Mass Mutual | July 2022
MassMutual repriced its term life insurance to improve our competitive position in key areas while adjusting some products to improve profitability. Now, applications can be submitted for this new rate series. Read More.
Jess Guyer
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Prudential | July 2022
Prudential’s premium limits have increased to $5MM for all products EXCEPT SUL Protector in NY where the limit will remain at $2MM. Any premiums over these amounts will be eligible for our Product Profitability review process.
Lincoln | July 2022
Lincoln’s guidelines for nonmedical conditions that prompt the need for labs/vitals have been updated to offer consideration for more clients. For complete details, please review Lincoln’s Lab-Free Consideration Presubmission Qualification Guidelines.
Securian | June 2022
AZ, CT & IN to transition from SecureCare UL to SecureCare III, effective JUNE 27th.
This leaves DC, DE, ND, and SD as the only states left to transition from SecureCare UL to SecureCare III. These remaining states will transition in the coming months.
Key dates
- Friday, June 24, 2022: Applications for SecureCare Universal Life in AZ, CT and IN must be signed, in good order and received by Securian Financial’s home office or submitted via eApp by 3 p.m. CST.
- Monday, June 27, 2022: SecureCare III will be available in AZ, CT, and IN. To accommodate SecureCare III’s product changes, we will offer a new application
Transition rules
- All licensing and LTC certification training must be in good order before the sale of any LTC products. Review LTC licensing and training requirements in each state.
- Applications for SecureCare Universal Life in AZ, CT and IN must be signed, in good order and received by Securian Financial’s home office or submitted via eApp by 3 p.m. CST June 24. If a new application is needed due to a licensing issue or because the application is not in good order, the client will no longer be able to apply for SecureCare Universal Life and will need to apply for SecureCare III.
- If a client has already submitted an application for SecureCare Universal Life and started the underwriting process, but wants to switch to SecureCare III, the new application is required. This must be sent to us, along with a cover letter explaining the desired change. Any completed underwriting requirements will be applied to the new application.
- SecureCare Universal Life policies that have already been issued, paid and in-force cannot be exchanged for SecureCare III, unless the policy is in its free-look period.
Annuities: The Swiss Army Knife of Financial Planning
Due to rising interest rates, annuities are once again becoming a part of the conversation for financial advisors looking for safe-haven alternatives for their clients. Annuities are an attractive option for clients looking for competitive rates and guarantees. However, while advisors have always looked to annuities as investment return vehicles, their real value is their utility as planning vehicles. Annuities are the Swiss Army Knife of financial planning.
Here are five financial planning strategies in which annuities can play a critical role:
1. Legacy Planning
According to the LIMRA LOMA Secure Retirement Institute, 95% of annuities are never annuitized. This means they are not converted to a guaranteed stream of income and are instead passed through to beneficiaries as a death benefit. If that is your clients’ intent, why not add a death benefit enhancement rider, which could boost the death benefit by as much as 90%? The only caveat, is the beneficiary must take the proceeds over a five-year (or longer) payout.
2. Post-Retirement Health Care Planning
According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple will need approximately $315,000 (after tax) to cover their health care expenses. While Medicare should cover most health care costs in retirement, it is estimated that, on average, about 15% of a retiree’s annual expenses will go to health care. That includes Medicare premiums, copays, and deductibles.
The costs can be significantly higher for retirees earning more than $91,000 ($182,000 for married couples). The Income-Related Monthly Adjusted Amount (IRMAA) can increase monthly Medicare Part B premiums to as high as $578 or nearly triple the baseline premium. The IRMAA assessment is based on a two-year lookback of your Modified Adjusted Gross Income, and many are unaware of this.
One of the more commonly used planning solutions for covering health care expenses in retirement is to carve out a lump sum of money and place it in a deferred annuity.
3. Long-Term Care Planning
Not included in that $315,000 health care expense figure for retirees is the cost of long-term care, which can boost out-of-pocket costs by more than $50,000 a year. You can use the same planning approach of setting up an annuity dedicated to health care costs. Did you know that a Pension Protection Act (PPA)-compliant annuity could create as much as four times the benefit?
For example, by purchasing a $100,000 PPA-compliant annuity—or converting an existing annuity through a 1035 exchange—you can create as much as $400,000 as a long-term care reserve that can pay for qualifying extended care expenses with tax-free distributions.
4. Social Security Planning
Many retirees do not know about Social Security tax. That is the provision that allows the IRS to tax up to 85% of Social Security benefits when your gross earnings from all sources exceed $34,000 ($44,000 for joint filers). Income sources include retirement plan distributions (except Roth’s), dividends, capital gains, and even tax-exempt income—but not income from an immediate annuity.
Immediate annuities also deserve a closer look as rising interest rates translate into higher income payout rates.
5. Charitable Planning
Charitable gift annuities (CGA) have long been a preferred method for the charitably inclined. A CGA is set up as a contract with a 501(c)(3) charitable organization that guarantees to pay the donor, or annuitant, a guaranteed lifetime income in exchange for the remainder of the annuity. The charity gets immediate use of the funds, and the donor receives a current tax deduction on a portion of the gift.
First American Insurance Underwriters gives you access to all the top annuity providers. We also have in-house expertise to help you develop the best annuity solutions for your clients.
— By Ed Stone, LTC, DI & Annuity Specialist
Allianz | June 2022
Allianz Life Pro+ Advantage Fixed Index Universal Life Insurance Policy is now available on iPipeline’s iGo. We’re making it easier to do business with us, with quicker submitting and issuing of polices. Start submitting with iGo today!
Legal & General | June 2022
Effective August 1, Legal & General will no longer accept the traditional paper life insurance application (LIA). As of this date, these forms will no longer be accepted. All applications must be submitted digitally through our website. Read More.
CASE STUDY: Newly Diagnosed Diabetes and Anxiety
Client profile:
Male, age 48 looking for $2MM term life was recently diagnosed with type two diabetes and prescribed Farxiga a (very low dosage) with a 7.1 a1C. Secondly, he was also diagnosed with anxiety recently and was prescribed bupropion.
What were the challenges?
The advisor’s primary carrier offered at table 8. FAIU received 6 table 6 offers, 1 table 5 offer, 1 table 4 offer and an attractive two offer.
What was the First American solution?
Both the client and advisor were happy to accept the table B offer.
What was the outcome?
Annual premium (Banner Life) annual premium $6,268 table 2.
Have a similar client? Apply Today!
Disability Buy-Out: A Powerful Door Opener
Do you want to increase your share of the business market? How would you like to uncover solid cross-selling opportunities while positioning yourself as a valuable problem-solver? 3 words: Disability… Buy… Out
The Significance of Disability Buy-Out
Some business owners have a buy-sell agreement in place. It is a widespread practice where the partners or the business owns life insurance on the partner’s lives. If one partner dies, the death clause in the agreement triggers the payment of life insurance proceeds to the deceased partner’s family or estate for their share of the business. The remaining partners absorb the deceased partner’s share of the business.
But what if the partner does not die and instead suffers a permanent injury or illness?
Most people do not know that buy-sell agreements typically carry two clauses: a “death clause” as described above and a “disability clause.” In many cases, advisors sell life insurance to fund the buy-sell agreement’s death clause, but they neglect to fund the disability clause. This is a missed opportunity as the average person is six to seven times more likely to become disabled than they are to die during their normal working years.
When a partner becomes disabled and unable to work for an extended period, the other partners and the business face the same consequences as if the partner were to have died. A disabled partner still owns a share of the business and is entitled to its profits but cannot work to help generate those profits, placing additional stress on the business.
What They Do Not Know Can Hurt Them
Check your clients’ buy-sell agreements and if it does include a disability clause, it may contain language that requires the other partners to buy out the disabled partner after a period. If that is the case, where do they get the money to do so?
One simple solution is to fund the disability clause with a disability buy-out policy for each partner. A disability buy-out policy will compensate the disabled partner in one of three ways:
- A lump sum payable after one year of disability
- An initial down payment with annual installment payments over several years
- Scheduled payments for six or seven years
You Know Who to Target
Your top prospects for a disability buy-out are in your book of business—business owner clients with one or more partners. You may have already sold them life insurance to fund one of the clauses. HAs the other been taken care of?
Straightforward Approach
Ask just two questions to start the conversation:
- Do you have a buy-sell agreement in place?
- What have you done about the disability clause in the agreement?
This helps uncover many new opportunities as we are sure you will find many multi-owner businesses do have a buy-sell agreement, mostly unfunded for disability. Many are outdated and have shortfalls for both life and disability, and some are even incorrectly structured.
The primary reason for asking the first question is so you can ask the second question. Nine out of ten businesses have never addressed the possibility of one partner becoming disabled and unable to work. When you help them understand what the disability clause says and that the odds of a disability are far greater than death in their working years, it creates the opportunity for you to help them resolve this key area as a problem solver. This will help differentiate you by identifying problems they did not know they had and offering a solution and will also open the door to additional opportunities and referrals.
Working with First American Insurance Underwriters, we will help you find a disability buy-out solution tailored for your clients’ needs and circumstances. Reach out to us and we will find the best solution for you and your client.
— By Ed Stone, LTC, DI & Annuity Specialist
Nationwide | June 2022
Advisors can now earn up to 10% higher target premium on Nationwide New Heights® IUL. To qualify for the new target premiums, policies must be funded and in-force on or after June 13, 2022. Contact us to learn more.