My "Bersonal" View

At the beginning of the year I wrote about the turmoil facing the health insurance agents as the dawn of the “Obamacare” system was upon us.

https://jeffreyberson.com/2012/11/08/obamas-victory-and-health-insurance/

The thinking has not changed. Articles have been popping up all over about what to expect and the changes that are coming. For our reps who are health agents the future is murky at best and dire at its worst. That is why we have been running a highly successful “transition training” class for all health agents who want to be prepared for the coming changes. This article from “Employee Benefit News” outlines one of the changes, Obama’s plan to use “Navigators” to guide consumers and educate them on their choices for health care.

Brokers Accepting Navigators as Reality

 By Gillian Roberts

June 26, 2013

Kelly Fristoe is an independent agent in Wichita   Falls, Texas. The outgoing president of the Texas Association of Health Underwriters has been engrained in his community selling insurance for nearly 23 years and knows the heart of his Texas towns. He can’t imagine a navigator being placed anywhere near his business area — a more rural part of Texas. “We have $8 million for navigators in Texas … I don’t expect that there will be a navigator in communities that’s less than 50,000,” he said during an interview at the National Association of Health Underwriters meeting in Atlanta this week.             

“Even if there is a navigator out by me, they’re not going to be able to handle the ranchers in remote areas,” he continued. “My opinion is that navigators will be focused on the inner city, focusing on the people who are not as interested in buying health insurance as the rural ranchers who also will qualify for subsidies.”

In April, the Obama administration announced $54 million in grants for the navigators, whose job will be to provide information about people’s options for coverage under the law, but not provide advice on which coverage to take. The navigators will not be licensed and will be paid hourly at a rate of around $28 – $46 per hour, according to NAHU leadership. CMS has repeatedly assured brokers and agents that they can become navigators if they would like, but they could not receive a commission for any insurance carrier from that point forward. CMS official Gary Cohen, head of the insurance oversight division, said in April that he’s confident brokers will continue to add value in the advice they give to U.S. citizens and employers of all types going into 2014.

At the NAHU conference this week, numerous brokers said that navigators couldn’t begin to replace the roles that they’ve held in their communities for years. Their question: What’s the point of them at all?

“My suspicion is that they won’t play a significant role in most marketplaces,” said NAHU’s new president, Tom Harte of Landmark Benefits in New Hampshire. “They’ll be accessible to those who need it, it may be that they’re more accessible to those people who are Medicaid eligible or need help with subsidies, but ultimately the broker is going to be providing that same service.”

Harte cautions that the details of the navigator program are still being rolled out state-by-state, but most state insurance commissioners will have a disclaimer that navigators will have to hand to a consumer stating that “I can’t tell you to pick plan A or plan B.”

Fristoe says it will be brokers like him who know the ins and outs of communities across the nation who will be taking care of people in remote areas, like the ranchers he discussed. He says he’s considering advising on a fee-based commission model and will take people like them to the public exchanges or find other appropriate private options for them.

Today, I feature a guest for the blog. Local estate planning attorney and colleague Merwin Miller writes a wonderful newsletter that I get every month. In his letter to the author section he brings up a great question…what happens if your trust is contested? How can we avoid that problem?

Here is Merwin’s take on that subject:

Dear Mr. Miller:

I have a Living Trust that leaves everything to my two kids. But I am not
dividing it equally between them. The daughter has been very helpful to me in my golden years, helping me out where necessary and visiting constantly. My son, has been around but not with the same frequency. Further, my son doesn’t really need my money that much. My daughter could use the help. What are your thoughts on this?
—-Loving Mom

Dear Loving:
There is nothing wrong with leaving your assets unequally to your children. It’s your money; you can leave it equally, unequally, or leave it all to charity.  That’s the theory, now here’s the reality. Although you can leave it anyway you want, you probably don’t want to create a problem between your children where none presently exists or exacerbate a sibling rivalry. As a judge friend of mine mentioned to me once, “One can sue anyone, anytime, about anything! Whether or not they can win is another story.”

If you leave an unequal distribution to your two kids, will the son be upset? Will he be upset enough to file suit on the basis of your mental incompetence or your daughter’s undue influence over you? Again, he may not be able to win but that does not stop him from commencing and prosecuting the lawsuit.

Safeguards-The Appointment with the Attorney:

Leaving your estate unequally is a significant move, so think it through very carefully, make sure it is what you want to do and not what someone else has told you that you should do. Further, when you see the lawyer, don’t have your daughter sit in the meeting, don’t have her drive you, and don’t have her make the appointment. If she does any of these things, it just strengthens the argument that she was exercising undue influence over you.

Safeguards-The Family Meeting:

If you think your son might actually contest, there are a couple of things you can do. But the one thing you should not do is leave it to the attorney to explain it to the family after you are gone. That is a plan that is fraught with peril since you will not be there to explain your actions.

First, and foremost, you should hold a family meeting where you can talk to both your children and tell them what you have done (or are going to do). Note, I say tell them what you have done (or are going to do) because you are not asking for permission, you are simply explaining what your plan is and why, so that they understand. You should be able to judge from this discussion and your son’s reaction how problematic this approach may be after you are gone.

Safeguards-No Contest Clause:

Second, if you think there may be a problem, you can place in your Trust and Will a “no contest” clause. Although cut back in its effectiveness by legislation a few years ago, this type of clause still can pack a punch where necessary. Essentially, this clause dictates that if a beneficiary of the Trust contests unsuccessfully, then that beneficiary loses what he was going to inherit.

Safe Guard -Estate Planning Review:

And last, don’t be one of those who think that once a trust is written and signed it never needs to be revisited again. You should review the situation every few years (I say every 2-3, others every 5-6.) That way, if the situation changes with your son, you can modify your plan as appropriate.

I took a family vacation this week. We went to DC to meet up with my extended family on both sides. It was great to see both my mom and dad and though they both have some health challenges they are both getting around and doing well in their later years. This is particularly important to me since I live over 3,000 miles away from both of them. It got me thinking about my own “later years” and the idea of Long Term Care insurance. I have taken some action by purchasing LTC insurance. But there are so many options I thought it would be good to investigate them.

Lucky for me I have a great business partner who understands all of the different options. Steve Locko has been my partner at ISN since 2004. He has seen the evolution of the long-term care industry and the emergence of all of the different products and solutions surrounding the industry. Here is a snapshot, written by Steve, of how the different riders work and what to look for.

Living Benefits & Chronic Illness Riders (by Steve Locko)

Living benefits help clients plan for long-term care needs using life insurance chronic illness provisions.  Why are they so important today? Clients won’t buy more costly long-term care policies that may never be used, and insurers recognized it was time to offer an alternative and better value proposition using life insurance.

Terminally ill people had limited access to life insurance proceeds as early as the mid ‘80s.  Soon thereafter, Jackson National, Prudential and a few others found other countries offering critical illness and nursing home benefits, and began adding similar riders to life policies here in the early ‘90s.

So living benefits are not new.  What is new is the explosive growth of marketing and sales of life products that offer living benefits.  Clearly, offering access to life insurance for chronic illness – the topic we’ll cover today – has driven new life sales and helped our clients preplan for long-term care, more effectively and with less cost.

Sure, living benefits are a simple concept on first glance, but there is a very real complexity in how the moving parts of these policies work. We don’t need to talk about straightforward details like claim criteria or indemnity versus reimbursement benefits, but there are issues that deserve some attention:  1.) Long term care riders (LTCi) and chronic illness riders (CIR) use different underwriting and fees, 2.) Chronic illness benefits are paid on very different terms and, 3.) Your client’s life insurance and premiums are something to consider before, or while living benefits are used or exhausted. 

LTCi riders are considered a LTC benefit, require LTC underwriting, and have a separate rider charge.  Life policies using LTCi riders are more costly, but also are the most transparent because they disclose in advance a stated benefit amount and a benefit period; both correlate to provide substantially a “dollar for dollar” living benefit equal to your client’s life insurance amount.

CIR riders, because they usually “accelerate” death benefits, typically won’t underwrite for LTC or have a fee other than at claim.  But be assured your client does pay a cost to access these benefits.  That cost is a “black box” approach that, because clients are looking to access life benefits early insurers can and will discount available living benefits, and your client will likely be asked to surrender far more life insurance than they actually receive in chronic illness living benefits.

Simply put, your client may – for the majority of carriers offering CIR benefits – have no real idea what their chronic illness rider will actually provide in benefits when the time comes, or at what cost to their life insurance.   But if cost is an issue and your client understands this important difference, who can argue that obtaining significant chronic illness benefits under this approach isn’t a very good idea? 

Finally, recognize that most insurers view living benefits as a solution to end of life long-term care issues.  Make sure your clients keep premium payments current, and know that while on claim for chronic illness, insurance and other costs continue and clients who come off of a claim may be facing a lapsed or nearly lapsed policy that will require significant premiums to ensure any remaining life insurance is available going forward.

Until last year I was one of the last hold outs when it came to Social Media. Facebook? Not me. LinkedIn…who needs it? Blog? What for? I am sad to say I was living in the past, similar to my attitude on texting when everyone else was doing it, I always said why text when you can actually call someone?

I was motivated to action early in 2012 when I went to a conference on Social Media. The statistics on usage and the relevance of the medium were staggering. As I sat there I remembered how years ago (in the late 90’s) I had to argue with my partners at ISN to create a website. One of my partners kept saying to me: “If you can show me how a website can make us money I will be all for it.” I tried many ways to convince him until one day it dawned on me. Here is how the conversation went:

Jeff: “We need to have a website”

Jim: “I am not investing the money unless you can show me how it makes us money!”

Jeff: “Can you tell me how our business cards make us money?”

Jim: “Business cards? You have to have a business card! It is part of doing business!”

Jeff: “Jim, that is my point, a website is the business card of the 21st century. We have to have one to do business.”

As I sat in the conference on Social Media I realized that in my own way I had become like Jim. I suddenly realized that Social Media, all forms of Social Media, were just as important as a business card. When we got back to the office we began to create all of the pieces we needed to be relevant in today’s business environment.

Still not convinced? Here are some interesting facts that may change your mind:

1. Over 90 percent of high-net-worth investors participate on social media in some form.

2. More than five million investors use social media to help with final decisions

3. Only 4 percent of investors currently interact with their advisor on social media, but 52 percent said they would connect with their advisor on social media.

4. Of the five million investors who use social media, 73 percent use LinkedIn — more than Facebook, Google+ and Twitter combined.

5. Two-thirds of high-net-worth investors visit LinkedIn and Facebook on a monthly basis.

6. The ultra-affluent ($5 million+ in investable assets) are passionate about investment research, with LinkedIn proving to be an invaluable resource.

7. In fact, high-net-worth investors value financial content on LinkedIn and Facebook more than any other platform.

8. 46 percent of investors using social media do not have a financial advisor.

9. 28 percent of investors would perceive a financial company as “innovative” a “leader in the industry” or “on the cutting edge” if they offered social media tools.

Probate costs money…up to 5% of your estate. Suprisingly, probate does not only impact the wealthy. The people who are impacted the most by probate are usually the ones who have the smallest estates. And, unfortunately for them they are also the least likely to plan ahead to avoid probate. What most people fail to realize is that probate costs are based on the gross size of the estate and not on the net worth. Why the gross size? Because the court has to make sure that your debts, including probate fees, are paid or resolved before it can pass your assets to your heirs. Therefore the fees are calculated on the entire estate, including your debts.

How do you avoid probate ? The only way: A GOOD TRUST. A Good Trust will provide a lot of benefits that a Simple Will will not. And the cost of a Trust will certainly be far less than the cost of probate.

The most common trust is a Revocable Trust. Here are some of the benefits of a Revocable Trust:

• The Revocable Trust will avoid probate. The successor trustee whom you have selected will distribute your assets as instructed in your trust. With probate fees at 5%, this can save the estate a lot of money
• The cost of a Revocable Trust is usually about half the cost to probate an estate of $100,000.
• A trust gives you flexibility and control over the disposition of your assets. You can change or revoke your trust for any reason and you retain full control over the assets in the trust while you are alive.
• A trust will also avoid time delays that are usually caused by probate. All the successor trustee needs to transfer the assets to your heirs is a death certificate and a copy of the trust.
• Revocable Trusts are not a matter of public record so they are much more private than probate which is part of the public record. The trustee does not have to reveal the provisions of the trust to anyone unless instructed so by the trust itself.

As a service to our reps and clients, ISN is affiliated with the American Academy of Estate and Asset Protection Planners. Through this relationship we have access to a national firm that can write a trust for your clients or for you no matter where you may live. It is a simple process and we can help you learn how to provide this service to your clients as well. Give me a call and let me help you help your clients.

I have known Bob Seawright for many years. We worked together when he was a business consultant at Asset Marketing Systems and my company was part of their new life insurance initiative. I always felt he had a great mind for our business and when I heard he had a blog I began following him. When I saw he wrote a piece on a book that I had read I asked him if it would be ok to post the article here. He was kind enough to say yes.

What I like about Bob and the way he writes is that he has a great way of making a point and then connecting it to our business. “The One Percent Doctrine” is not a book about our buisiness…but Bob makes it relevant. Enjoy.

Last week I read a great book by Reid Hoffman and Ben Casnocha called “The Start Up of You.” As a business owner and entrepreneur I truly connected to the thoughts and ideas they bring forward. In a nutshell, “The Start Up of You”  can help change your mindset. It starts with the question:

“How do you survive and thrive in this fiercely competitive economy?”

Then, they provide an answer.

“You need a whole new entrepreneurial mindset and skill set. “

Drawing on the best of Silicon Valley, “The Start-Up of You” helps you accelerate your career and take control of your future–no matter your profession. But, if you are a recent college graduate or if you are in school now, they also provide a different way of looking at career opportunities. I know for me, my path was different from the norm.  This link to a slide presentation by Reid Hoffman is a must see if you have a kid in college, if you are a kid in college or if you just want to change your mindset.

http://www.slideshare.net/reidhoffman/the-3-secrets-of-highly-successful-graduates

At ISN, we have had great success with our summer intern program. Each year we bring on one or two college interns and give them the opportunity to learn our business. Most of them have been highly productive, all of them have brought something unique to our team. For the interns we bring on board their path and future  has not been set. Each intern has taken the experience they got here into their careers and built on the foundation that was established. Some of them we have hired after college and some we have recommended to others in our industry.

If you want to hear more about our internship program, feel free to give me a call. In the meantime, pass on the info from Reid Hoffman…you could help some young person change their life.

We have been waiting for the final word on Brian Gilder’s new book deal. Today we are happy to announce that Brian’s latest release has hit the book stores. As most of you know, Brian is one of our top advisors who is the mastermind behind our state-of-the-art training “Follow the Money – Tax Returns Lead to Sales Ideas.”

https://jeffreyberson.com/2012/10/15/briangilder/

Now in his latest book, “The Financial Playbook” Brian tells us how he has successfully linked the ideas of financial planning to the concepts in sports that we all know and love. This book is a WINNER. It gives every advisor a road map on how to connect with clients from all walks of life. Brian has a plan to help reps use this book to find more clients and he is willing to share his ideas. He is also willing to give readers of this blog a discount on “The Financial Playbook”. Check out the book, check out the website…and call ISN for more info on how to implement this program.

http://www.thefinancialplaybook.com/pages/the-financial-playbook

— Adapted from How to Say It With Your Voice, Jeffrey Jacobi, Prentice Hall Press

Nervous public speakers tend to rush. They mumble, mutter and stammer their way through their speeches, yearning to finish and get off the stage.

Yet there’s a simple technique that calms anxious presenters: the well-timed pause.

Pauses are like adding commas to spoken text. They enable you to regroup mentally while letting audiences follow your remarks more easily.

Use these guidelines to decide when to pause:

√ Transitioning within sentences. When using words such as “but,” “because” and “however,” pause to connect the full sentence. Example: Jim has fine sales skills; (pause) however, his administrative skills need to improve.

√ Listing many items. When running down a series of action steps, reminders or statistics, pause before advancing to the next one. Otherwise, you might string them together and make it hard for others to distinguish between each item.

√ Opening prepositions. For sentences that begin with a preposition, pause before you complete the sentence. Exam­­ple: Despite our best efforts, (pause) the deal fell through. This also applies when you start a sentence with an adverb. Example: Ideally, (pause) we’d file the report this week. 

√ Addressing a large audience. If you’re speaking outdoors or in a high-ceiling auditorium or other expansive space, the sound of your voice may need more time to fill the area. Slow your tempo and pause more frequently between sentences to accommodate the acoustics.

I am a very lucky guy. I have a wonderful wife and two great kids. For a long time while I was working my wife was a “stay-at-home” mom. She did a great job managing our household and raising our kids. Most of the time she was 10 times more busy than I was. I found that out first hand this week as she just started a new job (she got a great position as a Director of Human Resources for a well-known non-profit) and was in New York City for training. For this week I found out what life as a single parent would be like. If you are a single parent you are probably smiling right now. Single parents face unique challenges and I certainly don’t need to tell you how busy their lives are. But also among those challenges is the responsibility for the financial well-being of the family, both while you are alive and if something should happen to you.

For the single parent, their children are their top priority, so financial decisions need to be made carefully. Single parents have special planning needs compared to married couples. Without a spouse, the planning will naturally focus more on protecting the children and strengthening their future. Here is a simple checklist for the single parent so that you can help them prepare for the challenges, issues and decisions in the planning process:

• Set up a budget and stick to it – With just one income it is critical for a single parent to pay close attention to how the money is spent. Limiting credit card use is a must and setting priorities for short and long-term goals is essential
• Save for children’s education – It is important to plan properly for this expense. For the single parent this means “save first” spend what is left. This takes discipline and is the key for all to follow.
• Update your will – We see so many parents who have yet to create a will and just as many who have not updated the will’s that they do have. This document is crucial if something should happen to you and will specify how your assets should be managed, who will care for your children and who will be responsible for transferring your properties after your death.
• Set up a trust for minor children – A will can establish a trust to better protect the children’s financial interests and control how the assets can be distributed. In this way your wishes can live on after you are gone
• Review your life insurance –  Most single parents are the only financial support for their children making life insurance an even greater necessity. Life proceeds should also be tied to an ILIT (Irrevocable Life Insurance Trust) so the proceeds can be excluded from your estate and avoid estate taxation.

As you can see, the planning for a single parent is all about the kids. After spending a week as a single parent I can see why. Take the time to understand that about your clients who are single parents and you will certainly find success.