Friday, March 29, 2024

In A Word

I recently spent three weeks in Poland doing what I feel called to do these days. I traveled with two teammates named Rich and Joan (a delightful married couple). We conducted three nightly seminars each week on the subject of Emotional Intelligence. Our audience was comprised of university students from multiple universities in three different cities. We spent the daytime hours meeting with individual students for mentoring. Our purpose in traveling to other countries is to use what God has given us (our experience, training, wisdom from our lives and careers) to encourage university students to use what God has given them, so they can, in turn, make a positive impact on other people.

We started in Poznan, ended in Warsaw, and in the middle week, found ourselves in Krakow. There we stayed in a boutique hotel named “Amber.” At the front desk we received a guide meant to help us pronounce Polish phrases that we may want to use in our encounters with native speakers.

Sadly, we did not find the guide to be all that useful. Consider the examples shown in Table 1.

We had nothing. Our tongues and lips locked up like we had mouthfuls of peanut butter.

The guide is intended to address the needs of a traveler, someone who does not speak the language. The guide is designed to somehow help travelers use a few expressions to better navigate their unusual surroundings. It is not altogether successful.

This experience caused me to reflect on the language we use in independent distribution and financial services, and in life insurance specifically. The people we serve are often experiencing traumatic changes and stressful financial fluctuations. How well does our lexicon meet their needs?

Point: At a time when the industry is marketing complex products with opaque and technical features, it behooves the independent financial professional to use great care to use the right words in all communications.

Where there is ambiguity, or when the information is stated in terms that people generally do not use, the opportunity for misunderstanding increases. For example, today’s indexed universal life policies are steeped in words, phrases, and terms that individually confuse the reader and, when considered in combination, utterly baffle the mind.

This hard-to-understand terminology invites distrust. This opens the door to commentaries and articles stating such things as, “Critics say indexed universal life insurance is being sold dishonestly.”1

Life insurance at its very core comes to life when people come to the end of theirs. The good of life insurance enters into grief.

Question: In the life insurance industry, are we providing clear guidance, sharing useful, understandable words, and giving people the ability to navigate the strange world of grief?

Grief
The writer C.S. Lewis (born November 29, 1898; died November 22, 1963) spent most of his adult life as a bachelor. In 1956 he married an American writer named Joy Davidman. Tragically, she died of cancer four years later at the age of 45. Lewis, a deeply respected thinker, philosopher, theologian, and author of nearly three dozen books, found himself without words, without answers.

To help himself sort out the confusion of emotions, doubts, and lost direction, he kept a journal that became a book entitled, “A Grief Observed.”

Here is how the book begins:

“No one ever told me that grief felt so like fear. I am not afraid, but the sensation is like being afraid. The same fluttering in the stomach, the same restlessness, the yawning. I keep on swallowing.

At other times it feels like being mildly drunk, or concussed. There is a sort of invisible blanket between the world and me. I find it hard to take in what anyone says. Or perhaps, hard to want to take it in. It is so uninteresting. Yet I want the others to be about me. I dread the moments when the house is empty. If only they would talk to one another and not to me.”2

Point: When a life insurance death benefit is paid, the money slides in under an invisible blanket separating the deceased’s family from the world. The death proceeds land in the world of grief.

Personal Pain of Grief
Lewis died one week before his 65th birthday. My own father died one week before his 67th birthday.

It was a little after 8:00 AM on Monday, November 15, 1993, and I was sitting in a conference room with all the other executives of Manhattan National Life. We were about to begin an all-day planning session to choose our strategies for 1994. My assistant, Becky, opened the door, apologized for interrupting, and came to me and whispered in my ear, “Dave, Di is on the phone. You need to take her call.”

My wife let me know that my Dad had unexpectedly died overnight. I informed my colleagues and headed home from downtown Cincinnati. I went directly to Spring Grove Cemetery. Designated as a National Historic Landmark, Spring Grove is very much like a park with over 700 acres of trees and flowers. There among the headstones I wept like never before. Every one of those graves held the remains of people who left grieving loved ones behind. I was not experiencing anything new. But it was new to me.

Lewis: “The death of a beloved is an amputation.”3

My Dad died whole in all his relationships. He and I knew we loved one another and there was nothing that needed to be said or forgiven. Yet, suddenly, the familial appendage known as “Dad” was gone from this world, from my life.

In A Word
Those of us in the life insurance industry should pay attention to the words we use to describe our products and our processes.

Consider the following examples:

Beneficiary
It is easy to find a dictionary definition or legal description of this word.

A beneficiary is a natural person or other legal entity who receives money or other benefits from a benefactor. A beneficiary is the person or entity chosen by the deceased to receive the benefits from the decedent’s life insurance coverage.

Beyond its definition, we have the opportunity to incorporate the truer essence of the word in our usage.

To be a beneficiary, then, is to be lovingly selected, and generously designated to receive valuable benefits. A beneficiary is the target of the intentions and affections of the deceased.

Point: Every independent financial professional should take great care in explaining the beautiful essence of the relationship between the policyholder and the beneficiary.

Claims
The word “claim” has many different uses. It can refer to property, to rights, or to something set aside for another. Alternatively, a claim can take on a negative connotation and mean “an assertion,” or even “allegation.” Independent financial professionals can help grieving families by stating the word “claim” in the positive sense of seeking what is due or securing a privilege or what is rightfully theirs.

“The loss of a loved one is devastating, and the life insurance claim process may only add to that feeling of grief and finality. But try to take solace in knowing that your departed loved one had a life insurance policy to help you during this difficult time.”4

Beyond the Words
Not only do life insurance products achieve their purpose when an insured dies, the independent financial professional can also.

Because life insurance companies are not tracking every insured to see if they are still living, the deceased’s family or surviving business partners must notify the company when the policyholder dies. The process is called filing a claim. And the assistance of an independent financial professional can prove invaluable.

It all begins with two key steps:

  1. Finding the life insurance policies that the deceased owned.
  2. Procuring multiple certified death certificates.

Researching Policies
Occasionally people own life insurance policies but their own families are not made aware of their existence. Or, if they are, they cannot find the policies or any information. If the family or surviving business partners believe such life insurance policies existed, but do not know which companies issued the coverage, a seasoned independent financial professional knows that the National Association of Insurance Commissioners (NAIC) has created a Life Insurance Policy Locator.

The NAIC Life Policy Locator can assist consumers in locating life insurance policies and annuity contracts of a deceased family member or close relationship.

The Web Site is: https://eapps.naic.org/life-policy-locator/#/welcome.

The member companies will search their records to determine whether they have life policies or annuity contracts owned by the deceased. If found, these companies will contact the surviving family or business partners but only if they are the designated beneficiary or authorized legal representative.

Here are other ways that helpful independent financial professionals can guide the surviving family/business partners in their search for policies:

  • Look through the decedent’s records, files, and safety deposit box.
  • Contact the decedent’s previous employer to discover if the person may have been a certificate holder of an employer-provided group life policy.
  • Review bank account statements to see if payment was being made to a life insurance company.
  • Ask the decedent’s auto or home insurance agents if they had helped the decedent purchase life insurance through them.

Note: If you are an independent financial professional, remind all your clients who own life insurance to let their beneficiaries know that the life insurance policies exist. Otherwise, the beneficiaries won’t know they’re owed a death benefit. They will not know the loving intentions behind the policies.

Retrieving Death Certificates
A certified death certificate is needed to file a life insurance claim. A surviving family member or business partner can usually get a certified death certificate from a state/local health department. Many other financial institutions will also request certified death certificates.

To the family left behind, the death certificate is something that makes the loss very real and, suddenly, official.

I remember a financial advisor telling me that my own mother’s death certificate was actually a Certificate of Merit indicating that she had lived well and successfully passed through this world and was on her way to the next (and better) world.

Submitting the Claim
In addition to the death certificate, the deceased’s family will need other information, including:

  • Name of insured
  • Date of death
  • Cause of death
  • Place of death
  • The claimant’s name

All this will be submitted to the life insurance company that will review the claim.

Again, these can be viewed as the following:

  • The name of the deceased competitor
  • The location of the finish line
  • The time the race was completed
  • The name(s) of the people who cheered the competitor all along

Summary
It is a privilege to develop and distribute financial products that translate good intentions into concrete acts of love. The financial services industry, and the life insurance industry in particular, facilitate the fulfillment of dreams that continue after we are gone.

Life Happens describes it this way: “The main reason to buy life insurance is because you love people and want to protect them financially.”5

Helping people purchase life insurance is an honorable mission. It is, however, only half-way to completion. Being there, serving the surviving family members and business partners, entering into their world of grief—that is the second half, and perhaps most important phase, of the mission.

The point of this article is simply to remind those of us involved in this meaningful industry that we need to take great care to use the right words when the promise of life insurance is fulfilled.

C.S. Lewis was torn on whether or not he wanted people to speak to him in his time of grief. “I see people, as they approach me, trying to make up their minds whether they’ll ‘say something about it’ or not. I hate if they do, and if they don’t.”6

In our business, we must show up, and we must be prepared to say the right things.

Footnotes:

  1. https://www.forbes.com/advisor/life-insurance/indexed-universal-life-insurance-problems/.
  2. “A Grief Observed,” by C.S. Lewis, N.W. Clerk publisher, 1961.
  3. Ibid.
  4. https://www.forbes.com/advisor/life-insurance/how-to-make-claim/.
  5. https://lifehappens.org/about/campaigns/.
  6. “A Grief Observed,” by C.S. Lewis, N.W. Clerk publisher, 1961.

Hegemony

Hegemony is a political and social concept that may best reside in our consciousness as the proverbial 500 pound canary. It is the force that holds sway with a dominant influence over a given current reality. Always follow the money—in the United States long term care costs have reached over $275 billion not including the insidious billions of families’ and friend’s unpaid care expenses. Uncompensated care is now estimated at an additional 450 billion. The majority of the hard dollar long term care costs continue to be paid through Medicare and Medicaid with an additional quarter paid with private out of pocket funding. Private insurance payments remain in the single digits. However our long standing and frankly valiant efforts to shift that claims control to individuals is clearly demonstrated by the fact that over $12 billion was paid by private health based sources and that does not include monies from annuity or life combination policies.

We are not alone. According to a recent market analysis, the global long term care markets where North America has the largest presence is expected over the next five years to have a composite annual growth rate of 5.6 percent. There are a number of new truths associated with our chosen market that significantly contribute to a positive outlook for growth. Care has shifted dramatically to a home based platform. Bear in mind only eight percent start benefits in a nursing home. COVID experience has turned up the heat on augmenting home care with managed care technologies. These efficiencies with medical data and direct access to patient care management are fueling growth. We need to bear in mind that this shift has not yet revealed a substantial reduction in cost.

A recent analysis of global trends summarized our position as, “The long term care market is expected to witness significant growth. However, the high cost associated with nursing home services and a lack of awareness of long term care services restrains the market’s growth.” When I got to this insightful revelation frankly I almost screamed out loud. The same brilliant analysis should have been archived from the last six decades.

We know the facts. Every day through 2029 another 10,000 will turn 65 and 70 percent of those will require some care with almost 20 percent lasting more than a year. The average median cost for a private room in a nursing home is over $92,000 and assisted living over $43,000. Yet consumers refuse to take action. Like many of those reading this column, I have spent the majority of my professional career beating my head bloody against the truth of the insurance profession’s most persistent conundrum.

In a world which now demands transparency, I wish to acknowledge that I am a happy retiree of State Life/One America as well as the proud owner of a long term care paid up policy from the company. I would like to commend their most recent consumer research attempting to understand the aftermath of the COVID catastrophe. The consensus of thought for many of us was that the concentrated effects of institutional confinement should have induced a greater understanding of the risk. Surprisingly only 15 percent of the consumers they surveyed confirmed that their perceptions of the problem had been enhanced. Of those surveyed a mere 16 percent had any plan in place with only 29 percent even researching their options for protection. The majority believed that cost was the most significant obstacle. What was not a departure from current wisdom is that, in regards to prioritizing financial goals, the survey clearly indicated that the number one concern was sufficient money for retirement. Of course, none of us could imagine a more lethal projectile on this primary destination than a need for extended custodial care. For those who are able, an asset-based insurance approach does significantly provide control of both care and money. Even though this consumer research indicated that an overwhelming majority of those surveyed indicated that their top motivation was to remove the financial burden from family members, I am not sure it struck at the motivation to buy at its beginning. Research over the last 20 years has consistently suggested that buyers take action to protect money. This has historically proven however to be a post sale rationalization. It is personal experience with the financial and emotional consequences of a claim that created the momentum to complete a sale. The wisdom of ownership confirmed by its legendary persistency has always been a banner of financial family pride.

Drum roll for the summary. The problem is bigger and more tangible than ever. The marketing opportunity is larger and more appealing from a potential profitability standpoint than ever before. As outlined in numerous previous columns, new and looming attempts to mandate government imposed funding strategies will only add fuel to the fire. Forgive me…my eternal optimism is bubbling to the surface again. However, I will lay claim to the notion that market algorithms are shifting a fresh wind to our sails.

Other than that I have no opinion on the subject.

Technology Impacting Insurance Sales Through AI Leads, Digital Sales STP, And Illustration Workflow

What’s the latest innovation in technology for insurance sales? Artificial Intelligence (AI) can be used for lead generation, lead follow-up, strategic marketing, customer retention, and client support. Leveraging AI gives you more control over the sales cycle, helping clients identify hot leads earlier and faster. Artificial intelligence is quickly becoming the most sought-after technology solutions for businesses in every industry. AI can help automate several aspects of your business, freeing up more time and resources for you to focus on revenue generation. I met with Brett Barker, chief sales officer of ATS Global. The conversational AI offered by ATS Global has been helping companies unlock hidden opportunities for businesses for more than 15 years. Let’s look at what this unique technology can do and why it’s worth considering for your business.

What is Conversational AI?
Conversational AI refers to an artificial intelligence system that can understand and respond to natural language input. This type of AI is used by businesses across industries to automate customer service responses, facilitate marketing campaigns, and assist in sales prospecting. By leveraging a powerful conversational AI platform, companies can free up their employees’ time so they can focus on higher-value tasks like revenue generation instead of mundane daily activities like data entry or customer support inquiries.

The Benefits of Conversational AI
By implementing a quality Conversational AI system, businesses can achieve greater efficiency in their day-to-day operations while also creating more meaningful connections with customers. This type of technology enables companies to process orders quickly and accurately without human intervention, identify trends faster so they can improve customer service, and even anticipate customer needs before they arise—all without sacrificing the personal touch that customers expect from businesses today. Additionally, using a conversational AI system helps reduce overhead costs associated with traditional customer service teams as well as eliminates errors due to manual data entry or miscommunication between teams.

Moreover, a quality conversational AI platform, offered by ATS Global, provides deep insights into customer behaviors so companies can better identify key opportunities and craft targeted strategies that will drive growth and maximize ROI. In fact, many companies are seeing over 20 times ROI after implementing their AI assistants. Through its advanced analytics capabilities, ATS Global’s solutions provide actionable insights so businesses can make better decisions faster than ever before.

In short, investing in a powerful conversational AI platform is essential for any business looking to stay competitive in today’s market. With ATS Global’s solutions, you can create efficiencies within your team while also creating meaningful relationships with customers through personalized interactions powered by artificial intelligence. Unlock the potential of Conversational AI and start driving more revenue today! Learn more about ATS Global at http://atsglobal.ai/.

Covr’s Digital Sales Platform a Complete Straight-Through-Process
Coming soon from Covr Financial Technologies is the official launch of Advisor 3.0, the latest version of the insurtech’s flagship technology product. Covr Advisor 3.0 provides a digital omni-channel, multi-carrier, multi-product, complete transaction management and service platform to advisors at their partner firms.

“We are very proud of the new and enhanced capabilities in our Advisor 3.0 platform,” said Ron Alexander, president and head of innovation. “Covr is constantly striving to grow and exceed our partners’ needs, and this latest version of our signature platform is the latest example of those efforts.

Features include embedded tools and journeys such as multi-product needs analysis, redesigned quoting tools and estimators for term, permanent and asset-based long term care, and new illustration management. Advisors on this platform have access to a full policy review journey, and expanded multi-carrier accelerated underwriting. Advisor 3.0 also launches new digital informal case submission, and improvements to licensing and appointment management.

In addition, the product offers 100 percent drop ticket for more than 30 carriers and 600 products. Digital application fulfillment and e-delivery and signature streamline the process for advisors and clients alike. Improved case status delivery on and off platform lets advisors easily track their cases, and a brand-new resource center houses a digital library of product resources, marketing and training materials.

Covr APIs enable seamless integration with any CRM including Salesforce.com, planning software such as MoneyGuide PRO, licensing and suitability/compliance systems, and many others. With Covr Comply, Covr has also launched a turnkey, product-agnostic compliance review unit that can be used alone or embedded in the end-to-end purchasing and transaction process. Also new is Consumer for Advisor, which gives writing agents and financial advisors the ability to send out personalized digital marketing and provide digital application fulfillment in a direct-to-consumer environment inside of the same ecosystem. All cases processed through Covr are displayed for advisors or aggregated at the home office level. Covr can also aggregate all in force policies to be managed in one centralized place with the Covr Insights in force visualization and management tool.

In September, Covr announced that Citi had chosen their technology to simplify the life insurance process for Citi’s U.S. consumer wealth management business. Covr also recently launched Covr Pro, bringing its digital life insurance technology to independent advisors. By signing up online, advisors can get immediate access to the full suite of digital BGA resources including virtual sales support, quoting and needs analysis tools, application fulfillment, case management, products from the leading carriers, and market-leading compensation—all with no production requirements. For details of these digital sales solutions, visit https://covrtech.com/.

Ensight’s Streamline Illustration Workflow Expanded to Hybrid Long Term Care Products
One of the critical business applications of technology over the past two decades is to streamline inefficient back-office processes, unleashing time for firms to refocus on the fundamentals that drive success and revenue. Regarding the wholescale transformation of the illustration (workflow) process across U.S. life distribution, Ensight has perhaps redefined the life insurance illustration experience more than any other software platform over the last several years.

The great news for the industry is that Ensight has now extended its market leading life insurance illustration platform, Ensight Intelligent Quote, to support the hybrid, asset-based long term care products, launching with a broad portfolio of the leading hybrid long term care insurance carriers, including Lincoln Financial, MassMutual, Nationwide, OneAmerica, and Securian Financial.

Ensight’s new hybrid long term care capability streamlines the illustration workflow, enabling case designers and wholesalers to simultaneously run illustrations for the leading products and flexibly benchmark product performance across different dimensions, such as: Monthly long term care benefit; overall long term care benefit pool; indemnity vs reimbursement; and other key areas. Additionally, Ensight is the first and only multi-carrier illustration platform to deliver a fully auditable Best Interest-centric illustration process, which ensures the hybrid long term care products are compared on a “like-for-like basis” specific to the actual client case. This fills a critical need in the sector and has been a long time coming. Increasingly, brokerage general agencies and specialist long term care distribution firms are required to implement Best Interest processes, platforms and auditability within their internal operations by key financial institutions and channels.

Another big win for brokerage distribution is the unification of permanent life insurance and hybrid long term care products within a single workflow, on a single platform. Long term care risk today can be managed through a traditional long term care policy, an asset-based policy or a life policy with a long term care rider. Ensight’s wide breadth of product class coverage across permanent life products and the asset-based long term care products will enable brokerage to provide financial professionals with a broad scope of options. All of this built around a more efficient illustration process enabling brokerage to focus on what really matters—client case discussions, growing relationships and closing the coverage gap. Sales Illustration platform information is available at https://ensightcloud.com/.

2023 Disability Insurance Goal Setting And Opportunities

A new year, a new set of goals for 2023. Let’s start with goals that are reachable for the various types of financial service specialties.

Opportunity Number 1: You! This should be the easiest goal to accomplish and the most important one. A successful producer should own a disability policy on themselves. First, it’s the right thing to do. If you couldn’t work, how long could you really last financially without making some really hard choices? Having the cost of your fixed living expenses covered should at least be considered at the bare minimum. When you jot down your budget and your expenses, what needs to be paid every month in order for you and your family to maintain some semblance of your standard of living? Next, going through the application and underwriting process will give you a better understanding of the experience your client would go through as well. In addition, many companies offer producers discounts on themselves and the commission helps to offset the costs.

Opportunity Bumber 2: Low hanging fruit and current clients. Your clients like you and like doing business with you. While every client who is still working and building their wealth needs a disability policy, there are certain clients who tend to buy disability insurance more than others. Those are your clients who are professionals (physicians, dentists, attorneys, and accountants,etc.) and business owners who are making in excess of $100,000. Many of these clients have the need and the excess income needed to buy an individual DI policy. Think about how many clients you supported with various insurance products and planning over the past year. Did you ask about disability insurance? Did you ask them what their strategy would be if they couldn’t work and had to live off their current savings? How many of your clients can actually live off their current savings?

Opportunity Number 3: Commercial P&C clients. Let’s think of a disability as another peril that you need to protect for your client. How many business interruption or workman’s comp policies did you write or renew in 2022? Did you discuss with that business owner or professional what would happen if they had a major car accident, an accident at home, or had to take off work to focus on their health? There are so many sicknesses that can disable a person. In fact, there are more people on claim for sickness than for accidents. If a disability were a peril that was mandated to be covered, then everyone would need to buy this policy. Unfortunately, disability insurance is optional but one of most important for every client to have in their portfolio. Your professional and small business owner with business interruption should also be looking at business overhead expense coverage as well.

Opportunity Number 4: Life buy-sell or loan clients. Most producers will have clients who needed life insurance coverage to insure the obligations they have assumed in their business operations agreements or a business loan. Many of you have clients who have sought you out for life insurance for these needs. Many business owners don’t realize that the majority of business agreements contain a disability provision that details the process of buying out a disabled owner who can no longer work. Hopefully, the disabled owner has their own disability income policy to provide them income after they are forced to cede their interest in the business to another owner(s). Many advisors miss the opportunity to discuss disability buy-sell insurance with the clients they just assisted on the life insurance. Same goes for those clients who reached out to you for life insurance loan coverage. If these clients couldn’t work due to a career ending disability, does the bank still want to get paid back? Of course they do, as would any creditor. They don’t care if someone is working or not as long as that client meets the obligations of the loan.

Opportunity Number 5: Group LTD and group life clients. If you work in employee benefits, then you know that the primary enrollment season just finished up and you can start to focus on some of the other parts of your business. Don’t miss the excess disability insurance to layer on top of the LTD. While group disability insurance has its benefits, most of the time the benefits are taxable and are capped at a certain maximum per month. We just had a case with 25 executives who were either capped based on their income or would have a coverage gap due to the taxes. For example, a client with 60 percent to a cap of $6,000 per month of LTD may only end up with $3,500 to $4,500 per month, give or take, due to the Federal, State, and possibly some FICA as well. This gap can be made up by layering individual disability insurance on top of the group. In the case we mentioned earlier, since there were 25 lives involved, we were able to obtain a guaranteed issue disability program. In fact, depending on the company, you can go down to as low as five lives and still get a guaranteed issue individual disability program to layer on top of the group LTD.

The opportunities in your current block of business are really endless. It’s a matter of recognizing the need and working with a wholesaler/MGA that specializes in disability income insurance planning. Let’s have an awesome 2023!

“If I Don’t Sell That Product, It’s A Bad Product”

A while back, I posted something on LinkedIn about how to assist consumers that desperately need help get qualified for Medicaid. As you know, Medicaid can pay for long term care (nursing home care primarily), if a consumer is deemed financially incapable. It is not a replacement for long term care insurance, but it can help consumers that did not prepare. And now those consumers are in a time of distress and need. Afterall, this is what we do as an industry—help folks in their time of need. After posting these Medicaid planning tips that leveraged “Medicaid Compliant Annuities,” there were several positive responses from agents who wanted to learn more.

However, as with any social media post that gets thousands of views, there were a few negative posts—although a tiny percentage of total responses. I would divide these negatives into four different camps:

  1. An attorney: All the attorney had to say was that all financial professionals should hire an attorney if they choose to help clients with this, and it’s ridiculous that I should even comment on Medicaid because I am not an attorney. Basically, only attorneys are smart enough to cover this topic.
  2. Fee-Only Advisor: This guy had nothing to say other than annuities are bad and include a lot of “fees,” which was ironic to me. (By the way, single premium immediate annuities for Medicaid purposes generally have no fees!)
  3. The life insurance guy that downplayed Medicaid: Because if everybody owned life insurance with a chronic illness rider, the client would never be in that position in the first place. (PS. I am a “life insurance guy” myself but disagreed with him bashing the client in hindsight.)
  4. My Favorite: The guy that must’ve viewed my post as taking away from his long term care insurance sale. This guy wanted to criticize me because I called it “Medicaid planning,” like the rest of the world—including the CFP Board! (He didn’t realize that I am a significant fan of long term care insurance.) He took the opportunity to plug his designation course for all that were viewing. LOL. Consumers are destitute because of long term care expenses, and we are quibbling over terminology?

My social media post—believe—is an unfortunate microcosm of what can take place in this wonderful industry. All four individuals above viewed that scenario of helping clients who previously failed to plan as taking from their paychecks. I am sure they would not admit that, but that is where the negativity came from. Any proposed solution that was outside of how they got paid in their own world is a bad solution. To the Chevy guy, there is not a Ford on Earth worth anything and vice-versa. This mindset does our collective industry no good. It is OK to be cheerleaders for products and strategies that are different from what we offer and still make great money! There is about $30 trillion in financial assets that Americans own currently. There is enough to go around.

In politics, if you listen to the commentary from our “leaders” on both sides of the aisle, there is never anything that the other side does that is any good. If one party comes out and says, “We cured cancer,” the other party will discuss how that “horrible development” will put a strain on pharmaceutical sales and the industry will collapse. Therefore, those politicians stand on the platform of negativity, as if that will help their party’s cause. What about the “Party” of the American People? Why not just view it all as one party—The American People Party?

I like the social media example above because of the amount of irony. I use attorneys every single week. I am pro attorney. I am also an “investment advisor” that charges fees on securities assets. I am a part of that “party.” As many of you know, I love life insurance and I especially love the chronic illness riders. What about long term care? If everybody in America owned an LTCI product, consumers would be in better shape. I am pro LTCI.

My point is not about how bad social media, or our industry, is, my point is about how we as professionals need to think beyond our immediate paycheck because the “partisanship” in financial services does nothing good for our business as a whole. For instance, is there anybody in our business that thinks Ken Fischer has done anything good for our industry and the reputation of financial professionals? This is the guy who says he would die and go to hell before selling an annuity. Where is he today as the stock market is down over 20 percent and the bond market down 15 percent? Do you think he has turned a few consumers away from our business because of his messaging? Absolutely. I am sure there are consumers that have not saved much in retirement dollars—whether in annuities or with Ken Fischer—because of Ken Fischer’s messaging.

There was actually a fifth camp in my social media post. It was one gentleman that effectively said that he was previously interested in the medicaid planning topic but not so much anymore because of the “partisanship” and confusion. I agreed with him!

Just as important to me is the power of one’s word. When people realize that you are a “partisan” that cheerleads only about your product/strategy, then all of your words ring hollow from there. This is why nobody believes what politicians say, especially when they are speaking about the other party.

When you are a “partisan” in financial services, your recommendations will be scrutinized heavily and your constructive criticisms will be discounted. And when your words become hollow to your prospects and/or clients you will not achieve full potential. Because of this, I do believe in transparency and calling out bad actors and bad strategies. For those close to me, you know that is my style. When my 15-year-old asks me how I thought he did in his basketball game, he knows what he is going to get whether good or bad. But, he is all ears and takes my feedback seriously. He doesn’t even ask my wife (his mother) how he did because she will invariably tell him “Great Honey!” every single time because she is such a positive and wonderful human being. In short, honesty is important but just because some person or some strategy was not in the same “Party” as you does not make them a “bad actor” or their options “bad strategy.” Our words need to mean something.

I listened to a podcast a while back where Neil deGrasse Tyson—an astrophysicist—was talking. He was discussing the deepest part of Earth’s surface and also the highest part of Earth’s surface. He stated that the Mariana Trench in the Pacific Ocean is the deepest—being over 30,000 feet deep. That is about six miles deep! Additionally, the tallest point on Earth is Mt. Everest at around 30,000 feet high. Almost six miles high! These are huge peaks and valleys to us small Earthlings. However, if you were a giant that was holding planet earth that was now about the size of a cue ball, you wouldn’t even feel that valley or that peak. In other words, in relative terms, the Earth is as smooth as a cue ball when you think “big enough.” This makes sense because twelve miles of difference between the deepest part and the tallest part is nothing compared to the overall size of the planet which is almost 8,000 miles in diameter!

Now I am not saying that our industry is as perfect as the surface of a cue ball. What I am saying is that I think it is important that we “think big picture” when it comes to our industry. Are there peaks and valleys when it comes to some products and some strategies? Absolutely. However, by more consumers being involved in our industry, those consumers and the world will be a better place. Partisanship does not help that cause.

A Side Of IDI With Your LTD? Don’t Miss Open Enrollment Season Opportunities!

With the holiday season in full swing it’s easy to get distracted, but there are more reasons why this is one of our favorite times of the year. Many companies have now aligned their benefit enrollments to be this time of year as well, with benefits typically starting on January 1. Regardless of your insurance industry focus, this is one of the best times of year to reach out to your clients.

Financial planners, insurance producers, personal lines:
This is a great opportunity to reach out to your clients to see if their company is offering benefits and if they have decided to enroll in any of the programs. Offering to review what your client enrolled in will allow you to open up some conversations that may have been overlooked in the past. Clients who have been offered group life insurance may have chosen to obtain additional coverage as well. This gives you the opportunity to ask them how they came up with the amount requested and if that death benefit would be sufficient to replace their income for the time period that their beneficiaries truly need.

For example, someone making $100,000 per year who is the primary or only income provider for a family may get one or two times their income in group life insurance. Some plans allow for the individual to elect for more life coverage that may require underwriting and/or an extra cost.

Why are we talking about life insurance in a DI article? There are a few reasons that we’ll discuss. One is that for many working adults with families, life insurance can be about replacing the earnings of the main income producer(s). Next, if a client is taking more life insurance than what is given by the group, the client has likely recognized that they are underinsured. This gives you the opportunity to assist with some basic income replacement planning. In addition, the cost of many supplemental plans can be more expensive than fully underwritten plans. This gives you the opportunity to improve their current scenario with lower premiums or more coverage for the same price as the supplemental life. Lastly, and possibly more importantly, this gives you the opportunity to discuss income replacement strategies when someone is disabled instead of passing on.

We know that clients who are working and in their wealth building years are more likely to have a disability than to pass early. So, naturally, if a client is concerned about replacing their income when they pass, they should have a keen interest in continuing their income if they were to become disabled.

What if the client also were given or signed up for group disability? (Note: Group disability insurance is often referred to as LTD, versus IDI, which is individually purchased disability insurance.) We’ll continue this discussion.

Employee benefit brokers and financial planners, insurance producers, personal lines:
When presenting group LTD, it’s important to realize the potential taxes that can offset the total payments received in the year. For example, take a client who makes $120,000 salary per year and has group coverage that’s employer paid with the premium not grossed up in the client’s income.

With group LTD that pays a monthly benefit of 60 percent of income up to a maximum monthly cap of $8,000, the client’s group DI benefit in this example would pay a qualifying disability to the client of $6,000 of gross disability benefits per month. Why gross you may say? When there’s employer pay group benefits, the disability payments will actually net out much lower due to the taxes that will need to be paid. There will be federal and state income taxes. In addition, for the first six months, Social Security withdrawals will need to be paid as well.

Now that $6,000 per month of benefit actually doesn’t seem as much as it may have initially. In fact, depending on the client and if they have joint income, the benefit could be reduced by more than 40 percent. Of course, this can vary based on the client’s tax bracket and state of residence. Now imagine this client isn’t making $120,000, but has been making $1,200,000 for the past few years. The group benefits may only cover a small fraction of what the client needs to maintain their standard of living. It’s essential that clients in these scenarios have excess coverage.

Now, what if you were able to add the additional coverage but not need any comprehensive medical underwriting? There are individual disability insurance companies that will allow guaranteed standard issue (GSI) depending on the make-up of the group and the industry. We call this the GSI marketplace that is usually used to supplement the group LTD. For companies that inspire to have benefits that compete with the top companies in the county, suggesting GSI disability insurance for the high earning executive class is important.

In addition, those companies that have an egalitarian philosophy of providing equal benefits to all employees are usually interested in providing additional benefits to those team members whose income percentage replacement is lower than others. Taking the example of a client who makes $500,000 per year with an $8,000 monthly cap on the group LTD, their gross income replacement is less than 20 percent! Compare this to an employee who makes much less and has less responsibility, but has a dramatically higher percentage of replacement at 60 percent due to not being capped out.

Take advantage of the best time of the year for so many reasons, including setting up individual benefit review appointments for the first quarter of the year. May you and your family have a wonderful holiday season and a happy and healthy new year!

Grace That Runs Deeper Than Rulebooks

As a child, I was always threatened by Christmas. Santa is described by these frightening lines in the Christmas song:

He sees you when you’re sleeping
He knows when you’re awake
He knows if you’ve been bad or good
So be good for goodness’ sake!

And the moral? “So! You better watch out!”

Over my career in financial services, I often wondered if I were in fact doing “good for goodness’ sake.” Or, to be honest, doing good for my good. For mere personal gain. To receive acclamation.

Ethics in Financial Services
A sound measure of goodness is ethics.

In 2014 the Bank Negara Malaysia (BNM) and Securities Commission of Malaysia (SC) announced the formation of the Financial Services Professional Board (FSPB). The objective of the FSPB was to “drive the development and harmonization of professional standards across the banking and insurance industry, Islamic finance and capital markets, working closely with regulators and the professional bodies within the financial services sector.”1

The financial services industry plays a central role in any economy. This is why, in 2018, the FSPB established the Professional Code for the International Financial Services Industry; basically, a shared commitment to a common set of values, designed to engender trust in the financial industry.

On May 24, 2018, Ms. Jessica Chew Cheng Lian, deputy governor of the Central Bank of Malaysia (Bank Negara Malaysia), gave the Welcome Address at the convention where the new FSPB Professional Code was launched. In her remarks she said:

“There is an acknowledgement that behavior is ultimately regulated by something that runs deeper than rulebooks. It is not an easy thing to put your finger on. Regulators have talked about ‘the way things get done’ in an institution, or ‘the human element in everyday decisions.’ We like to think of it as how one behaves when no one is watching.”2

Everyone, that is, including Santa.

Trust Is Rooted in Ethics
Here are the five principles contained in the Code of Ethics for The Financial Services Industry:

  • Principle 1: Competence “Individuals across the financial services industry shall develop and maintain the relevant knowledge, skills and behavior to ensure that their activities are conducted professionally and proficiently. This includes acting with diligence, as well as obtaining, and regularly updating, the appropriate qualifications, training, expertise, and practical experience.”3
  • Principle 2: Integrity “Organizations and individuals acrossthe financial services industry shall be honest and open in all their dealings. This includes behaving in an accountable and trustworthy manner, and avoiding any acts that might damage the reputation of, or bring discredit to, the industry at any time.”4
  • Principle 3: Fairness “Organizations and individuals across the financial services industry shall act responsibly and embrace a culture of fairness and transparency. This includes treating those with whom they have professional relationships with respect and ensuring that they consider the impact of their decisions and actions towards all stakeholders.”5
  • Principle 4: Confidentiality “Organizations and individuals across the financial services industry shall protect the confidentiality and sensitivity of information provided to them. This includes using it for its intended purposes only and not divulging information to any unauthorized persons, including third parties, without the necessary consent from those involved unless disclosure is required by law or regulation.”6
  • Principle 5: Objectivity “Organizations and individuals across the financial services industry shall not allow any conflict of interest, bias, or undue influence of others to override their business and professional judgment. They shall declare, to those concerned, all matters that could impair their objectivity.”7

This is a good list. Santa would be pleased if all of us in the financial services industry, especially independent distribution, acted accordingly.

Point: In independent distribution we need to act ethically in order to strengthen the trust others place in us.

More than Ethics
On April 14, 1939, John Steinbeck published his novel The Grapes of Wrath. It had staggering success. Steinbeck wrote the 619-page novel in longhand, in a mere five months. His wife, Carol, prepared the typed manuscript. The book sold over 400,000 copies in its first year of publication. In its review, The New York Times wrote, The Grapes of Wrath is “a magnificent novel of America.” Because of the novel’s success and influence, Steinbeck received the Pulitzer Prize in Fiction in 1940.

Back then First Lady Eleanor Roosevelt wrote a nationally syndicated newspaper column, entitled “‘My Day,” which ran six days a week. In her column she wrote: “Now I must tell you that I have just finished a book which is an unforgettable experience in reading. The Grapes of Wrath by John Steinbeck both repels and attracts you. The horrors of the picture, so well-drawn, make you dread sometimes to begin the next chapter, and yet you cannot lay the book down or even skip a page.”8

In fact, the First Lady traveled to California to see for herself the living conditions at the labor camps that Steinbeck described. The Grapes of Wrath, and Ms. Roosevelt’s support, led to Congressional hearings about labor law reforms and wage regulation.

Steinbeck’s wife Carol not only typed the novel, but she also suggested the title. The Grapes of Wrath comes from the opening lines of Julia Ward Howe’s Battle Hymn of the Republic, published in 1862:

“Mine eyes have seen the glory of the coming of the Lord
He is trampling out the vintage where the grapes of wrath are stored
He hath loosed the fateful lightning of his terrible swift sword
His truth is marching on.”

Ms. Howe and her husband visited Washington, D.C. in November 1861. While there, Howe heard Union troops singing a marching song called John Brown’s Body, a song that glorified the abolitionist John Brown, a man who was convicted and hanged for murdering a family of planters, and for killing a group of U.S. Army soldiers at Harpers Ferry.

While Howe and her husband were both strong anti-slavery activists, there was something distasteful about heartily praising a murderer in song.

Howe wrote the new lyrics to the same tune the very next day. She took dead aim at slavery. One verse of the hymn includes the words “let us die to make men free.” This is a call to fight to end slavery.

After she had written the lyrics, Howe wrote in her diary that “something of importance” just took place. In fact, her poem and the popular tune became an important part of American culture. Battle Hymn of the Republic was sung at the funerals of Winston Churchill, Robert Kennedy, Richard Nixon, and Ronald Reagan. In 1963 Judy Garland sang it on national television in honor of John F. Kennedy. More recently, it was performed at the memorial services for the victims of 9/11 and at President Obama’s second Inaugural Address.

Point: Today we easily embrace ethical behavior, and we all roundly agree with ending slavery. Santa, again, would be pleased.

Grace that Runs Deeper than Rulebooks
But wait.

One might ask why Carol Steinbeck chose Battle Hymn of the Republic as the source of her husband’s book title.

Carol Steinbeck chose Battle Hymn of the Republic as the source of the title for her husband’s novel because, like Howe’s lyrics, The Grapes of Wrath tackles a huge social ill—the maltreatment of immigrants and the poor.

In the 1930’s, the Dust Bowl created intolerable living conditions for over a million people living in the Central Plains who migrated west to find work and establish life in places like California’s Central Valley. For many, the only choice they had was to leave, and they found themselves on Route 66 headed to California.

Once these throngs of impoverished people arrived, tensions ran hot between the migrant population and the established merchants, landowners, and middle class of the western states. There is a huge divide between ownership and aspiration.

Steinbeck: “The quality of owning freezes you forever in ‘I,’ and cuts you off forever from the ‘we.’”9

Greed and generosity are competing forces in the novel. Steinbeck portrays self-interest and altruism as equal and opposite powers. The rich are depicted as greedy, and the poor are presented as generous. The landowners and businessmen are blamed for upholding a system that keeps the poor families in poverty. The people in power kept prices controlled in order to increase profits. The employers created extreme competition for good-paying jobs in order to keep wages low.

The majority of people already living in the western states felt fear and anxiety as these hordes of people came looking for assistance and opportunities.

Every now and then Steinbeck describes the acts of kindness offered by ordinary people seeing the needs of others and feeling empathy. Acts of grace.

Point: There is something beyond ethical behavior. It is called grace.

There is an unfamiliar line in Battle Hymn of the Republic which states that to the extent that you fight slavery and its proponents, “so with you My grace shall deal.”

Independent Distribution and Immigration
In the United States we all see the spiraling immigration problem. Countless people are streaming across our borders. It will require the strength and wisdom of political leaders and other decision-makers to resolve the myriad issues involved with immigration. It is massively beyond anything we can address here.

However, the reality cannot be escaped that millions of migrating people are living within our borders, and they, like Steinbeck’s “Okies,” have traveled hard roads and are seeking to find work, settle into communities, and raise families. They are a challenge wherever they settle, but tensions, anxieties and fear ought not to preclude independent life insurance distribution from addressing the needs for our products that these newcomers have.

Let’s return to the words of Ms. Jessica Chew Cheng Lian.

  • Something that runs deeper than rulebooks
  • Something not easy to put your finger on
  • The human element in everyday decisions

Deeper than Rulebooks
According to the ACLI: “Life insurers provide jobs, protect American families, and invest in the economy. 90 million American families count on life insurers’ products for protection, long term savings, and a guarantee of lifetime income when it’s time to retire. Given today’s economic uncertainties, the financial and retirement security these products provide has never been more important.”10

In 2022 Forbes Advisor conducted a survey on life insurance.11 It includes some interesting findings:

  • Fewer than half of people without life insurance surveyed in this study say they feel financially secure.
  • 44 percent of American households would encounter significant financial difficulties within half a year if they lost the primary wage earner in the family, and 28 percent would reach this point in only a month.
  • 106 million American documented and naturalized adults do not believe they have adequate life insurance coverage, according to the 2022 Insurance Barometer Study conducted by LIMRA and Life Happens.12

Imagine what the statistics would be for the 11 million undocumented immigrants living in the United States. They also have to worry about taking care of their families after their deaths.

Immigrants have the same needs for life insurance as U.S. citizens:

  • Income replacement
  • College funding for dependents
  • Debt cancellation

(Note: Purchasing life insurance is not illegal for an undocumented immigrant.)

Point: Undocumented persons are as much in need, if not more so, for the products offered by the life insurance industry.

Something Not Easy to Put Your Finger On
But can they actually acquire coverage? Are they excluded by the rulebooks?

Without proper paperwork and documentation, just about everything an undocumented immigrant does in the United States will be more difficult.

Life insurance offers many benefits to immigrant policy owners and their beneficiaries regardless of their citizen status. Life insurance rates are not impacted by immigration status. However, finding life insurance is not easy for people who are not U.S. citizens. Citizenship status will influence which life insurance companies will be able to provide coverage and what further information is required to acquire a policy.

Undocumented immigrants living in the United States do not have Social Security numbers. They do not have U.S. citizenship. How, then, can they apply for life insurance?
(Note: People entering the United States illegally, with no documentation whatsoever, are not able to get life insurance.)

Undocumented immigrants can use a tax identification number (ITIN) to apply for life insurance policies. (With numerous carriers.) An ITIN is issued by the IRS. With it, immigrants can open a bank account, file taxes, and purchase life insurance. An ITIN is not contingent upon citizenship, and life insurance companies normally do not ask any questions about a proposed insured’s immigration status. The ITIN is not an indication that a person is an undocumented immigrant. Many foreign nationals and other legal, non-U.S. residents utilize an ITIN. Using their ITINs, life insurance companies will search the immigrant’s medical history and review their background for criminal activity.

These are extremely useful documents for immigrants applying for life insurance:

  • A valid driver’s license
  • Documentation of the last-seen doctor visit
  • Employment history and paycheck records
  • A current, valid passport from the home country
  • Other requirements:
  • Must reside in the United States and provide an address
  • Have a U.S. bank account

Life insurance company underwriters consider and approve undocumented immigrants based on:

  • MIB
  • Driving records
  • Prescription drug history
  • Health history
  • Working status
  • Lifestyle situations such as credit history
  • Insurable need

While Federal law protects life insurance beneficiaries, and undocumented immigrants can receive death benefits from life insurance policies regardless of immigration status, certain government agencies may intervene due to immigration status.

Point: With special attention given to non-citizen status, immigrant persons can qualify for life insurance policies with some documentation.

The Human Element in Everyday Decisions
Undocumented immigrants are especially at risk if a spouse or partner dies unexpectedly. Typically, very few extended family members live nearby to help the deceased’s immediate family.

In addition, because they are just getting started in the United States, they generally do not have adequate financial reserves should an emergency happen.

Most immigrants are willing and able to pay one or two dollars per day for life insurance to help their surviving family and loved ones should they die. Life insurance is an important financial safety net for both U.S. citizens and immigrants to the United States.

Question: As an independent financial professional, are you open to helping people (who are technically illegal immigrants) in their pursuit to provide their families and loved ones with financial security through life insurance?

Application:

  • How can you broaden your activities and offerings to attract and serve the immigrant population?
  • Are your services discoverable by immigrant people living within your same geographic area?
  • Are you willing to expand your marketing to cross language barriers and socio-economic differences?
  • How can you enhance your networks by working cooperatively with agencies serving immigrants, with English as a second language services, and other organizations aligned with the concern for the present and future of these recently arrived families?
  • What can you do to tailor your processes so that you serve this imperiled population?

Summary
Even children who came across America’s southern border illegally hope for Santa to find them. Santa is no respecter of borders. Nor does he inspect citizenship documentation.

Can we as an industry rise above politics, cross cultural barriers, and do what only we can do—provide financial security needed to anticipate the unexpected occurrences of death and disability?

Steinbeck: “Man, unlike any other thing organic or inorganic in the universe, grows beyond his work, walks up the stairs of his concepts, and emerges ahead of his accomplishments.”13
With grace as our motivation, let us walk up the stairs of the concepts that make our industry great!

Footnotes:

  1. https://www.bnm.gov.my/-/announcement-on-the-formation-of-the-financial-services-professional-board-and-the-appointment-of-its-chairman-and-board-members.
  2. https://www.bis.org/review/r180613c.htm.
  3. https://www.maybank.com/iwov-resources/corporate_new/document/my/en/pdf/FSPB_Code_of_Ethics_PartA_B.pdf.
  4. Ibid.
  5. Ibid.
  6. Ibid.
  7. Ibid.
  8. https://www.arts.gov/stories/blog/2020/ten-things-you-might-not-know-about-grapes-wrath.
  9. “The Grapes of Wrath.” John Steinbeck, The Viking Press-James Lloyd, April 14, 1939.
  10. https://www.acli.com/About-ACLI/Learn-More-About-the-Life-Insurance-Industry.
  11. https://www.forbes.com/advisor/life-insurance/life-insurance-statistics/.
  12. Life Happens: 2022 Insurance Barometer Study.
  13. “The Grapes of Wrath.” John Steinbeck, The Viking Press-James Lloyd, April 14, 1939.

Enemies

Take a deep breath and try to relax a little, we have survived another political season. Political winds of change whether progressive or conservative favoring reform, inertia or nostalgia for the past have always defined, inspired or restricted our carefully planned insurance responses. It has always been a perpetual progression of action—reaction involving a careful evaluation of potential risk mitigation opportunities. Within the nature of our discipline we have repeatedly tried to ameliorate the risk of insurable events. The balance of political alternatives reminds us once again that our choices come to a pivotal head at our perceptions of control. Personal control of an individual’s claim destiny or the acceptance of additional centralized perhaps even coercive management. Our universal hope of course is that these most essential components are able to find a balance that benefits the greater good. In LTCSS circumstances that hopefully translates into an acceptable level of mutual decision making and maximum level of quality managed care.

In my humble opinion no one has been a more consistent hard headed advocate of exposing the corrosive relationship between the public response to custodial care for the aged and the lack of success in private responses to reduce and return control of individual claims destiny than Stephen Moses. His most recent manifesto “Long-Term Care: The Problem” recently released from the Paragon Health Institute once again provides conclusive irrefutable evidence that the still mushrooming consequence of current market conditions is the fault of existing misguided public response to the problem. The truth is we have always been fighting ourselves. It is the incestuous relationship between the holy trinity of Social Security, Medicaid and Medicare that has made it virtually impossible for us to adequately blunt this risk from the private sector. Private funding solutions including insurance, reverse mortgages and life settlements have had no room to breathe free when all the oxygen has already been sucked out of the room by State and Federal mandated, frequently capped and therefore underfunded, politically loose footballs. This exceptional white paper provides more than a sufficient arsenal of hard statistic ammunition to defeat any spurious attempt to defend the expansion of public taxpayer funded strategies. More of the same will not help. It will however most certainly exacerbate the problem.

This statistically exhaustive presentation of the facts, clearly researched, reveals more than just a smoking gun. It provides irrefutable evidence of a massive self-inflicted wound:

  • The current response to the problem is not working. New taxpayer subsidized solutions will only throw gasoline on an existing hot fire. Half of Americans will need paid care and the number of those 85 and older will triple in the next 35 years.
  • Medicaid remains severely underfunded and Medicare currently has unfunded liabilities of almost 35 trillion.
  • Medicaid and Medicare currently pay for 70 percent of care in America. Medicaid has a direct negative impact on LTCI. Because it pays for three fifths of the expensive costs (nursing homes) but only reimburses two fifths of the cost. The shortfall lands on private pay patients.
  • It is often forgotten in the conversation but the largest source of Medicaid long term care expense comes from Social Security spend down. Some long term care funding does come from Medicare Part A. The projected demise of the trust funds for both these programs reflect a very short future shelf life. Can we guess where that shortfall may ultimately reside?
  • It is true that shifting the focus to HCBC has succeeded, now representing approximately 50 percent of current overall spending. What is not true is that it is saving any money. Even though claims for HCBS grow, combined costs also continue to grow.
  • Required Medicaid impoverishment remains a ghost story told around financial planning camp fires. It is pure fantasy.
  • Compounding problems remain the definition of a Dual Eligible. One-third of overall expenses now come from those qualifying for both Medicaid and Medicare.
  • LTCI has experienced reserve and persistency concerns that have caused onerous rate increases and carrier defection from the market. The striking difference is that insurance claims will be paid. Confidence in government programs may or may not be justifiable.
  • Claim location matters. Private insurance claims show that three-fourths begin at home. Medicaid would suggest just the opposite.

Stephen’s voice has been steady and spot on from the beginning. The system has always been our own worst enemy. His personal message could not be more timely, “Government subjugates, markets liberate.“

Other than that I have no opinion on the subject.

Consumer Focus From Wellness Apps To Digital Life Sales

Last month saw the release of the Global Consumer Study, new research carried out on consumers across the world and their attitudes towards insurance. 12,728 people from 22 global markets were asked about a range of topics, including: Buying and claiming insurance, purchase triggers, causes of stress, road and cyber insurance, mental and physical health and the use of wellness apps. As part of the study, researchers surveyed over 1,000 U.S.-based consumers, enabling us to build a picture of the modern American and what they are seeking in their insurance experience.

Americans are happy to share data
U.S. respondents showed a willingness to share data with insurers to enable them to assess risk. Interestingly, 80.5 percent of them felt either comfortable or very comfortable in sharing information about their employment with their insurance provider. This was followed up by openness around sharing previous claims data (79.2 percent) and openness on sharing data from health check-ups (76.7 percent). The possibility of a discount was the main driver for this, with three quarters of U.S. respondents interested in possible reduced insurance premiums in exchange for this data.

U.S. consumers love a health app
Findings from the study show the use of health and fitness apps has remained strong in 2022 and shows no signs of declining, with more than half of global respondents saying they have a general fitness app (51 percent). In the U.S., the popularity of such apps rises nearly another 10 percent. Curiously, U.S. women seem to have a far greater appetite for general fitness apps than their male counterparts, with 68.9 percent of American women owning one, compared to just 45.5 percent of American men. And perhaps surprisingly, the data demonstrate that Boomers and Gen X use general fitness apps more than Millennials and Gen Z in the U.S.

Consumers want multiple claim points
Multiple access points are being used by consumers in the U.S. when making insurance claims. These methods range broadly from online (33.4 percent) and email (16.3 percent), to agents (19.3 percent), apps (14.9 percent), and more. However, despite a growing movement towards digitization, the most common claim method for American consumers remains a phone call (45.1 percent). This bucks the global trend, where online claims are the preferred method. With this in mind, it should also be acknowledged that some U.S. insurers are yet to offer online claims capability.

Download the full research at www.remarkgroup.com. ReMark is a worldwide InsurTech consultancy specializing in consumer insights, marketing campaigns and tech solutions.

Plum Life delivers more fruit for less labor
In today’s life insurance sales environment, advisors are working more than ever remotely and digitally with their clients. This can lead to a lack of personal touch and critical guidance through the sale, not to mention the difficulties of lead generation and client follow-up as expressed by many agents. But it does not have to be that way… Plum Life was designed exclusively for agents and to allow them to sell completely online. As a user, the experience is simple, instinctive, and demonstrates an understanding of how agents sell. Their platform also houses all functions in one location, making it easy for agents to place business. Plum Life automates appointments, submitting and placing applications, tracking commissions and helps agents manage their inforce clients. Because they understand the entire sales process, they have been able to digitize the entire process allowing agents to customize the experience to a specific person or case. Helping agents sell life insurance is at the core of what they do.

Plum Life offers a diverse product suite from A-rated carriers, all designed for a digital agent sale. Their growing list of products and carriers boasts both an instant issue and accelerated term options, whole life, AD&D and two flavors of final expense. Registration is free with Plum Life, which makes it a good option for independent agents. It is intuitive and easy to navigate, with a sleek interface designed specifically for mobile use, allowing agents to start selling quickly. Agents also get access to powerful lead generation and marketing tools, and case management is automated.

Plum Life also keeps agents, and their clients, in the loop as they go through the sales process. With email reminders and text alerts, agents can quickly and easily stay on top of things and clients are reminded to take required actions. When asked, a Plum Life representative stated this functionality is a “big differentiator and helps drive conversion.” While there are a few other digital platforms available for life insurance sales, many of them are focused on direct-to-consumer sales and put the agent experience secondary, sometimes trying to cut them out completely. Others simply do not have the breadth of products or tools available from Plum Life. For today’s agent who is looking to work with clients digitally, Plum Life has a lot to offer. Agents can register at www.HelloPlum.com.

UComplete is seamless in the carrier’s life fulfillment process
A powerful model for straight-through processing for life insurance digital sales is an “Agent to Customer Self-Service Process.” ApplicInt has a product “UComplete” that simplifies the eApp process while engaging the agent with their client. The agent runs a multi-carrier quote and completes a drop ticket (then hands off to the client). This is done by the agent who emails a link to the customer to complete Part A of the life insurance application online. The Part B medical questions part has options where the customer can complete, or can be completed via tele-interview or by an examiner performing a digital Paramed exam. The customer will securely eSign the forms in the same experience. If the customer has any questions, then they can do a real-time chat with a call center for assistance as needed. There is a warm transfer to a call center to schedule an exam if needed. This is a seamless process. The forms and data are automatically sent to the carrier in-good-order. The agent is notified of the status via email. The agent is then freed up to focus on sales.

There is a second model for ApplicInt’s UComplete, which is a carrier direct to consumer process. This makes it easy for consumers to apply for life insurance from a carrier’s website. It would start with a secure login process on the carrier’s website. Getting a login is a quick and painless process, but very secure. Once the consumer logs in, they run a term quote. There is a health analyzer available to use so the client can be placed in the correct underwriting category, which impacts the premium quoted. If the client is approved as applied for, then the placement ratio is increased significantly. Leveraging the same functionality of UComplete above, the consumer completes Part A of the life insurance application online. The Part B medical questions are options which can be completed via tele-interview or by an examiner performing a digital Paramed exam. The customer will securely eSign the forms in the same experience. If the customer has any questions, then they can do a real-time chat with a call center for assistance as needed. There is a warm transfer to a call center to schedule an exam if needed. This is a seamless process. The forms and data are automatically sent to the carrier in-good-order.

The flexibility of U*Complete’s seamless integration is because ApplicInt is the only solution provider that has a call center solution “CallComplete” and a digital Paramed platform “ExamComplete.” Any step of the process can also be integrated using an API into a carrier’s supported system so that their workflow remains the same. Other features where ApplicInt transforms the life insurance process includes integrating with a carrier’s automated underwriting process. The ApplicInt platform can also do scoring of data based on carrier rules. The end-to-end process starts with easy access to an agency or carrier portal supporting single sign-on to delivering the data and forms to the carrier in-good-order. This reduces the overall process by five days. The ApplicInt fulfillment software solutions are used by the industry’s largest Paramedical providers. You can visit www.applicint-usa.com to learn more.

GLWBs, Step-Ups, And Other Random Annuity Thoughts

A few weeks ago I was preparing an indexed annuity illustration for one of our agents who had a client that wanted guaranteed lifetime income. So, I was running one of my favorite indexed annuities with the GLWB rider. As I looked at the printout, I came across something that I hadn’t seen in years. It was a “step up!” It had been such a long time since I’ve seen one of these, at least on this type of a GLWB rider, that I was confused until I realized what was happening and why it was happening: The 11.5 percent S&P 500 “cap” was outpacing the GLWB rollup rate. Now that is not something you saw when caps were at five percent!

Over the last few weeks I have also had a few questions from agents asking me, “Can you explain what is happening in this illustration?” So, I felt the topic to be worthy of a column along with a few other random thoughts on GLWBs.

A couple decades ago I was with a very large company that was a leader in the variable annuity space. At the time, the hot item with variable annuities was “guaranteed lifetime withdrawal benefits”(GLWBs), and its predecessor, “guaranteed minimum income benefits” (GMIBs). These were very popular because, on the back end of the dotcom crash, consumers were looking for guarantees to protect them from the turmoil they had just experienced. The GLWBs separated themselves from the GMIBs in that the GLWBs did not require annuitization, just “withdrawals.” Hence, with the GLWBs, the company did not require the client to lose control of their account value by locking it into a perpetual income stream.

At that time our hot VA product story was that the client had a “benefit base” that was guaranteed to grow by seven percent every year, regardless of what the actual account value did on that variable annuity. Even if the account value lost 50 percent, again, the client had that baseline guarantee that they can eventually take income based off of. Furthermore, the variable annuity world marketed an additional benefit, and that benefit was “step-ups.” The notion of a step-up was that if, at the end of the year, the actual account value is higher than the benefit base—meaning that the account value increased by more than what the seven percent rollup percentages had done—the client’s new benefit base would “step up” to what that account value was in that year. And then the ongoing seven percent roll up percentages would generally apply to that higher value. Later on came quarterly step-ups, monthly step-ups, and then daily step-ups. Then the economy crashed in 2009, interest rates plummeted, and these robust variable annuity benefits “stepped down”…but I digress.

We all know that GLWBs on indexed annuities came from the variable annuity world. The first GLWB was put on an indexed annuity chassis around the year 2006, after the variable annuity business had been running with the concept of GLWBs and GMIBs for years. This made sense to the indexed annuity market because the VA business had used these riders with huge success. The VA business was a good business to copy because the VA business at the time was about six times the size of the indexed annuity business. 2006 VA sales were $160 billion and indexed annuity sales were around $25 billion.

Over the last two decades these riders have evolved like everything else. I now discuss that there are two different categories of GLWBs in general: a) Performance-Based (the newer breed); and, b) Guaranteed Rollup Riders (the traditional breed).

The performance-based riders generally have minimal (sometimes none) “rollup rates.” These riders largely rely on the account value to increase in order to have the benefit base (and eventual income) increase. An example of one of these GLWBs may be, your benefit base will increase by two times what the amount of credit/performance was in your account value.

The performance-based riders are a good option for the clients/agents that believe that the performance of the underlying index may enable the benefit base to grow faster than what a guaranteed rollup rider may be able to do. These riders effectively rely on “step-ups” like what I discussed with the variable annuities.

The other category—at least how I categorize them—is “Guaranteed Rollup Riders.” These are the traditional seven percent, 10 percent, etc., benefit base rollup rates. These GLWBs are for the clients/agents that want straight guaranteed income without any reliance on the account value. These are the riders that have been on indexed annuities since the beginning.

Generally, the “performance-based” riders will show “non-guaranteed” income that is higher than the guaranteed-rollup riders, at least based on the illustration. However, from a guaranteed income standpoint, the guaranteed rollup riders will generally show the highest guaranteed income.

With the guaranteed rollup riders, something odd is starting to happen with interest rates having spiked the way they have, and that is the potential to receive a step-up on the benefit base… If the indexed annuities in the early years had much potential for “step-ups” back then, then I certainly don’t remember it. If there was ever much potential then it only lasted until the financial crisis, when interest rates really started to plummet.

Why no step-ups? Two primary reasons:

  1. Low interest rates: Because caps and par rates on these products were so low that the odds of having the accumulation value outpace the “benefit base” was almost nothing. (Caveat: There are some “volatility-controlled indexes” that show very high “backcasted rates” that have been able to show a step-up, but that has not been the norm.)
  2. Bifurcation of objectives: Another reason that you have not seen step-ups on this flavor of GLWB is because the GLWB focused annuities are “generally” watered down from an accumulation standpoint relative to the same company’s accumulation focused annuities. If you compare the cap rates, par rates, etc., on a product that provides very good guaranteed income, you will find that the tradeoff is “usually” the lack of accumulation performance. (Note: There are exceptions to this rule in that there are products that have the same cap as their “accumulation focused” counterpart. Hence, the product I used in the first paragraph.)

With interest rates having increased the way that they have, and by choosing a product that also has great accumulation potential, there may be opportunities to show the consumer the potential for an occasional step-up on their indexed annuity. But be cautious of rosy illustrations.

One last point on income focused products that also have great caps, par rates, etc. Even without a “step-up,” a great income focused annuity represents less of an “opportunity cost” to the client—versus a purely accumulation product—when that income focused annuity also has great accumulation potential.

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