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BlogIndustry Insights & Education

Read what our marketers and staff have to say about the life & annuity marketplace. Get helpful tips on boosting sales, submitting cases, and tapping underserved markets.

We love to hear from our readers - feel free to post a comment, question or suggestion for a future blog.

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Think Your Clients Understand Long-Term Care Costs? Think Again.

It's no secret that long-term care costs are rising, but consumers are ill-prepared for both the rate of increases and the reality of their projected life spans. According to a September 26, 2017 article by Emily Gurnon, The Staggering Prices of Long-Term Care 2017, the future of our most vulnerable adult age group has scarcely been more trepidatious.

In her article, Gurnon cites industry giant Genworth Financial, whose Genworth 2017 Cost of Care Survey highlights some rather disturbing trends:

  • 5-year annual growth for all areas of assisted living grew at least 3%.
  • Cost of adult care varies considerably, with adult day-care averaging $18,200 annually to private room nursing home care at $97,500.
  • The cost of home health care ranges from $47,934 yearly average for homemaker care to $49,192 for home health aid services. In fact, assisted living facilities might actually offer a slight savings, averaging $45,000 per year.
  • Probably the biggest shock to consumers is the fact that private nursing home care costs have risen a staggering 50% in the past 13 years. Combine this with the fact that Medicare DOES NOT cover extended nursing home or hospital stays, and many seniors will find themselves financially ill-prepared for their twilight years.

    So what can we in the life insurance and long-term care industry do to protect our clients? If you have not reached out to your clients, now is the time to conduct a policy review. Davis Life & Annuity contracts with more than 40 top life, annuity, and long-term care insurance carriers. We can help you find the product that offers the immediate and long-term protections they need. Call us today at 800-747-5612. You and your clients will be glad you did.


    Would you like to read more about today's topic?

    The Staggering Prices of Long-Term Care 2017 | Emily Gurnon
    originally published September 26, 2017 at NextAvenue.org

    Compare Long Term Care Costs Across the United States
    originally posted August 14, 2017 at Genworth.com

    Find Your Path Forward: Medicare | by U.S. Department of Health and Human Services
    last updated October 10, 2017 at LongTermCare.gov

    CLICK HERE to learn more about Life Policy Reviews, the no-cost way to evaluate your clients' existing life and long-term care policies, while discovering ways to improve coverage.

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    A Special Message from Al and Bob, During Breast Cancer Awareness Month

    Al StockwellIn honor of Breast Cancer Awareness Month, and in honor of cancer survivors everywhere, the following is an encore presentation of Ask the Underwriter: Clients with a Cancer History. We are sure you will find the information presented just as timely now as it was when originally posted.

    According to the American Cancer Society, an adult born in 1960 has approximately a 50% chance of being diagnosed with cancer of any form. While this statistic might be shocking at first, Davis Life & Annuity's Life Marketing Director Al Stockwell and Vice President of Underwriting Bob Pedigo address the success of cancer treatments, and give a realistic understanding of how much or how little a cancer diagnosis affects a client's ability to procure life insurance coverage.

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    Have You Re-discussed Life Insurance Lately?

    Which is harder: asking your clients if they have enough life insurance, or explaining to their families why they didn't?

    It's not easy approaching your clients about life insurance, we get it. But if one thing has come out of the DOL Fiduciary Rule controversy this past year, it is a renewed understanding of the need to act in the best interest of our clients. And sometimes that means having conversations they might not want to have.

    Clients often do not see the immediate value of life insurance. They might consider it lost money because they themselves will never use the benefits. They might underestimate the impact they have on their families as far as financial well-being. Many fear the cost will be prohibitive. Or they might assume their financial portfolio is already stable enough to provide for themselves and their family, and no further changes are necessary.

    But the life insurance industry is ever-evolving in its desire to provide both long-term security for your clients' families while offering features that provide benefits directly to the policyholders. According to a 2016 LIMRA report, nearly 40% of households realize they are under-insured, if not uninsured altogether. Nearly the same percentage would also be financial difficulty within a few months of an event that caused a loss of income. These clients do not understand that life insurance is often much more affordable than they estimate, with benefits such as long-term care riders and chronic illness benefits that offer tax-free security not found in other financial planning products.

    That's why we at Davis Life & Annuity encourage you to try a Life Policy Review. Simply put, if you give us the rundown on the coverage your clients currently have, we will do the leg work to find something better. And if they have no coverage at all, we contract with more than 40 top life and annuity carriers to ensure they get the best product available for their needs and budget. No cost to you. No risk to them.

    Give us a call to work on your next case. Your clients will be glad you did.

    Call Now! 800-747-5612

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    Annualized Premiums Up, Number of Policies Down in First Half of 2017, Says LIMRA

    LIMRA published their latest report this week, entitled "U.S. Individual Life Insurance New Premium Increases in First Half of 2017"and the news is a mixed bag. Across the board, life insurance sales are up over this time last year, with total individual premiums up an impressive 4% over 2016 numbers. Most notable in the growth, according to the September 26, 2017 report from LIMRA, is whole life, which boasted 5% growth in the first half of 2017.

    Despite the good news, overall numbers of policies issued were down. Whole life policy numbers suffered the worst, with the total number of policies written down 4%. Term policies remained steady, with a 3% increase in annualized premiums offsetting a 1% drop in total number of policies written. Universal life, which experienced impressive 4% growth in annualized premiums, suffered considerable drawbacks with a 5% decrease in number of policies.

    What is the takeaway from all of this? It is important to remember that, also according to LIMRA calculations, 4 in 10 households are aware they do not have enough life insurance. As Life Insurance Awareness Month comes to an end, let’s be sure to finish strong by reminding our clients that even in relatively strong economies, life insurance is a tool to ensure financial stability. Davis Life & Annuity contracts with over 40 life insurance and annuity carriers, so give us a call at 800-747-5612 for your next case. You will be glad you did.

    CHECK OUT LIMRA'S LATEST FINDINGS

    CLICK HERE to read the original report.

    CLICK HERE for LIMRA'S 2016 Life Insurance Fact Sheet

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    Did the Equifax Breach Affect Your Clients? Are You Sure?

    Last week, it was announced that a data breech from May-July of this year occurred at the Equitrust credit reporting bureau. The number affected was astronomical, 143 million Americans - almost 45% of the population.

    Now is a good time to call your clients and make sure they know what to do to check their credit and make sure their identity is safe. For added assistance, Suncrest Advisors has prepared an informative article on how to proceed in protecting your vital information.

    CLICK HERE to find out what you and your clients can do.

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    UPDATE: Which Team are YOU Rooting for?

    It's That Time of Year Again!

    We all get along just fine the other 364 days of the year, but there is something about the Iowa State vs University of Iowa football game that brings out the athlete in all of us. We hope you enjoy this year's team rivalry photo, a new tradition here at Davis Life & Annuity.

    UPDATE:

    After one of the closest games in matchup history, the University of Iowa Hawkeyes topped the Iowa State Cyclones in overtime, 44-41. We hope both teams have a great season, and look forward to the match up next year.
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    Happy 71st Anniversary, Ron & Aggie Davis

    Let's take a moment to congratulate Ron and Aggie Davis on 71 years of marriage. Ron founded this company with his wife's help and support back in 1980. Here's to the successful partnership that yielded one of the premier IMOs for life insurance, SPL, and annuities. May Mr. and Mrs. Davis have many more years of happiness to come.

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    Two months in, what has changed with the DOL Rule?

    June 9, 2017 sparked the implementation of the DOL Fiduciary Rule. In the months leading up to the roll-out date, producers, IMOs, brokerage houses, and carriers were scrambling to understand the myriad of new disclosure and compensation rules. One particular hot button was whether or not commission-based compensation would still be allowed. Threats of only allowing fee-based transactions when dealing with products funded by retirement account dollars were spewed by major financial adviser firms. Many other firms threatened to only allow fee-based services to clients, period. But nearly six weeks later, have these threats been carried out?

    The Good News

    Commission-based sales are NOT a thing of the past.
    According to finance journalist Greg Iacurci in his March 24, 2017 article "Morgan Stanley eliminating commissions, finder's fees in 401(k) plans" only two firms are actively making plans to eliminate commission-based compensation. Despite implied pressure from the DOL to abandon commission-based annuity sales in favor of fee-only models of producer compensation, Morgan Stanley Wealth Management is the only firm so far to publicly eliminate commissions for advisers and producers servicing 401k accounts. Merrill Lynch Wealth Management has proposed following suit, but as of yet has not firmly laid out plans for changes. Most stakeholders in the industry realize that for many clients, working off fee-based only business models might actually work against clients' best interests, due to the simple facts that

  • 1) many clients are 401k asset rich, but do not have liquid assets to afford front-end fees;
  • 2) in order to pay fees, clients might need to take early withdrawals on accounts, putting themselves at a tax disadvantage for withdrawn funds that would otherwise be 1035 transferred.
  • Compliance has been relatively simple for fixed annuities.
    Even though pending Best Interest Contract Exemption (BICE) enforcement is causing concern among carriers, marketing organizations, and advisers, DOL compliance programs have been relatively simple to implement, often with minimal to no cost to advisers and producers. In fact, Davis Life & Annuity is steps ahead of the competition with its own DOL Compliance Toolbox.

    The U.S. Court of Appeals is finally starting to side with producers, not the DOL.
    Fighting the good fight to protect the industry from unnecessary regulatory red tape, the plaintiffs of the DOL Fiduciary Rule lawsuits are at last being given a ear for their complaints. As InsuranceNewsNet author John Hilton stated in his August 1, 2017 article "DOL Rule Opponents Have Good Day in Appeals Court", Fifth Circuit Court of Appeals saw through the DOL's rhetoric to the potential negative consequences of the bill. The three-judge panel cited the lack of proof the industry was in need of additional regulations, as well as the fact that "reasonable compensation" is a highly subjective and suspect term. Hopefully, as parties submit follow-up briefs future arguments will have continued success.

    Motion to delay BICE filed.
    A Notice of Administrative Action was filed August 9, 2017 in the United States District Court for the District of Minnesota. In it, plaintiffs Thrivent Financial Solutions for Lutherans request a delay of the BICE from January 1, 2018 to July 1, 2019. Submitted to the Office of Management and Budget (OMB), successful delay of BICE enforcement would grant carriers and marketing organizations

  • 1) time to further argue against and request clarification of arbitrary terms such as "reasonable compensation",
  • 2) work out flaws in implementation and interpretation of the DOL Fiduciary Rule,
  • 3) conduct better impact studies to ensure proposed legislation will not actually injure clients financially or create prohibitive barriers to practice for independent producers and advisers,
  • 4) possibly successfully argue for its repeal.
  • The Bad News

    Despite a second quarter rally, fixed annuity sales are suffering.
    Despite sales being up over 13% compared to the first quarter of 2017, sales are still markedly down for non-variable annuities according to Look to Wink's most recent sales reports. This is the second year sales failed to meet the previous year's benchmarks, with 2016 sales at this time down 13% over 2015, as noted in Look to Wink's 2nd quarter, 2016 sales report.

    The damage is apparent in other areas of the industry, too.
    Although we at Davis Life & Annuity are not financial planners, we cannot help but notice what happens in the retirement accounts arena will eventually have an effect on the products we and our producers offer. As InvestmentNews.com reporter Dale Brown reported in his July 31, 2017 article "DOL fiduciary rule already proving to be harmful and onerous", a recent report from the Financial Services Institute (FSI) showed even the slight move to fee-based only platforms was causing a financial squeeze on middle-income retirement account owners, as well as owners of small businesses. The FSI is actively working with Congress to enact a more streamlined and uniform standard that is friendlier to lower-tier investors and producers alike. But will this proposal be too little, too late?

    More financial planning firms feel forced to hop on the fee-only compensation wagon
    The BICE may be attorney-plaintiff friendly, but it is causing owners of mutual funds and similar accounts to pay hefty fees in the name of compliance, as opposed to holding direct business accounts. This is just one example of the catch-22 created by the DOL Rule, according to Brown's article: financial service providers must act in the best interest of their clients, which is prohibitive in how compensation for products is allowed. As a result, net cost of products increases, and many products, such as Simple IRAs, become to expensive and complex to offer. So, in the end, the attempt to act in the best interest of clients forces planners to restrict their product offerings, which reduces the opportunities for clients to access the products that would be most beneficial to them in the end.

    What do do now

    We have been in business for 37+ years. We have all the tools you need for DOL compliance, and have worked diligently to stay ahead of the DOL. We are working steadfastly with trade groups and industry experts to minimize the impact of this faulty rule on our agents, advisers, and producers. Call us today at 800-747-5612 for your next case. Your clients will be glad you did.

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    REMINDER OF SPECIAL HOURS: Our office will be closed August 4, 2017.


    It's time for our annual team-building retreat!

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    The Fight's Not Over: News of DOL Delay on the Horizon

    The fight is not over to delay the controversial DOL Fiduciary Rule. Although phase one of the rule, proof of acting in the clients best interest and related provisions, went into effect on June 9th, phase two may not come into play on January 1, 2018. Does this mean the fiduciary rule is going away? Does this mean redaction of the rule? F
    CLICK HERE to read the complete article:


    Panel: DOL Rule Will ‘Most Certainly’ Be Delayed


    by John Hilton | Originally Published July 19, 2017 on InsuranceNewsNet.com