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A week doesn’t go by without the AgencyONE Underwriting Team encountering a file that includes a diagnosis of obstructive sleep apnea. We’ve all heard the Darth Vader jokes about wearing a CPAP mask, but what IS sleep apnea and why is it relevant to the underwriting process? In this ONEIdea, we will define obstructive sleep apnea, explain its diagnosis and treatment, and discuss the associated mortality concerns.  There is more to that snore; preferred ratings for obstructive sleep apnea are possible assuming the client follows the recommended treatment and negotiations are successful with the targeted carrier partner.

What is Obstructive Sleep Apnea?

Obstructive sleep apnea (OSA) is a breathing disorder that occurs during sleep. There is actually more than one type of sleep apnea, but the most common one and the focus of this discussion is obstructive sleep apnea. Obstructive sleep apnea is the result of blocked airflow (obstruction); usually caused by the collapse of soft tissue in the back of the throat (upper airway) and tongue during sleep. Some of the most common symptoms of OSA include daytime fatigue, loud snoring, witnessed episodes of stopped breathing, headaches, and elevated blood pressure.

It may come as no surprise that OSA is found to be more prevalent in men. The Mayo Clinic reports that men are TWO TO THREE TIMES more likely to have obstructive sleep apnea as compared to women. Some additional risk factors for developing obstructive sleep apnea include older age, obesity, smoking, and even alcohol or sedative use. The condition frequently goes undiagnosed and is considered a cardiac risk factor for sudden death…while you sleep.

How is Obstructive Sleep Apnea Diagnosed?

OSA is traditionally diagnosed by a polysomnography (sleep study) completed in the comfort of your own home or at a sleep medicine facility. The at-home testing is obviously less involved, but still measures breathing, oxygen levels, snoring, and possibly even limb movements. A polysomnography at a sleep facility is more extensive and requires more sophisticated equipment. The equipment measures the breathing patterns, oxygen, limb movements, as well as the activity in the heart, brain, and lungs. In either testing environment, the sleep study generates a report that is interpreted by a physician to diagnose OSA and determine the severity of the condition. The physicians who analyze the results are ultimately looking for how many apneic events there were (pauses in breathing during sleep) and how significantly the oxygen levels decreased.  Those results are then translated into an obstructive sleep apnea diagnosis of mild, moderate, or severe.

How is Obstructive Sleep Apnea Treated?

Once a physician has determined the severity of the obstructive sleep apnea, they can make treatment recommendations. Lifestyle modifications can be made if the OSA is related to weight, alcohol intake, and/or sleeping positions, especially if it is only mild in severity. In other situations, an oral device or surgery may help open the obstructed airway. However, the “Gold Standard” treatment for moderate and severe obstructive sleep apnea is PAP (positive airway pressure). The most commonly used PAP device is a CPAP (continuous positive airway pressure) system. The CPAP machine provides warmed and humidified air, in a continuous pressure, adjusted to the user’s OSA severity to effectively keep the airway open while sleeping. The CPAP mask covers your nose and mouth, which can take some getting used to, but it works…and can save your life….and your relationship!

Why is Obstructive Sleep Apnea an Underwriting Concern?

Obstructive sleep apnea isn’t JUST snoring. It is the CAUSE of the snoring. The mortality risks are real and based on the severity of the condition.  The potential physical side effects are sleepiness during the day which may result in impaired driving abilities and trouble concentrating. The potential medical side effects are significant and include heart attack, stroke, abnormal heartbeat, heart failure, high blood pressure, etc. Severe OSA is associated with an increased risk of every single one of these events/conditions and, if left untreated, can result in death. Often you hear of someone, “dying quietly in their sleep” without a known cause. Was the culprit undiagnosed obstructive sleep apnea?

How is Obstructive Sleep Apnea Underwritten?

When underwriting OSA, underwriters are mostly focused on the following factors to determine the risk class:

• Sleep Study Results – Is the diagnosis mild, moderate, or severe obstructive sleep apnea?
• Treatment- Is treatment required? What kind of treatment was prescribed (oral device, CPAP, etc.)?
• Compliance- Is the treatment being followed as recommended and is it effective? For example, if the CPAP machine is being used, the device will generate a report that shows how often it is being used and if it is doing its job.
• Comorbid Conditions– Are there any other conditions present that contribute to the OSA risk? i.e., obesity, hypertension, coronary artery disease, atrial fibrillation, etc.
• Alcohol and/or Drug Misuse

Case Study

Mr. Vader is a 60-year-old non-smoking male seeking $4,000,000 of Variable Universal Life (VUL) insurance coverage for personal purposes. He stands 5’10” tall and weighs 240lbs. His medical history is significant for hypertension treated effectively with Lisinopril and hypercholesterolemia (high cholesterol) managed with Atorvastatin. He also has a mildly elevated fasting blood glucose but does not carry a diagnosis of pre-diabetes or type II diabetes. Last year, Mr. Vader’s wife complained about his snoring and mentioned that she witnessed frequent apneic events (stopped breathing) while he was sleeping. At the urging of his wife, Mr. Vader underwent a sleep study. His results confirmed a diagnosis of severe sleep apnea. The recommended treatment was a CPAP machine. A CPAP titration study was then completed to determine the appropriate CPAP pressure to effectively treat his severe sleep apnea. Mr. Vader has been fully compliant with CPAP treatment for the last nine months. Based on his complete medical history, AgencyONE targeted three carriers for informal consideration (Carrier X, Y, Z). Due to the recency of his OSA diagnosis and the severity, both Carrier X and Carrier Z assessed at Standard Non-Tobacco rates. However, AgencyONE successfully negotiated a Preferred Non-Tobacco offer with Carrier Y due to Mr. Vader’s well documented CPAP compliance. A formal application was submitted, and Mr. Vader placed, not $4,000,000 but, $5,000,000 of VUL coverage at Preferred Non-Tobacco rates. The outstanding offer AgencyONE negotiated was enough motivation for Mr. Vader to secure additional coverage!

$5MM VUL 10-Pay No Lapse Guarantee to Age 100

AgencyONE’s Underwriting Team consistently provides experienced and knowledgeable underwriting along with high-touch service to our AgencyONE 100 Advisors, all while delivering the best offers available in the marketplace.

Please contact AgencyONE’s Underwriting Department for more information at 301-803-7500 or to discuss a case.

If it has been a few years (or even a few months) since your last annuity case popped up, you may be surprised at how much the landscape has changed. Fixed annuity rates are more competitive than they have been in years, and both clients and advisors are seeing the benefits. According to ThinkAdvisor.com, fixed annuity sales are up an astonishing 45% since Q2 2021! Fixed-rate deferred annuities are seeing a large share of the action, with sales increasing 76% year over year.

If you are not actively marketing and considering fixed annuity solutions for your clients, you may be leaving sales on the table.

Multi-Year Guarantee Annuities (MYGAs) – A Competitive Alternative

For clients looking for shorter-term guaranteed returns, three (3) and five (5) year guaranteed products are extremely competitive. They offer better rates than bank CDs with the additional advantage of tax deferral. MYGAs are a great option for your conservative/moderate risk client who is looking for a safe place to park their money for a few years with an attractive combination of risk and opportunity cost. 

Fixed Indexed Annuities (FIAs) – More Attractive 

In fact, the cap rates for many S&P 500 account options are twice as high as they were at this time last year! More and more carriers have also added alternative indexed account options that can provide uncapped growth potential. Lifetime income riders are making a comeback as well, providing flexible options for guaranteed income regardless of underlying performance, while the client retains access to policy cash value. 

Income Annuities – Immediate and Deferred

Income annuities are also seeing the benefits of increased interest rates. The idea of a guaranteed income stream is likely appealing to many of your clients. Do your clients have:

• An old life or annuity policy that isn’t meeting their needs?
• Assets that have grown, and want to lock in those gains by turning them into an income stream that they cannot outlive? Income annuities, with a variety of guarantee options, may be the answer! 
• Do they have qualified funds, but no need to access them? A QLAC could help defer a portion of their RMDs. 

Click here to see a snapshot of current MYGA, FIA and SPIA rates and please contact AgencyONE at 301.803.7500 to see how a fixed annuity could be the solution to helping your clients achieve their goals. 

We’ve all heard about OSTEOPOROSIS but WHAT EXACTLY does this condition mean to underwriting life insurance protection or long-term care contracts? This ONE Idea will discuss bone health and why it is so important to mortality and morbidity when considering the purchase of insurance.

Aging & Bone Health

If you are over age 30, you are unfortunately on the downslope of bone strength. Whether male or female, your bones begin to remodel or change after age 30 with genetics, nutrition and exercise impacting the rate of decline in bone mass and bone strength. After menopause, women can have a marked decrease in bone mass and increase in demineralization. The statistics tell us that 1 in 3 women over the age of 50 will experience an Osteoporotic fracture in their lifetime. It’s not much better in men – 1 in 5.

Structure of Your Bones

Your bones are solid on the outside but have an interior that looks like rolled-up cheese cloth or sponge. Bone marrow occupies the center and is instrumental in manufacturing new blood cells. The bone MATRIX is a combination of spongy bone, compact bone, arteries/veins, and a protective sheath that contains a nerve matrix that generates pain when you injure or break a bone. Your bones are more than just a structural component of your body…. they are living things. Bone material is manufactured, reabsorbed, and manufactured again by your body – a process that becomes LESS efficient as we get older.

What is Osteoporosis

Osteoporosis is defined as the metabolic bone disorder that results in the reduction of bone material or bone MASS in the microscopic structure of the bone. It leads to microscopic fractures in the bone matrix that weakens the overall structure. Less mass means less strength. Less strength means the bone is more prone to fracture. AgencyONE’s underwriting team often sees bone studies on older clients that show fractures in the vertebrae of the back as bone strength decreases. Additionally, as we age our bones demineralize and we actually get SHORTER.

How to Diagnose Osteoporosis

The standard test for diagnosing Osteoporosis is the DEXA scan (Double-Energy X-ray) which generates a SCORE. The underwriting of both LIFE and LONG-TERM CARE insurance are DIRECTLY impacted by your client’s DEXA score. The LOWER the DEXA score, the worse the condition. A score of -1 (minus one) is the lower side of NORMAL; a higher score like “0” or +1 would be excellent. A DEXA score between -1 and -2.4 would indicate Osteopenia (the precursor to Osteoporosis) or LOW BONE MASS. Osteoporosis is more severe and comes with a DEXA bone mass score -2.5 or lower.

Bone Health & Underwriting

DEXA scores play a MAJOR part in underwriting both life insurance and LTC contracts. Life insurance companies will evaluate your client’s ability to perform the SIX ACTIVITIES OF DAILY LIVING when assessing your client’s risk. Is your client having difficulties NOW because of deteriorating bone health? Is your client using a cane or walker to get around? Has your client had a fracture or fall within the past 5 years? These kind of MORBIDITY issues can certainly play a role in MORTALITY. The worse your client’s bone density the more likely your client could sustain an injury from a trip or fall.

Aging & Bone Health – Nutrition & Exercise

Good Nutrition and regular physical exercise have proven to defer the negative effects of aging on the bones. Getting the RIGHT amount of Calcium and adequate Protein in your diet is an important start along with a taking a Vitamin D supplement which helps the body absorb Calcium more efficiently. Advise your clients to speak with their physician about nutritional support and exercise. Strength exercises are important but RESISTANCE exercises such as swimming, exercising with elastic bands, walking, playing tennis, hiking, and dancing may be even better. Strength exercises build muscle which assists with balance, movement, and stability and can help prevent a fall that could possibly result in a fracture, a break, or worse!

AgencyONE’s Informal Inquiry contains a LIFESTYLE information page that allows for you and your client to ADD this vital information for underwriting review. LIFESTYLE CREDITS for underwriting purposes can be gained with calcium supplements, vitamins, regular exercise regimens, good nutrition, and social interaction. This is VERY IMPORTANT INFORMATION to provide the life insurance underwriter in your cover letter and applications.

Underwriting Bone Health – Case Study

Ms. Summers is a 58-year-old healthy woman who is seeking $3,000,000 of permanent life insurance coverage with a long-term care rider. She would consider an underwritten chronic illness rider as a back-up option but securing a long-term care rider is the ultimate goal for the client. Ms. Summers is a very healthy and active individual with minimal medical history, but she was diagnosed with Osteoporosis in 2019 through bone density scanning (DEXA). At the time of diagnosis, Ms. Summers began a prescribed Fosamax treatment and has remained on the medication without issue. Since her diagnosis and start of medical treatment, Ms. Summers has also increased her exercise. She engages in light aerobic workouts five times per week and strength training four times per week. A repeat DEXA in 2021 revealed that her bone density was stable from prior imaging with her lowest T-score at -3.1.

AgencyONE approached four carriers informally for consideration of Ms. Summers’ case. Carriers A, B, and C offer long-term care riders, while Carrier D only has the option of an underwritten chronic illness rider. Given Ms. Summers’ overall favorable health profile, including regular physician follow-up, well managed Fosamax treatment, and routine exercise, AgencyONE’s underwriting team was able to successfully negotiate offers (including their respective riders) from ALL four carriers. Carrier D’s annual premium was the lowest, but with the chronic illness rider the monthly benefit was capped at only $11,700 a month! Carrier A was far and above the winner as they offered an LTC rider with the highest per month benefit for the lowest annual premium. Ms. Summers submitted a formal application to Carrier A and secured both the life insurance coverage and LTC benefits needed to protect her family and provide long-term care benefits should she need them in the future.

If you have older clients with waning bone health, AgencyONE will help get the coverage they need with the appropriate carrier at the desired premium.

Please contact AgencyONE’s Underwriting Department at 301-803-7504 for more information or

 to discuss a case.

My client is currently pregnant and wonders if she can apply for Life Insurance now or should wait until after the child is born? We get asked this question on a fairly regular basis, so we thought that addressing the subject in this ONEIdea would be helpful to any of your formerly, currently, or future pregnant clients. The short answer is YES, your client CAN apply for life insurance assuming the pregnancy is NORMAL and without any complications; however underwriting pregnancy and pregnancy-related conditions may be more complicated than you think.

Pregnancy-Related Underwriting

Underwriters must view pregnancies through a different lens. Most people think of pregnancy as a 40-week gestation period. However, in the medical community and underwriting world, the term “pregnancy-related” refers to and includes the pregnancy, delivery, and postpartum period (even up to one year after delivery). Like any other “condition,” there are variables involved when underwriting a woman who is currently pregnant. Following are the basics:

• Age: Is she under age 35 or is this an “Advanced Maternal Age Pregnancy”?
• General Medical History: Does she have a history of any significant medical impairments outside of the pregnancy?
• Obstetric History: Has she had prior pregnancies? If so, were there any complications associated with them – i.e. gestational diabetes, preeclampsia, HELLP syndrome, ectopic pregnancy, etc.?
• Current Build/Vitals/Labs: Is her weight and blood pressure within limits deemed as healthy by her physician? Has her lab work been consistently normal for that of a pregnant woman?

Generally speaking, if your client has had no significant medical impairments, no history of any pregnancy-related complications – currently or with prior pregnancies – and has maintained a healthy weight and normal labs, then she is eligible to apply for life insurance coverage NOW. She would, very likely, be considered at the best possible qualifying class with most of our carrier partners.

If your currently pregnant client has a history of any significant medical impairments and/or pregnancy-related conditions (i.e. gestational diabetes), then our carrier partners will more than likely postpone her application until post-delivery. However, if there is any doubt, please do not hesitate to contact the AgencyONE Underwriting Team for assistance.

Additional Underwriting Considerations – When and How to Apply

In underwriting, a large WEIGHT LOSS or GAIN during pregnancy is averaged over the past 12 months. A first trimester application for insurance (less weight gain) may very well result in a more favorable underwriting outcome than a third trimester application.  Additionally, applying for life insurance at later-stages of the pregnancy (i.e. third trimester) could present with ABNORMAL lab values; a direct result of the pregnancy. However, the underwriters cannot simply dismiss those abnormalities and may postpone the application and request repeat labs post-delivery. We have carrier partners who do consider currently pregnant applicants through their ACCELERATED UNDERWRITING Programs. Reach out to the AgencyONE underwriting team to help you target the best options for that consideration.

What is the mortality concern?

Pregnancy-related deaths are rare, but they are possible. The CDC estimates that 700 women die in the U.S. each year from pregnancy-related complications. An even more shocking statistic is that approximately 60% of those deaths are preventable! The most common causes of pregnancy-related deaths are heart conditions and stroke.

Postpartum Conditions

Postpartum depression and anxiety are another aspect of pregnancy that our underwriting team encounters often. Depending on the severity of the diagnosis, a history of postpartum depression may cause an even longer postpone period post-delivery (6 months to one year) until stability on treatment is achieved.

Let’s look at a case that AgencyONE recently underwrote on a pregnant client with a history of postpartum depression:

Case Study

Mrs. Preston is a 35-year-old successful businessowner seeking $2,000,000 of Variable Universal Life (VUL) coverage guaranteed to maturity. She has a 5-year-old daughter and is currently in the second trimester of pregnancy with her second child. Mrs. Preston is a very active, healthy woman with minimal medical history. She did experience a short period of mild postpartum depression after her first child was born. Mrs. Preston reached out to her primary physician when she started to experience mild depressive symptoms. She took a prescribed treatment of Zoloft for two months and was able to discontinue the medication with no ill-effects or continued depression.

AgencyONE sent Mrs. Preston’s case, including a summary of her history, to Carriers X, Y, and Z. Both Carrier X and Z declined to offer coverage until the delivery of Mrs. Preston’s second child and receipt of a favorable postpartum follow-up. Given that Mrs. Preston’s postpartum depression symptoms were only mild, and she received prompt and effective medical advice and treatment, AgencyONE was able to negotiate a Preferred Non-Tobacco offer with Carrier Y. AgencyONE submitted a formal application and coverage was placed in force before the delivery of her second “bundle of joy”.

Pregnancy is a very exciting and joyous time in an expectant’s mother’s life and is a perfect time to start planning for the future with the purchase of life insurance coverage. AgencyONE’s underwriting department has the knowledge and expertise to underwrite the most complex cases and is a phenomenal resource to you when meeting with clients and questioning whether their medical history will allow you to deliver an offer that your client will agree to place.

Please contact AgencyONE’s Underwriting Department at 301.803.7500 with any questions or to discuss a case.

During one of your clients’ annual reviews, you discover that that they have an old inforce policy that may or may not be underperforming with a substantial cash value. You’ve also determined during the review that the existing policy does not meet all of your client’s current needs. However, with value in your client’s existing policy, you may be able to provide some important options to consider and features to add that will better meet your clients financial planning needs.

What are your next steps? Obtain the needed inforce information for a thorough review of the current contract. This should include an annual statement and 1-2 inforce ledgers to show the long-term performance projections. Most older policies don’t include options that are currently available. One type of coverage that is worth looking at is Long-Term Care or Chronic Care coverage.  These options increase the flexibility of an insurance solution AND ultimately benefit your clients’ overall financial plans.

Let’s assume for this ONE Idea that your client would still like a policy that accumulates cash value. You could use one policy that includes a cash accumulation indexed solution and just add the LTC rider. This type of policy provides death benefit, options to build cash value, projected income, and a long-term care benefit. However, as an acceleration of the death benefit, the payment of the LTC rider benefits will reduce BOTH the death benefit and cash surrender value of the policy. Withdrawals and loans will also reduce BOTH the cash value and the death benefit which will also impact the LTC benefits available. Additionally, the policyowner may not be able to take any income while the long-term care benefits are being received. Is there a solution if your client wants BOTH income AND guaranteed Long Term Care benefits?

The Solution

A possible solution is to 1035 the existing contract and split the proceeds to purchase two different policy types.  One policy would accumulate cash value and provide income while the other would provide a long-term care benefit that increases over time. Having two policies will give your client an income stream AND long term care benefits if needed!

Accumulation Life Design

Let’s have a look at the numbers. Mr. Smith is a 51-year-old Preferred NT male with a 1035 exchange of $300,000 and an annual premium of $10,000 per year paid to age 65.

For the first part of the case, AgencyONE designed an increasing death benefit contract using $200,000 of the 1035 plus $10,000 of premium to age 65. The goal of this product is to accumulate cash value for future distributions. Without the LTC rider, there will not be a rider charge to draw down or decrease the cash value. See the projected non-guaranteed cash values and death benefits in the far-right columns.

Next, AgencyONE solved for income (withdrawals to basis then standard loans) at current max AG49A crediting rates from ages 67-85. This illustrates $49,548 of income per year.

Hybrid Long Term Care Design

For the second Hybrid/LTC portion, AgencyONE used the remaining $100,000 of the 1035 as a single pay. Since the client is younger, AgencyONE solved for 6 years of benefits with a 5% compounded rate.

The monthly LTC benefit starts at $3,879 and grows each year guaranteed:

• By age 70, the benefit is $9,802 monthly
• By age 75, the benefit is $12,510 monthly
• By age 80, the benefit is $15,967 monthly

This design is flexible and can be split into different income and LTC benefit amounts as long as you maintain product minimum limits. The split plan keeps each piece separate and provides both income and LTC benefits as needed. You may be wondering which carrier allows this split design.  The good news is that AgencyONE has three carrier partners that will allow this 1035 split into a life and hybrid product.

AgencyONE’s Case Design Department is available to collaborate with you and your clients on their inforce policy evaluations. Our superior knowledge of carrier solutions and product intelligence help to ensure that your clients get the solutions that meet their insurance needs and financial planning goals.

Please contact AgencyONE’s Case Design Department at 301.803.7500 for more information or to discuss a case.

When advising clients about legacy and estate planning, many financial, legal, and accounting advisors recommend insurance solutions, generally owned by irrevocable life insurance trusts (ILITs), to provide the needed liquidity to complete stated wealth transfer and legacy objectives. WHY?

• Life insurance provides an income and estate/ inheritance tax-free cash payment when owned by an ILIT.
• Life insurance enjoys an automatic step up in basis, and hence no capital gains taxes are paid on any gain over the amount paid (basis), when owned in a trust. This cannot be said about other capital assets that may have to be sold at a taxable gain to provide cash payments from a trust to beneficiaries.
• Life insurance is completely uncorrelated to all other capital markets and pays a lump sum cash benefit exactly when it is needed for exactly the expected amount.
• Life insurance benefits can be guaranteed for life.

Life Insurance Benefits and Guaranteed Returns

Long-dated guarantees and low premiums are important to many, if not most, permanent life insurance designs. However, if the advisor is simply recommending a solution based on the lowest premium available, he or she may be missing additional value for the beneficiaries to whom the trustee owes a fiduciary duty.

Consider a 60-year-old male client, a best-class risk, who is applying for $1MM of coverage. He would like a policy that is paid-up after 10 years and fully guaranteed to age 100. The advisor obtains various quotes from insurance companies and finds that Carrier A will provide the guaranteed coverage desired for the lowest premium at $29,868 annually for 10 years. The same $1MM of guaranteed coverage at Carrier B costs $36,626 annually for 10 years for the same guarantees to age 100. Easy decision, right? Not so fast!

Carrier A’s product is the type of Guaranteed Universal Life (GUL) contract that you may be familiar with – it essentially behaves like a level premium term contract to age 100. Carrier B’s product is a protection oriented Variable Universal Life (VUL) solution that provides the same guaranteed coverage to age 100 BUT offers far more flexibility and upside than the GUL solution.

Lower Premium or More Upside

Would your client rather have the lower premium option with no market participation or upside potential, OR a contract that has the potential to accumulate significant cash values, provide future opportunities for 1035 exchanges (to other solutions should needs change), a cash payment exit strategy or higher death benefits if the cash value growth causes a death benefit increase? Let’s look at some numbers to compare:

• Carrier A – $29,868 guaranteed level 10-pay premium
• Carrier B – $36,626 guaranteed level 10-pay premium

Carrier A certainly wins on premium and hence a higher rate of return at death. HOWEVER, the cash value, death benefit, and IRR on death benefit make a compelling case for Carrier B. The table below shows how each policy would perform under a few different market conditions – a 0% annual return, a 7% annual return, and tracking the performance of an equity fund with historical performance data (See the full comparison linked HERE).

As previously stated, Carrier A requires a guaranteed premium for 10 years with a guaranteed death benefit to age 100, while Carrier B requires a higher guaranteed premium for the same 10 years.

Illustration Rates Are Sequential

The problem with life insurance quotes, and much of the analysis used to make recommendations, is that illustration rates are sequential. In a GUL, it is an irrelevant fact because the interest rate assumption does not impact the performance of the contract. IT IS GUARANTEED – the owner pays a stated premium as due for 10 years and the insurance company pays the death benefit – period, end of story. BUT in a VUL, sub-account/ investment performance is not sequential, even though it is illustrated as such, for example the 7% sequential return as seen above. Combining the two, however, a contractual guarantee for a death benefit with a market-based upside potential, is the best of both worlds!

Historical Lookback Analysis

Many advisors are not aware that a historical lookback is available for this analysis, as seen in the chart above. The Equity Income Fund returns seen in the fourth column from the right of the analysis is the actual performance of that sub-account. It is the combination of a guaranteed death benefit WITH this potential upside which needs to be considered in any insurance solution.

While Carrier A’s guaranteed premium refund option provides meaningful surrender values in select years, Carrier B provides meaningful cash values even at a 0% annual return. Looking at a 7% projection or the historical lookback, it’s not even close! At age 88, a reasonable life expectancy for a healthy 60-year-old, the historic lookback projects a $2.15MM death benefit – more than twice the death benefit, and an IRR which is two and a half percentage points higher than the GUL!

Maximize Upside Minimize Risk

In legacy and estate planning, the key metric for the success of any fiduciary is to maximize the upside potential for the beneficiaries of an asset, while minimizing risk. Had this client bought this asset 28 years ago, and assuming death at age 88, they would have had a guarantee of a 4.33% tax free return with actual performance of 7.73% – Tax Free.

As a final comment, because Carrier B’s contract is fully guaranteed to age 100, the client and his or her investment advisor are free to choose aggressive growth-focused allocations to capture as much market upside as possible, leading to potential future death benefit increases.

AgencyONE’s Case Designers are experts in the analysis required to ensure that your clients risk planning needs align with their financial goals.

Please contact the AgencyONE Marketing Department at 301.803.7500 for more information or to discuss a case.

*For Advisor Use Only

Many people are confused about how marijuana use is treated during medical underwriting for life insurance. They believe that having a medical marijuana prescription will make the process easier… “no problem, I have a prescription” …. well, not necessarily. This week’s ONE Idea will deal with some common misconceptions about underwriting and marijuana use and discuss how they should be managed to help the underwriting process for insurance.

Marijuana is legal now. True, but also FALSE

Marijuana is fully legal in certain states for recreational use. In other states, you must have a PRESCRIPTION to access “dispensaries.” In other states, marijuana is still considered illegal and a crime to possess. This set of conflicting standards across different states is further complicated by the FEDERAL government’s consideration of marijuana which is still listed as a Schedule I substance …and a crime. However, the federal government’s enforcement (Justice Department) of this has been put on LOW priority in most areas except BANKING.

Banks operate under FEDERAL regulation and jurisdiction. Even if marijuana use has been legalized by a particular state, the MONIES earned by “local” (state) marijuana industries are STILL considered ILLEGAL ACTIVITIES at the Federal level! Depositing monies into the Federal Banking systems that have been generated from “illegal” activities is simply MONEY LAUNDERING from the Fed perspective. A quote from a California Assemblyman in an article entitled “Banking and Cannabis: Yearning to be Buds” on the NCSL (National Conference of State Legislatures) website says it all: “Having an entire industry operating with limited access to banking services is a serious public safety threat and makes commercial cannabis businesses a target for crime, putting the safety of employees and customers at risk.” Life insurance companies operate within the rules and regulations of the FEDERAL banking system and cannot/should not accept monies from known “criminal” sources.

Having a PRESCRIPTION for Marijuana makes it OK. True, but also FALSE

Underwriting life insurance protection with admitted marijuana usage has loosened considerably over the past few years. However, by admitting to PRESCRIPTION usage of marijuana, you are also admitting to a TREATED MEDICAL PROBLEM. Think about it. Most prescription marijuana cards have been obtained by phone or internet interviews without an exam AND include the admission of a medical issue like anxiety, sleep disorder, back pain, neck pain, etc. It is a farce in most cases, but the admission of prescription marijuana use is also an ADMISSION of a MEDICAL PROBLEM and therefore an underwriting concern. Admitting “Back Pain” or “Anxiety” for receipt of the marijuana card raises the underwriting concern for Long Term Care contracts as well as Life Insurance applications.

If your client has a legitimate medical issue, then it should be admitted on the life insurance application AND the underwriters will need the medical records or statement from the “prescribing” physician. However, the majority of these so-called PRESCRIPTION cards are NOT associated with legitimate medical issues. Clients should always tell the truth on a life insurance application and admit “RECREATIONAL” use of marijuana if this is in fact the case. Having a prescription card may help your client obtain the recreational marijuana he/she wants, but it does NOT help the life insurance underwriting process. How OFTEN your client uses marijuana is the underwriting issue, NOT whether he or she has a prescription. So, if your client wants to use marijuana and thinks that having a prescription card will make the use of it “legitimate,” remember it may complicate things in the eyes of the life insurance underwriter, potentially extend the underwriting process and delay getting your client’s coverage in place.

Underwriting and Marijuana Use: Case Study

Ms. Mary Jane Smith is a 44-year-old non-smoking woman (age nearest 45) with a history of mild anxiety and insomnia. She wants to secure $5,000,000 of 20-year term life insurance coverage. Mary Jane was treated for anxiety with daily Lexapro but found the side effects to be more troublesome than the anxiety itself. She researched treatment alternatives and decided to try medicinal marijuana through a certified medical cannabis provider. The medical marijuana prescription in this case allowed Mary Jane to discontinue her anxiety medication, which in AgencyONE’s opinion, made her a BETTER RISK. Mary Jane now successfully manages her mild anxiety symptoms and insomnia by vaping marijuana four to five times each week. She discontinued her Lexapro use and attends individual therapy sessions on a monthly basis.

Mary Jane’s case was targeted to three of AgencyONE’s carrier partners for consideration through a quick quote summary. Carrier A saw her as a Standard risk but would have to assess smoker rates. Carrier B was able to offer non-tobacco rates but would not consider an offer better than Table 2. Carrier C (a current age carrier) quoted Standard Non-Tobacco rates, and a formal application was submitted. Once all formal application requirements were received by Carrier C, the AgencyONE Underwriting Team successfully negotiated a Preferred Non-Tobacco underwriting class for Ms. Smith!

Recreational use of marijuana no longer carries the stigma of “illegal” activity, so more people are admitting to its use on life insurance applications. Several carriers will still consider marijuana use as a SMOKER rate class, while others will consider it as PREFERRED NON-SMOKER, potentially even with admitted use of multiple times per week. There is a wide swing in the underwriting perceptions among carriers and how they assess these admitted uses. Please call AgencyONE to discuss your policy needs and your client’s admitted usage and we will discuss your carrier and product options.

Contact the AgencyONE Underwriting Department at 301.803.7500 for more information or to discuss a case.

Check out the corresponding video for this post HERE!

AgencyONE just wrapped up their first IN PERSON Annual Advisor Conference in almost 3 years, April 24 – 26 at the Dupont Circle Hotel in Washington, DC. It seemed like eons since we were last together and able to enjoy SPEAKING FACE-TO-FACE and SITTING IN THE SAME ROOM. We SAW peers and business partners that we hadn’t seen in a long time and met new advisors who recently joined our AgencyONE 100 community of Advisors. We HEARD leading speakers and industry experts discuss topics important to you and your clients. And we FELT the camaraderie that comes from experiencing an in-person meeting.

High Praise for the Speakers & Content

For those of you who could not attend our Annual Conference, we missed you. The advisors that did attend commented that the meeting was truly outstanding, full of relevant and timely topics presented by the best and brightest speakers the industry has to offer. (More on that later). The meeting also provided AgencyONE 100 advisors the opportunity to present sales and marketing ideas. The feedback we received from these sessions were that they were incredibly valuable and they invigorated seasoned advisors to try new marketing and sales concepts in their businesses.

Early Bird Session

The conference kicked off with an early bird session on planning for business owners featuring speakers from Kalamath Consulting and Principal Financial Group. This was followed by a fully insured business owner exit planning case study presented by advisors from Pacific Advisors. These sessions set an incredibly high bar for the rest of the conference, as attendees began to immediately collaborate with one another and were provided with actionable sales ideas. Attendance at these early sessions filled the room to almost capacity, and interest was so significant that two specific business owner planning study groups were created to focus on opportunities in this market in 2022 and beyond.

The Tone of the Conference

AgencyONE Managing Partner Gonzalo Garcia officially opened the conference with eye-opening metrics on whether clients are receiving the services they expect from their wealth advisors. Some of the statistics shared included:

1. 82% of clients expect to receive advice on obtaining life insurance but only 12% receive it;
2. 80% of clients expect to receive advice on business succession planning but only 1% receive it; and
3. 93% of clients expect to receive estate planning advice for after their death but only 22% receive it.

These statistics resulted in a BIG A-HA moment in the audience and confirmed that there is more opportunity than ever to provide clients with the services they expect from financial advisors and subsequent sales opportunities. The referred to metrics and their details can be found in Gonzalo Garcia’s ONE Idea titled Client Expectations: Investment & Risk Management.

A Variety of Speakers & Topics

In an attempt to close this “services expected vs services received” gap and provide AgencyONE 100 advisors with information they can use NOW both with their clients and in their practice, AgencyONE officially kicked off our annual conference. The speakers and presentations provided an in-depth look at all aspects of the industry – there was truly something for everyone. We heard from an insurance carrier CEO, an economist, an industry watchdog, an estate planner, a marketing expert, fellow advisors, a technology and security specialist, industry and product analysts, and underwriters. Linked here is a copy of the 2022 conference agenda and following is a list of the sessions and speakers. These presentations are available ONLY to AgencyONE 100 advisors via your personal dashboard on the AgencyONE website (if available for distribution).

Working With Business Owners – The LARGEST Untapped Market
Cary Fry, MBA, ChFC, CLU, CMFC, Exec. Sales & Distribution Leadership, Kalamath Consulting
Fletcher Brown, Founder & President, Kalamath Consulting
Jim Wanek, CLU, Managing VP, Life Distribution, Principal Financial

Fully Insured Financial Infrastructure for Business Exit – Winning Submission of the Forum 400’s Forum MAX Fast & Furious Sales Idea
Jason Giorgio, CLU, CFP, MBA, Pacific Advisors
Kim (Mo) Mahoney, MBA, WMCP, RICP, CExP, CEPA, Pacific Advisors

The State of the Life Insurance Industry & Where 2022 is Taking Us
Brooks Tingle, President & CEO, John Hancock Insurance

The Economy, Markets, Inflation, The Debt, The War …. Now What?
Tim Uecker, CIMA, VP, Investment Specialist, Prudential Financial

A Washington Update: Tax & Regulatory State of Affairs
Marc Cadin, President & CEO, Finseca

Planning in a World of Legislative Uncertainty
Edward A. Renn, JD, Partner, Withers Worldwide

5 Biggest Marketing Opportunities for Advisors in 2022
Samantha Russell, Chief Evangelist, FMG Suite/ Twenty-Over-Ten

AgencyONE 100 Advisors Discuss How their Marketing has Changed Over the Years
David Appel, CLU, ChFC, AEP, Managing Partner, Appel Insurance Advisors
Robert Trotenberg, CLU, CLTC, Founder & President, Arbor Group

The Future of Life Insurance Distribution
Bill Shelow, CEO, Libra Partners

Opportunities for Long-Term Care & Linked Benefits in 2022
Shawn Britt, CLU, CLTC, Director Long Term Care Initiatives, Nationwide Financial
Kim Natovitz, CLU, CLTC TriBridge Partners

Product Update in a Post 7702 World Featuring Whole Life & Variable Universal Life Product Solutions
Kevin Shannon, Managing Director, MassMutual Strategic Distributors
Wayne Baldwin, CLU, FLMI, Regional VP, John Hancock Insurance

Bobby Samuelson Unfiltered – an advisor ONLY event (vendors and carriers could not participate)
Bobby Samuelson, Editor, The Life Product Review

Mobile Device & Email Security
Luis Jarquin, Senior Training Specialist, designDATA

Low Volatility Index Accounts – IUL Redux and Other Product Updates
Bobby Samuelson, Editor, The Life Product Review

A Unique Approach to the Construction of Low Volatility Index Accounts
Tom Haines, SVP, Capital Markets & Index Solutions, The Annexus Group

Point/ Counterpoint
Bobby Samuelson, Editor, Life Product Review
Tom Haines, SVP, Capital Markets & Index Solutions, The Annexus Group

How Underwriting Technology Has Changed in Real Time
Julie Melendez, Director of Underwriting, AgencyONE
Elizabeth Thimme, Product Lead, Vive Solutions
Andrea Caruso, Executive VP & COO, MIB
Charles Fowler, Assistant VP & Digital Platform Underwriter, Symetra

2022 Underwriting Update – Panel Discussion
Dennis Bartos, PA, Partner, AgencyONE
Bill Wheeler, FALU, FLMI, VP Underwriting, Protective
Angela Thieschafer, FALU, FLMI, Assistant Chief Underwriter, Security Mutual Life Insurance

We Had Fun Too!

Besides the fabulous content, we also had some fun, as we always do at AgencyONE. We enjoyed carrier dine-arounds at a variety of local Dupont Circle restaurants (thank you to all of our carrier sponsors for hosting our AgencyONE 100 advisors). We hosted a phenomenal conference dinner at Boqueria restaurant on M St. in DC where we enjoyed sangria, tapas, paella, churros and more! We mingled, shared ideas, talked and collaborated and even had some late night cocktails in the Doyle Bar at the Dupont Circle Hotel.

If you missed this meeting and would like to learn more about what was presented, please let us know. If you have questions about how to access the presentations or any of the speakers, please let us know. And if you are not working with AgencyONE and either want to learn more, have a case you would like to discuss or want to be included in future AgencyONE events, please let us know. 

Contact AgencyONE’s Marketing Department at 301.803.7500 for more information or to discuss a case.

Do you ever get a cool idea for an extra comparison page or presentation that may help close a case? Or perhaps it could answer an objection that your client may have? We frequently get calls from our AgencyONE 100 Advisors to discuss these ideas and produce ways to present them in a meaningful format to clients. While we are willing and able to create presentations in Microsoft Excel, I have found that another great resource is a product planning tool called Insmark. Insmark has been around for a long time, is familiar to many of you, and continues to assist in AgencyONE’s daily illustration work. This popular program has options that compare and contrast life insurance products for ease of presentation purposes. While Insmark has numerous options, this ONEIdea will feature the highlights and screenshots of the top 3 Insmark modules available to help clients better understand your insurance design. These are the 3 we use regularly at AgencyONE.

InsMark Module #1 – Comparison of Other Investments Versus Your Policy

Our first Insmark featured module is a great option for showing clients a comparison between buying a minimum death benefit life insurance product used to accumulate cash value and depositing the premium money into an investment account. This is for the client who thinks the cash value and income will perform better in an investment account. Insmark sets up the numbers from each option side by side and you choose the type of investment (Tax Deferred, Roth, Brokerage), input rates of returns, management fees, sales fees, and tax rates. Following is a sample layout assuming a 45-year-old male client who contributes $25,000 per year for 10 years. Next, we will show income from ages 71-85. The income is solved in the life policy and then matched in the investment account.

InsMark Module #2 – The Premium Financing System

Our second most used module is one of my personal favorites since I handle many requests for premium financed illustrations. This helps compare a financed example to a traditional sale by showing the costs and extra requirements of a financed scenario. This module illustrates third party financed life insurance owned by an individual, a company, or a trust using any policy desired. The features included with this module are very flexible and customizable to your particular sale when it comes to exploring how financing tracks over a client’s lifetime. Choose the product, amounts of coverage, repayment options, product crediting and loan rates.

Below is a sample premium finance presentation on a 55-year-old male client who wants to premium finance a life policy over 10 years. The client will pay interest annually and then pay off the loan with out-of-pocket values over time during years 15 to 25. The assumed bank loan rate is 4.25% in all years. (For an actual Premium Finance case we would stagger the loan rate based on the lender’s current schedule or requirements).

InsMark Module #3 – Cost of Waiting to Purchase Life Insurance

The research firm, Spectrem Group conducted a study of wealthy investors in 2021. They asked these investors what services they received from their financial advisory\wealth management companies, as well as what they expected to receive as part of their overall wealth management services. See the results in the graph below.

I am not surprised that most financial advisors and wealth management firms provide investment management services, first, and financial planning services secondarily, in that order. Customers expect investment management and seem to be receiving it (95% expected to 88% received). Financial planning falls a bit shorter: 96% of customers expect this service from their advisor and receive it 70% of the time. After that, however, they are being woefully underserved with respect to their financial advice expectations. The financial services profession can do so much better than that, but collaboration will be critical to better serving consumers and hoping to meet their expectations.

Many financial advisors focus on investment management (portfolio construction, rebalancing, financial planning, retirement planning, etc.), while others focus on insurance (life, disability, long term care, etc.). It would appear from the study referenced above that the two rarely meet.

Please take a moment to revisit the graph above, study it carefully and think about your relationship with your best customers. How would they rank your service offering versus what they expect from you? Is there a meaningful gap in any area?

If your investment or wealth management services correlate with this study in:

• Wealth transfer advice (while still alive) – 96% expected, 24% received;
• Estate planning advice (after your death) – 93% expected, 22% received;
• Long-term care insurance advice – 83% expected, 14% received;
• Life insurance advice – 82% expected, 12% received; and/or
• Business succession planning – 80% expected, 1% received;

then you should consider collaboration with a risk management advisor. If you are a risk management advisor and do not offer investment management or financial planning, you should consider partnering with a wealth management firm.

A recent article in Kiplinger titled Insurance Can Make or Break Your Financial Plan by Roxanne Alexander discusses how a lawsuit, a storm, or a bad accident can ruin the best laid financial plans and how the correct property and casualty coverage can help shift some of that risk to insurance companies.  We all buy car and homeowners insurance, as it is required before you can drive or own a home. Similarly, any of the following can have a devastating effect on financial plans if not properly made and executed:

1. The loss of income due to the breadwinner’s inability to work because of a disability
2. The loss of family income due to the pre-mature death of one or both breadwinners in a family unit
3. The financial burden or caring for the elderly whether at home or a care facility

What impact would any of these have on your clients’ financial plans?

Clients’ expectations of their financial and wealth advisors are changing. The Spectrem Group has conducted a follow up research study entitled Wealth Management Redefined, which will provide new insights into how investors think about wealth management and what it means to them in today’s world. More on this study and subject in another article.

Meeting client expectations, especially for higher income and net worth clients, is critical to the long-term success of a thriving financial services practice. If you do not have collaborative or outsourced partnerships with other disciplines in the financial services industry, you should. Your client’s well-being and that or your business may depend upon it.