Athene | FEBRUARY 2023
Rates are increasing on many Athene annuity Products. Applications must be submitted before March 3, 2023! Read More.
Rates are increasing on many Athene annuity Products. Applications must be submitted before March 3, 2023! Read More.
Annuity rates are increasing for certain MassMutual Products purchased after February 21, 2023. Read More.
Enhancements have been made to Allianz’s Risk Class Upgrade Underwriting Program. Read more.
For most people, the decision to buy life insurance often comes down to a choice between a term and a permanent policy. However, when presented with information on how both policies work, many find permanent life insurance much more appealing, especially when they learn about the potentially large cash value, growth opportunities, dividends, and other tax-favored benefits they can use while living.
Also, permanent policies are meant to last and not just for a specified time frame like a term policy.
But even then, the decision often comes down to cost. For the same death benefit, term insurance is less expensive. So, how can advisors address the cost issue to help get their clients what they really want? Here are three ideas:
Reduce Premium Costs with a Healthy Lifestyle
The Cost of Insurance (COI) is a significant factor in determining the premium amount. Fortunately, there is a way to reduce these costs. One carrier has a program that uses “health credits” to reduce the COI for people who do the things most of us do ordinarily, such as annual doctor and dental visits, regular eye exams, going to a gym, eating healthy, and walking, among other typical healthy lifestyle habits.
A healthier insured benefits the insured and the insurer with increased longevity, so the projected savings are passed on annually to those who maintain a healthy lifestyle. To encourage their insureds, the insurance company offers a free Fitbit or discounted Apple Watch, monthly grocery discounts, and much more. It’s a win-win for the insured and the insurer.
Reduce Premium Costs by Spreading Out the Death Benefit Payments
For many people, it may be preferable to have the death benefit spread over a period of time rather than taking it as a lump sum. That might b
e the case when the beneficiaries are younger or less financially responsible. That would also be more economically beneficial for the insurance carrier. Some carriers offer such an option and pass their cost savings onto the insured through reduced premiums or an extended death benefit guarantee. Not only can your client get the insurance they want at a lower cost, but they also have more peace of mind knowing their beneficiaries will responsibly receive the death proceeds.
Offer Permanent Policies that can Compete with Rated Term Policies
How about people considering a term policy who have been rated table D or lower? In many cases, the premiums are exceedingly high for temporary coverage. You can help your client obtain greater financial security by working with a carrier offering “good health credits.” Essentially, the carrier reviews the medical records looking for factors that substantiate the case for a lower rating if they choose a permanent policy. In some cases, the premium on a permanent policy can be very close to or less than the rated term policy.
Another idea is to “dial down” a permanent universal life policy so the guarantee mimics the term period while applying the good health credits. Again, this lowers the premium and increases the options for the insured. Being able to obtain permanent life insurance coverage for the approximate cost of temporary term coverage is an obvious win for the insured.
Bring More Value to Your Clients with Great Ideas
When buying life insurance, many people want a good deal. But more importantly, they want to address a critical issue with the best possible solution. You can either bring them a lower premium term quote or a thoughtful solution tailored to their needs and circumstances. That’s the value great advisors bring to their clients that make them stand out.
The internal sales team at FAIU is well-versed in these and other ideas and the carriers that offer them. Bring us your competitive cases and let us help you differentiate yourself as a true problem solver.
In recent years, financial advisors have struggled with introducing the issue of long-term care to their clients. Citing rising premiums and a general unwillingness among their clients to broach the subject, many advisors have grown reluctant to pursue the matter. This is despite the increasing threat of rising long-term care costs and the growing odds their aging clients will someday require some form of nursing care.
Every now and then, a rare window of opportunity opens for financial advisors to reach out to clients with a real solution to a financial problem most of them face—a chance to swoop in and help them avoid an inevitable assault on their finances. Most often, such opportunities result from a government policy threatening to raise taxes or impose costly regulations.
This time, it’s a state-level program that will force most people to relinquish more of their wages for mandatory participation in a state-run long-term care insurance program. While the program’s intent may be worthy—to ensure state residents have at least some protections against the rising costs of long-term care—its design and implementation are fraught with inadequacies typical of a government-imposed bureaucracy.
A case in point is the state of Washington’s WA Cares Act, which is due to become active in July 2023. WA Cares will require employers to withhold a payroll tax equal to .58 percent of employee wages to provide Washington residents with up to $36,500 of lifetime benefits to cover the costs of long-term services and supports (LTSS). That’s a lifetime benefit in a state in which the average cost of long-term care ranges between $3,800 and $6,750 per month!
By the way, the .58 percent payroll tax is uncapped, meaning that the higher a resident’s income, the more they will pay into the program for the same limited benefit. This tax rate is not guaranteed to stay level. It could easily be raised in the future.
While the window of opportunity for Washington advisors has closed, the concept is on the table in 17 other states that have introduced or are considering similar legislation, including:
California
New York
South Dakota
Minnesota
Michigan
Vermont
Pennsylvania
Maine
Illinois
North Dakota
Indiana
North Carolina
Colorado
Louisiana
Massachusetts
Connecticut
Virginia
Although there is no active timeline for a program to be implemented in any of these states (California, New York, and Pennsylvania are likely to be next), advisors don’t want to get caught flatfooted as they did in Washington, which offered a brief window of opportunity to purchase individual coverage that could qualify for the exemption. You can expect that the exemption for private coverage will have little or no window in other states. So, now is the time to start conversations with your clients.
With the opening of this window of opportunity, you’ll have plenty of resources and support from FAIU to help you start the LTC conversation with your clients. This report from NAIFA’s LTC center provides vital background information on the efforts by states and the federal government to launch government-run long-term care programs.
Insurance Advisors Are Sages, Not Salespeople
By Ken Shapiro, President
The insurance industry can be misunderstood. There’s an assumption people make that advisors are just salespeople trying to make a buck, and they can’t be trusted. In truth, anyone who has worked with a great advisor knows that advisors are far more sages than salespeople.
As an advisor, you play an important role in the lives of your clients. You’re a sounding board for some significant financial decisions that may affect not only your client, but also their children and grandchildren. You are playing an integral part in your client’s legacy planning.
As the needs and goals of your clients evolve, providing ongoing support and navigation is essential. It is in this process that trust is established. What an incredible honor and huge responsibility.
If you were just a salesperson in those moments, you wouldn’t be invited into their lives–at least not for long. Salespeople show up for a transaction and then disappear. A sage is a bringer of wisdom, someone who earns trust over the long haul by listening and by caring about their wellbeing, and in doing so, recommends the right solution for their needs.
In these uncertain times, you may feel pressure to switch into salesperson mode so that you can hit some home runs with your clients. Don’t fall into the trap of thinking that every interaction with a client needs to result in a home run. Instead, go back to the basics and focus on getting some solid base hits. If you just get your foot in the door and make someone a client with a basic term insurance policy–that’s reason to celebrate. If you get a referral from them, that’s another one. With clients or prospects, offer to conduct an insurance review.
By the time you’ve made a few base hits like this, you’ll have earned enough trust that you can build bigger solutions for them. It doesn’t have to happen all at once.
Remember–you’re a sage, not a salesperson.
Please see important dates for year-end business. Read more.