By: Gary Bleetstein- February, 2019 ASG Insight

 

 

The debate continues in the life underwriting as to how the use of Cannabis should be treated for Underwriting purposes.

 Today, Marijuana use is the third most used drug in the US- just after Alcohol use which is legal in all states.

Here are some facts about marijuana use in the US and Canada

Canada has recently as federal law permitted recreational use of Marijuana in many forms in all areas of the Country

In the US- 

·        25 states permit medicinal marijuana

·        18 states have broad laws for marijuana

·        12 states allow for recreational use and more states are adopting laws for recreational use every week

Here are some other facts about use in the US

·        10.6 million people use marijuana 10 times a year

·        4 million people use marijuana twice a month

·        2.3 million people use marijuana once a week

·        5.4 million people use marijuana daily

Here is the Conundrum in underwriting marijuana use

·        Under Federal Law marijuana use and profits are illegal

·        Under state laws- it is legal

·        There are not enough facts about the use of marijuana and how it will effect long term or short term mortality

 Some other considerations include

·        Most carriers do NOT test for marijuana use

·        The industry does not know who is telling the truth on underwriting and medical questions

·        Many MD s do not as a practice put all marijuana use facts in the records

So what do you do if a client is using marijuana or in the marijuana business

·        Your client is best to tell the truth

·        Medical Marijuana use underwriting will be based on the reason the client has a marijuana prescription

·        For recreation use- we have seen offers from Best Class to STD based on amount of use

·        For client s investing or owners in the marijuana business- it will be extremely hard to get business coverage- they can in some cases get personal coverage

In closing – this is a very liquid and rapidly changing scene and your client should not be afraid to apply for life insurance- we recommend you call us first to pre-underwrite the situation.

 

 

By: Sam Kaufman- January, 2019 ASG Insight

 

Another year is in the books and 2019 has certainly gotten off to a rapid start on all fronts.   In Washington, we have had the longest Government shutdown in history and in our industry many changes loom on the horizon that will affect how we do business.    For me personally, I enter my 50th year in this industry having seen brokerage evolve into a major segment of the industry from what were no more than corner stores.    It has been a great career and I look forward to the challenges ahead.   

 

Technology will be the biggest contributor to change this year and for many years to come.  I remember my first Wang Computer and how many of my colleagues looked at me as though I came straight from outer space.   The days of the carbon copy were replaced by the photocopy and e-mail has become the primary means of business communication.   Advertising took to digital media and the catalogues you would receive are now sent over the internet.   All this while the life insurance industry remained far behind others in the financial service industry. 

 

Advisors will need to adopt new ways of doing business and remaining engaged with their clients.    Accelerated forms of underwriting that make use of multiple databases and artificial intelligence will continue to grow and advisors will need to get up to speed on their utilization to keep pace with the demands of their clients for shorter and less intrusive methods of obtaining life insurance.   At ASG our goal is to bring the most current methods of transacting business to the advisor and their clients.             

 

On the legislative front, an in depth review of AG 49 in response to multipliers and other features that have been added to Indexed Universal Life policies will undoubtedly bring changes in the way IUL is illustrated.    Existing IUL policyholders will be seeing changes to Caps and Participation Limits as the cost for the underlying options increase.    Expect to see the introduction of new IUL products as the marketplace recognizes IUL as a mainstream product.   

 

Like everything today, we all need to remain up to speed.  ASG is dedicated to being ahead of the curve and through our affiliation with Lifemark Partners will bring you the most current technology and sales support tools.  

By: Jay Scheiner JD CLU
Partner, Agent Support Group

Some of our clients apply for long-term care (LTC) insurance with a LTC rider, only to be denied coverage due to adverse health history. Often these clients already own, or can qualify for, a life insurance policy without an LTC rider. In this situation, many families can preserve family assets by using life insurance as a stand-in for a long-term care policy or LTC rider.

Example: Denise, age 60, is a non-smoker, in reasonable health except for type 2 diabetes, osteoporosis, and a questionable echocardiogram. She applies for

$600,000 of Guaranteed Universal Life with an LTC rider that will provide up to

$12,000 a month for up to 50 months of care. The $600,000 policy with LTC rider would cost Denise $11,800 per year at standard. The same $600,000 policy without the LTC rider would cost her $9,800 per year. While Denise is accepted as a standard risk for life insurance, she is denied coverage for the LTC rider. Denise accepts the policy as offered without the LTC.

Fast-forward 20 years and Denise, now age 80 and disabled, requires long-term care services and would qualify for an LTC claim. She remains disabled for 36 months before she dies.

If Denise had a policy with LTC she would have paid $236,000 in premiums until the time she became disabled, and another $29,900 until she passed away. After a 90-day elimination period – during which Denise would pay

$36,000 for her care – the policy would pay her $12,000 per month for the remaining 33 months of her life, for a total of $396,000. At her death her beneficiaries would receive the balance of the policy, $204,000, as a death benefit. The total Denise and her heirs would receive from the policy would be the combined policy limit of $600,000.

If Denise had a policy without LTC she would have paid $196,000 in premiums until the time she became disabled, and another $29,400 until she passed away. By spending down her savings, Denise would pay $12,000 per month for care for the 36 months of her disability, for a total of

$432,000. After her death her beneficiaries would receive the $600,000 death benefit tax-free – effectively replenishing all of the costs of Denise’s lengthy illness and care plus an additional financial legacy for her loved ones.

As you can see from Denise’s story, life insurance can act as an ideal asset to replace the cost of care even in the absence of LTC. We have worked with agents and advisors in structuring hundreds of insurance plans for the purpose of funding the cost of care. Sometimes the solution comes in the form of a traditional LTC policy. More often than not it is in the form of life insurance with an LTC or

chronic illness rider, and certain situations call for a single premium LTC hybrid product. There are times, though, when a family like Denise’s, which bears the burden of long term care expenses, can best be reimbursed using the death claim from a life insurance policy.

What Is Your LTC IQ?

By: Mark D. Milbrod, CLU
November, 2018 ASG Insight

November is Long Term Care Awareness Month and just like changing our smoke alarm batteries when we adjust for Daylight Savings Time, it’s probably a good time to take a good look at our own LTC planning.    What do you know and what don’t you know?  Just what is your LTC IQ?

As advisors, we talk to our clients about the need for proper planning every day.  But, do you have your LTC planning in place?  I worked for Prudential when I first started in the business.  The very first week, my Sales Manager had me apply for my own life insurance policy and once it was issued, I kept it in my briefcase at all times.  During my sales calls, I can say that I practiced what I preached. This created more  credibility behind the words that I spoke.  By going through the process, I sat in the shoes of my prospective clients and had a better feel for what they would be going through.

Today, when I meet with clients, I have the LTC conversation with just about everyone.   And yes, there is an LTC policy in my briefcase.  But unlike Life Insurance, the LTC process is a little different.  Have you gone through the process yourself?  If not then you should.  What better way to start the conversation with your existing or prospective clients.  Besides, as I stated earlier, when you practice what you preach, you tend to be a bit more passionate about the subject.

Today’s LTC marketplace is much different than it used to be.  Most of the stand alone products are gone with only a few carriers remaining. For the most part, the products are often very costly and have non-guaranteed premium structures.  There is also a forfeiture of the premiums paid if you never go on claim.

There are several other popular options that provide the most comprehensive types of LTC protection today.  Each variety includes a life insurance component that creates a multi purposed pool that can be used for pure life insurance, LTC benefits or a combination of both.  The first option is a life insurance policy (typically a GUL), with a Long Term Care Rider.  By utilizing this design, you take away the “use-it or lose-it” approach.   If you never go on claim with these options, the death benefit will be paid to a named beneficiary.  Some of these policies also have a unique feature not found in the stand alone options, an indemnity style benefit.  Indemnity benefits allow access to your LTC pool without having to submit receipts for care or having that care provided exclusively by skilled care workers.  This allows for greater flexibility and access to the entire pool of benefits.

Another option is the Hybrid/Blended Life plan designs.  These are often purchased as single premiums and provide a larger, leveraged pool of benefits.  These too, can be accessed as either an Indemnity or Reimbursement style of benefits.  In addition, a Return of Premium (ROP) feature is widely used with these options.  The ability to have a modest death benefit pool, a larger LTC pool and access to your premiums through that ROP option provides a smart parking space for money.  These funds would normally be ear marked as self-funded assets for a potential LTC event.

The last option worth mentioning is the potential of providing LTC benefits on an unlimited basis, regardless of how long a claim would last.  The first couple of options have a finite benefit pool that once exhausted, ceases to provide any additional payments.  Granted, the average length of an LTC claim is between three and four years so most of the previous options should be adequate.  However, for some cognitive illnesses such as Dementia and Alzheimer’s Disease, a patient can have a life expectancy between 8 -12 years from the time of diagnosis.   For this option, it is an interesting feature that can protect against those types of prolonged illnesses.   It should be noted that this particular option is available on an individual or joint life basis that can potentially provide life time benefits for two insureds.  Unfortunately, it is not available in all states, including New York.

So let’s take a quick LTC IQ Quiz:

  1. True or False? Stand alone LTC policy premiums are not guaranteed and can be increased several times during the life of the contract?
  2. True or False? Guaranteed Universal Life, Indexed Universal Life and Whole Life can have available LTC Riders that will guarantee premiums for the life of the contract?
  3. True or False? There is a rider available that will pay LTC benefits with an unlimited/uncapped pool?
  4. True or False? Indemnity based LTC Benefits can be used for informal/unskilled care and even be utilized to reimbursement a family member for wages lost as a result of providing that care?
  5. True or False? Older life insurance policies can be 1035 Exchanged into newer polices with LTC Riders or Hybrid/Blended Life platforms?

If you didn’t answer TRUE to all five questions or weren’t sure about the answer, call us to find out how to best utilize the products and services available through Agent Support Group.

There are so many different options available in today’s LTC marketplace.  It is definitely not what it used to be.  Unfortunately, most people that we know (ourselves included), can relate to these issues due to a personal experience or knowing someone that has been through it with a loved one.   The Baby Boomer generation has 10,000 people turning age 65 every day.  70% of this group will require some degree of long term care in their lifetime.   This makes this a grossly underserved market and one of the largest opportunities in our industry today.

 

By: Gary Bleetstein
Partner, Agent Support Group

Every time I see a new email from a Life Carrier or BGA, it is usually associated with either a new IUL product but most recently, with new Underwriting Technology.

The question is, will this new technology take the place of the Life Insurance Advisor?

Most advisors do not even know the difference in E Applications, Drop Ticket or Accelerated Underwriting Programs not to mention GI programs using Bots !

I attend meeting after meeting on these subjects and I must say, there are two answers- NO and in some instances Yes.

Let’s start with Yes first –

Yes, the new Underwriting Processes will assist with the smaller term and UL sales for ages 60 or 65 and less for healthy insured’s. This may or may not even be a market for you.

However, what happens when either a carrier or agent goes direct to the insured via a bot or new technology- who will help the insured get all of the answers they need? Surely no bot that I am aware of can do that, and many of these programs are only taking 30-40% of the applicants. Up to 60% will still need regular underwriting?

The client at that point may need to speak with an advisor.

Now let’s look at the NO – Technology will NOT Remove the need for the Advisor?

For your more substantial clients and those with even moderate health issues, tell me the name of a Bot who can talk to an underwriter about the A1C or Hemoglobin Levels, or even the build of a client? What about a split dollar plan or premium financing? Can an underwriting program assist a client with these issues? I think not.

My firm and I have done our homework on these issues and we feel strongly that the industry will continue to find a way to streamline the underwriting process, but this does not mean it has found a way to streamline the need for the advisor.

There will always be a place in this great business we are in for the advisor who can truly add value to a sales and underwriting process and I feel strongly whatever programs come out of carriers, there will be a good spot of advisors in the Life Insurance Industry.

The Promise of Kilimanjaro

By: Jay Scheiner
Partner, Agent Support Group

 

Agent Support Group (LifeMark) is pleased to announce that ASG Partner Jay Scheiner’s new book, The Promise of Kilimanjaro, has been released on Amazon and is receiving early accolades and five star ratings.

With a Forward by insurance industry legend Joseph Jordan, author of Living a Life of Significance, The Promise of Kilimanjaro is not just a story about a mountain.  Africa’s highest peak is the backdrop for this surprising memoir of a man driven to pursue a challenge of significance. You’ll scale an 800-foot cliff, and flash back to D.E.A. training alongside Nicaraguan Contras. There’s an attempt to sail the Atlantic solo, the terror of falling off a moving boat in open water, and the lure of a precious stone.

The book reminds us of the frailty of life and the importance of the peace of mind that we, as insurance advisors, offer to our clients. The Promise of Kilimanjaro – a true story that will inspire, even if you never plan to set foot on a mountain.

You can learn more about the book and purchase it by clicking HERE for the Amazon link .

By: Sam Kaufman
Partner, Agent Support Group

2018 will be the start of an era of rapid technological change for the life insurance industry, an industry that has been lagging behind others in the financial service arena.   Technological change will affect the way every advisor does business going forward and our relationships with the companies.   Those who choose not to navigate the new technology super highways will be left behind in a cloud of dust. 

Early in the year many companies will be introducing advanced accelerated underwriting programs that will require the advisor to utilize an electronic application for submission.   In other words, no electronic application then no access to the accelerated program.    One company has already announced that they will be offering their portfolio of products up to age 65 for amounts up to 2,500,000 for all underwriting classes, standard or better, via the electronic process.   Electronic submission and accelerated underwriting are the result of companies and agencies alike needing to reduce their upfront costs for acquiring business.  

Michelle DellaPia joined ASG in November to lead our electronic application advisor training and submission processes.   ASG is devoted to making certain that its advisors are able to take advantage of all the latest technological processes and not miss the train as it pulls out of the station.  

This is just the beginning of a five year period where vast changes will be effecting the way advisors do business.   Artificial Intelligence (AI) will become the norm and although there are many privacy issues surrounding its implementation, you can expect that may applications will be underwritten in “Robot” like fashion.   The primary goal is to achieve enhanced customer satisfaction and make the application process easier and more efficient. 

Enhancing customer satisfaction on the front end will be easier than the post issue service which continues to be an area that creates a multitude of problems.    Many of these problems could be reconciled if the companies would come together on the way post issue transactions are processed.   When you realize that every company has its own change of owner/beneficiary form, you begin to realize the seriousness of the problem as this, in itself, only serves to create questions and in the end dissatisfaction.  

The next big area to require change is the 1035 Exchange process.   Today when I get to a checkout counter, the person asks were you able to find everything you wanted and hope you come back.   When you leave a life insurance company via a 1035 Exchange, they kick you in the backside and ask you never to come back.    I don’t quite understand this philosophy as it appears contrary to enhancing a customer experience.    Banks clear checks in a matter of hours and life insurance companies take a minimum of 20 days to process a 1035 exchange.   

Like usual I am probably preaching to the choir, but as a good preacher I wish my congregation of loyal advisors the best for 2018. ASG will always be here to help.

 

By: Gary Bleetstein
Partner, Agent Support Group-11-17

 

While Long Term Care is not the easiest topic to discuss or write about, it is one of these things in life that will be weighing on many families for many years.

Yes, people are living longer, however, we must consider their overall conditions and if a parent or sibling is living longer because of a Long Term Care issue, is this any better for society.

November is Long Term Care Awareness Month and it is for this reason I wish to try and point out some important items and issues with Long Term Care.

By now, we should all know how Long Term Care needs are becoming a larger part of our business, even in the high net worth markets. Costs for Long Term Care at home or at a facility are escalating with no real reductions in costs at this time.

The National Median Annual Costs for Long Term Care are –

·       $ 91,250 for private room in a nursing home ($ 7,600 monthly)

·       $ 80,300 for a semi-private room in a nursing home ($ 6,700 monthly)

·       $ 45,760 for Licensed Home Health Aid ($3,800 monthly)

·       $43,200 For Assisted Living ($3,600 monthly)

Let’s just look at one situation – a 75-year-old with full onset of Alzheimer’s. Choices for care become limited without a tremendous amount of family resources and money. Of course most prefer to keep a patient at home rather than in a facility- but this is not always possible. Should the patient require a nursing home in the major cities in the Northeast- these costs can run over $12,000 a month or $ 144,000 a year. If the cost of care for this individual is for 4 years – the costs could be $ 576,000 easily. Where will this money come from? and in the Northeast – these costs could be $ 750,000 or more.

Will it come from and adult child, a spouse, or a domestic partner? or Should you and your client consider protecting assets now and purchasing Long Term Care with Guaranteed Premiums and Benefits? 

I feel strongly that whether a client purchases Long Term Care or Chronic Illness Care- it is our responsibility s advisors, to show our clients what is available to them.

The type of products I recommend to advisors are:

·       Life Insurance with LTC or Chronic Illness Riders – with costs that are guaranteed

·       Linked Benefit Products that provide either single pay or limited pay options for Life Insurance, Annuities with Guaranteed Long Term Care costs and benefits. 

While this is an area of our business that can be difficult to discuss, we need to also realize that it is our job to help educate our clients to assist them in mitigating future risks and what better time to do this than right now –

Long Term Care Awareness Month

Have a Safe and Wonderful Thanksgiving

Insurance by Selfie!

Jay Scheiner, JD, CLU, Partner
Agent Support Group/LifeMark

Insurance companies can’t keep up with buyers’ demand for instant product gratification; even “accelerated” underwriting programs aren’t fast enough for some consumers. Meanwhile, companies have an interest in eliminating costly exams and lab fees. So, 21st Century tech to the rescue! Enter Chronos, a new technology from Lapetus Solutions, Inc. (LSI), the science and technology company that uses facial analytics to estimate life expectancy, with an approach similar to what advanced law enforcement uses to predict how a fugitive may age over decades. The client submits a selfie to the insurance company and the insurance company provides an indicative quote for life insurance.

A selfie reveals more than whether it’s a good hair day: facial lines and contours, droops and dark spots could indicate how well you’re aging.  A photo may reveal early signs of heart disease, diabetes, or even dementia. It can help estimate your body mass index (BMI), determine your physiological age (how old you look), and indicate whether you’re aging faster or slower than your actual age.  A selfie can even hint at whether you smoke, or smoked in the past.

If a proposed insured applies for coverage with a carrier that uses Chronos, the theory is that buying a policy online could someday take only minutes; clients may also avoid a paramed exam and labs. Many insurers are looking into this new technology, but the makers of the system are reluctant to disclose which ones just yet. “[Chronos] may or may not meet the vetting process to make carriers comfortable,” says Robert Kerzner, present and CEO of LIMRA.

Facial analytics that can predict life expectancy have the potential to revolutionize life insurance underwriting, as the technology may prove as accurate in predicting risk as current methods, and additional electronic checks such as the MIB, MVR or prescription drug database might be used as a cross-check. Chronos could also streamline the process of buying insurance by reducing the number of questions clients have to answer, another sore spot for consumers. BUT – while the newswires have lit up over the past six months with articles and press releases about selfie insurance being here, THEY’RE WRONG! I can’t find a single carrier that will actually write a policy based on this technology right now.  I was told by one senior insurance executive

exploring Chronos that they’re now just using it for analytics.  When someone takes the selfie quote on their site, the responses go to the insurance company, which through the technology will give the person their facial age; then the information gathered goes to Lapetus for beta testing and data collection to expand their research. I was told they then delete the information. Hope so.

Will insurance-by-selfie replace traditional underwriting procedures or even the newer rule engines that companies are using to access risk and make underwriting decisions? Probably not. Could it become another tool that insurers can use to assess risk and streamline the process? That’s more likely.

And then there’s the further concern that insurance-by-selfie can become another way the industry attempts to bypass the agent in transactional insurance sales. It’s possible. One of the insurance carriers we represent has the system in the testing stage. Ominously, the company executive announcing it on LinkedIn has the title, “Vice President, Direct-to-Consumer Distribution.”

Smile and say “cheese.” This is one story we should all keep watching…

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Sources:

–      How your Selfie could affect your life insurance, USA Today, Barbara Marquand, NerdWallet, April 25, 2017

–      Can a Selfie get you quicker life insurance coverage?,  Accuquote.com, Byron Udell, May 2, 2017

–      Underwriting Life Insurance with a Selfie, GlobalData, Danielle Cripps, News Archives 2017

–      Interview of a confidential source (We’ll call this officer “Deep Selfie”) who is a top executive at a major life insurer, September 26, 2017