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Lisa Mitchell

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The Problem, The Truth + The Solution Behind Accelerated Underwriting Programs

Recently there has been a lot written and said about Algorithmic Underwriting Programs (AUPs), also known as Accelerated Underwriting or Fluid-less Underwriting, by AgencyONE and many of our colleagues in the life brokerage business. In a COVID-19 world of “social distancing” advisors and clients are finding that this may be “the only way” to submit insurance applications in hopes of a no-exam, no-fluids\labs (blood and urine) underwriting process and the fastest way to get a policy issued and in force.
 
AUPs, currently offered by many carriers, allow clients to apply for BOTH term and permanent life insurance via an electronic application submission or “drop-ticket” subject to certain guidelines, for example, up to $2,000,000 of coverage and up to age 60. AgencyONE has created a spreadsheet which is available on our website and available to all AgencyONE 100 advisors that details the carriers and guidelines, etc. Please note that this spreadsheet is fluid and changing almost daily as carriers continue to modify their fluid-less underwriting guidelines under the current pandemic situation.
 

The Problem

So, what is “The Problem”? The problem is that many of these AUPs are woefully lacking in what the carriers call “throughput” – which are applications submitted that are successfully accelerated without exams. Clients are being rejected from these programs after the application has been submitted and this presents an issue for BOTH the client, the advisor and for AgencyONE. But not everyone is rejected, and this is where “the truth” is important.

The Truth

“The Truth” are the numbers behind the success, or not, of the Accelerated Underwriting Platforms and the numbers vary widely between carriers. One carrier is experiencing a 46.5% acceleration of the applications submitted. This means that less than half of all applications submitted under their AUP get accelerated successfully. But that DOES NOT tell the entire story, because AUPs are highly sensitive to age. For the “right” age demographic, the statistics are better. For ages 18 to 34, that number goes up to 61.7% and for ages 35 to 49 the number is 50.7%. So, with this carrier there is better than a 50% chance of acceleration.
 
Another carrier is doing a little better – with 38,000 AUP submissions about 65% are being accelerated without labs or exams. But the average age of the insured is 38. And a third carrier, with 72,000 cases submitted under their AUP, is experiencing a throughput of 46% of clients between the ages of 18 to 40 and 35% between the ages of 41 to 60. And in the spirit of full disclosure, there is a fourth carrier whose overall average throughput is only 20% (not very encouraging).
 
We could continue with “the numbers”, but we hope you get the point. There is value in these AUPs, but we need to stack the deck in our/your favor to increase your throughput. And this brings us to “the solution”!
 

The Solution

“The Solution” is using the tools and questionnaires available to do comprehensive field underwriting prior to carrier selection and case submission to do everything possible to ensure that your case experiences AUP throughput. Statistics confirm that with good field underwriting, throughput does significantly increase! One carrier reports that their approval rate increased from 41% (no pre-screening/checklist) to 60% with the advisor using the checklist (average age – 39) and there are other carriers whose statistics also confirm this conclusion.
 
Last week AgencyONE had a webinar on our VIVE submission platform. This platform has a Health Analyzer questionnaire that will tell you if your client will likely qualify for AUP. It can be quickly completed by asking the client a few additional questions – consider this “field underwriting” (yes, back to the basics of Insurance 101).
 
Other platforms which we have highlighted, such as iGO, also have similar screening questionnaires. In addition, many of the carriers that offer AUPs have checklists that can be completed to provide guidance on whether the prospective insured is a good candidate for accelerated underwriting.
 
If you (the advisor) use the screening checklist, the chances of success are far greater than if you don’t. And the advisors that discuss the details of their case IN ADVANCE with the AgencyONE Underwriting Team and seek advice on carrier selection are also experiencing a greater percentage of throughput success. Additionally, full disclosure with the client is critical. It is imperative that you discuss with your client, UPFRONT, that even with fabulous field underwriting there is a possibility that the case MAY NOT qualify for AUP (some people will walk through the TSA checkpoint at the airport and will get pulled out of line for a random “pat down” for no obvious reason).
 
We are in an evolving environment and one that is changing very quickly. Accelerated Underwriting Programs should be reviewed, considered and utilized for BOTH your term and permanent cases, but in the proper situation. Do not give up on accelerated drop ticket underwriting just because you had a client or two that required exams, as this is the future, not because of COVID-19 but because this is where the client experience is going to end up. The better field underwriting we can give the carriers, the more successful these programs will become. The more successful they become the more expanded the limits will be, until fluid-less underwriting becomes the norm for the life insurance industry.
 

 

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Your Clients NEED You Today More Than Ever

The recent office closings, shutdowns and teleworking as a result of the COVID-19 Virus (otherwise known as the Coronavirus) has created an environment where salespeople, such as insurance advisors, will potentially have limited opportunities to “see” clients for an undetermined period of time. Traditionally, most insurance professionals have been face to face with clients in order to complete needs analysis, present solutions and take insurance applications. How are you going to get that done during these times? How will your business survive? How will your prospective or existing clients fulfill their orders to purchase much-needed insurance?
 
The Medical Information Bureau (MIB) recently reported that life insurance application activity had increased by 5.6% for the month of February year over year after only a 0.4% increase during all of 2019. The largest growth age group was 0-44, increasing 7%, while age 60 and older increased by 6.4%.  Whether this increase in buying activity correlates directly to the current pandemic or not is unknown, but we suspect that events such as this tend to make people more conscious of their own mortality and the well-being of families and businesses.
 
Consider the online insurance aggregator and comparison site, True Blue Life Insurance, which recently reported an unusual spike in insurance application requests after Kobe Bryant’s tragic death. On Sunday, January 26th, the same day as the helicopter crash, application requests increased by 58% and on the following Monday, they were up 61% as reported by Yahoo Money. The trend continued throughout the entire week at the end of which it normalized. Everyone “knew” Kobe and the tragedy hit home for many consumers.
 
Every year LIMRA reports that individual life insurance ownership is at all-time lows, while interest in the product is currently increasing for a variety of reasons, not the least of which is the current pandemic.
 
If you are sitting in your office wondering what you are going to do for the next 4 to 6 to 8 weeks, or maybe longer, and how your business is going to survive, it is time to take a good hard look at Vive.
 

Vive is a needs analysis, quoting, risk assessment and online application platform that is exclusive to Partner firms of LIBRA Insurance Partners, the merger between LifeMark Partners and BRAMCO. The beauty of this platform is that it takes less than 5 minutes to provide a quote, complete a client interview and “drop a ticket”. Vive takes the algorithmic decision of whether a client qualifies for accelerated or algorithmic underwriting out of your hands. If a client qualifies, then no exams or fluids are required and the case automatically moves forward! If not, exams are scheduled and medical records are requested. This platform works across the entire technology spectrum, from mobile phone, to tablet, to laptop to desktop and provides a multi-carrier quoting and submission process.
 
Furthermore, the system provides a Vive Score, which weighs important factors beyond price. The Vive algorithm considers the following weighted factors:
 
  • Carrier Rating – as defined by the Comdex Index
  • Conversion Privileges – based on product availability and conversion parameters
  • Product Features – such as competitiveness of premium grace periods and product riders
  • Accelerated Underwriting Eligibility – whether a carrier offers Accelerated Underwriting with no exam, blood and medical history**
 
Vive aggregates all these factors to display an overall Vive Score for the product.
 
** The next generation of the Vive Score, which is under development, will also factor in speed of policy issue, as well as advisor and client experience.
 

Finally, each carrier on the platform has agreed to certain Service Level Agreements (SLA’s) upon which the carrier is measured through the new business process and is displayed in the dedicated case management system for tracking purposes.
 
The Vive Platform provides an easier way for insurance advisors during COVID-19 to take care of their clients in today’s unsettling environment. 
 
Please contact AgencyONE’s Marketing Department at 301.803.7500 for more information or to discuss a case!
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Crossing the JUMBO Line – Underwriting Large Face Amounts

Let’s face it – large face amount life insurance cases ($10 million and up) can make the life insurance business more exciting and possibly result in a case that makes the difference between a “good” year and a “great” year for an Advisor. However, the underwriting landscape for JUMBO cases is very challenging and requires a high level of care, knowledge and expertise to ensure the case is evaluated and executed properly. JUMBO underwriting a case demands thorough preparation to avoid common mistakes and the difficult task of correcting these mistakes after they have been made. 

What is JUMBO?

Yes, the word JUMBO translates to a large amount of life insurance coverage but in the contract language of Reinsurance Treaties or Agreements, it has very specific reinsurance stipulations that MUST be adhered to according to law. JUMBO is defined as a carrier’s maximum total amount that can be underwritten without being “looked at” by their reinsurance partners. The treaties that exist between the carriers and their reinsurance partners define the JUMBO limit as the sum of all coverage: in force, applied for and being replaced.

  • IN FORCE: the total amount of life insurance coverage that is in place on an individual. This number will include corporate protection that does not directly benefit the client AND any life settled contracts that remain in force with a third-party owner/beneficiary.
 
  • APPLIED FOR: all formal applications count toward the JUMBO limit and are treated the same as in force coverage. Multiple formal applications for the same case sent to different carriers can be problematic and cause a client’s case to exceed a carrier’s JUMBO limit – typically $65,000,000.
 
  • BEING REPLACED: carriers may have specific requirements to ensure that any coverage being “replaced” is NOT viable for reinstatement after-the fact (similar to an Absolute Assignment required with 1035 exchanges).

The Jumbo limit may be different from carrier to carrier.  If that combined coverage exceeds the carrier’s JUMBO definition or limit, then the case MUST involve “facultative” underwriting. This means that the case goes to the reinsurers to fully underwrite the medical and financial justification for the risk and the direct insurer loses their ability to automatically bind (autobind) this case to their reinsurance pool for a specific risk.  

Reinsurers

When the case is “sent to the reinsurers”, we often see MULTIPLE underwriting offers from a single direct writing carrier. Multiple reinsurers will often produce different underwriting opinions for the same case. When a case goes to the reinsurers, AgencyONE’s direct carrier underwriter acts as our advocate in the reinsurance negotiations. AgencyONE’s professional relationships with both carriers and their reinsurance partners are strong and very beneficial to your clients’ cases.

Carriers have varying guidelines that define JUMBO for their specific underwriting authority. AgencyONE’s carrier partners have some of the highest JUMBO limits in the industry. Carriers with smaller RETENTION (what the carriers retain themselves on any risk) will consequently have a lower “JUMBO” line defined for them. Conversely, the LARGE retention players like Lincoln, John Hancock and Prudential will have underwriting authorities much higher in their autobind AUTHORITY.   But even these large retention carriers have a “JUMBO” line in the “proverbial sand” which is triggered at $65 million – combined total of IN FORCE, APPLIED FOR and BEING REPLACED. 

The importance of preparation and planning when looking to place a JUMBO case cannot be underestimated. Consider carriers that have the right amount of retention and the appropriate underwriting to fit your client’s case. Common mistakes must be avoided such as “formally” shopping a case by applying for a $10 million face amount with 3 carriers. This scenario creates a $30 million LINE as defined by the JUMBO definitions and can often trigger a crossing of the JUMBO line. Multiple applications to different carriers are problematic unless properly handled by all parties involved in the case.

Case Study

An AgencyONE 100 Advisor presented a case featuring a 47-year-old male, Standard risk, with a net worth of $88 million. The client already had $23 million in force. The Advisor and his client wanted tiered protection with a Permanent product foundation including a multi-year laddered Term product totaling an additional $40 million in coverage. The Advisor favored using a specific carrier for $10 million worth of coverage, but the product did not price well at Standard underwriting. AgencyONE advised the client and Advisor NOT to take the formal application to any carrier just yet.
 
AgencyONE’s underwriting team thoroughly evaluated the case before involving multiple carriers on an informal basis to target the best available products for Standard and Standard Plus if it could be negotiated. The client’s existing $23 million IN FORCE coverage was NOT being replaced but the desired $40 million of new coverage was hovering just under the JUMBO limits for our targeted carrier partners. Informal underwriting was completed and the thoroughly executed formal applications and complete exam requirements were “formally” submitted to LOCK in the underwriting. AgencyONE completed the case without a hitch using 3 carriers and placing 5 total policies all AUTOBOUND!
 
It is imperative to present a well-prepared and thorough package for any case but especially for a JUMBO case as they are scrutinized and looked at differently than smaller cases. AgencyONE is your large case specialist with the knowledge and expertise to ensure that your JUMBO cases are packaged and submitted properly the first time around!
 
Please contact AgencyONE’s Underwriting Department at 301.803.7500 for more information or to discuss a case.
 
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Wealth Managers and Risk Managers: The Perfect Team

There is nothing like a great, perfectly cooked steak with a beautiful bottle of Cabernet Sauvignon. If you prefer fish, maybe a buttery Chardonnay, but the bottom line is that executive chefs and sommeliers spend years of training to put together great food and wine pairings and we pay a lot of money to enjoy them.
 
Another perfect pairing in the pursuit of delivering holistic financial wellness to clients is the wealth manager AND the insurance advisor.
 
In a February 21st 2020 article in WealthManagement.com, Larry Roth discusses How RIAs Can Maximize Their Sale Value During a Recessionary Cycle.
 
While an 1,800 point drop in the Dow Jones Industrial Average as experienced this past Monday and Tuesday may not cause a knee-jerk reaction to change the way a wealth manager does business or makes portfolio recommendations, it is clear, as Larry Roth points out, that “many high-visibility economists are starting to predict a recessionary cycle could be around the corner” and that a recession would diminish RIA fees and ultimately firm valuations. I have made the point, in many previously written articles*, that there are things that both can and cannot be controlled to preserve the value of a wealth management business. If the Wealth Manager is building a business that he or she intends to sell some day, a recession causing a diminished book value and a reduction in the value of the practice is out of their control but has a meaningful impact on their personal financial well-being. Mr. Roth indicates that an RIA must look beyond AUM fees and that “growing investor interest in receiving more holistic financial advice” is one avenue to pursue to maximize practice value.  
 
 
Risk management is an integral part of providing holistic financial advice and acting as a fiduciary to clients. Insurance advisory for risk management not only protects and preserves the client’s assets but also serves to stabilize the value of a wealth management practice as well. I am not talking about commission revenue, as many RIAs do not or prefer not to take commissions. I am talking about retaining assets in the RIAs AUM portfolio and not selling into a down market when their client needs:
 
  1. The financial means to pay for care during a long-term care or chronic illness event;
  2. Cash to pay living expenses during a short- or long-term disability; or
  3. To provide beneficiaries with the funds to pay for final expenses, probate expenses, taxes or other post death needs to preserve the value of legacy assets for their heirs.
We all know that insurance provides the non-market correlated means to handle these needs. Insurance proceeds are always available at par value and often income, capital gains and estate tax free, if properly structured.
 
In a February 24th article, also in WealthManagement.com, author Eric Lawton, in Stress Testing Client Wealth Plans, discusses the benefits of stress testing financial strategies and that it is “becoming an increasingly popular activity among the wealthy and their advisors”. 
 
“Stress testing can also be done, and often is done, when people don’t know if they have the best wealth management solutions for their situation. If you feel confused or uncertain about the wealth management solutions your clients are employing – which might occur after a big life change, for instance – then stress testing may be a good idea” says Mr. Lawton.
 
What is a bigger life changing event than severe illness or death? During the financial planning process with clients, are clients’ financial goals and objectives stressed in the event of death, disability or long-term care? If your answer to this question is “no”, then both the clients’ financial plans and wealth manager’s enterprise value are at risk. Mr. Lawton concludes by asking “are you (the wealth manager) technically proficient?” and continues by stating that “this question involves a bit of harsh honesty and some self-awareness” and “that it won’t do much good if the person doing the stress test can’t expertly evaluate a client’s current wealth solutions or ones that potentially could be a good fit for them”.
 
Collaboration between the disciplines of wealth management and insurance advisory is critical to the long-term success of any financial plan for any client. Whether the client is in the early stages of wealth creation or in the decumulation phase of their lives, both disciplines must be a part of the plan.
 
AgencyONE’s select network of the top life insurance advisors in the country, combined with our own technical proficiency in insurance planning for both individuals and businesses, product knowledge, as well as medical and financial underwriting, are available to wealth managers, investment managers and registered investment advisors. Expertise, transparency and communication are the key elements for successful collaboration, and these are benchmarks of AgencyONE.
 
Our life insurance experts at AgencyONE can act as your “technically proficient expert”. They will partner with wealth managers to help stress test a client’s financial goals and objectives. The end result — helping the wealth management community serve their clients more holistically, enhancing relationships with both them and their heirs and, ultimately, preserving the value of your own practice.
 
Call AgencyONE to discuss how we can help you partner and collaborate to better serve your clients.
 
Read more from Gonzalo Garcia: 
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An IUL with Guarantees to Life Expectancy

Guaranteed Universal Life (GUL) products continue to be the “go to” for many of our Advisors because they offer a guaranteed premium that, when paid in full and on time, provides a death benefit exactly as specified.  Simplicity and reliability continue to be strong selling points for Advisors offering GUL contracts. Because GUL contracts are unaffected by policy crediting rates, internal charges or market performance, they consistently perform as designed.  The concept of a policy that works like a term contract that can be designed to last as long as necessary is fairly easy for a client to grasp and considered very attractive.

IUL with competitive guarantees

There is however a significant downside to GUL policies – they lack the opportunity for cash value build-up. This means much less flexibility to skip premiums if necessary and less opportunity for an exit strategy. Protection-focused Indexed UL (IUL) products look to bridge that divide and provide competitive guarantees along with the upside of index-linked performance. In exchange for guarantees to or just beyond life expectancy (ages 85-95), a protection IUL product illustrated at a GUL product’s premium and a modest rate of return can provide significantly more cash value and projected coverage that runs longer than a GUL product. The “win-win” is more flexibility for your client and possibly higher targets for you, the Advisor.

To help show these values in an easy to compare format one of our carrier partners added an agent-only page to their quote system. This comparison offers a quick look using the GUL premium in their Protection based IUL product. AgencyONE recently had an opportunity to assist one of our Advisors in presenting this additional choice to their client. Our underwriters negotiated an outstanding offer with this carrier partner for a 52-year-old male client, Preferred Non-Tobacco, wishing to have $2,500,000 in coverage. The original request from the Advisor was for a GUL product with coverage that would last up to age 101. The GUL contract met the client’s needs and fell within budget, but it lacked the flexibility offered by an alternative protection-focused IUL product with the same premium. The following table illustrates the benefits of both options:

Significant Cash Value

The IUL contract projects significantly more cash value than the GUL contract which allows the client flexibility to skip a premium payment down the road, make a withdrawal from the policy, surrender, or exchange the contract should the need arise. The alternative IUL product presented in this ONE Idea provides a guarantee to age 94 which is beyond the client’s life expectancy. Presented with the options, the client felt confident switching to the alternative IUL product knowing that even modest index returns would generate significant cash value.

In this case study, AgencyONE presented an alternative to the Advisor that resulted in coverage placed that afforded his client more flexibility and upside potential while paying the same premium as the GUL and only sacrificing a few years of guarantees.
 
AgencyONE has the carrier and product knowledge and planning expertise to help YOU find the best solutions to satisfy your clients financial goals and needs and assist YOU in gaining the edge over your competition.
 
Please contact AgencyONE’s Underwriting Department at 301.803.7500 for more information or to discuss a case.
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Understanding the Role of NT-proBNP in Medical Underwriting

Because EKGs can easily be performed incorrectly in the field and/or the results transmitted illegibly, carriers are considering alternatives. Many carriers are electing to use a blood test called an NT-proBNP instead. In this ONE Idea, we will discuss what this test represents and show you how it can affect underwriting offers. 

Over the last few years, we have seen remarkable changes in the approach to life insurance underwriting. Technology and access to data are making digital platforms and lab-free accelerated programs possible. This year we will continue to see changes in underwriting, particularly with age and amount requirements. Carriers are continually analyzing COST versus the PROTECTIVE VALUE of the medical data they use to make underwriting decisions. 

What is it? 

B-type natriuretic peptide (BNP) is a hormone produced by your heart. N-terminal (NT)-pro hormone BNP (NT-proBNP) is a non-active prohormone released from the same molecule that produces BNP. Our bodies continually produce these hormones in small quantities and the amount released relates to pressure variations within the heart. A blood test showing the release of a larger amount suggests the heart is working harder than normal due to conditions such as heart disease, arrhythmia, heart failure, etc. The results are also considered predictive of new cardiac events and heart disease that may not yet have been discovered by the doctor. While this blood test does not measure what the EKG does (which primarily measures the electrical conduction of the heart), the NT-proBNP is considered an age-based screening tool for all-cause mortality, simply put, any potential cause of death. 
 
NT-proBNP levels are typically higher in women, older ages in both male and female, and individuals with kidney disease. For life insurance purposes, a male’s NT-proBNP should be less than 75pg/mL and a female’s less than 300pg/mL.
 
There is nothing your Clients can do to “prepare” for this NT-proBNP portion of the life insurance exam. However, carriers currently RATE slight elevations very differently, so it is important that you ask your Clients to RETRIEVE THEIR LAB RESULTS for AgencyONE’s review. This helps to ensure their cases get directed to the carrier best suited to evaluate them.

Case Study

Ms. Sally Smith is an (age nearest) 79-year-old, non-smoker applying for a $1,000,000 VUL policy. Aside from medically managed high blood pressure and cholesterol, her medical history was fairly benign. Getting a jump start on the insurance application process, Ms. Smith was examined for Carrier B and proactively retrieved a copy of her lab results for AgencyONE’s underwriting review. Ms. Smith’s labs were within normal limits EXCEPT FOR an elevated NT-proBNP of 363. Armed with this information, AgencyONE’s underwriting team approached the carrier most suited to Ms. Smith’s case, Carrier A, along with two additional carriers at the request of Ms. Smith’s Advisor. As anticipated, Carrier A provided the most favorable offer at Standard Non-Tobacco. Both Carrier B and C were at the opposite end of the spectrum at Table 4.
 
It is also important to note that Ms. Smith’s mature age is outside the underwriting parameters for most (if not all) carrier shave/crediting programs. This drastic difference in the underwriting offers between Carrier A, B, & C is solely due to the NT-proBNP value. This difference is more astonishing when we look at the variation in annual premium amounts as seen in the table below:
 
 
AgencyONE successfully negotiated a Standard Non-Tobacco offer for Ms. Smith with Carrier A who offered a significantly lower annual premium than the next two carriers. The Client and the Advisor were very pleased with the handling of the case and its outcome.
 
Each Client’s case is unique, and each carrier is unique in the way they review and underwrite cases. AgencyONE’s carrier knowledge and case evaluation and placement are just three of the many reasons our Underwriting Department is considered THE BEST in the field.
 
Please contact AgencyONE’s Underwriting Department at 301.803.7500 for more information or to discuss a case.
 
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OH, the JOYS of Reg 187 & Reg BI!

Reg 187 and Reg BI: In a recent article written by Bob Veres titled The Awful Consequence of Non-Fiduciary Advice, the author “asked financial professionals if they had any stories about the harm caused by predatory recommendations from sales agents posing as advisors”. It is a long article, full of anecdotes from advisors with “horror stories” about what they came across. While I don’t agree with many of Mr. Veres’ opinions, some of these stories are worth repeating.
 
Another advisor who was clearly not operating under a fiduciary standard recommended that a 30-year-old resident doctor, unmarried and loaded with student loan debt, buy a $1.5 million permanent life insurance policy with premiums amounting to $32,000 a year.  “There was no discussion about debt, the potential to make 401(k) investments or creating an emergency fund, and he told me he had no desire to provide life insurance proceeds to his brother when he died,” says Sharlee Cretors, of SC Financial Services in Scottsdale, AZ, who inherited the mess as the doctor’s new financial advisor.
 
This is one of the few stories with a happy ending.  “We were able to unwind the insurance product, enroll him in his 401(k) plan for maximum deferral, build up his emergency fund, and his student loans are being paid down,” says Cretors.  Is it not easy to see the difference between fiduciary “best interests” advice and the advice provided by agents who aren’t bound by the fiduciary standard?
 

What the “anecdote” does not address:

It does NOT adress the fact that any student loans that the resident doctor was “loaded up with” may have to be repaid at death depending on whether it was a federal versus a private student loan.  Maybe some term life insurance with a strong conversion option should have been part of the conversation. Furthermore, there is no discussion about disability income insurance. A young doctor’s biggest asset would be his/her ability to earn an income for life assuming he/she is able to work at all, or in his/her chosen profession. Maybe disability should have been part of the discussion. I am not suggesting that a $1.5MM whole life policy with a $32,000 premium was or wasn’t appropriate, but it is easy to see how someone would say that it was “all about the high commission” and that the so called advisor did not do their job. I would argue that possibly the “hero” in the story did not do her entire job either – so shame on both of them.
 
As the insurance industry now grapples with Reg 187 compliance in NY for both life insurance and annuities and since the passage of the SEC Regulation Best Interest (Reg BI), it is stories like the one above that fuel the continued debate over best interest practices of the insurance industry and commission driven sales people. Furthermore, according to the law firm of Drinker Biddle as reported by WealthManagement.com on January 31, the DOL rule is not dead either, stating that “the new rule is expected to align with the SEC regulation, and some were expecting it as early as the end of last year”. Finally, as if that was not onerous enough for the financial industry, Massachusetts has proposed a new Fiduciary Conduct Standard that would make Reg 187 look like a walk in the park.
 
Let’s face it, acting in the client’s best interest is a GOOD THING and financial advisors of any kind – insurance agents, broker dealers or investment advisor representatives – should do it every time they interact with a client – without fail. If that were the case, we would not need all this regulation, but regrettably it is not always the case, so here we are. 
 

The more significant question that should be asked:

“Is it about commission or is it about making the right recommendation”? For years, much of the fee-only and fee-based investment advisor community has made the argument that commissions are bad. 
 
I recently heard a story about a fee-based advisor who had completed a financial plan for a client. The client, a young and healthy man, trains and competes in triathlons. One of the recommendations was that the client purchase term life insurance. Since the advisor did not sell commission-based insurance, he recommended that the client purchase it online through one of the typical vendors – which, by the way, will make a commission on the sale. During a triathlon, the man died. His widow, upon return to her home, found the life insurance application on the man’s desk. He had never submitted the application.
 
The point of this story is that it was not the commission that was bad, it was the lack of action or maybe, the lack of urgency. People buy car insurance because they don’t know if or when they will have an accident. The same can be said of any insurance – homeowners, health, disability insurance… but we all have it in some form or fashion. Someone is getting paid a commission on these products, so why is it so bad that a life insurance agent gets paid a commission? Maybe it’s because the product being sold or recommended is not the “right” product for the needs of the client, such as in the example presented earlier.
 
So, what is the right product for the right circumstances? 
Clearly, there is no right answer, but Reg 187 and other regulatory requirements that come along are going to force anyone making financial recommendations, including life insurance, to ask a lot more questions and “get it right”. AND, it has nothing to do with the fact that the sale of the product pays some sort of commission.
 
During a recent insurance company sponsored webinar on New York’s Reg 187, I was exposed to a software platform that helps advisors create the documentation needed to recommend life insurance through a client profiler, a product profiler, a life insurance wizard and product validation. The software is called RightBRIDGE. Created by Capital Rock, the system integrates with several financial planning software systems such as MoneyGuidePro and eMoney and provides recommendations tied to needs analysis and suitability for life, long term care and disability insurance. It creates a documentable justification for the recommendations made, or to be made, to a prospective client for insurance and other risk mitigation purposes, by collecting the requisite Reg 187 data elements.
 
This analysis takes the conversation away from HOW insurance professionals get paid to WHY they get paid, allowing for a more transparent and best interest relationship with the client and potentially other financial advisors that may be part of the collaborative team. I applaud the approach because, lets face it, regulation around Best Interest is not going to go away any time soon. We need to embrace it and do the right thing for our clients relative to their risk management needs.
 
A sample Client Profile report can be seen below and is based on documented needs analysis. For more sample reports around product selection and validation, please see the CapitalROCK RightBRIDGE website.
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In Conclusion:

I have one final comment and a selfless plug for AgencyONE. Often, the right product solution or the right carrier, may not be the “right” underwriting. AgencyONE specializes in helping advisors find the best solutions (product or otherwise) for insurance prospects and clients, but underwriting impaired risk cases is our specialty. Advocating and negotiating the best possible offers for your client is our mandate – EVERY DAY.
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Survivorship Insurance: Options And Improvements

Survivorship insurance policies (aka second to die) continue to be a very popular estate planning tool primarily because they are considered less expensive than issuing policies on a single life. In Survivorship insurance policies, this savings occurs because the insurance company can spread the mortality cost over two lives instead of one, and in most cases, over a longer period of time. The death benefit payout does not occur until the last person named on the policy dies. Unlike single life contracts which are used for income replacement as a result of the death of a breadwinner, or business needs such as key person replacement or funding a buy-sell agreement, these contracts are typically used in estate and\or legacy planning situations and are commonly owned by a trust.

Traditionally, Survivorship contracts were guaranteed policies with little or no cash value which would allow the client to lock-in a premium for the duration of the policy. With carriers discontinuing guaranteed Survivorship contracts from their portfolios, they have had to implement new competitively priced options. These new products are typically built on indexed chassis and have longer built in guarantees and offer cash value upside. What these newer indexed products have lost in guarantees, they have made up in cash value build up AND flexibility making them much more attractive than the fully guaranteed older products.
 
 
 
 
We can see the growing popularity of the indexed Survivorship products when we look at the options that are currently available in the marketplace:
  • One current assumption Survivorship Universal Life (SUL) product
  • Four guaranteed Survivorship Universal Life (SUL) products
  • Eight indexed Survivorship products (some offer guaranteed premium design options)
 
Each of the 3 tables below shows a comparison in premium, cash value and guarantees between a fully guaranteed Survivorship product and a new indexed Survivorship option for male and female preferred non-tobacco age 50 (Table 1), 60 (Table 2), and age 70 (Table 3). All examples are for a $5,000,000 face amount and have been solved to carry the policy to age 100.
 
 
In the three examples above, you see that the indexed Survivorship product has a lower projected annual premium compared to the fully guaranteed scenarios (14 – 20% depending on the ages illustrated). The indexed product has projected cash values, assuming a 5% illustrated return, of approximately ½ of the death benefit AND STILL offers guarantees up through the low to mid age 90’s. Annual policy reviews with your clients can identify any under-performing years which can be managed in order to continue coverage as required by your clients’ needs.
 
Every planning situation is unique and must consider all aspects of your client’s financial needs and goals but the next time you meet with your married clients, consider a Survivorship policy. You very likely will be able to insure the couple more cheaply than insuring them individually while also providing them with the flexibility that cash value build up offers.
 
AgencyONE’s Case Design team has the deep product knowledge and design expertise to provide cost effective solutions that meet all your clients’ needs.
Please contact AgencyONE’s Case Design Department at 301.803.7500 for more information or to discuss a case.
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Have You Devised Your 2020 Business Marketing Plan?

Marketing is a mainstay of any successful business. It helps identify you in the marketplace and ultimately helps to sell your services. Have you developed your business marketing strategies for 2020?
 
One of the many valuable benefits that AgencyONE offers to their AgencyONE 100 Advisors is access to our considerable library of marketing pieces. Have you used these ONEIdeas with your clients and centers of influence? AgencyONE stands ready to customize them for you.
 
Simply login to our website to have a look at our complete library and then let us know what interests you and how you want to use it. We will be happy to make your requested modifications (Our AgencyONE 2019 Year in Review lists all of our 2019 ONEIdeas with hot links to the piece).
 
All we need is your logo and contact info to turn any of OUR marketing material into YOUR marketing material. We can even modify an existing piece to make it more “client friendly” or to appeal to your referral sources and/or centers of influence. Don’t hesitate to contact us if you see something that sparks your interest. Or, if you don’t see what you want – call AgencyONE and we will help you develop it.
 
Every week, AgencyONE’s ONEIdea marketing features sales ideas focusing on either advanced markets, a case design idea and product intelligence, or the latest information in medical underwriting.
 
We are pleased to announce that AgencyONE will also be providing a quarterly ONEIdea that will focus on specifically HOW TO “MARKET” YOUR MARKETING – how to use email marketing, connect through social media, discuss what makes a successful website and more.
 
What Are You Doing?
 
Email Marketing: How often do you “touch” your clients and prospects? If you need a fast and effective way to connect there are a variety of small business email marketing companies available – Constant Contact and MailChimp to name just a couple. These sites are very user friendly and offer a tremendous number of design templates and tutorials from which to work and learn. They provide the most efficient way to get your message out to your target audience.
 
Social Media: The LinkedIn platform offers many marketing opportunities. It is a great place to connect with peers, clients and prospects. LinkedIn also allows you to post and market your content AND highlight your experience, skills and expertise. Its basic offering is free but LinkedIn also has a variety of pay subscription levels from which to choose depending upon how you want to use the platform and what you want to achieve. LinkedIn is an inexpensive and efficient platform for marketing and prospecting.
 
Website Analytics: Is your website really working for you? Does it engage your customers? Perhaps you created your website, launched it and then forgot about it. In today’s VERY FAST MOVING technological world websites are expected to continue to engage and offer new information. Google Analytics is free and one of many analytic tools available that provides statistics about who visits your website and where they spend their time. Google Analytics is currently used by more than 50% of the top 10,000 websites worldwide and is considered the best tool for small businesses.
 
AgencyONE’s goal is to help YOU obtain the tools and gather the information necessary for YOU to continue to provide value to YOUR existing clients, increase YOUR client base, AND help differentiate YOU from the competition. The right kind of marketing can help make this happen.
 
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AgencyONE Year In Review: 2019 ONEIdeas

With 2019 quickly disappearing and 2020 less than two weeks away, we thought this the perfect time to provide our advisors with a 2019 ONEIdea YEAR IN REVIEW. Industry and financial news provided plenty to discuss in our weekly ONEIdeas. These cutting edge sales ideas featured advanced marketing strategies, medical underwriting, and product intelligence that accurately reflect the current state of the life insurance, estate and wealth planning industry.

Following is the AgencyONE 2019 Library of ONEIdeas:

 
Remember, all of these ONEIdeas can be customized and branded for our AgencyONE advisors with a logo and contact information for use with referral sources and centers of influence.
 
We look forward to providing that unique ONEIdea that will help close your next big case, provide value to your clients, help differentiate you from your competition AND keep you up-to-date with planning ideas, industry trends, underwriting niches and product information.
 
AgencyONE’s weekly ONEIdea will be on hiatus until the second week in January 2020. We wish you all a very JOYOUS Holiday Season and a safe, healthy and prosperous New Year!
 
Please contact AgencyONE’s Marketing Department at 301.803.7500 for more information or to discuss a case.

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