Moving Forward – The American Way
We are truly living in challenging times. The world is in chaos because of terrorism; who knows what to believe from any of the presidential candidates; and many insurance companies previously owned by European parent companies are being spun off while Chinese and Japanese insurance companies are buying American insurance companies. As Lee Iacocca once said, “In times of great stress or adversity, it’s always best to keep busy, to plow your anger and your energy into something positive.” American National Insurance Company continues to plow ahead in a positive direction with over 110 years of conservative American values and financial strength aligned with consistent, innovative leadership.
2015 was another steady year of growth at American National Insurance Company, experiencing increases in both life and annuity production. 2016 promises to continue that trend with new and repriced products to enhance your opportunities with us.
On February 1 we are launching our latest product innovation. Signature Guaranteed Universal Life with a return of premium rider will be an industry leader in competitive guaranteed premium rates for the life of the contract. The return of premium rider is simply named Cash-Out Rider. For face amounts exceeding $250,000, at the policy owner’s discretion, the Cash-Out Rider will return up to 65 percent of the premium in year 15, with up to 100 percent return of premium in years 20 and 25. Plus, the policy will include our extremely valuable chronic, critical and terminal accelerated benefit riders at no extra cost where approved. For more information, visit our website at www.img.anicoweb.com or contact your local American National Insurance Company distributor.
Actuarial Guideline 49 (AG 49) was introduced September 1, 2015, implementing guidelines on how indexed universal life (IUL) is illustrated. There were many in our industry, including me, who had some concerns regarding how illustrated rates were being shown. Many of us who were concerned lived through the 12 to 14 percent illustrative rates of universal life during the 80s. Of course we did not want to see that piece of history repeat itself—where typical universal life illustrations were minimally funded and thereby subject to lapse when crediting rates dropped. However, the vast majority of those illustrating IUL did so with maximum premium funding. Funding with maximum non-MEC premiums makes a huge difference if and when crediting rates drop. As is normal, there are always a few outliers in our industry who push the edge of the envelope with illustrated rates on IUL. The outliers who pushed the extreme created a situation conducive to additional regulation which now penalizes those insurance companies and/or agents who are conservative in their approach. In my opinion this is what took place and therefore brought about the implementation of AG 49.
Despite the outliers, it was clear the major mutual insurance companies, including one large stock company which has been in the brokerage market for years, were the driving force behind the push for the illustration guidelines. Why? The goal was to slow down sales of IUL, thereby preserving sales of dividend driven whole life products. I don’t believe the AG 49 guideline will curb indexed universal life sales. IUL has its place in the market and makes complete sense for many who are seeking upside potential with downside protection. With that said, after the next phase of AG 49 is implemented in March of this year, maybe it is time we take a look at the “black box” called dividends.
No mutual company can now boast, “we have never reduced dividends.” Dividend based whole life products are not without their own risk of underperforming verses what is illustrated. As you may recall, the industry faced illustration concerns when mutual insurance companies were illustrating vanishing premiums. Weren’t the dividends supposed to pay the full premiums after the vanish point as illustrated and explained by agents?
What I am really saying is there seems to be a double standard in the industry. If we are going to curb so called IUL illustration abuses, let’s look at all illustrations for every type of policy. The product sold is only as strong as the insurance company supporting the product and the assumptions used by the insurance company in designing the product. Let’s open the “black box”.
Loyalty is something we wholeheartedly believe in at American National Insurance Company. We support those who support us! We want to partner with those few agencies who want a special relationship with an insurance company. While recently attending the NAILBA meeting in Orlando, many brokerage agencies were concerned about the lack of loyalty between the agent and the brokerage agency. Agencies are challenged with agents jumping from agency to agency looking for the best “deal”.
I find this interesting, as I, for one, have been expressing my concerns for years about the use of spread sheets for every sale—no matter the type of sale. I too used spread sheets in my agency, but it was not the only value-add offered. What happened to “tell me about your client” or “what are you trying to accomplish?” I don’t see this type of value-added service in many agencies. These days every agency has 30-plus insurance companies and offers agents some of the most competitive products in the market. This is not exciting anymore. This is old news! Every agency can do this. We all have heard the old saying, “in the absence of value, price is the only differentiator.” Times have changed and we must change with them. The old saying should be modified to, “in the absence of value and the existence of price equality, commission is the only differentiator.” This is true today and is why agents are looking for the best deal. Value-added is not bringing 30-plus companies onto a spread sheet showing the best three or four rates. Value-added is bringing other opportunities to the agent that the agent didn’t realize existed. When was the last time a simple term sale was turned into a buy-sell with multiple policies or expanded to a key person sale with a non-qualified retirement plan? This type of value-added assisted planning brings value—thereby increasing loyalty between the agent and agency.
American National Insurance Company is unique and different. We want to partner with select agencies who want to grow their businesses. We want to invest in the relationship. We want to bring value to the relationship. If you want to differentiate your agency or practice, reach out to us. We are looking for a few good partners.
All the best with less stress and more opportunity in 2016. [CWK]
