View From the Top Part II
Top Life Executives Give Their Take on the State of the Industry
by Leila Morris

 8. Which new product types does you company have on the horizon?

Mike Rodman, CFP, president, Advanced Planning Services, San Diego: Advanced Planning Services is marketing several advanced sales concepts. These include an objective policy appraisal service, real estate based planning techniques, a tax-saving program for people with large qualified plan balances, a risk management program using domestic captive insurance companies, executive benefit planning, and carrier-approved financing programs.

Jim Jacobsen, vice president of Product for CIGNA Group Insurance: We are committed to helping people stay healthy and proactive through various health and wellness programs; helping people in a time of need by offering accelerated benefits that can be added to a life policy and offer early payout options of life insurance proceeds should an individual become terminally ill or be diagnosed with a critical illness such as cancer or heart attack; and we help beneficiaries cope with a loss through comprehensive counseling and support services.

Paul LaPiana, CFP, national sales manager, Life Insurance at MetLife: We are focusing on our core product lineup, which includes a full suite of competitively priced life insurance products using the 2001 CSO table. In April, we launched a single life UL with secondary guarantees (Guarantee Advantage Universal Life), which provides affordable guaranteed death benefit protection. On May 1, we launched Equity Advantage VUL, which focuses on the accumulation market providing strong internal rates of return on cash surrender value and distribution features. This fall, we are launching a 2001 CSO compliant whole life product providing death benefit guarantees with competitive accumulation features. Also, we’re developing a variable survivorship product for release in 2009. That said, we plan on sunsetting our 1980 CSO product portfolio this fall.

Peter Golato, CLU, ChFC Nationwide Financial Services Inc: We are planning to broaden the offering of our long-term care rider on other living benefits in our portfolio. As mentioned previously, we are introducing a whole life product that is easy for a property/casualty agent and their licensed staff members to sell. Finally, we are developing additional benefits to enhance the customer experience of doing business with Nationwide.

Jeff Koll, assistant vice president of product development for Life Products, Colonial Life: We’re exploring some possible supplemental health products. We’re also considering several upgrades to our core product offerings of life and disability insurance.

C. Ray Trueblood, CLU, ChFC, CFP, vice president for Life Insurance Marketing Strategy at Jackson National Life Distributors LLC. Jackson plans to launch three variable universal life (VUL) contracts in October. We feel the VUL market has long-term viability. Jackson expanded the disciplined investing strategies available within our VULs last year and focused on cross-selling VUL products to agents who were already selling our variable annuities. We also launched a universal life insurance product in 2007 and a traditional whole life product designed for our captive life sales force, the JNL Southeast Agency.

9. What are you focusing on, as a company, to stay healthy and preserve market share in the coming years?

Mike Rodman, CFP, Advanced Planning Services, San Diego: Advanced Planning Services offers a turnkey solution for broker dealers to enter the insurance business in a compliant manner. Plus, we offer brokerage general agents (BGAs) a turnkey advanced sales system and back-room outsourcing. Our underwriters have developed a proprietary method to conduct medical assessments.

Lynne Rosenberg Kidd Innovative Solutions Insurance Services, LLC: As always we must focus on technology, people, and our margins. To sustain strength into the future, you must be profitable. Profits sustain you when the market may be down while allowing you to continue to invest in your business with people and technology. As I said earlier, numbers of producers or premium are not necessarily the best indicators of a successful agency. Rather, agencies that provide market opportunities, technological advances, knowledgeable people and results will always stay healthy and preserve market share.

Jim Jacobsen, CIGNA Group Insurance: CIGNA has branched out and grown into a health service company. It’s about understanding how health, life, accident and disability coverage work together to meet people’s emotional, physical, and financial needs for a lifetime.

Paul LaPiana, CFP, MetLife: In the independent distribution group of MetLife’s retail business, our approach is to focus on a select group of independent distribution partners and build strong mutually beneficial business relationships at all levels of the organization. We allocate dedicated resources to make it easy for these firms to do business with us. We are building strong business relationships with our chosen business partners by providing a full suite of competitively priced life insurance products, responsible underwriting offers, and excellent service.
We also continue to create powerful partnerships with our chosen distributors as we build operational, technological, and marketing bridges among MetLife and key distribution partners to grow our market share within these organizations through the sale of annuity, life insurance, long-term care, and disability income products. We firmly believe that this strategy will help these distributors, who are focused on the long term, to grow their business by leveraging our significant resources. We also believe that it will help MetLife to grow its overall market share in the years ahead, too.

Peter Golato, CLU, ChFC Nationwide Financial Services Inc: Companies that recognize the value of the producer and the end customer will win in the future. Everyone is time-starved, which means that it takes something truly effective to break through the clutter. Adding to this clutter is the inherent complexity of life insurance. We are identifying customer needs and developing ways to exceed these needs.

Jeff Koll, Colonial Life: A couple of things are very important here. First, our product offering must be upgraded continuously to meet our customers’ changing needs. The best product offerings will be determined through market analysis and customer feedback. One of our top goals is to have superior speed-to-market with new products. Secondly, we need to continuously improve our service to all customers. We regularly seek feedback on our levels of service. While we’re scoring very well today, the expectations of the market are changing constantly and we’ll change as much as possible to meet and exceed these expectations.

C. Ray Trueblood, CLU, ChFC, CFP, Jackson National Life Distributors LLC: Jackson recently adopted a new corporate tagline, “Long-Term Smart.” The phrase represents our strategy of preserving market share by adding value rather than competing on price. We add value with flexible products that can be customized to meet the customer’s needs and by offering advisors innovative sales tools, educational support and high-quality service. We decided early on to concentrate our wholesaling efforts on the advice-based distribution channels that we feel are most likely to experience long-term growth.
Jackson also makes it a point to avoid participating in markets that are not in line with our central focus, which include protection and accumulation products. We are not overly reliant on one product; diversification allows us to meet the needs of our customers throughout all phases of the business cycle.
10. Are there any other trends that you see in the life-insurance industry that agents should know about?

Mike Rodman, CFP, Advanced Planning Services, San Diego: There is more interest in life settlements and annuities. We use the latest technology to expedite the underwriting process. We’re always trying to identify other trends among those 45 to 65 and develop products that meet their needs.

Jim Jacobsen, CIGNA Group Insurance: As consumers take more ownership of their employee benefits, group carriers are likely to benefit from strategies that will build employee demand for products and create combinations of products and services that address the employers’ needs to deal with workplace situations. For example, we believe in tailoring offerings to fit life stage needs. Offering additional value-added services that help protect health and welfare of people makes life insurance more valuable.

Paul LaPiana, CFP, MetLife: We see a shift in financial planning at the client level due to demographic trends. Clients are looking to solve multiple concerns like accumulation of wealth, tax management, asset protection and most importantly – lifetime income. Producers and financial professionals are looking for ways to cultivate client relationships to become the trusted advisor. They want to coordinate these concerns on behalf of their clients while expanding growth opportunities in their practice. This is driving a convergence in the marketplace. Everyone is now trying to provide the same types of solutions and products to the retail client. The key question is, “How will they get there?”

We have seen a push towards a wealth management focusing on holistic planning instead of product transactions. Wealth management solutions that address the client’s multiple needs often result in protection product sales, which include life insurance, annuities, long-term care, and disability income insurance. This presents opportunities for distributors as broker/dealers, banks,  and financial professionals with the expertise and resources to help them implement these kinds of solutions. This shift at the client level encourages distributors to evolve their business models to include expertise for multiple products, which will open up opportunities and relationships. Building a multi-product platform will also help distributors diversify their business opportunities and revenue streams. Building client relationships and trust will be instrumental in determining who will have the appropriate access and will be able to implement protection-product sales at the retail level.

Lynne Rosenberg Kidd, Innovative Solutions Insurance Services, LLC: I am hopeful that the business will refocus itself on selling protection for families rather than premium finance. Sadly, the lucrative premium finance market has taken some agents’ eyes off the other markets. This narrow focus can be a tremendous opportunity for those who want to grow into the traditional business and estate planning markets. In the spirit of full disclosure, ISIS has chosen to participate in selective premium financing cases. However, we have aggressively continued to drive our other market segments as well.

Peter Golato, CLU, ChFC, Nationwide Financial Services Inc: The change in the industry to selling universal life continues. Consumers are looking for guarantees and they want to make sure the death benefit is there when they need it most. In tough times, there are customers who seek an opportunity to buy low, so we are still committed to the VUL market and continue to have success. For this reason, a complete product set that spans the consumer risk spectrum is important.

Jeff Koll, Colonial Life: The market is changing and it’s important for all agents to be aware of this. I believe it’s critical for agents to know their products and services thoroughly and to know how they meet the needs of their clients. It’s also important to understand how your company goes to market and how that is similar or different from your competitors. Understanding how the market is changing and what your company is doing to adapt to the change will be important for all agents.

C. Ray Trueblood, CLU, ChFC, CFP, Jackson National Life Distributors LLC: Retirement income is the most prominent trend in the industry right now. I think that the real challenge is not necessarily finding the ideal product, but gaining a better understanding of the psychological implications of retirement. The fact is that people’s thinking changes dramatically as they age. Things that never concerned them in the past, such as mortality, become top of mind. The most successful advisors will be those who recognize how their clients’ goals and attitudes are changing.

11. Has your company taken any measures recently to speed up the underwriting process?

Mike Rodman, CFP, Advanced Planning Services, San Diego: Yes, in addition to our proprietary method of conducting medical assessments, we use underwriting summaries, which are reviewed by our internal underwriter and distributed to the appropriate carriers. We also stress that complete information needs to be included on applications. Our case managers work with agents to be sure that all requirements are obtained in a timely fashion.

Lynne Rosenberg Kidd Innovative Solutions Insurance Services, LLC: We constantly monitor cycle times, which allows us to monitor the carriers as well as the employees. Our employees are compensated based on cycle times. In addition, imaging has saved us money and time in getting information to carriers. We work closely with BRAMCO and our carriers to streamline how we process business.

Jim Jacobsen, CIGNA Group Insurance: We are committed to continuously enhancing our underwriting process to make sure that it runs as smoothly and efficiently as possible. We are able to consistently meet our customers’ needs and expectations in a timely manner due to our dedicated staff along with advanced technology,

Paul LaPiana, CFP, MetLife: Absolutely, we continue to make significant investments in our core life insurance business to make it easy for distributors to do business with us. For instance, we have made major investments to automate our underwriting platform including direct linkage to major organizations to expedite requirement gathering and implementing a fully imaged, paperless environment for our UW’s. We believe automating how we communicate with firms on the status of pending business, licensing, commissions, and in-force policy positions is critical to differentiating service delivery to producers and clients. This type of straight-through automation has been in place in the mutual fund and annuity space for many years.

Examples include linkages to application order entry systems, case status packages (proprietary or off the shelf packages) and bundled e-mails (which are triggered when any event on a case occurs). We recently introduced a shortened life insurance application. We are working on launching an express order system and a straight through automated processing system. It will use rules based underwriting for certain types of life insurance sales.

We have also moved toward having dedicated teams across sales, account management, internal sales support, case management, and underwriting to build strong relationships with firms and producers. These teams meet daily to review cases and handle escalated issues. They are responsible for understanding the specific preferences of our key distribution partners.

We launched a team to handle term and permanent cases of $1 million and below and age 50 and below. So far we have seen a 25% reduction in calendar days from submission to issue. We also rolled out the large case underwriting for cases over $10 million and over age 80. This segmented service model has improved our overall time service and responsiveness on all size cases.

Peter Golato, CLU, ChFC, Nationwide Financial Services Inc: In March, we liberalized some of our underwriting requirements to help streamline the process. Changes included replacing physician exams with paramedical exams, eliminating chest X-rays as a routine age and amount requirement, eliminating stress testing at certain ages and amounts, and raising our oral fluids amount at certain ages. We are continuously looking at process improvements to reduce our underwriting turnaround.

Jeff Koll, Colonial Life: Speeding up the underwriting process is becoming more important. Colonial Life has taken some steps to improve the speed of our underwriting. In some cases, this will come with a cost of taking on more risk and potentially higher premiums. However, there is a lot that can be done by changing the underwriting approach and using technology to improve the speed.
C. Ray Trueblood, CLU, ChFC, CFP, Jackson National Life Distributors LLC: We review our underwriting processes and procedures on an ongoing basis and regularly examine alternatives to improve efficiency. We have had our proprietary fax-in, imaging, and online processing systems in place for several years now. The paperless environment allows us to underwrite, process and approve more than 70% of applications within 30 days.

12. What types of guarantees are selling today and what are the newest innovations?

Mike Rodman, CFP, Advanced Planning Services, San Diego: Secondary guarantees have become more popular with carriers. Some of them can offer a shorter guarantee and catch up later. Also, there is more flexibility for catching up if a premium is missed.

Jim Jacobsen, CIGNA Group Insurance: Guarantees with respect to benefits haven’t been a key focus in the group marketplace, and most innovations are focused on other product and service features. One such focus today is self-service, giving people access to their information in real time.

Paul LaPiana, CFP, MetLife: From a life insurance perspective, we’re continuing to sell secondary guaranteed UL and survivorship UL. We are also selling our long-term care purchase option, which guarantees the option to purchase long-term care insurance in the future. In addition, we are seeing an increase of activity in variable life insurance with premium based guarantees and secondary guarantees. Our new Equity Advantage VUL has some built in premium based death benefit guarantees, which provides clients protection during volatile equity markets.

As stated before, innovations that we see on the horizon include VUL products with annuity-type riders for enhanced income and withdrawal benefits, enhanced settlement options to enable consumers to turn life insurance contracts into an income stream, and the combination product addressing multiple needs in one policy.

Lynne Rosenberg Kidd Innovative Solutions Insurance Services, LLC: today, the different types of UL secondary guarantees usually look pretty similar to the client. The main innovation in this area is one I mentioned previously. One of our core carriers is offering a no-par whole life product that is somewhat more expensive than guaranteed UL but offers much better cash values. There is less flexibility in premium payments, but even here there are several choices of a premium period.

Peter Golato, CLU, ChFC Nationwide Financial Services Inc: The majority of guarantees that are selling today are those associated with no lapse guarantee universal life, which continues to dominate the UL category. We have also observed guarantees becoming popular on VUL. We recently introduced a protection-oriented VUL product to complement our accumulation-oriented VUL product. In addition, companies are continuing to develop new guaranteed income and withdrawal benefits. While these are not as popular as the benefits seen on annuities, the industry is looking for solutions to consumers’ concerns about maintaining their lifestyle in retirement.

C. Ray Trueblood, CLU, ChFC, CFP, Jackson National Life Distributors LLC: Many providers are continuing to enhance their VUL products with guaranteed living benefits, new investment options and long-term care riders. In April, Jackson added a rider – Policy Preserver – to its UL and VUL products. The rider is designed to prevent a policy from lapsing when the client is using loans to supplement retirement income.

13. How will the interest rate environment affect the various life insurance products?

Mike Rodman, CFP, Advanced Planning Services, San Diego: As always, when interest rates go up, cash outlay or premiums become less expensive and premiums become more expensive as interest rates go down.

Jim Jacobsen, CIGNA Group Insurance: Typically, rising or declining interest rates don’t have a significant affect on group life product offerings. The nature of our business requires a long-term outlook, which should be reflected in risk assumptions.

Paul LaPiana, CFP, MetLife: From a sale perspective, when interest rates go up, cash accumulation and whole life products become more favorable in the marketplace. This is primarily due to the higher crediting rates and dividends in the policy. It helps with the ability to accumulate cash value in the policy, which becomes more appealing to consumers. Higher crediting rates also allow policyholders to put fewer premium dollars into the policy for an equivalent death benefit or get a higher death benefit for an equivalent premium.

When interest rates go down, term and secondary guarantee UL products allow consumers premium dollars to purchase more death benefit in the policy for relatively less premium dollars when compared to some other products. Historically, when the interest rates are low the equity markets perform better which increases the focus on variable life products. This allows for exposure to the equity markets through sub accounts, which may appeal to consumers when interest rates are down.

Jeff Koll, Colonial Life: This depends on the investment strategies companies are using. In general, Colonial Life has had good investment results over the past several years and our credited interest rates have been relatively stable as a result of this.

Lynne Rosenberg Kidd, Innovative Solutions Insurance Services, LLC: As I write this, the interest rate environment is a little more friendly to fixed annuities than it has been recently, as they are paying better than comparable CDs. Long-term premium financing is also more attractive than it has been in the past few years. The short-term interest rates that are the basis of premium finance loan rates have come down, while the long-term rates that affect life insurance pricing have remained stable. In other words, premium finance loans have gotten cheaper while the cost of the life insurance has remained about the same. This means that financing has more value relative to paying out of pocket. I make this statement not to endorse all premium finance sales. Rather, there are true legitimate needs for premium finance. The interest rate environment better supports those legitimate needs.

Peter Golato, CLU, ChFC Nationwide Financial Services Inc: The volatility of interest rates concerns us more than the rate level. Fixed products, such as universal life, term life and whole life, are sensitive to the level of earned rates. Products with strong guarantees are extremely challenging to build and support, especially those with the ability to short pay or single pay. For example, the competitive landscape for UL no-lapse guarantee products tends to climb and fall with the interest rate environment. The ability to respond quickly to interest rate changes is important and has become an escalating priority.

C. Ray Trueblood, CLU, ChFC, CFP, Jackson National Life Distributors LLC: Low interest rates have helped boost indexed life product sales, but as rates start to climb, we are likely to see movement back into fixed products. Meanwhile, the volatile equity markets have driven many investors out of variable products. Consumers have turned to universal life as an asset accumulation vehicle with guaranteed returns and death benefits, which is evident in the fact that UL holds the largest share of total annualized premium.

14. What do you think of the underwriting and reinsurance market and how is it affecting sales?
Mike Rodman, CFP, Advanced Planning Services, San Diego: Carriers are losing business because of the tightening of reinsurance. BGAs are breaking up policies to meet carrier retention limits, to avoid the tightening of the reinsurance market.

Jim Jacobsen, CIGNA Group Insurance: The group life insurance market, as a whole, continues to be extremely competitive. Many carriers are competing for the same market share.

Paul LaPiana, CFP, MetLife: The reinsurance marketplace is primarily represented by the top five reinsurance companies, which have about 75% of the overall market. Facultative underwriting is offered through only about six companies. So, overall capacity in the reinsurance market remains tight and is limited by a constricted market. With fewer reinsurance companies out there and short-term mortality experience higher than expected, there has been higher pricing, lower capacity, and less aggressive underwriting offers from the reinsurance companies.

We see a shift in direct writers retaining more business due to the tightness in the reinsurance market. This has led to insurance companies being a little more flexible with underwriting decisions on individual cases since decisions are not subject to reinsurance treaties and capacity is not restricted by the reinsurance. Overall, there is nothing on the horizon to indicate that the reinsurance companies will increase capacity.

We are now in a part of the reinsurance cycle in which the companies have raised prices, which raises product costs and effects profitability. All products in the marketplace will need to be priced to reflect the changes in the reinsurance marketplace. This environment has made sales in the higher end market and multiple impairment older age cases more difficult.

Lynne Rosenberg Kidd, Innovative Solutions Insurance Services, LLC: Unlike a couple of years ago, the reinsurance market is not an issue for BGAs. Most carriers have increased their retention and are not as reinsurance-dependent. Consequently, we see that the carrier offers have, once again, become quite diverse. This presents challenges in make sure that you get the best offer without inundating the carriers with informal cases. Handling informal cases well and quickly is critical to a BGA. There continues to be a disconnect between carrier cycle times and my own goals for cycle time for our agency. We continue to work closely with the carriers to improve their communication with us. I long for the day when you get live people on the phone!

Peter Golato, CLU, ChFC, Nationwide Financial Services Inc: We have not noticed an effect of the underwriting and reinsurance market on our sales. However, we have noticed that agents may have a misunderstanding of how the reinsurance market works, and so they may be leaving business on the table by not bringing reinsurance into the case discussion.

C. Ray Trueblood, CLU, ChFC, CFP, Jackson National Life Distributors LLC: Jackson grew life sales by 12% in 2007 compared to the prior year, and we feel our efficient underwriting process contributed to this increase, and to our consistent growth over the past several years. From an industry perspective, there has been a settling of the issues between direct and reinsurance companies. It appears that people have gotten more comfortable with the adjustments in underwriting for the elderly and the modification of exception underwriting.

15. What qualities separate the really successful life agents?

Mike Rodman, CFP, Advanced Planning Services, San Diego: Agents who are driven to do it right and who are tied into a niche market seem to be the most successful. Having some type of natural market will make it easier to generate sales and get referrals, which will generate even more sales. Agents who are more likely to succeed in the high-income and high-net-worth markets have a strong grasp of the needs of their clients and the needs of their clients’ advisors.

C. Ray Trueblood, CLU, ChFC, CFP, Jackson National Life Distributors LLC: First and foremost, successful life agents have a real passion for what they do. Advisors must believe in what they are doing in order to be effective whether they’re helping affluent clients with estate planning and wealth transfer or working with the middle market to make sure that families have adequate protection in place. Those who make an effort to understand their clients’ attitudes and goals will provide the most value.

Jim Jacobsen, CIGNA Group Insurance: In general, successful brokers share a number of characteristics. They know the products they are selling in depth; they establish close relationships with underwriters and customers; they’re persistent, they’re committed to success; they believe in what they are doing; and they are able to demonstrate the value to prospective buyers and intermediaries.

Paul LaPiana, CFP, MetLife: The qualities that I see in all of the successful brokers that I have worked with include the ability to focus on the customer’s needs while being persistent and patient in their approach.
Other traits include having multiple product expertise and acumen or being part of a team that can address the holistic planning needs of clients today. Successful brokers are usually credentialed professionals who always work towards upgrading their skills to become better at what they do. Many are involved in the industry through associations and involved in their communities. In addition to having excellent networking and interpersonal skills, they have integrity. They focus on the long-term financial success of their clients. I think these traits make them successful not only in our industry, but also in life.

Lynne Rosenberg Kidd Innovative Solutions Insurance Services, LLC: Hard work and relationships are key qualities of successful life agents. Life insurance is not a commodity. We have all heard the adage, “Life insurance cannot be bought – it must be sold.” I believe this statement completely. Producers who get to know their customers, who have patience, and who have a true commitment to their clients’ needs will always be the most successful. Over the past few years, I have seen a decline in the number of producers with these qualities. The result is that more producers are involved in the same case. A producer’s business is no different than mine. I must have good, solid relationships with my customers to withstand the competitive climate. The same holds true for producers and their clients.

Peter Golato, CLU, ChFC Nationwide Financial Services Inc: Successful life insurance agents have a strong customer focus and are able to identify and respond to the needs of each customer. Through this reputation, they maintain customer loyalty and generate more referrals in which to grow their business.

Jeff Koll, Colonial Life: The very best and most successful agents focus not on sales, but on meeting their customers’ needs. They get to know their customers’ needs, they know their products, and they find ways their products can meet those needs. These agents have integrity. Only sell customers what they need. In the long run, customers will know if the agent is meeting their needs and if so, they will stick with them.