Thursday, July 24, 2014

Turning RMDs into Income for Life

There are times when one-size-fits-all is filled with advantages, but in terms of retirement, most clients are vastly different from one to the next.

At 70½, people are required to take minimum distributions (RMDs) from their traditional IRA, 401(k) or from other qualified money. They’re expected to calculate and withdraw the correct amount on their own or face harsh penalties if it isn't done correctly or on time. Most retirees follow the RMD path, but the question is whether it is right for them.

There are several issues with the RMD path, as payments start small and gradually increase as a person gets older. This could lead to an increased risk of the person's accounts running out of money faster than they expected. Plus, most people don’t know what the next 10 years of their life are going to look like. A financial professional can step in and help their client mitigate the longevity risk.

One option is to consider rolling the IRA into a lifetime income annuity. This approach may provide a higher amount of income than a RMD and there’s joint life payout for family members.* This option also eliminates market risk and clients know exactly what they’re getting, so they can plan ahead.

Because retirement now tends to last 20 to 30 years, clients need to plan for the future. It may mean looking at opportunities to address the longevity risk and using a lifetime income annuity or deferred lifetime income annuity to remove the risk of running out of money.

Tom Hegna is one of the nationally recognized coaches in the Partners Advantage Advanced Coaching and Business Building program. He specializes in simplifying retirement strategies so producers don't have to sell - they just show. He has the unique ability to pump up a crowd and give them easily digestible strategies to complex issues, using a variety of financial vehicles, such as annuities and life insurance. Tom can help change the way you manage your book of business.

*Annuity features may vary by product and may not be available in all states.  Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.

This blog is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement.  Encourage your clients to consult their tax advisor or attorney.


Thursday, July 17, 2014

Medical Underwriting and the Law of Large Numbers

Although medical underwriting is an art, based on a science, the actual rate class assessments are derived from the actuarial analysis of the law of large numbers. When an underwriter is making a medical mortality assessment, they are basing their assessment on the underwriting manual that will provide the life expectancy of that applicant. The assessment is based on categorizing the medical points of the case and aligning them with other prior applicants who have had like medical experiences. When added to the vitals of a case (male, female, family history, etc.), this assessment is then based on the carrier’s mortality experience of that grouping.

As a result, you get table ratings and flat extras that indicate the percentage increase in mortality for applicants with like medical history. If an assessment of Table D or Table 4 is received, that assessment is indicating that when this applicant is grouped with past applicants with like histories, the mortality rate is 200% higher than an applicant who has an average or standard mortality. A standard assessment simply indicates that the life expectancy is neither increased or decreased based on the applicant’s medical history and their life expectancy is at a normal rate.

The good news is Partners Advantage offers you the benefit of an in-house underwriting team to help you better navigate the underwriting process. We can help you put your next case on the right road. Give us call if you have questions or need underwriting assistance. Learn about our specialty services here.

PAIS 01052114

Thursday, July 10, 2014

Understanding Simplified Issue, Guaranteed Issue and Non-Med

A financial professional must understand simplified issue products, guaranteed issue products, and “non-medical” so they can provide practical guidance to their clients, especially in regard to differences in policy types and when the products should be used.

Simplified Issue Products - These shouldn’t be used for an impaired risk applicant. While these products ask fewer health questions, it’s still designed to identify who has significant medical issues and who won’t qualify for the product. Carriers offer consumers rates from a table built into the product, making it easier to make an offer for those individuals with mild health impairment. If the situation or condition is rated higher than the product is priced for, the person is declined for the product. This doesn’t mean that the applicant isn’t insurable; rather it means that this insurance requires additional underwriting.

Guaranteed Issue Products – These types of products are available to most applicants, unless you’re living in a long-term care facility or a hospital. The face amount is generally low and no exams or health questions are required for the policy to be issued. Approval is given often in minutes, as the underwriting is automated and easily available for those between 40 and 80. The way this product works is the graded benefit is payable during the several years of the policy, based upon a return of premiums paid and the low percentage compounded annually for two-three years.

Non-Medical Insurance – This term means the product is underwritten without lab work or an exam being required to complete the process. Carriers check the MIB, MVR information, and pharmacy script check, as well as the medical answers provided on the application. At times, the carrier will verify details with medical records to further access the situation. You may also hear it referred to as a "non-med" policy.

PAIS 02051214

Thursday, July 3, 2014

Words Matter!

Selecting the right words to represent annuity concepts and products is crucial because people put different expectations and meanings on different words – it could mean the difference between a suitable and an unsuitable sale!

Here are NAFA’s top ten WORDS that MATTER:

  1. Insurance: Fixed deferred annuities aren’t investments. They’re insurance contracts promising that money will always earn some minimum interest at a rate created by the insurer or by changes within the market index. 
  2. Interest: Fixed annuities earn interest, but not “returns” or a “gain.”
  3. No Investment Risk: Annuities are insurance products, not investment products. The basic premise is their premium and prior interest are protected from negative results in the financial markets.
  4. Premium: It doesn’t matter where the money comes from to purchase the annuity, the money paid into it is called premium.
  5. Two Types of Annuities: Fixed and variable are two types of annuities, which are explained in the new NAIC Annuity Buyer’s Guides available at
  6. Interest Calculation: Interest-crediting methods vary among fixed annuities and clients can choose from a variety of declared or set-rate annuities and indexed annuities. 
  7. Certainty: Fixed annuities provide clients with the certainty of a fixed interest rate that’s added to the annuity’s account value.
  8. Safety:  Safety is exemplified through the guarantees provided by fixed annuities. During an  economic crisis and market volatility the account value will not lose value.  The product's guarantees are outlined in the contract with the issuing company and is backed by the strength and claims paying ability of the issuing insurance company.
  9. Protection: Fixed annuities provide financial protection from longevity risk. 
  10. Suitability: The Gold Standard of Suitability provides consumer protections by requiring financial professionals and insurance companies to put their clients’ interests first by making suitable recommendations. 

Fixed annuities aren't suitable for every consumer or every financial plan, but use WORDS that MATTER to protect against confusion, while also promoting awareness and understanding of benefits and possibilities.

This is adapted from NAFA Annuity Outlook magazine, "Words Matter," written by Scott Hinds, full article available here:
Used with permission from NAFA Annuity Outlook magazine.

This article is being provided to you by Partners Advantage Insurance Services, LLC. We believe this information to be reliable as of 05/08/14, but we do not guarantee the accuracy or completeness of the information.


Thursday, June 26, 2014

Hybrid Products Aim to Address Health Protection Needs

According to the U.S. Department of Health & Human Services, someone turning age 65 today has about a 70 percent chance of needing some type of long-term care.  And while one-third of today’s 65 year-olds may never need long-term care, there will be about 20 percent who will need long-term care support for longer than five years.

Although many consumers understand the need for protection, some may underestimate the costs associated with such care. After all, costs are high, as the national median cost of care in an assisted living facility is $3,500 per month, or $42,000 per year.  

Given this information, many financial professionals and their clients are searching for solutions to address this growing need. While many clients may understand the need for protection, some may be hesitant to purchase a product they may never use. Carriers are responding by developing combination life and annuity products, which are sometimes called “hybrid” or “linked-benefit” products. These include life insurance policies or annuity contracts that offer optional chronic illness or long-term care riders^ that:

  • Are guaranteed to derive a benefit.
  • Give clients the opportunity to tap into the life policy’s death benefit or an annuity’s value to address catastrophic health needs.
  • Allow clients to have income for retirement or leave a legacy if they don’t need money to supplement health-related costs.

Although hybrid products do not provide complete catastrophic health coverage, they do offer some protection on a more affordable basis. Many of these products and riders also have simplified underwriting, so no medical examination is necessary.

Among the most attractive features of a hybrid product combined with a rider is that it provides some protection to help pay for costly health expenses; yet, it also maintains the annuity’s value or life insurance death benefit if the funds are not needed to pay for health-related expenses.

^ With the purchase of any additional-cost riders, the contract's values will be reduced by the cost of the rider. This may result in a reduction of principal in any year in which the contract does not earn interest or earns interest in an amount less than the rider charge. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

  1. : U.S. Department of Health and Human Services,
  2. Ibid.
  3. Genworth 2014 Cost of Care Survey -


Thursday, June 19, 2014

Beyond “Checking In”: Keeping Prospects Engaged

A major component of any sales process is prospecting. But, the follow-up portion of the sales process isn't always quite as intuitive for many financial professionals.

Are you “touching base” with your prospects regularly? If so, how are you encouraging them to keep listening and take action? Instead of leaving vague voicemail messages that your prospects will quickly delete, provide some value or tidbit of information to help keep prospects engaged. Bestselling author and sales strategist Jill Konrath offers three focused strategies to assist you in keeping the sales process in tact :

  • Re-emphasize your value 

Remind prospects of how you are different and how you can help them. Touch upon a previous conversation by further addressing your prospects’ concerns.

Example: “Tom, during our previous discussion, you emphasized how important it was for your to ensure you didn’t outlive your retirement savings. I’ve helped several people who had the same concern. Let’s get together soon to discuss some potential strategies that may help you.

  • Share relevant insights and ideas

Prospects are interested in those who can assist them in improving their lives. Understand their concerns and share how you are committed to help them secure a better financial future.

Example: “Tom, I know you’re concerned about having a steady stream of retirement income. I’ve been thinking about potential strategies and some of these have already helped provide some of my clients with a reliable retirement income flow. Let’s chat for a few minutes and I can share these with you.”

  • Inform

Are your prospects wondering if they should continue taking your calls? Instead of just “checking in,” continue to inform them, so they will want to continue the conversation.

Example: “Tom, I understand that there are a lot of things to consider when building your retirement strategy. I thought you may be interested in this article on (relevant topic). Let’s set up a meeting to discuss and address some of your questions.”

  “3 Sales Follow-Up Strategies to Replace ‘Touching Base,’” June 2012,
The material from third-party sources is being provided as a service to you. Please note that the information and opinions included are provided by third parties and have been obtained
from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Partners Advantage Insurance Services, LLC. Financial Professionals should ensure they continue to follow the current policies on the use of any advertising, third-party materials and/or social media as required by your broker/dealer and/or the carriers that you represent.


Thursday, June 12, 2014

Map Out Your Marketing Calendar

Life changes quickly for all of us and you never know when a client or prospect might need your products and services. So you want to make sure you stay 'on their radar' and when a need arises - they think of you. Look for other events besides birthdays and anniversaries to send a note. If you see an engagement or wedding announcement, a Little League championship victory, or a business expansion, take the time to send a personal card, it will speak volumes. Events that are significant to your client’s lives are reason for celebration and your gesture and acknowledgement will set you apart from the crowd.

Plan out multiple ways to reach new prospects and deepen relationships with current clients. Send out a special note at Super Bowl time reminding clients that now is great time to score some touchdowns for their financial future! Hold a Saturday Open House for local Business Owners to network and learn about options and strategies to help them feel more secure about their financial future.* Take a few hours to plan out your marketing calendar for the year with communications that could include: press releases, newsletters, special events, webinars, and customer surveys. View a sample marketing calendar here.

*State insurance laws and regulations have different limitations on acceptable levels of gift and entertainment giving, with some of those limits being zero dollars.  It is your responsibility to check the laws and regulations of each state in which you do business to ensure you are in compliance with the specific requirements of those states. You must also comply with all requirements of all entities under which you are registered to do business.