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Best Practices

  • Lorman: “New Hurdles for Employers Who Obtain New Corporate Owned Life Insurance,” 2006-10-30

    Hurdles_employersThe Pension Protection Act of 2006 includes new rules applicable to employers who obtain life insurance policies, also known as corporate owned life insurance (COLI) on the lives of one or more of its employees. Under the new rules, the following requirements must be satisfied if the employer desires to exclude the policy proceeds from its income upon the death of the employee.
    Advisors need to be aware of these rules. Failure to satisfy the requirements will result in the policy proceeds being included in the employer’s income (except to the extent of the premiums paid by the employer). These new rules apply broadly to most corporate owned life insurance policies, including policies that are owned by and payable to the employer to fund deferred compensation payments or to fund equity redemptions at the death of the insured. The rules also apply to policies that are owned by an employer where the death benefit is payable to a designated beneficiary (although it is not clear how the rules would apply in that situation).

  • Comptroller of the Currency, Administrator of National Banks, “Insurance Activities: Comptroller’s Handbook” 2002-06-01

    comptroller_handbookThis “Insurance Activities” handbook booklet provides information for bankers and national bank examiners on the risks, controls and supervision of national banks’ insurance activities by the OCC. This booklet provides examiners guidance on performing appropriate assessments of risks to national banks from insurance activities, including a process that may be used in planning and conducting risk assessments. Because of the complexity and importance of the legal requirements associated with insurance activities, this handbook also contains considerable legal guidance.
    National banks have conducted insurance sales activities since the early 1900s. The types of insurance products and services offered and the associated distribution systems are changing significantly as this business line evolves. In recent years, national banks have engaged in insurance activities as a means to increase profitability mainly through expanding and diversifying fee-based income. Banks are also interested in providing broader financial services to customers by expanding their insurance product offerings.

Demographics

  • The Scan Foundation: “Growing Demand for Long-Term Care in the U.S. (Updated),” 2012-06-01

    ClarkeH6_The ClarkeSchool_DemographicsandLTC_Scan Foundation_Growing Demand
    This fact sheet describes trends that contribute to the growing demand for long-term care among Americans. The Scan Foundation anticipates significant growth in the demand for long-term care based on U.S. population is also living longer, often with chronic illness and disabling conditions. It is estimated that the long-term care need will increase from 12 million today to 27 million in 2050.

  • BISA: “Engaging Female Clients: An Industry Imperative,” 2013

    ClarkeH6_TheClarkeSchool_Demographics_Engaging_Female_Clients_2013By 2020, women are projected to control half of the wealth in the U.S. One driver for this is a dramatic increase in their earning power: four in ten women out-earn their husbands, representing an increase of more than 50% from just twenty years ago.

  • ESRI, Is “Seniors” One Demographic Group? An Analysis of America’s Changing Demographics, 2010-01-01

    seniorsWith over $2.3 trillion in disposable income, seniors are a force to be reckoned with. In 2000, the median age in the United States was 35.3 years. By 2010, this number had increased to 37.1 years. The population change for seniors, who are here defined as being 55 or older, is higher than the percentage change for the US population. For both boomers and seniors overall, their interests, social influences, goals, and preferences are very different from those of previous generations and among themselves.
    To succeed in today’s fiercely competitive environment, financial institutions must thoroughly understand consumer spending patterns as tastes and behaviors change and new products are introduced. Staying abreast of or even anticipating shifts in consumer spending patterns can greatly benefit those who are responsible for making strategic decisions about product and service development, site selection, merchandise mix, and marketing.

Products

  • The Scan Foundation: “Growing Demand for Long-Term Care in the U.S. (Updated),” 2012-06-01

    ClarkeH6_The ClarkeSchool_DemographicsandLTC_Scan Foundation_Growing DemandThis fact sheet describes trends that contribute to the growing demand for long-term care among Americans. The Scan Foundation anticipates significant growth in the demand for long-term care based on U.S. population is also living longer, often with chronic illness and disabling conditions. It is estimated that the long-term care need will increase from 12 million today to 27 million in 2050.

  • Life Health Pro: “Using Facts to Combat the Long Term Care ‘Self-Insurance’ Plan,” 2010-04-06

    ClarkeH6_TheClarkeSchool_IndNews_Using_Facts_Combat_LTC_Self_Insur_20100406Learn how to combat the “I’ll just self insure” objection.
    Americans are dramatically underprepared to pay for long-term care. According to the National Clearinghouse for Long-Term Care Information, 70 percent of people over age 65 will require some type of long-term care services during their lifetime. On average, care will be required for three years. While only one-third of today’s 65-year-olds may never need long-term care services, 20 percent will need care for longer than five years.
    Despite the proven need for coverage, LIMRA estimates that only about 7 million Americans have long-term care insurance. The U.S. Census Bureau estimates that, in 2010, there were more than 40 million Americans age 65 and older.
    Asset-based long-term care is a viable solution. Policies are built either on the chassis of whole life insurance or an annuity. Advisors can have a discussion with clients about their long-term care plans, or the nearly bankrupt state of the government, which may not provide for them.

  • Life Health Pro, “Embrace Asset-Based Long-Term Care Products,” 2013-11-05

    ClarkeH6_TheClarkeSchool_IndNews_Embrace_Asset_Based_LTC_Products _20131105Rate hikes and facts make long-term care products more viable than ever.
    While rate hikes in standard policies concern consumers, hybrids, riders and facts are driving the consumer to long-term care products.
    A great LTC feature is death benefit paid to heirs if the policy is not used or exhausted in entirety. Qualified assets in a portfolio can be used while maintaining their tax-favored status.

  • Insurance.com: “Baby Boomer Trend: Asset-Based Long-Term Care Insurance,” 2012-07-09

    ClarkeH6_TheClarkeSchool_IndNews_Baby_Boomer_Trend_LTC_Insur_20120709The American Association for Long-Term Care Insurance reports that buyers are getting younger, the majority now being under 65.
    Low interest rates may be driving the increase as consumers look for ways to get a better return and or use of their funds, and at the very least provide money to their heirs if they don’t need care.
    While combination policies have been around for 30 years, only recently have insurers enhanced and repackaged their offerings.

  • Forbes: “New and Unexpected Ways to Fund Long-Term Care Expenses,” 2014-04-21

    ClarkeH6_TheClarkeSchool_IndNews_New_Ways_Fund_LTC_20140421Long-term care planning is much more than just buying insurance. Less than 10% of people have a long-term care plan, and only 8% have long-term care insurance. Yet nearly 70% of people will need long-term care at some point in their lives.
    Discover how hybrid policies a combination of life insurance and long-term care policies bring new opportunities to funding long-term care expenses.
    Long-term care expenses can also be financed through a variety of newly developed “hybrid” or so called linked-benefit products. One method seeing tremendous growth and adoption is the life insurance policy that offers tax qualified long-term care riders. Life insurance policies can also be used to fund long-term care costs in a variety of other manners: withdrawals or policy loans, life settlement option, or a viatical settlement. Annuities can also be used to fund hybrid plans. Companies like One America offer fixed annuities with long-term care riders. An existing life insurance or annuity product can fund a hybrid product via a 1035 exchange.

  • American Banker: “Is it Time to Bring Life Back to Banks?” 2014-06-26

    ClarkeH6_TheClarkeSchool_IndNews_Is_It_Time_Bring_Life_20140626
    For the last 20 years, there have been marked changes in both banking and insurance. Some banks gravitated to auto and homeowners insurance, because they were straightforward, quick transactions.
    Some banks became interested in getting into the insurance business. Insurance providers used to lack innovation from both a product and technology basis. That has changed. Hybrid life and long-term care products are addressing client needs. Processing and underwriting is almost 100% electronic.
    Banks are experts at building relationships and that’s exactly what the insurance business needs. Both industries are similarly concerned with helping clients preserve and grow their wealth, and do so in highly regulated environments. The latest advancements in banking and insurance only enhance their compatibility.

  • Daily Finance: “9 Reasons You Should Take another Look at Whole Life Insurance,” 2014-03-05

    ClarkeH6_TheClarkeSchool_IndNews_9_Reasons_You_Should_Look_Whole_Life_20140305A properly designed whole life insurance policy can provide your clients with the ability to live the life they want.
    Lack of information can challenge a viable product in the marketplace. Properly designed, a whole life product can provide principal protection, annual guaranteed growth of money, non-taxable dividends, access to cash, death benefits and more.

  • Investopedia: “Let Life Insurance Riders Drive Your Coverage,” sourced 2014-09-14

    ClarkeH6_TheClarkeSchool_IndNews_Let_Life_Insur_Riders_Drive_20140914To cut premium costs, it is always a good idea to get a rider at economical rates. Riders provide several kinds of insurance protection. Of course, for that you have to meet the rider’s outlined conditions.
    This article delves into various types of riders and discusses the ways they can drastically affect the way you buy life insurance. It is a great tool to help clients consider eventualities and make appropriate decisions.

  • Fox Business: “The 9 Most Useful Life Insurance Riders,” 2011-02-35

    ClarkeH6_TheClarkeSchool_IndNews_9_Most_Useful_Life_Insur_Riders_20110525This is a great article that advisors can give to clients. Basically, it explains how life insurance riders offer flexibility, extra benefits, and peace of mind.
    It reviews different types of riders, including: waiver of premium, disability income, guaranteed insurability for declining health, term conversion, and accelerated death benefits.
    The article emphasis that there is no longer a one size fits all policy, making product knowledge imperative.

  • BISRA: “2012 Bank Life Sales Close to All Time High,” 2012

    ClarkeH6_TheClarkeSchool_IndNews_2012_Bank_Life_Sales_Close_2012This is the second highest product level in history for the bank channel with total life insurance premiums sold through financial institutions reaching $1,621 million in 2012, up 13% from the prior year.
    Banks continue to integrate wealth management products with single premium products “Since 2009, at least 9 out of every 10 dollars in new life sales premium sold in the bank channel has come from single premium products” stated Dan Beatrice, Associate Research Director at BISRA.

  • NASDAQ: “Is The Time Right For Income Annuities?” 2014-06-27

    ClarkeH6_TheClarkeSchool_IndNews_Is_Time_Right_Income_Annuities_20140627Industry experts expect the income annuities sales to double in the next 4 years.
    LIMRA Secure Retirement Institute says From 2009 to 2013, sales of SPIAs and deferred income annuities (DIAs) surged almost 40% to $10.5 billion.
    Growth is linked to the rising tide of retirees, who increasingly will lack a pension.

  • Wall Street Journal: “Long Derided, This Investment Now Looks Wise,” 2009-July-14

    ClarkeH6_TheClarkeSchool_IndNews_Long_Derided_This_Investment_20090724
    For years variable annuities were shunned for being too expensive, now they’re looking like they are a wise choice. Most annuities offer some form of investment guarantee for an additional fee. Because of such guarantees, many holders of variable annuities actually saw their accounts increase 6% or more in value last year, when the Standard & Poor’s 500-stock index dropped nearly 39%.
    Baby boomers find these products to their liking. Features like the “living benefit” eliminate the fear of out-living their income.

  • Wall Street Journal: “Variable Annuities and Guarantees Are Thriving,”2011-05-14

    ClarkeH6_TheClarkeSchool_IndNews_Variable_Annuities_Guarantees_20110514
    Diversifying Variable Annuities among carriers offers selection and protection.
    Using purchasing strategies like staggering and special riders, variable annuities come to the front of guarantee products.
    Client solutions go even deeper when adding in diversity among the different carrier products.

  • Investment News, “Indexed Annuities Gain Popularity While Rates Remain Low,” 2014-23-14

    ClarkeH6_TheClarkeSchool_IndNews_Indexed_Annuities_Gain_20140223Indexed annuities are becoming more popular.
    Indexed annuities are becoming popular with reps at broker-dealers and wire houses as a viable fixed-income alternative and a possible provider of lifetime-income benefits.

  • Investment News: “Guaranteed Features Propel Indexed-Annuity Sales,” 2014-06-06

    ClarkeH6_TheClarkeSchool_IndNews_Variable_Annuities_Guarantees_20110514
    Fixed-income alternatives offer firms more opportunities with more growth than CDs.
    Indexed annuities have been gaining popularity all year long as low interest rate CDs are less promising. Insurance sales agents account for the largest growth rate in the sector.

Annuities

  • NASDAQ: “Is The Time Right For Income Annuities?” 2014-06-27

    ClarkeH6_TheClarkeSchool_IndNews_Is_Time_Right_Income_Annuities_20140627Industry experts expect the income annuities sales to double in the next 4 years.
    LIMRA Secure Retirement Institute says From 2009 to 2013, sales of SPIAs and deferred income annuities (DIAs) surged almost 40% to $10.5 billion.
    Growth is linked to the rising tide of retirees, who increasingly will lack a pension.

  • Wall Street Journal: “Long Derided, This Investment Now Looks Wise,” 2009-July-14

    ClarkeH6_TheClarkeSchool_IndNews_Long_Derided_This_Investment_20090724
    For years variable annuities were shunned for being too expensive, now they’re looking like they are a wise choice. Most annuities offer some form of investment guarantee for an additional fee. Because of such guarantees, many holders of variable annuities actually saw their accounts increase 6% or more in value last year, when the Standard & Poor’s 500-stock index dropped nearly 39%.
    Baby boomers find these products to their liking. Features like the “living benefit” eliminate the fear of out-living their income.

  • Wall Street Journal: “Variable Annuities and Guarantees Are Thriving,”2011-05-14

    ClarkeH6_TheClarkeSchool_IndNews_Variable_Annuities_Guarantees_20110514
    Diversifying Variable Annuities among carriers offers selection and protection.
    Using purchasing strategies like staggering and special riders, variable annuities come to the front of guarantee products.
    Client solutions go even deeper when adding in diversity among the different carrier products.

  • Investment News, “Indexed Annuities Gain Popularity While Rates Remain Low,” 2014-23-14

    ClarkeH6_TheClarkeSchool_IndNews_Indexed_Annuities_Gain_20140223Indexed annuities are becoming more popular.
    Indexed annuities are becoming popular with reps at broker-dealers and wire houses as a viable fixed-income alternative and a possible provider of lifetime-income benefits.

  • Investment News: “Guaranteed Features Propel Indexed-Annuity Sales,” 2014-06-06

    ClarkeH6_TheClarkeSchool_IndNews_Variable_Annuities_Guarantees_20110514
    Fixed-income alternatives offer firms more opportunities with more growth than CDs.
    Indexed annuities have been gaining popularity all year long as low interest rate CDs are less promising. Insurance sales agents account for the largest growth rate in the sector.

Life Insurance

  • American Banker: “Is it Time to Bring Life Back to Banks?” 2014-06-26

    ClarkeH6_TheClarkeSchool_IndNews_Is_It_Time_Bring_Life_20140626
    For the last 20 years, there have been marked changes in both banking and insurance. Some banks gravitated to auto and homeowners insurance, because they were straightforward, quick transactions.
    Some banks became interested in getting into the insurance business. Insurance providers used to lack innovation from both a product and technology basis. That has changed. Hybrid life and long-term care products are addressing client needs. Processing and underwriting is almost 100% electronic.
    Banks are experts at building relationships and that’s exactly what the insurance business needs. Both industries are similarly concerned with helping clients preserve and grow their wealth, and do so in highly regulated environments. The latest advancements in banking and insurance only enhance their compatibility.

  • Daily Finance: “9 Reasons You Should Take another Look at Whole Life Insurance,” 2014-03-05

    ClarkeH6_TheClarkeSchool_IndNews_9_Reasons_You_Should_Look_Whole_Life_20140305A properly designed whole life insurance policy can provide your clients with the ability to live the life they want.
    Lack of information can challenge a viable product in the marketplace. Properly designed, a whole life product can provide principal protection, annual guaranteed growth of money, non-taxable dividends, access to cash, death benefits and more.

  • Investopedia: “Let Life Insurance Riders Drive Your Coverage,” sourced 2014-09-14

    ClarkeH6_TheClarkeSchool_IndNews_Let_Life_Insur_Riders_Drive_20140914To cut premium costs, it is always a good idea to get a rider at economical rates. Riders provide several kinds of insurance protection. Of course, for that you have to meet the rider’s outlined conditions.
    This article delves into various types of riders and discusses the ways they can drastically affect the way you buy life insurance. It is a great tool to help clients consider eventualities and make appropriate decisions.

  • Fox Business: “The 9 Most Useful Life Insurance Riders,” 2011-02-35

    ClarkeH6_TheClarkeSchool_IndNews_9_Most_Useful_Life_Insur_Riders_20110525This is a great article that advisors can give to clients. Basically, it explains how life insurance riders offer flexibility, extra benefits, and peace of mind.
    It reviews different types of riders, including: waiver of premium, disability income, guaranteed insurability for declining health, term conversion, and accelerated death benefits.
    The article emphasis that there is no longer a one size fits all policy, making product knowledge imperative.

  • BISRA: “2012 Bank Life Sales Close to All Time High,” 2012

    ClarkeH6_TheClarkeSchool_IndNews_2012_Bank_Life_Sales_Close_2012This is the second highest product level in history for the bank channel with total life insurance premiums sold through financial institutions reaching $1,621 million in 2012, up 13% from the prior year.
    Banks continue to integrate wealth management products with single premium products “Since 2009, at least 9 out of every 10 dollars in new life sales premium sold in the bank channel has come from single premium products” stated Dan Beatrice, Associate Research Director at BISRA.

Long-Term-Care

  • The Scan Foundation: “Growing Demand for Long-Term Care in the U.S. (Updated),” 2012-06-01

    ClarkeH6_The ClarkeSchool_DemographicsandLTC_Scan Foundation_Growing DemandThis fact sheet describes trends that contribute to the growing demand for long-term care among Americans. The Scan Foundation anticipates significant growth in the demand for long-term care based on U.S. population is also living longer, often with chronic illness and disabling conditions. It is estimated that the long-term care need will increase from 12 million today to 27 million in 2050.

  • Life Health Pro: “Using Facts to Combat the Long Term Care ‘Self-Insurance’ Plan,” 2010-04-06

    ClarkeH6_TheClarkeSchool_IndNews_Using_Facts_Combat_LTC_Self_Insur_20100406Learn how to combat the “I’ll just self insure” objection.
    Americans are dramatically underprepared to pay for long-term care. According to the National Clearinghouse for Long-Term Care Information, 70 percent of people over age 65 will require some type of long-term care services during their lifetime. On average, care will be required for three years. While only one-third of today’s 65-year-olds may never need long-term care services, 20 percent will need care for longer than five years.
    Despite the proven need for coverage, LIMRA estimates that only about 7 million Americans have long-term care insurance. The U.S. Census Bureau estimates that, in 2010, there were more than 40 million Americans age 65 and older.
    Asset-based long-term care is a viable solution. Policies are built either on the chassis of whole life insurance or an annuity. Advisors can have a discussion with clients about their long-term care plans, or the nearly bankrupt state of the government, which may not provide for them.

  • Life Health Pro, “Embrace Asset-Based Long-Term Care Products,” 2013-11-05

    ClarkeH6_TheClarkeSchool_IndNews_Embrace_Asset_Based_LTC_Products _20131105Rate hikes and facts make long-term care products more viable than ever.
    While rate hikes in standard policies concern consumers, hybrids, riders and facts are driving the consumer to long-term care products.
    A great LTC feature is death benefit paid to heirs if the policy is not used or exhausted in entirety. Qualified assets in a portfolio can be used while maintaining their tax-favored status.

  • Insurance.com: “Baby Boomer Trend: Asset-Based Long-Term Care Insurance,” 2012-07-09

    ClarkeH6_TheClarkeSchool_IndNews_Baby_Boomer_Trend_LTC_Insur_20120709The American Association for Long-Term Care Insurance reports that buyers are getting younger, the majority now being under 65.
    Low interest rates may be driving the increase as consumers look for ways to get a better return and or use of their funds, and at the very least provide money to their heirs if they don’t need care.
    While combination policies have been around for 30 years, only recently have insurers enhanced and repackaged their offerings.

  • Forbes: “New and Unexpected Ways to Fund Long-Term Care Expenses,” 2014-04-21

    ClarkeH6_TheClarkeSchool_IndNews_New_Ways_Fund_LTC_20140421Long-term care planning is much more than just buying insurance. Less than 10% of people have a long-term care plan, and only 8% have long-term care insurance. Yet nearly 70% of people will need long-term care at some point in their lives.
    Discover how hybrid policies a combination of life insurance and long-term care policies bring new opportunities to funding long-term care expenses.
    Long-term care expenses can also be financed through a variety of newly developed “hybrid” or so called linked-benefit products. One method seeing tremendous growth and adoption is the life insurance policy that offers tax qualified long-term care riders. Life insurance policies can also be used to fund long-term care costs in a variety of other manners: withdrawals or policy loans, life settlement option, or a viatical settlement. Annuities can also be used to fund hybrid plans. Companies like One America offer fixed annuities with long-term care riders. An existing life insurance or annuity product can fund a hybrid product via a 1035 exchange.

Retirement-Social-Security

  • New York Times, “Our Ridiculous Approach to Retirement,” 2012-06-21

    ClarkeH6_TheClarkeSchool_IndNews_Our_Ridiculous_Approach_Retirement_1118Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.
    For clients to maintain living standards into old age they will need roughly 20 times their annual income in financial wealth. If they earn $100,000 at retirement, they’ll need about $2 million beyond what they’ll will receive from Social Security. With an income-producing partner and a paid-off house, the need is less. This number is startling in light of the stone-cold fact that most people aged 50 to 64 have nothing or next to nothing in retirement accounts and thus will rely solely on Social Security.