz uses analogies and simplified terminology to resonate with clients. “FIUL products can be complex for the average consumer when trying to understand the allocation options available and what may be suitable for their financial objectives,” says Walter. “I take the approach of making it simple enough for someone not familiar with FIUL to understand.” Walter adds, “These are long-term financial products, and we want our clients to have a sound understanding of how the products work so they believe in the FIUL product they purchased and are satisfied with the protection and accumulation potential they may achieve.”

To find out more about Allianz and its strategy to support your clients in understanding the benefits of a diversified allocation option lineup, visit

Product and feature availability may vary by state and broker/dealer. September Guarantees are backed solely by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis

2017 » InsuranceNewsNet Magazine


The Life Insurance Issue • Special Sponsored Section

GWG Life Finds the Solution to “Failure to Plan” In Your Clients’ Life Insurance Policies By Chris Orestis, Executive Vice President, Life Insurance Secondary Markets, GWG Life

ith a manageable mortgage, $1.3 million in investments and a pay-as-you go lifestyle, John and Mary had done everything right to set up their retirement Chris Orestis to be the golden years that so many aspire to. But, there was one bill they hadn’t factored into their planning, and it wasn’t even something they could have managed — John’s 82-year-old mother was about to outlive the savings that she had been using to pay for her room in a nursing home in a small town in Minnesota. For millions of Americans approaching retirement, this is just one of the stories of sticker shock about unanticipated health care and living costs in retirement. Fidelity’s Retiree Health Care Cost Estimate shows that for a couple retiring today, the average health care costs paid during retirement are estimated to be $260,000. And if that’s not enough of a shock, consider that is the average cost and doesn’t include responsibility for an aging parent. The total could be even higher if a retiree is forced to seek long-term care. But, there is a potential solution that is already in many consumers’ homes, tucked away in a drawer — life insurance. Most consumers have no idea that the life insurance policy they bought to provide income for their heirs can be exchanged to pay for assisted living, home care and all other forms of long-term care. GWG Life, a leader in providing solutions for seniors, is getting the word out to agents and advisors about two new programs aimed at helping Annual Health solve the problems many cliAge Care Costs ents face in post-retirement:

These programs are aimed at finding new ways to serve your clients, even those you may not have been in contact with for years. The options move beyond simple cash transactions to sources of income to pay for needed care and expenses at a time when other options can be greatly limited. Here are a few key facts about how a life insurance policy can be converted to a long-term care benefit plan and potentially rescue seniors and their families from the backbreaking financial strain of paying for long-term care:

The Book of Business Review Program, in which GWG Life experts review your book of business to find clients who could benefit from the LifeCare Xchange Program.


The benefit plan is not long-term care insurance. A long-term care benefit plan allows policyholders to use a universal life or term life insurance policy to pay for long-term care. In essence, you can turn a death benefit into a “living benefit” that covers the expenses of the policyholder now.

You can convert when you need it. You can’t wait until you’re about to move into a nursing home or assisted-living facility to buy long-term care insurance. At that point, it’s too late. But you may be able to convert a life insurance policy to a longterm benefit plan at any time. There are no waiting periods, no care limitations, and no costs or obligations to apply.

The full death benefit comes into play. The value of the exchange is not limited to the cash value, but is based on the death benefit. That means seniors will receive money they can use for their long-term care benefit plan. If the insured person dies

Annual Projected Costs vs. Social Security COLAs

The LifeCare Xchange Program, a tax-free benefit exempt from Medicaid spenddown requirements that can be used for health care and senior living expenses.


Average 66-Year-Old Couple Social Security

Annual Difference

Percent of Social Security Dedicated to Health Care Costs


























InsuranceNewsNet Magazine » September 2017

The Life Insurance Issue • Special Sponsored Section

before the benefit amount is exhausted, any remaining balance is paid to the family or the named beneficiary as a final lump-sum payment.

Facility Care: Nursing Home (Private Room) Median Annual Cost**

The goal is to keep policies from lapsing or being surrendered to the insurer for a small cash value. That’s what happened to John’s mother who, faced with increasing premiums and a desperate need for cash to pay for long-term care, let her life insurance lapse. “We never anticipated having to pay for her care at the same time we were going into retirement,” John says. “It has been quite a shock to us. We thought we had planned for everything.” Part of the problem is that while millions of people own life insurance policies, few of them understand their rights as owners. Life insurance policies are assets. Think of them just like a house. Homeowners wouldn’t just move out without selling their property. Why should the owner of a policy “move out” without first finding out what the real value of the policy is? On July 19, the National Association of Insurance Commissioners (NAIC) endorsed the life insurance secondary market as a vehicle to fund long-term care. In a policy statement titled “Private Market Options for Financing Long-Term Care,” the NAIC’s long-term care subgroup described how proceeds from exchanging a life insurance policy on the secondary market can “fund a bank and trust account to make monthly payments directly to a designated long-term care provider” which can save taxpayers millions in Medicaid funds now being used for longterm care services. When you consider that, according to the Life Insurance Settlement Association, seniors are abandoning a staggering $112 billion of life insurance face value annually, it quickly becomes obvious that this kind of private market innovation can be a very powerful financial solution. Seniors don’t want to be a financial burden on their family or spend down to below the poverty level just to qualify for Medicaid. They want access to information and options that will allow them to remain financially independent and able to afford to pay for their own care. GWG Life is a leader in the secondary market for life insurance policies, providing seniors with over $418 million in exchange value for their life insurance since 2006.

Life insurance policies are assets. Think of them just like a house. Homeowners wouldn’t just move out without selling their property.

** Numbers exclude Puerto Rico

As part of our Book of Business Review Program, GWG Life is offering to analyze life insurance policies to see if they can be Xchanged to meet what we have identified as four important needs:

Protection: Maintain a portion of the policy with a Retained Death Benefit.

Income: Supplement retirement funds for life with an Immediate Income Annuity.

Benefit: Pay health care and senior living expenses with a tax-free Long-Term Care Plan.

Lump Sum: Generate immediate funds with a Cash Payout.

Many of the policyholders may be hidden even to you, their life insurance agent, as they have fallen out of contact with you after they bought their policy. That’s why we developed our Book of Business Review Program, which can be used to renew the relationship while offering policy owners a new solution that can make you a hero to them. We believe this is a great opportunity to help your clients when they reach the most vulnerable time of their lives. If you want more information and to have your book analyzed, contact us. We would love to have you join us as a trusted partner and an Appointed Agent for our program. For more information about how you can tap into our resources to serve your clients, check out our website at Your clients need to hear about this opportunity.

September 2017 » InsuranceNewsNet Magazine


The Life Insurance Issue • Special Sponsored Section

Appealing to Women as Clients and Financial Professionals


racy Edgar has helped brokerage general agencies with strategic direction, planning and marketing for 18 years. In her current role with OneAmerica®, she leads the Care Solutions wholesaling team. In this Q&A, she discusses her unique experience in emergency medicine as a trauma and charge nurse at a level-one trauma hospital, her observations on the unique considerations of women as clients and financial professionals, and what both bring to her position as National Accounts Vice President, Brokerage.

Q: What does your nursing experience bring to your role in financial services?

My background in nursing may not seem to be a logical transition, but the lack of planning I saw was very eye opening. An injury, illness or accident caused patients to lose their independence. As an emergency department nurse, I wanted to know more about their options for planning and protection and a way to address the concerns I had for patients: “What would you do if you couldn’t get back to your previous level of health and you needed somebody to come in and provide care for you? What’s your plan for that?”

Q: What kind of personal experiences shaped your career?

My grandfather had Alzheimer’s disease. Every asset my grandparents had went to his nursing home care and left my grandmother impoverished. So for the last 10 years of my grandmother’s life, she lived with my parents because she couldn’t be financially independent. In my grandmother’s last years, my mother cared for her mother’s physical needs, which didn’t leave my mother time to help care for a new grandchild. It can end up being four generations of people affected by lack of planning. I wanted to get that message out, so I started at the very bottom of a career agency channel. My grandmother was part of my inspiration for moving from the emergency department to a career where I could help people plan effectively.

Q: What are your thoughts on recruiting more women to work in financial services?

It’s important to remember that what we do is about people and their well-being, so women can add a lot of value because of their experience and perspective. I also think there’s great value in training and bringing up producers who are new to the industry. Look for people who have passion and compassion, and then develop them to learn how to present products and services to fit with that passion and compassion.

Q: What is your advice for sales conversations with women?

Women today are more highly educated and financially empowered than ever. I recently read a book called The Soccer Mom Myth by Michele Miller and Holly Buchanan. It had some great suggestions for connecting with women and improving engagement, including understanding the factors that influence how and why women buy. Women who were born in the late ’40s to early ’50s are a powerful buying force, but few organizations market to them, even though they have more money and time and are more active than almost any other demographic. Every aspect of a meeting where a woman is present can be tailored to ensure that she feels she is being heard. That’s the most common complaint we hear about sales meetings: Women feel as if everything is addressed to the male, whether he’s the breadwinner or not, and she’s being left out of the conversation. Regardless of who is the family breadwinner, women range from complete control to significant influence on the finances. Improving the financial services experience for women is crucial for success. In any meeting a financial professional is having — with a couple, a single person, the family breadwinner or any combination — ensuring female engagement will help create a better financial strategy.

See for yourself how asset-based long-term care is an innovative alternative to traditional long-term care insurance. Download the OneAmerica LTC Report today at and help your clients protect themselves, the ones they love and their retirement future.

Q: How does being a nurse shape your conversations?

People are drawn to nursing because compassion and passion drive them to devote their lives to helping other people. Trauma nursing experience lends credibility to telling a client, “Longterm care is not an old person’s problem; it’s everyone’s problem.” After discharging a parent with a serious illness or impairment from the emergency department, I’d see their adult children unable to cope with caring for them. Many felt as if they had to make a choice between losing a job and keeping a promise to care for that parent.

Q: What would you say to women who have an interest in becoming financial professionals?

They can be very successful. Women bring a unique way of thinking, because they tend to be planners — which makes them a valuable asset — and are also usually family caregivers. That can help women walk in someone else’s shoes, so when they relay information to clients about planning, it comes from the heart. Women are often able to give a clear picture of both the emotional and financial impacts of lack of planning.


InsuranceNewsNet Magazine » September 2017

About OneAmerica® A national leader in the insurance and financial services marketplace for 140 years, the companies of OneAmerica help customers build and protect their financial futures. OneAmerica offers a variety of products and services to serve the financial needs of their policyholders and customers. These products include retirement plan products and recordkeeping services, individual life insurance, annuities, asset-based long-term care solutions and employee benefit plan products. Products are issued and underwritten by the companies of OneAmerica and distributed through a nationwide network of employees, agents, brokers and other sources who are committed to providing value to our customers. To learn more about our products, services and the companies of OneAmerica, visit OneAmerica® is the marketing name for the companies of OneAmerica. Products issued and underwritten by The State Life Insurance Company® (State Life), Indianapolis, IN, a OneAmerica company that offers the Care Solutions product suite.

September 2017 Âť InsuranceNewsNet Magazine


Paul Feldman Reveals Why Everyone Reading This Should Come To The Advisor Super Conference efore founding InsuranceNewsNet, Paul Feldman thrived as a financial advisor. During his rise, he got to know the top producers and marketing legends alive. The strategies and tactics he acquired helped him regularly write 10X more business than his peers—a skill set that he now wants to share with you. With the Advisor Super Conference coming up in September, we had a chance to catch up with Paul to find out why you need to be there.


Q: Why should an agent/advisor go to the Advisor Super Conference, rather than a free one sponsored by his or her own company? A: First, forget about the superior food and drink selection. Put aside the fact we’re giving away hand-tailored Italian suits, hosting “Live From the Blue Carpet” interviews, offering celebrity photos ops, and networking opportunities with the greatest marketers in the world. Forget all of it. People are registering in droves because we’re offering real, takehome-and-use-it value that advisors need in order to thrive in this evolving industry. Unlike other events, the Advisor Super Conference isn’t being held to bore you with explaining meaningless company information, new product updates, or new hoops you have to jump through to write the same business. This is the one event where advisors and agents will be inspired to write more business, see more clients, and significantly improve their bottom lines. We’ll help them master tactics not taught anywhere else. Things like how to attract any type of client they want to work with. How to generate more leads than they ever thought possible. Or conversational strategies that are simple to apply, yet dramatically impact how well they connect and build trust with clients to close case after case more easily. By the time it’s over, attendees will be fired up and energized about their careers. Because what they do IS

important. And we want that passion to resonate so strongly, their clients will feed off it for years. And if they stick around for Bonus Day with Dan Kennedy, attendees could double or even triple that takehome value.

Q: Speaking of Dan, why did you handpick Jay Abraham and Dan Kennedy to be your keynote speakers? A: There are three top business development and growth consultants in the world. Jay Abraham and Dan Kennedy are two of them. Together they’re called “the fathers of modern marketing.” They’re two people I trusted to grow my business as an advisor. And I grew it exponentially. They make a perfect team. Dan is a business consultant and a copywriter who’ll open your eyes to new angles and methods to grow your client base that this industry has never seen before. Jay guarantees to blow your mind, showing you how to think and act in such a way that you build deeper relationships with your clients than

ever before. He’ll show you how to be known as THE agent or advisor people want to go to and THE person who is top-of-mind when they think of financial products. It’s said that just an hour of Jay’s time can be worth millions to your bottom line. At the Advisor Super Conference, he’s going to speak and mingle with attendees for more than three hours. It’s an opportunity that even heads of major corporations beg for. And those are just two of the keynotes. Our complete speaker lineup could sell out AT&T Stadium and is guaranteed to hand you even more knowledge and skills. Q: What does 10X mean? A: It’s a concept that takes your business from wherever it is now and grows it exponentially. Many businesses are lucky if they grow at all. Most of the time, it’s a long, slow process. When you 10X, you set a standard of excellence for yourself and commit to seeing BIG gains. It’s a powerful mindset that breeds powerful actions. And just a few small changes or improvements in efficiency here and there—from how you attract new clients or make recommendations to how you organize your desk—can really add up. Before you know it, you’re on your way to doubling, tripling or even quadrupling your production, sometimes by doing even less work than ever. That’s 10X. Q: What if I don’t find any value? A: I’m so sure you’re going to love this event that if you attend all the sessions and don’t feel like you got at least one breakthrough idea, I will refund every single penny you spent on your Advisor Super Conference registration fee. Q: How do you register? A: If you haven’t been to the website yet, or in a while, you need to check it out – Every detail, from the agenda to a huge video library full of valuable information, is right there at your fingertips.

Orchestrated from the ground up to hand you the critical skills needed to grow your business! TIME


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6:00PM – 8:00PM

Welcome Reception featuring Bull Riding, Cowgirls

6:15PM – 6:45PM

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Breakfast - Networking

8:30AM – 8:45AM

Opening - Paul Feldman

8:45AM – 9:30AM

Dan Seidman - Got Influence

9:30AM – 10:00AM

Break - Networking – Sponsored by Key Management Group, Inc.

10:00AM – 12:00PM

Jay Abraham - Abraham Group, Inc. - Keynote Speaker - Sponsored by White Glove Workshops

12:00PM – 2:00PM

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Lunch and Learn with Liberty Tax

2:00PM – 2:30PM

Simplicity Financial Marketing - Dave Vick - 5 Fundamentals of 4 Mega Producers

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Karlan Tucker - Tucker Advisors - How I raised myself from failure to $500,000 weekly in FIA and managed money sales

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Jorge Villar - RME 360

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Dean Zayed - Brookstone Capital Management - The keys to becoming the most enhanced financial advisor possible

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Brett Saso - Make Insurance Interesting

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Special Dan Kennedy Presentation

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Mastermind Group with Dr. Maribeth Kuzmeski

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Paul Feldman - Closing Remarks

NEVER BEFORE HELD Mastermind Groups! Navigate challenges using the collective intelligence of others! “If you’re lucky enough to get invited to one, you will most likely see a marked change in yourself and your business.”

Enter promo code: 2GQ92F when registering to unlock $647 worth of bonus materials and a very special rate just for you!



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The Life Insurance Issue • Special Sponsored Section


John Hancock Vitality Expands the Reach of Life Insurance with Apple Watch®

arning an Apple Watch for as little as $25 is the latest enhancement of a new approach to life insurance introduced by John Hancock two years ago: the John Hancock Vitality solution. This innovative solution integrates life insurance with a technology-enabled wellness program — and rewards people for living healthy. With John Hancock Vitality, clients can save up to 15 percent on their annual premium, and earn valuable rewards and discounts for the everyday things they do to stay healthy, like walking, exercising and buying healthy food.

Changing The Life Insurance Conversation

In the life insurance market, where a significant number of consumers remain uninsured or underinsured, John Hancock Vitality is engaging customers in a compelling way so they can see the everyday value it can provide in their lives. “John Hancock Vitality is changing the life insurance conversation and ownership experience for consumers by making it more engaging, fun and rewarding,” says Brooks Tingle, senior vice president, marketing and strategy, John Hancock Insurance. “We are continuously evolving this program with new benefits like Apple Watch to ensure it remains relevant and attractive to today’s consumers.” Unlike with traditional life insurance, John Hancock Vitality customers aren’t just putting their policies away in a drawer. In fact, thousands of policyholders are saving money and earning rewards for their healthy choices. According to John Hancock, policyholders are participating in the program an average of 22 times a month as they redeem rewards, exercise (taking 9,000 steps per day compared to the average American at 5,900!) and make smart choices at the grocery store (saving up to $600 a year on their healthy food purchases). 1

Earning An Apple Watch For $25

Now John Hancock Vitality policyholders can earn an Apple Watch Series 2 for as little as $25 by exercising regularly.2 Whether they walk, run, bike, swim or participate in other types of exercise, they can earn Vitality Points that go toward their monthly watch payments over 24 months. The more points they earn through regular exercise each month, the less they’ll pay for their Apple Watch. To keep it simple, customers can seamlessly integrate their Apple Watch Series 2 with the John Hancock Vitality program to track their monthly physical activity goals. Participants can monitor their progress on the John Hancock Vitality member website or mobile app. Although the Apple Watch benefit is relatively new to the program, policyholders who have purchased an Apple Watch For agent use only. This material may not be used with the public. 1. Healthy food savings are based on qualifying purchases and may vary based on the terms of the John Hancock Vitality program. 2. Apple Watch Series 2 can be ordered for an initial payment of $25 plus tax, and over the following two years, monthly payments are based on the number of standard and advanced workouts completed. Apple is not a participant

in or sponsor of this promotion. Apple Watch is a registered trademark of Apple Inc. All rights reserved. Please note: Apple Watch Series 2 is not available in New York. In New York, entertainment, shopping and travel rewards are not available and are replaced by healthy living and active lifestyle rewards. John Hancock’s Net Promotor Score Data, reported by Clarabridge in April 2017.

are increasing their steps by an average of 2,000 per day.

Reaching a Broader Market

John Hancock Vitality can be a great fit for people at all stages of their lives. “We’ve seen strong appeal and tremendous feedback across market segments — from millennials to seniors,” says Tingle. “While different program elements appeal to some segments more than others, everyone loves the idea of saving money, earning rewards and getting the support they need to lead a healthy life.” There are also specific client segments, such as people living with diabetes, for whom the program’s focus on living healthy is especially beneficial.

Ongoing Client Connections

Customer engagement with the program is giving advisors a chance to touch base more frequently with their clients and to build lifetime relationships. Every time the client reaches a health milestone — and earns valuable rewards and discounts on hotels, cruises, entertainment and more — it reinforces the connection with their advisor. With significant customer engagement, clients are happy with the program and, according to John Hancock’s Net Promotor Score, they are recommending John Hancock Vitality almost twice as often as policyholders who have purchased traditional life insurance policies.

Getting More Out Of Life

It’s no secret that the life insurance industry has struggled to keep pace with the rapidly changing needs of consumers and has been slow to leverage state-of-the-art technology. With technology from wearable devices to smartphone apps and Apple Watch, people can track their fitness activities, making it easier for them to take a more active approach to their health than ever before. Innovations like John Hancock Vitality are doing just that by successfully engaging customers and enhancing the ownership experience. In fact, John Hancock Vitality life insurance sales doubled in the program’s second year, and they expect sales to double again this year.

To learn more about John Hancock Vitality, visit

Insurance policies and/or associated riders and features may not be available in all states. Some riders may have additional fees and expenses associated with them. Premium savings will apply based on the status attained by the life insured.

insured under the eligible life insurance policy.

Vitality is the provider of the John Hancock Vitality program in connection with policies issued by John Hancock.

Insurance products are issued by John Hancock Life Insurance Company (U.S.A.), Boston, MA 02210 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595. MLINY071117027

John Hancock Vitality program rewards and discounts are available only to the person

Rewards and discounts are subject to change and are not guaranteed to remain the same for the life of the policy.

September 2017 » InsuranceNewsNet Magazine


The Life Insurance Issue • Special Sponsored Section

Whole Life Insurance. A Flexible Financial Instrument.


financial plan is the money road map for your life — while you’re employed, during retirement and even after your death — so it must be secure, offer tax advantages and provide you with the ability to buy time and have financial confidence no matter what life throws your way. But can a single financial product Randy S. Fine address all these objectives? Yes — if it’s a whole life insurance policy. “If you’re in a place, financially, where you can put a reasonable amount of money away, and if you have a time horizon to build your savings, you’re probably a great candidate for a whole life product,” says Randy S. Fine, president of Robert Fine & Associates, and a 27-year veteran of the insurance and financial services industry; a Registered Representative of Park Avenue Securities LLC, an indirect, wholly owned subsidiary of The Guardian Life Insurance Company of America®; and the peer-elected president of Guardian’s Executive Committee. According to Fine, “At its core, whole life insurance provides an important death benefit, while also

economic and financial upheaval, including the Great Depression, Black Monday and the 2008 financial crisis. Fine continues, “I don’t know any other part of someone’s portfolio that comes with such key guarantees.”

Financial Flexibility at Its Core

Participating whole life policyholders in a mutual insurance company receive dividends2 as their share of the company’s profits. Although these payments aren’t guaranteed, Guardian has paid dividends every year since 1868, including a record distribution in 2016. “Mutual companies pay dividends to their policyholders, who are owners of the company. As a mutual company, Guardian doesn’t have stockholders, and it doesn’t have to satisfy Wall Street every quarter with earnings. It’s run by a board of directors and a CEO,” Fine avows. “Whole life products are built with guaranteed cash value, and the boost on top of that is dividends,” Fine says. “Policyholders can use dividends in many ways, such as enhancing their cash value and death benefit, paying their premiums or taking distributions out in cash.” Policyholders are effectively “investing in Guardian and the company’s 150-plus-year successful business model.” Whole life products were invented to protect widows and orphans after the primary breadwinner’s death, and designed to stay in force permanently. Over the years, these products have been enhanced through many advanced benefits and riders,3 which can improve their attractiveness and flexibility. For instance, should a policyholder become disabled, the waiver of premium rider is exercised and future premiums are funded by the insurance company while the policy remains in force permanently. Specific riders can also help provide funds for necessary long-term care services, and a new patent-pending rider offered by Guardian can be chosen by the policyholder to add equity participation that may help increase the policy’s performance potential.

“Mutual companies pay dividends to their policyholders, who are owners of the company. As a mutual company, Guardian doesn’t have stockholders, and it doesn’t have to satisfy Wall Street every quarter with earnings. It’s run by a board of directors and a CEO.” providing important financial flexibility. It’s such a versatile product — offering benefits like no other financial instrument available today.”

Whole Life Is a Long-Term Guarantee

“A whole life policy with a company such as Guardian provides three important guarantees1 — a specific death benefit, a premium that can never be increased and an increasing year-over-year cash value,” Fine says. Every year since its founding in 1860, Guardian has honored the guarantees on its whole life policies, persevering through many periods of


InsuranceNewsNet Magazine » September 2017

Increase Your External Rate of Return With Whole Life

The cash-value portion of whole life has numerous benefits. It accumulates tax-free4 for the life of the policy, and you can withdraw it, borrow it or apply it for many other uses. You certainly can’t say that about your IRA, 401(k), or stock and

The Life Insurance Issue • Special Sponsored Section

bond portfolios. In fact, when you need liquidity, you might have to sell your stocks and bonds at distressed prices, plus pay taxes on the gain and possibly an early withdrawal penalty. From a portfolio perspective, putting whole life insurance at the foundation of your financial plan allows you to take some additional risk in your other investments. “The cash value of your whole life policy is safe, secure and available, so you can be more aggressive and maybe even realize better returns on your other investments,” Fine explains. Take, for example, the scenario that includes a client who was on an extended vacation in Hawaii, thousands of miles from home. He called Fine and said, “I didn’t realize that my checking account balance is very low. I have payroll this week, taxes next week and contributions to make in a few weeks. Can I transfer money from the cash value of my whole life policy into my checking account, essentially as a loan?”5

A Sound Financial Foundation

Owning a whole life policy is part of a prudent financial-planning strategy. Whole life policyholders enjoy a long-term, norisk guarantee. They have the flexibility to accumulate and use cash without penalty, buy time and confidence, and increase their external rate of return, all while protecting their family’s financial security. “Whole life can be a sound financial instrument at any age. I bought my first whole life insurance policy as a diversified portion of my portfolio at the age of 22, and have continued purchasing several additional policies since that time,” Fine declares. “I’d spoken with friends and clients to see where they were financially, and I realized that waiting to buy a whole life policy didn’t make sense, because the premium would only increase as I got older. I learned that the sooner I could lock in whole life insurance, the better. Yet with that said, I’m still seeing 50-, 60and even 70-year-olds in good health procure whole life on a regular basis. “All the money I’ve accumulated over time is safe, and in all these years, I’ve never had a down year. I’ve been accumulating significant cash value, which I have used in several ways: owning a business, raising children, meeting responsibilities, sending kids to college, paying down mortgages. The options with my whole life policies are truly endless.”

From a portfolio perspective, putting whole life insurance at the core of your financial plan allows you to take some additional risk in your other investments. Fine provided the client the good news he needed and helped him quickly access the cash value of his policy to meet his unexpected short-term obligations. The client paid back the loan — without having to liquidate other assets and without tax consequences — when he returned from Hawaii. The flexibility of the whole life policy’s cash component enabled the client to buy time and have confidence when he needed them most. In another instance, a client had the opportunity to buy his neighbor’s property before it was listed, but he needed to pay cash to get the property at a favorable price. His whole life policy’s cash value was several hundred thousand dollars, thereby providing the client instant liquidity without any tax liability. “Within 48 hours, my client had a check and bought the property,” Fine recalls. “Two years later, he made over $250,000 when he sold the property, and that’s when he paid the money back to the policy. Yes, he paid loan interest for two years on the money he borrowed, but it had very favorable terms, and he made more than $200,000 in profit on the sale of the real estate.” Fine reiterates that while whole life insurance products can be a sensible option for anyone looking to build a sound financial plan, they can also work well for wealthier individuals and families. “Higher-income consumers are often some of the most prominent buyers of whole life products, allowing them to put money away to protect their families, businesses and estates,” he says. “They can’t directly fund Roth IRAs because they earn more than the income limit. As a result, they’re running out of ideas for investing their money while experiencing certain tax advantages. Whole life insurance products are tax-favored, so they’re advantageous for people who, because of their high income, miss out on other tax breaks.”

Find out more about Guardian whole life at 1 All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims-paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash value. 2 Dividends are not guaranteed. They are declared annually by Guardian’s board of directors. 3 Whole life riders incur either an additional premium or cost. Rider benefits may not be available in all states. 4 Guardian, its subsidiaries, agents and employees do not provide tax, legal or accounting advice. Consult your tax, legal or accounting professional regarding your individual situation. 5 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10 percent federal tax penalty.

2017-43885 Exp. 7/19

September 2017 » InsuranceNewsNet Magazine


The Life Insurance Issue • Special Sponsored Section


Family First Life’s ‘Quintant Approach’ Wraps Families in Safety and Creates Legions of Highly Successful Agents


hawn Meaike knows what it’s like to be overworked and underpaid as an agent in the field. Before becoming the president of Family First Life (FFL), he logged 60- to 70-hour weeks for a well-known insurance carrier. Before that, he grew up watching his mother work 80 hours a week, year after year, just to make ends meet. With a true passion for improving lives and creating an “everyone wins” atmosphere, he’s a firm believer that if you honestly care about protecting your clients and doing what’s best for them, FFL has a home for you. In this Q&A, Shawn discusses why and how FFL’s “Quintant Approach” makes its agents invaluable to a client and how that relationship in turn is the foundation for FFL’s legion of highly successful agents. Q: FFL puts a lot of emphasis on making its agents successful. As you are the president, does your background have anything to do with that? A: My background was in social work, and I’m a big believer in trying to help people’s situations. When I got my life insurance license, I just got excited about helping families. But then what hit me as I started to really learn the industry was if the life insurance agents are doing the majority of the work, why don’t they get to keep the majority of the money? So my background in wanting to put people in a better position definitely helped. I come from a very, very modest upbringing. I watched my mom work 80 hours a week and not get compensated the way I believed and she believed that she

Family First Life President – Shawn Meaike Q: What separates FFL from other IMOs? A: We’re different on almost every level that you can find. Number one, we pay our agents better. Our concept is pretty simple. When you look at our compensation and the max comp that we have, plus bonuses, there’s nobody in the same ballpark. We also do something we have not found any other agencies willing to do: We don’t require and don’t even allow you to sign a contract with us. Third, your vesting begins day one with us. Also, the renewals that you earn, because you did earn them, they’re yours — even if you decide that you want to move across the world and do something entirely different. Our training is very real. We don’t have anybody training [who] hasn’t sold and isn’t selling life insurance at a very high rate. And I think the last thing I’ll say, what separates us most from every other IMO is that we make money WITH people, not OFF them.

“...what separates us most from every other IMO is that we make money WITH people, not OFF them.” should be. And so my background very much plays into our philosophy; the company puts our agents first, and we expect our agents to put their clients first. We need to leave our clients in a better position than we found them financially, and we take a lot of pride in that.


InsuranceNewsNet Magazine » September 2017

The Life Insurance Issue • Special Sponsored Section

Q: And that goes hand in hand with the array of products you offer. What is the Quintant Approach your company speaks so frequently about? A: Absolutely. What happens in this industry is there are a lot of companies that only focus on one product and agents who can only sell one thing, and that’s it. If you’re an agent and you help a family with one product, like final expense insurance, because that’s all you know, it makes you very vulnerable. Number one, you’re not going to be as profitable. Number two, you’re not going to play that significant of a role in somebody’s life. Your clients have a myriad of needs. And we want our agents to be equipped to service every single one of them. We’re here first and foremost to help people. We want to make sure that we leave them better off than when we found them — any way we can. So we protect them from five angles, [with] what we call our Quintant Approach. First, we have mortgage protection term life insurance. You buy it, and it pays off your house if you die. [If ] you don’t die during that term, you get all your money back. Return of premium is very popular and makes mortgage protection the majority of what we sell on the term side. Next we have final expense insurance, which is pretty straightforward, too. And the best part of both of them is that they’re lead-driven. We don’t cold call or cold knock. I don’t believe in it. All the families that our agents service and handle have filled out a lead request and sent it back to us. So it makes everyone’s job very easy. Third are annuities. Here there’s a big payoff but a longer sales cycle. We get a lot of people above the age of 50 [who] do have retirement, and they want to protect it and don’t know how to do that. We have countless clients who fall below the $1 million net-worth category but need a solid retirement income plan. Everything from floor and bucket strategies to glide path and removal of risk, including bear markets, sequence of return risks and elimination of fees in retirement, are what FFL agents specialize in and what makes us so potent in this sector. Fourth up we have IUL. We get a lot of agents [who] meet with people in their 20s, 30s and 40s and help them with term, but these same people don’t have any kind of retirement — no retirement plan. And this is the perfect opportunity for an agent holding an annual review with a client to upsell them IULs, last-to-die policies, Section 162 benefit plans and other advanced insurance concepts. This is a lucrative way to continue to help a consumer throughout the insurance sales cycle.

And our newest Quintant element is Medicare Supplement, and we’re helping people out on that side. We’re saying, “OK, now that you’re of a certain age and you need something to supplement Medicare, what is that going to be?” To bring it all together, we’re now able to play a more complete role in serving people’s lives. In our situation, if you’re meeting with a couple [who’s] younger and you help them with term and an IUL, then maybe they refer you to their parents because they know you offer Medigap and retirement protection. It allows the agents to become comprehensive and get a much better return on all their leads. They become a meaningful part of people’s lives by being able to help in all those different areas with this approach.




Financial Inventory & Social Media


Q: It’s great that your company puts so much focus on serving clients as completely as possible. And it’s a major win-win situation for the clients and the agent. So if I were an agent, what would I have to do to get started working with you?

A: The first thing is to visit or call our corporate office at 844 -277-2761. They’ll assign you to someone regionally. I’m not hardheaded enough to pretend to manage you from my office in Connecticut if, for example, you’re in Northern California, I know a lot of IMOs do that. But we think that logic is ludicrous. Like I said earlier, we want to make sure that you’re as successful as you can be. So we’re going to place you with someone who can provide you with regional support. They might not live five minutes from your house, but they’re regionalized and able to assist you any way possible.


To see how much more FFL can enhance your career by offering you the best tools, greatest training, highest compensation and endless referrals for properly servicing your clients, visit or call them at 844-277-2761.

September 2017 » InsuranceNewsNet Magazine


The Life Insurance Issue • Special Sponsored Section


Taxes eliminated.

Protective Life’s Client-focused, Competitive (not just deferred) VUL: Customizable and Flexible


ne of the most overlooked growth strategies for high-net-worth clients is using a variable universal life insurance (VUL) policy as a retirement planning strategy. Yet it’s also one of the most powerful, largely because of its unique combination of tax advantages. Clients who’ve maxed out other qualified retirement accounts — typically 401(k)s and IRAs — are looking for additional tax-sheltered growth opportunities. VUL provides tax-advantaged cash accumulation that other financial instruments do not, making it a sound enhancement to high-net-worth clients’ retirement portfolios. Protective has taken this feature a step further. Its Strategic Objectives Variable Universal Life product offers low fees and expenses — keeping costs in check so clients can realize maximum potential cash value.

3. An option for clients who don’t qualify for a Roth IRA Clients in a high-income tax bracket may not qualify for a Roth. With VUL, individuals in high-income brackets can allow any cash-value growth to build over time, similar to that of a Roth IRA.

Taking a Smart Tax Strategy Further: Low Fees and Expenses

Protective Life’s Strategic Objectives Variable Universal Life product takes all these advantages even further. Strategic Objectives is designed specifically to keep costs in check — through low fees and expenses and no-load funds — so clients realize maximum cash value potential. It’s one reason Strategic Objectives appeals to clients who are focused on accumulation potential. This product also features a solid lineup of more than 50 top-notch funds and asset allocation models from which to choose. Strategic Objectives is just one of the ways Protective delivers PROTECTIVE LIFE’S STRATEGIC OBJECTIVES on its fundamental promise to offer products that provide solid VARIABLE UNIVERSAL LIFEtax strategy A smart value to clients and that “stand the test of life.” In real terms, this means Strategic Objectives — the likeperfect all Protective Life prodA unique combination of tax advantages makes variablethat universal life insurance (VUL) retirement The unique advantages of VUL: uctsmax — isout designed to deliver the value clientslike expect at the strategy component for high-net-worth clients who contributions to qualified accounts 401(k)s andtimes Tax deferral during the contribution phase in their livesand when theycan need it thethat most. IRAs. After-tax contributions accumulate cash value tax-free, clients access cash value as tax-free

That’s why your clients’ retirement portfolio needs VUL.

Tax-free* withdrawals and loans on for retirement loans andlater withdrawals. What’s income more, there are no limits on contributions or withdrawals. VUL Can Help Secure Your Clients’ Financial Future Now No limits on contributions or withdrawals Protective Strategic Objectives VUL is a powerful retirement Low fees and expenses planning tool for high-net-worth because PLUS: We’ve taken VUL even further. The Protective Strategic Objectives Variable Universalindividuals Life (SOVUL) productitistakes the unique dual “tax deferred—tax elimination” advantages Higher target premiumsdesigned around low fees and expenses, keeping costs in check so that clients can realize maximum potentialof VUL even further. This product is designed specifically with low fees value. This, along with a solid lineup of investment options, makes Strategic Objectives VUL an exceptional 24-month rolling target cash premiums and expenses so clients are able to realize maximum potential choice—in fact, one of the best VUL options available today. Higher supplemental retirement income streams cash value accumulation.

See for yourself how much Strategic Objectives VUL in particular emphasizes accumulation over protecVUL can change your clients’ Go tocash tion. Premium payments are allocated across various investretirement plan. Go to

See for yourself.

Retirement and Tax Benefits Associated with VUL

ment options, increasing the potential for greater cash value accumulation. What’s more, there are no limits on contributions Though interest is charged on loans, in general, loans are not taxable. Withdrawals are taxable to the extent they exceed basis in the or withdrawals. policy. Loans outstanding at policy lapse or surrender before the insured’s death will cause immediate taxation to the extent of gain in While there are pros forloans all types of life insurance * Assumes the policy is notThe a Modified Endowment Contract. Loans can impact the and policy.cons Unpaid and withdrawals reduce cash values and policy benefits. tax treatment of life insurance is subject to policy change. and death benefits and may result in taxable income upon lapse, maturity, or surpolicies, many peopleNeither find the growth ofnor tax-deferred cash value Protective Life its representatives offer legal orvalues tax advice. render of the policy. Loan interest charges may be applicable. Please see the product and tax-free loans on Variable these policies offers severuniversalbeneficial. life insuranceVUL policies issued by Protective Life Insurance prospectus for moreCompany details. (PLICO) under policy form number (VUL-14 9-15) statemeet variations thereof. Product features may vary by state. Securities distributed by Investment Distributors, Inc. (IDI), al advantages to help and clients retirement income goals.and availability Protective Strategic Objectives Variable Universal Life policies are issued by Protective the principal underwriter for registered products issued by PLICO, its affiliate. Both companies are located in Birmingham, AL.

Life Insurance Company (PLICO) under policy form VUL-14 9-15 and state variations

thereof. Securities offered Investment Distributors,Strategic Inc. (IDI), the principal Variable underwritInvestors should carefully consider the investment objectives, risks, charges and by expenses of Protective Objectives 1. Tax-deferred growth for retirement planning er forbefore registered productsThis issued PLICO, its affiliate.isBoth companies areprospectus located in Life insurance and its underlying investment options investing. andbyother information contained in the With VUL, cash valueUniversal accumulation (above premiums paid) is Birmingham, AL.its Product features and availability may vary by state. for Protective Strategic Objectives Variable Universal Life insurance and underlying investment options. Investors should read the tax-deferred until withdrawn. Moreover, there are no minimum prospectuses carefully before investing. Prospectuses may be obtained bycarefully contacting PLICOthe at 800.265.1545. Investors should consider investment objectives, risks, charges required distributions, so clients can leave cash value in their and expenses of Protective Strategic Objectives Variable Universal Life insurance and its underlying investment options before investing. This and other policies to grow on this tax-favored basis until they need it. PLAG.659545


2. Tax-free policy loans Any cash value can be taken out via a policy loan. That’s money your clients can borrow tax-free. (However, any policy loans that are not repaid reduce the death benefit.)


InsuranceNewsNet Magazine » September 2017

Professional Use Only. Not For Consumer information is contained inFor theFinancial prospectus for Protective Strategic ObjectivesUse. Variable Universal Life and its underlying investment options. Investors should read the prospectus carefully before investing. Prospectuses may be obtained by contacting PLICO at 800.456.6333.

For Financial Professional Use Only. Not for Use With Consumers. PLAG.659289 (06.17)

Taxes eliminated.


(not just deferred)

That’s why your clients’ retirement portfolio needs VUL. A smart tax strategy A unique combination of tax advantages makes variable universal life insurance (VUL) the perfect retirement strategy component for high-net-worth clients who max out contributions to qualified accounts like 401(k)s and IRAs. After-tax contributions accumulate cash value tax-free, and clients can access that cash value as tax-free loans and withdrawals. What’s more, there are no limits on contributions or withdrawals.

Low fees and expenses We’ve taken VUL even further. The Protective Strategic Objectives Variable Universal Life (SOVUL) product is designed around low fees and expenses, keeping costs in check so that clients can realize maximum potential cash value. This, along with a solid lineup of investment options, makes Strategic Objectives VUL an exceptional choice—in fact, one of the best VUL options available today.

See for yourself. Go to Though interest is charged on loans, in general, loans are not taxable. Withdrawals are taxable to the extent they exceed basis in the policy. Loans outstanding at policy lapse or surrender before the insured’s death will cause immediate taxation to the extent of gain in the policy. Unpaid loans and withdrawals reduce cash values and policy benefits. The tax treatment of life insurance is subject to change. Neither Protective Life nor its representatives offer legal or tax advice. Variable universal life insurance policies issued by Protective Life Insurance Company (PLICO) under policy form number (VUL-14 9-15) and state variations thereof. Product features and availability may vary by state. Securities distributed by Investment Distributors, Inc. (IDI), the principal underwriter for registered products issued by PLICO, its affiliate. Both companies are located in Birmingham, AL. Investors should carefully consider the investment objectives, risks, charges and expenses of Protective Strategic Objectives Variable Universal Life insurance and its underlying investment options before investing. This and other information is contained in the prospectus for Protective Strategic Objectives Variable Universal Life insurance and its underlying investment options. Investors should read the prospectuses carefully before investing. Prospectuses may be obtained by contacting PLICO at 800.265.1545. PLAG.659545


2017 » InsuranceNewsNet Magazine Use.53 ForSeptember Financial Professional Use Only. Not For Consumer


How Asking the Right Questions Resulted in a Big Case A good referral, combined with matching up the right benefits for the prospect’s needs, led to a million-dollar sale. Knowing what questions to ask didn’t hurt either. Here’s how it all came together. By Phil Bodine


few years ago, I closed a permanent life insurance case with a $1 million premium. It was one of the largest policies of my 27 years in the industry. On top of that, the sale was to a client who initially had little or no interest in learning about the benefits of life insurance. It started with a referral to a young married couple who had no children. The husband had worked for a small company and he was able to retire when he was only 38. Although he had always managed his own money, he and his wife needed some financial guidance. 54

One of their top concerns was the taxes they were paying on their portfolio. These were taxes that they were paying on their investment income. I responded to this concern by demonstrating how a life insurance policy is not subject to taxation on the build-up of the cash value of the policy. The couple also was concerned with the market fluctuation of their portfolio and the risk of loss. I responded by demonstrating that life insurance policy performance was not tied to the market, and that the guarantees offered by the insurance policy helped place some of the risk on the insurance company. I also showed them the value of a death benefit for charitable and estate planning purposes as well as how life insurance could help protect their assets. I didn’t tell the husband directly that I thought he needed more life insurance. But I knew if he had further understanding of the policy structure and what the

InsuranceNewsNet Magazine » September 2017

coverage could do for him and his wife while they were still living, he would want to investigate it further.

A Greater Understanding

I could see the further we went down this path, the more intrigued and engaged about life insurance he became. At first, he didn’t understand life insurance and its potential to work for him and his wife, but eventually he did. In the majority of large cases I have handled, most of my clients initially don’t understand how life insurance works. At my agency, we believe there are 60 direct and indirect benefits to life insurance. In this particular case, out of all of those benefits, I homed in on only the benefits this couple found most appealing. The key to solving your clients’ problems is asking the right questions. I believe 90 percent of your sales are made in the opening interview. For me, it’s not about the close; it’s about the open.

HOW ASKING THE RIGHT QUESTIONS RESULTED IN A BIG CASE LIFE Here are some additional effective questions I have developed throughout the course of my sales career and I use with my prospects: 1. What questions do you have for me? When I first meet with a new client, I always start with this question. That opens the door for me to read the client. 2. How long have you been married? This helps me to know if we are dealing with “your” money or “our” money. 3. Who do you rely on for financial advice? This is one of the most important questions. The answer to this tells me how committed they are to their current advisor. 4. What do you believe is the best investment? This is an opportunity for me to get some introspection as the client tells me what they really want when they answer this question. 5. What do you like to do when you are

not working? This question is important to find out their values. This also lets me know whether they give money to charities, which may lead to discussing charitable planning at our next meeting. 6. What would you like to do to make successful progress? The client will give you a road map when they answer this question. 7. What are your expectations of me? What do you want me to do for you? These are the most important questions of all. I have strategies and ideas to help the client, but the client’s answers to these questions help me focus on what the client wants.

What Clients Want Vs. What They Have

One of the biggest mistakes I usually encounter is that sophisticated clients are making unsophisticated financial decisions. I first go through the questions I listed previously so clients can tell me exactly what they want. I take their

answers and marry them with their current financial picture. This is where I often see a contradiction — what clients want and what they have can be completely different. And that is what I found out about this couple. To help minimize their risk and tax issues, I found out what they wanted first, and then focused on these issues to add more value to their lives. Whether or not they needed life insurance wasn’t even a question. The clients wanted everything that I showed them — they just didn’t know that life insurance would help them get there. It is all about what the client wants, not what I want for the client. Phil Bodine, founder and CEO of Verdeo Financial and Insurance Strategies, based in Granite Bay, Calif., has been affiliated with Ohio National since September 1991. He is a 19year Qualifying and Life member of the Million Dollar Round Table and Top of the Table. Phil may be contacted at

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September 2017 » InsuranceNewsNet Magazine



The Right Life Insurance for Each Stage of the Business Cycle


Sta r

Mat u

A stage 1 business owner is in business for one to three years and is normally someone around 20 to 30 years of age with a young family. Typically, their goal is to put together enough assets to start a viable business with the goal of surviving the early years while income is tight. In addition, it frequently means shouldering significant debt while plowing profits back into the company for future growth. Meanwhile, the owner needs life insurance for key person protection in case they or another important employee die. Further, life insurance may be needed to cover business debts and to fund a buy and sell agreement with potential successors. Typically, because cash is in short supply, term insurance is an affordable solution to meet each of these life insurance needs. The owner should consider buying convertible term coverage for the key person protection and the funding of a buy/ sell agreement. Converting the term coverage to per-

Gro w


Stage 1 — Startup

p tu

If the business owner successfully demonstrates survival skills through the first three years in the business, the business generally grows. The owner usually is focused on expanding the business within the limits of their cash flow and available investment capital. In addition, they tend to pay down or pay off related debt. As their revenue stream is growing, they continue to need key person protection for themselves and any employees who are significant to the bottom line. Further, funding for buy/sell agreements should keep pace with the business’s growing value, and overhead business expense should be considered along with disability insurance for the key people. Finally, as the customer base is building, there is an increased need to focus on retaining valuable key employees through executive bonus or nonqualified deferred compensation plans. Executive bonus plans using cash value insurance have the advantage of being the simplest and easiest employee benefit plans to set up and administer, but since the employee has unfettered ownership of the policy, it is not acting as a “golden handcuff” to keep the employee around. Conversely, restricted bonus arrangements are a more effective way to retain a valuable employee. To receive the employer’s premium contributions, the employee must agree not to touch the policy’s cash value until a triggering event, such as the passage of a certain period of time. In addition, the employee must agree to pay back the employer’s premium advances if the employee leaves early. Nonqualified deferred compensation plans, which typically are funded informally with life insurance, are also good for retaining valuable employees. However, they are much more complicated to set

ing n io


ecoming a business owner offers emotional and spiritual rewards to those involved. It’s a commitment of finances, hard work and long hours. Once that commitment is made, all business owners go through comparable phases of life that match up with the life cycle of their business operation in terms of startup, growth, maturity and transitioning to new owners. Here is how you can match the right life insurance for each stage of that business cycle.

Tra n s it

By Louis S. Shuntich

manent protection (when it becomes affordable as the business grows) gives the owner flexibility that does not come with term coverage. For example, if a key person policy is converted from term coverage to permanent coverage and the key person lives to retirement, the policy can be sold to them, given to them as a supplemental retirement benefit, surrendered for cash or kept until the key person dies.

y rit

All business owners go through a life cycle, and their life insurance needs change as the business grows and evolves.

Similarly, if a term policy funding a buy/ sell agreement is converted to permanent insurance and the sale takes place on the owner’s disability or retirement, the cash value may be used as a down payment on the purchase price. Likewise, from a personal perspective, the business owner could use term or convertible term coverage to protect their family and name their spouse or a family trust as the beneficiary.

Stage 2 — Growth

InsuranceNewsNet Magazine » September 2017

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Insurance products issued by: Minnesota Life Insurance Company | Securian Life Insurance Company


Source: Minnesota Life and Securian Life Competitive Research. S&P 500®, Standard & Poor’s 500® index, Standard & Poor’s®, “S&P®”, “S&P 500®”, “Standard & Poor’s 500®”, and “500” are trademarks of Standard & Poor’s and have been licensed for use by Minnesota Life Insurance Company (“Minnesota Life”) and Securian Life Insurance Company (“Securian Life”). The Indexed Universal Life Series Policies (“the Policies”) are not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in the Products. The Policies are not sponsored, endorsed, sold or promoted by Standard & Poor’s (“S&P”) or its third party licensors. Neither S&P nor its third party licensors makes any representation or warranty, express or implied, to the owners of the Policies or any member of the public regarding the advisability of investing in securities generally or in the Policies particularly or the ability of the S&P 500® (the “Index”) to track general stock market performance. S&P’s and its third party licensor’s only relationship toMinnesota Life and Securian Life is the licensing of certain trademarks and trade names of S&P and the third party licensors and of the Index which is determined, composed and calculated by S&P or its third party licensors without regard to Minnesota Life and Securian Life or the Policies. S&P and its third party licensors have no obligation to take the needs of Minnesota Life and Securian Life or the owners of the Policies into consideration in determining, composing or calculating the Index. Neither S&P nor its third party licensors is responsible for and has not participated in the determination of the prices and amount of the Policies or the timing of the issuance or sale of the Policies or in the determination or calculation of the equation by which the Policies are to be converted into cash. S&P has no obligation or liability in connection with the administration, marketing or trading of the Policies. NEITHER S&P, ITS AFFILIATES NOR THEIR THIRD PARTY LICENSORS GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN OR ANY COMMUNICATIONS, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATIONS (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P, ITS AFFILIATES AND THEIR THIRD PARTY LICENSORS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS OR DELAYS THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE MARKS, THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P, ITS AFFILIATES OR THEIR THIRD PARTY LICENSORS BE LIABLE FOR ANY INDIRECT, SPECIAL, BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE. Orion IUL is designed first and foremost to provide life insurance protection and should always be promoted as such. Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender charges. Interest crediting will vary based on the movement of the investments within the underlying index. The underlying indices only recognize the changes in stock prices and do not include any dividend returns. The policy does not actually participate in the stock market or the S&P 500® Low Volatility Index. One cannot invest directly in an Index. Participation rates are subject to change and may be less than 100%. One could lose money in these products. These materials are for informational and educational purposes and are not designed, or intended, to be applicable to any person’s individual circumstances. It should not be considered as investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. Securian Financial Group, and its affiliates, have a financial interest in the sale of their products.

1 2

Securian Financial Group, Inc. Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Minnesota Life is not an authorized New York insurer and does not do insurance business in New York. Both companies are headquartered in St. Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues. 400 Robert Street North, St. Paul, MN 55101-2098 ©2017 Securian Financial Group, Inc. All rights reserved. F88673-23 7-2017 DOFU 7-2017 223893

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

LIFE THE RIGHT LIFE INSURANCE FOR EACH STAGE OF THE BUSINESS CYCLE up and administer, and have specific limitations on when the employees may have access to the funds. On the personal side, the owner’s financial success at this stage of the business cycle means they are most likely interested in maintaining a comfortable lifestyle for their family if they die. This typically requires life insurance coverage adequate to provide spousal support, mortgage protection and college funding for the children.

Stage 3 — Maturity

In this phase, the business is now established in the market. It has a solid management team with a consistent cash flow that can support ongoing key person coverage, overhead and disability insurance, key person retention plans and ongoing business exit strategies (life insurance-funded buy/ sell agreements).

2017 is $5,490,000 per individual. This means that if the business owner individually has wealth in excess of $5,490,000, or more than $10,900,000 as a married person, they have an estate tax exposure. To deal with that, they can engage in various estate tax-saving techniques that may be used to reduce or eliminate their estate tax exposure. These approaches have two things in common: They often require the business owner to change how they own or manage their property, and they often require the owner to engage in large estate-reducing gifts. These obstacles may be met with resistance from the owner, as they can be resistant to change. Consequently, if the owner is opposed to making changes in how they own or manage their property, they may engage in the more palatable alternative of simply prefunding any potential estate tax liability with life insurance purchased through

Business owners typically plan their retirement around the assumption that they can sell their interest in the enterprise. The problem with this kind of thinking is that selling an interest in a closely held business is not like selling a share of publicly traded stock on an established exchange.

At this point, the owner needs to think about doing their retirement and succession planning because of their advancing age and the important relationship that exists between these two objectives. Their financial success means that now more than ever, they have more to lose. Proper planning that should focus on business succession and family support, often for their parents as well as their adult children, is now a concern. Another possible need at this stage of life might be estate tax planning. The federal estate tax applicable exclusion for 58

an irrevocable life insurance trust.

Stage 4 — Transitioning

At this stage, the owner is in their late middle-aged and inclined to rely on what they have already built over the years for their financial support. While they may not be particularly interested in growing the business, they realize that inaction may result in the eventual decline and termination of the business to their detriment. Consequently, they see the need for transition planning to new owners as being paramount.

InsuranceNewsNet Magazine » September 2017

Business owners typically plan their retirement around the assumption that they can sell their interest in the enterprise. The problem with this kind of thinking is that selling an interest in a closely held business is not like selling a share of publicly traded stock on an established exchange. Instead, it typically requires a period of two or three years during which the business must be prepared for sale or other disposition. This involves creating a plan to package and market the business to suitable successors and can involve addressing certain preliminary life insurance needs regardless of the business exit strategy adopted. Consideration should be given to maintaining any bonus or nonqualified deferred compensation arrangements that were designed to retain key employees, since their presence is essential to maintaining the value and salability of the business during the transition to new owners. In addition to the possibility of key employees leaving the company, there is also the risk that such people might die during the transition period. To protect the business owner and prospective successors from this risk, any key person coverage should be continued. Since all business owners face the fact that they eventually will die, retire or become disabled, it is wise for them never to leave themselves or their family in a position where they do not know what will happen to their business if any of these things happens. One last thing to keep in mind. If the business owner’s exit plan is to transfer the business to one or more children, but not others, that leaves the question of how to deal fairly with the children who will not receive an interest in the business. The way to make things equal is to have the business owner purchase life insurance on their life, and make the children who are not to receive an interest in the business the beneficiaries. This way all of the children may be treated equitably or fairly. Louis S. Shuntich, J.D., LL.M., is director, Advanced Consulting Group, Nationwide Financial. Louis may be contacted at louis.shuntich@






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September 2017 » InsuranceNewsNet Magazine



Annuity Buyers Want To Talk Before Committing


Annuity buyers want to have a conversation with someone before committing to something long term. That’s a major finding from an annuity pilot program in Arizona. The early findings in Nationwide’s Guarantees Retirement Income program raise new questions for insurance companies serious about expanding through the growing direct-to-consumer channel to reach middle-income consumers directly online. During business hours, it’s easy to route people to live advice dispensed by voices at the other end of the line. But after hours, or on weekends or holidays, when many people are more likely to sit down and give retirement investing serious thought, that silence often causes people to abandon the sign-up process or put off the decision. To keep people on its website, Nationwide is looking to test artificial intelligence chat functionality in which a computer generates the next question from questions that visitors are already asking.


When it comes to making that retirement nest egg last, women need more information. That’s the result of a retirement income literacy test conducted by The American College. Only 18 percent of retirement-age women can pass a basic quiz on how to make a nest egg last in retirement. Nearly twice as many retirement-age men are able to pass; and although those numbers are still grim, this underscores the trouble women face in their own retirement knowledge. There was a discrepancy in performance between men and women across the areas of annuity products in retirement (16 percent of women vs. 24 percent of men), company retirement plans (30 percent of women vs. 40 percent of men) and investment considerations in retirement planning (21 percent of women vs. 49 percent of men).



president of life insurance and annuities at Nationwide

exposure to global markets and many asset classes. • Pacific Life introduced Pacific Index Foundation, an FIA that replaces its flagship fixed indexed annuity, Pacific Index Choice, in approved states and firms. Like its predecessor, Pacific Index Foundation offers longer guarantees, with rates and caps guaranteed for the entire withdrawal charge period. It also offers even more straightforward, easy-to-understand ways to earn interest, as well as shorter withdrawal charge periods.


Annuity carriers continue to release new products to keep up with changes in the marketplace. Here’s a rundown on some of the latest. • Symetra released two fee-based fixed indexed annuities (FIAs) — Symetra Advisory Edge and Symetra Advisory Income Edge. Both annuities provide retirement customers with asset protection and interest crediting opportunities through multiple index options, including the JPMorgan ETF Efficiente 5 Index. • Nationwide launched its first fee-based FIA. The FIA will be marketed through advisors as Nationwide Summit. It is being marketed as the only fee-based FIA offering access to the J.P. Morgan MOZAIC Index, a diversified index offering



There arestill 11 companies People want to offering talk to somebody, whether family QLAC (qualifying longevitya annuity member or a professional. contract) products. While this isThey want talknew to part somebody before a smalltoand of the DIA pulling the trigger. market, we expect to see an uptick in sales in 2016. — Eric Henderson, senior vice

Between now and 2045, more than 30 million Americans will retire.

InsuranceNewsNet Magazine » September 2017

Source: LIMRA

The Social Security and Medicare trust funds will not be able to pay all debts inside of 20 years unless Congress acts, an annual report by the Treasury Department predicted. The forecast means that by 2034, the program will have enough revenue to cover only 77 percent of promised Social Security and Medicare benefits. The nongovernmental organization Committee for a Responsible Federal Budget, in a response to the report, noted that the Social Security Administration will pay out $27 billion more in benefits in 2017 than it will generate in tax revenue. It added that the Disability Insurance trust fund will run out of reserves by 2028, and that failure to address the problem soon will lead to all Social Security beneficiaries’ seeing a cut in benefits within 17 years.

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Financial strength ratings as of 7/11/16. Ratings may change. For current financial strength ratings and additional ratings information, visit Financial strength ratings include A.M. Best is A+ (second highest of 16 ratings), S&P’s is AA- (fourth highest of 21 ratings), Fitch (Fifth highest of 21 ratings), and Moody’s is A1 (Fifth highest of 21 ratings). Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Fixed annuities issued by Pacific Life (Newport Beach, CA) are available through licensed, independent third parties. If you are affiliated with a broker/dealer, check with your home office for product restrictions. September 2017 » InsuranceNewsNet Magazine



DOL Rule Leads to New Annuity Tools

The Fate of FIAs Rests With DOL Rule Tweak As part of its review of the Obama administration’s fiduciary rule, Department of Labor regulators are expected to consider returning fixed indexed annuities to a less-stringent exemption. By Cyril Tuohy


ould the Department of Labor’s request for information on the fiduciary rule signal an opening for the return of fixed indexed annuity (FIA) sales under a less stringent exemption? The possibility gives policy analysts like Judi Carsrud, government affairs director for the National Association of Insurance and Financial Advisors, hope that advisors will get another shot at making life easier for themselves in the years to come. Nothing would please Carsrud and other annuity advocates more than if DOL regulators shifted FIAs out from the burdensome Best Interest Contract Exemption, or BICE, and back into the less-stringent Prohibited Transaction Exemption 84-24, or PTE 84-24. Such a turn of events isn’t out of the question. DOL regulators signaled they are keen 62

to explore the advantages and drawbacks of expanding the types of annuities covered under PTE 84-24 as part of a broader review of the fiduciary rule’s exemptions. “Would it facilitate advice to expand the scope of PTE 84-24 to cover all types of annuities after the end of the transition period on Jan. 1, 2018?” regulators asked. The answer from the annuity commu-

sell the majority of the $60 billion worth of FIAs sold every year, is a key element in the FIA calculus.

Redefining Financial Institutions

The past 15 months have been a long, strange trip for FIAs. Beginning in April 2016, indexed annuities were separated from their fixed annuity cousins and placed, along with variable annuities, under the more rigorous BICE. Regulators decided the higher sales threshold applied to FIAs because indexed annuities were opaque. FIAs didn’t meet the standard Judi Carsrud, government affairs director required of the fiduciary rule for NAIFA designed to limit conflicts nity is an unequivocal yes. of interest among financial advisors, the Regulators also indicated an interest in DOL said. looking at the implications of expanding When industry groups pointed out that the definition of what constitutes a fi- the fiduciary rule seemed to ignore the nancial institution beyond banks, broker/ status of IMOs, effectively putting a huge dealers, insurers and registered invest- question mark on a fast-growing $60 bilment advisors. lion slice of the fixed annuity market, regExpanding the definition of a financial ulators went back to the drawing board. institution to include more independent But the DOL solution was to set the bar marketing organizations (IMOs), which for IMOs to qualify as a financial institution

“Either regulators need to move all FIAs back to the 84-24 exemption, or regulators must develop a workable exemption ...”

InsuranceNewsNet Magazine » September 2017


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Life Insurance is issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio. Nationwide Life Insurance Company, Nationwide, the Nationwide N and Eagle, and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company. © 2017 Nationwide. NFV-1254AO (05/17) September 2017 » InsuranceNewsNet Magazine


ANNUITY THE LATEST ANNUITY HAPPENINGS so high that only about a dozen IMOs could even contemplate it. Either regulators need to move all FIAs back to the 84-24 exemption, or regulators must develop a workable exemption so that the bulk of the 300 to 400 IMOs operating in the U.S. can continue selling FIAs, Carsrud explained. “Or they can redefine what is a financial institution,” she added.

Yearning for Simplicity

The tortured treatment of FIAs by lawyers and federal bureaucrats was done with

little input from advisors who have to live with the rule out in the real world of clients and retirees. The solution would have been to leave all fixed annuities under PTE 84-24 and leave the impartial conduct standards of the fiduciary rule intact while writing a simple exemption for products that don’t fall under PTE 84-24, Carsrud said. Requests for information like the one published by the DOL in the Federal Register aren’t necessarily an indication of where or how the DOL is leaning, she said. Rather, it is part of collecting informa-

tion to comply with President Donald J. Trump’s order to review the impact of the fiduciary rule on the marketplace. “We’re still looking forward to working with the new (DOL) team and rolling up our sleeves,” Carsrud. And who knows — she may yet get her wish of seeing FIAs moved back under PTE 84-24, which is where she and many others believe FIAs belonged in the first place. InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at

Research Tools Helping Agents Comply With DOL Rules New annuity research tools will help advisors demonstrate that their recommendations are in the best interest of clients. By Cyril Tuohy


nother annuity data provider has jumped into the widening pool of vendors delivering comparative tools to help advisors comply with new Department of Labor fiduciary regulations. The latest offering, branded as AnnuityNexus, comes courtesy of Northfield, Ill.-based Beacon Annuity Solutions, the software and analytics arm of Beacon Research. Beacon has been a longtime provider of fixed annuity data, but more recently indexed and variable annuity data as well. “AnnuityNexus was designed to provide carrier-reviewed, detailed product comparison and disclosure reports to quickly and easily document annuity sales recommendations and exchanges in this postDOL world,” said Beacon Annuity Solutions founder and CEO Jeremy Alexander. The tool is highly configurable, allowing distributors to “define the firm-specific product shelf” for fixed rate, indexed and variable annuities, the company said in a news release.

More Data Platforms Serving the Market

AnnuityNexis is far from alone in gathering annuity data with an eye toward helping advisors navigate a fiduciary landscape. Other data platforms — AssessBEST, Envestnet, eMoney Advisor, Riskalyze, RiXtrema, AssetMark and fi360, for 64

example — have been launched or retooled recently to help advisors prove, document and comply with a bestinterest standard. INN Publisher Paul Feldman is a founder of AssessBEST. As one of the early fixed annuity data collectors with research more than 20 years old, Beacon has amassed a significant database, Alexander said. AnnuityNexus allows for annuity exchange comparisons between more than 2,700 products with product histories dating back to the original purchase date. The tool also lets advisors view rider information, the company said. More than 250,000 financial advisors through 30 of the largest broker/dealers, independent marketing organizations and banks rely on the tool, the company said.

Stakes Raised for Data Vendors

The fiduciary rule, the first phase of which took effect last month, has raised the stakes for data vendors and service

InsuranceNewsNet Magazine » September 2017

providers on which advisors and their broker/dealers rely. Selling annuities and offering advice under the rule’s Best Interest Contract Exemption require significant disclosures and documentation, as well as a signed contract between advisor/agent and client. But for advisors to document that their product recommendations were in the best interest of a client, advisors need access to historical and comparative data. The data will prove critical should advisors need to prove in court that they provided a client with the best product or solution available at the time of sale. Full implementation of the fiduciary rule is scheduled to begin Jan. 1, 2018. InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.

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PLUS Foresters Financial™ makes a $1,000 payment to their designated registered charitable organization in the name of the insured. Call your Foresters Distribution Partner for more information Foresters products and its riders may not be available or approved in all states and are subject to eligibility requirements, underwriting approval, limitations and state variations. Underwritten by The Independent Order of Foresters. 1 The designated charitable organization must be an accredited 501(c)(3) organization under the Internal Revenue Code and eligible to receive charitable contributions as defined in section 170(c) of that code. Foresters Financial and Foresters are trade names and trademarks of The Independent Order of Foresters (a fraternal benefit society, 789 Don Mills Road, Toronto, Canada M3C 1T9) and its subsidiaries. MN132 414963 XX US (XX/XX) (05/17) FOR PRODUCER USE ONLY. NOT FOR USE WITH THE PUBLIC. XXXXXX 415351 US (09/17)


Is It Time for Safety-Seeking Clients to Look at Fixed Annuities? A look at how fixed annuities stack up against bond mutual funds. By Chris Conklin


ne of the most important conversations you’ll have about managing a client’s finances is what portion of their money should be used for “risky” investments to maximize growth potential and what portion should be kept “safe” to ensure preservation of capital when the markets get turbulent. This foundational conversation is about finding the right balance, taking into account your client’s long-term financial goals and temperament for overall financial risk. For the risky portion, it is typical for advisors to recommend stocks and stock mutual funds. For the safe portion, a typical recommendation is money market accounts, certificates of deposits or — perhaps the most common choice — bond mutual funds. However, for many clients, there is a lesser-known but better alternative than bond funds: a fixed annuity. Why is it better? Because a fixed annuity can provide clients with a similar rate of return than a bond mutual fund, with greater safety. 66

Safety First

Advisors typically recommend clients place a portion of their money in assets geared to ensure protection of principal. As clients get older, they often place a higher portion of their assets in nonstock vehicles that offer increased safety to help ensure that they stay on track for a secure retirement. Bond mutual funds are a common asset for advisors to recommend as a safe option, with most such funds offering a low single-digit current yield. What many clients don’t realize, though, is that bond mutual funds are actually quite risky to buy when interest rates are low. If interest rates go up, the value of your clients’ bond mutual fund holdings may decrease substantially — the exact opposite of what your clients expected when they were looking to find a safe place for their money. Fixed annuities can provide superior safety. That’s because both a client’s original premium and any credited interest are contractually guaranteed to be protected from loss.

Areas Where an Annuity Can Outperform a Bond Mutual Fund

While an apples-to-apples comparison

InsuranceNewsNet Magazine » September 2017

may not be possible, there are a few key ways in which a fixed annuity differs from a bond mutual fund. Safety — A bond mutual fund’s value fluctuates every day, and the value can decrease at any time. In fact, this can be one of the more frustrating aspects for clients, as many purchase a bond mutual fund for safety of principal, only to learn that the value can drop. A fixed annuity has a contractual guarantee not to lose value and can provide clients with peace of mind that they truly are protected from risk. Earnings — The growth of a fixed annuity is often comparable to a bond fund, but it is more predictable. Consider that a bond fund can have a year where its dividend income is more than offset by a loss of principal value, whereas a fixed annuity is guaranteed never to lose value. Because of this, a fixed annuity’s earning pattern can be more attractive to clients. Tax treatment — A bond mutual fund generates dividends every month, whether clients like it or not, and thus it generates taxable income even if the fund loses value during the year. Bond fund capital gains


How Do Bond Mutual Funds Stack Up Against Fixed Annuities?



Tax Treatment

Bond Mutual Funds

Fixed Annuities

If interest rates go up, the value of bond mutual fund holdings may decrease substantially.

The original premium and any credited interest are contractually guaranteed to be protected from loss.

Can have a year when dividend income is more than offset by a loss of principal value.

Are guaranteed never to lose value.

Generate taxable income even if the fund loses value during the year. Capital gains and losses are eligible for capital gains tax treatment.

Taxes are deferred until funds are withdrawn.

and losses would be eligible for capital gains tax treatment, but clients aren’t buying bond funds for capital gains, as such gains would likely be minimal. With a fixed annuity, taxes are deferred until funds are withdrawn, so customers have more control over their taxation. For many clients, as long as they don’t plan on taking withdrawals until after age 59½, the taxation of a fixed annuity can be very attractive. Most financial advisors, even those who strongly favor stocks for large portions of their clients’ money, recommend to their clients bond mutual funds and other assets geared toward safety of principal. For that “safe” money, a fixed annuity purchase should be something that advisors frequently recommend. Chris Conklin is vice president of individual annuities at The Standard. Besides being a Fellow of the Society of Actuaries, Chris is a licensed agent, has sold insurance and annuities, and co-owned a national marketing organization. He may be contacted at

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September 2017 » InsuranceNewsNet Magazine




Even Those With Employer Coverage Struggle With Costs Even with employer-based health coverage, workers struggle with health care costs. Nearly four in 10 workers on employer-sponsored health plans are personally experiencing or know someone who is having financial difficulty due to medical bills. That’s the word from Securian Financial Group. And it’s not only older workers who are hurting. More than half (52 percent) of millennials who are on their employer’s health plan said they are personally struggling or know someone who is struggling to pay medical bills. According to the survey, 28 percent of employees with health insurance through work facing an outof-pocket expense of $5,000 or more would use their of workers don’t know personal savings to pay rather than other means, inhow they would pay for an cluding a Health Savings Account (8 percent) or supunexpected medical bill plemental group insurance (7 percent).



What drives consumers to decide which health plan is right for them? Premiums are the major factor in choosing a health plan, according to the Employee Benefit Research Institute (EBRI). EBRI looked into whether financial incentives, such as $0 premiums, encouraged consumers to enroll in a health savings account-eligible health plan, and whether the incentives affected risk selection in the plans. Here’s what they found. Health insurance premiums are a major driver of plan choice. After eliminating employee premiums for all coverage tiers, HSA-eligible health plan enrollment increased from 4 percent to 25 percent among individuals with employee-only coverage and from 2 percent to 31 percent among individuals with family coverage. Healthier-than-average employees are enticed by $0 premium for an HSA-eligible health plan. Offering covDID YOU




erage with no payroll deduction attracted individual enrollees who were marginally healthier than those who would have enrolled without this financial incentive in place.


One of the major players in the Affordable Care Act marketplaces announced it is shedding about 10 percent of the staff in its corporate and health-plans units. Molina Healthcare is laying off about 1,400 workers as the company looks to cut costs and increase profitability. Molina employs about 6,400 people in its corporate segment, and 7,700 people in health plans. Founded in 1980 by a Long Beach, Calif., emergency room doctor, Molina Healthcare has traditionally been known as a Medicaid provider and emerged as a major player in the ACA’s health insurance markets. As of March, the company had about 4.8 million members in 12

Only one-third of U.S. adults have an advance directive in place. Source: Health Affairs

InsuranceNewsNet Magazine » September 2017

Our citizens are dying. We must act boldly to stop it. — The interim report to President Donald Trump from the Commission on Combating Drug Addiction and the Opioid Crisis.

states and Puerto Rico who were eligible for Medicaid, Medicare and other government-sponsored health care programs for the poor.


Farming is a risky profession, at the mercy of things such as weather and market factors. Now you can add the cost of health care to those risks. Lack of access to affordable health insurance is one of the most significant concerns facing American farmers, according to a U.S. Department of Agriculture study. Three out of four farmers and ranchers (73 percent) in the survey said that having affordable farmers have health insura pre-existing ance was an

2 out of 3 condition

important or very important means of reducing their business risk. And just over half (52 percent) are not confident they could pay the costs of a major illness such as a heart attack, cancer or loss of limb without going into debt. Two out of three farmers and ranchers (64 percent) reported having a pre-existing health condition. With an average age of 58, farmers and ranchers are also vulnerable to higher insurance premiums due to age-rating bands. And among farmers and ranchers 18 to 64 years old, one out of four (24 percent) purchased a plan in their state’s insurance marketplace.


How Much Critical Illness Coverage Is Enough for Workers? Critical illness coverage offered through the workplace is significantly more affordable for employees than buying it on their own. How you can help your employer clients determine the right amount for their workers. By Carlos Bello


our employer client has decided critical illness coverage is critical protection for its workers and their families. But now they’re wondering how much coverage is enough. That’s a great question that many brokers hear. This information can help you guide your clients to find the right amount of coverage to offer their employees. If a person goes through a serious health event, they’ll want to be able to focus on getting well without having to worry about money. However, even with health and disability insurance, the reality is that being

The first thing to do is ask your employer client these three questions, and get the cleint to weigh the emotional and psychological benefits that come with each scenario: 1) Do you want your employees’ medical expenses to be taken care of? 2) Do you want your employees to be able to keep up with everyday expenses? 3) Do you want to preserve your employees’ standards of living?

Taking Care of Medical Bills

If an employee is diagnosed with a life-threatening illness, the last thing their family should have to think about is money. Yet the medical bills are likely to start pouring in regardless of the type of medical coverage the employee has. Between diagnostic services, visits to the

Disability insurance typically replaces 60 percent of a person’s income at a time when expenses are racking up... Critical illness coverage can act has a supplement, replacing the remaining part of the employee’s wages. sick affects not only medical health but also financial health. It could take years to recover financially from a critical illness. What’s more, a financial hit takes an emotional toll, which can impact productivity on the job. Critical illness insurance provides a lump sum of money when an individual is diagnosed with a covered illness. That lump sum can be spent any way the person desires, such as to pay for medical specialists or child care, or even to cover everyday expenses. 70

emergency room, specialist visits, surgeries and prescriptions, one can reach an out-ofpocket limit quickly. And since treatment may span multiple years, the worker might have to pay their out-of-pocket limit more than once. As an example, Healthcare Bluebook, which calculates the cost of common services in different geographic areas, reports that the range in cost for an emergency room visit in Houston is $1,900-$5,947, and an abdominal CT scan ranges from

InsuranceNewsNet Magazine » September 2017

$240 to $3,100. The cost of mastectomy surgery ranges from $10,400 to $32,515. Based on common health plan designs and calculations of potential out-of-pocket responsibilities, I recommend providing at least $15,000 of critical illness coverage to cover out-of-pocket costs, surprise medical bills, and transportation to and from the hospital.

Keeping Up With Everyday Expenses

Besides medical expenses, there are also some indirect but significant costs that come with a serious illness. Perhaps the most important is missed income if a person is unable to work. Disability insurance definitely can help with this. However, disability insurance typically replaces 60 percent of a person’s income at a time when expenses are racking up. Critical illness coverage can act as a supplement, replacing the remaining part of the employee’s wages. Plus, a family member might have to take time off work to serve as a caregiver, so there may be more than one missed income to make up. The combination of lost income and medical bills can make it difficult to manage everyday expenses. Using national averages of monthly mortgage payments and other important costs, I recommend providing an additional $10,000 in coverage to assist with regular expenses, like mortgage, food and clothing. This brings the total recommended coverage to $25,000 if both medical expenses and everyday expenses need to be met.

Preserving Their Standard of Living

Critical illness also can have a lasting impact on a family’s standard of living, limiting their capacity to save long term. In fact, the Journal of Oncology says the financial consequences of cancer may last several years after the initial diagnosis, negatively affecting the quality of life of the cancer survivor and his or her family.

Having enough financial resources such as critical illness coverage during recovery can keep a family’s financial goals on track. Whether a person wants to save enough to send kids to college, move to a dream house or retire, I recommend providing an extra $10,000 in coverage to help a family stay on track to achieve their goals. This brings the total recommended coverage to at least $35,000 for medical and everyday expenses, as well as preservation of a person’s standard of living. Higher-income earners who have little liquid assets set aside for financial emergencies might benefit from higher levels of coverage, depending on their personal long-term aspirations.

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Some Cost-Effective Solutions

If your employer clients are sold on the value but not the cost of critical illness coverage, remind them that offering critical illness coverage through the workplace is significantly more affordable than if their employees were to buy it outside of work. Many employers choose to pass the premiums along to their workers — which is a good solution to cost concerns. There’s incredible value in simply giving employees affordable access to critical illness coverage. Another more affordable option is to offer critical illness coverage for employees’ life stages instead of their lifetimes. Unum’s research shows that consumers tend to keep critical illness coverage for three to five years during the life stage they think they need it most. By obtaining coverage for a life stage, it’s easier for consumers to get higher amounts of coverage at a more affordable price.

Critical Coverage for Customers

The cost of a critical illness is a moving target, but the relationship between medical problems and financial problems is hard to ignore. By asking thoughtful questions about what employers hope to accommodate through critical illness coverage, you can help your clients determine the right amount of coverage to offer to their workers. Carlos Bello is a director of product and market development at Unum. Carlos may be contacted at

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Bye-Bye, myRA Remember myRA, the Obama administration’s savings program for people who didn’t have access to retirement savings plans at work? You can tell myRA goodbye, three years after it was created. The Treasury Department has determined that myRA is too expensive to administer, so the program is ending. The 30,000 participants in myRA will be informed they can roll their money into a Roth individual retirement account. President Barack Obama ordered the creation of these so-called starter accounts. Since their inception, about 20,000 accounts have been opened, with participants contributing a total of $34 million, according to the Treasury, with a median account balance of $500. An additional 10,000 accounts have been opened, but their owners have not made contributions. U.S. Treasurer Jovita Carranza said that demand for the accounts was not high enough to justify the expense. The myRA program has cost $70 million since 2014, according to the Treasury, and would cost $10 million annually going forward.


More changes are afoot at MetLife. MetLife will acquire Logan Circle Partners, Fortress Investment Group’s traditional fixed income asset management business, for approximately $250 million in cash. Logan Circle Partners has more than 100 institutional clients and more than $33 billion in assets under management. With the spinoff of MetLife’s retail life insurance and annuity business into the new company Brighthouse Financial, and with the Logan Circle acquisition, MetLife will have more than $560 billion in total assets under management, of which more than $140 billion will be managed on behalf of third parties.

OLDER AMERICANS AREN’T AS POOR AS WE THOUGHT Forget the images of elderly people existing on day-old bread and burning furniture in DID YOU




the fireplace for warmth. Millions of retirees are living rather well — much better than previously thought — according to new research. For those who worked and qualified for traditional pensions in another era, the golden years really are golden. Research by the U.S. Census Bureau showed that the median U.S. household of those age 65 and older had $44,400 of income in 2012. The percentage of those in that age group who are at or below the poverty level is 6.9 percent. The most popular retirement benefit among older Americans is still the traditional pension, collected by 56 percent of households 65 and older. Withdrawals from individual retirement accounts were taken by 32 percent of older households,

The median U.S. household of those age 65 and older had $44,400 of income in 2012

THE AVERAGE RETURN ON AN INITIAL PUBLIC OFFERING was 20 percent retirement-age pass basic quiz how to this Only year.18% The of average increase inwomen the firstcan day (or a“pop”) is 13on percent.

make a nestCapital egg last in retirement. Source: Renaissance

InsuranceNewsNet Magazine » September 2017

Source: The American College

Overall, consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating. — Lynn Franco, director of economic indicators at The Conference Board

and about 5 percent took money from 401(k)-style defined contribution plans. As for Social Security, the Census Bureau finds current retirees are less dependent on it for income than previous estimates have suggested.

WOMEN, MILLENNIALS DRAWN TO ESG FUNDS Environmental, social and governance (ESG) funds can be a magnet for women and millennials who are interested in investing, a new study says. Eaton Vance’s second quarter Advisor Top-of-Mind Index shows that not only do investors in those demographics go for ESG funds, but also that more millennial and female advisors favor them as well. Female advisors are more likely to express interest in responsible investing strategies than are their male counterparts, according to the report. Forty-six percent said responsible investing is an important part of their practice, compared with 38 percent of male advisors, while 44 percent expect to increase their responsible investing recommendations in 2017, compared with 35 percent of male advisors. In addition, millennial advisors are more likely to emphasize responsible investing than their older counterparts are. Fifty-five percent of millennial advisors said responsible investing is an important part of their practice, compared with 37 percent of all other advisors, while 41 percent say clients are increasingly discussing responsible investing, compared with 27 percent of all other advisors.


WHAT ADVISORS WANT NOW! You learn a lot after over a decade in business and $2 billion in assets under management. For Brookstone Capital Management, one big theme to their success has been that service still matters. We asked five leaders from Brookstone to share their thoughts on what it means to provide world-class service and what really matters to Advisors.

Dean Zayed Chief Executive Officer

“Personally, I am committed to providing the gold standard of service in the RIA space. The way I see it, Brookstone has 40+ employees who are on-call to help Advisors grow. Each and every employee has the singular goal of doing whatever it takes to satisfy the needs and concerns of our Advisors. The Ritz-Carlton defined high level service in the hotel industry and my goal is for Brookstone to reach that same pinnacle of service in our industry.”

Darryl Ronconi Chief Operating Officer “Even though our focus is on Advisors, we know there is a client on the end of every interaction. We want to make sure we are providing our Advisors with the necessary resources to service those clients. Our Advisors have access to some of the best software and technology in the industry, and we are always evaluating new service partners to add even more value. In addition, the creation of a turn-key service model has given Advisors a necessity — immediate access to our team to service their everyday needs.”

Derek Gubala National Director of Business Development “Advisors and strategic partners all want the same thing. They want to build a relationship with a firm that is responsive, service centric, and focused on mutually beneficial growth. We have become the preferred RIA partner for many FMOs/IMOs because they value our team and trust we are committed to doing what is in the best interest for Advisors.”

Mark DiOrio Chief Investment Officer “Our investment platform was built with every level of Advisor in mind. My pledge to Advisors is to give them any tool needed for success. That can come in the form of our in-house managed model portfolios or taking the time to help them build a customized solution for clients. Rolling up my sleeves and working with Advisors to give them that personalized service will always be the most valuable use of time.”

Matt Lovett Chief Compliance Officer “Our compliance team operates as a true partner to our Advisors. Clearly, the main goal is to protect our Advisors, but we also understand their business and the multiple facets of it — including sales. Our team is focused on providing quick response times and working with Advisors to find the solutions they need. We are also prepared in every way to be a fiduciary partner in the post-DOL world, and are committed to minimizing any disruption to our Advisors’ practices.”

Find out more about Brookstone and how they position Advisors for success – visit September 2017 » InsuranceNewsNet Magazine


Five Financial Risks That Communicate Urgency Establish a risk management plan for clients to weather market cycles. • Dave Vick


hy should clients move money out of the market if it’s doing poorly — or even if it’s doing well? It’s important to educate your clients on what could happen so they understand the risk in our current market environment. Here are five reasons why clients should consider moving their money now, no matter how the market is performing.

1. What’s coming next?

So what might be coming next in the market? The truth is, we just don’t know. What we do know is that the market moves in boom/bust cycles yet rises over time from one cycle to the next. With all the ups and downs of market cycles, it’s easy for clients to lose sight of where they might be in any current market cycle. Let’s take a look at the current cycle we’re in to gain some insight. Where are we in the current market cycle? We can think about it like the image below. To the left is the beginning of a market cycle, the middle is the height of gains and investment in the cycle, and to the right is the end of the cycle, usually where investors despair.

MARKET CYCLE If the image above represented our current market cycle, where on this bell curve do you, or your clients, think we are in terms of this market cycle? This is a great exercise to take your clients through. Ask them to show you where on this curve they think we are right now. Almost everyone would say that we are toward the top or at the top of this curve (demonstrated in the 74 74

image below). Nobody would say that the market will keep going up forever.

MARKET CYCLE If we think we are at the top (or near the top), what is the next big thing in the market? Most advisors and clients would agree that it will be a market correction. I guess you would say it’s the one thing we know for sure will happen next.

2. When is the next bear market coming?

On average, these bear markets lasted almost one year and stocks fell almost 30 percent. It also can take some time to break even in stocks after a bear market. The longest break-even period in this time frame was after the 2000-02 bear market, when it took five years and eight months for an investor to recover from the previous peak. After the recession of 2007-08, it took four years and five months to make your money back. One of the few guarantees in the stock market is that things are bound to go wrong in the future. But this also makes it very difficult to predict when the next bear will strike. All of the data in the world on valuations, fundamentals, technicals, geopolitical events and sentiment can’t help you predict the precise moment other investors collectively will decide it’s time to panic.

What don’t we know about the next bear 3. How deep will the correction be? market? We don’t know when it will hit. What else don’t we know? We don’t know Russell Napier, in his book Anatomy of how deep the correction will be. By definithe Bear, researched the bottom of the tion, a market correction is 20 percent, but four largest bear markets in history. He it could be more — much more. Could it be asked whether there are any historical 30 percent, 40 percent or even 50 percent? commonalities that run through the bot- We don’t know. History shows that market tom of the biggest bear markets. S&P 500 Bear Markets Since WWII He came up with Peak Trough S&P 500 5-Year Treasuries some answers and May 1946 Oct. 1946 -26.6% 0.4% has been pretty June 1948 June 1949 -20.6% 1.6% dead-on since the July 1957 Oct. 1957 -20.7% 1.4% publishing of the Jan. 1962 June 1962 -26.4% 2.5% book in 2005. We Feb. 1966 Oct. 1966 -22.2% 1.3% don’t want to creNov. 1968 May 1970 -36.1% 8.6% ate fear for our Jan. 1973 Oct. 1974 -48.2% 4.0% clients but rather Sept. 1976 Mar. 1978 -19.4% 7.6% Nov. 1980 Aug. 1982 -27.1% 28.8% ma ke sen se of July 1987 Dec. 1987 -33.5% -1.8% what is going on. July 1990 Oct. 1990 -19.9% 1.8% According to July 1998 Aug. 1998 -19.3% 3.0% Bloomberg, since Mar. 2000 Oct. 2002 -49.1% 32.7% World War II, Oct. 2007 Mar. 2009 -56.8% 15.0% there have been Apr. 2001 Oct. 2001 -19.4% 6.1% 15 bear markets in the Standard and Averages -29.7% 7.5% Poor’s 500.

InsuranceNewsNet Magazine Magazine »» September September 2017 2017 InsuranceNewsNet

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corrections could go deep. Napier believes it will be at least 50 percent from its height. It is true that investors buy stocks at all times throughout a given year. It’s also true that those buy stocks at all times throughout a given year would be selling their stocks at all times throughout the following year or later. In theory, there shouldn’t be any clumping — that is to say, a critical mass of sellers that would overwhelm buyers for a short duration and make stocks fall precipitously. But theory and reality often clash.

4. How long will the correction last?

We don’t know how long the correction will last. By definition, it will have to be at least six months, but again, many corrections last for longer than that. The average of the four longest bear markets in American history is 17 years. The truth is, we just don’t know how long a correction will last. The longest bear market was 1929 to 1954. The problem that many investors face is that they want to know both prices and timing. That combination is almost impossible to forecast. It’s possible to forecast a price, potentially (although much harder) possible to predict a time interval, but certainly not possible to forecast both. Markets always should be viewed against ongoing trends. The U.S. stock market is in an uptrend right now. The way other markets are trending, combined with chart structures on the U.S. stock chart, can provide some price projections. For instance, a very long-term target of 2,500 points in the S&P 500 is certainly a realistic scenario. Forecasting exactly when that price level will be reached is impossible. So again, we don’t know how deep these corrections could go or how long they could last.

5. The next swing-down: a little or a lot

If you could stand on the Dow the day President Ronald Reagan took office and look back, you would see a relatively mellow Dow line. You would see some small bumps, but the movements were not that pronounced. Now let’s look at the Dow from when President Barack Obama took office in 2009. You now look back from 2009, and you see a giant cliff looking down. The volatility has changed completely. It’s obvious that there’s been a paradigm shift 76 76

Number of 3% Daily S&P 500 Moves by Decade 120 101

100 80 60 40 18

20 4








0 1971-80


Sources: Water Oak Advisors; Yahoo! Finance. Data represents all daily returns available for S&P 500 index since 1951.

in the markets. Since 1990, there have been major volatility shifts in the markets. No one knows the reasons why — whether it’s due to the advanced technology, or 401(k) plans changing the way the average investor saves for retirement, or maybe the cultural shift toward the acceptance of gambling as a society, who knows? What we do know is the volatility we’ve experienced in the past 30 years is vastly different from that of the previous 60-100 years. And what about now? Every day since President Donald Trump took office seems to bring a new political shock, so you might be surprised to learn that the stock market is just shy of all-time highs. The new president may be unpredictable, but that volatility has yet to spill over into the financial markets. But remember, there’s a high probability that investors will see a bear market during any president’s time in office. Bear markets are a natural outcome of a complex system such as the stock market, which is driven by emotions that can often take things to the extremes. It begs a number of questions: What will happen next? Will it be a little drop or a big drop? What is the trend? If you look at the graph above, it’s easy to see the trend is toward massive market movements. We don’t know when, how deep or how long the correction will be, but those truly are not the right questions to ask. The right question to ask is whether you have a plan to manage this type of risk for your

InsuranceNewsNet Magazine Magazine »» September September 2017 2017 InsuranceNewsNet

clients’ retirement years. This is the one thing you have control over. You can’t control when, how deep and how long the next market correction will be, but you can control or help control your clients’ plans to deal with this risk. While it’s true that people need to think about where we are in the market so they understand the risk in the market and the risk we face right now, what they really need is a plan.

Do you have a plan for your clients?

You need a simple plan that clients can latch onto, a plan that will successfully lead clients to better financial decisions. If you give clients something simple that helps them understand how their retirement assets can be protected, you will retain their business. If clients can answer this question effectively, they will significantly increase their protection: Where do bond alternatives (such as fixed indexed annuities) fit into your portfolio of assets? No matter what process you use, be sure that you have a plan in place to manage these types of risks for your clients in retirement or approaching retirement. In the long run, both you and your clients will be glad you did. Dave Vick is a principal with Simplicity Financial Marketing. Dave may be contacted at


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September 2017 » InsuranceNewsNet Magazine


A Retirement Portfolio for Clients Who Can’t Retire How does an advisor plan for the client who wants to work in retirement? Such a plan can improve the retirement outlook, but the pitfalls include unrealistic expectations. • Brian O’Connell


ore and more financial advisors are grappling with clients who haven’t saved much for their postcareer years — and who plan to continue working in retirement, given their need for income. That creates an interesting — and challenging — dilemma for money management professionals. How does an advisor build an investment strategy around that “working in retirement” model? First, the data. According to the Employee Benefits Research Institute’s 2017 Retirement Confidence Survey, 30 percent of U.S. career professionals “feel mentally or emotionally stressed about preparing for retirement.” Additionally, only 41 percent say they’ve “tried to figure out how much money they will need in retirement,” EBRI reports. The “no or low savings” issue is so vexing that a whopping 80 percent of survey respondents told EBRI they will work for pay, either full- or part-time, in retirement. Make no mistake, eight out of 10 workers who expect to work for pay in retire78 78

ment is an alarming number, and one that advisors should focus on as they help plan retirements for their clients.

‘No Surprise’

Some money managers, though, are already realistic about clients who delay retirement, or who don’t plan on retiring at all. “It’s no surprise. The single best thing that a client can do to improve his or her retirement plan is to work longer,” said Jamie Hopkins, director of retirement planning at The American College in Bryn Mawr, Pa. “Working longer shortens the retirement period, reduces the impact of inflation, allows assets to grow for another year and increases income.” Yet Hopkins also issues a cautionary note on the topic of working in retirement. “Far more people express the desire to work in retirement than actually end up working in retirement,” he noted. “This is a big misalignment of beliefs and reality, which can cause a client to undersave for retirement because they were banking on some income from continued work.”

InsuranceNewsNet Magazine Magazine »» September September 2017 2017 InsuranceNewsNet

That said, advisors would do well to start building retirement models that include a job in retirement for clients who say working in retirement is their goal. But what would such a plan look like? “When setting up a plan for someone working in retirement, it’s important to first look at their employment and ask how secure this income really is,” Hopkins noted. “How long can the person realistically keep working? Will the job be there? Are there health risks?” Working in retirement also increases an individual’s human capital, and wealth managers should know that. “With higher human capital, the individual is able to take on higher risk investments investments, or at equities, because employment functions more like a safe income source comparable to bonds from an asset allocation standpoint,” Hopkins added. “By allowing the person to invest more aggressively, this also increases the likelihood the investments will produce higher returns and improve the longevity of the portfolio.”

Lower Withdrawal Rates

There’s another built-in feature of a “working in retirement” portfolio.


“Working in retirement also allows the individual to keep his or her withdrawal rates lower for the first few years of retirement, drastically improving the total amount of money that can be spent throughout retirement,” Hopkins said. The biggest challenge that advisors will face in dealing with a client working in retirement is gauging how long the person will continue working. “If the plan is built around five years of additional work, and the client leaves the workplace entirely after a year or two, this could throw the plan off, requiring drastic changes,” Hopkins noted. “In many cases, additional work in retirement is seen as extra income and not fully relied upon in the planning process because of the potential uncertainty of continued work.” Wealth mangers need to build flexibility into the plan. They cannot overly rely upon continued work because the data shows that most people do not continue to work throughout retirement even if they express a desire to, he said. For advisors, there are myriad challenges in planning for working retirees — challenges that go beyond simply creating an

investment portfolio. “The trick is to take a look at their entire situation, including work-life balance, and build a portfolio that matches the client’s goals,” said Mark Painter, a financial planner with EverGuide Financial Group in Berkeley Heights, N.J. By looking at current income needs and current savings needs, investment advisors can develop a plan that allows a person to reduce the number of hours worked over time and create a longer transition to retirement, Painter explained. It’s a lot like threading the needle, though. “By being too aggressive on the savings and appreciation, you could take unwarranted risks, and by being too conservative you could miss out on the potential to grow the asset base,” he stated. One harsh reality is that many advisors refuse to work with career professionals who need to work in retirement to eat and pay the bills — mainly because they don’t have enough money. “Financial planners don’t deal with this segment of the population because they have no savings or investments to retire on and thus no assets from which the plan-

ner can collect a fee,” said David Poole, a financial planner at Brightworks Financial Planning in Columbia, S.C. Ideally, money managers should put others’ needs above their own, and help people discover and reach their goals. Helping clients overcome their obstacles requires a never-ending skill set in financial services, Poole said. “You want to work with these struggling clients and help them map out a course that will get them through their golden years,” he said. “I can’t say it will look or sound like normal retirement, but it will allow them the dignity and peace of having a plan while they continue to work as long as they can.” Brian O’Connell is a former Wall Street bond trader and author of the best-selling books The 401(k) Millionaire and CNBC’s Guide to Creating Wealth. He’s a regular contributor to major media business platforms, including CBS News, The and Bloomberg. Brian may be contacted at brian.oconnell@

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8 Simple Ways to Get More (and Better) Client Referrals Advisors are often reluctant to ask for referrals and clients are uncomfortable giving them. How to break the deadlock. By George Diaz


know some people who hate asking for referrals from their clients for fear of disturbing them or asking for “too much.” I understand the mentality, but I believe it is wrong. When you get your clients to promote your agency in a simple and uncompromising way, it’s doing them a favor. Why? Referrals are what we might call social currency. We all like to recommend companies and quality products because it is a way to help each other. Unfortunately, many insurance agents never properly prepare and train on how 80

to request referrals in an effective and convenient way for both parties. This can lead to interactions like the following: Agent: “If you are satisfied, could you maybe give me the names of three people who could also benefit from my excellent service?” Customer: [uncomfortable pause] “Oh ... um ... well ... I guess you could call my ... I really don’t have phone numbers with me now ...” Agent: “Sorry, but can you think a little harder about a few people before we end our meeting?” I do not want your clients to lose the opportunity to make referrals, but at the same time, you shouldn’t have awkward conversations. Here are eight ideas for generating great referrals.

InsuranceNewsNet Magazine » September 2017


You must change your mentality. Stop believing that you are “asking for referrals” and imagine this instead: “I am helping my clients increase their social status by facilitating the recommendation of an agency that is easy to work with, cares about clients and can save money for their friends.” If you do not convince yourself of this, your problem may be more complex than simply needing referrals.


A referral bonus program is a system whose goal is to give value to clients who refer your agency. You can include different ideas, but the most important thing is that it must be a standard procedure, replicable and easy to implement. Having this program offers many advantages.

8 SIMPLE WAYS TO GET MORE (AND BETTER) CLIENT REFERRALS BUSINESS » It will be easy to explain and replicate for your clients. » You are less likely to have an unwanted referral. » You can develop promotional material for your products (brochures, etc.). » Your clients will have an extra motivation to refer you and will be more willing to do so.


If your clients do not have your contact information with them, they will be unlikely to refer you to their acquaintances. Initially, be sure to be among your clients’ telephone contacts. Then meet their family members and also have them in your phone. Work on this until each member knows you. Explain to your client the benefits of having their family members know your contact information in case of an emergency. This can even be done as early as the first sale. To the client, it will appear that you will be available to them at all times. For example, if you sell a policy to the mother of the family and she experiences an emergency, it’s important for other family members to have your contact info.


Make business cards with additional space to place “Referred by _______________________________.” In the blank space, write the name of your client and give it to them to pass to their contacts.


One reason why your customers hesitate to refer you is because they do not want to look bad if they recommend your services and you are not the right fit for that person. Eliminate that risk by explaining the types of clients you serve and what you can offer them. Be careful about describing your clients with a profile different from theirs, as it will make them doubt if they are with the right agency. Here are two exercises that illustrate my point. Exercise 1 — Ask your client: Excluding your co-workers or family, think of someone you know who would be happy to make sure their loved ones are

protected, or to have a financial plan for their retirement. Take time until you have thought of someone. Exercise 2 — Now think of a neighbor who would be happy to have those same services. The first question is more difficult to answer because the client will not know whom to refer. The second question has fewer options, and I bet you yourself imagined your neighbor thanking you for helping them. The point is, when you ask for referrals from your clients, ask them to think

about a specific group of people from which it is easier to choose.


The email signature is a block of text that automatically appears at the bottom of your messages. Most agents have their contact information and maybe a link to their website. This block of text is a good place to request referrals, because your client will be reading the email and can forward the information to their contacts. Use “Fwd my contact information” as your action message to remind the reader how to recommend you and above all, invite them to do so.


When you receive referrals from a client, post it on your social networks for everyone to see while you thank the person who gave it to you. This accomplishes many things. It shows how much you appreciate their confidence in you. This will increase

your chances of getting more contacts, and your social media followers will be able to see this. It also reinforces to your existing clients that other people are so happy with your services that they are inviting their friends to get to know you. This social test will improve customer perception and retention.


LinkedIn has an interesting tool that can help you identify referrals. When you look at the profile of someone you do not have in your network and you are connected by a third

person, LinkedIn will show you who that third person is. This means that you can send a casual message to the person you’re connected by to request to be introduced. Obviously, a lot depends on your relationship with that third person, but you never know what you can achieve by trying. Now it is my turn … If any of the ideas presented in this article are useful and you know someone who might appreciate it, please share it. You will be helping two people with a minimum of effort. Happy hunting. George Diaz, MBA, has written for various financial websites and has more than 15 years of sales experience. George may be contacted at George.

September 2017 » InsuranceNewsNet Magazine



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‘Passing the Hat’ Is No Substitute for Planning More people are using crowdfunding sites to take the place of life insurance to pay for funeral and burial expenses. By Jocelyn Wright


ike many, I am active on social media. Being a financial planner, I cannot tell you how much it breaks my heart when I see posts from individuals who have lost family members and must rely on the help of others to pay for funeral expenses. When we were growing up, we called this “passing the hat.” However, in today’s technological age, there are online crowdfunding sources such as GoFundMe and YouCaring to replace “the hat.” Of course, people are now using these sites to pay for things that they otherwise would have had to plan and save for in the past, such as vacations, weddings, and the like; so why not final expenses? There is a time and a place for everything. Let us just focus on families using crowdfunding to take the place of life insurance to pay for funeral and burial expenses. A growing number of people are using these sites to raise money for expenses related to the death of a loved one, according to a NerdWallet report. Online fundraising for funeral expenses is one of the most common charitable causes. In fact, I came across a site reporting that requests following a death increased at two times the rate of other campaigns. The average amount raised per memorial campaign was between $2,358 and $3,000. The median cost of an adult funeral in 2014 was approximately $7,200, which includes a viewing and burial, according to a National Funeral Directors Association 2015 report. The price increases when adding such extras as flowers, repast with relatives and guests, and a headstone. While the median cost of a funeral has increased nearly 29 percent (28.6 percent) during the 10-year period from 2004 to 2014, the cost of life insurance has actually decreased 82

during that same period due to increased life expectancy and other factors. Roughly 28.32 million life insurance policies were purchased in the United States in 2015, compared with 40.1 million purchased in 2001, which was the highest number of policies purchased during the period between 1998 and the present. From 2008 to 2015, the total number of life insurance policies in force declined from 334.69 million to 280.82 million. A 2016 study by LIMRA, “Trends in Life Insurance Ownership,” revealed that 30 percent of U.S. households have no life insurance. This is equivalent to record low levels set in 2010. It is widely known that Americans have a history of being extremely generous following a crisis or tragedy. People will open their hearts and wallets to support people who have been deeply affected by unexpected loss. I often wonder if this generosity has led us to be too relaxed in our planning. Are more people today depending on the support of family, friends and, in many cases, complete strangers to provide financial support during their time of loss? The fact is that relying on the kindness of others to take care of those things we otherwise should have planned for is not real planning. While the timing of any death is unknown, we do know with certainty that it is going to happen. There is a way to plan for the uncertainty of when it will happen, and that is what insurance is all about. In most cases, life insurance can be secured for pennies on the dollar. Also, the family breadwinner should not be the only one covered. Coverage for the other family members also should be considered so that everyone in the family unit is protected in the event the unimaginable happens. Anyone who has heard my story knows that the reason I became a financial planner is because my paternal grandmother passed away with only a $5,000 life insurance policy when I was a sophomore in college. Even in 1990, that was not enough to pay for her final expenses. As a result, my

InsuranceNewsNet Magazine » September 2017

father and his siblings had to make up the difference. My father would roll over in his grave at the mere thought of using crowdfunding to ask for help with paying for a family member’s funeral, especially that of his mother. Yet, as stated in the NerdWallet report, a growing number of people are resorting to this method of non-planning, although it is unknown if this is a last resort or simply the initial go-to strategy. Could this increase in the use of crowdfunding campaigns to pay for funeral expenses and the decrease in life insurance sales be correlated to our low personal savings rate? It is definitely worth a deeper look. Fortunately, all is not lost. There is hope for future generations. It seems that millennials do not suffer from the same planning haze as do older generations. LIMRA’s most recent “Trends in Life Insurance Ownership” study found that, since 2010, the percentage of millennials who own individual life insurance was up 48 percent. As a whole, 70 percent of millennials own group and/or individual life insurance. This is a 10 percent increase from 2010. “Many of this generation became adults during the Great Recession,” said Robert Kerzner, LIMRA president and CEO. “As a result, our studies indicate that they are more concerned about protecting their financial well-being than prior generations were at the same age.” Moreover, the top reason that 49 percent of millennials bought life insurance was to pay for final expenses. It is encouraging to know that the generation that perfected crowdfunding knows when to use it, and when to depend on solid financial planning instead. Jocelyn Wright is the chair of the State Farm Center for Women and Financial Services at The American College. Jocelyn may be contacted at jocelyn.wright@


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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.


The Business Case for Having a Culturally Diverse Workforce The ability to reach new markets is a major reason many companies are trying to attract and retain culturally diverse advisors. By Ayo Mseka and Aamir Chalisa


AIFA’s Diversity Task Force held a successful Diversity Symposium in May. This event brought together forwardthinking executives from some of the nation’s top financial firms to discuss the importance of having a diverse workforce and provide helpful hints for making this happen. We recently caught up with one of the task force’s members, Aamir Chalisa, who shared with us the business case for having a culturally diverse workforce and outlined the steps to achieve this goal. NAIFA: Why is it important for the financial-services industry to have agents and advisors from culturally diverse markets? Aamir Chalisa: The United States is changing rapidly and becoming more culturally diverse each and every day. We have folks immigrating from all over the world to the U.S. This creates an opportunity for the financial-advisory industry to attract and retain agents from these diverse markets. NAIFA: What are some of the benefits of having a culturally diverse workforce? Chalisa: Having a culturally diverse workforce allows you to serve your marketplace and community better. Also, a diverse agent force signals to your customers that you are in tune with the changing face of America and that you have the capacity to deal with people from diverse markets and serve them well. NAIFA: How do you recruit and train culturally diverse agents, and how 84

Solutions for Addressing Diversity Challenges • Create and foster STUDY GROUPS to facilitate discussions about challenges and possible solutions. • Get out of your COMFORT ZONE and try to do things differently. Avoid adopting the “this has always worked for us” mindset. • Understand CULTURAL DIFFERENCES and communicate effectively, based on those differences, instead of taking a one-size-fits-all approach. Source: NAIFA’s Diversity Symposium

do you retain them once they are on board? Chalisa: You recruit diverse agents directly from the communities in which they live and then train them to understand the nuances of each culture. To ensure success, you provide them not just with training but also with foreign-language marketing materials in areas where language may be a barrier, such as in the Hispanic and Chinese communities. You retain them by training them well, creating a climate of inclusion in your organization and supporting their marketing activities in the various communities they serve. NAIFA: Can you share a few best practices one can use to manage culturally diverse agents and advisors successfully? Chalisa: Creating a “United Nations” in my branch is the cornerstone of my success in the industry. I truly believe that we have to work in, and support, all markets. We have to help people in diverse markets, many of whom are new to this country and are looking for direction in managing their finances. As a manager of an organization, I recognize having diverse agents on board to support people in these markets will help you gain more

InsuranceNewsNet Magazine » September 2017

clients and help you become more successful in your practice. NAIFA: How does cultural diversity affect the bottom line of a financial services practice? Chalisa: Many financial services practices are catering to diverse markets now. This is because you have a lot of immigrants who have done well financially, own large companies, and are looking for agents and advisors who do comprehensive financial planning. As a result, diversifying your workforce will help generate more revenue and positively affect your bottom line. NAIFA: What is the most important piece of advice for advisors looking to make their practice more culturally diverse? Chalisa: Live and breathe diversity every day, and embrace it. Embrace it not because it’s the nice thing to do, but because it’s the right way of doing business in our world today. America is not a melting pot; it is a salad bowl, with cultural diversity built into the very fabric of the society. Consequently, if you are a businessperson, it’s in your best interest to understand this development and seek to build diversity at every level of your operation. If you do this, your practice will grow, and you will feel good that you are helping people of all income levels in your community become more financially secure. Ayo Mseka is editor of NAIFA’s Advisor Today magazine. Ayo may be contacted at ayo. Aamir Chalisa, MBA, LUTF, LACP, is a NAIFA Diversity Task Force member and managing director of Futurity First Insurance Group in Oak Brook, Ill. Aamir may be contacted at

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Steering Your Clients Toward Permanent Life A well-planned permanent life insurance policy could be the key to a family’s present and future financial stability. By Kerry Wallingford


ife insurance is a tremendous asset class that provides an impressive amount of flexibility to your clients’ financial plan when designed properly. With limitless possibilities, a well-planned life insurance policy could be the key to present and future financial stability for a family. Life insurance policies offer many benefits, and they can be tailored to fit clients’ wants at every life stage.

Communicate Value and Assess Wants

Life insurance has many nuances, and some advisors are not confident in conveying its value. I like to frame the concept of insurance as a “want” rather than “need” product, because true financial need is difficult to define for most people. In addition, we know people move in the direc-

Term and permanent policies both offer benefits to loved ones after death, and both lend a degree of flexibility to the financial plan before that point. Although term life insurance is lower in premium initially, over time a term policy will cost more than a permanent policy, especially when you consider the opportunity cost and the want for coverage in later years. Money paid into the policy disappears and is gone forever, and the only thing your family gets in the end is the death benefit, as long as the policy is still in force. With permanent insurance, the client has opportunities during their lifetime to use the living benefits. When clients understand the living benefits of life insurance, they understand the value of how it fits into their overall plan. If your client isn’t ready or able to purchase a permanent policy, it’s best to set up a term policy with a conversion option. Once they are ready to build life insurance into their total financial portfolio, the policy can be converted from term to permanent. This conversion privilege may be important due to health changes,

I like to frame the concept of insurance as a “want” rather than “need” product, because true financial need is difficult to define for most people. tion of their wants, so I frame the question as if the client has died and then ask him which statement they would rather I say to his widow: “Jan, this is how much Mike wanted you to have” or “Jan, this is how much Mike thought you would need.” Most clients want to leave behind the biggest possible check for their family. However, if we focus only on their “needs,” they may never end up with what they really wanted in the first place. Another key consideration is the type of policy your client wants and can afford. 86

so it’s important to write the term insurance with a company that has high-quality conversion products.

Keep Financial Promises With Life Insurance

At its core, life insurance is a promise keeper. It gives the policyholder peace of mind and the ability to say, “If I’m not here, our dreams for the future will still happen.” With the right plan, the insured can leave behind a check to protect their family’s future, and also use the policy as an asset

InsuranceNewsNet Magazine » September 2017

to achieve financial goals before death. Although it’s most often thought of as a benefit to the bereaved, life insurance has significant living benefits for the policyholder, too. Permanent life insurance is not an investment and shouldn’t be used as one. It is a financial tool that offers competitive returns and can be used to achieve financial dreams. Depending on policy structure, its features include tax deferral, tax-free distributions, no-loss provisions (not available on variable life), protection from creditors and lawsuits (in certain states), and guaranteed ability to borrow against the policy with nonstructured repayment plans. One of the greatest living benefits of a permanent policy is the lending opportunities. Loans taken against the policy follow a nonstructured loan repayment, and with certain carriers, disbursements do not diminish returns. This gives clients the flexibility to repay on their own terms while continuing to earn interest or dividends. Policies also can be leveraged as collateral for loans given by third-party sources. Living benefits make life insurance a valuable asset for many reasons: to accelerate clients’ personal economy, use the velocity of money and improve financial plans. Loans can be taken out against the policy without jeopardizing accrual or returns and reinvested elsewhere to work in two places at once. When borrowing against a non-direct recognition whole life insurance policy — a guaranteed right — the client still earns the full dividend and the policy grows. Funds can be invested or used to pay for various life expenses, like education for children, mortgages and other needs as lives change. If clients lose their jobs, the cash values inside their policies may be leveraged to keep them on their feet until they find their next jobs.

Communications Are Key to Strengthened Client Relationships

The agent-client relationship is a longterm partnership, not just a sales pitch. It’s

MDRT INSIGHTS critical for financial advisors to build relationships with clients in order to assess their needs and wants on an ongoing basis. Scheduled reviews help agents and clients refine financial strategies and plan for upcoming life developments. Clients’ lives change, and as a result, so do their financial needs and wants. Some clients — especially young and transitioning families — require more frequent communication, as their needs can change dramatically in a shorter amount of time. The key is to be in communication with your clients consistently. Be flexible to their needs so they understand you are there for them. If you do the right job as an advisor, clients may include you in financial conversations about things even when unrelated to their insurance products and portfolios, like when buying a house or car, to make sure it fits in the plan you have helped them create. Not all clients will be open to communicating life changes. However, if frequent meetings aren’t realistic, you still need to reach out to them on a regular basis to open up routine communication. This can be through various channels, such as newsletters, emails or phone calls. These reviews and check-ins not only assess ongoing needs but also remind clients who you are, what they have, why they bought it and how the insurance you have written can help them.

Confront Misconceptions

Because there are so many variations and types of life insurance products on the market, clients may have preconceived notions or prejudices against a policy’s implications. Work with clients to illustrate how a policy can be customized. Money management professionals often hold misconceptions about life insurance policies as a financial tool. They may believe that a life insurance policy unnecessarily keeps money out of the market, but the accessibility of policy funds makes this a false assumption. Life insurance liquidity gives clients the opportunity to invest in various areas, like stocks and real estate. For example, I can borrow against my life insurance policy, make an investment and pay back the policy with the resulting capital gain. Life insurance is not a competitor to money management; it is a great strategy partner. While not having a life insurance policy initially keeps more money in the market, an uninsured client’s death will take the money out of the market to save the family’s financial stability. Money managers and life insurance strategists are natural alliances that should be nurtured. Kerry Wallingford, RICP, CLU, ChFC, is an insurance advisor and founder of her practice, Wallingford Financial, based in Seattle. Wallingford is a 17-year MDRT member with two Court of the Table and seven Top of the Table qualifications. Kerry 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.


Turn Those Clichés Around and Grow Your Practice By flipping the assumptions about life insurance, you can help prospects make an informed decision about buying the coverage that’s right for them. By Eric Sondergeld


very day, financial professionals help individuals determine whether they should purchase a life insurance policy and, if so, what type and how big a policy to buy. LIMRA applies these principles to entire populations to size the overall opportunity. Most recently, LIMRA determined an estimated unmet need of $12 trillion of coverage exists. This represents a tremendous opportunity. One way to take advantage of this opportunity is to innovate. In his book Disrupt, Luke Williams suggests beginning by identifying clichés in your business. He defines these clichés as the “widespread, hackneyed beliefs that govern the way people think about and do business in a particular space.” He suggests flipping clichés, or assumptions, upside down as a source of innovative inspiration. All life insurance policies share the same two benefits: peace of mind for the insured and a benefit to help offset the financial impact of the insured’s death. Life insurance is also unique in that it’s the only type of insurance where the insured is not also the named beneficiary. Here are three examples of flipping assumptions, all focused on the beneficiary, that can help prospects make an informed decision about purchasing a life insurance policy. ASSUMPTION: Death benefits are paid as a lump sum. OPPOSITE: Life insurance is an income replacement vehicle. Life insurance needs analyses typically include a number of years of income replacement. Income is the second-most common reason people own life insurance. Yet death benefits are predominantly paid as lump sums, and beneficiaries may not 88

48% $200,000 $12 Trillion $340 Billion

Almost 1/2 of all households (over 60 million) have a life insurance gap.* Average life insurance need per household. Current sales potential of the underinsured market. New life insurance need entering the market each year. *2016 Life Insurance Ownership in Focus – Households

be well-prepared to manage such a sum for income. Consider thinking about how benefits are paid rather than simply how much. Doing so may resonate with many prospects, since LIMRA’s 2016 report, “Could Product Design Be a Driver of Growth?” finds that more than 3 in 5 consumers would like to receive part or all of their benefit in the form of a monthly income. Although there are few life insurance products designed to distribute the benefit as an income automatically, most policies actually include a variety of benefit payment options. ASSUMPTION: Life insurance coverage is a flat amount that doesn’t change. OPPOSITE: Offer flexible products that change over time. Life insurance can be thought of as financing the impact one person’s death has on other people. But should the death occur today, it would be difficult to determine accurately what that need would be, since neither the insured’s nor the beneficiaries’ financial situations are constant. Tailor solutions by layering different coverages. Stay in touch with clients to modify coverage as their and their beneficiaries’ situations change. Clients will likely welcome ongoing contact, as 2 in 3 insured households said they would like to review their coverage at least every two years. ASSUMPTION: The right amount of coverage is what a traditional needs analysis determines. OPPOSITE: A modest, flat amount of coverage may be enough for some.

InsuranceNewsNet Magazine » September 2017

More than half of consumers don’t buy insurance because they don’t know how much to buy, and nearly as many worry about making the wrong decision. A modest policy — such as $50,000 or $100,000 — is certainly better than nothing. Compared with nothing, these can be significant amounts and could make a tremendous difference in the lives of many survivors. Such “starter” policies could give financial professionals a reason to discuss more significant coverage later. The concept of “enough” is difficult to grasp, especially when trying to plan to have enough of something that may not be needed for many years. Perhaps this is a good opportunity to consider Stephen R. Covey’s second habit, in his book The Seven Habits of Highly Effective People, which is to begin with the end in mind. If we design for the ultimate user rather than adhere to tired clichés, and work our way back to the present, can we achieve better results? So many things in the life insurance industry have remained unchanged for a very long time. Some things never should change, but for all the others, we should ask why they haven’t. I encourage you to explore some of the industry’s long-held assumptions related to life insurance by turning them on their heads. Eric Sondergeld is corporate vice president, strategic and technology research, with LIMRA. Eric may be contacted at

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*The above statistics are actual sales f rom our advisors. Your results may differ. We do not guarantee results.

InsuranceNewsNet Magazine - September 2017  

Signs of Life: LIMRA data shows that the insurance market has stabilized but companies and advisors are proceeding with caution.

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