Our Summer of '24 Blog features a variety of sales ideas, client materials, underwriting advice, and product insights to help you finish the year strong.  You'll find some of these ideas useful every day, and some of them worth keeping in your pocket for when you come across clients who have unique and specific needs.  We selected these six topics as most likely to set you apart from the competition, and to give you an edge as 2024 comes to a close.

Private Split Dollar

If your client's estate could benefit from a trust funded with life insurance, but they want to fund the policy while reducing taxable gifts, consider a Private Split Dollar arrangement.

Is a private split-dollar arrangement right for your client?  Consider a private split-dollar strategy if your client:

• Wants to minimize gift taxes.
• Wants the flexibility to recover the funds supplied to pay premiums.
• Has used up or doesn't want to use their lifetime gift tax exemption(s) and/or gift tax annual exclusions.
• Wants to leave a larger legacy to their beneficiaries.

Click here for Symetra's Private Split Dollar Consumer Brochure

Mirrored Loan Strategy

Clients who own their business often resort to loans as a source of working capital.  And, in recent years, a line of credit has been an appealing source of funds, providing access to loans at what were often very favorable interest rates.

But the loan interest rate scene has changed, and not for the better.  A variable interest line of credit that started at 2% or less several years ago might be pushing 7% or higher today.  And that kind of "rate shock" can turn what was positive leverage into a capital-eating nightmare.

But for business owners with sizable permanent cash value life insurance policies, there is often an attractive alternative:  Borrow from their policy and pay off the commercial loan.  If the policy loan rate is favorably lower, the problem may be solved.  But what if the policy loan rate is variable as well?

The ultimate solution?  Find a more suitable product that solves your client's problem.  Through a 1035 exchange.

Click here for Prudential's Case Study on How Mirrored Loans May Help

Business Owner Insights to Help You Plan For the Future

Principal asked what's on the minds of business owners, like you.  While business and financial planning may not always make it to the top of your client's to-do list, putting plans in place may be easier than you think.  Inside Principal's 2024 Business Owner's Insights, you will find:

• Snapshot of Top Priorities and Realities
• Are Your Priorities Similar to or Different from Your Peers?
• Do You Have the Right Team Helping You?
• What Are the Next Steps?

Click here for Principal's 2024 Business Owner Insights to Help You Plan for the Future

Underwriting Updates - Summer 2024

Substituting a Recent Physical Exam in Place of an Insurance Exam

Several companies have come out with programs that allow an applicant to use a recent, complete physical exam in place of an insurance exam and lab.  These are physical exams that include an applicant's personal history, review of systems, vitals, blood, urine, and EKG.

Death benefits allowed under some of these programs can be quite generous with amounts up to $65 million, which makes them useful for even your largest cases.

While carriers may advertise these programs, they don't always indicate whether a case they receive qualifies for their specific program.  In view of this it is extremely worthwhile to ask the carrier(s) upon case submission if they will accept an applicant's recent exam results in place of an insurance exam.

Carriers participating in these programs include John Hancock, Lincoln, Nationwide, Pacific Life, Principal and Prudential.  There are also other carriers that allow exam substitution but don't necessarily publish a program, so it's always important to ask if an applicant's recent complete exam may be used to forgo an insurance exam.

Microdosing

Microdosing is where one takes a small does of a drug that is below a hallucinogenic amount. The drug used is typically a psychedelic drug, which is said to have several positive effects for mood, creativity, treatment for depression and other mental health issues.

Currently there is a lot of debate on whether this practice is safe or effective in the long term.  Carriers are challenged to underwrite cases where microdosing is indicated on application or in the medical records. Most often these cases are turned down.

If you encounter an applicant who microdoses, the best course of action is to determine the reason(s) for doing this, collect medical records and then have a discussion with the carrier upfront prior to application submission.  One needs to consider the entire case and applicant details to determine if coverage is possible and on what basis.

Coverage on People who Work in the Marijuana Industry

It's been a struggle to find carriers that will allow coverage to be written on someone who is employed in the marijuana industry, for either personal or business related coverage, even though several states and the District of Columbia have legalized recreational use and possession of marijuana.

However, there is some good news to share!

New York Life (NYL) is now considering potential insureds who work in the marijuana industry, including those whose only income is marijuana related.  In addition, there are no additional restrictions or limitations on product or face amounts.  Although NYL does impose minimum premium requirements

Cases are considered on a case-by-case basis and there are several requirements to provide before an application can be taken

Click here to see what's needed "up front" to consider these individuals for coverage.   NYL will vet these situations closely for acceptance.

Accelerated Underwriting Update

Accelerated Underwriting models have become commonplace in the life industry, with most carriers now offering or considering these models.  Many of these programs have been present for quite some time, and in view of this the life industry has learned a few interesting things about them.  A 2024 article published by RGA reinsurance company titled "RGA : Accelerated Underwriting Analysis: Examining Today's Accelerated Underwriting and its Bright Future*" helped to shed light on some of these learnings.

Here are a few of their findings of interest:

• Acceleration rates vary from 10-70%, with average rates in the 40-50% range
• By forgoing exams via the accelerated process, there has been excess mortality which carriers' term "mortality slippage."   The authors indicate mortality slippage occurs primarily with lower face amounts of less than $500k, with mortality rates at 120% of expected.  While face amounts greater than $500k have better than expected mortality, with rates in the 80% area. In addition, females have much lower mortality slippage than males, with female mortality being 40% lower than expected.  Whereas males have a 40% increase in expected mortality.
• Not surprisingly, there is lower acceleration numbers and greater mortality slippage at higher ages due to medical impairments which are more common at these ages
• Common tools used in accelerated underwriting include pharmacy records, MVR, MIB and ID verification.  Other tools include credit data, clinical labs, medical data, credit data, and combination scores for credit and medical data
• Carriers are further focusing on a few key types of tools already in use to further enhance their accelerated underwriting processes.  These include clinical lab data, medical claims data, and electronic health records

We will continue to monitor these and similar programs and update you as new information becomes available

* RGA : Accelerated Underwriting Analysis: Examining today's accelerated underwriting and its bright future, January 2024, Taylor Pickett, Actuary, Pricing, US Individual Life, RGA, and Christine Kachelmuss, Associate Actuary, RGA

New Buy-Sell Strategies and the Connelly Case

The Connelly case upended almost 20 years of traditional buy-sell stock redemption planning.   As a result, clients and closely held business owners in your orbit will be looking for advisors to craft new business continuation and buy-sell agreements, funded by life insurance, and structured to shield the value of life insurance proceeds from their estates.  Mass Mutual has developed a comprehensive set of resources as a guide to the next steps for you and your clients.

Business Owners:  Check Your Buy-Sell Agreements

Buy-Sell Planning:  Strategies for Competitive Businesses

Wait and See Buy Sell Arrangements

Trusteed Buy-Sell Arrangements

Unique Term Products and Features to Help You Close the Sale

Not all Term Life Insurance is created equal.  Sure, there are features that most have in common:  a fixed duration, some kind of conversion option, a limited conversion period, a few optional riders, and very low prices when comparing premiums on day one with permanent insurance products.  But even though "Plain Vanilla" is the most widely available Term Life flavor, not all your clients have "Plain Vanilla" needs or goals.  So here's a quick rundown of unique Term products and features, and a link to a handy reference chart that's up to date as of August 2024.  To keep in your back pocket, when you meet a prospect who wants "Neapolitan."  With sprinkles.

• Conversion contract language that guarantees the right to convert to any product currently offered (Nationwide, Prudential, Penn Mutual)
• Chronic illness and Critical illness Living Benefits Riders (Ameritas, Corebridge, National, Nationwide, TransAmerica)
• Partial conversions of a portion of the Term death benefit (All carriers)
• Business-owned Market Riders – Salary increase and Business Value increase riders (Principal)
• Chronic Illness Rider that can be converted to a permanent product (Protective, Securian)
• No Minimum Conversion period – Ability to convert at any age (New York Life, Securian)
• Single life Term to Survivorship Life – See Chart
• Choice of Term duration – Select-a-Term (Corebridge)
• Alzheimers accelerated death benefit rider (National Life)
• Child Rider Post-Issue (Pac Life)
• Additional/Other Insured Rider (Mutual of Omaha, Symetra)

Need more?  Contact Windsor and we'll find the Term product that's right for you and your client.