The Weekly Brew- Covering LTC costs

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The Weekly Brew-Pension max

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Double Shot February 2017

 

 
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Changes

In our industry there is one time that our clients should always be ready to talk. When life is changing then it’s time for financial plans to change as well.

Some of these changes are obvious. The passage of time gives lots of reasons for a financial review. Big events such as getting married or becoming a parent or homeowner for the first time are clear reasons to review your coverage and should prompt a discussion with ease.

Less dramatic changes, however, also warrant looking at your plans and making sure that they are still working for you. Having a second child might not necessarily prompt a full financial review, even though all the costs of child rearing and education have essentially doubled.

Another point in our lives that warrants a financial review is change in employment. Any change really should prompt a discussion. With a new position comes new salaries, new challenges, potentially new costs, and even new risks; without a professional staying in front of clients’ ever changing needs opportunities could be missed to maximize benefits and minimize costs.

As one of our own is moving on to new horizons I want to remind all of our readers that change can be exciting and scary, but it should be a reminder to be conscious of the decisions we’ve put on autopilot and to make sure that our needs are still being met.

 

 

 

 

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Are your LinkedIn settings working for you?

In the social media world we live in today, it is important to stay on top of the latest trends, updates and features of the tools you are using to market yourself on the web.  LinkedIn is a fabulous tool with more features than you probably even realized.  If you’re like me you probably created an account years ago and just started connecting with your friends, similar to Facebook.  It wasn’t until I got the opportunity to really dive into all that LinkedIn has to offer that I realized what an amazing tool this is!  In my next few blog posts I will be going over all things LinkedIn.  For today, lets discuss your settings, as this section has recently gone through some renovations.

Having your settings adjusted the right way for you is an important thing that many overlook or don’t take the time to do.  We all know time is money and you want to do what you can to avoid wasting time on some of the least important features of LinkedIn and focus that time on the potential money maker features to improve your efficiency.  Let’s take a look at some ways to adjust your settings to help with this.

1.) Reduce the type and frequency of inbound LinkedIn emails.  A way to help declutter your inbox!?!  This is probably something we all want.  Not all notification emails are pertinent to your success on LinkedIn.  They have eight major email notification categories and if you have never gone in and changed from the default, you might be getting more in your inbox than necessary for your day to day activity.  To update, Go to your settings by scrolling over your photo on the top right of the page.  Select “Privacy & Settings” then “Communications”, then “Email Frequency”.

LinkedIn

One important section to look at here is the “group updates”.  There are a lot of benefits of being in a lot of LinkedIn groups that we will go over in a future posts.  However, receiving email updates on all the groups all the time can be a bit overwhelming.  You have the option to choose how often, if at all you want to be notified from these groups.

2.) Decide who you’ll allow to send you invitations to connect.  If you are getting bombarded with invitations to connect, you may want to limit who is able to request a connection with you.  Again, this is through “Privacy & Settings”, “Communications”, then “Who can send you invitations”.

invites

3.) Limit how much, if any, of your profile is visible to the general public.  When someone does a “Google search” of your name, your LinkedIn profile usually comes up very close to the top.  You have the option to adjust your settings to display all, some, or none of your LinkedIn profile in an internet search.  Again, go to “Privacy & Settings”, “Privacy”, then “Edit your public profile”.

profile

4.) Become invisible when you are “stalking” others.  I’m sure you’ve seen the Who’s Viewed Your Profile feature on LinkedIn that is now one of the top rated features provided.  Did you know that you can make yourself anonymous when you are checking out others profiles?  You can change this temporarily or permanently in settings.   Go to “Privacy & Settings”, “Privacy”, “Profile viewing options”.

privacy

5.) Tell LinkedIn you really don’t want to hear from them.  Every time you sign up for something, they ask you if you want to receive newsletters, special offers, etc.  LinkedIn has a similar feature.  You can turn on or off receiving announcements, partner announcements, or invitations to be involved in research.  This is found under “Privacy & Settings”, “Communications”, “LinkedIn messages”.

6.) Stop LinkedIn from using you as an advertising subject.  Did you even know that they were doing that?  Unless you tell them otherwise, they can use your photo.  Go to “Privacy & Settings”, “Privacy”, “Data Privacy & Advertising”.  Make sure to review all the default settings and change those you need to.

advertising

7.) Don’t let your network know when you are changing your profile.  Did you ever have someone congratulate you on a new job via LinkedIn when really you have been at the job for months or even years, but are just now getting to updating your LinkedIn profile?  This can be avoided by changing the default settings.  Especially if you are making lots of changes to your profile, you might want to think about at least temporarily turning this setting off.   You can do so by going to the right-hand column of your profile and sliding over the button from “Yes” to “No”.

profile2

8.) Hide your connections’ updates individually or forever.  You have the option to hide your connections updates if you no longer wish to see them in your home feed.  Simply select “Hide this particular update” from the drop-down menu from the down arrow on the top right of the update.

updates

I hope that these simple steps help you on your way to becoming  more efficient in the LinkedIn world and help you focus on activities that will lead to better business and greater success.

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NAVIGATING VETERAN’ BENEFITS

As the number of veterans separating from service increases year over year, I foresee a need for advisors to become more adept in navigating veteran’s benefits alongside their clients.  Additionally, there are some benefits that active service members are entitled to that are prudent for financial advisors to keep in mind.  Over the course of my next several blogs, I will introduce several of those benefits.

In this post, I will talk about the various life insurance benefits available to service members and veterans and most importantly, I will demonstrate how to protect your client’s insurability.  This conversation is geared more towards the client who is National Guard or Reserve as they are who you are more likely to have as a client.

Every member of the National Guard or Reserve who is activated and deployed is eligible for Servicemembers Group Life Insurance (SGLI) for the duration of their activation/deployed.  They do not have to be deployed overseas for this benefit, they just need to have active duty orders.  SGLI has a base death benefit of 50K and go as high as 400K.  As a veteran myself, I always elected the highest death benefit of 400K because it was cheap and it was going to my family in place of me should I die in combat and I wanted them to remember me fondly.  Now for some strange reason, I was the statistical outlier in that regard.  In most cases, many of the soldiers in my unit, to include those who were married with children, didn’t elect more than the base amount.

Remember, this is a conversation about protecting insurability for the future.  Let’s say that you have a client, SSG Smith from Antigo, WI.  SSG Smith is a Cavalry Scout, a dangerous job and should he be deployed with the Wisconsin National Guard it is very likely that he will be in harm’s way on a daily basis.  SSG Smith’s unit receives orders to activate and deploy to Southwest Asia in support of current operations against ISIS.  Before he deploys, he sits down with you to make sure that all of his financial matters are squared away.  During the conversation, you ask SSG Smith what death benefit he elected for his SGLI and his answer is 100K and you take that as a good answer and move on to another topic.  Here’s where we dig into that protecting insurability conversation, he needs to elect that 400K and here’s why:

  • SSG Smith deploys to Al Asad Air Base, Al Anbar Province in Iraq
  • During his deployment, SSG Smith hits an IED while on patrol
  • Thankfully SSG Smith survives, but due to the force of the blast he now Traumatic Brain Injury
  • SSG Smith re-deploys to Wisconsin and after therapy he heads back to work
  • Six months after going back to work, he starts to suffer from PTSD
  • Simultaneously, his construction company with his brother is growing and he needs both personal and business insurance
  • Due to his history of TBI and recent diagnosis of PTSD, SSG Smith is not a great insurance risk, the best offer we could find was Table 6
  • This is bad news, because this out of range of his budget for both his business and personal needs
  • This isn’t 100% bad news because he has 100K in SGLI coverage that is convertible to Veterans Group Life Insurance within 1 year and 120 days of separation from active duty and if converted within 240 days, he does not need to answer health questions. In addition, both SGLI and VGLI are fully convertible to permanent coverage offered through several carriers
  • 100K is better than nothing, but wouldn’t it be great if he had more insurance?

This is why it is crucial that service members deploying elect 100% of the coverage that they are eligible to receive.  The cost is nominal, and if they deploy and return with no issues it won’t have caused a financial burden.  However, if they deploy and return with issues that affect their insurability, it is an invaluable benefit.

 

In addition to SGLI and VGLI, members of the Wisconsin National Guard have access to an additional benefit, Group Term Life Insurance for Wisconsin National Guard Servicemembers which offers up to 45K in additional term coverage and if convertible to a New York Life whole life policy.  If, SSG Smith elected this coverage in addition to his 400K of SGLI, he’d have 445K of total death benefit that could be converted to permanent insurance.  Because of foresight and planning, his insurability was protected and he has options that he would not otherwise have.

 

A summary of each benefit can be found here:
SGLI

 

VGLI

 

SSLI (National Guard)

 

 

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Piecing together a contract

 

Lately I have received several questions about why certain elements of a contract are required. It may seem tedious to worry about all these details but without an approved contract there is no business. Since this is not an everyday occurrence for most of us I have compiled a list of what is necessary and why.

Carrier specific contracting paperwork is always required. This is where signatures and all of your personal information will be compiled. The contract will also include any provisions that the company has for you to write business with them. Knowing what sort of contract you are entering into is generally wise and I personally would take the time to go through the provisions of any agreement I was entering into just for my own peace of mind.

A copy of your insurance license for all states where you would like to write business with this carrier will speed along the process. Your resident state should always be included and additional states can be added as necessary. This can often be acquired by the carrier or contracting specialist but any items the carrier does not have in front of them when contracting is received will slow down the contracting process.

Anti-money laundering training is required for all producers since the Patriot Act. The actual provisions for this training were fairly ambiguous but since each carrier was left to interpret for themselves, most have settled on a biennial training requirement (there are a few exceptions that require annual training) and will hold all business if that time period has passed without a renewal.  This means that with initial contracting you should submit your most recent renewal and be prepared to submit renewals as you complete them.

Errors and Omissions is insurance coverage for insurance producers that protects you in case you make a mistake( otherwise known as an error or omission) that leads to negative consequences for the client which could ultimately result in a lawsuit. This is something that all producers must have in force in order to write business and most carriers will require proof of coverage to work with an individual.  While we all hope never to be in the situation of needing this coverage as insurance producers we also know the value of being prepared in the event that the unexpected happens. Since the carrier could potentially be held responsible in the event that an individual selling their products in not covered most carriers require this to be in place before they will even consider a contract.

A completed W-9 is not required for all contracts but some carriers will request this as part of the contracting packet. This is for tax purposes just as if you were accepting employment with the carrier and allows for more effective reporting to the IRS.

A direct deposit form along with a voided check is required by many carriers. For those carriers that do not require direct deposit, they do pay faster and at a lower dollar amount if it is set up. Ultimately this makes getting paid easier so it makes sense to set it up.

Additionally carriers require hierarchy information. This is something that will come from your managing general agent or MGA (for a lot of our readers this will be Insurance Services group). One of the most overlooked elements of the contract is that for independent agents it is often a sub-contract. In order to protect themselves and to facilitate “in good order” business many carriers only offer contracts with an intermediate party involved, the MGA is essentially an expert who helps keep business going with minimal interruptions.  By signing your contract your MGA is essentially vouching for you with the carrier, lending you the credibility they have earned to encourage the carrier to accept your contract, and agreeing to help get good business in the door.

If you need help with any of these elements the best thing to do is ask. After all, one of the best things about the structure of contracting is that the experts are built in.

 

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Think You’re Prepared? Think Again. Then Figure it Out!

Monday, March 21st, was World Down Syndrome Day. This day falls on 3/21 every year as people with Down syndrome have 3 copies of their 21st chromosome. I never paid attention to this day…never even knew it was a thing, until this year.

My daughter was born in August and, unbeknownst to us, was born with Down syndrome. What did that mean for our new, tiny family? Kennedy needed to be in the NICU for a week and has two valves in her heart that remain open, but should be closed. We go for routine echocardiograms and the valves are starting to close. She is doing so well that her cardiologist doesn’t need to see her again (unless there are significant changes of course) until she’s 3! That’s great news! We are lucky and she is growing really well and is healthy!

Before Kennedy was born, my husband Joe and I knew that we needed to increase our life insurance – big life event, right? We worked with our agent to figure out what we would need, went through the super simple application process, and bam! More insurance. We chose to go with term insurance and figured that we could look at permanent products as we went along. We knew that this was what we were supposed to do, but many people don’t. It’s important to double back with your clients and check in on them. Are they buying a house? Getting married? Having a baby? What a super easy way to talk to them about their needs.

We knew that we needed the extra coverage, especially with a baby on the way so that we would be prepared for the unexpected and/or be able to leave her something when we died (maybe for her to take an amazing vacation or pay off her student debt or provide a little extra for her family). It was important for us to know that should something unexpected happen to one or both of us, there would be means to pay off the mortgage and student debt, fund college for her; and, she would know that we were looking out for her when we chose to get insurance in the first place.

While we prepared for benefits in case one of us died unexpectedly, we didn’t prepare for Kennedy to have a disability. We are now facing a new reality. We need to revisit our term policy and get additional coverage, in case she has more needs down the road. We need to look at conversion to a permanent product and/or a product that can specifically help fund a Special Needs Trust.

Currently, we are looking at the PruLife Survivorship Index UL which offers the ability to not only cover the unexpected but can also work for us to leave a legacy for Kennedy and care for her special needs and her financial future, even when we’re gone. Through this product, we would be able to fund a Special Needs Trust which would provide tax benefits for Kennedy and protect any benefits she receives from the government.

Joe and I never expected that we would need to discuss things like a Special Needs Trust, but reality isn’t always what you expect and I’m glad that there are insurance options that we can use to ensure that Kennedy is taken care of now and in the future. Your clients may face the unexpected too, and they’ll turn to you for sound advice on products that can give them the coverage they need. That’s where we can help! Bring your unexpeteds to us and we can help you guide your clients to the best product for their reality.

We don’t know what the future holds for Kennedy. We certainly hope that she will be able to live on her own, but she may need a little extra help and we may not be there to always provide it for her. However, when we’re gone, we know that she will have our life insurance benefit to help.

The love of our lives: Kennedy

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Chronic Illness Riders vs. Qualified Long-Term Care Riders

While Long-Term Care Insurance may be a viable option for many, Financial Advisors are moving away from stand-alone Long-Term Care Insurance due to rate stability and the fact that the benefit is paid out to the client while living or, to their heirs at death.

Advisors are shifting to Chronic Illness Riders or Qualified Long-Term Care Riders in the planning process today, using life insurance as the funding mechanism for the client’s caregiving needs. Both riders offer many benefits and, by using this planning method, clients may elect to use their qualified plan assets or highly taxable annuities to pay for their care, allowing the death benefit to pass to the heirs tax free.

Let’s examine the difference between the two rider options:

Chronic Illness Riders

Characteristics

  • In most cases, there is no cost for the rider, however, discounting of death benefit occurs when accelerated.
  • Indemnity mode of payment allows family or friends to care for the client while still receiving proceeds.
  • There are no additional morbidity underwriting requirements to qualify.
  • Typically, table 3-4 or better automatically includes the benefit.
  • Typically no more than 2% monthly or 24% annual acceleration of the death benefit is available.
  • You can take a single or flexible premium approach.

Carriers who use the Chronic Illness Rider Model

  • North American
  • Prudential
  • Protective

Qualified Long-Term Care Riders

Characteristics

  • The client pays for the rider whether they use the benefit or not.
  • Reimbursement mode of payment is only available for qualified caregivers.
  • Additional morbidity underwriting is required, so there is a possibility that the client could be approved for life insurance but not for the LTC Rider.
  • A higher monthly LTC benefit is available even for smaller face amounts due to a 4% monthly acceleration of the death benefit.
  • You can take a single or flexible premium approach

Carriers who use the Qualified Long-Term Care Rider Model

  • John Hancock
  • Lincoln MoneyGuard

Both the Chronic Illness Rider and the Qualified Long-Term Care Rider are viable options for clients looking for a solution to help with potential Long-Term Care needs, but remember, these are planning options only available in using life insurance as the funding mechanism for those needs. I would be happy to discuss your client’s need and work with you on a plan that will meet their needs. Please feel free to contact me with any questions.

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For Now, Business as Usual

Last April (2015), the Department of Labor proposed regulations that would require a best-interest contract between advisors working with retirement accounts and their clients. If you haven’t been paying attention, you can read up on the proposed regulation here. In short, the rule would establish a contract that would legally require advisors to act in their client’s best interest and will allow firms to set prescribed compensation models. The DOL released a fact sheet on the proposal that you can access here.

For almost a year now, advisors have been on the defense – both advocating against the regulation and worrying about how it is going to affect their business. NAIFA has been leading the charge lobbying against the rule arguing that the regulations would reduce the availability of services and advice advisors are willing to provide to clients; some advisors may choose to shift their practices away from retirement business; Consumers may be unable to continue working with trusted advisors. NAIFA explains why and how the DOL Fiduciary Proposal would have a great impact on advisors here. There is also a fact sheet from NAIFA here.

We know the proposal is not what our industry needs. However, until it has become law, it is business as usual. As advisors, it is our duty to provide our clients with the best information and the best products that we can. We can’t press the pause button on our businesses to wait and see what the DOL is going to do with this proposal or how it is going to flesh out. We can be aware of what is going on, and we can join in the NAIFA efforts to lobby against it, but from a business stand point, we must keep moving forward in the same way that we always have.

If you are not a member of NAIFA, I strongly encourage you to become one. The association will not only lobby for our industry and its members but it will also provide you up to date information about the rule and how it is moving forward.

Be prepared for the possibilities that the regulation could bring with it, but do not be bound to it until it is the law of the land. Make sure that you keep working so that when changes do happen you are still in business.

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