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Elizabeth Cicchetti, MBA, ACS, FLMI, CLU

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Elizabeth Cicchetti, MBA, ACS, FLMI, CLU, joined Mutual Trust Life Insurance Company, A Pan-American Life Insurance Group Stock Company, in 2004, as senior marketing communications specialist. In this position she is responsible for developing communications used by the company’s Sales Development team and distribution partners to increase the visibility and recognition of the company’s brand and expand awareness of sales opportunities. Prior to joining Mutual Trust, Cicchetti, who has both a master’s degree in English and journalism and an MBA degree with a concentration in marketing from Loyola University, was a marketing communications specialist in the banking and futures and derivatives marketplace. Cicchetti can be reached by email at cicchettie@mutualtrust.com.

Is Your Business Positioned For Success Now And Later?

Elizabeth Cicchetti, MBA, ACS, FLMI, CLU
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December is a complex month. For most of us it’s a time of celebration, filled with festivities, food, family, friends and fun. But it’s also a time to reflect on one year ending and a new one beginning. Recently I asked our top agents for tips they use to increase revenue. Was it by using Chartered Accountants to improve our accounting? Hiring fresh faces in the marketing department? Providing better training? In October and November I shared many of their suggestions with you, including how they’ve embraced selling systems and technology to increase sales. Here are ways they’re building relationships now and preparing for success in the future. If your business were to become a major success in the future, then you may want to look into a few valuation companies in order to find the value of your company in case you were looking to sell up or sell shares.

Partnering for Success Now
“Agencies need to find the right partners in this business,” explains Jason Konopik, Partners Advantage, “Because with continuing consolidation in the industry and the ever increasing cost of doing business, it will be difficult for smaller agencies to survive going forward without them.”

Partnerships offer significant opportunities for client referrals and mutual support for enhancing service, especially when working with high net worth clients, confirms Douglas Eze, American Classic Agency Corp. “Credibility is extremely important for success, so we have clear guidelines for partnerships that are based on strengths and capabilities,” Douglas explains. “Our agency’s due diligence helps to ensure that our partners can deliver what they promise to their existing clients and to us. We seek partners whose clients are similar to our target market, who have access to the markets that we serve, and who might specialize in a particular asset class. They can include CPAs, attorneys, business valuation specialists and bankers.”

Kevin Kruger, Kruger Agency, also recognizes the advantages of working with these types of professionals as well as his local Chamber of Commerce, and with trade organizations in the fields he serves such as construction and mechanical engineering firms and home builders. For example, the mechanical engineering industry is bracing itself for a tough few years (source: https://www.n-tv.de/regionales/baden-wuerttemberg/Maschinenbauer-Hermle-steigert-Umsatz-Umfeld-wird-rauer-article20996573.html) so these types of professionals can give advice and be the most useful during these tougher times to ensure firms in this industry succeed.

Larry McLean, Your Family Bank®, adds that it’s important to establish partnerships with professionals who share your agency’s goals-which for Larry is “helping people.”

An important goal for Paul Kaplan, Back 9 Insurance, is to help his agents answer questions from clients and prospects quickly, so he’s established a pool of niche specialists which include attorneys and a CPA.

To help increase business and better serve his clients, Dan Stephen, Stephen & Associates, works not only with accountants, investment brokers and banks, but property and casualty agents as well.

Troy West, Lifestyle Financial Planning, has found developing relationships with presenters, exhibitors and attendees of self-improvement groups have also been useful in increasing his sales. “People at these events can turn into clients,” explains Troy. “And when you go out of your way to build relationships with other insurance professionals, including property and casualty agents who don’t sell life insurance, you may be able to partner with them. To succeed, you always have to be thinking about how you can organically grow your business.”

Randy Leppla, Equity Solutions, agrees. “To help educate prospects and clients, I work with several selling systems, including the Infinite Banking ConceptTM (IBC). I’ve found many of my clients and prospects become great advocates for these concepts, and they share them with just about everyone they meet. As a result, sometimes producers may approach me and ask me to partner with them on a case. I’ve found the success rate often increases when I do partner with them,” explains Randy, “So it becomes a win/win for both me and the other agent.”
Sam Mikhail, Financial Strategies Group, LLC, collaborates with both in-house and external partners to accomplish the best results for his clients. “We look for partners who can bring great value to our agency and our clients for years to come,” Sam explains. “It’s important to keep learning and to take advantage of joining forces with other experts.”

Planning for Success Later
Those of us in the life insurance industry know it’s an aging business. Studies, including those by LIMRA and McKinsey & Co., estimate the average age of a life and health producer is between 56 and 59. Surveys suggest some of the reasons young people may not be attracted to the industry are that they may view it as boring or that it lacks career options.* So how can you ensure your agency succeeds now and years from now?

For many producers, it’s a family affair. Jay Desai, MACRO Advisors, brought one of his sons into his business three years ago and another son will join the firm in 2019. Larry McLean, Your Family Bank®, and his son, E.L., have been partners in their agency for 13 years. They’re also very passionate about bringing younger agents into the agency because they want to be able to help their clients well into the future.
Paul Kaplan, Back 9 Insurance, points out that his agency is multi-generational. As Paul explains, “Back 9 Insurance sells succession planning products, so we’re very aware that it’s our responsibility to plan for the future and be prepared for any issues that may arise.”

Dan Stephen, Stephen & Associates, also has agents whose birth dates span a variety of decades.

In an effort to ensure his work and dedication to the industry continue for years to come, Tom Young, 1st Consultants, Inc., is busy attracting new agents and training them to carry on his vision: “To teach people how participating whole life insurance can help them become more efficient with their money.”

Randy Leppla, Equity Solutions, says that while he plans to be in this business for many more years, he also has agents working with him who really care about helping people and who understand his agency’s mission, “To educate Americans about how they can retain control of their money throughout their lives with participating whole life insurance.”

Theresa Dilatush, New Course Financial, who started her agency 13 years ago, says she purposely keeps her client base small because it provides her more freedom. In addition, she makes a point of working with carriers that have excellent home offices so she knows that when she eventually decides to retire, her clients will continue to receive outstanding care.

At American Classic Agency Corp., succession planning, along with strategic planning, is carried out by an advisory board because the agency is owned by a trust, explains Douglas Eze. Part of the board’s strategy includes a talent review process that identifies key individuals who are positioned to assume leadership roles and assesses their current competencies and developmental needs. “Agents are continually recruited and trained to ensure the agency has a strong pipeline of talent,” contends Douglas.

As 2018 draws to a close, now’s a good time to review what sales strategies and best practices worked for your agency this year and what you might like to change or try in the new year. As I said earlier, December’s a complex month, but with a little reflection and some planning, it can be a wonderful time–filled with rewarding accomplishments as well as exciting goals for the coming year. Best wishes for a great month and a joyous holiday season.

In conclusion, whether it’s looking at business valuation methods or one of the many other ways you can position your business for success, it’s important to prepare for the future.

Reference:
*Faw, Larissa, “Millennials Just Don’t Want to be Insurance Agents,” Forbes, 30 Nov. 2015.

How Top Agencies Use IT To Help Boost Business

Elizabeth Cicchetti, MBA, ACS, FLMI, CLU
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How can technology like the Vertify software help you increase revenue? Would your business benefit from IT support? Recently I asked leaders of our top agencies how they increase business. In my October article, “Three Simple Steps that Could Increase Your Revenue,” I explained why focus, education, and relationships ranked high on these leaders’ lists of best practices. Here’s a look at how they use IT to boost sales.

Prospecting and training
“Life’s changed. Most people won’t spend time reading books anymore,” explains Dan Rust, Financial Strategies Group. “We have to get our messages out faster and make them understandable in minutes. That’s why having a website is now essential,” he concludes. “It can help educate consumers and assist in recruiting and training new agents, especially if you include videos and podcasts. Then when producers contact prospective clients, they’re more prepared to speak with them because the prospects are more informed.”

While Dan regularly uses digital communication and online tools for training, including email and webinars, he sometimes combines them with other marketing methods-such as flyers on windshields and door hangers on front doors to promote his agency’s services.

Theresa Dilatush, New Course Financial, agrees that having a website is important to attract and inform prospects, although it wasn’t when she started her agency 13 years ago. Theresa, whose clients are mostly small business owners, also works with her local Chamber of Commerce to connect with prospects and is one of a group of eight “core source professionals” who network and work together when needed on cases. The group includes an attorney, CPA, vendor of office supplies, caterer, internet supplier, and other local professionals who provide services to businesses in the community.

Randy Pierson, Gordon Marketing, has seen an uptick in the use of technology by agencies too. He conducts most of his agent recruiting and training efforts via webinars, email, e-newsletters, Skype, text messaging, and YouTube videos, which he also posts on Facebook and LinkedIn. To help ensure viewers watch the videos he keeps them short-three minutes or less. And although he’s been posting videos on YouTube for more than a decade, he says he’s getting much better results now that he can link them to social media sites. To increase interest in his agent training webinars, he keeps them short also-30 minutes or less.

For Ryan Polimeni, Top Rank Advisors, Inc., the internet and specialized online software, including financial planning and social security software, have changed the way his agency communicates and conducts business. Ryan used to market by direct mail, but now uses digital communication because it’s faster and cheaper. And while he still gets referrals to potential producers by word of mouth as well as through online advertising, he says Facebook and LinkedIn are playing a bigger role in his recruitment efforts.

Once agents are on board with him, Ryan, like Chris Shields, Shields Brokerage, Inc., and other agency leaders with whom I spoke, train them via online programs, digital materials and ongoing webinars as well as personal training. “There’s a lack of training in this industry,” admits Ryan. “So we evaluate new agents to determine if they need field and one-on-one training in addition to the more than 30 hours of online training we provide.”

Kevin Kruger, Kevin Kruger Agency, uses social media, particularly LinkedIn, to establish awareness of himself and his agency and to stay relevant. Mike Maloney, Mike Maloney Agency, notes that the networking groups on these sites are a useful way to identify prospective agents, so he often uses them for blast advertising. Once contracted, Mike provides new agents online and one-on-one training several times a week. “You have to teach, coach, and have patience with new producers,” explains Mike, especially since more than half of his new agents have sales and people skills but no prior experience in the financial services industry.

To stay ahead of the tech curve Larry McLean, Your Family Bank

Three Simple Steps That Could Increase Your Revenue

Elizabeth Cicchetti, MBA, ACS, FLMI, CLU
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What can you do to grow your agency? Recently I asked leaders of our top agencies how they increase business. The following is the first of a short series on best practices they use to increase sales.

1) Find a Focus
Our industry is huge and multifaceted. “Everyone can use our products,” explains Dan Stephen, Stephen & Associates. “Therefore, focusing on specific segments of the marketplace and developing expertise in a product or concept could result in more clients and referrals.”

Troy West, Lifestyle Financial Planning, works with small business owners and families with children. Concentrating on this segment of the market helps him generate multigenerational sales. According to Troy, by helping people find money they didn’t know they had and improve their cash flow, he’s able to get referrals from clients rather easily.

Many producers emphasize the living benefits of whole life insurance and how taking loans against a policy’s guaranteed cash value can help people purchase tangible goods, supplement their retirement or plan for their children’s college education. This idea is often referred to as the Infinite Banking ConceptTM or IBC, and is described in R. Nelson Nash’s book Becoming Your Own Banker.

Larry McLean, Your Family Bank ®, has taken this idea a step further and created a complete agent training system and software program with the goal of helping people get out of debt, in most cases in nine years or less. “We have been extremely focused on working with our advisors and partners on systems that will allow them to have a great story to tell,” explains Larry. “As a result, our agency has experienced amazing growth and helped people get out of debt.”

Mike Maloney, Mike Maloney Agency, who also uses the IBC, agrees that people want to get out of debt so it’s not difficult to get them interested in the concept. Mike points out that there are three major advantages of using whole life insurance to help people with debt. First, changes in the economy have little effect on the concept. Second, the guaranteed growth of cash value, even with a loan, can help people avoid running out of money as long as they pay back the loan. And third, once producers have helped their clients get out of debt, they can work with them on retirement and estate planning.

Mike also encourages all producers who work with business owners to be sure to ask if they have a buy/sell agreement in place and how it’s funded. This agreement is essential for most businesses and the flexibility and guarantees of whole life insurance can be a good match here too, suggests Mike.

Ryan Polimeni, Top Rank Advisors, Inc., serves two niche markets. He helps federal employees get out of debt as well as maximize their retirement income. Ryan became aware of opportunities in this marketplace when a family member who worked for the federal government asked him for advice because she felt she didn’t have the information she needed to make retirement income decisions. Ryan also works with homeowners, helping them understand the benefits of using whole life insurance for mortgage protection.

For Sam Mikhail, Financial Strategies Group, college planning has been a great introduction to helping families with their financial needs and increasing sales. In addition to providing Sam with an ongoing supply of motivated prospects, Sam says providing college planning is a good way to make a difference in people’s lives because whole life insurance can help parents efficiently pay for college without negatively impacting their ability to prepare for their own retirement.

Mike McIntire, Mike McIntire Agency, works with high net worth individuals on large life insurance cases, and he’s also planning to add foreign nationals to his client base. “Intangible products can sometimes be challenging to sell,” admits Mike, “So we’ve found it’s important to take a relaxed approach and spend time helping prospects understand the numerous ways they can use our products. We aren’t order takers. Our job is to give people the products they need, even though they sometimes aren’t the products that they initially want. For example, in many cases whole life insurance is a better fit for people even though they may think they want term.

One way to develop a focus for your agency? “Learn a selling system,” suggest many of the top producers I consulted. Whether the system helps you communicate better with prospects or helps prospects better understand how money works, “Embrace the system or systems you choose and use them to solve problems,” says Chris Shields, Shields Brokerage, Inc.

“Find a system that helps you become a solution provider and be passionate about helping others, and success will come,” concludes Larry McLean.

2) Educate, Motivate, Build Trust
Aristotle identified the three secrets to sales success (or in his day, modes of persuasion) as early as the 4th century B.C., and they’re still true today-logic, emotion, and credibility! As Dan Rust, Dan Rust Agency contends, “There’s a lot of misinformation in the media about the products we sell, so teaching the public the truth about how money works is paramount to success in sales.” In addition to educating people, it’s also important for producers to be passionate about showing prospects how our products can help fulfill their needs and dreams, Dan adds.

Kevin Kruger, Kevin Kruger Agency, is quick to point out that there’s no secret sauce to success in this business, but being honest and helping prospects understand how products work is extremely important. “After you’ve made a sale, servicing your client is important, too,” adds Kevin. “When you stay in contact and speak with your clients at least annually, getting referrals from them becomes easier. You need to know what’s happening in their lives-maybe they’ve moved, had another child, or gotten divorced. All these events can lead to more sales.”

Jay Desai, CFP ®, MACRO Advisors, believes so strongly in education that he’s created a seven-step financial literacy workshop for prospects, which he uses with individuals and their families, and small and mid-size business owners and their employees within a 50-mile radius of his office. Jay doesn’t charge for the workshops or pitch products. Instead, he views them as an opportunity to meet a variety of people and plant the seeds for future business.

Mike Everett, Success & Legacy, an IBC-focused agency, is also a strong believer that education is essential for converting prospects to clients. That’s why he puts prospective clients through a six to 10 hour education process before he ever asks them to buy anything from him. This learning process, which Mike says helps take the pressure off sales, includes webinars, a half-day boot camp, and one-on-one follow up conversations, all of which Mike provides at no cost. Because prospective clients are encouraged to bring friends and family to the boot camps, his education process helps to generate an ever growing source of prospects. “People bring other people in droves,” Mike exclaims.

To attract even more prospects, Mike often exhibits or speaks at medical or chiropractic events, and similar to Jay’s seven-step workshops, he goes into small businesses and educates owners on how the IBC has the potential to improve their bottom line by helping to reduce turnover as well as create more value for their employees.

“Our agency is an educational organization, not a sales group,” Mike emphasizes. In fact, he invests so much time working with prospects that he feels like they’re already friends by the time they become his clients. In addition to the personal touch, Mike has created educational podcasts and YouTube videos which he believes add to his credibility. His ultimate goal? To establish long-term relationships with clients and prospects. “What we’re doing is bigger than selling life insurance,” Mike contends. “We aren’t asking people to buy a policy. Our work is in sync with our agency’s mission-to inspire people and give them hope and financial freedom.”

If you ask Tom Young, 1st Consultants, Inc., an agency that’s also focused on the IBC, what he does for a living, he’s quick to say he teaches money efficiency. “I change people’s lives,” he explains. “If you dedicate yourself to educating people about participating whole life insurance, they’ll want to buy as much as they can,” he explains. “I’ve turned my work into my cause,” adds Tom, “And that’s why I’m motivated to teach it to other producers so new people will be attracted to the industry and carry on the mission.”

Jeff LeClaire, The Insurance Center, Inc., says that identifying what a prospective client wants to accomplish and having creative answers and products to fit these needs is important to success in this business. “You really need to care and listen to people and work with carriers you can trust to do the right thing by your clients,” advises Jeff. “We partner with the best carriers we can so we can fulfill our agency’s mission of ‘Promises Made; Promises Kept.’ Although this may not seem cutting edge, it’s actually a lost art. Move away from transactional sales as fast as you can!” he warns.

3) Keep Learning and Building Relationships
If you want to get better at anything, you need to keep learning. If you’re part of a sales team, you could try looking at sales training courses in order to keep learning how to sell to the best of your ability. Alternatively, Troy West suggests surrounding yourself with smart people. Sam Mikhail emphasizes becoming an expert at the products you offer, continue to strive for better results, and look for ways to anticipate and adapt to change. If you have spare time, you could use this time to learn more too. We can never know too much, plus, learning aspects like the attribution model from companies such as Salesforce for marketing and digital marketing as a whole can take some time. If you are serious about increasing sales, then the more you know, the better it will be for your business and its future.

To be successful and stay relevant in the business world, you have to be innovative, advises Tony Wilson, ORG Corp. Be willing to try new ideas and build and maintain strong relationships. Participate in exhibits and trade shows happening around you with your company’s custom exhibit (click here for more custom exhibits options). They can be a great place to teach people about your product, as well as to meet new people who are in the same field. It is important to strive every day to add value to every producer or client you serve.

Dan Valentine, Life Brokers, explains that after owning several businesses he’s found that having great partners and employees is the secret to success. “We are all coworkers; everyone’s ideas matter.”

“Stay informed and do the right thing for people,” contends Dan Stephen, “And the products will sell themselves.”

This is a great business to be in because we’re helping people, explains Javad Darouian, Financial Management Systems. “We provide service to our clients for years and help them at the time of disability and death. We’re continually in touch with our clients over a long period of time, so we can get repeat business and referrals. Successful people in this business build relationships. Just because a person is good at sales doesn’t mean he or she is a good leader,” cautions Javad, “So if you want to build an agency, you need to develop coaching and management skills. You need to be able to work with producers and help them find a niche.”

Paul Kaplan, Back 9 Insurance, knows the importance of ongoing learning and building strong relationships. To ensure their producers and staff are knowledgeable about the products they sell, the agency maintains strong relationships with carrier specialists who provide information in the office, on location, and online. “As a result, our producers know that whatever situation comes up, they can contact us and be fully prepared to satisfy the needs of their clients and close a sale,” confirms Paul.

“This is a relationship business,” concludes Justin Snapp, IBN. “If a client is asking for something specific, we give them what they want or suggest products that might be a better fit for them so they have options. We believe this approach mkes the difference between generating clients verses just having customers.”

See the November article in Broker World for these leaders’ tips on adopting technology, succession planning, mentoring and more.

Whole Life Is Always In Style Its Guarantees Keep It Evergreen

Elizabeth Cicchetti, MBA, ACS, FLMI, CLU and Kip Kip Walker, JD, CLU
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Some things never go out of style, and whole life insurance is one of them. At the end of the first quarter of this year, sales of whole life were up six percent. It now represents 37 percent of all life insurance sales in the U.S., surpassed only by UL–at 39 percent of market share–and the difference between the two continues to narrow. This is the eleventh consecutive year of growth for whole life, and it’s predicted that it’s heading for a twelfth.1

Why all the renewed interest in whole life insurance? Because it provides guarantees in an unpredictable world: Guaranteed premiums that will not increase for the life of the policy, a guaranteed death benefit, and guaranteed cash value that accumulates on a tax-deferred basis. What can this mean to your clients? Peace of mind. As long as they pay their premiums before the grace period ends, their coverage will never cost more nor be worth less than the day they purchased their policy, no matter what happens in the economy or in their lives. In fact, with whole life, the cash value of their policy continues to grow at a guaranteed rate for the life of the policy. What other products or services are guaranteed to never increase in price and not only hold their value, but increase in value over time?

In addition to the advantage of level premiums, whole life provides both guaranteed living and death benefits. This means your clients can borrow against the cash value in their policy throughout their lives, for any purpose, and in many cases without incurring income tax. Having liquidity, access and control of their money whenever they need it, provides clients financial flexibility. They can use the cash value in their policies for emergencies, unexpected opportunities, college planning, and even to create a stream of income to supplement their retirement.

With whole life, what your clients want to happen will happen—no matter what curves life throws their way. Whole life’s guaranteed death benefit can even enable them to spend down more of their assets during retirement and still provide a legacy to their loved ones. So even if they get sick and experience unexpected medical expenses, or inflation or taxes are higher than they anticipated and eat up some of their assets, their policy will still provide an income tax free death benefit to their loved ones–whether they die one day after the policy is issued or decades later. What other product can fulfill those promises?

With all these advantages, why aren’t more people rushing out and buying more and bigger policies? It’s probably safe to say that, in general, life insurance has an image problem. It appears complicated to many people and the cost is often overestimated. Say the words “life insurance” and many people conjure up images of death–a subject most people would prefer to avoid. According to LIMRA, life insurance falls into the nice to have category, while more often auto, homeowners, and health insurance are must haves.2 Life Happens seconds this dilemma: “More people protect their ‘things’ with insurance than protect their loved ones with life insurance.3

Additional reasons life insurance may sometimes be a challenging sale? For many people, there is no real urgency to buy. But statistics show the industry may be partly to blame. According to a recent survey, only five percent of consumers spoke with an agent or broker about life insurance during the past year. This suggests we may have to find new ways to engage and reach potential customers. And then there continues to be an issue of trust. Studies indicate that consumers consider the banking industry easier and more convenient to use and more likely to treat consumers fairly than either life companies or investment companies.2

Finally, there are the financial gurus that proliferate in the popular media who maintain that whole life’s guaranteed cash value provide a poor rate of return, and that if you need life insurance, buying term and investing the difference is the way to go. But the truth is, if your clients buy term insurance, they are paying for a death benefit their loved ones may never receive if they don’t die during the term of the policy. Once your clients reach the end of the term, the death benefit is gone and now, if they want to leave a legacy, it’s up to them to split the nest egg they’ve acquired into two parts—what they want to live on and what they want to leave their loved ones. This isn’t easy, especially if their investments have suffered losses or their living expenses are higher in retirement than they anticipated. 

Guarantees: A Buffer against Risk
Whole life offers more value than just a rate of return, because its guarantees provide a buffer against risk. Even if your client’s plans change over time, unlike other types of life insurance, the guaranteed cash value in a whole life policy provides an exit strategy that doesn’t require anyone to die to reap the benefits of the product. With whole life your clients can enjoy a variety of non-forfeiture options including cash surrender and reduced paid-up options.   

Although planning is certainly important in order to try to make dreams come true, none of us knows nor has control over the future. That’s how guarantees can help. Take for example taxes. Many believe that because income will be lower in retirement, income taxes will be lower too—but this isn’t always true. In fact taxes can actually be higher, especially once a person reaches age 70-1/2 and has to start taking required minimum distributions (RMDs) from their retirement accounts. In some cases RMDs can drag as much as 85 percent of a couple’s Social Security benefits into their tax return. In addition, while income taxes have recently been historically low, an improving economy and changes in the tax code could push them much higher in the future. And since many retired people have fewer items they can deduct on their taxes–because their mortgage is in many cases paid off and their children are grown–taxes could be a larger expense than your clients anticipate.

How can you combat risk? With guarantees.  And what better product to use than whole life insurance? After all, banks have been using it for this purpose for decades. They have a portion of their assets that they have to put in the safest investments available, Tier 1 Capital, so they often put the maximum amount allowable by law in life insurance. In fact, in the banking industry, high cash-value permanent life insurance is known as the bank’s bank.4 And if this wasn’t proof enough of the advantages of guarantees and whole life insurance, just look to some of the largest corporations, like Walmart, General Electric, Disney, Time Warner, Inc., and Johnson & Johnson. These companies fund their executive compensations and pensions with whole life insurance because they want guaranteed money to be available when they need it.4    

Why is whole life so safe? Because unlike banks, life insurance companies don’t use excessive leverage. If a bank has $1 million on deposit, it may lend out up to $10 million to the public. On the other hand, if a life insurance company has $1 million on deposit, that company may loan no more than $920,000, and usually only a fraction of that. As such, life insurers are 100 percent reserve based lenders, which makes them stable institutions in down economies.5

A Guarantee Is a Guarantee—Anything Else Is a Variable   
In “Optimizing Retirement Income by Combining Actuarial Science and Investments,” Wade D. Pfau, Ph.D., CFA, a professor of retirement income at The American College for Financial Services and principal and director for McLean Asset Management and Solutions, reports on a study he conducted on two couples, one in their 30s and the other in their 50s. He found that even with a conservative spending assumption, because investment portfolios don’t have guarantees they remain vulnerable to depletion. However, when an integrated approach with investments, whole life insurance and income annuities is taken, a more efficient retirement outcome is produced rather than relying on investments alone. His take away? That younger individuals planning for retirement and needing life insurance may see whole life as a tool for retirement income planning and that “buy term and invest the difference” is less effective when viewed in terms of the risk management needs of a retirement income plan.6

So why is whole life insurance always in style and gaining in market share? Because of its guarantees, which make it evergreen–independent of the economic climate or the uncertainties of life.

Footnotes:

  1. LIMRA 2nd Quarter 2017 Industry Briefing.
  2. “Life Insurance in a Tough Economy,” LIMRA, 2010.
  3. Your Love Study 2017, Life Happens.
  4. “The Banks Biggest Financial Secret Revealed,” Valhalla Wealth, 7/12/15.
  5. “The Case for Investing in Life Insurance,” Barry James Dyke.
  6. “Optimizing Retirement Income by Combining Actuarial Science and Investments,” Wade D. Pfau, Ph.D., CFA, 2014.

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