Insurable Interest Canadian Insurance Blog

Variable universal life insurance is a dynamic product that has evolved over the decades to provide a variety of client solutions.What sets VUL apart from other permanent life insurance products is the investment component, where the cash value is placed in subaccounts managed by professional money managers. Most VUL products have between 50 and 100 subaccount investment options to choose from. This allows a custom portfolio to be built within the insurance wrapper. When you look in the rearview mirror, many advisors and clients were hurt by the way VUL was designed, marketed and sold in the past. Take the late 1990s as an example. The industry was not funding policies adequately, there were no protections in place and agents were illustrating VUL north of 10% annualized. I think we all know what happened, and it was a major black eye for the VUL industry. Ever since then, most have steered clear of the product. Today, a maximum of 7% gross is the adopted standard for illustrating VUL, with many broker-dealers placing further internal restrictions closer to 6% gross. As with many historical examples, crisis breeds innovation and the industry has tried to learn from that mistake. That particular market...

Stress has a huge impact on your clients and their workplaces. Stressed-out employees are less productive and less engaged, costing your clients thousands — if not millions — of dollars annually, according to a Colonial Life study of full-time U.S. workers. According to the survey, 40% of employees say they experience high or moderate levels of stress. Half of these employees named finances as a top stressor. Here are some of the highlights from the study of more than 1,500 U.S. workers on the impact stress is having on their workplace: More than 40% said stress made them less engaged. More than 40% said it made them less productive. Nearly one in four said it caused them to be absent more frequently. And nearly 25% said it has caused them to look for a new job. But there’s good news, too: As a benefits professional, you are in the perfect position to help your clients and their employees focus on wellness programs that can lower stress and improve both productivity and engagement in the workplace. Increase Wellness, Decrease Spending Employee health and wellness matter. A healthier workforce is not only more productive, it also helps curb the constantly rising cost...

When it comes to guaranteed lifetime withdrawal benefits on a fixed indexed annuity, why are joint payouts often left out of the conversation? Hint: It’s not because spouses don’t want or need joint payouts. Many couples share finances and need their retirement income to last as long as either spouse is alive. In fact, under the Retirement Equity Act of 1984, federal law requires married people to elect joint and survivor annuity payouts on a pension unless their spouse signs a notarized statement waiving their rights to the money. But joint payout elections on an FIA are few and far between. Why is that? Typically, annuity income riders are structured to favor single lifespans, resulting in a vast majority of payout elections covering a single life — even if the annuitant/owner is married. According to Society of Actuaries projections, for a couple at age 65, there’s a 50% chance that one person in the couple will be alive at age 92. That’s one in two survivors who may live for many years with lost income — all while coping with the loss of a loved one. Does it make sense that their ongoing annuity income source is eliminated just when...

Andy Albright wanted to give his top producers and corporate leaders a bonus — a half a billion dollars’ worth. It was not in cash but in face value. It was a retention tool that many insurance agencies have used for business clients, but not for their own employees. The strategy can take different forms. In Albright’s case, he wanted to reward the top 71 people at his agency, North Carolina-based National Agents Alliance, with an indexed universal life policy that they can keep, as long as they stay at the company or don’t work for a competitor if they leave.Albright got the idea when he was helping his alma mater, North Carolina State University, work out a plan for coaches after the University of Michigan sweetened head football coach Jim Harbaugh’s already-significant salary by adding a multi-million-dollar life policy funded by the school. “So, I’m sitting here saying, ‘Man, what a way to give a gift and a retention play at the same time,’” Albright said. “And if they’re doing it for big-time college coaches who are making two million, three million dollars, my guys are making millions. Why can’t I do it for them?” Not only did he...

Football star Travis Henry learned the hard way that fathering children is expensive. Not even the $20 million Henry earned over a seven-year career in the National Football League was enough to support his offspring. Of course, having 11 children by 10 different women contributed to the financial strain. Henry claimed to be broke in 2009 after he was arrested for nonpayment of child support. At the time, an attorney for the 30-year-old Henry estimated that his client owed about $170,000 annually to the mothers of his children. The one-time “Mr. Florida Football” bemoaned his predicament in a New York Times interview: “I’ve lost everything in this mess I’ve gotten myself into.” The Travis Henry story is not atypical. Young athletes and big money continue to be a potent cocktail for potential misery. In Henry’s case, his NFL orientation included a session on family planning and the financial dangers of having children out of wedlock. Henry admitted that he paid no attention. And that highlights the difficulty sports leagues, agents, family and loved ones face in trying to steer athletes toward sound financial principles. The reality is most athletes are not making the $20 million that Henry made. Yet, peer...

If you ask Mark Acre what he will be doing at 9:30 a.m. tomorrow or at 3 p.m. Monday, he will have a quick answer for you. Acre has time management down to a science, part of his mastery of processes that go into the making of a successful financial services practice. He uses the app Habitify to break down his day into 15-minute increments and tells him what to get done and by what time to get it done. At the end of the day, the app Hubspot asks him what he did today and what his plan is for tomorrow. He is the owner of OneSource Insurance Group in Ozark, Mo., a practice he described as the Walmart of financial services, insurance, real estate and tax services. “We have 19 insurance and financial advisors specializing in different categories,” he said. “And then we have two people who do taxes and 13 real estate agents.” A thriving practice, Acre said, boils down to three things: effort, performance and plan. And creating processes around all three of these things ensures accountability and a greater likelihood of success. “When I think problem, I think process,” he said. “I look at the...

Staff Sgt. Travis Mills was lying on a stretcher in a helicopter just minutes after his arms and legs were blown off by a buried bomb in Afghanistan, almost certain he was going to die. He did not know if he would see his wife and baby daughter again. He did not know if he even wanted to live. Then he turned his head toward one of his wounded men, who was screaming and writhing in pain. Mills smiled and winked to let him know everything was going to be OK. That’s who he is. Lying on the ground after a bomb blew up next to him, Mills was already aware that all his limbs were blown off, but he told his medic to make sure his men were OK. But in the following months, he did not know if he would be OK. Although he had been trained by his parents, coaches and the U.S. Army to never give up, he was not sure why he should go on. He had been a star in baseball, basketball and football back in high school in Michigan, entered the 82nd Airborne at 6 foot-3 inches, 250 pounds, capable of lifting 550...

Industry lobbyists are tallying long hours tracking regulatory and legislative efforts that threaten to substantially change the sale of insurance products. Rule changes are advancing on three fronts: The Securities and Exchange Commission approved Regulation Best Interest, a standard of conduct for brokers, by a 3-1 vote. Two National Association of Insurance Commissioners’ working groups are inching toward changes to rein in illustrations. A Senate bill would require health benefits brokers to disclose their commissions and other incentives they receive. SEC Rule: Bold Or Feckless? Regulation Best Interest, a three-part rulemaking package aimed to establish a standard of conduct for broker-dealers, will better protect investors, the SEC said. The newly adopted rule comes just one year after the Department of Labor’s fiduciary rule was vacated. The timing is about all the two pieces of legislation have in common. The final version of Reg BI is a whopping 771-page tome, noticeably longer than the proposal, of precedence, interpretation and justification for omissions and changes. Takeaways from the legislation: 1. There’s still no definition of “best interest” — Noticeably missing from the proposed rule, the SEC has chosen not to include a definition of the phrase in its final rule, either. 2....

When people meet me, they might sense something a little weird. OK, a lot weird. One key thing is, I don’t hear perfectly. I have worn hearing aids since I was 3, but the latest models are small enough to escape notice. At some point after I meet people, I might mention I am hearing-impaired, particularly in noisy situations. The other thing is also not immediately detectable. In fact, most people never realize this one: I am blind. I mean I am legally blind. I have tunnel vision that has reduced the range that I can see to about 15 degrees. Less than 20 degrees is considered legally blind in most jurisdictions. To put that in perspective, you probably have 180 to 210 degrees of vision. That means if you looked straight ahead and stuck your arms out from your sides, you would see your hands, 180 degrees from one to the other. You might even see a little behind them, which would be as much as 210 degrees. If I held my arms straight out in front of me as if I were holding a basketball and stared at a spot between them, I could not see either thumb...

An overwhelming majority of Canadian investors believe that protective measures should be put in place to ensure that investment firms and advisors can take action when they suspect investors have become vulnerable or that others might be attempting to financially exploit them. In a survey released Friday by the Investment Industry Regulatory Organization of Canada (IIROC), 92% agreed it is necessary to have such regulatory tools in place to allow advisors and firms to protect vulnerable investors. Some 93% support having a “trusted contact” listed on their account – someone the firm or advisor can contact if they believe an investor has become vulnerable or may be subject to attempted financial exploitation. “Safe harbour” would provide firms with protection As well, 86% support creating a regulatory “safe-harbour” that will provide investment advisors and firms with protection from possible regulatory sanctions if they take action to protect a potentially vulnerable investor. The example IIROC cites is temporarily refusing instructions that are not in the investor’s best interest while investigating the situation and/or reaching out to a trusted contact. “It is encouraging to see resounding support from Canadians for measures to safeguard vulnerable investors – particularly seniors – and protect them from...