By now, you have probably heard that our AgencyONE Annual Advisor Conference starts in a little under a week on April 28th-30th in Washington, DC. We’ve put together a great Agenda full of excellent speakers who will talk about sales ideas and topics that will elevate your practice and benefit your clients throughout 2024 and beyond. If you haven’t registered yet, you still can through our meeting website. We hope to see you there!
I will be presenting a breakout session on Sunday, April 28 at 4:00pm that focuses on Hybrid / LTC products and LTC rider options. This ONE Idea will give you some advance information on that topic and explore the current Hybrid / LTC products in the marketplace. I will also discuss this subject in more detail in the next few ONE Ideas and explain their specific product benefits, competitive cells, and the sales ideas that have been successful for our AgencyONE 100 advisors.
The following information summarizes basic product specs and features which will help you identify the products that may be right for your client(s).
Lincoln Moneyguard
Reimbursement LTC contract
Issue ages: 40-80 years old (age last)
Individual and Couple discounts are available; both clients do not need to apply to obtain the couples discount
Premiums: Single pay up to 10 yrs based on client age
Benefit years: 3 to 6 years
Minimum / Maximum Death benefit: $50,000 / $500,000
Inflation Options: 3% or 5% compound increase
Return of Premium Options: 70% of premiums paid for Basic; 100% of premiums paid after year 10 for Vested
Contact our Case Design team to discuss the interesting additional features that come with the contract such as Terminal Illness Rider, Flex Care Cash, and the Benefit Transfer Rider.
Nationwide Carematters II
Indemnity LTC contract
Issue ages: 30-70 years old (age last)
Underwriting class: Non-Tobacco Single, Tobacco Single, Nontobacco Couple, Tobacco Couple. Both clients do not need to apply to obtain the couples discount
Premiums: Single pay, 5-pay, 10-pay, Pay to 65 (ages 30-54) Pay to 100 (ages 30-65)
Return of Premium Options: Minimum refund with Max LTC benefits, Vested option
Contact our Case Design team to discuss the available designs for clients using compound benefits to show additional value in the future. Also, ask about using the product with our split 1035 sales idea.
Nationwide Carematters Together
Indemnity LTC contract
Issue ages: 30-70 years old (age last)
Maximum age difference between insureds is 25 years with a Preferred rating, 10 years with a Standard rating
Underwriting class: Each Insured can have a separate class – Non-Tobacco Preferred, Tobacco Preferred, Non-Tobacco Standard, Tobacco Standard
Premiums: Single pay, 5-pay, 10-pay, 20-pay, Pay to 100 (options available are based on oldest insured’s age)
Minimum / Maximum Monthly Benefit: $1,500 / $20,833
Benefit Months: This product allows the clients to purchase a specified number of benefit months – 48, 72 or 96 payments
Inflation Options: 3% compound for life, 3% compound for 20 years, 5% compound for life
Return of Premium Options: Minimum refund with Max LTC benefits, Vested option
Contact our Case Design team to see how this product compares when purchasing a set number of benefit months. It also offers a great way to insure two lives.
OneAmerica
Reimbursement LTC contract
Asset Care: Single and Joint; Single Premium and Recurring Premium are available
Issue Ages: 35-80 years old with a maximum 25-year age difference between joint insureds
Underwriting class: Non-Tobacco, Tobacco, Table Ratings Available – TBL 5, TBL 6 or TBL 8
Premiums: Single Pay, 5-pay, 10-pay, 20-pay or Pay to 95
Benefit Periods: 25 months with COB extension of 25 or 50 months, 33 months with COB extension of 33 months, 50 months with COB extension of 50 months, and Lifetime
Minimum Face Amount: $50,000
Inflation Options: 3% and 5% compound
This product offers the most pay period options. Contact our Case Design team to discuss client rating options and OneAmerica’s pre-packaged product offering that uses qualified funds to pay for both individual and joint policies.
Securian SecureCare III
Indemnity LTC contract
Issue ages: 40-75 years old (age last)
Underwriting class: Non-Tobacco Single, Tobacco Single, Non-Tobacco Couples, Tobacco Couples; both clients do not need to apply to obtain the couples discount
Premiums: Single pay, 5-pay, 7-pay, 10-pay, 15-pay (options available are based on insured’s age)
Benefit years: 4-8 years
Minimum / Maximum Death benefit: $50,000 / $500,000
Inflation Options: 3% and 5% simple. 3% and 5% compound increase
Return of Premium Options: Vesting (100% refund), 75% (75% refund of premium) and LTC boost (smaller surrender value but max LTC benefit)
Contact our Case Design team to discuss this very competitive product, its applications for clients looking to utilize the compound feature, and its three options for reimbursement.
To help make this information more accessible, we are compiling a list of all the carrier product details into a quick reference spreadsheet which will be housed on our website and available to our AgencyONE 100 advisors. Remember, the next few ONE Ideas will highlight these products in more detail along with some of the important sales niches for each product.
If you are already registered for our conference, we look forward to seeing you. If you haven’t, you can still register on our event website HERE!
Please contact the AgencyONE Case Design Team at 301.803.7500 for more information or to discuss a case. If you have any questions about our Annual Conference or need help getting registered, please contact Lisa Mitchell at 301.803.7504.
There are many ways in which businesses can market themselves and build relationships with their clients and prospects. While one type of marketing may not be superior to another, Social Media Marketing is among the most popular. It is being viewed by a much wider and larger audience than ever before and those who are using it for business report they are having success in acquiring new clients and building relationships with existing ones.
92% – The Percentage of financial professionals using social media for business who report that it has helped their business acquire new clients – 2023 Putnam Social Advisor Survey.
78% – The percentage of “social sellers” who outsell their peers that do not use social media -LinkedIn – Social Selling: Definition, Benefits & Tips for Sales Leaders.
There are a number of things to consider before you make the leap into social selling (leveraging an online social network to build relationships and meet sales objectives) or social media marketing. First and foremost, WHERE & HOW do your clients consume information – Linked IN, Facebook, Instagram, Twitter, or X? It is very important to market to your clients “where they are.” When planning your social media strategies, it is also very important to consider the following:
Your business’s policy on social media;
Financial industry laws and regulations;
Your branding;
Being authentic with your audience – listen and engage, avoid being “salesy” – you are looking to become a trusted expert for your clients and prospects online;
Post consistently; and
Plan ahead.
The social profiles for your business are a reflection of you. Take time to optimize your profile so that it presents you and your business in the best possible light. Hearsay’s 5 Pillars of Social Selling ROI says that “advisors were 7x less likely to be called if they did not have a complete social profile.” Additionally, implement a strategy in advance to support your business goals.
This week’s ONE Idea introduces a social selling platform developed by one of our carrier partners. Designed for use by all financial advisors, it contains dozens of regularly updated, compliance pre-approved, and NON-BRANDED or white labeled content. The subject matter has been created and curated to appeal to a wide range of clients and prospects, and can be easily shared on your social media pages.
This platform is streamlined, very user-friendly and organizes all of your social media interactions in one place. You simply link your accounts, schedule your posts, and begin sharing!
What Will I Have Access to on the Platform?
Content Library – A full, up-to-date library of compliance-approved and non-branded posts on all kinds of topics – financial, retirement, risk planning, personal interest, and lifestyle.
Single Dashboard – One place for all your social media which is always ready to be posted without much effort from you. Send it out with the pre-filled comment or modify the message to personalize it to your business.
Training & Support – Our carrier partner’s Social Media team is available to help with any questions about the social media business pages of our AgencyONE 100 Advisors. You will also have access to reference guides and client conversation starters.
Free Mobile App – There is also an app that can be downloaded on your devices where you can access all of the same content and post from there.
The compliance pre-approved content provides a wide range of articles on everything from “how to budget for a vacation” to “results from a multigenerational survey on retirement” to “how to avoid the 4 most common life insurance mistakes”, and more. The platform offers the following categories of articles to choose from:
Featured content – content from national publications & news outlets – Kiplinger, Money, CNBC, etc.
Advisor-facing content – educational material from the carrier for the advisor
Mindfulness & Motivation – uplifting graphics and comments for sharing
Explore – client facing articles on Life Insurance & LTC, Individual & Group Retirement, Financial topics explained, Family & Money Management, and Healthcare Expenses – all from a variety of publications & news outlets
Trending – Topics that have been trending in the media
Analytics
Posting is important but if you can’t monitor your efforts, what’s the point? The platform allows you to check your post’s activity and track it across all your platforms. You will be able to stay abreast of how much attention your posts are getting – what’s working and what isn’t.
Calendar
You can schedule your posts a month at a time from the Planner section of the platform. If you change your mind, you can easily edit posts before they have gone out.
The Advisor Advocate
This area of the platform contains articles written by our carrier partner’s advanced markets experts and includes topics that pertain to specific financial planning and advanced markets situations. These are branded pieces by the carrier.
If you have been thinking about getting started on social media to advance your business, now is the time. Begin leveraging your social network and positioning yourself as a trusted resource for your clients and prospects. We are happy to schedule a tutorial for our AgencyONE 100 Advisors.
Please contact AgencyONE’s Marketing Department at 301.803.7500 for more information
Our Case Design team is often asked to review inforce policies for our AgencyONE 100 advisors and clients who are looking for solutions that will better utilize existing policy cash values to satisfy a different planning need. Opportunities for replacement often focus on adding a benefit that does not exist with the current coverage – anything from paid up death benefit to guaranteed income to living benefits. This week’s ONE Idea will explore some lesser-known options to consider and the rules and the work-arounds available for your clients who want to create joint benefits by exchanging an individual policy.
Section 1035 exchanges are a powerful tool lent by the IRS to help clients exchange one life or annuity policy for another without any taxable recognition of gains or losses. One limitation of the rule, however, is that exchanges must be like-to-like: ownership as well as the insured(s)/annuitant(s) must match from the original policy to the replacement. Additionally, 1035 exchanges from life insurance to annuities can be accomplished, while the opposite is not true. The table below displays the existing exchange rules.
While these rules are mostly straightforward, there exist a few hidden workarounds that can unlock additional JOINT benefits when exchanging an individual life or annuity policy. By knowing these rules, you can help your clients reach their goals and add value by being a subject matter expert!
Scenario 1 – Your client’s current life insurance or annuity policy has grown significantly, but now it’s time to think about taking income.
Josh (male, age 62) is the current owner of a participating whole life policy that was written on him as a child. His grandparents generously paid for a cash-rich paid-up policy that has grown over the years with dividends and paid-up additions. Josh now has other more cost-effective death benefit coverage inforce and is looking for alternative uses for his whole life policy’s approximately $500,000 of cash value.
He has looked into taking income tax free distributions from his whole life insurance policy but has heard horror stories about how unmanaged contracts can accrue large loans that must be addressed later, a risk he is not willing to take. Ideally, Josh would use this policy to create a floor of guaranteed income for him and his wife Beth (female, age 61). Having a guaranteed income base would allow his AgencyONE 100 advisor to invest his other assets more aggressively. Knowing that it is not possible to 1035 an individual life policy to a joint SPIA, Josh’s advisor gives AgencyONE a call looking for solutions.
The Workaround: Fixed indexed annuities these days often have optional lifetime income with the flexibility to elect lifetime guaranteed income when it best suits the client. The client can turn on the lifetime income stream immediately after issue or defer and let the annual income grow. Access to cash value, comparable payouts, flexible deferral, and higher commissions make such products attractive SPIA alternatives. An additional benefit is that the income rider can often pay based on joint lives when a spouse is listed as the sole primary beneficiary.
Options for Josh, the client:
Option 1: Individual indexed annuity with lifetime income rider – a $30,900 lifetime annual income amount is available immediately after issue – based on Josh’s life only
Flexibility to defer income and take a larger annual amount later (ex: $51,750 after 5 years; $75,600 after 10 years)
Retains access to policy’s cash value which continues to increase based on underlying index performance
Option 2: Individual indexed annuity with a joint lifetime income rider – $27,300 lifetime annual income amount is available immediately after issue – based on joint lives
Flexibility to defer income and take a larger annual amount later (ex: $46,350 after 5 years; $68,400 after 10 years)
Retains access to policy’s cash value which continues to increase based on underlying index performance
Because of Beth’s younger age and longer life expectancy, the couple ultimately chose option 2 which creates a lifetime income stream based on Beth’s age.
Scenario 2 – Your client’s current life insurance or annuity policy has grown appreciably but he has reached out to you and requested help minimizing the impact of the taxable gain.
Ryan (male, age 64) had a $25,000 windfall at age 30. On the advice of a family financial advisor, he invested the lump sum in a variable annuity and hasn’t thought much about it since. Now, at age 64 the cash value of the policy has increased to $250,000. He likes seeing the cash value number grow on his annual statements every year, but at the same time, the liability of $200,000+ of taxable gains has made him hesitant to take any action.
The AgencyONE 100 Advisor recalled a ONE Idea about how annuitieswith long term care benefits can potentially eliminate tax liabilitiesbut wonders if there is anything that can be done to provide joint LTC benefits for Ryan and his wife Sarah (female, age 65). The advisor knows they cannot directly 1035 an individual annuity to a joint annuity and reached out to AgencyONE for some additional solutions.
The Workaround: One of AgencyONE’s annuity/ LTC carrier partners has run into this situation before and developed a workaround that can provide joint long term care benefits. The new like-to-like policy was issued with the same individual owner and annuitant, but crucially with a provision to add Ryan’s wife, Sarah, as the sole primary beneficiary and as an “eligible person” for LTC benefits.
Options for Ryan, the client:
Option 1:$10,520 initial monthly LTC benefit with projected annual increases
Available for either or both clients (husband / wife)
Lifetime, uncapped pool of LTC benefits
All 3 options can potentially eliminate the income taxes otherwise due on gains when used to pay for LTC expenses.
Ryan and Sarah ultimately selected Option 3 – A Win/Win outcome! The AgencyONE 100 advisor’s solution addresses the issue of taxable gains in the policy – potentially eliminating taxes on the growth altogether! The solution also provides valuable long term care coverage for both Ryan and Sarah that they cannot outlive!
The AgencyONE Case Design team is well-versed in these options, rules, andworkarounds and available to assist you in looking for ways to help your clients turn old individual contracts into policies with joint benefits that better fit their current needs.
Contact AgencyONE’s Case Design Department at 301.803.7500 for more information
The more you know about the underwriting process, the better equipped you will be to address the questions that arise in underwriting life insurance protection today. Your FIELD UNDERWRITING expertise is even more important now in this age of electronic applications and Drop-Tickets. Your clients have high expectations and depend upon your knowledge to direct their unique medical and financial circumstances to the right carrier. The Underwriting Team at AgencyONE is here to address all your questions and concerns…and point you in the right direction.
This week’s ONE Idea on Coronary Artery Disease (CAD) is the first part of a 2-part series where we will discuss the basics of heart disease, the inherent risk factors underwriters assess, the methods for diagnosing CAD, and how an informed AgencyONE 100 Advisor and their clients can help to positively affect the outcome of their cases.
Coronary Artery Disease (CAD) is still the #1 Killer in developed countries. While the past 30 years have seen remarkable advances in the diagnosis, treatment and prevention of coronary disease, the single most important factor in longevity and survivability is….your client.
A very scary fact is that often the first sign of heart disease in an otherwise healthy individual is DEATH. Life Insurance Underwriters look at ALL the risk factors when reviewing insurance case files. While some people are predisposed to developing coronary artery disease due to family history, most of the other risk factors are tied to individual behavior. Behaviors CAN BE MODIFIED and may result in SIGNIFICANT BENEFICIAL EFFECTS.
We all know that the heart is the engine that pumps blood to the entire body, but we often forget that the heart has its own blood supply provided by rather smallcoronary arteries. A narrowing of the blood flow through any of the coronary arteries can lead to a Heart Attack (MI—Myocardial Infarction) which literally means Heart Muscle Death.
Cholesterol plaque buildup inside the coronary arteries is the culprit most of the time. This process can be slow to occur over decades. With people living longer, we are seeing more cases of previously undiagnosed coronary artery disease showing up with first-time symptoms in those over age 75.
RISK FACTORS ASSESSED
Family History – The one risk factor that you cannot modify is your genes…at least not yet! However, knowing that you have a family prone to heart disease can provide you with the knowledge and hopefully the time to modify your lifestyle and delay or prevent coronary artery disease.
High Blood Pressure – This condition is pretty easy to control with the medication options available today.
Cholesterol and Triglycerides – A healthy diet and exercise is a good start. Statin and other medication options today have also reduced this mortality risk factor.
Obesity – Do your clients know their BMI (Body Mass Index)? A person with a BMI equal to or over 30 is considered obese. Accumulation of fat in your body generally also means accumulation of fat in your coronary arteries…. a true risk factor.
Diabetes – Coronary Artery Disease and Diabetes are mortality multipliers – meaning life expectancy is potentially lower and the underwriting risk is higher when these two are tied together. Tight control of A1C values in people with Diabetes will slow the progression of CAD. New oral medications and injectables are making a positive impact on controlling Diabetes and Obesity, thereby lowering the risks of death from Coronary Artery Disease.
DIAGNOSING CORONARY ARTERY DISEASE
Resting EKG – This is the first line screening test. It is a simple test of electrical signals across the heart muscle. An abnormal EKG can lead to additional diagnostic testing as a resting EKG is really just a screening test. Life insurance companies have started to lean away from resting EKG requirements and are choosing a new blood test called NT-PRO BNP, a protein marker specific to the heart muscle. Elevations of this protein correlate with the heart working too hard.
Stress Test/Stress EKG/Treadmill – This is still an excellent step 2 test to identify the presence of Coronary Artery Disease. A rising heart rate during exercise shows a disturbance in the normal electrical conduction system when that area of the heart does not receive enough oxygenated blood, usually due to the narrowing of the coronary artery blood flow. Stress tests are generally performed WITHOUT dye. However, the use of radioactive markers and dyes during testing can be visually diagnostic and show areas of perfusion issues and whether or not the heart muscle is getting enough oxygen – a possible indication of coronary blockage.
Echocardiogram/Stress Echocardiogram – While Echocardiograms are excellent tools for “seeing” how the heart muscle and valves are working, a Stress Echocardiogram is a valuable tool that searches for Coronary Artery Disease by looking at wall motion of the heart muscle during exercise. Lack of oxygen or coronary blockage shows up as lower or impaired wall motion dynamics.
Chest CT Scans/Coronary Calcium Scores/CT Angiogram – With just 10-15 minutes in the CT scanner, doctors can visualize those coronary arteries for cholesterol plaques and have an extremely good indication of the presence and extent of any coronary artery disease.
Cardiac Catheterization – This is still considered the Gold Standard but there are risks associated with this course of action. Cardiac catheterization means threading a catheter into the coronary arteries and injecting dyes. This procedure affords the cardiologist the ability to treat Coronary Artery Disease with STENTS that open clogged arteries. Opening a narrow coronary artery with a stent can offer IMMEDIATE relief to the patient, return normal blood flow to that area of the heart, and often stop or prevent an infarction of muscle tissue.
CASE STUDY
Mr. Smith is 57 years old and recently had an Executive Physical exam with no symptoms. He is slightly overweight with a BMI of 36. The client had a routine “Total-Body” CT scan and posted a coronary calcium score of 144. A significant percentage of this is in the LEFT MAIN coronary artery. A follow up diagnostic test showed no major concerns from a cardiac standpoint.
The AgencyONE underwriting team and advisor discussed how the underwriting risk factors were going to be perceived by the carrier underwriters and how best to prepare Mr. Smith for the insurance exam and lab work. The client became actively engaged in the underwriting process and offered to go back to his cardiologist to specifically address some of the concerns that existed in the medical chart notes.
AgencyONE positioned Mr. Smith’s case with a carrier partner whose competitive guidelines for calcium scoring were in line with what we needed and negotiated a NON-SMOKER PLUS for $3.5 million in coverage.
Our next ONE Idea in April of this 2-part Coronary Artery Disease series, will take a deeper dive into CAD cases, discuss the medical and surgical management options we are seeing, and discuss more specifically the risks in underwriting Coronary Artery Disease.
As always, AgencyONE’s underwriting unit is here to answer your underwriting questions and help you better understand the diseases and risk factors underwriters assess. The more our AgencyONE 100 Advisors know, the easier it will be to prepare your clients for the underwriting process, and the more likely your case is to proceed smoothly and get placed at the right carrier for the best possible rate.
There is undeniable value and huge potential in doing policy reviews with your clients. This week’s ONE Idea drives that message home and is based on a case that resulted in success for both the client and the AgencyONE 100 Advisor.
Our advisor’s client, Mr. Smith, is an unmarried 49-year-old male with a current whole life policy. Unfortunately, the dividend projections on the policy will not be favorable for the near future and may impact the ability to reduce future premiums. The illustrated vanish – the point at which the dividends are high enough to cover the entire premium – is still a way off. As a result, the policy will require the client to continue paying premiums for many more years. After reviewing the policy’s annual statement and considering other options with his advisor, Mr. Smith asked if there was a way for him to stop paying premiums now. During additional fact finding, the AgencyONE 100 advisor discovered that Mr. Smith also has a parent who is currently on claim and using long-term care benefits. The client would like to see something that would cover Long-Term Care (LTC) for himself in the future, if needed.
Alternative Options to Inforce Whole Life Policy – 1035 with no Additional Premiums
Mr. Smith, a Georgia resident, is considered preferred best, has a 1035 of $384,000, and does not want to pay any additional premiums. Following are some options presented:
1035 only and solvefor the maximum guaranteed death benefit. AgencyONE showed the advisor a guaranteed VUL since they are the most competitive on single premium designs. The carrier provided a death benefit of $2,060,000 which is fully guaranteed for lifetime.
Addition of an underwritten chronic care rider. AgencyONE also suggested that $500,000 of the death benefit be used towards the chronic care rider. $500,000 of total benefit provides $10,000 per month for 50 months and lowered the death benefit solve to $2,028,000. Any LTC benefits used will drop the death benefit dollar for dollar.
The two options above are the quick and easy comparisons. Adding a Chronic/LTC rider can be a great way to provide living benefits along with the required death benefit. But… there are better ways to do this with a carrier who will split the 1035 into two contracts on the same client. This design is especially good for clients with larger 1035’s. Splitting the 1035 allows the client to fund two different policies that will complement each other.
Alternative Option – Splitting the 1035
In this scenario AgencyONE split $75,000 off the total 1035 ($384,000) to purchase a Linked Benefit Hybrid contract and used the remaining $309,000 to purchase a fully guaranteed policy with a death benefit of $1,658,000. Since this life policy does not have the chronic rider added, there will be no death benefit reduction from any future LTC claims.
The $75,000 paid-up Hybrid LTC contract is a true LTC contract with an indemnity payout. Since the client is younger, AgencyONE can start the benefit lower and add a 3% compound to the design to increase the benefit as the client gets older.
The hybrid/LTC policy buys an initial monthly benefit of $5,595 that increases annually with a 3% compound rider. It is a 6 year – 72-month benefit period with an available death benefit of $134,275 if the LTC benefits are not used. The graph below shows the guaranteed benefits available starting in year 1.
The hybrid/LTC product is a much better option for anyone who wants increasing future LTC benefits. There is also a surrender value available if the client chooses to walk away from the contract in the future. Where this contract really excels is in the monthly LTC benefit and total LTC benefit pool available. Remember, this is a monthly benefit for 72 months compared to the 50 months benefit available with the chronic care life insurance rider. The total pool available exceeds the life insurance starting in year 6 and the monthly benefit exceeds $10,000 in year 21. The benefit and total pool continue to grow annually for lifetime.
AgencyONE has two carrier partners who can internally split 1035’s for life and hybrid/LTC and a few other options for splitting 1035’s into two life contracts. Preliminary discussions must take place between AgencyONE and the advisor to determine the fact pattern details in order to provide the best possible value for your client.
This kind of insurance risk planning is made possible by advisors who maintain and foster relationships with clients, focus on policy reviews, and work with a BGA like AgencyONE that is customer service-minded and has a clear understanding of carrier solutions.
Please contact the AgencyONE Case Design Department at 301.803.7500 for more information or to discuss a case.
Evan does a nice job at saying “it depends”, gives us the math and then tells the story of a gentleman, who had $5MM of assets and no liabilities, who dropped “a significant amount” of life insurance. The gentleman later developed cancer and passed away. He states:
I have never known a death to be timely…
There is no mention as to whether the dropped insurance was term insurance or permanent and no reference to his age or general health. It is a sad story for sure and one that might have ended differently had there been a little more information and discovery than just an “on paper” decision.
I can hear the conversation and it probably goes something like this …
“You have $5MM of assets [assume qualified plans, real estate, non-qualified investments], no liabilities and with your Social Security benefits and investment accounts we can generate $X in income for both you and your spouse for the rest of your lives, assuming a “safe” 4% distribution rate. Our Montecarlo analysis shows a 90+% probability that you will never run out of money, and you should be able to leave a legacy to your children and grandchildren with the remaining assets. You don’t need life insurance so let’s drop it and reinvest the premium savings into your investment portfolio or use it for lifestyle spending”.
Evan’s own words are:
As I consider my own retirement and legacy objectives (now that I am 62 and my children are in their 30s), I ask myself a lot of questions, as I am trained to do. However, many people may not think about all the scenarios, and most of them involve some level of risk outside of just the investment performance and sequence of return (Montecarlo simulation) risk. The risk of dying too soon, the risk of living too long, the risk of getting sick along the way and the inevitable risk of transfer taxes.
Consider the following questions when contemplating the use of permanent life insurance during retirement:
1. Is 4% ofyour incomegenerating assets enough for you to live the life you want to live? Could you take more income at the risk of leaving less to your children\ grandchildren?
2. If you have a legacy objective (because NOT everyone does),could you spend more and replace the inheritance with life insurance? Permanent life insurance could be your permission slip to spend more during your life while having your children receive 100% liquid cash that is income tax free and uncorrelated to any other asset class. Life insurance does not care if “the market” (any market) is down 20% the day you pass away – the value of life insurance is always 100% of what you expect it to be.
3. Could you reduce the sequence-of-return risk during retirementwith guaranteed lifetime income annuities? A life annuity will never run out of money. It is, by definition, a longevity hedge, but it will cease to pay upon your (and\or your spouse’s) death. Could you replace those annuity assets with life insurance?
4. Inwhat order are you going to spend down assets? Qualified plans and annuity assets will be taxed to your children as ordinary income when they inherit the funds. Have you considered the reality that the IRS is a 40% beneficiary of those assets? Maybe more if you have a large estate and would owe estate taxes. How does that impact the value of your legacy assets? Could you use permanent life insurance to cover the taxes on this liability or possibly allow them to convert to a Roth IRA and have the insurance proceeds pay for the taxes on the conversion?
5. Do you have any charitable intentions? You could designate a charity, or a donor advised fund (DAF), as the contingent beneficiary of your qualified plans and annuities while replacing the assets to your children with tax free life insurance.
6. How much do you like those not so cute 35-year-old children? Do THEY have kids? Do you like THEM? I’ll bet you do. How much do you want to leave them? Could you use life insurance for that?
7. Are there any special needs or disabled grandchildren? Do you want to help your children with them?
8. What if you got sick and required home healthcare or nursing home care? Is that scenario built into the Montecarlo analysis? How will an illness impact your retirement income or your legacy assets if you draw them down to pay for care? Did you know that you could add a long-term care rider to a life insurance policy? Could life insurance proceeds replenish assets expended on elder care?
9. What about life insurance cash value? How does that play into your tax planning? Did you know that cash value grows free from income taxes? Did you know that distributions from life insurance during retirement could be taken income tax free if structured properly? Did you know that you could borrow from your policies at a very low cost to no cost. Imagine having your own bank where you could borrow money for that trip to Italy.
10. Did you know that if you really needed or wanted to, you could possibly sell your life insurance for a cash payment?
I could go on and on about why permanent life insurance has a place in your portfolio during retirement but don’t take it from me. Ernst and Young conducted a very thorough study and analysis entitled Benefits of Integrating Insurance Products Into a Retirement Plan. Their conclusion was that “permanent life insurance and deferred income annuities with increasing income potential outperform investment-only approaches in our analysis.”
Mr. Beach – I am sorry. You make some good points but your article was ultimately a promotion to do a needs analysis with your firm. While I applaud your theory and agree that this should be a deliberate and thoughtful consideration, the right answer lies in asking the right questions.
Please contact AgencyONE’s Marketing Department at 301.803.7500 for more information or to discuss a case.
The start of a new year is always a good time to reflect on the past and look ahead to the future in both the near and long term. When I reflect on recent annuity performance, an old adage comes to mind: “The best time to plant a tree was 20 years ago, the second-best time is today”. That quote feels especially poignant today when looking at the sharp rise in popularity and competitiveness of fixed annuities over the last year. The best time to buy an annuity might have been last October, but the second-best time very well may be today!
What’s happening with interest rates? The expectation among many economic punditsin the coming year seems to be reflected in fixed-rate decreases at most annuity carriers. At its peak, a 5-year MYGA could be purchased at an impressive 6.15%; the same product is now available at around 5.20%. While this may seem like a large decline, these rates are still some of the highest in recent memory – higher than at the same time last year and nearly 2 percentage points greater than the same time in 2022!
Product rates and features, while slightly down from recent highs, are still historically competitive. But that is only one piece of the puzzle. Much of the market optimism is driven by individuals who are retiring now, are planning for retirement, or are in the early stages of retirement. An InvestmentNews.com article dated December 18, 2023 reports that as many as 22% of Americans and 31% of Boomers who are still working plan to retire in 2024.
Let’s not forget that annuities are primarily an insurance vehicle. How should you position product features around client objectives to meet the needs of those who are around retirement age? Following is a quick refresher on key annuity product features, where the opportunities lie, and the talking points you might employ to show how annuities can help your clients succeed in retirement.
Income Annuities
Opportunities – Consider for clients who have benefitted from market rallies and want to lock in those gains in the form of guaranteed lifetime income. An old life insurance policy with more cost basis than cash value can carry over that original basis to reduce taxable portions of income.
Talking Points – The floor of guaranteed income that annuities offer may help your clients feel comfortable investing their other assets more aggressively – a plan that may potentially improve their overall portfolio performance. These annuities offer a guaranteed income that will last as long as the client or their spouse is alive. Clients can give themselves a raise every year in retirement with an increasing income option.
Opportunities – Ideal for clients who are looking for a safe place to park funds and earn a competitive return. Changing risk tolerance? Offer an alternative that is entirely predictable.
Talking Points – Clients can park their money for 3-7 years and lock in a 5.0%+ competitive guaranteed crediting rate with tax-deferred growth and have access to funds if a need arises. The product is available for clients up to age 90 with no underwriting.
Fixed Indexed Annuities
Opportunities – Consider for clients approaching or in early retirement who do not have the same risk tolerance that they once did. Can their portfolios weather a market decline, or would they benefit from the principal protection of a 0% floor and market upside?
Talking Points – S&P 500 caps are in the 10% range, which is still twice as high as a year or two ago. Uncapped accounts offer diversification and additional upside. Income Riders provide guaranteed competitive payouts with flexibility to activate a guaranteed lifetime income stream when the client wants, while still retaining access to cash value.
Long-Term Care Annuities
Opportunities – Consider for clients who have an inforce policy with significant taxable gains. They can potentially avoid future taxes on distributions by utilizing a policy with leveraged tax-free benefits for LTC expenses.
Talking Points – Guaranteed long-term care benefits can increase as the client ages or offer an unlimited total benefit pool.
Bottom line: Over the last year, our AgencyONE 100 advisors and their clients have become more active and knowledgeable in the annuity space. If you are still not talking to your clients about annuities in 2024, someone else will be. Continue toeducate yourself about annuities so that you do not leave opportunities on the table!
Please call AgencyONE’s Annuity Department at 301.803.7500 for more information
Economic predictions abound at the end of every year. Business owners create plans and strategies for the coming year based on their own predictions and, perhaps, those of others – the experts. We continue to hear and read varied business, industry, and economic predictions, but which are correct? No one knows what will happen until it happens, but it doesn’t stop people from making predictions. Even our own Gonzalo Garcia gets caught up in the game. His ONE Idea from January mentions how much he likes reading the speculations of financial pundits. They are entertaining and sometimes someone gets lucky and gets it right. Dennis Bartos also brought us a timely piece last month about a potentially serious condition that led the US Defense Secretary to go AWOL for a few days in January and find himself in hot water because of a hospital stay. Who could have predicted that?
We hope our latest ONE Ideas have offered you guidance, inspiration, and at least one idea. With that in mind, the following is a recap of our ONE Ideas for the month of January.
Our first ONE Idea for the month is from Dennis Bartos, PA – Prostate Cancer: Forget the Defense, Let’s Go on the Offense. With Defense Secretary Lloyd Austin in the news with a diagnosis of Prostate Cancer, Dennis thought it timely to discuss the condition. His January 12th ONE Idea explored the implications of the age of onset, types of testing, scoring, and treatment, and how the AgencyONE underwriting team underwrites the condition. The ONE Idea also shares case studies from the clients of our AgencyONE 100 Advisors. This highly informative article is a must read.
The second ONE Idea for January is from Gonzalo Garcia, CLU – A 2023 Review & 2024 Predictions – Why Not? His January 23rd article mentions how little we can know about the future and how difficult it is to control its outcome. Economic predictions are everywhere and while they are often wrong, these predictions are very entertaining and get people thinking and talking. Many make their living – and quite a good one – by reading the economic “tea leaves” or their “crystal ball.” Gonzalo highlights a couple of economists in the prediction business who he likes and “make sense to him.” He goes on to overview the 2023 industry and economy and makes his own educated predictions for 2024: Interest Rates, Premium Financing, Private Financing/ Split Dollar, Annuities, M&A Activity, The Sunset, Peak 65, The Great Wealth Transfer, The National Debt, and Politics & Regulation. Stay tuned to see if Gonzalo can predict the future!
We look forward to bringing our AgencyONE 100 Advisors support, exciting content, and events in 2024 that are designed to help grow your business and post another successful year!
Remember, you can find our most recent ONE Ideas under “Updates > Blogs”on our website homepage. Additionally, a full library exists on your personal Dashboard on our website under the Sales/Marketing tab (you must have a website login for access to the complete library). If you see a ONE Idea you like, we will happily brand it for your company. Just let us know.
AgencyONE provides these ONE Ideas to help you and your clients gain a better understanding of the planning, product selection, design, and underwriting that goes into the purchase of life insurance (with and without linked benefits), annuities and disability insurance. We hope you find these ONE Ideas helpful when assisting your clients with their financial, wealth, business, and estate planning needs.
It seems that this time of year, EVERYONE has an opinion about what will happen in the coming 12 months. I “love” reading all the financial pundits speculating on how the economy will perform and which direction the stock market is going, and by how much.
I received the adjacent chart from my personal financial advisor a few days ago and it made me realize just how little we can possibly know about and control the future.
Let me start by saying that those people who are so bold as to predict the future movement of the markets (or the economy) are either arrogant, clueless, or have some other agenda. But I ask myself: “Self? How can they be so consistently wrong?”
Well, they are not always wrong … sometimes they are just lucky. Sometimes it is just better to be lucky than good.
Then there are articles like the following from John Mauldin of Mauldin Economics. Mauldin has a very tempered approach in his newsletter and I find it an interesting read, but is his crystal ball any clearer than anyone else’s? Not likely, his agenda is to sell newsletters, subscriptions, books and promote speaking engagements.
So, if most predictions can’t be counted on, why am I even taking the time to make 2024 predictions? If nothing else, entertainment value. I love these sorts of articles – they make me smile 😊.
Speaking of smiling, I recently attended a Study Group meeting in New Orleans where I had the pleasure of seeing Peter Ricchiuti, Professor of Economics at Tulane University and Founder of Burkenroad Reports. Talk about taking the prediction business to a new level! This is a very smart man, and he takes the driest of subjects, economic and financial predictions, and makes them entertaining. If you want to see a master at this, click the picture just below to watch the video:
It is as if he doesn’t take himself seriously, but he makes a lot of sense to me.
ANYWAY … 2023 was an interesting year for the insurance industry and certainly for AgencyONE. Some key highlights that emerged from 2022/2023 that will continue to create both opportunities and challenges for 2024 are:
Higher Interest Rates – This was a big part of the 2023 story and had several notable impacts:
2023 Products – We saw some meaningful increases in interest rates on some products. Of note, the John Hancock flagship product, Protection UL, had several interest rate increases for both current in force and new policies. For those of us who have been in the industry for a while, we have seen decades of nothing but declining rates on current assumption products. This was great to see, especially from carriers that benefitted existing policyholders. There were also a lot of cap and participation rate increases on the IUL side from a variety of carriers. The same can be said in the Whole Life space with dividend increases. Overall, a great benefit to most life insurance customers.
2024 Prediction – Permanent Life insurance is a great stabilizing asset, it doesn’t matter what kind (UL, VUL, IUL, WL) and LIMRA expects 2023 to end in line with what was a record sales year in 2022. IUL premium softened through the third quarter of 2023, while policy count was up, which leads me to believe that the challenges in the Premium Finance market (see below) impacted the large case IUL market. Expect to see more of that during 2024 as interest rates stabilize at a higher level for premium finance loans. Interestingly, VUL sales were up 20%, driven by a small group of carriers and I am guessing they are John Hancock, Securian, Nationwide and Lincoln, among others. This is reflective of the emergence of these carriers offering GUL products on a VUL chassis. There are other carriers developing similar products as they look to appease the independent market’s addiction to the GUL space, so expect more of that. I also expect 2024 to continue to fuel the Whole Life space as dividend rates increased pretty much across the board.
Premium Financing – Ouch!Those customers who had rate renewals on their commercially premium finance loans saw interest rate increases of double (in some cases triple) the previous year’s rate. I remember in 2021 and into 2022 seeing premium finance rates from banks in the high 2% to low 3% range. New loans in the latter part of 2023 were being offered or renewed north of 7% in many cases. This was a huge shock to customers who had large loan balances and were paying interest to the banks. Cash flowing interest payments became a huge financial strain, and many clients were NOT happy, some wanting to get out of their transactions altogether.
2024 Prediction – While there are a lot of premium finance promoters still marketing their services, I don’t see this part of the market bouncing back in 2024. I think that the combination of higher interest rates and a down year for the S&P 500 in 2022, caused a lot of ZERO’s to be credited to IUL policies. The market took a hit as consumers realized a number of things:
1. The numbers don’t always look like the spreadsheet that was sold to them;
2. That cash flow is required to service these loans; and
3. Collateral calls can and do occur if the cash value doesn’t go up as illustrated.
Private Financing\Split Dollar – In January of 2022 the 7520 rate was 1.6%, while at the end of 2023 it hit 5.8% which put pressure on the financial objectives of some transactions. For term loans, the story was not much different. The Short, Mid and Long-Term AFR rates started in January 2022 at .44%, 1.30% and 1.82% respectively, and started 2023 with massive increases and an inverted yield curve at 4.5%, 3.85% and 3.84% respectively. Rates leveled off during 2023 and the yield curves flattened relatively but now show a bit of a “U” at 5.26%, 4.82% and 5.03% respectively. This also had an impact on transactions that use the Federal AFR rates such as GRATS, CRATS and other discounting strategies.
2024 Prediction – I have always said that I would rather pay myself or my family interest (such as in a private financing transaction) than pay it to a commercial bank. IRS-published rates are more attractive than commercial lending and for those who have the assets to do a private financing transaction, this may replace some of the lost premium from premium financing in the estate and wealth transfer market. I am also a big fan of Split Dollar, and we are seeing more and more of it as a tried-and-true strategy for estate planning and executive compensation. Finally, private financing transactions between the older generation and younger generation(s) are very attractive at many levels. I expect to see more and more interest in this space.
Annuities – If nothing else, this was the most meaningful market impacted by rising interest rates with sales shattering the 2022 record of $313 Billion. While final numbers are not yet reported, LIMRA was predicting over $350 Billion for 2023 and some experts are predicting another record year in 2024. I believe the experts, so I don’t expect the annuity rocket to slow down any time soon. There are other reasons discussed below that also play into this. If you are not offering your clients fixed-rate annuities, someone else will be, so don’t ignore this space.
M&A Activity – As the cost of capital rose, deals got more expensive for buyers and the market cooled with insurance brokerages as multiples came off their peak. M&A activity dropped by 17% according to Marsh, Berry & Co, LLC during 2023. Not much to say here, but as interest rate increases have subsided and the insurance industry has gotten a year older, many practitioners in both the retail and wholesale insurance business are looking to sell before the dry powder runs out in the Private Equity space.
The Sunset is coming, The Sunset is coming – As AgencyONE and many others in the industry have talked and written about, the Sunset Provision of the Tax Cut and Jobs Act of 2017 will take effect on January 1, 2026 – two short years from now. There has been heightened awareness of this amongst the legal, accounting, and financial services professionals during 2023, but clients still seem a bit non-plussed. People with a net worth of over the current gift and estate exemptions, which sits at $13.61MM for individuals ($27.22MM for married couples) in 2024, would be well served to begin taking advantage of the “gift” provided them by TCJA to transfer assets to younger generations during their life or to plan their estates to optimize wealth transfer during the next two years. You don’t have to be in that financial stratosphere, however. High net worth individuals with high incomes and many years left of compounding estates will be well served to do an estate projection and act before the end of 2025. Attorneys will be hammered and generally not as accessible as we get closer to that sunset. Additionally, expect higher income tax rates as well, as we revert to a maximum tax rate of 39.6% versus the current 37%.
2024 Prediction – This year and next will be very busy for those practitioners who call themselves estate and gift tax planning experts. Motivating consumers to see this for what it is, a massive tax planning gift that could benefit the next generation(s), will be the most important activity we can engage in. Income tax planning will also be critical and well-designed life insurance, as a tax-free bucket (either during life or at death), is an excellent tool in the toolbox.
Peak 65 – We have been saying for years that 10,000 Americans turn age 65 every day. Well, this year is different. That 10,000 number will increase to 12,000 in 2024. 4.4MM people will turn 65 in 2024. The impact of the aging boomers is extraordinary in so many ways, but the peak of the aging of America is occurring THIS YEAR! Think of the opportunities for longevity planning with guaranteed income annuities, for generational wealth transfer planning (which is further highlighted by the previously discussed Sunsetting of the TCJA), Long Term Care needs, business owner exit planning needs … I could go on and on.
2024 Prediction – I am so bullish on finding ways to advise aging Americans and there are so many needs that are largely unadvised and unfulfilled. I believe that the aging of America is going to hit us hard this year and offer financial security professionals a massive opportunity to help consumers in ways we never thought possible, specifically around longevity hedging with income annuities and morbidity hedging with some form of Long-Term Care solution.
The Great Wealth Transfer – Do you know what happens when the largest generation in the history of mankind (The Boomers) fall in love and start to multiply? Generation Y, affectionately known as Millennials, happens. The Boomers have also created the largest amount of wealth in history. This Millennial generation is now larger than the Boomers, as some Boomers have begun to pass away, and they are going to be the beneficiaries of the largest wealth transfer ever in the next 20-30 years. While Millennials seem face down into their phones or tablets for everything, study after study shows that they want and need advice from a real person.
2024 Prediction – This is a massive opportunity, but we must meet them where they are when delivering financial guidance. They know a LOT more than their parents (the Boomers) did at their age because of the way they consume information and you had better be prepared for that if you are advising this market segment. The amount of wealth they are going to inherit is staggering and we must help them plan their own financial lives and prepare them to be good stewards of this extraordinary gift.
Global Unrest – We now have two very visible wars going on in the world and there are many smaller skirmishes that nobody even talks about. The risk of continued war and unrest is high, and it puts a tremendous amount of pressure on the American people to support democracy around the world. Of course, this comes at a cost. I have no predictions on war other than to move on to my next point, which is …
The National Debt – Yes, we will continue to be the bullhorn for democracy around the world and we will continue to send money to Ukraine and Israel and other less significant but important democratic countries, but how do we continue to pay for this generosity? At 33+ trillion dollars of debt, interest rates up and a Congress that cannot get anything done, we are headed for a train wreck, or at a minimum, a higher tax environment.
2024 Prediction – Who knows? But, as a country, we are burdening our children, grandchildren and great-grandchildren with some very dire economic realities or staring down the barrel at a massive revenue generation effort by the Federal Government – otherwise known as higher taxes. We just cannot continue to move in this direction. That said, the insurance industry has one of the most favorable tax solutions at our disposal if Congress does not take it away. This tool, life insurance, also serves to create and provide liquidity with very favorable tax treatment. We need to continue educating consumers and look for new ways to distribute our products, solutions, and services. I see continued change in insurance distribution with more and more players and technology vying to get into our space.
Politics and Regulation – Yes, it is an election year and even the best prognosticators don’t know what is going to happen. I have no predictions and even if I had an opinion, this would not be the place to voice it. The bottom line – there will be a lot of continued divisiveness in politics regardless of the outcome of the election…and with that comes political agendas. More taxes, less taxes, more regulation, less regulation. Right now, all the noise is about the Department of Labor Fiduciary Rule and like our Congress, the divisiveness on this issue is enormous. Calling how we get paid to advise clients and other advisors on financial security should not be referred to as “junk fees”. As I have discussed before, the conversation should not be about commissions versus fees. It should be about acting in the best interest of the client and making appropriate recommendations for risk management and protection products AND providing diligent ongoing reviews and customer service. We have a big battle ahead of us on this one. Also, we need to keep an eye on the Long-Term Care mandates currently being reviewed in any number of states, California being the biggest. We don’t want a repeat of what happened in Washington.
2024 Prediction – I am not bold or arrogant enough to predict anything here, but I will conclude with this … If you look at all my previous points, you will notice that it is a VUCA world (Volatile, Uncertain, Complex and Ambiguous) and we must recognize that reality in order to better guide our clients on the crazy journey called life. Making predictions as to where the market is going and what is going to happen to the economy, or in our politics, is a fool’s errand. More and more, in a post-pandemic era, we are recognizing the possible value of the lessons that Mother Nature taught us and continues to teach us.
I truly believe that the opportunities ahead of the financial security profession are endless and we are at a point in history, demographically, economically, technologically, politically, and otherwise, where the VUCA-ness of life is overwhelming to our customers. The sooner we recognize this and empathize with that reality, the better financial guides\coaches we will be to them. Only then will we be able to be true fiduciaries.
I want to thank everyone who was a part of AgencyONE’s journey during 2023 and encourage those of you whom we have the honor of serving (and all financial professionals) to recognize that your clients need your sage wisdom and guidance – today more than ever.
With the Defense Secretary, Lloyd Austin, going AWOL recently with a newly diagnosed Prostate Cancer, it seems an appropriate time to visit the topic – Prostate Cancer, PSA readings and the life insurance underwriting concerns surrounding elevated PSA’s.
Prostate Cancer is the third leading cause of cancer deaths in men in the US. However, the very good news is that despite a prostate cancer diagnosis, only about 1 in 40 (very low risk) will actually die of the disease. What that means is that routine PSA testing is working and we are finding these cancers early. Yes, men should get PSA/ Free PSA routine testing.
This week’s ONE Idea will discuss things to consider when presented with a client who has had prostate issues.
AGE OF ONSET
Nearly every man over the age of 90 (almost 100%) will have prostate cancer present when they die, according to autopsy statistics. However, men are more likely to die WITH the cancer present than die OF the disease! This statistic shifts dramatically the younger we areand is in direct correlation with the levels of testosterone present at younger ages and diminishes as men get older. Testosterone is like Miracle-Gro to a prostate cancer cell so with testosterone levels falling off with age, the prostate cancer tumor cells grow much more slowly. Conversely, at younger ages with higher levels of testosterone, real mortality risk is present.
PSA
The PSA blood test (Prostate Specific Antigen) has been utilized effectively for decades as the best screening test to detect prostate cancer. Most men under age 70, will have PSA levels less than 3 but even up to 4 is considered normal. The ABNORMAL flag arises when PSA numbers are above 4.0. Every male above age 50 should have PSA and Free PSA testing performed at the same time as routine blood testing for comparison purposes moving forward.
FREE PSA
This blood test is often performed in tandem with the basic PSA screen. Free PSA breaks the total PSA into two component parts like total cholesterol testing that is broken into good (HDL) and bad (LDL) cholesterol percentages. The Free PSA component for a normal healthy male is 25%. Flags of concern don’t start until that number drops to 18%. So, the lower the Free PSA component, the more likely that a prostate cancer exists.
PSA VELOCITY
This term applies to the rise in PSA levels that routinely occurs as men get older and the prostate naturally enlarges (BPH-Benign Prostatic Hypertrophy). For ease of understanding, let’s say a male 60 has a PSA reading of 2.0 while the next year, the PSA reading is 2.5. A flag should be raised by a competent physician that, although the PSA level is still in the normal range below 4.0 as discussed earlier, this PSA velocity (speed of rise) year-over-year is a concern and should be investigated. In this example, the PSA velocity is 25% and a flag should be raised. That is exactly what happened in a case AgencyONE had last year with a very astute urologist in Pittsburgh.
THE DRE
The dreaded Digital Rectal Exam – a gloved finger examination of the prostate via the rectum. The prostate should be smooth and firm but in prostate cancer, nodules may be present, or the gland can feel boggy and enlarged. An abnormal DRE warrants further investigation by the doctor.
THE PROSTATE BIOPSY
If an elevation in PSA exists and the physician further screens with Free PSA testing or other diagnostic tests available today (like MRI), the next step could be a biopsy. The prostate gland is like a plum or apricot in size with two “lobes” and the urethra running through it. When/if the prostate enlarges, it can impinge on the urine flow through the gland (another topic for another time). In the case of a Prostate Biopsy, it is normal procedure to take 6 samples from each side of the prostate gland so 12 samples total from targeted and documented areas of the gland. These are called CORE SAMPLES and result in a pathology report for all 12 of these prostatic tissue samples.
GLEASON SCORE
The biopsy cells are graded on a scale of 1 to 5 as there are 5 very distinct cell patterns that occur as normal prostate cell tissue changes into tumor cells. The first score involves the predominant pattern of cells in the biopsy specimen. The scoring then takes a second step noting the second most prominent pattern and adds them together resulting in the TOTAL GLEASON SCORE. So, a male with a biopsy grade of 3 might have a SECOND most predominant pattern of 4 making a total Gleason score of 7 (3+4=7). A Score of 7 is a serious cancer. A score of 6 is less serious and more common. Higher numbers are worse.
TREATMENT OPTIONS
Prostatectomy – the surgical removal of the prostate does result in a second pathology report since the first report of Gleason Scoring was the result of just 12 biopsy probes. The Gleason Score on the final whole gland pathology can change for the worse.
Brachytherapy – Radioactive seed implants result in destruction of prostate cells from the inside out and have much less complications than the results of a total prostatectomy.
External beam radiation – Improved and better-focused medical technologies have created less complications with this course of therapy.
Active Surveillance – also called Watchful Waiting. This treatment option is noteworthy because a younger male, say age 60, with a low Gleason Score prostate biopsy might opt for no treatment since prostate cancers are slow growing and watching the PSA velocity may be the best course for a couple years. Additionally, there can be serious life changing complications with the treatment of prostate cancer, such as male erectile dysfunction. The second group of males – age 70 and over – seems to be the statistical cutoff line (the Defense Secretary is 70). Again, testosterone levels are falling so the cancer does not grow as fast and clients are likely to die with prostate cancer, not of it.
Underwriting a Watchful Waiting case can be challenging as many carriers prefer NOT to participate unless a definitive treatment has been chosen.
Case examples:
1. Mr. Smith, age 58, had an annual checkup 3 years ago. A lab panel was completely normal and included a PSA reading of 2.8. However, the attending physician APS notes indicated concern about his previous PSA reading of just 2.15. This .75 rise (PSA VELOCITY RATE) in Mr. Smith’s PSA reading warrants further investigation. The subsequent workup found a significant 4-core sample prostate cancer graded Gleason 7 (3+4). The client elected for removal of his prostate. No further spread was noted beyond the gland. AgencyONE was successful in negotiating a Standard Plus offer, and $4 million of permanent life insurance protection was placed for Mr. Smith.
2. Mr. Johnson is 64 years old and received a fresh diagnosis of Gleason 6 (3+3) Prostate Cancer in 2022. The client chose Watchful Waiting (active surveillance) which calls for follow-up biopsy checks, sometimes annually. In this case, Mr. Johnson underwent a one-year follow-up biopsy in December 2023 which showed a similar Gleason Scoring and no significant increase in spread inside the gland (core sample percentages). AgencyONE negotiated and received a STANDARD offer. The case is being finalized now at $7.5 million face.
AgencyONE’s breadth and depth of medical and underwriting knowledge and experience is a tremendous benefit to all of our advisors and their clients. We look forward to helping you with your 2024 cases and beyond.
Please contact AgencyONE’s Underwriting Department at 301-803-7500 for more information or to discuss a case.