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Luke Cosme

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Luke Cosme is senior vice president, chief sales and marketing officer at Mutual Trust Life Solutions, where he manages the company’s distribution and sales development and support efforts. Cosme joined Mutual Trust in February 2014 after serving for a decade as sales vice president at North American Company for Life and Health, where he was responsible for the recruitment and development of MGA relationships, sales strategies and case placement. Cosme started his career at North American in 1997 after graduating from the University of Illinois at Urbana-Champaign, where he majored in economics. At North American, he held positions as sales director, financial institutions, and worked in client services before being promoted to sales vice president in 2004. Cosme can be reached at Mutual Trust Life Solutions, 1200 Jorie Boulevard, Oak Brook, IL 60523. Telephone: 800-323-7320, ext. 5300. Email: cosmel@mutualtrust.com.

Joy And Pain

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Most athletes will tell you that the pain of losing is far greater than the joy of winning. Pat Riley, the legendary coach and team executive, said it even more succinctly: “There’s winning, and there’s agony.” This is a psychological concept called loss aversion that was first posited in the 1990s by Nobel Prize winning economist Daniel Kahneman and his research partner, Amos Taversky. Kahneman used to do an experiment with his students called the Coin Flip Scenario. He asks a student if he or she wants to flip a coin. If it lands on tails, then the student pays him $10. If it lands on heads, how much would he or she have to win to make it a worthwhile gamble? For most people, they would have to win at least $20 to make the bet. In short, the pain of losing $10 can only be offset by the possibility of winning an amount much greater than $10. This is because, for most of us, pain is more acute than pleasure.

This same result plays out over a wide variety of situations, including personal finance decisions. This is why diversification is so important and a core part of every good financial plan. However, even in something as seemingly straightforward as diversification, there are differences of opinion. For some diversification is finding a good potential return and layering it with a great potential return. This is the “if some is good, more is better” approach. This can work in some situations, but, if the two options are closely correlated, you’re really not protecting against the downside risk. You’re really just trying to maximize the positives and hoping to weather the storm when things don’t go your way. However, if we believe that diversification is more about risk management, then our approach should be one of mitigating negatives rather than maximizing positives. In life insurance, I would suggest that putting all of your client’s money into one type of product is closer to the former than the latter, even if you have multiple index options from which the client can choose. To truly diversify your client’s plan you need to look at more than one product. Much has been written in these pages and elsewhere of the power of indexed universal life, so for this article I’m going to talk about the benefits of looking at whole life, not as an alternative, but in conjunction with an IUL.

The First Day is the Worst Day
A whole life policy provides guaranteed cash value growth each and every year. That means that regardless of market conditions, interest rates or company decisions the client sees an increase every year. In addition to the guaranteed cash value growth, whole life also provides a non-guaranteed element—dividends. While dividends cannot be guaranteed to be paid, the impact that they have on the policy, once paid, is guaranteed. If the client elects to use dividends to purchase paid-up additions, then both the guaranteed cash value and the guaranteed death benefit of the policy increase. That means that those increases can never be taken away. In an IUL the potential for increases in cash value is potentially significant, but it is not guaranteed and can be more or less than what is illustrated. If the return is less, or potentially zero, the cash value in an IUL can also potentially decrease as cost of insurance charges are applied. For a client that is concerned about seeing her values potentially go down or even stagnate for a period of time, whole life can be a solution. If a portion of her money goes into whole life, then that portion will either grow exactly as illustrated on the guaranteed side, or if a dividend is paid, will look even better. In short, with whole life the first day is the worst day her policy will ever have. If anything changes, it changes for the better.

Guaranteed Contribution
The most important part of any financial plan is the money that goes into it. That is especially true for insurance. If the client can’t pay the premium, then the plan won’t work as promised regardless of interest rates or market performance. So what happens if your client becomes disabled and can’t afford to pay their premiums? Most IULs offer a Waiver of Monthly Deduction rider, which is valuable, but doesn’t guarantee that the premium is paid. Rather, it waives the costs that are deducted, so while the cash value won’t decrease due to cost of insurance charges, it also won’t grow as planned because the premium isn’t being paid. Again, for a client who is concerned about seeing her values stagnate in a vehicle that she planned to use for retirement income, whole life can be a solution. With the Waiver of Premium rider on whole life every dollar of the client’s premium into their base whole life policy continues to be paid. Many companies also have a Disability Benefit rider that will waive some or all of the additional premium being paid into a paid up additions rider. This means that, if a client becomes disabled, the portion of her retirement savings that she allocates to whole life continues to be contributed just as if she were paying it herself. In short, with whole life you not only guarantee the cash value growth, you also can guarantee the contribution.

The moral of this story is that our conversations should not be whole life or IUL. The choice shouldn’t be binary, especially when we consider the concept of loss aversion—the pain of losing is far greater than the joy of winning. Whole life ensures that some portion of your client’s plan is guaranteed to grow, even if the client becomes disabled. So to truly diversify your client’s plan and mitigate those negatives, we should be talking about whole life and IUL.

Mutual Trust Life Solutions 2024 Carrier Forecast 

Better in 2023—More in 2024

At the close of almost every year I say to myself that the coming year can’t possibly be as challenging as this one. Fast forward to the end of the next year and…2023 was certainly no different. Rapidly rising interest rates helped improve portfolio yields for the first time in a long time. But those same rising interest rates made many financial service products more competitive as well. Add client concerns about inflation, the cost of housing and the economy in general and we saw a year where activity remained strong, but the money that clients were willing to put into life insurance declined.

We had some ups and we had some downs. We were reminded again that while nothing is ever quite as good as it seems, all is not lost. Sure there is uncertainty (when is there not?), but with that uncertainty comes opportunity. We can bring some certainty to an uncertain world by talking to clients about one thing that they’ll never have to worry about–a participating whole life policy. Whole life insurance provides certainty in premiums, certainty in cash values, certainty in death benefits and certainty in performance. Participating whole life provides certainty in premium. Whole life premiums are guaranteed and whole life policies come with non-forfeiture options that keep the policy in force if your client cannot pay their premium. Participating whole life provides certainty in cash values. Whole life policies not only provide guaranteed cash values that the client can access at any time for any reason, they also provide guaranteed cash value growth, every year. Participating whole life provides certainty in death benefits. Whole life death benefits are guaranteed. As long as your client pays the premium, the death benefit is guaranteed to stay in force regardless of changes in interest rates or the performance of a market index. Finally, participating whole life provides certainty in performance. With premiums, cash values and death benefits all guaranteed, your client knows exactly what they will have today, tomorrow and every day. In fact, the only way your client’s policy can change is if the company pays a dividend, and then it changes for the better! If your client elects to have dividends purchase paid up additions, which many clients do, the result is an increase in the guaranteed cash value and the guaranteed death benefit. Those increases are guaranteed for life!

Whole life can be a valuable part of any financial plan because of the certainty that it provides regardless of the uncertainty they might be experiencing in the rest of their financial world. Ensuring that clients hear this message is our challenge, so we can never stop trying to make our products better and easier to access for our clients and for our agents. At Mutual Trust Life Solutions we continue to do just that, finishing 2023 on a high note with more to come in 2024.

We introduced a new and improved version of our flagship product, Horizon Value.TM One of the best early guaranteed cash value products in the market is now even more competitive across the board. Shortly after we announced our largest dividend scale increase in decades. Great news for agents and great news for clients! Heading into 2024, you have to take a look at Mutual Trust.

Strong guarantees and a competitive dividend–take a look at Mutual Trust.

Flexible solution that works well with all the major selling systems–take a look at Mutual Trust. True single premium whole life–take a look at Mutual Trust.

Competitive first-year and renewal commissions–take a look at Mutual Trust.

For participating whole life solutions you can trust, you have to take a look at Mutual Trust.

More in 2024
We start the year bigger, safer and stronger with the acquisition of Encova Life. The acquisition enhances our scale in the United States and brings $60 million in revenues, $600 million in assets, $38 million in premiums and 82,000 lives.

We will introduce our first indexed UL product in the first quarter of 2024. The performance is built into the product so agents can easily explain how the product works and clients can actually understand what they are buying. Also with Vista Life IUL, agents will be able to talk to clients about the benefits of IUL and whole life in their plan. Imagine, the upside potential of IUL combined with the guaranteed growth of whole life. That’s a compelling argument!

And it’s not just product that will change in 2024. We will introduce a new, web-based version of our illustration software, accessible from anywhere and complete with new reports and capabilities. We will also make improvements to our underwriting process which will help us to collect better information and eliminate some exams and reports that add time and make your job more difficult.

So, a couple of things to remember in 2024. Whole life can be a valuable part of any financial plan. For whole life, you have to take a look at Mutual Trust Life Solutions in 2024. Because life is uncertain, but whole life is guaranteed.[LC]

Joy And Pain

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Most athletes will tell you that the pain of losing is far greater than the joy of winning. Pat Riley, the legendary coach and team executive, said it even more succinctly: “There’s winning, and there’s agony.” This is a psychological concept called loss aversion that was first posited in the 1990s by Nobel Prize winning economist Daniel Kahneman and his research partner, Amos Taversky. Kahneman used to do an experiment with his students called the Coin Flip Scenario. He asks a student if he or she wants to flip a coin. If it lands on tails, then the student pays him $10. If it lands on heads, how much would he or she have to win to make it a worthwhile gamble? For most people, they would have to win at least $20 to make the bet. In short, the pain of losing $10 can only be offset by the possibility of winning an amount much greater than $10. This is because, for most of us, pain is more acute than pleasure.

This same result plays out over a wide variety of situations, including personal finance decisions. This is why diversification is so important and a core part of every good financial plan. However, even in something as seemingly straightforward as diversification, there are differences of opinion. For some diversification is finding a good potential return and layering it with a great potential return. This is the “if some is good, more is better” approach. This can work in some situations, but, if the two options are closely correlated, you’re really not protecting against the downside risk. You’re really just trying to maximize the positives and hoping to weather the storm when things don’t go your way. However, if we believe that diversification is more about risk management, then our approach should be one of mitigating negatives rather than maximizing positives. In life insurance, I would suggest that putting all of your client’s money into one type of product is closer to the former than the latter, even if you have multiple index options from which the client can choose. To truly diversify your client’s plan you need to look at more than one product. Much has been written in these pages and elsewhere of the power of indexed universal life, so for this article I’m going to talk about the benefits of looking at whole life, not as an alternative, but in conjunction with an IUL.

The First Day is the Worst Day
A whole life policy provides guaranteed cash value growth each and every year. That means that regardless of market conditions, interest rates or company decisions the client sees an increase every year. In addition to the guaranteed cash value growth, whole life also provides a non-guaranteed element—dividends. While dividends cannot be guaranteed to be paid, the impact that they have on the policy, once paid, is guaranteed. If the client elects to use dividends to purchase paid-up additions, then both the guaranteed cash value and the guaranteed death benefit of the policy increase. That means that those increases can never be taken away. In an IUL the potential for increases in cash value is potentially significant, but it is not guaranteed and can be more or less than what is illustrated. If the return is less, or potentially zero, the cash value in an IUL can also potentially decrease as cost of insurance charges are applied. For a client that is concerned about seeing her values potentially go down or even stagnate for a period of time, whole life can be a solution. If a portion of her money goes into whole life, then that portion will either grow exactly as illustrated on the guaranteed side, or if a dividend is paid, will look even better. In short, with whole life the first day is the worst day her policy will ever have. If anything changes, it changes for the better.

Guaranteed Contribution
The most important part of any financial plan is the money that goes into it. That is especially true for insurance. If the client can’t pay the premium, then the plan won’t work as promised regardless of interest rates or market performance. So what happens if your client becomes disabled and can’t afford to pay their premiums? Most IULs offer a Waiver of Monthly Deduction rider, which is valuable, but doesn’t guarantee that the premium is paid. Rather, it waives the costs that are deducted, so while the cash value won’t decrease due to cost of insurance charges, it also won’t grow as planned because the premium isn’t being paid. Again, for a client who is concerned about seeing her values stagnate in a vehicle that she planned to use for retirement income, whole life can be a solution. With the Waiver of Premium rider on whole life every dollar of the client’s premium into their base whole life policy continues to be paid. Many companies also have a Disability Benefit rider that will waive some or all of the additional premium being paid into a paid up additions rider. This means that, if a client becomes disabled, the portion of her retirement savings that she allocates to whole life continues to be contributed just as if she were paying it herself. In short, with whole life you not only guarantee the cash value growth, you also can guarantee the contribution.

The moral of this story is that our conversations should not be whole life or IUL. The choice shouldn’t be binary, especially when we consider the concept of loss aversion—the pain of losing is far greater than the joy of winning. Whole life ensures that some portion of your client’s plan is guaranteed to grow, even if the client becomes disabled. So to truly diversify your client’s plan and mitigate those negatives, we should be talking about whole life and IUL.

Mutual Trust Life Solutions 2023 Carrier Forecast

An Exciting New Chapter—Mutual Trust Life Solutions

Early in 2022, we announced the merger of Mutual Trust Life Insurance Company into Pan-American Life Insurance Company and the introduction of Mutual Trust Life Solutions. This next step in the integration process that began in 2015 makes Mutual Trust Life Solutions a fully integrated division of Pan-American Life Insurance Group and reaffirms our commitment to the Mutual Trust brand and to the whole life portfolio of products. The merger creates a company that is bigger, safer and stronger for our clients and our distribution partners, with more than double the capital and surplus and risk-based capital of more than 500 percent.

Greater financial strength is certainly one of the benefits of the merger, but just as important are the things that did not change. First and foremost, we are not demutualizing and there are no external investors. We are still a Mutual Holding Company owned by the policyholders. Second, Mutual Trust will continue to operate from its existing offices in Oak Brook, IL, providing the same high-quality service that you expect from the people that you trust with your business today. Third, our commitment to distributors, to guarantees and to participating whole life remains firm. We will continue to offer the same quality products with the same features, benefits and availability that our distribution partners enjoy today.

So what is changing? As mentioned before, we are bigger, safer and stronger than ever. Financial strength has been and always will be a key focus for the organization. To that end the merger allows us to diversify our risks, making writing new business more capital efficient, alleviating surplus strain and providing more flexibility in product development. From a marketing perspective, our name and our logo have changed but still honor the Mutual Trust brand that you have come to know. There is also an immediate benefit on the product side, as the merger also provides our distribution partners with easier access to all of the products that PALIG has to offer including group health products, accident products and life insurance products for foreign nationals.

So, as 2023 opens, we have a larger organization with even greater financial strength, a sterling ratings profile and an improved Risk-Based Capital ratio. We have expanded growth opportunities for the company and our distribution partners and we have a competitive product portfolio that will continue to expand throughout the year. Mid-year, look for us to add a critical illness rider to our whole life portfolio. Later in the year we will introduce our first indexed universal life product, adding a competitive cash accumulation product to the portfolio. And for early 2024, look for a new limited pay participating whole life product with guaranteed payment periods, guaranteed cash values and guaranteed cash value growth.

The New Year will bring new challenges and new opportunities as it always does. Over the last few years, as an industry, we showed the world the value that our products provide and the importance of what we do. Through economic uncertainty, political turmoil and a global pandemic, we showed the world that no one does more good for families, for businesses and for our communities than our industry does and has done for over one hundred years. There has never been a better time to be in our industry and I am excited for the role that Mutual Trust Life Solutions will play. From everyone here at Mutual Trust, we wish you and your families a happy and safe new year!

Do I Have To Pay Forever?

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A question that we get frequently from clients is “Do I have to pay forever?” It’s not an unreasonable question, especially if the policy has been put in place to cover a specific need. If the purpose of my policy is to pay off my mortgage, why do I need to pay after my mortgage has been paid off? If I bought the policy for income protection, do I really need to pay the premium after I retire? The same question applies for retirement supplement. Even though many things can and will change between the time a policy is applied for and the time it is needed (or not), the idea that you have to pay forever can be a daunting proposition. Though they may never need to do it, it would be nice to have the option to stop paying at some point. The question for the agent is what happens if they do?

With participating whole life, your client has a non-forfeiture option designed for this exact situation—reduced paid up (RPU). RPU gives the client the ability to stop paying premiums and use the existing cash value as a single premium to purchase a lower guaranteed death benefit. That death benefit is guaranteed for life. No additional premium payments are needed. But that’s not all. The client still gets all of the benefits of participating whole life! The paid up policy has guaranteed cash value and guaranteed growth of cash value. The paid up policy has the ability to earn dividends, which can be used to increase the guaranteed cash value and the guaranteed death benefit. All of this happens automatically when the client selects RPU. He has a guaranteed paid up policy that continues to grow for the rest of his life.

Now some may argue that the same concept can be accomplished with an IUL. My answer to that would be “maybe, if…” Certainly we can structure an illustration to show a limited pay scenario, but will there be sufficient cash value to ensure that the death benefit will continue for life? What about the cash value? Maybe, if the client pays the same premium every year. Maybe, if the policy performs as illustrated. Maybe, if caps stay the same, participation rates stay the same, COI charges stay the same… That’s a lot of “maybe, if…” for a client who just wants to hear “No, you don’t have to pay premium forever.” Which answer do you think your client will prefer?

There is good news for current IUL clients who have that concern. As long as they have cash value in their IUL policy, and they are insurable, they can create their own RPU solution with single premium whole life. For a client like those that we described earlier—they bought coverage to address a specific need and now don’t want to continue paying premium—they can take their cash value and purchase a single premium whole life policy with guaranteed death benefit and never pay another premium. Or a client with an IUL that is underperforming and doesn’t want to continue paying premium, they can purchase a single premium whole life and receive guaranteed cash value growth with the potential for even more growth with dividends. The best way to address a policy that has underperformed is to offer one that is guaranteed to perform. Remember, if you focus on the guarantees, then the first day of your single premium whole life policy is the worst day it will ever have. If anything changes it’s because the company paid a dividend, which will make the guaranteed side of the illustration look even better.

The RPU solution is not perfect and it is not free. By electing RPU, the client is lowering their death benefit and potentially decreasing the cash value growth. But, it provides flexibility for your clients. It protects them from potentially losing coverage altogether. It allows them to continue to benefit from a plan that may have served its initial purpose but has the potential to do much more. It helps you definitively answer the question “Do I have to pay forever?” It also gives you another reason to take another look at an old friend—participating whole life!

Consider All Viable Solutions

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Flammable and inflammable mean the same thing. So do regardless and irregardless, though some (including my retired, English teacher mom) would tell you irregardless is not a word. In our industry, viable and marketable used to have similar meanings. A viable solution was one that addressed a client’s need, met a reasonable expectation and, in doing so, was considered by an agent among a number of solutions. A marketable solution was one that was designed to address a client’s need, set a reasonable expectation and, in doing so, was promoted by a carrier to be considered by an agent among a number of solutions. Unfortunately, viable and marketable mean very different things now because we have elevated two more words to the same definition: Probable and possible. If this word salad that I served is confusing please bear with me as there is a salient point.

Participating whole life has always been a viable solution for a client looking for additional money for retirement. Guaranteed cash values and guaranteed cash value growth give the client a baseline of what will be accessible at any point in time. The only variable? The client needs to pay the premium. The dividend in participating whole life provided a non-guaranteed aspect to the growth in the policy, an additional benefit that increases the cash value. The only variables? The company must perform well and declare the dividend that was illustrated. Was the policy going to perform exactly as illustrated each and every year? No, because of the variables. The client may not pay their premium. The company may declare a dividend that was higher or lower than what was originally illustrated. But, as a solution, it addressed the client’s need and set a reasonable expectation for what a client could expect because there were only a couple of variables to consider. The client’s result was probably going to be close to what was originally illustrated, so it was viable and it was marketable.

Then something changed. Our view of what was probable expanded. We traded guarantees for more upside. Instead of basing policy performance on company performance, we based it indirectly on the performance of a market index. The market goes up and the policy participates in a portion of that gain. The market goes down and the policy earns nothing, but at least it doesn’t lose anything. But what about the variables? The client needs to pay the exact premium, the market needs to increase by the exact same rate every year and the company needs to maintain caps and participation rates at the same level as when the policy was issued. Like participating whole life, the policy will not perform exactly as illustrated because of the variables. But what are those variables?

  • The client may pay the specified premium, or they may pay more or less.
  • The markets may do better than originally assumed or they may do worse. For the purposes of this article we are going to assume that they do not have the exact same return each and every year, because they never have.
  • The company may keep caps or participation rates at the exact same levels as originally illustrated or they may increase or decrease them.

As a solution, it addresses the client’s need and sets a reasonable expectation, but there are many more variables to consider. As we layer on each of those variables, the client’s result moves a little further away from probable and more towards possible. We’re ok with that because possible tends to illustrate better, so it is now the bar for viable and marketable.

So, what’s the problem? Products are supposed to improve over time. Companies are supposed to find new ways to help clients. The new is supposed to supplant the old. Things are supposed to get better. If we assume that all is equal, that could be what is happening here. But is it? All we are doing is trading guaranteed growth and some non-guaranteed upside for very little guaranteed growth, more non-guaranteed upside and a promise that zero is your hero. For some clients, that is an acceptable trade-off, but many still prefer what is probable over what is possible. Either will work for the right client. The problem arises when we go back to the question of what is viable and what is marketable. If we only present what we think is a marketable solution rather than multiple viable solutions, we run the risk of clients and products being mismatched, or even worse, not being matched at all.

One step we can take to address this is to consider all viable solutions, not just the ones that we hear about most. Participating whole life has a place in the retirement supplement universe, because it still gives a client a probable solution. Indexed universal life has a place in the retirement supplement universe, because it still allows the client to take advantage of what’s possible. Even better, what if we gave them both? Participating whole life for guaranteed growth, even when markets are down, and indexed universal life for potentially greater growth when markets are up. That’s a plan that’s both viable and marketable.

In A World Full Of Volatility, Give Your Client Certainty

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Volatility is the word of the day. For so many years, economic news has followed a predictable trend—the markets are up, inflation is low, prices are stable, etc. There was comfort in that predictability. Sure, there were the occasional spikes in gas prices and rough days in the market, but our 401(k) statements generally looked good and we didn’t gasp when we went to the gas station to fill up. Those trouble-free days seem far away now. Since the beginning of the year, markets have sputtered, with occasional upward ticks more than offset by weeks in the red. Inflation is at 40-year highs and prices on everything from gas to plywood to milk seem to be on a persistent march upward. And our 401(k) statements? Well, we might be tempted to not look for a while.

This is not intended to be one of those “the end is near” manifestos. Things are rough right now, but things have been rough before. Volatility is nothing new. It just took a break for a while. What might seem new are the feelings that it engenders: Uncertainty, unease, fear. It has been a while since our clients experienced these feelings, so it is incumbent on us to help them navigate those feelings and offer potential solutions that can help mitigate their fears. This is the time for us to shine!

So how do we counter a world full of volatility? With some certainty. Even better, with some guarantees. With many aspects of our clients’ financial lives seeming out of their control, you can provide them with at least one thing that they’ll never have to worry about—a participating whole life policy. Whole life insurance provides certainty in premiums, certainty in cash values, certainty in death benefits and certainty in performance. Consider the following…

Certainty in premium. Whole life premiums are guaranteed. Your client can take comfort in knowing that the company cannot increase their premium or the cost of their coverage. Additionally, whole life policies come with non-forfeiture options that keep the policy inforce if your client cannot pay their premium. This is especially valuable for the client whose disposable income is being squeezed in ways that it hasn’t been before. And it is not a one-size-fits-all solution—most policies offer a number of options to meet different client needs:

  • Premiums can be paid from policy cash values.
  • Automatic premium loan—As the name suggests, a loan against the policy cash values is taken to pay the premium.
  • Extended term insurance—The policy cash value is used to purchase term insurance for the death benefit amount.
  • Reduced paid up—The policy cash value is used as a single premium to purchase a paid up policy.

Certainty in cash values. Whole life policies not only provide guaranteed cash values that the client can access at any time for any reason, they also provide guaranteed cash value growth every year. The schedule of guaranteed cash values and guaranteed cash value growth is written into the policy and is not subject to interest rate changes or the performance of a market index. If your client pays the premium, the guaranteed cash value grows every year. Zero is not your hero when you can have guaranteed growth!

Certainty in death benefits. Whole life death benefits are guaranteed. As long as your client pays the premium, the death benefit is guaranteed to stay in force regardless of changes in interest rates or the performance of a market index.

Certainty in performance. With premiums, cash values and death benefits all guaranteed, your client knows exactly what they will have today, tomorrow and every day. In fact, the only way your client’s policy can change is if the company pays a dividend, and then it changes for the better! If your client elects to have dividends purchase paid up additions, which many clients do, the result is an increase in the guaranteed cash value and the guaranteed death benefit. Those increases are guaranteed for life!

The guarantees in whole life provide your clients with certainty. They know their coverage will be there. They know what it will cost. They know what their cash value will be and they know that they can access it. Whole life can be a valuable part of any financial plan because of the certainty that it provides regardless of the volatility they might be experiencing in the rest of their financial world. Remember, life is uncertain, but whole life is guaranteed.

Mutual Trust Life Insurance Company 2022 Carrier Forecast

At this time last year, I did not have “redesign your entire product portfolio for the second time in three years” on my 2021 bingo card. However, as the year began and the changes to IRC 7702 came to light, plans changed and we all set out, excited to see what the future held for our industry. Today, more product changes loom as companies try to figure out where the competitive landscape has settled. It seems that there were as many interpretations on product pricing as there were products to price. Products changed. Features changed. Rates changed. What did not change is our industry’s ability to find a way to continue to help people, families, businesses and communities when they need it most. We enter the new year with a greater level of appreciation of the value of our industry among the general public and armed with products better positioned to deliver that value. Our potential to make a difference has never been greater. I’m proud to be a part of our industry and the part that Mutual Trust will continue to play in realizing that potential.

As we look to what the next year will offer, it’s important to look at how we got here. At Mutual Trust, the first step we took was to talk with our distribution partners. If we had to redesign the portfolio again, we wanted to make sure that we designed something that worked for them—so we listened. The feedback that we received had five common themes and those became our product development priorities.

First, maintain the focus on early guaranteed cash values. That has been a staple of our product portfolio for years and the reason that our portfolio has been and continues to be a competitive solution for selling systems and selling concepts like Your Family Bank, Infinite Banking, Circle of Wealth, Wealth Building Cornerstones and LEAP. Mutual Trust will continue to be the company that you trust for guarantees.

Second, maintain the flexibility of the paid-up additions riders. Our portfolio remains one of the most flexible in the marketplace, with the ability to contribute up to $100,000 to the flex PUA every year. All that is required to continue that limit is a minimum payment of $100 every year. Add the disability income rider and you can protect up to $15,000 per year in contribution to the flex PUA if the client becomes disabled. Mutual Trust will continue to be the company that you trust for PUA flexibility.

Third, we need a longer term rider option. The 10-year term rider was effective, but the portfolio could be made even more flexible with a longer term option for younger clients. Like the 10-year rider, the new one will have the same commission levels as the whole life portfolio, so that customizing the client’s coverage doesn’t come at a cost to the agent. Mutual Trust will continue to be the company that you trust for premium flexibility.

Fourth, we need a full e-app process in place. The current remote signature process works, but true e-app process will make an excellent service model even better. We will introduce our new e-app process in the first quarter of 2022. Mutual Trust will continue to be the company that you trust for excellent new business, underwriting and policy service.

The last common theme we heard from everyone in every conversation–please don’t touch commissions! Our new portfolio will offer the same competitive first-year commissions and the same highly competitive renewal commissions. Mutual Trust will continue to be the company that you trust for the Power of Renewals!

In response to the feedback, we introduced our new portfolio in the fourth quarter of 2021. As before, Horizon Value offers some of the most competitive early guaranteed cash values in the industry. We have one of the most competitive single premium whole life products in the market in Horizon Legacy. With the introduction of Horizon Guarantee in December, we have a competitive and flexible death-benefit focused whole life product. We added a 20-year term rider to make customizing coverage easier and we lowered our loan interest rate to better reflect the low interest rate environment. Finally, we didn’t touch commissions!

The last few years have shown the country the power and the value of what we do. With the new year will come new opportunities and new challenges, which we will tackle head-on as we always have. There has never been a better time to be in our industry and I am excited for the role that Mutual Trust will play. From everyone here at Mutual Trust, we wish you a safe and happy holiday season! [LC]

The Power Of Renewals

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It used to be that people got into the life insurance business because of the renewals. “Mailbox money,” as it was sometimes called, helped smooth out the ups and downs of commissions and ensured that the agent wasn’t starting each year at square one. Renewals also gave the agent a means of funding his or her retirement, either as a renewal stream of income or a basis for selling the practice to another agent. For better or worse, the trend over the last 20 years has been toward heaped commissions, where almost all of the commission is paid in year one and renewal commissions are nominal at best. The result of this focus on the “urgency of now” is that the Power of Renewals has been overshadowed.

The result of this gradual transition is that renewals are looked at as a “nice to have,” rather than an absolute necessity, which just does not make sense. Think of the amount of time, energy and hard work that goes into placing a life insurance policy inforce. The prospecting, the client meetings, shepherding the case (and the client) through underwriting and then reminding them why what they are doing is so important. And that’s just the beginning. Then comes the servicing, the client reviews and reminding them why what they are doing is so important. All of that takes time, energy and hard work as well. Which brings us back to the original point about renewals. With all of the work that is done on the front end and all of the work that will be done when the policy is inforce, a renewal shouldn’t be a “nice to have,” it should be an absolute requirement. Is all of that work done just for the first premium or do you earn every premium that is paid? I think it is the latter. If a client pays a premium, the agent should get paid a commission that matters.

I said before that the trend has been toward heaped commissions, but not for everyone. There is one product that still recognizes the Power of Renewals–participating whole life. Renewal commissions in many participating whole life products range from two to four times what many UL and IUL contracts pay in the first ten years, while paying the same first-year commission. What does that mean in actual dollars? Potentially a lot. Let’s take an agent at a 90 percent contract who writes $100,000 in paid target premium per year. His first year commission is $90,000 each year, but what about the renewals? In a participating whole life policy with a 5.5 percent renewal (yes, this does exist!), the total renewal commission over ten years is $222,750 and the renewals paid in year 10 alone are almost $45,000. In a UL or an IUL that pays a two percent commission, the total renewal commission over ten years is $81,000 and the renewals paid in year 10 alone are $16,200. Which would you rather have? That is the Power of Renewals.

In addition to the dollars, another benefit of a good renewal stream is the flexibility and the peace of mind that they can provide to your practice. Everyone wants to grow their practice, get more clients and make more money, but it’s usually not that simple. Growth requires capital to invest in the business, something that is not always readily available. In the previous example, the difference in renewals in years eight through 10 is more than $22,000, $25,000 and $28,000, respectively. What could that be used for? Hire a part-time employee? Move to a bigger office? Invest in a better CRM system? All are possibilities when there is a stream of renewals.

If 2020 taught us anything, it is that peace of mind is important and can be fleeting. When the world shut down, our business slowed. Seminars were on hold. Client meetings were tough. Underwriting requirements were harder to get, so the business already submitted slowed as well. As our industry always does we found a way, but when prospecting, meetings and underwriting slow, so does revenue. And when revenue slows, peace of mind can take a holiday. Renewals would not have solved the problems that we faced last year, but they sure could have brought some peace of mind. In the previous example, the total renewals for participating whole life in years eight through 10 were almost $35,000, $40,000 and $45,000, respectively. In a year where top line revenue took a hit, would that have helped calm the nerves?

Renewals are not a “nice to have.” They should be an essential part of your business. A good, producing agent can build up a healthy stream of renewals in less time than you think. For that agent, January doesn’t mean starting from scratch, it means adding to an annuity stream of income. One that they can count on year after year. If you would like to take advantage of the Power of Renewals, all you have to do is take a new look at an old friend–participating whole life. Happy selling!

A Simple Way to Make Your Business Owner Client’s Money Work Smarter

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Most business owners maintain a reserve account or an emergency fund. It’s the money they’ll use if the business truck needs a new transmission or the building needs a new roof. It’s the money that they hope they never have to touch, but that they are thankful to have if they ever do. Saving the money is a smart first step, but what do they do with it? Where should it go? It’s generally for emergencies, so it needs to be safe and it needs to be readily accessible. For a lot of small business owners, this means that it goes to the bank, in either a savings account or a money market account. It’s safe and it’s liquid and it’s probably earning less than one half of one percent, but that’s the price you pay for safety and liquidity. Or is it?

There is another option that provides safety and liquidity while also making your client’s money work smarter–participating whole life insurance. Let’s walk through the solution… First, a single premium whole life policy can be structured to provide better than 97 percent of the single premium in cash value at the end of year one. Since whole life has no surrender charges, the client has access to every dollar of that cash value. In many cases, the cash value in the whole life policy exceeds the premium paid by the third policy year. Second, whole life not only guarantees the cash values, it guarantees that the cash values will grow each and every year at a rate that far exceeds the rates that you can get in a money market account right now. Non-guaranteed policyholder dividends are available in addition to the guaranteed increases. While dividends are not guaranteed, once they are paid they can actually increase the guaranteed cash value and the guaranteed death benefit beyond what is guaranteed in the original contract. As an aside, when is the last time that you saw a policy do better than illustrated on the guaranteed side of the ledger? If you’re not selling whole life, you probably never have. Third, your client’s reserve account now has a guaranteed death benefit! This where their money starts working smarter because it’s doing two jobs instead of one. Should an emergency arise, there is cash available. If something should happen to the business owner, that same cash has purchased a guaranteed, tax-free death benefit that may be many times larger than the emergency fund itself. That’s money the business can use to continue operating and paying employees. That’s an emergency fund to cover all emergencies.

Let’s take a look at how this can work for your business owner client and for you. Our client is 45 years old and has owned his own business for about 10 years. He has built a reserve account of around $60,000 which, thankfully, he has not had to use. It’s at his local bank and he hasn’t thought much about it because it’s only for emergencies. Like many business owners he may have some life insurance, but probably not enough to protect his business if something happened to him. And his focus right now is on building back up after COVID-19, not on life insurance. How can you help him? By making his money work smarter and do two jobs instead of one. We are going to use $50,000 of his $60,000 reserve account to purchase a competitive, participating whole life policy from a highly-rated company and structure it for maximum early cash value. On day one his death benefit is $180,000, almost four times the amount of his single premium. His guaranteed cash value at the end of the first year is almost $48,000 and he has access to every dollar of that money. At the end of the second year, his cash value is more than $49,000. By the end of year three his cash value is more than $51,000, which is more than he will have in his interest bearing account earning one half of one percent. By year 10 his cash value is more than $66,000 and he still has a tax-free death benefit of more than $180,000.

So, have we met the client’s expectations? As we said at the beginning it’s his emergency fund, so he wants safety and liquidity above all else. Is his money safe? Absolutely! His whole life policy provides guaranteed cash value and guaranteed cash value growth every year. Is his money liquid? Absolutely! Whole life has no surrender charges, so every dollar of cash value in his policy is available to him if he needs it. And while his money is growing and accessible, it’s also providing him with a tax-free, guaranteed death benefit that helps protect the business that he has worked so hard to build.

The best part of this solution is that no one has ever likely talked to this business owner about this option. That’s a conversation that can open up a lot of doors. To get started, all you have to do is take a new look at an old friend–participating whole life. Happy selling!