Wednesday, May 22, 2024
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Jason Wellmann

Jason Wellmann is senior vice president of life insurance sales for Allianz Life Insurance Company of North America (Allianz Life). In this role, Wellmann is responsible for leading Allianz Life’s life insurance strategy through all distribution channels. Wellmann joined Allianz Life in 2010 as vice president of branch office development, working closely with Questar Capital, a division of Allianz Life, and its branch office managers at each Allianz Distribution Group (wholly-owned) field marketing office (FMO) to maximize recruiting and sales development efforts. He also worked closely with each FMO to help maximize its life insurance sales. Wellmann attended Minnesota State University, where he majored in speech communications and minored in business administration. He has his Series 6, 7, 24 and 63 registrations and is involved with many industry organizations, including GAMA, AALU and NAIFA. Wellman can be reached at Allianz Life, 5701 Golden Hills Dr., Minneapolis, MN 55416. Telephone: 763-765-7212. Email:

Navigating The Virtual Sales Process


This past year has certainly been unlike any other, with so many of us seeing our “normal” ways of life upended. For many financial professionals, the biggest change—and challenge—might very well be the inability to meet with clients in person. These valuable in-person client meetings needed to be quickly moved to online video chats. And whether we like it or not, the virtual sales process has fast become the new norm.

Navigating this new virtual sales process can be tricky for even the most technologically savvy of us. Beyond making sure your audio and video are working properly, there are additional rules and procedures you’ll need to follow to make sure your business can succeed online.

Despite some challenges, there is no doubt that putting your head in the sand and trying to wait this out until some semblance of normalcy returns is simply not an option. While so much of our lives continues to be upended due to the COVID-19 pandemic, the needs of the clients don’t stop. In fact, a recent Allianz Life study, found that 72 percent of Americans say the impacts of the COVID-19 pandemic are making them rethink how to protect their retirement savings from volatility. That’s a significant opportunity for financial professionals to rise to the technology occasion, meet with clients virtually and help them determine a strategy for protecting their retirement savings from market risks.

If you’ve moved your business online, or are gearing up for additional virtual sales meetings, here are some best practices for conducting your sales process online.

Do your homework
Before you can start meeting with clients online, you’ll want to check in with specific carriers on any policies and procedures you’ll need to adhere to during the virtual sales process and if there are any limitations to what sales can be conducted virtually. With Allianz, for example, the majority of fixed index annuity (FIA), life insurance and variable annuity (VA) sales can be done online. For VA sales, be sure to also follow the requirements of your broker/dealer (B/D) or registered investment advisor (RIA).

You’ll also need to research a preferred virtual platform to use, and get trained to help ensure you’re up to speed on how to properly use the tool. Your field marketing organization, B/D or RIA may have preferred tools or even requirements for which tools to use.

Lights, camera, action!
Now that you know what you’ll cover and how you’ll connect with clients, you’re ready to conduct your first virtual meeting. As you get ready to meet online you’ll want to consider some of the things that will impact how you’ll show up on screen. Consider your attire, lighting and even camera angle to make sure you appear well on camera.

With the visuals all set, make sure your audio connection is ready to go. One thing to keep in mind is the mute button. Turn it off for the start of the meeting and, if you’re planning to utilize this feature during the call, keep an eye on it so you don’t start talking while you’re still muted. As the meeting host you can also mute other participants during the meeting to cut back on echo or background noise.

Before scheduling the meeting it’s helpful to create an agenda and think through your objectives. This will help provide structure and guidance to this new style of meeting. Before you start, be sure to pull up the agenda or any other documents you plan to share during the meeting so you aren’t having to search for them while on the call.

During the meeting
There are a few to-do items that are recommended for virtual sales procedures. First, you will need to visually see the client on screen and validate their identity by having them show you a valid, legible and unexpired government-issued picture identification.

You’ll also need to find out if the client is calling you from their state of residence. If not it may be considered a nonresident sale, and in that case you may be beholden to a carrier’s nonresident sale procedures.

As you conduct your meeting keep in mind the carrier and state-specific requirements for conducting virtual meetings that you had brushed up on previously.

Of course during the meeting you won’t have as many personal cues from the clients as you would during a face-to-face meeting, so be sure to check in frequently with attendees and ask if there are any questions. Allow ample time for response so clients can unmute themselves and ask their questions.

Once you have run through your agenda items you’ll want to formally close out the meeting and disconnect so the meeting platform doesn’t continue to run.
After your meeting go ahead and send out any follow-up items you discussed with the client and clearly state any required next steps or action items required of the client.

Benefits of virtual sales
While making the move toward conducting business online can seem overwhelming, there are a number of benefits for both you and your clients. First and foremost is protecting the health and safety of both you and your clients in an uncertain time.

Another benefit of moving to virtual meetings is flexibility. You can meet with clients from anywhere, and this added flexibility likely means more options for meeting times both for you and the client. This can also mean cost savings for you—no more driving to and from meetings—and you can also reduce expenses associated with a brick-and-mortar office location.

This added flexibility means you can also meet with clients located anywhere—you no longer need to seek out clients in your geographical area. It also opens up a big opportunity to reach underserved communities that may not have been as accessible previously.

Virtual meetings also allow you to meet more regularly with your clients. Having this additional access can help improve communication and deepen trust between clients and financial professionals. It also enables clients to have access to documents and files right at home and allows clients to include a spouse, partner or adult children in meetings more easily.

Adjusting to a virtual world
Conducting virtual sales meetings may feel strange at first, but beyond all the ways the pandemic has influenced our day-to-day lives, the fact is that many aspects of our business are moving online. So many businesses have made huge advances in the technology and mindset required to conduct business online. Many carriers have online application processes, like the Allianz ApplyNow feature, which allows financial professionals to complete the application process completely online—including client e-signatures. Once the application is submitted, contract e-delivery allows you to receive documents online, helping clients receive their contracts more efficiently and you to close the sale quicker.

While the current health and economic crises are bringing about many challenges, the good news is that it’s forcing many of us to think differently and get outside of traditional ways of getting things done—often resulting in more efficient business procedures.

Whether you’ve been conducting virtual sales for some time, or if you’re ready to get started now, following these best practices will help you prepare to meet client needs and help them address risk within their retirement portfolio.

Annuity guarantees are backed by the issuing insurance company. Variable annuity guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions. Some guarantees are provided through built-in or optional riders that may be available at an additional cost.

Products are issued by Allianz Life Insurance Company of North America and variable products are distributed by its affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297.

How Fixed Index Universal Life Insurance Policies Can Help Provide A Level Of Stability In Volatile Markets

As clients deal with the economic fallout of the COVID-19 pandemic, many may be looking for ways to diversify their portfolios in order to be better prepared for market volatility going forward. In fact, a recent Allianz Life study* found that over seven in 10 (72 percent) say the impacts of the COVID-19 pandemic are making them rethink how to protect their savings from volatility.

One important product that may help provide the protection and a level of stability that many seem to be looking for after the end of the longest bull run in history is a fixed index universal life insurance (FIUL) policy. Not only do these products provide consumers with death benefit protection, but also accumulation potential, flexibility for the future, and features that can help protect against ongoing market volatility.

What’s more, FIUL products are not what they used to be and continue to evolve, providing innovative solutions to clients who are looking to not only provide protection for their loved ones in the event of their death, but also reducing exposure to the aforementioned market volatility risks that can threaten an overall portfolio.

An important part of changing any pre-existing narrative on FIUL is educating clients on the new reality of this important product. Start the conversation with clients about new innovations in the life insurance industry, and how there is more to FIUL than meets the eye. Consider sharing these reasons why innovative FIUL products might be a good fit for those looking to help mitigate against the risks that market volatility can have on their portfolios.

Opportunity for accumulation
While the main purpose of an FIUL policy is to provide a death benefit, it also has the potential to build accumulation value tax-deferred, based on changes in an external market index. It’s important to remind clients—especially ones who have been burned by extreme market downturns in the past—that their money isn’t actually invested in the market, but can earn interest based on their chosen index’s positive annual performance potential.

This also means their policy won’t lose value due to negative index performance—likely a welcome feature based on recent market volatility. However, fees and benefit charges will still reduce a policy’s values, including the death benefit, so be sure to clarify this with your client to avoid any surprises.

Innovative features such as index locks on FIUL policies mean that clients have the opportunity to lock in indexed interest earned once at any point between policy anniversaries and prevent a zero percent credit. The index will unlock at the beginning of the next policy year. This can again help clients take advantage of any potential market upswing while also protecting them from additional drops in the market.

A customized level of diversification
FIUL policies allow clients to choose their level of diversification through various allocation options. These options determine the amount of interest credited to a policy, and are made up of an external index and a crediting method. Each policy has a variety of allocation options available—with some offering the opportunity to accumulate more interest (but with potentially more volatility), while others may have a lower interest potential (but with a little more stability). Clients may also select a fixed interest allocation option.

And remember that while diversifying across different financial products and types of accounts is a way to help mitigate risk, the same holds true for diversification within an FIUL policy. You would likely never recommend a client put all their funds into one index allocation option and hope for the best. Within a policy, choosing multiple allocation options provides clients opportunities for accumulation when things are going well, while still protecting them if the market drops. Diversifying allocations within an FIUL policy does not guarantee that the policy will earn interest in any given year. And no single index allocation option will be most effective in all market environments. Index allocation options may be subject to a cap and/or participation rate.

Indexes that target lower volatility are becoming more popular in the marketplace as well. These can help level out conditions by easing some of the drastic ups and downs a pure equity index can experience.

It’s important to check in on the allocation options annually, to check that they have the appropriate level of diversification given changing market conditions, and also to help make sure they are meeting the client’s financial goals.

Weathering the storm
Today’s FIUL policies are designed to help address a number of different risks to a portfolio. While the death benefit is its primary purpose, FIUL policies can offer so much more—especially for those who are looking to de-risk their portfolios as a result of recent market turbulence.
And since no one knows when or if the market will level out any time soon, now may be a good time to talk with clients about how they can look to add a level of stability with accumulation potential to their portfolio. An FIUL policy might just be the answer for their financial needs.


*COVID-19 Pandemic Wreaking Havoc on Americans’ Retirement Plans While Anxiety over Continued Market Risk Remains,
It’s important to note that with an external index, your client’s policy does not directly participate in any equity or fixed income investments—your client is not buying shares in an index.

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.

Allianz Life Insurance Company of North America 2020 Carrier Forecast

The Evolution Of FIUL

2020 is sure to bring many changes and opportunities to our industry, but one thing that is likely to continue is the growth of fixed index universal life insurance (FIUL). Since Allianz Life Insurance Company of North America (Allianz Life®) decided to focus on growth in the FIUL market in 2011, FIUL has grown significantly to be the second leading product in the U.S. life insurance market and now comprises 25 percent of total life insurance sales.1

Why has FIUL been so popular? The innovative product design has been the main engine behind the evolution of FIUL, providing consumers with death benefit protection along with accumulation potential and flexibility for the future.

Flexibility is key, as clients are becoming increasingly challenged to find ways to protect their loved ones while also having the ability to address other financial issues. FIUL has helped in that regard, providing financial professionals with a useful financial vehicle that can help their clients meet their financial goals.

Yet, the evolution of FIUL hasn’t come without its challenges. One important issue facing the industry that will continue in 2020 is regulatory change.

Actuarial Guideline 49 (AG 49), has changed the landscape of the industry, especially when it comes to product design and illustration capabilities. Originally, AG 49 was introduced to try to level the playing field regarding how products are illustrated. However, some carriers have incorporated different features and enhancements, including bonuses, to allow the illustrated credited rate to be higher than what may have been intended by the regulators. Increased charges increase the option budget to pay for higher bonuses or higher caps.

This new trend of high bonus, high charge product designs is becoming commonplace in the industry. Although they are generally actuarially sound, these product designs may skew a client’s understanding of potential benefits if illustrations are not explained properly.

Products with higher bonuses may illustrate well assuming a flat interest rate, potentially illustrating higher cash values and higher loan amounts. Questions remain, however, as to how determining the risk profile has changed and what happens in the product knowing it is unlikely the policy would achieve the flat illustrated rate, or the external index experiences some volatility. With an external index, your client’s policy does not directly participate in, or receive dividend payments from any of them through the policy.

It’s important to remind clients that with all FIUL policies, nothing comes for free. If they are seeing a higher illustrated rate, they also need to understand that asset charges will also be higher—so more of the risk in the product has been shifted to them. And perhaps even more important, the higher the illustrated rate and associated charges, the lower the chance of success. If not communicated properly, this could set unrealistic expectations for product performance.

This goes to the topic of product design. Clients have the flexibility to choose how to allocate within their FIUL policy in a variety of ways, from low bonus/asset charge models to options with higher bonus/asset charges that offer the possibility for the highest possible loan solve. A product with a higher bonus/charge design may very well make sense for a particular client, but the bottom line is they need to understand the reality that their chances to achieve that level of success are lower than if they go with a more conservative bonus/charge structure. Unfortunately, when FIUL products are illustrated for prospective clients today, that is not always the case.

Hopefully, later this year when the next phase of AG 49 goes into effect, the issues associated with higher illustrated credited rates will be somewhat mitigated as carriers will need to illustrate at the same maximum illustrated rate, regardless of any bonus or multiplier. This will bring the focus back to product features and financial strength of the carrier—and will also prompt financial professionals to do a better job of telling the complete story of how FIUL products can be designed and what clients should expect from different scenarios.

Given these issues, there are a few things that can be done to help navigate the associated risks:

Understand volatility and sequence of returns—Market volatility has been a near constant for the past few years, and Americans are certainly aware of it. In fact, according to the most recent Quarterly Market Perceptions Study from Allianz Life, Americans are increasingly anxious about the effects of market volatility on their finances and 50 percent now say they are worried a major recession is coming.2 This volatility could create an issue if your clients start taking distributions from retirement accounts at the wrong time, which can create a problem with sequence of returns. Sequence of interest rates can also impact an FIUL policy. While a policy may still achieve six percent overall, the policy likely will get there by achieving varying interest rates. For example, over a four year period, the policy may return 12 percent, eight percent, zero percent and four percent averaging out to a six percent credited rate. The order of that sequence is what matters—especially in the zero percent years. Once your client starts taking loans3 from any available cash value accumulation through annual interest credits earned in the policy when the external index experiences positive index returns, an FIUL policy becomes much more vulnerable to sequence of interest rates. Understanding how variations in credited interest can affect their policy is important, as it can impact how much can be accessed from the policy and how long it will remain in force.

Determine risk profile—Figuring out how much risk your client is willing to take to accomplish their financial goals is a fundamental part of the financial planning process, and should be a key topic when discussing their FIUL policy. For example, if your client wants to have a death benefit of $500,000 with potential loan amounts of $50,000, how much are they relying on a certain illustrated rate to achieve the loan amount? Can they take the risk of higher charges and potentially outperform, or should they pick an option that could be a little more stable? This is a crucial conversation to have with your client in order to determine how they can most effectively use their FIUL policy to accomplish multiple financial goals.

Set expectations—Equally important to discussing risks with your client is setting their expectations about how their FIUL policy fits into their overall financial plan. Be sure to talk with your client about the full range of possibilities—what can go right, what can go wrong, and what different decisions regarding where to allocate their money truly mean. This includes talking about the various index allocation options and loan flexibility issues. It is important to review your client’s FIUL policy annually to make sure it is meeting their financial goals.

Run multiple illustrations—Provide your clients with multiple illustrations at different rates, also refer to the guaranteed rate scenario, so they can see the impact of potential underperformance—not just the best case scenario. Different illustrated rates will also show how the loan amounts can be impacted in different market environments and how the loan amount may need to be adjusted in the future to help the client reach their goals.

Utilize available tools—In addition to showing the impact of sequence of returns and various return levels, look to utilize other pre-approved tools that can help explain different outcomes. Examples include benchmarking tools that allow you to compare indexes and look at historical performance, or charge ledgers that can help compare product to product.
With the growing need for flexible solutions that can help Americans address a variety of common financial concerns, the future looks bright for FIUL. It’s dependent on our industry to help our clients understand the complete picture and make sure the FIUL story remains a positive one going forward. [JW]


  1. 3Q 2019 LIMRA’s U.S. Retail Individual Life Insurance Sales by Channel with All Splits.

2. Allianz Life Quarterly Market Perceptions Study, October 9, 2019.

3. Policy loans and withdrawals will reduce the available cash value and death benefit and may cause the policy to lapse, or affect guarantees against lapse. Withdrawals in excess of premiums paid will be subject to ordinary income tax. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. If a policy is a modified endowment contract (MEC), policy loans and withdrawals will be taxable as ordinary income to the extent there are earnings in the policy. If any of these features are exercised prior to age 59½ on a MEC, a 10% federal additional tax may be imposed. Tax laws are subject to change and you should consult a tax professional.

Life insurance policies require health and financial underwriting and have certain fees and charges associated with them that pay for the death benefit, underwriting expenses, and issuing and administering the policy. These policy charges would continue to be deducted, and loans will reduce the policy values and could cause the policy to lapse.

Bonus products may include higher surrender charges, longer surrender periods, lower caps, or other restrictions that are not included in similar products that don’t offer a bonus. The index allocations that offer the interest bonus will generally have lower caps and participation rates. There is no guarantee that a policy will be credited with an interest bonus every year as it is based on the growth of an index.

Product and feature availability may vary by state and broker/dealer.

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, MN 55416-1297. 800.950.1962.

Permanent Life Insurance And Bridging The Gender Gap—How Female Clients Can Benefit From More Education About FIUL Benefits


Innovations within permanent life insurance have made the category much more dynamic in recent years and worth considering for clients in need of death benefit protection as well as more flexible options for their finances.

So why do permanent life insurance products not get the attention they deserve? Simply put, too many people are unaware of the potential opportunity for additional living and tax advantages that may be available through permanent life insurance.

We initially discovered this lack of awareness through our 2018 Life Insurance Needs Study.* The study found that more than half of respondents (51 percent) were unsure or didn’t believe cash value from permanent life insurance can be used to help fund college education, supplement retirement income or assist with other financial needs. Additionally, a full two thirds (66 percent) said they were unsure or didn’t believe benefits paid from life insurance are not taxable.

We commissioned the again in 2019** and found a similar education gap, but this time the cause for concern is specific to women. Unfortunately, women are trailing men in their awareness about additional potential benefits that permanent life insurance can offer—knowledge that could help women build more flexibility in their (or their family’s) financial portfolio.

Only 34 percent of women believe that the available cash value from a permanent life insurance policy can be used to help fund education, retirement or other financial needs versus more than half (51 percent) of men. Furthermore, only about one- quarter (27 percent) of women know that death benefits paid from life insurance are generally not taxable versus 38 percent of men.

Most concerning, only one-third of women believe that any available cash value from a permanent life insurance policy can be used to supplement retirement income while you are still alive versus more than half (52 percent) of men who know it can be used for that purpose.

The survey, which questioned Americans between the ages of 35-60 with an annual household income of $100,000 or more, also found that fewer people who work with a financial professional are discussing permanent life insurance benefits with their financial professional than they did last year. These include discussions about sources of potentially tax-free retirement income (67 percent versus 75 percent in 2018), ways to fund their child’s college education (60 percent versus 70 percent in 2018), and financial products that offer low/no interest loans against its cash value (45 percent versus 52 percent in 2018).

Focus on Education Needed
Women play a significant role in family finances, so it’s crucial that they have all of the information about ways they can build a stronger financial future for themselves and their loved ones.

It’s important to note that the issue isn’t that women are uninterested in the topic. The misconceptions noted above exist despite the fact that women place high value on financial products that can provide benefits available through permanent life insurance. When asked what they find valuable in financial products, 83 percent of women said one that “provides a source of tax-free income in retirement,” followed by 77 percent who value one that “provides tax-free money for family/loved ones” and 50 percent who want a product that “provides the ability to use the funds to pay for college.”

While life insurance is not a college funding vehicle and does not provide a source of guaranteed income in retirement, it does provide the opportunity to build accumulation value. Any cash value in a life insurance policy can be accessed through policy loans and withdrawals income-tax-free1 that can help supplement retirement income or complement a college funding strategy.

Clearly there is an appetite for products that can help solve for multiple issues, but financial professionals need to make a greater effort to communicate with their clients—especially women—and truly explore all available options. This means working with women to understand their distinct financial challenges and the different ways that financial professionals can help provide both protection and opportunity to their client’s long term financial strategy.

FIUL as an Option
The good news is that recent innovations have opened the door for greater understanding and acceptance of index products, including fixed index universal life insurance (FIUL). As a reminder, FIUL is a permanent life insurance policy that allows for an opportunity to build accumulation value based on positive changes in an external market index or a fixed interest allocation. There is also a built-in annual floor that ensures the accumulation value will not decrease due to market volatility as the policy is not directly invested in the market2 (although certain fees and expenses will reduce policy values).

More than nine in 10 of respondents in the 2019 Life Insurance Needs Study said the ability to save enough to retire comfortably is important when planning for their financial future. Now, more than ever, Americans need a diverse mix of financial products to help them achieve that goal and the financial services industry must do more to educate all clients about their options.

For clients that need death benefit protection, but also want the opportunity for increased flexibility for their finances as well as potential tax advantages, FIUL is a viable solution. It’s clear that the financial planning community has an excellent opportunity to educate their female clients about the living and tax benefits of permanent life insurance. Providing this information can demonstrate a more complete understanding of female clients’ needs and the potential solutions that might help those clients achieve their financial goals.

Allianz Life Insurance Company of North America offers insurance and annuities in all states except New York. In New York, products are issued by Allianz Life Insurance Company of New York.

Further info:
*Allianz Life Insurance Company of North America conducted an online survey, the 2018 Life Insurance Needs Study, in January 2018 with 803 respondents age 35-60, having an annual household income of $100K+.

**Allianz Life Insurance Company of North America conducted an online survey, the 2019 Life Insurance Needs Study, in March 2019 with 803 respondents age 35-60, having an annual household income of $100K+.

1. Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. If a policy is a modified endowment contract (MEC), policy loans and withdrawals will be taxable as ordinary income to the extent there are earnings in the policy. If any of these features are exercised prior to age 59½ on a MEC, a 10 percent federal additional tax may be imposed. Tax laws are subject to change. You should consult a tax professional.

2. Although an external index may affect the interest credited, the policy does not directly participate in any equity or fixed income investments. Your clients are not buying shares in an index.

Allianz Life Insurance Company of North America 2019 Carrier Forecast

Entering A New Era For Life Insurance

When words like “innovation” and “technology” are the main points of discussion, life insurance isn’t usually the first topic that comes to mind. But as I look at the landscape for the life insurance industry in 2019, it’s these terms and their potential impact on our business that have me more excited than at any previous time in my 25 year career.

At Allianz Life Insurance Company of North America (Allianz Life), our focus on innovation within fixed index universal life (FIUL) insurance is helping us to meet client demands concerning flexibility, portfolio diversification and a desire to include insurance solutions in more holistic planning efforts. For too long, life insurance has been viewed as only a “protection” product, but the innovations available through FIUL products provide a number of compelling additional advantages customers are looking for, including accumulation potential, a level of protection from market losses and income-tax-free supplemental retirement income through policy loans and withdrawals.1

However, it’s the innovation behind the policies and implementation of new technology within the application process that has me excited about the future. As with many other areas of life, the entire insurance industry is moving toward a completely digital end-to-end experience and FIUL is no exception.

Innovations behind the policy
Customer-focused enhancements are being made in a number of areas, most notably electronic applications and submissions through our ApplyNOW system that both simplify and speed up the application process.

In the short time since we’ve implemented this digital processing system we’ve seen a number of benefits, including: A decrease in the amount of time needed to complete an application from 60 minutes by traditional mail to only 12 minutes online; a decrease in the application submission process from four-to-five business days to instantly via one click online; a reduction in incoming calls for status from an average of two calls per application to less than one call per application; and an increase in “good order” applications from 15 percent to 90 percent.2

The significant increase in “good order” applications is not only great for the financial professionals that work with us, it’s also great for the policyholder since it results in faster processing and quicker coverage.

Other technology-based enhancements the industry is embracing include electronic delivery of policies, which saves time for the policyholder, and also new digital tools that allow faster communication about any policy changes between agents and clients.

A better underwriting experience
Innovations related to accelerated underwriting are also having a significant impact on increasing customer satisfaction. With no exams or medical records required, customers can receive coverage much quicker and with none of the hassle/inconvenience associated with things like paramed exams, collection of labs/fluids, and Attending Physician’s Statements (APS).

As with ApplyNOW, customers are already seeing real benefits from these enhancements to the underwriting process. Under the old process with paper application/worksheet, full underwriting could take up to 33 days. With accelerated underwriting, that time has been greatly reduced to 12 days or less, and as little as three days in some cases (accelerated underwriting is subject to specific eligibility criteria). An easier process for insurers means a better overall experience for policyholders, which is crucial in order to meet the high level of consumer expectations that exist in the digital age.

The positive effect of InsurTech
Innovation within back-end operations of the life insurance industry is also carrying over to the bigger picture affecting the future of our business. Perhaps the most exciting thing happening in the life insurance industry today is the investment many insurers—including Allianz Life—are making in new ideas and new technology that have the potential to impact both the way we do business now and what the insurance industry of tomorrow may look like.

The InsurTech space has been blowing up in recent years, offering a fresh perspective on a variety of insurance and financial planning topics. Our Allianz Life Ventures team, which is a part of Allianz Life, is engaging with a number of these groups that are bringing a real sense of energy and excitement into the industry—taking innovative approaches to existing challenges and also helping to form how we approach our current lines of business.

For example, we’re investing in companies that are looking to streamline the traditional life insurance purchasing process in ways that can help people calculate their insurance needs, review products, and purchase an appropriate amount of coverage, all with minimum hassle. As we become more digital, Allianz Life has the opportunity to learn from these new business models and apply some of that knowledge to improve the FIUL experience for our customers.

Other companies we’re supporting are embracing app-based technology to offer their customers innovative new ways to purchase life insurance and combine that experience with other financial planning needs. This approach can teach traditional insurers a great deal about speed, flexibility and effective ways to combine products and services that consumers find compelling.

Beyond innovations within the life insurance space, we’re also working with companies that are building new ways for people to access financial planning help—and easier ways for financial professionals to connect with their clients. The efficiencies these businesses are working to develop within the financial planning landscape are not only good for the financial services industry, they are also inspiring to companies like Allianz Life as we determine the best ways to make our products and services more relevant to today’s consumers.

While “innovation” and “technology” may not always be top of mind in connection with life insurance, that dynamic is rapidly changing, bringing a world of possibilities to the future of our industry. As we listen to new ideas and embrace different ways of doing business, we enhance our ability to evolve and adapt to a constantly changing environment.

As Americans develop a better understanding of their need for protection and the many ways life insurance can help them achieve their financial goals, it’s crucial that insurers are able to connect with them when, and where people choose—and not only meet, but exceed consumer expectations throughout the entire process. [JW]

Allianz Life Insurance Company of North America offers insurance and annuities in all states except New York. In New York, products are issued by Allianz Life Insurance Company of New York.


  1. Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. If a policy is a modified endowment contract (MEC), policy loans and withdrawals will be taxable as ordinary income to the extent there are earnings in the policy. If any of these features are exercised prior to age 59½ on a MEC, a 10% federal additional tax may be imposed. Tax laws are subject to change. You should consult a tax professional.
  2. Internal statistics are from 4/1/2017 to 4/20/2018.

Seizing The Opportunity


The time has come to take another look at life insurance and reevaluate the role it can play within an overall financial strategy. While term insurance certainly is important, more attention needs to be paid to the innovations happening within the industry—particularly with fixed index universal life (FIUL) insurance and the larger value it can bring in helping clients meet their overall financial goals. The new reality is that clients not only want (and need) the protection offered by life insurance, they also want the opportunity to accumulate cash while enjoying additional tax advantages. FIUL offers just that.

A new lens on life insurance
Life insurance has traditionally been viewed as a protection product. And while protection in the form of a death benefit that is generally income-tax-free to beneficiaries is no doubt a primary feature, FIUL can serve a much greater role in a financial portfolio. As a reminder, FIUL is a universal life insurance policy that allows for an opportunity to accumulate cash value based on positive changes in an external market index or a fixed interest allocation. There is also a built-in annual floor that ensures the cash value will not decrease due to market volatility as the cash value is not directly invested in the market.1 (Although certain fees and expenses will reduce cash value.) 

In many cases, cash value accumulation from FIUL can provide an added layer of protection from market volatility. This accumulation opportunity helps clients to diversify their portfolio, which is particularly important when preparing for retirement. While most clients have 401(k)s or other savings investment vehicles in place, some might face  limitations due to having maxed out contributions. FIUL is another arrow in the quiver, so to speak, in the effort to accumulate funds.

Emphasis on FIUL benefits
When it comes to discussing FIUL as an option with clients, there are two key features of the product that are deserving of an increased level of emphasis. Living and tax benefits are two product benefits that may be available and that help set FIUL apart as a potentially appealing option for clients.

Living advantages are all about an added layer of flexibility. Any available cash value accumulated in a FIUL policy can be withdrawn or loaned2 and used to cover unexpected expenses or to help meet a financial goal such as helping to pay for college, buying a home or supplementing retirement income. And living advantages are also age agnostic when it comes to their appeal. Young families can attain the death benefit protection that is so critical in this life stage while potentially building cash value that can be used toward both long-term and short-term goals dependent upon their specific financial needs.2 For those later in life, FIUL’s ability to allow loans and withdrawals against accumulated cash value can offer an added layer of protection that may be available if needed to help fund retirement or to help build a legacy. 

While life insurance is not a college funding vehicle and does not provide a source of guaranteed income in retirement, it does provide the opportunity to accumulate cash value. Any cash value in a life insurance policy can be accessed through policy loans and withdrawals income-tax-free2 that can help supplement retirement income or complement a college funding strategy.

The tax advantages of FIUL can be extremely valuable and can play a significant role in developing, or redeveloping, an overall financial strategy. There are three primary tax advantages to keep in mind. First, and most widely known, is the income-tax-free death benefit. Second, is a lesser known benefit that the accumulated cash value is tax-deferred. And third, the aforementioned policy loans and withdrawals are generally not taxable.2 All have the possibility of being beneficial for clients.

Opportunity abounds
While the benefits of FIUL spelled out above are hopefully noteworthy, perhaps the real story has to do with what clients want and what clients understand about the product. There is much work ahead for financial professionals, but with that comes an unprecedented opportunity. A recent study indicated that the vast majority of Americans are still unsure about the full benefits of permanent life insurance (including FIUL). Even more intriguing is that consumers are actually quite interested in these products and are undereducated about the living and tax benefits that may be available.3 Consider the following data:

  • 85 percent of Americans find value in financial products  that provide a source of tax-free income in retirement.
  • 66 percent are unsure or don’t believe benefits paid from life insurance are not taxable.
  • 51 percent are unsure or don’t believe cash value from universal life insurance can be used to help fund college education, supplement retirement income or assist with other financial needs.

All of this adds up to a great opportunity for financial professionals to better serve their clients—especially those advisors who may not have offered life insurance solutions in the past and are just beginning to embrace a holistic planning approach that addresses all aspects of their client’s financial life.

What next?
Financial professionals have an obligation to bridge what is a clear education gap with clients. The first step is to stop “playing old tapes” and take a different approach to life insurance. 

With products such as FIUL, protection, accumulation potential, and flexibility come together to serve an increased role as a cornerstone of an overall financial strategy. Diversification has always been a core component of a well-balanced financial strategy and FIUL is yet another option for consideration in helping meet the overall financial needs and goals of your clients.

1 Although an external index may affect the interest credited, the policy does not directly participate in any equity or fixed income investments.  Your clients are not buying shares in an index.  The index value does not include the dividends paid on the equity investments underlying any equity index and dividends are not reflected in the interest credited to the policy. Interest paid on the fixed income investments underlying any bond index, however, are reflected in the index value which impacts the interest credited to the policy.

2 Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax.  If a policy is a modified endowment contract (MEC), policy loans and withdrawals will be taxable as ordinary income to the extent there are earnings in the policy. If any of these features are exercised prior to age 59½ on a MEC, a 10 percent federal additional tax may be imposed. Tax laws are subject to change. You should consult a tax professional.

3. Allianz Life Insurance Company of North America conducted an online survey, the 2018 Life Insurance Needs Survey, in January 2018 with 803 respondents age 35-60, having an annual household income of $100K+.

Protecting Your Legacy With Added Flexibility


The end of the year is typically a good time to evaluate your financial situation and determine if you’re doing the right things to meet your long-term goals. While many clients tend to focus on portfolio performance and managing their retirement accounts, an equally important aspect of financial planning is often overlooked— estate planning.

Creating a legacy that can help family members maintain their lifestyle and live comfortably for years to come should be a top priority, including the role life insurance can play in the equation.

Since the death benefit is passed to their beneficiaries generally income tax free, clients can use life insurance to help replace lost income to their family. The death benefit can also assist with other expenses, such as their children’s education, paying off their mortgage or other debts, and simplifying the transfer of assets.

While traditional life insurance is certainly a good option to use within estate planning strategies, fixed index universal life (FIUL) insurance can be a great way to build additional flexibility into your client’s overall financial strategy. 

Before we address the advantages of FIUL, it’s a good idea to understand the basic benefits of using life insurance in estate planning.

Prompt payments—When your client selects a specific personal beneficiary, it not only makes it more likely that the death benefit will be paid promptly to their loved ones, but also that it will be distributed according to your client’s wishes.

Help with estate taxes and bills—Life insurance can be used to replace wealth lost due to taxes and expenses. Your client’s beneficiaries can use the life insurance proceeds to help replace the assets in your client’s estate that are used to pay costs of settling your client’s estate, including taxes and fees. If your client has an estate tax concern, one way to use life insurance is to have it owned by an irrevocable trust.

Charitable giving—Life insurance allows your client to give to their favorite charity by naming the charity the beneficiary of their life insurance policy. If the charity is the owner and beneficiary of the life insurance policy, and if your client gifts cash to the charity to help it pay the policy premiums, the cash gift may provide them with an income tax deduction. Alternatively, if your client is the insured, owns the life insurance policy and names the charity as the policy beneficiary, upon their death the death benefit is included in your client’s estate but their estate may receive an estate tax deduction for the amount of the death benefit paid to the charity.

Wealth replacement—When the death benefit proceeds from your client’s life insurance policy pass to their family, they can replace some or all of the wealth they have given to a charity upon their death (or during their lifetime).

Equalize distributions—If your client owns a business, life insurance can be used to equalize estate distribution between children who participate in the business and those who don’t. A life insurance policy can create an asset for your client’s children who are not active in their business.


The Case for FIUL
Clearly, there are many compelling reasons to include life insurance within your client’s estate planning strategy—so what additional benefits does FIUL add?

First and foremost, FIUL offers more flexibility for the insured to utilize while they are still alive.

FIUL differs from traditional universal life insurance by providing the opportunity for the policy to build cash value accumulation from indexed interest. FIUL can provide an opportunity for the policy’s cash value to increase based on positive changes to an external market index, but the policy’s cash value will never decrease when the external market index is negative (although fees and expenses will apply which will reduce cash value). Although an external index may affect the interest credited, the policy does not directly participate in any equity or fixed income investments—clients are not buying shares in an index.

This means your client can access the available cash value in their policy via income-tax-free policy loans and withdrawals to address more immediate financial concerns like potential tax increases, market volatility and inflation. In fact, a recent study* found that inflation is currently the number one economic worry for the majority of Americans, with 32 percent saying they were either “panicked” or “very worried” about it.

Your client can also use available cash value from the policy for things that may be a bit further down the line such as supplementing college funding, supplementing retirement income, or even taking that once-in-a-lifetime trip they’ve been planning forever. With a policy loan or withdrawal from an FIUL policy, they can use available cash value to take their dream trip and still have the reassurance their loved ones will receive the death benefit, minus the loan, as long as their policy is still in force.

Keep in mind that taking policy loans will reduce the death benefit and cash value, and may cause the policy to lapse, which may make those loans taxable. So, it’s important to carefully manage policy values while taking loans. Withdrawals up to cost basis are income tax free.

Another reason your client should consider FIUL as part of their estate planning strategy is the health care benefits that are available—via optional policy riders—for emergencies in case the insured is diagnosed with a chronic or terminal illness. In exchange for an extra cost, and certain restrictions including underwriting, your client can add this additional level of protection that they can access during their lifetime should they experience serious health complications.

Using life insurance within an estate planning strategy can help solve a variety of problems resulting from the loss of a family’s primary provider. Adding FIUL to the equation should be considered as part of this conversation because it can give your client greater flexibility for today, while still providing the protection benefits necessary for tomorrow.  


*The Allianz Life 2017 Inflation Study was conducted by Ipsos via their eNation Online Omnibus in March 2016. The survey was completed via Ipsos’ iSay/Amario Panel with 1,005 U.S. adults age 18+, and was commissioned by Allianz Life.

This content is general information for educational purposes, and is not intended to constitute fiduciary advice. Clients should consult their financial professional for a specific recommendation about purchasing this product.

The Facts Of Life – Helping Clients Understand The Myths And Realities Of FIUL


Financial professionals have a number of challenges to address when discussing life insurance needs with their clients. First and foremost is a responsibility to understand the specific financial concerns that are common to different target audiences.

While younger clients are typically worried about saving for college education and retirement, retirees’ concerns often center on rising health care costs and leaving a legacy for their children and grandchildren. Many women clients need assistance with how to start saving and investing with smaller systemic contributions, while small business owners tend to focus on succession planning issues. Above all, each audience is concerned with death benefit protection for their spouse or partner (including business partners). 

Another factor common to each of these groups is the need for help separating the myths from realities surrounding life insurance products—something that is especially true with fixed index universal life (FIUL) insurance.

Since it was first introduced, FIUL sales have been steadily growing. New carriers have been entering the market and launching new products, and new regulations, such as Actuarial Guideline 49 (AG 49), have gone into place and affected how FIUL policies are illustrated and sold. But as the market grows, so do the misconceptions about FIUL.

A closer look at some of these myths can help bring clarity to this topic and help you better communicate the opportunities FIUL may offer your clients.


Myth 1: The ability to offer cash value accumulation potential with a level of protection is too good to be true.
Reality: Most FIUL insurance policies offer the potential for cash value accumulation which is protected from negative index performance (however, fees and charges will reduce cash value). This is achieved by the company putting a portion of the premium into their general portfolio. Generally, this portfolio is conservative and made up mostly of bonds. This helps the insurance company provide a level of protection with the policy because, if the index performance is flat or negative, the client will not lose cash value due to the index performance.

A smaller portion of the premium is used to purchase options. These options help provide the insurer with the ability to offer cash value accumulation potential based on the positive performance of an external market index. When the external market index has positive performance, the cash value is credited with indexed interest (typically subject to a cap or participation rate).

The insurer generally spends the same amount regardless of the index allocations chosen. If the chosen index increases, the option will provide a return that is equal to the amount needed for the policy. If the chosen index decreases, the option will not provide credited interest to the policy.

Another misconception in the industry is that if the external market’s performance is greater than the cap on the life insurance policy, the carrier makes money. This is not true. Most carriers transfer away their investment risk with hedging, either internally or through investment banks. The carrier’s goal is to immunize themselves from market movements, focusing on their core business—insurance risk.


Myth 2: The product with the highest cap has the most accumulation potential.
Reality: Even though a carrier offers the highest cap, it may not yield the most cash value accumulation potential. With the goal to standardize illustrations across the life insurance industry, AG 49 set parameters for calculating a carriers’ maximum illustrated rate.  However, carriers are still competing to offer the highest cap.

There are ways that the carrier’s options budget may be unrealistically inflated. For example:

  • Artificially inflating caps, which can cause a product to have high charges or poor benefits.
  • Aggressive investing—which is risky—and the carrier may not be able to sustain the caps in times of crisis.
  • Minimizing the investment component, which can create an unbalanced product.

The cap is no indication of future cash value accumulation that a client could realize.

Another aspect of the discussion about index allocation is the importance of diversification. In addition to index choices, each crediting method offered has a different risk and return profile which should be considered in conjunction with your clients’ needs. With FIUL crediting methods, indexed interest may be applied annually to the policy based on the performance of the chosen index allocations. Each crediting method has strengths and weaknesses depending on the index performance. No choice is best in all scenarios, so that’s why it’s important to help your clients create a diversified strategy. Diversifying your allocations in an FIUL policy does not ensure the policy will earn interest.


Myth 3: All accumulation bonuses are designed the same
Reality: Accumulation bonuses are becoming more common in FIUL, but it’s important to know that not all bonuses work the same. A few facts about bonuses that are important to consider:

  • Some bonuses are only applied to unloaned values, while others may be applied to both loaned and unloaned values.
  • Not all bonuses are guaranteed, which means the insurance company may have the right to change the amount of the bonus or remove it entirely in the future.
  • Products with a bonus may also have caps and participation rates adjusted to take the bonus into account.
  • Some bonuses require allocation to a specific account or index, and some may be applied to both the fixed and index accounts.

In addition to these considerations, it’s important to understand the different types of bonus designs that carriers use:

  • Multiplier factor: Instead of having a set bonus rate, another type of bonus design links the bonus rate to positive changes in an index. A multiplier applies a factor to the annual index accumulation, and may be subject to a cap.
  • Flat rate bonus: The insurance company applies a flat rate bonus to the cash value of the policy monthly or annually.
  • Look-back bonus: Another type of bonus that is linked to the indexed interest credit looks back at the past index credits to the policy. This method has a specified bonus rate and is based on the total amount of index credits to the policy over the previous specified period.
  • Monthly charges earn interest: In most FIUL policies, monthly charges are taken out before any interest is calculated. This type of bonus applies interest to any monthly deductions.

Clearly, many variables exist regarding bonuses within FIUL products. While no bonus can be ideal in every situation, it is important to understand how a carrier’s bonus is designed so your client can be similarly informed when deciding which product is right for them.


Myth 4: Illustrations demonstrate exactly how the policy will perform while in force.
Reality: Illustrations are a snapshot of how the product and features could work and are often based on a flat illustrated rate. To provide clients and financial professionals with insight into how an illustrated rate can impact the accumulation potential of a product, many carriers provide historical backcasting in policy illustrations. While backcasting does not guarantee future interest credits to a policy, it does provide some understanding of how the policy could react in different market environments. 

There are also several other variables to consider that would affect how a policy would perform and why it may vary from the original illustration:

Clients generally have the flexibility to change allocation selections yearly. They are not locked in to the initial allocation options they select. Perhaps the client would like to change or diversify their allocation selections. Different allocation selections perform differently; this would affect the original policy illustration. Assuming there is any available cash value, clients may also take policy loans or withdrawals. No one can be sure of what their future needs will be; if they borrow more or less than they originally anticipated, that would also cause performance to differ from the original policy illustration.

Some policies offer chronic illness protection. While some clients may anticipate and prepare for future health needs, we can’t foresee the cost of future medical and living expense that would be covered.

FIUL provides great flexibility and these are just a few features of which clients could take advantage. However, this flexibility means that their policy may not perform exactly as their illustration at one point in time suggested.

Although an FIUL policy will never be the right fit for every situation, it’s important for financial professionals to understand the different aspects of FIUL so they can provide their clients with all of the relevant information. Only when clients have all the facts can they make a truly informed decision about whether or not the product is a good fit for their specific financial situation. 

Allianz Life Insurance Company of North America


Positioning Life Insurance As Your Client’s Financial Engine

As we embark upon a new year, it’s fair to say that there is a good deal of uncertainty facing the financial services industry.

This is especially true when considering how we can help clients achieve a more secure financial future. Although markets reached record highs in 2016, volatility is still top of mind for many Americans, and it’s difficult to predict how markets will truly react when the new administration takes over in January. In addition, this administration will likely bring policy and regulation changes affecting tax laws, thereby creating a very different environment for savers in 2017. At the very least, these potential changes may drive people to question several aspects of their current financial strategy, so financial professionals should be prepared to address a wide variety of concerns in the coming months. 

But as we wring our hands trying to determine the most effective ways to help our clients deal with all of this uncertainty, it’s important to remember that some things within the world of financial planning never change–namely, the need for protection–both to and through retirement.

Protection (risk management/insurance) has always been an important concept within financial planning but one that may get less attention than the other core planning topics, including investments, tax strategy, retirement, estate planning and employee benefits and/or business planning. Although “guarding against uncertainty” is actually the base of the traditional financial planning pyramid, there tends to be less written about the value of insurance and risk management as the cornerstone of a sound financial strategy. 

What if a protection strategy could offer more than insurance against future challenges and serve as a true financial engine for your client’s portfolio? For clients that need death benefit protection and are looking to diversify their financial portfolio, cash value life insurance–such as fixed index universal life (FIUL) insurance and the additional advantages it offers–has made this a possibility, and one that financial professionals should consider for clients looking for an appropriate solution.

Protection with Flexibility
You’ve likely already worked with your clients to save for future needs through common financial vehicles such as their company-sponsored qualified plan and tax-advantaged plans such as IRAs, as well as saving accounts and so forth. However, it’s important to remind clients that any successful financial strategy needs a mix of various assets and financial vehicles to help support and protect their long-term financial goals.

Typically, each asset or financial vehicle reflects different levels of risk, which over the long term may help your client reduce their overall financial risk. The more diversified their financial options, the more likely your client will be able to weather the ups and downs of uncertain markets by providing some opportunity for accumulation while still protecting a portion of their assets.

When considering diversification as you help them plan for their long-term financial goals, it’s also important to ask, “How protected are your assets?” If your client is not there to properly fund these financial vehicles, will those vehicles continue to be funded by surviving family members as they had intended them to?

This is where the flexibility of FIUL comes into play, because it provides the primary need for protection through the generally income-tax-free death benefit that can help beneficiaries maintain their lifestyle, offering reassurance should something happen to the insured–but it can also supplement other financial challenges through additional advantages, helping to bridge the gap between your client’s retirement savings and retirement income goals.

Given that the average American man can expect to live to age 84–and woman to age 86–outliving retirement assets could be a real possibility.1  Only 13 percent of Americans are very confident (38 percent are somewhat confident) that they will have enough money to live comfortably in retirement.2 In fact, two in three pre-retirees don’t expect their income from Social Security and pensions to be enough to support their basic living expenses after retiring.3

With FIUL, clients can help supplement their retirement income by accessing any available cash value through income-tax-free policy loans and withdrawals (loans may be subject to interest charges)4 to supplement other sources of retirement income including Social Security, pensions, qualified plans such as a 401(k), tax-advantaged plans such as IRAs, and other nonqualified vehicles such as annuities, savings accounts, CDs, and investments.

Importance of Tax Diversification
As previously noted, our current view of the future tax environment is cloudy at best, so now may be a good time to reevaluate your client’s tax strategy. Taxes can have a significant impact on how much of your client’s savings they can access in the future and the amount they can pass on to their beneficiaries. That’s why it is so important to also consider tax diversification as part of their retirement strategy. Tax diversification involves placing assets in a variety of financial vehicles that have different taxation structures. 

Although current speculation is that the new administration will bring a more favorable tax treatment for the majority of Americans, the uncertainty surrounding potential changes underscores the need to diversify by allocating to vehicles that offer different tax treatments in order to mitigate exposure to any adverse tax impacts. FIUL can help achieve this goal through a combination of three distinct tax advantages: tax-deferred cash value accumulation, income-tax-free loans and withdrawals,4 and the typically income-tax-free death benefit. 

It’s important for clients to understand that life insurance does not have the same restrictions as other financial vehicles, making it a powerful asset as clients look to build their retirement security. Life insurance has no penalties for accessing cash value prior to age 59 ½, assuming the policy is not a modified endowment contract. Accessing any available cash value through policy loans and withdrawals currently does not have an effect on your client’s Social Security income. And last but not least, there are no required minimum distributions at age 70 ½.5

Between qualified plans/traditional IRAs, Roth IRAs/Roth 401(k)s, individually owned mutual funds, municipal bonds and nonqualified deferred annuities, there are many tax advantages to consider with the various financial vehicles available to help Americans build and maintain their financial assets–but life insurance should also be a part of this discussion to effectively ensure your client is managing how much and when they are being taxed.

Opportunity for a New Approach
According to LIMRA’s 2016 Trends in Life Insurance Ownership study, there are nearly 5 million more U.S. households that have life insurance coverage compared to 2010.6  This is positive news for the life insurance industry; however, the growth in households with life insurance coverage reflects an increase in population rather than an increase in market penetration.  The study found 30 percent of households remain uninsured, equal to the record low set in 2010. 

This means that more than 37 million American families are completely uninsured and at financial risk if their primary wage earner dies unexpectedly. What’s more, LIMRA estimates that 48 percent of households (60 million) have an average life insurance coverage gap of $200,000, which amounts to more than $12 trillion in total market need.

Why are so many Americans still reluctant about purchasing life insurance? More than 7 in 10 American households say a reason they have not bought more life insurance is because they have other financial priorities right now, such as paying off debt or saving for retirement. Nearly two thirds say they cannot afford it.

Clearly, there is still a significant need for people to build more financial reassurance into their portfolios by adding life insurance, but there is a gap in their understanding of how they may be able to achieve multiple goals through today’s innovative insurance products. That’s why it’s so important for financial professionals to realize the possibilities available via products like FIUL, which can help their clients get the protection they need along with the potential to address other financial issues that may be more “top of mind.”

If you haven’t already, now is the time to consider how FIUL might fit into the products and solutions you are currently providing to your clients. Although life insurance may not be thought of as the key component of a solid financial foundation, it can truly be the engine that helps drive your client’s strategy–providing both the protection and the flexibility necessary to help navigate an uncertain financial future. [JW]

1. Social Security Administration Life Expectancy Calculator, October 28, 2014.
2. 2013 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many, Employee Benefit Research Institute, March 2013.
3. “Facts about Life 2013,” Life Insurance Awareness Month, LIMRA, September 2013.
4. Policy loans and withdrawals will reduce the available cash value and death benefit and may cause the policy to lapse, or affect guarantees against lapse. Withdrawals in excess of premiums paid will be subject to ordinary income tax. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of unrecovered cost basis will be subject to ordinary income tax. If a policy is a modified endowment contract (MEC), policy loans and withdrawals will be taxable as ordinary income to the extent there are earnings in the policy. If any of these features are exercised prior to age 59½ on a MEC, a 10 percent federal additional tax may be imposed. Tax laws are subject to change and you should consult a tax professional.
5. Life insurance does not provide a stream of income in retirement. Any potential supplemental income is available through policy loans and withdrawals.
6. Life Insurance Ownership in Focus, LIMRA, September 28, 2016:

The Customer Of Tomorrow, Today


What type of person might be considered the “target” customer for Fixed Index Universal Life (FIUL) insurance coverage?  Of course, that is a difficult question to answer without more specific information about the client’s needs and goals–but this question may bring to mind a customer profile that centers on someone who is married with kids, typically in their 40s and in the middle of their higher earning years. This person has an interest in protecting their family’s finances in the event of an unexpected death, and they have the income to afford appropriate coverage.

While it’s true that this person may be a common candidate for the death benefit protection available through FIUL, this demographic isn’t the only direction financial professionals should look when recommending the benefits of FIUL coverage. Although younger, and likely having less disposable income and fewer family protection concerns, millennials are fast becoming an intriguing possibility for all areas of financial services including FIUL.

Millennials may not exactly fit what we may think of as a target customer for FIUL coverage, but they’re known for being financially savvy and having in interest in protecting their financial future–two attributes that lend themselves to receiving sound financial guidance. Whether they are risk adverse or simply see the value in saving for the future, there is great potential to connect with this demographic and have productive conversations about the many benefits FIUL can add to their long term financial plans.

Millennials Have Short and Long Term Financial Concerns

According to the 2016 LIMRA Insurance Barometer study, younger Americans showed a higher level of concern than older generations over many financial issues including paying monthly bills, supporting themselves if they became disabled and were unable to work, paying off their mortgage/rent and paying off/reducing credit card debt. This is understandable as they are in or near the family-forming years, face the burden of high student loan and credit card debt, and are further from their peak earning years.

Surprisingly, millennials were also more concerned about several financial issues that people confront later in life, such as having money available for a comfortable retirement, paying for medical expenses, paying for a child’s school/college and burdening others with funeral expenses. These responses tell us that millennials are not only thinking about short-term financial concerns–they also have their eye on the future and how they can adjust their spending/savings behavior now so they may be better prepared down the road.

Recent advances with life insurance products have helped by offering more ways for millennials to address future uncertainty with their finances. FIUL can address concerns millennials have about protecting their loved ones (even if starting a family is still a few years away) with the income-tax-free death benefit to beneficiaries, but can also provide the flexibility to help deal with other future concerns including income replacement, a college funding strategy, paying down a mortgage or other debts, estate tax coverage, final expenses and business succession.

These features are important as millennials have significant concerns about their ability to deal with the effects of rising costs as they get older. According to a new study* on Americans’ perceptions of the effects of inflation, millennials (48 percent) report being either “very concerned” (36 percent) or “terrified” (12 percent) that the rising cost of living will affect their retirement plans. Additionally, 49 percent of millennial respondents note they are either “very worried” (34 percent) or “panicked” (15 percent) that they won’t be able to afford the lifestyle they want in retirement due to rising costs.

FIUL can help address some of these concerns by providing the opportunity for the policy to build cash value accumulation from indexed or fixed interest which may be accessed for various reasons. (Keep in mind, any cash value taken from the policy is accomplished through policy loans and withdrawals. Taking policy loans and withdrawals against a life insurance policy will decrease any available cash value and death benefit. Clients should carefully manage policy values to help prevent a policy lapse and potential tax consequences of any outstanding loans.)

With the potential to help cover some of these future expenses, the issue then becomes determining an appropriate amount of life insurance coverage for younger buyers. Although they may see the value of more extensive life insurance coverage later in life, many millennials simply can’t afford the necessary premium to achieve that level of coverage on a permanent basis right now and are left with insurance that might not meet their desired needs. This is unfortunate because millennials are likely able to secure more coverage now when they are younger and may be in better health.

Thankfully, a convertible term rider–a new solution available through some FIUL contracts–can help younger clients who want to lock in insurability now, with the flexibility to adapt as their life changes. Available at an additional cost, a convertible term rider provides the opportunity to add term insurance coverage to a permanent policy–and gives the client the option to convert a portion or, over time, all of this term coverage into permanent coverage without additional underwriting. The client will maintain their desired death benefit protection, but because they are converting into an FIUL policy, they will also have the potential to accumulate cash value through the additional permanent coverage.

Flexibility for a Changing Lifestyle

Consider the example of David, a hypothetical client who is 30 years old and in good health. He’s a recent medical school graduate in his second year of residency. Since he is young and healthy, David thinks it would be an appropriate time to get life insurance protection. He anticipates a significant increase in his income when he completes his residency. In the meantime, he has modest income while making payments on student and auto loans and contributing to his retirement 401(k) plan.

David needs coverage that is affordable within his budget and provides an adequate death benefit, but would also like a strategy that can supplement his retirement savings. This convertible term rider within FIUL meets nearly half of his needs since it locks in insurability on the additional term amount now while he is young and in good health–but has flexibility to change as his lifestyle changes. Because David is on a limited budget he can’t afford the amount of permanent coverage he would like right now through the base policy alone, but through a convertible term rider he can get adequate coverage for the present while setting himself up for more extensive permanent coverage in the future.

For example, using the rider, between the two types of coverage he is able to have a $1,000,000 death benefit–with $250,000 in the base policy and $750,000 in the convertible term rider–at the lower cost in the first year of the policy.

Five years down the road, David’s financial circumstances change and his income has increased. He’s decided that he would like to increase his permanent coverage and, at the same time, increase his potential to accumulate cash value. So, in policy year six, David coverts a portion of his convertible term rider coverage into permanent coverage–which he can do without having to go through additional underwriting. In this scenario, he now has $500,000 in the base policy and $500,000 in the convertible term rider, maintaining the $1,000,000 death benefit.

In policy year nine David converts the remaining portion of the convertible term rider into permanent coverage (again without additional underwriting). He continues to have a $1,000,000 death benefit, and with his term coverage now consolidated into permanent FIUL coverage, he has the potential to continue to accumulate cash value for future needs. By utilizing the convertible term rider option with his FIUL policy, David was able to save over $35,000 in premium payments in policy years one through nine and still get the $1,000,000 life insurance coverage he needed.

Of course, it’s important for the client to realize that certain terms and conditions exist with this type of rider regarding when conversions can be made and how much can be converted each policy year–but if they understand these considerations, an FIUL policy with a convertible term rider can be an effective solution for some millennial clients.

As younger people continue to become more savvy about saving and financial planning, it’s important that the industry provides solutions that meet their needs and help them achieve their financial goals, both now and in the future. Product innovations within the life insurance industry are clearly moving us toward this new reality, helping financial professionals to create stronger, more meaningful connections with millennial clients.

*The Allianz Life 2016 Inflation Study was conducted by Ipsos via their eNation Online Omnibus in March 2016. The survey was completed via Ipsos’ iSay/Amario Panel with 1,005 U.S. adults age 18+, and was commissioned by Allianz Life.