Jay Scheiner, Executive VP
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 and 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 designat- ing a guardian or trustee the courts will intervene, which may cause long, frustrat- ing 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 contingen 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 man- age the life insurance death proceeds, and other assets they might have in the account, as they see fit prior to the children 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 pos- sess. 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.

Sam Kaufman,
President, Agent Support Group

At the beginning of this year we all believed that we had a clear vision for 2020.  Then came Covid-19, which required us all to change the way we conducted our day to day business.  The life insurance industry rallied to the cause with new expanded underwriting systems and procedures in an effort to accommodate advisors and their clients in a way never seen before.   We should all applaud our insurance companies for the rapidity in which they responded to this world changing event.

During this time, Agent Support Group reached out to advisors to educate and train them in the use of automated e-application processing systems, e-delivery and e-signatures.  Suddenly, a new world was thrust upon us and we all needed to speedily adjust to our new environment.   Perhaps the only thing lacking was creating public awareness to the fact that the life insurance industry was here to help provide needed financial protection for families and businesses.

Historically, the life insurance industry has been like a snail in adopting technological advances similar to those we have all witnessed in the financial services industry.   However, in 2020 the industry came to the rescue of Americans that were concerned about the financial needs of their families and businesses.   This presented an amazing opportunity for advisors to engage their clients and a reason to reach out.   Just a simple act of calling to check in on the status of a client and letting them know that you are here to help.

Covid-19 may be just a warning shot to let us know that technology, while bringing many benefits, does not replace human compassion.  We have quantified every element of our lives by comparing costs, but maybe not the product we are selling.   How many of you are selling the first product on a term spreadsheet, not knowing that the conversion feature may have limitations that are important to your client.  Is “cheap” always good?   We all know the answer, but do we make it part of our practice.

Hopefully, everything that has occurred in 2020 will bring some good.  Whether it be a speedy discovery of a safe vaccine or just a change in the way we conduct our day to day lives.   Remember, we are selling financial security that will be here for your client when needed.

Gary Bleetstein, Senior Vice President

There was quite a lot of discussion in the industry about IUL and in its early stages, how will it look, and how will it illustrate? Remember when carriers would set maximum crediting rates based on their own lookback durations and their own calculations. This alone  caused the industry to realize IUL would look either great or even better than great. At this point everyone or almost everyone wanted a level playing field for illustrating IUL.

Then came the multipliers and other factors that made IUL products impossible to compare, especially when it came to accumulation and expenses.  Some carriers were riding high on illustrating top rates, bonus’s and huge multipliers, some guaranteed and some not.

After a number of years of this, the industry has and plans to have this fall, a new Regulation spirit where products with very high multipliers, high cap rates and other features may need to review how they will compete when they may not be permitted to use these factors when illustrating IUL in the future. This is one way of leveling the entire playing field. Another change being reviewed dis the way a carrier illustrates loans in an IUL Going forward, loans are going to be shown at .5% higher than the stated loan interest rate which will effect product performance.

Well 2015 is behind us and now it’s time to re-evaluate the true performance of an IUL and in that case, any cash value life insurance product. Our clients and advisors expect our carriers and our distribution to give them all of the facts and let’s hope the new AG- 49-A does just that for IUL.

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Jay Scheiner, Executive VP

Many families can preserve precious assets by using life insurance as a stand-in for a long-term care policy when the insured is unable to qualify for LTC coverage.

Often, our clients apply for long-term care (LTC) insurance or combined life with LTC rider, only to be denied coverage due to adverse health history. Frequently these clients already own, or can qualify for, a life insurance policy without an LTC rider. In this situation, families can accomplish similar goals 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 and osteoporosis. She applies for $600,000 of Universal Life with a qualified LTC rider that would provide up to $12,000 per-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-plus risk for life insurance, she is denied coverage for the LTC rider. Denise accepts the policy as offered – without the LTC rider.

Fast-forward 20 years:  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 from 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.

Life Insurance AS Long Term Care Insurance:  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 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.   ~JS

Sam Kaufman,
President, Agent Support Group

My Mother would occasionally give me a kick in the rear and tell me I better straighten up.   The Covid 19 Pandemic gave the life insurance industry a big kick in the rear triggering an unprecedented acceleration in sales processes and underwriting that I have never witnessed in the over 45 years in this industry.   Many new sales opportunities have resulted from these enhancements and if you have not taken advantage of them – shame on you.

Now more than ever client engagement is a necessity.   Your clients need servicing not only concerning their life insurance policies, but also their estate planning.   Opportunities for sales abound, but you must reach out to your clients to capture these sales.   Waiting for your telephone to ring will not work.

Last week an advisor 80 years old submitted two applications via e-app with 15,000 of target premium.   I will admit that he had some assistance from his grandchild, but he got the job done and policies will likely be issued within ten days.   Another advisor had a client, age 54, that we were able to get 5,000,000 with John Hancock without an examination.   From application to e-delivery in 10 days.

There are no excuses for not taking advantage of the multiple accelerated underwriting programs available from multiple life insurance companies. There will never be another opportunity like the present for you to engage your clients and demonstrate your professionalism and concern for their families.

The entire team at ASG is here to help you get started.

Gary Bleetstein, Senior Vice President

I have been in the life business for over 30 years and have never seen the situation the way it is today.

Carriers are increasing rates, reducing death benefits or not even entertaining applications at older ages, and auto mated underwriting appears to be in our near future for cases under age 60 and face amounts in the 3-5  million range.

We have state insurance departments extending the premium paying dates for up to 90 days, with or without financial justification, and carriers are removing certain products as a result of both covid-19 and zero interest rates.

But there is some good news to report:

• People are still asking about buying life insurance.
• The Life Insurance Industry stayed alive even after the two world wars and the 1918 flu virus.
• Our industry is nimble and has found ways to overcome some required medical requirements via auto underwriting and some good logical thinking, using aps client portals.
• While the markets may have tanked, some people still have estate and other planning needs- especially now.
• For larger cases- some clients are still willing to be examined under the correct circumstances.

Agent Support Group- an AmeriLife Company is in business and here to stay and serve our advisors and their clients from submission to commission.

We have great technology, great underwriting and sales programs, but most important, we have great people who work for us. ASG is proud of each and every one of our employees who work every day to make your lives easier and we applaud their work and work ethic.

Together, we will wind this battle, win this war and continue to move forward in the financial services business.

Jay Scheiner, Executive VP

Welcome to Agent Support Group’s 5^th anniversary edition of ASG NEWS coming to you direct from New York City. ASG remains open for business with all employees operating remotely. Our staff has the training, technology and experience to successfully work from remote locations without interruption. We will guide you through the new ways of doing life business, assisting you with accelerated underwriting programs and electronic applications.

Many of you have been touched by the events of the past month and we pray for you and those you love. Everyone in the ASG family has been affected as well with family members or friends taken ill. And then there are the heroes among us: ASG family members include those who serve as healthcare professionals and as volunteers and workers in businesses tirelessly providing needed resources such as food and medicine deliveries to our neighbors. My daughter Marissa is on the front lines as an RN at a medical center in the heart of Manhattan. Several of our employees help care for the elderly who are most vulnerable. We have seen the very best of our people in this most uncertain time.

In this issue of ASG NEWS we’ll show you exciting ways ASG can help insurance advisors continue their practice in these trying times – here is a brief sampling of this months newsletter content.

• Important carrier bulletins.
• Mark’s Blog, “The New Normal.”
• A 3 ½ minute video with tips to improve your webcam communications.
• ASG’s coronavirus business continuation plan & ASG staff directory.

As you know, ASG recently became part of AmeriLife. We welcome our new relationship and expanded offerings of products and services. We also welcome the many AmeriLife affiliated agencies that can now offer the cutting-edge life products in ASG’s portfolio. Wishing all of you health and safety during this time.  ~JS

Gary Bleetstein, ASG Partner-Oct. 2019

There has been as you know much discussion and questions as to why there is such a fuss being made about PBR- Principle Based Reserves and the 2017 CSO Mortality Tables.

Well, the fuss is because effective December 31, 2019 – ALL CURRENT LIFE PRODUCTS THAT HAVE NOT BEEN ADJUSTED CANNOT BE ISSUED ANY LONGER!

Principle Based Reserving – PBR is an NAIC requirement effective January 1,2020 that states a carrier must have compliant products or the old non-compliant products may not be permitted to be issued. For over 100 years, products were reserved based on actuarial assumptions. The new PRB is a required modeling valuation based on new technology, product pricing and reserves which are based on a Given reserve structure throughout the industry.

The 2017 CSO rules which give the Insurer’s in calcultaing cash values, statuartor reserves and pricing.

So why such as fuss ?

The fuss is really over which products and which carriers will have approved products by January 1, 2020, and the big issue is which carriers will have completed the re-pricing and what products will be availabe where and when ?

Consensus is that term pricing may be reduced and permanent product pricing may decrease or increase but in no case substantially.

In other words, the industry expects products that are re-priced should look similar to those being sold today.

At ASG, we will try and send updates on a regular basis to keep you informed about the products and availablilty and we also have a link on our website to assist you with questions.

Congratulations, it’s your birthday in September and you are a year older.  The bad news is that your cost for life insurance has increased.  Don’t put off protecting your family and business – It only cost pennies a day.

Perhaps too many of us, as professional advisors, complicate the message and create confusion to demonstrate our professional expertise. Did you ever consider that this only serves to create confusion, leaving the client completely bewildered and unable to make a decision.  

The “Keep it Simple” approach still works and not only results in a sale, but also establishes an advisor/client relationship that will continue into the future.  It is this type of relationship that creates a base for bonding between the advisor and client that will continue into the future.

Engagement is the next most important factor in growing a strong network of clients that will help you grow your client base.  Check in with your term policyholders as they near the maturity of their level premium term duration.  Review their business to determine if changes are needed.  Advisors need to be pro-active doctors and not wait for the patient to call with chest pains. 

September is Life Insurance Awareness month.  Advisors, it’s time to give a shout out to all of your clients and let them know your interested in the health of their life insurance program.  After all, you know they’re not going to call you.