Advisors Blog

Here are top 10 sales ideas to help get a great start to 2022! Contact your marketing brokerage manager for more information on any that interest you.

LIFE INSURANCE

1. Build Back Better Act and Retirement Plan Changes 

If and when it passes into legislation, the Build Back Better Act has a number of retirement related provisions. These provisions are exclusively designed to raise revenue to pay for non-retirement provisions. As a result, the retirement plan changes will primarily impact taxpayers at the higher end of the earning spectrum. Proposed retirement plan changes currently include: 

• Backdoor Roth – Effective in 2022, the House BBBA would end backdoor Roth conversions.  No participant (regardless of income level or savings amounts) would be allowed to convert any after-tax funds to Roth.  Conversions from other sources (such as match or non-elective contributions) would still be permitted (with the exception noted in the next bullet point).  As currently drafted, the bill would end both (1) in-plan Roth conversions from after-tax funds, and (2) rollover of after-tax funds (from a qualified plan or a traditional IRA) into a Roth IRA. 
• No Roth Conversions for “Applicable Taxpayers” – Applicable taxpayers are prohibited from doing any Roth conversion from any source effective in 2032.  An applicable taxpayer is someone that earns more than $400,000 (single), $425,000 (head of household) or $450,000 (married).  As described above, all participants would be prohibited from converting after-tax funds to Roth (effective in 2022).  Under this provision, applicable taxpayers could not make any Roth conversion from any source (including match and nonelective contributions). 
• New Required Distributions for Participants with More Than $10 Million – Effective in 2029, if an applicable taxpayer (as defined above) has retirement savings of more than $10 million, a portion of that excess over $10 million must be distributed.  The $10 million figure will consider savings in IRAs and all defined contribution plans, and will be adjusted for inflation.  Generally, the applicable taxpayer must receive a distribution equal to 50% of the amount above the $10 million mark. 
• No New IRA Contributions for Some “Applicable Taxpayers” – Applicable taxpayers (as defined above) who have retirement savings of more than $10 million are prohibited from making any contributions to an IRA.  This rule also goes into effect in 2029. 

2. Life Settlements

Considerations for the new year should include Life Settlements. 

• Inflation on the rise, might consider selling policy for cash 
• Life Settlement industry growing 34% each year on average 
• More than half of Americans don’t know they can sell their policy ¹ 

What a financial advisor needs to know about life settlements from Forbes magazine 

• Life Settlements are regulated 
• It is worth the trouble after taxes 
• You don’t need to be an expert to bring up the subject ²

Gallagher's Life & Annuity Brokerage has connections to several life settlement experts. If you are interested in learning more about life settlements but don’t already have a connection with an expert, please let our Life Marketing team know, and we will invite you to an upcoming life settlement webinar. 

3. Simplified Issue Life Insurance for Multi-Life Executive Carve Outs and Groups

Gallagher has access to multiple carriers that offer simplified-issue, non-medically underwritten life insurance for clients with 10 or more executives. The Gallagher Life Brokerage can provide a variety of products, including annual, 10 and 20 year term as well as permanent policies with premiums guaranteed to age 90, for business clients who want to provide additional coverage on an employer paid basis to a select group of their key executives.  

The amount of coverage available without medical exam will vary by carrier and is dependent on the number of employees enrolled. But in some cases we have been able to provide as much as $3,000,000 of additional coverage without requiring exams. This is a key plus for busy key-employees who want additional coverage without the time and inconvenience of the underwriting process.  

4. Life Insurance Still Needed During COVID-19  

The life insurance industry is alive and well despite the COVID pandemic. Though some prices have gone up due to low interest rates and some older-age clients will have difficulty getting coverage during COVID, overall the industry is doing well in terms of new applications and claims.  

The good news is that improvements to the process with new online tools are here to stay, and will continue to make life easier on agents long after the pandemic is over.    

Eliminate Exams with Accelerated Underwriting Programs*  

Several of our carriers offer a “no-exam” process, especially for younger clients and smaller face amounts, although some carriers could go up to age 60 and $1,000,000 face amount, and during COVID many carriers have increased that to $2,000,000 and even $5,000,000. These programs are designed to cut costs and reduce the application cycle time for otherwise healthy clients who might not need an exam.   

*Note – An exam may be requested at the underwriter’s discretion. Clients should be informed that exams are “optional.” It's best to do a little pre-underwriting on these cases to see if the client is likely to pass with flying colors. Use this checklist as a starting point. 

Work Faster with Paperless eApps and Drop Ticket Applications  

Most of our carriers now offer some form of streamlined application process that eliminates all paperwork by using an online solution. In some cases, the insurance carrier will conduct an interview with the client and complete the entire application over the phone. All the agent needs to do is request the phone interview to get the process started. Be sure to check out the "Submit Your Business Electronically" section on our GBSLife Agent Portal for our list of eApps and Drop Tickets.   

Turbocharge your Cases with eDelivery  

Spend more time selling and less time worrying about policy placement with Prudential's ePolicy Delivery! Watch the introduction here to learn more! 

5. Life Insurance You Can Use While Living

How many of your clients are aware that today’s life insurance products offer a variety of features and benefits they can take advantage of while living?

Some policies can offer:

• A Long Term Care rider.
• A Chronic Illness rider.
• A Critical Illness rider.
• A guaranteed retirement income for clients reaching a certain age to protect against outliving your retirement assets.
• A complete refund of all premiums, in the event of early surrender.
• Tax-free deferrals and tax-free income that is available from many cash value life insurance plans that offer generous interest accumulation.

LONG TERM CARE

6. 2019 Washington State Long-Term Services and Supports Trust Act Litigation

There are several challenges to the 2019 Washington State Long-Term Services and Supports Trust Act in progress. A citizens’ initiative (I-1436) would make participation in the program optional, and a class-action lawsuit has been filed in the Western District of Washington, alleging that the law is preempted by ERISA, is unconstitutional, unlawfully discriminates against employees based on age, and violates other state laws. It is unclear whether any legislative reforms, the citizens’ initiative, or the lawsuit will result in termination or reform of the program. Nonetheless, many employers with Washington employees are preparing for withholding the payroll tax beginning on January 1, 2022.  

7. More States Enacting LTC Legislation 

Meanwhile, a number of states are looking to follow Washington’s lead on legislation.  The expectations are currently that they could end up with better solutions than the state of Washington which would likely lead to a significant opportunity for those prepared to implement LTC and LTC hybrid solutions consistent with a state’s legislation in their practices. Maximize your selling success should legislation become effective in other states with lessons learned from placing policies in the state of Washington: 

• Coverage should be secured well in advance of any state-imposed deadlines.  Most carriers eventually stopped taking applications in the state of WA due to concentration of insureds and persistency concerns.  
• Don’t assume only the higher compensated employees will be motivated to “opt out” of the state’s tax.  Many younger, lower earning employees still prefer private LTC coverage to a state’s minimal, non-portable offering.  
• When using group Life/LTC, consider structuring as a direct-bill to the insured (through ACH).  Easier on the employer with no payroll deductions and increases portability.  
• Partner with a local Gallagher Voluntary Benefits specialist who can direct executive carve-outs toward you. 

8. LTC for Businesses

Businesses may be able to offer LTC as a tax deductible benefit to employees (and owners in some cases and even spouses) depending on age of insured and type of business entity. Only true LTC (that does not include a life insurance benefit) is normally deductible. See this handy guide covering tax advantages for LTC plans for businesses.

DISABILITY

9. Supplemental Disability Plans

Group LTD is a great base layer of income protection, but it has limitations and often a “cap” on monthly benefits that can leave someone with less than adequate income replacement, especially top earners. Employees may not even be aware of the gap in income protection until it's too late. Employers looking to attract/retain top talent can provide supplemental individual disability income policies to their top tier executives. For multi-life plans, Guaranteed Standard Issue no medical underwriting is possible – with multi-life discounts. Advisors can use this approach as a tool to get in front of business owners and top execs with higher incomes for potential ancillary product sales and services. Get started by using our GBS Disability Income Fact Finder. DI business is a great source of renewals for agents who write even just a handful of policies each year.

ANNUITIES

10. Bond Alternatives

Many investors are keeping a close eye on the interest rates forecast and several central banks have made it clear that rates will not remain near zero for long. Increasing interest rates will likely have a negative impact on the value of a bond portfolio going forward. Presenting bond alternatives that address stock market concerns and the low interest rate environment may help clients earn more credited interest than the low bond yields available today. Some of these products may even provide guaranteed income that a person can never outlive, helping individuals maintain the standard of living they are accustomed to. 

¹ https://www.harborlifesettlements.com/life-insurance-settlements-and-settlement-statistics/ 

² https://www.forbes.com/sites/forbesbusinesscouncil/2021/12/08/what-financial-advisors-need-to-know-about-life-settlements/?sh=28c378f91b01 

GBS Insurance and Financial Services, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

© 2021 Arthur J. Gallagher & Co.