Mark Rosen

What life products are currently seeing the best sales in your agency?  What other lines are significant parts of your business?

Rosen
Obviously, term insurance is always in the mix; guaranteed universal life sales continue but we see lots of growth in the “mortality-type guarantee” products as well.  These tend to offer significant guarantees with projected cash value benefits and a strong projected death benefit.  In addition, variable life, indexed life, and whole life continue to play a role in our firm.  It is very important to note that addressing a long term care need for clients is a major concern and life insurance products with a long term care or chronic illness rider or the various linked products are playing an important part in this discussion and driving significant sales.

Umekubo
We are seeing more and more GUL with riders (chronic illness and long term care) and one with a “longevity / income” rider being more receptive.  Index UL has gained more acceptance with some of our brokers, but we tend to be a more conservative group, so we prefer the IUL with longer or even lifetime no-lapse guarantees.  We will gladly take less “upside” for more guarantees.

No matter what changes the industry brings us, people still have the same three problems: Dying too soon, getting sick along the way, or outliving their retirement nest egg.  Good news is we have the solutions and tools to solve those problems.  All insurance is, at the end of the day, leveraged money bought with pennies on the dollar.

As far as other lines of business, we are a “full-service” BGA and we provide long term care insurance, annuities, disability income, chronic illness and Medicare supplement insurance to our brokers.  All lines are very important to our firm.  We are a rural-based agency and want to be a true “one-stop shop” for our brokers, plus it gives us a broader revenue stream for our agency.

Wall
We aren’t seeing a significant shift in the percentages of term to perm, however, as it relates to those two lines, what we are seeing with those product lines are:

Term. We’ve been telling the story of “product differentiators” for some time. Perhaps as a result, we are seeing, especially with experienced producers or producers who are doing long term planning, a renewed focus on products that offer conversions to the carrier’s entire product line—for the entire convertibility period; those producers will use products with limited conversion opportunities but only as a last resort.  

Permanent. Most of our permanent life insurance cases remain death benefit driven, very few are supplemental income driven; that being said:

• We’re seeing more current assumption product sales, either general account crediting or indexed crediting, sales using products that offer the ability to guarantee the death benefit for a long period of time and that will then project coverage thereafter. 
• We are also seeing less interest from producers in products that, while offering guarantees to age 121, have little flexibility. By that I mean products that, should a premium be skipped and never be repaid, will lose less of the guarantees than another product will lose. 
• When we do work on a case involving cash accumulation, we prefer to use carriers that have a formal program in place that will automatically, whether during the accumulation phase or the distribution phase, do policy performance re-calculations and will make suggestions on how to catch up on the originally projected values.

One line of business that we’re optimistic about, and which is becoming a greater part of our business, involves products designed to pay for “care.” In 2018, as an industry, we are blessed to have so many products at our disposal that can be used to pay for care—we have:

• Traditional long term care insurance; 
• Linked benefit products (based either on a life insurance or an annuity chassis); or,
• Hybrid products (life insurance with long term care or chronic illness riders).  

As BGA’s, we need to make these products available to our producers, but, more important, to educate them as to where each product works the best. 

The Brokerage Business Is Dynamic,The Potential For Success Unlimited

What do you find most exciting about the insurance business?

Kathy Carlson: Most of all, the camaraderie! Our industry has advanced over the past 25 years. The products we offer have improved, the means to apply for insurance have multiplied, the underwriting processes have progressed, and communications are instantaneous. While these changes in and of themselves are exciting, it is our propensity to share ideas and experiences with each other that has allowed the insurance industry to evolve in such positive ways.

I have established so many meaningful relationships and friendships. It’s uplifting to know the entire industry works together to continually improve in order to reach one common goal—that consumers get the best possible solutions for their needs.

William Cason: We have huge opportunities for writing more life insurance. All of the LIMRA surveys talk about how vastly underinsured and uninsured Americans are. Many people don’t have agents calling on them, perhaps an effect of the decline in home service agents. I think the use of technology and simplified applications/underwriting will help us reach the grossly underinsured as well as the often uninsured, middle market.

Michael Gorlick: Insurance, in its best form, is a creative process—combining one’s creative knowledge with a vast palette of products and resources—that is exciting and satisfying when it results in the best solution for a client’s important financial need. Being in the position to be “heard” regarding product development, product improvement and product distribution makes every day open to possibilities.

The brokerage marketplace is always dynamic. The sophistication of available products coupled with the depth of broker knowledge continues to grow. The markets we cater to will change dramatically over the next decade. I believe there is no better business to be in and the potential for success is truly unlimited.

On the producer front, the average brokerage producer is in his late fifties—in other words, an aging group of producers. However, we are seeing more business coming from independent broker/dealers, banks, and property and casualty firms. Providing back-office case management and marketing expertise to these groups, while exposing them to new lines of business, is where the brokerage industry’s future growth will be found. Exciting times lie ahead!

On the marketing front, a clear opportunity exists in the rapidly growing market for retirement products. The industry will be clearly defining its role in this large, fast-growing and profitable financial segment. According to LIMRA, over the next five years, nearly $1 trillion of retirement savings assets will enter the retail market.

Capitalizing on this emerging opportunity will require a better understanding of the needs of the customers approaching retirement as well as those customers already retired. Nearly one out of every two customers, age 55 to 80, expresses an interest in a guaranteed income product. This represents a market potential of nearly $250 billion, according to LIMRA.

There is no other industry that can guarantee lifetime income when it is needed most. Our industry is the only industry that can guarantee wealth transfer, income replacement, and income at any time. In an era when guarantees and security are so important to customers, we can play a starring role.

Mark Rosen: The insurance business may be thought of as staid and conservative, but it is really very dynamic with developments encompassing product changes, underwriting opportunities and sales ideas that relate to the current as well as anticipated tax environment. From the planner’s perspective, insurance provides a wide range of solutions to their clients’ needs from income replacement to business succession to retirement and tax planning.

What about the life insurance business keeps you up at night?

Cason: Not enough good training and an increase in the average age of the agent population. In years past, people went to work for career agency systems. Now everyone can sell life insurance, but apart from the mutual companies, no one focuses on it (money managers, financial planners, CPAs, banks, health insurance agents, senior market specialists, P&C agents, Internet marketing, etc.). As a result there are more and more Americans who are uninsured. While there has been a rise in worksite sales of life insurance, the usual results are that individuals are not being adequately insured, as no one is doing a needs analysis with them.

Training about the importance of cash-value products seems to be lacking. There are many agents who are caught up in the spreadsheet mentality (selling the cheapest product out there) instead of explaining and selling the value of products that might cost the consumer a bit extra but are a better fit.

I also worry that we don’t have enough young people entering the industry so distribution will look much different 10 to 15 years from now than it currently does. In addition to that, there are not enough advisors to sit down and do planning for people, so a large number of them either do not have life insurance or don’t have nearly enough.

Our country’s national debt is also somewhat concerning. As the government looks for alternative revenue sources, life insurance policies could get caught in the cross hairs. The possibility that we could lose the tax-favored treatment of cash value buildup in life insurance and also the tax-free status of the death benefit is a real possibility.

Gorlick: What keeps me up at night are the things that can’t be controlled—government regulations. We fought last year against fixed indexed annuities being regulated by the Securities and Exchange Commission and won. We constantly fight to retain the tax-free buildup in life insurance contracts. We are continually presented with new regulations describing how to conduct our business.

While I believe that government regulation is good when it truly protects the consumer, we appear to be constantly under attack as an industry. Was the financial meltdown in September of 2008 really caused by insurance carriers, as many in Congress would have you believe, or the failure of mortgage giants Fannie and Freddie (which, as of late February, received more than $150 billion in bailout funds with no end in sight)?

We know from LIMRA research that Americans in retirement have the following top four priorities: health care, inflation, volatility and longevity. We have strong consumer-friendly products—with guarantees—that can address every concern a customer may present. What other industry can provide all the financial solutions that individuals truly need?

We have products that will address health care (medical supplemental policies, traditional long term care, linked benefit life or annuities with LTC); inflation (a number of wealth transfer strategies); volatility (policies that absolutely guarantee tax-free benefits or other forms of payouts); and longevity (products that outlive the customer).

Nothing Wall Street offers has the guarantees and security that our industry can provide. It is interesting to note that the insurance industry is always regarded as being one rung below the upper tier of the financial services industry. Yet we can offer products for pennies on the dollar that can provide the solution that allows a family to be spared from financial devastation.

Rosen: I try not to let the things that I can’t control, like the pending legislative issues, keep me up at night. However, I certainly want to be aware and involved in the process and try to understand potential changes and their implications. So, at this stage of my career it isn’t so much the insurance business issues that cause me heartburn. Instead, many of the major issues and concerns revolve more around actually running a business such as staffing, technology, benefits, management and sales. While I am very proud of what our organization has accomplished, we have to work every day on the non-insurance aspects to keep things running right.

Carlson: I am concerned about the future. Where will brokerage general agencies fit into the marketplace in five years? As the insurance companies allow more direct contracts, from where will our business originate?

Another concern is that technology has changed consumer buying habits so they are more apt to gather information online. I observe so many agents focusing on selling insurance based on price quotes rather than uncovering their clients’ true needs. My fear is that the traditional relationship between agent and client is diminishing. Statistics from LIMRA show that the average household is underinsured. I’m eager to find a way to serve those potential customers.

Our core agent base is aging. Attracting new, younger agents must be a top priority for the industry.

What new product twists or legislation do you believe producers should be aware of?

Gorlick: On the annuity side: As more states adopt the NAIC model annuity suitability rule, each carrier must develop specific product training that must be completed before a producer can solicit any annuity business. Producers have been used to soliciting and then being appointed by the carrier; this will no longer work in many states, and producers need to be aware of this significant change in how they conduct business.

At Zenith Marketing, we track the state-specific regulations, which we constantly update. We are actively looking at creating our own four-hour CE approved course following NAIC guidelines. We are striving to make the annuity sale as easy as possible for our producers while providing them “real value” to help them grow their business.

On the life side: There is much to talk about because sometimes the easiest sale is the one that’s made instead of the challenging sale which may be more suitable.

For instance, product features such as return of premium riders on all products—including term—are under-presented. There are a multitude of valuable riders that should always be reviewed and considered. As an industry we have fallen in love with the spreadsheet. There is so much more we can do “beyond the spreadsheet!” Consider:

• In some situations, an individual life policy on the spouse is a better deal than survivorship universal life with one uninsurable.

• Sometimes 1035 money rolled into an immediate annuity can generate a net income that will purchase more insurance than the traditional 1035 exchange.

• Sometimes a term sale is the best solution instead of selling a “stripped down” universal life policy.

A professional insurance producer should know all the product options that are available and utilize his quiver of financial solutions and resources to present the best product for each client’s individual needs.

Rosen: Ask questions, understand your clients’ objectives, learn your product, including unique features and riders that can bring incredible value. Be sure to network and add value to every relationship. Also, recognize your primary role and then strategically partner for areas of the business that should not be allowed to sap your time and energy. These include shopping the market for underwriting and product support. There are brokerage agencies that have spent decades honing their expertise in these areas, and you can better serve your clientele by taking advantage of these resources.

Cason: There is potential for many business-owned policies to be written after implementation of the pension protection act that leaves policies subject to income taxation. Many agents don’t know about the law and many carriers don’t include a consent form with their application packet, therefore leaving many policies potentially exposed. Also, life/LTC hybrid products are very attractive.

What advice about building an insurance business do you have for producers?

Rosen: Ask questions, understand your clients’ objectives, learn your product, including unique features and riders that can bring incredible value. Be sure to network and add value to every relationship. Also, recognize your primary role and then strategically partner for areas of the business that should not be allowed to sap your time and energy. These include shopping the market for underwriting and product support. There are brokerage agencies that have spent decades honing their expertise in these areas, and you can better serve your clientele by taking advantage of these resources. [MR]

Carlson: Don’t just sell insurance, build relationships. Listen to your clients and ask the necessary questions, regardless of how difficult. Many agents are apprehensive about asking the personal questions essential to underwriting insurance—or afraid to return to their clients with undesirable news. Don’t walk away from the tough cases. Be up-front and honest. Build client relationships on trust and knowledge. Clients’ needs are always changing. If the relationship is there, you will have a client for life. And in turn, also gain additional potential for referral business. [KC]

Cason: Ask every client about life insurance. Brokers with multi-line agencies have a great opportunity to approach their clients about life insurance. Hiring the right support staff and investing in technology is also important. [WC]

Gorlick: If you as a producer “do the right thing,” you’ll be in business for a long time. And if that is your modus operandi, there is no better time to be a producer in this business. With current unstable economic events and changing demographics, the ability to provide guarantees, security and flexibility in the products we offer is unbeatable!

Producers need to partner with a brokerage general agency (BGA) that can get the business processed as quickly as possible with the least hassle, while achieving the desired result. They should leave that “back office” function to the expert—the BGA!

With one out of two households recognizing the need for more life insurance and 25 percent saying they are likely to buy in the next year, 2011 should be a banner year for the independent producer.

Undoubtedly the producer of tomorrow needs to be a generalist—providing a full variety of life, annuity, linked life/annuity with long term care, medical supplement, disability insurance, critical illness and traditional long term care solutions. Clearly, there are many different needs that must be addressed.

Consumers must understand that the government will not be able to provide an adequate safety net. Luckily, the insurance industry has the will and the way to protect their financial integrity. What a wonderful time to be in this business! [MG]