Gary Bleetstein, Partner-Agent Support Group

June, 2019

 

As Geico advertises with its Hump Day and Camel Advertisement, Do You Know What Day It Is?

Being in the Life Insurance business, as you all know, our days are busy with constant interruptions from clients, carriers, vendors, even sometimes advisors and we tend to forget what our jobs and careers are really about.

This month, June 28th is National Insurance Awareness Day and my belief is sometimes we need to sit back, slow down and remember what it is we should be doing.

As life insurance professionals and advisors, we certainly have all of the tools of the trade to make as many of friends, family and business associates aware of how special life insurance is and can be in many situations.

Life Insurance sold properly can save families from financial disaster, help those with Long Term Care needs to assist with the high costs of medical care, keep a business afloat after the death of a partner or key person and so on. I remember the first time I delivered a death claim and thought this was the worst possible thing to happen. Well, I was wrong and the widow who I gave the proceeds to and I are still close friends. The check saved her life as there were 4 children and little assets other than the life insurance.

Furthermore, where can you buy a financial product, have tax free accumulation of cash, and have a tax free death benefit paid? Where can you buy a product that has guaranteed rates not to increase, guaranteed current or future income with excellent tax avoidance?

Why are there so many people in our country that are either not insured or under insured? Why to so many advisors and prospective clients not understand how life insurance is for the living, not the dead. Life Insurance, LTC, Annuities and Disability products provide excellent solutions to many future problems, yet we continue to get information that so many people in this country have no insurance.

So let’s all celebrate our great industry and products, and begin talking about the needs for Life Insurance products and remember that June 28th is National Insurance Awareness Day.

by: Sam Kaufman, Partner

Agent Support Group-May, 2019 ASG Insight

 

 

 

Now that April 15th has past and we have all seen the actual impact of the Tax Reform Act of 2018 we can move forward and implement planning concepts with more peace of mind.   Life insurance continues to maintain a leading position as a tax favored vehicle for accumulation.    Although many advisors have been prone to favor GUL type products in the death benefit sale, IUL is quickly gaining traction as the vehicle of choice for supplemental retirement planning.

“Bridge Products” provide a guaranteed death benefit to age 85-90 with some having the ability to provide a lifetime guaranteed death benefit.    Contrary to GUL which has minimal or no cash value accumulation, IUL provides cash value accumulation that may be used for alternative needs as our life changes.   You have the stability of a guaranteed death benefit to life expectancy or beyond while enjoying the benefit of cash value accumulation for supplemental retirement needs.

This takes me back to when I first entered the life insurance business and there was only a choice of two products, whole life and term.   Some pundits would exploit the virtues of “Buy Term and Invest the Difference”, which had you done it 40 years ago would have worked out well.   However, most never invested the “rest” and have seen their term costs rise as they aged.   Whole Life was the original combination of term and investment under one umbrella.   Most advisors nor their clients viewed interest rates, mortality or general expenses as having minimal, if any, impact on performance.   If you are old enough to remember Flit craft, there was never a projected dividend schedule that was not far surpassed by the actual dividends paid.

Warren Buffet stated that had you invested 10,000 in an Index Fund in 1942 it would be worth 51 million today (CNBC Feb. 25, 2019).   If we follow the Oracle of Omaha’s wisdom and the pundits of “Buy Term and Invest the Difference” then IUL becomes the product of choice.    Add to that the ability to dial the guaranteed death benefit longevity and you have the perfect product today that can protect you and your family financially.

Life insurance products have become living financial instruments.   The modern day advisor needs to think about diversification of products within a client’s portfolio to achieve the best balanced financial results.   Think about blending products with GUL as an anchor, IUL as a conservative investments and whole life which tends to be more responsive to interest rate fluctuations.    Think out of the box, your client will appreciate the added value.

The sales team at ASG is here to help you implement a customized life insurance program for your client.  It’s more than just making the sale.

 

 

Jay Scheiner, Partner, Agent Support Group

April, 2019

 

You are an insurance advisor meeting for the first time with your new clients, Jim and Deb.  You asked them to bring, among other documents, their current insurance policies and their Wills to the meeting. This married couple, around 40 years old, have twin daughters, Dana and Donna, age 10. While reviewing their current life insurance policies, you notice that their beneficiary designations are not what they should be.

 

 Jim’ s Policy

Primary Beneficiary: Deb, spouse of the insured

Contingent Beneficiaries: Dana & Donna, children of the insured

 

Your clients should not name their minor children as direct or contingent beneficiaries, since a life insurance company can’t pay out proceeds directly to children until the children reach the age of majority, typically 18 or 21, depending on state law.

In most jurisdictions, to protect the interests of a minor, state law requires appointment of a guardian or trustee to administer proceeds payable to the child.  Appointment proceedings will delay access to the death proceeds and generate unnecessary legal and administrative expenses.  As important, the fiduciary named by the court may not be the one the insured would have chosen if they had made this decision during their lifetime.

 Deb’ s Policy

Primary Beneficiary: Jim, spouse of the insured

Contingent Beneficiaries: (none indicated)

Your clients should designate a contingent beneficiary in all of their life insurance policies, and the beneficiary designation should be worded in a way that will best benefit their children.

Having no named contingent beneficiary is the same as naming the insured’s estate as the beneficiary.  Is this a bad thing? It can be; in the absence of a Will designating a guardian or trustee, the courts will intervene, which may cause long, frustrating delays. The courts could also impose restrictions on how the proceeds will be spent or distributed, which may be contrary to what the insured would have wanted for their children.

While Jim and Deb will go to great lengths to protect their children (that’s a major reason they purchased the life insurance), they need you, the insurance advisor, to help them find appropriate solutions. It is therefore important that the beneficiary designations allow for the distribution of the life insurance proceeds in the most disciplined manner possible to provide maximum benefit to their children when the parents are gone.

Okay – here are some practical ways to ensure that minors, through the people entrusted with their care, have access to the life insurance proceeds intended for them.

  • Make the contingent beneficiary of  the insured’s  life insurance policy a

Testamentary  Trust in the insured’s Will.  The terms of your client’s Will can contain this Trust, which does not spring to life until the death of the insured.  Referencing the Trust in the Will is a precise way to ensure that the parent’s exact wishes for their children are followed. The Trust, which is a legal document, names the person the insured chooses as the Trustee, and describes how the parent would like to have the money managed and

spent, and for how long. An 18-year-old may be an adult under the laws of many states, but the client’s testamentary trust could be written to keep the newly-minted adult from frittering the money away before he or she is 25 or 30.

In our example, the contingent beneficiary section of the life insurance application would state: (Trustee’s Name) as Trustee under (Article X) of (Jim or Deb’s) Last Will and Testament dated (January 1, 20XX).

  • Taking advantage of the Uniform Transfers to Minors Act (UTMA) is an excellent way to ensure that children receive proceeds from a life insurance policy, especially if the parents have not yet executed their Wills. Under the UTMA, the parents would name an adult custodian who is given the discretion to make distributions for the minor’s welfare. The UTMA account (which is essentially a statutory Trust) allows parents to choose a custodian—a person they trust—who would manage the life insurance death proceeds, and other assets they might have in the account, as they see fit prior to the children’s reaching majority.

Some insurers have a specific form to assist in making a beneficiary designation with

UTMA custodian the beneficiary or contingent beneficiary of a life insurance policy.

If no special form is available, the following wording would generally be accepted: (Custodian’s Name) as custodian for (child’s name) under the (State) Uniform Transfers to Minors Act. However, you should confirm with the insurance company the specific wording they would accept.

  • Designate a Living Trust as beneficiary or contingent beneficiary in place of the child directly. This is similar to the Testamentary Trust referenced above, except that a Living Trust exists at the moment it is executed, whereas the Trust in the client’s Will (Testamentary Trust) begins its life only at the insured’s death.  Like the Trust in a Will, a Living Trust allows the insured to detail the terms and conditions of gifts and plan for every contingency. The downside of this type of Trust is that it will require some level of administration from the outset.  If your client has a child with special needs, your client should have a Living Trust. If their net worth is in the tens of millions, it’s a no-brainer, and in that case the Trust should be irrevocable.

Conclusion: Your clients rely on you to help them make good decisions with respect to their life insurance. These skills can separate you from those less knowledgeable. Your ability to immediately spot planning flaws (minor children as direct beneficiaries or silence as to contingent beneficiaries) may get your client to open up to you and begin talking about what is important to them.  Your understanding of, and the ability to explain the various beneficiary options is just one of many skill sets you should possess. While it may seem like a big job to get this step right, keep in mind that not doing so could have repercussions for your clients’ heirs for many years to come.

by: Mark D. Milbrod, CLU, CLTC-March 2019 ASG Insight

 

One of the biggest problems facing the life insurance agent is the ability to add value to the sale.  The worst thing we can do is to commoditize the sales we make.   What do I mean?  Let’s say we have a client that calls up and asks for $500,000 of 20 Year Term.  For a 40-year-old male in good health (assuming Preferred Non Smoker Rates), the premium would be $575 annually.  We can fill the order and simply move on.  Give him what he asked for.  But what have we done?   We just commoditized that sale.

The next year, that client is approached by some other “insurance guy,’’ and he sells him a new 20 Year Term for $550.  There is no loyalty on behalf of that client.  It was just a transaction.   In the above example, that $500,000 20 Year Term was probably purchased to protect a mortgage so the house will be paid off in the event of a premature death.

Now let’s rewind to that original request.  We didn’t just “fill the order.”  We sat with the client and asked what he needed the insurance for.  He is married and has two small children, ages 6 & 4. The wife is a stay at home mom and had no immediate plans to go back to work. As we mentioned, the $500,000 was needed to pay off that mortgage.  Now what???

I like to use a yellow pad at the point of sale.  I always ask the question, what happens after the mortgage is paid off?  Don’t you have other monthly expenses?  So, I take out the pen, start listening and wouldn’t you know it, they start telling me what other expenses they have.  Here’s a typical example, assuming a mortgage has been paid off by the initial Life Insurance proceeds…

 

 

This starts a whole new conversation and brings up an entirely different line of questioning…

  1. Do you want your spouse to be forced to go back to work?
  2. Who is going to take care of the kids?
  3. Wouldn’t it be great to have options?
  4. How long would you want to continue replacement income?

The list can go on and on.  The larger the expenses, the larger the policy size.  Besides, most people relate more to a monthly income number rather than to a very large death benefit that in most situations they feel is excessive.  The point in all of this is to take the commodity of the sale and make it more meaningful.  They are giving you the answers to the above questions and they are telling you what the monthly expenses are.  So now you can customize a plan to fit their individual needs.  In the example below, the client asked to have the $500,000 as an initial death benefit and then $4,100/month for 20 years.  Here is the result:

 

 

Had we just filled the order, the premium for the $500,000 of 20 Year Term would have been $575.  Now we are providing a total needed death benefit of $1,313,179 (which represents an initial lump sum of $500,000 and the balance paid out as a guaranteed monthly income of $4,100 for 20 years.

This amounts to a commissionable sale that is almost 2½ times the original request but of more importance, you have sold to the true needs of the client.  By doing this, you are taking on a larger advisory role and now this sale is so much more meaningful to the client and their family, it becomes virtually non-replaceable.

You can also add another layer to this sale by including an additional lump that is payable at the end of the income period.  Below is a chart illustrating the premium for various age and payout options…

 

 

I have always been a fan of consultative selling.  This approach adds significant value to the sales process.  It is huge client retention tool by making what you have put in place, virtually non-replaceable.    Clients understand that their policy is not just “paying off their mortgage.”  It means so much more.    Their families can continue to live an unimpeded lifestyle that they were accustomed to living.  It allows choices that would ordinarily be in jeopardy if not for putting together a properly designed plan.

The best part about it is that THEY are telling you what they need and that’s what makes it even more powerful.

If you would like to learn more about how we can help you take the commodity out of the sale, reach out to us today.

 

 

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 .