Sales & Marketing

The July 20, 2017 Wall Street Journal article, "Happy 100th Birthday! There Goes Your Life Insurance," points out a major hidden flaw in older life insurance contracts: the risk of living too long. In the mid-20th century, the life insurance industry, along with government regulators and actuaries, did not expect or anticipate that more than a handful of policyholders would reach age 100. But today, some insureds fortunate enough to approach these "golden" ages are surprised to learn that their policies will "endow"– that is, coverage will end and any cash values will be paid to the policy own...

A 2014 study by the RAND Corporation estimated the cost of informal caregiving in the US at $522 billion: "Across America, people spend an estimated 30 billion hours every year providing care to elderly relatives and friends. The cost is measured by valuing the times caregivers have given up in order to be able to provide care." Those numbers continue to grow in 2017, as the baby boomer generation ages and creates greater demand for long-term care services. Numbers like this get everyone's attention, and long-term care (LTC) is a concern that is at once personal, cultural and political. Those ...

You probably feel as if the field of Estate Planning is in turmoil right now – uncertainty about income taxes, estate taxes and wealth transfer solutions seems so disruptive that Larry Brody, a widely respected estate planning practitioner, has titled an upcoming presentation: "What the Hell Do We Do Now?" Is it really that bad? Well, here are links to two excellent and recent AALU publications that may help answer that question. Survey Says: Tax Reform and Client Planning – What Advisors are Seeing and SayingWhat's Trending: What Experts from the 2017 Heckerling Institute Had to Say The takea...

The tension is palpable. Underwriting is being turned on its head, driven by big data, automation, alternative risk assessment tools, and more predictive underwriting models and processes augmented by analytics. Go to any underwriting industry meeting and there will be considerable time and energy devoted to one or more of these topics, along with a fair amount of angst among the underwriting folks present. Traditional and new industry players speak about the latest risk assessment models and tools, back-tested through hundreds of thousands of client records and data points, producing mortalit...

Last summer ESPN.com ran the headline: Michigan, Jim Harbaugh agree to increased compensation in form of life insurance loan. We suspect that most sports fans just shrugged and moved on to see how the Cubs were doing, but those of us in the life insurance business sat up and took notice. After all, we seldom get any press on the business page, let alone the sports page. And this was indeed big news about a big compensation boost, using a relatively little-known but powerful combination: Split Dollar and cash value life insurance. (Related: American Institute of CPA's: Split Dollar Insurance Pl...

In our previous blog we explained how many of our clients feel as though what they want and expect from their life insurance policy is no longer in their control. Because some life companies have taken actions that create additional uncertainty and expense for their customers, it's up to us, as experienced professionals, to find a way to put our clients back in control. The key is to know what's important to your clients and then find the products and features that deliver the predictability and value they expect. No Lapse Guarantees (NLG) No question that we've seen a dramatic retraction of t...

If you have taken out a mortgage or obtained new automobile insurance in the last few years you have probably used an electronic signature (e-signature) platform. An e-signature provides both extraordinary convenience and the same legal standing as a handwritten signature, as long as it complies with regulations published by the National Institute of Standards and Technology (U.S. Department of Commerce). The beauty of e-signatures versus traditional wet signatures is that they can be executed portably and with ease via computers and devices. An insured can sign a document anywhere and anytime...

You've met with the clients and their advisors on a few occasions and the time has come to take an application and submit underwriting information to the carriers. However, what you hear next stops you cold: "Our son's friend is also in the business and we want him to shop our application as well to be sure we are getting the best offer and premium available." You pause and think. For several reasons you know that it's never a good idea to pit production sources against one another with multiple carrier submissions. It can complicate matters and often results in an inferior offer and a higher ...

Term life insurance sales in the US consistently represent about 70% of the total death benefit bought by consumers every year, according to the Insurance Information Institute. And for many of those buyers, the provision to convert their term insurance into permanent life insurance somewhere down the line represents an important option. But according to several leading term insurers, less than 5% of term life policyholders ever take advantage of this option, and those who do often are motivated by deteriorating health. Because these clients have a mortality risk of about five times normal for...

Accelerated underwriting is a new and growing trend that offers important advantages over other programs allowing for an insurance qualification process that does not require examinations or fluids. Having an approved policy in hand can occur in a few business days, rather than weeks, and product pricing is typically more favorable with many carriers offering their full suite of off-the-shelf products with no compensation haircuts. These are all positive factors associated with accelerated programs. However, since most accelerated programs are a triage process, there are no guarantees an appli...

Of all the progressive things the life industry has done in the past few years to advance underwriting standards and make it easier to do business, one area significantly lagging is charitable life underwriting. In charitable situations, the maximum amount of coverage available across almost every carrier in the industry is based upon a multiplication factor—typically 10—of one's past annual giving to a charity. So if an applicant on average has given $10,000 annually to a particular charity and desires to leverage this giving by allowing the charity to own life insurance on his life, he would...

A recent tax court case ruling in favor of the taxpayer in an intergenerational Split Dollar arrangement has propped open a "discounting" planning door that, up to now, the IRS had tried to slam shut. In the Estate of Clara M. Morrissette et al v. Commissioner, the tax court ruled that an intergenerational Split Dollar arrangement is covered by Split Dollar Regulations Section 1.61.22. In plain English, the ruling establishes that single-premium life insurance policies, held in irrevocable trusts, can be taxed under the Split Dollar Economic Benefit regime, and are not required to use the Loan...

Willard Scott can't keep up! It's no longer unique or surprising when we come across someone who is approaching age 100. We probably have someone in our own immediate family going strong at 85, 90 or even 95 years old. Whether because of good genes, healthy living, medical improvements or all of the above, living longer is a reality. The blessing of a long life has many advantages but it also requires that we think about how to pay for that extended number of years. The axiom that people fear "running out of money" more than they fear death is truer today than ever before. The major risks to r...