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What Role Can We Play To Correct Society’s Failings?

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This piece is my opinion (Brandon Unger) and mine alone.

Specializing in Life Insurance has given me a chance to see that superheroes do exist and that they are plentiful. However, most are not recognized for what they are and what they can do.

For anyone familiar with Batman, you’ve likely seen all the gadgets around his utility belt to help people. Smoke grenades for evasion, grappling hooks to stop a fall, even a sonic speaker to call in bats for cover. Most of his tools, are used to protect one person, or a small group of people.

Superman, for all his powers, is limited in the scope of how many people he can save at once.

Selling Life Insurance gives us powers that superheroes could only dream of. We can save individual lives. On more than one occasion I’ve seen cases where a client found out during their medical that they have an elevated PSA, went to the doctor, and caught prostate cancer early.

We also have the ability to protect the families of people that Superheroes failed to save.

We have so much power, but what I have been thinking of lately though, is how we can use that power to help bring equity to communities that our country has failed.

Both of my grandfathers came from very modest means. They both fought in World War II and when they came home, the GI Bill afforded them opportunities that their own poor families never could. Namely, they were able to purchase homes in suburbs with good schools to send their children to.

Why does any of this matter? Because if you look at the wartime pictures from both of my grandfathers, you will see some faces that are darker than theirs. When those faces – that they fought next to – came home, they did not have the opportunity to take advantage of the GI Bill – they didn’t even have equal rights under the law! Instead of purchasing property in the suburbs, they were relegated to rental properties in the inner city, in neglected school districts, where the American dream – that my grandfathers were giving to my mother and father – did not exist.

I have thought about this in the past and it is constantly on my mind these days. It brings me hope seeing protesters and I wish I could believe that they will finally affect real change, but I am skeptical. I have seen protests and riots before, I have never seen change.

Maybe I haven’t seen change because real change doesn’t happen overnight, it takes time, generations. The solutions we provide are predicated on generational timelines. We were built for this fight.

I am writing this from my grandfather’s old study. He purchased the co-op I currently live in, in 1951 after returning from the Pacific and marrying my grandmother. It was made possible by the GI Bill, my entire privileged life as I know it was.

We can do something a superhero could only dream of. We can be a catalyst that helps push the process of bringing equity to those that our government has failed time and time again, with the help of Marc Brown, P.A. estate planning attorneys. Just like the GI Bill, we can put a roof over the head of a family who may not be able to qualify for a mortgage. We can put kids through school who may not have the means. We can offer a group of our fellow countrymen the opportunity to see the cycle broken. All we have to do is reach out to them and help educate them on our solutions.

Forty years from now, when I look back on my career, I can tell you with confidence that I will be more proud if I can say “I helped bring equity to those that did not have it” than “I helped wealthy families pay as little in estate taxes as possible”. I hope you will join me on this mission.

Let’s Work Together

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It’s no secret that selling Life Insurance isn’t as glamorous as giving investment advice nor does it have as steady income as benefits and Property & Casualty. We know our process is archaic, frustrating and can takes months from start to finish.

None of this is news to us.

What we do not understand is why there seems to be a lack of strategic partnerships.

I have yet to find a financial advisor that dismisses risk management’s importance in a financial plan. Yet, I have found many that do not employ risk management in their process. Nor do they refer their client to a specialist.

I have asked repeatedly why they do not refer business. The most commons answers are that they don’t trust anyone who works for commissions and/or that they are scared the “Life Guy” will hurt their AUM bottom line.

My answer to these objections are simple. If you aren’t working with someone, your client is going to go to someone you don’t know, who may very well be in competition with you, and you then stand to lose all control over their risk management strategy. Take the time to meet some people who are professional Life Insurance Advisors. Establish a relationship and develop trust.

So, let’s work together. Life Insurance isn’t glamorous or easy, but it is important. If you do not want to get involved in the sales process, that’s ok, we can introduce you to people that can help you, help your clients.

2020 Vision

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By this time next week, nearly every carrier will only accept applications on PBR compliant products. This will be a greater reset for our industry than January 1st, 2020 ever could.

This is a reset in the fundamental methods that our products are reserved for. A shift of this magnitude has never been undertaken in our industry. However, next Monday, or a few weeks from now on January 1st, the most important piece of the Life Insurance industry will remain stagnant: Clients need for insurance and your ability to get them the best policy to suit their needs.

So, while the reserve requirements can change, the CSO tables can change, the names of products can change, your ability to offer your clients piece of mind remains. As always, we look forward to assisting you along the way.

The Fall of Life Insurtech

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Last week we found out that Prudential spent $2.35B to acquire a health and financial wellness start-up that is barely three years old. Two weeks ago, Ethos – a three-year-old Life Insurance start-up – was valued at nearly half a billion dollars. These are not anomalies. Carriers from A(XA) to Z(urich) have been dumping billions of dollars into Life Insurtech ventures for the past decade.

Taking these facts into consideration, you can probably understand why many people might call me crazy for prognosticating the downfall of the Life Insurtech industry. But here I am and mark my words, heads will roll. There is one major reason why.

These firms are bringing nothing new to the table. The goal of a tech start-up is to update an antiquated process and/or product by introducing Technology. The way Tesla builds their cars, their functionality, the sales experience, the driving experience, everything about it, is a far departure from how Ford operates.

What are Life Insurtech firms doing?

Creating New Carriers:

Due to the heavy regulations in our industry, they look no different than traditional carriers. Their two strengths lie in the fact that they do not have large books of unprofitable business hanging over their heads and their systems are generally more efficient as they are built on current technology and not a dozen legacy systems. The major drawback for them is that nearly all of them only offer Term Insurance. Their margins are razor thin and Venture Capitalists want serious returns in half a decade. This does not mean that they will not succeed, just that they are not disrupting the marketplace.

Harnessing Accelerated Underwriting:

To date, the fastest I have ever processed a case with a traditional carrier is twelve hours. That is like Mach 3 compared to where we were a few years ago when three weeks was a feat, however it is still lightyears behind the less than ten minutes it takes for some of the new entrants. I am not on board with this… yet.

We work with firms that have been around since Abraham Lincoln’s presidency. A firm does not thrive for that long by taking unnecessary risks. It helps that our industry must be conservative by its very nature. We have an obligation to be there financially for people when they need us most. The number one thing we cannot do is take risks.

Accelerated Underwriting programs are fantastic and are slowly being adopted industry wide. However, forcing them through without proper vetting will prove to be catastrophic. Due to low margins, it is not a maybe, it is a will be. While a consumer might be excited to get a policy before they finish their morning coffee, when the carrier becomes insolvent and their policy starts bouncing around, you can be sure that the next policy they purchase will be from a reputable carrier that has been around longer than their Apple Watch. This will not be a problem for long, the old guard will catch up when they feel they can offer these solutions viably.

Engaging Strategic Marketing:

Traditional carriers spend massive amounts marketing on television, radio, and print. Head over to Youtube or Facebook and you will see ads about cheap insurance if you run a 9-minute mile. The new entrants are trying their best break the online marketing problem our industry has. They have proven one thing thus far, the adage is true, Life Insurance is not bought, it is sold. For all the new ways to purchase Term Insurance online and the saturation of advertising, sales continue to decline.

Updated Systems/Processes:

As stated earlier, new carriers do not have to deal with decades of old systems in place. However, this is not disruptive, seamless integration of all systems should be a priority for any business. Some start-ups address this concern, but sadly, not enough. I believe this area is the only one viable to disrupt the industry but mainly in terms of efficiency on the back end. If the carriers had invested their billions of dollars focusing on updating their systems over the past decade – instead acquiring toddler firms – I believe they would already be realizing the increased margins that efficiency brings.

Selling Through New Distribution Channels:

The rise of planners that refuse to sell products or take commissions has led to customizing solutions that these channels can embrace. Traditional Carriers have embraced these solutions, but we have seen a lack of interest in updating them to comply with Principals Based Reserving. This tells us that they were either not adopted at the rate we were being told they were, that they were not profitable, or a mixture of both – which is most likely.

All these combined is why there is no Tesla in our industry and I highly doubt there ever will be. It is too expensive and Life Insurance profit margins sit comfortably between low and liability. To date, no Insurtech company has been able to disrupt this, even though some will claim they have or will.

Why? Because the major costs they strip out lead to other costs they must factor in.

For instance, everyone loves hating on commissions, but subtracting advisors from the equation forces a carrier to spend more (Many times much more) on acquisition costs. That is a major reason why Ethos’ rates are between 45% and 70% higher than the top rates at other carriers. Mind you, they claim on their front page that their rates are competitive right before showing sample rates that are clearly not. It is not just them; Haven Life’s Term rates aren’t much better.

Paying a producer to prospect (and field Underwrite) is simply much more cost effective for a carrier.

Where do we go from here?

First, the Venture Capital funds will dry up. VC firms have short attention spans. While the “valuations” of these Insurtechs may skyrocket in the short term, they are all losing money. Term Life takes decades to make it into the black. Far outside the five-year turnaround VC firms look for. This has begun manifesting itself with the limiting of VC dollars being allocated to Life Insurtech firms.

Second, a lot of people will be fired. I feel terrible for the team at Prudential involved in the Assurance IQ acquisition. I get the desire to combat John Hancock’s Vitality program but trying to combat a Global Brand that boasts over two decades of success with a firm no one heard about until it was acquired, is terrible judgement.

Third, most of the new firms that consider themselves Insurtechs will pivot to the SelectQuote model if they want to keep the doors open. This is where an agent follows-up anytime a Life Insurance quote request is made. Health IQ’s success has come from adopting this model with their clever (dishonest) marketing strategy.

Life Insurtech companies can teach us a great deal. Sadly, they are not new lessons, but rather reminders.

Life insurance is not bought, it is sold.

It is important to maintain current systems and processes.

There are new methods of disseminating information that should be taken advantage of.

There are new distribution channels and products to embrace.

Navigating through this difficult time in your life without the guidance of a financial advisor can sometimes put folks in a difficult position. As suggested by E.A. Buck Accounting & Tax Services, a professional can help you work through splitting assets and negotiate terms to ensure they are in your best financial interest so that you know what this means for your future.

Perhaps the greatest lesson we can learn though, is that the old distribution model, is still the best. Fewer and fewer advisors are selling Life Insurance or utilizing it in their planning and there is no amount of internet ads that can stop the resulting decline in sales.

Why I Do Not Like Any Carriers, Products, or Concepts

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What carrier(s) do you like?
What product(s) do you like?
What concept(s) do you like?

Have you ever been asked one of those questions? I must assume yes, because I am asked it constantly.

Feel free to let me know how you answer by emailing me, but here is how I answer.

I do not like any carrier, product, or process over another. I like good advisors. If I am working with a good advisor, then we will find the appropriate carrier, product, and/or concept that is in the best interest of their specific clients.

Inevitably, the next question I am asked is, “Well, how can you tell who is a good advisor?”.

This is slightly harder question, but I do have some criteria that I like to check-off.

  • Do they come off as more genuine or more salesy? This may seem intuitive, but I have met some amazing advisor who came off as very salesy, however, they were even more genuine when I was able to get by their salesyness (which was not always easy).
  • Do they have a sale in mind or their client in mind? If an advisor asks me about a carrier, product, or sale within fifteen seconds of bringing a case to my attention, it is usually a sign that they are more interested in moving a sale as opposed to assisting a client.
  • Does the advisor understand the differences and products and how they work? This is very important to me because I truly believe that if someone does not take the time to understand what exactly they are selling, then they probably do not care whether they are selling it appropriately.
  • I saved the most important point for last. Does the advisor take an active role in reviewing their clients portfolios? This question is the number one reason that I tell people that I do not like any single carrier, product, or concept over another. I will explain below.

Carriers have no allegiance to policy holders or shareholders. It sounds coarse but it is true. It is as true for mutual carriers as it is public carriers. Their first and foremost concern is the same as any business. Profits. If an old block of business is no longer profitable, they will find a way to make it more profitable, generally at the expense of the policy holders. If the carrier is still having trouble, they may just stop selling new policies all together. This will almost always have negative impact on policies with the added negative impact on servicing those contracts.

This is why the advisor is the key. I cannot tell the future. I cannot tell you what carrier, product, or concept will be best when your client needs their living or death benefit(s). However, if we review their policies every year or two together to make sure they are still appropriate, I am confident that the carrier, product, or concept will not be an issue when the time arises.

That is why I do not like any carriers, products, or concepts.

Close More Cases

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Like many firms, Algren’s internal systems track our productivity as a staff. How many quotes were requested, how many illustrations were created, how many phone calls made, how long since we have looked at certain cases, how often we speak to advisors, and much more.

Since our dealings are tracked by advisor as well, we can extrapolate a good deal of information on advisor activity too.

Historically, if an advisor asked for anything, it was their closing ratio. We can figure that out quickly and are happy to oblige. Recently we received a few in-depth requests (I blame it on sabermetrics). While the process is far more intensive – to get stats like “Illustrations per sale” – it is interesting to see what we come up with.

One of the most obvious findings was, the less illustrations run, the higher the placement ratio. We have all heard of “paralysis by analysis”. It was almost comical how strong it applied across the seven advisors we researched.

The advisor with the least amount of illustrations per sale had an average 4.9 (including revised illustrations) over 17 cases the last 6 months. His closing ratio was second highest at 88.2% (15 of the 17 placed). Most impressive (in my opinion) is that 5 cases came back “worse than applied for” and he placed all 5.

The advisor that requested the most illustrations per sale had an average of 13.3 over 24 cases the last 6 months. His closing ratio was the worst, at 71% (17 of the 24 placed). He placed 2 of the 6 cases that came back worse than applied for.

This is powerful even though it is a very small sample size. While discussing this with a colleague of mine who works on the competition team at a carrier, we came to the agreement that it is not just paralysis by analysis of the client and the advisor, it is also lack of conviction. When we must go through a dozen different illustrations for different products and different carriers, the planning process takes a back seat and even the smallest discrepancy between two perfectly appropriate and acceptable products can cast a shadow on them. This leads the advisor to question internally the solutions and ultimately lacks the conviction to make the sale to the client.

Inevitably, we end up hearing that the client purchased another product from another advisor. While I have no data on this, I feel very confident that the advisor that did make the sale, went in with only a few solutions.

I implore you, if you want to improve your business, do not ask for a million illustrations. Instead, present us with the specific plan you and your client discussed. We are very familiar with the competitive landscape and will make sure your client is presented with the right solution and explain to you why we presented it as such.

Decline to Standard Plus

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February 14th we received an application for $1,000,000 of Permanent coverage for a 58 year old. The Target premium was around $24,000. Not a bad case.

It took a while to get the client to complete his callback and then his doctor’s office added to the delays by holding his APS for about a month. The doctor finally sent them over and with everything submitted, we waited.

Two days later, DECLINED!

An EKG that came with the nearly 150 page APS had major concerns for the carrier and they wanted to see a new EKG. In addition, the client never completed a prostate exam that had been suggested by his doctor.

Cue Charles.

Charles shops the case to several carriers. One comes back Table 3 and that immediately prompts the original carrier to reconsider to a Table 4 – which is in the same ballpark of competitiveness as the newcomer.

We work with the advisor and he gets the client to agree to nearly the premium.

A day before the advisor is going to get signatures we get a third carrier that jumps into the fray. Their offer, “best case Non-Smoker Plus, worst case Table 2”. This was April 3rd.

April 4th the advisor gets the application signed for carrier number three with the assumption that Table 2 will stand. The case is submitted to the carrier, by us, April 5th.

Last Friday, one week after submittal, we get the policy issued at Standard Plus! The advisor went back to the client and said, “You have been declined at one carrier, we believe this is not only the best offer you will get, but you will likely not be able to get additional insurance in the future. Let’s get as much now as possible.”

The client agreed and took $1,750,000 which put the Target premium around $51,o00.

The advisor got the placement paperwork signed over the weekend and submitted them to our office today.

And that is how Charles helped to get a client from Declined to Standard Plus in under two weeks!

What Do I Do?

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I started in the insurance industry almost 10 years ago. From my first day on the job I was told I needed a 2-Minute Speech or an Elevator Speech about what I do.

In the early years it was a canned speech about growing and protecting people’s wealth. It was general enough and vague enough that it every now and then someone would ask me more in-depth questions.

As I grew in the industry, my speeches became more reflective of who I am as a person. At one point I even started my speech with, “I am young enough to believe that I can change the world”. While the sentiment may have been true then (and is still true today), I would not call it the most effective introduction.

In the past few years I have come to a point that I can no longer rely on one Elevator Speech to fully encompass the value I can bring an advisor because my value is complimented by the diverse set of talents each employee of Algren Associates brings to the table. How do I succinctly convey the dozens of services Algren and I can provide to advisors and their clients, especially in areas that are not my expertise?

And that brings me to why I am writing this article.

Around 8PM last night I was recounting my day.

I started off the day talking to an advisor who had gone straight to a carrier instead of to my office to ask for an in-force illustration. The carrier sent him an inforce showing the monthly premium as the annual premium, but no one noticed that and it sent him into a panic. I got Bryon in our office involved and we were able to get him corrected in-force illustrations.

My next stop was to a Starbucks with one of our advisors who just happened to be an old colleague of mine. We were discussing a case he currently has in underwriting, his current prospecting techniques, and how we could assist him grow his business.

From there I went to the office of an agency we are trying to grow our Disability Insurance platform with. We discussed their business model and how both of our agencies can continue to synergize together.

I then had a lunch appointment with an advisor who focuses on high-net worth clients. We specifically discussed the current opportunity C-Corps have in purchasing policies under the new tax-law.

From there I started working with one of our newer advisors to show him how Life Insurance can be utilized in Retirement Planning.

I then received a phone call asking about an overweight client and which carrier we should apply for. That call was directed to Charles who advised us on the three carriers he believes would make the best offer.

I ended the day making a connection between one of our advisors and a specialist that I believe can really help him add value to his clientele.

After tallying my day I asked myself, “What Do I Do?”

What I came up with was the following:

I work to make the sales and service processes of Life Insurance, LTC Insurance, Disability Insurance, and Annuity products as seamless as possible for advisors and their clients. My goal is introduce these additional solutions to an advisor or enhance their experience utilizing them in their practice.

And that is what I do.

Thank You

It was the heart of the winter. Meteorologists were predicting mayhem. As the day dawned, it looked like their predictions would be dead on.

Wind gusts were over 20 MPH and got as high as 40+ MPH. Rain was coming down in sheets, visibility was poor.

Luckily, it was above freezing.

On this miserable day, you were still able to fill a room in Melville for our annual Kickoff Meeting.

We cannot express the gratitude we have for you – our advisors. Your support of Algren Associates, your loyalty, your trust. We do not take any of it for granted.

We are reinvigorated by your efforts to attend our annual meeting.

We look forward to maintaining high-quality service on every case.

We look forward to strengthening our ties with you and creating new ones.

We look forward to increasing the value we bring to you and your clients.

Here is to making 2019 the best year yet.

Thank You.

Like a Lobotomy or a Broken Foot

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Between 1946 and 1956 roughly 80,000 lobotomies were conducted worldwide with the consent of individuals (and/or their family members). Put another way, 8,000 people every year had a surgeon drill into their skulls and remove a portion of their brain.

Taking it down a notch.

My wife’s foot has been hurting for about two weeks. Last week she decided to see a doctor. She was surprised to find out that she has a hairline stress fracture. They immediately put a boot on her, told her to stay off it, and will be working from home for the next week.

She is one of roughly 6,800,000 Americans that will experience a fracture this year. Without a doubt, nearly every single patient will accept a boot, or a splint, or a cast, and be on their way.

No questions asked.

Why in the world am I telling you this?

These patients are also our clients. They have no problem seeking out professional opinions when it comes to their health and wellness. They walk into their doctor’s office and tell them their symptoms. Their doctor likely asks a few additional questions and prescribes the appropriate treatment.

Sometimes, the client has been reading too much webMD and starts telling the doctor what is wrong with them and how to treat it. At this point the doctor will walk them through their reasoning and prognosis confidently – barring any additional information that could alter materially their prior assessment.

In our industry we are fantastic at accepting patients and prescribing solutions to what ails them. Where I find we fail is in letting our clients dictate their own solutions when they decide that ours are not a good fit.

Could you imagine if my wife had walked into her doctor’s office last week, explained her situation, and after her doctor had suggested she have her foot x-rayed my wife responded with “Can you just prescribe me rollerblades, so I can get places without picking up my foot and putting it down?”

It seems absurd but that is what we allow many of our clients to do. This likely sounds familiar to you:

“My spouse will not receive my pension if I die first”
“We suggest laddering Term Insurance with Permanent coverage”
“Thanks, but I’ll just take the Term Insurance”

And in order to not “lose the sale” we acquiesce.

Rollerblading with a broken foot might help you move around a little faster and minimize impact, but I am certain (even though I am not a medical professional) that it will not rehabilitate a broken foot. I am just as confident that 20-year Term Insurance is not the best planning tool for Pension Max cases.

It isn’t brain surgery…

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