Innovation and Insurance


On Oct. 21, 1879, Thomas Edison invented the first commercially viable light bulb. It lasted 13.5 hours … but soon, the average bulb lasted 150 hours, and within 10 years, commercial bulbs glowed for 1,200 hours. The speed of improvement on Edison’s commercial bulb was incredible. 

Today, technology and communication are the new light bulb. Google, Apple and Microsoft have changed the way we live, communicate and do business. However, the insurance industry isn’t catapulting like other industries with its speed of innovation. Why? Is it because we’re full of mature carriers and distribution? It doesn’t have to be that way, does it?

We have to look at new opportunities to expand and, at the same time, go back to our roots. Only 43 percent of Americans own life insurance outside of group contracts. Of that 43 percent, 70 percent believe they are under-insured. Why are we not addressing our own clients? What level of service are we providing to our existing clients?  

Richard Branson started Virgin Airlines based on a bad service experience. The airline industry hasn’t been the same since then. Which one of your clients will impact your business by leaving you, challenging you or becoming your competitor?

I challenge all distributors in our industry to force innovation. We can’t continue to help Americans at the level they need without significant change. It requires investment, commitment and vision. Bringing new people into the business is only part of the solution; we have to change the way those new people interact with their clients. Within 10 years, we have to distribute products in a new way that can reach more people and grow, just like Edison’s commercial light bulb. 

The Bottom Line: Innovators like Thomas Edison and Richard Branson changed the way we live. Our industry must also change so Americans can continue to thrive after catastrophic events. The light bulb changed 10 fold in 10 years; we have to do the same.   


innovation change technology

RMD, QLAC, IRA, DIA – What does it all mean? Action!


If your practice is anything like mine, activity is a critical component in driving revenue-generating opportunities. The IRS and U.S. Treasury put new required minimum distribution (RMD) regulations into place effective July 1, 2014, and in doing so, gave us an opportunity to increase activity that will drive sales in the fourth quarter of 2014 and into 2015.

These new regulations implement suggestions made in 2010, in response to the Obama administration’s request for information on lifetime income options. The new regulations allow an individual retirement account (IRA) owner to use a portion of their qualified money to purchase a qualified longevity annuity contract (QLAC), and have that portion exempt from RMD calculations.

A QLAC in our language is a deferred immediate annuity (DIA). It’s very important to note that a QLAC must be a DIA fixed contract issued from a carrier – no private annuities are allowed. In addition, fixed indexed annuities and variable annuities don’t meet the regulations.

Now you have a great reason to contact clients who aren’t using their RMDs and show them a way to continue to defer taxes on a portion of their qualified assets. These recent changes to IRS rules have many benefits: 

  • Your clients may defer 25% of their qualified assets, up to a maximum of $125,000
  • DIAs are the least expensive way to purchase a guaranteed future income stream, and purchasing today allows your clients to take advantage of today’s mortality credits. For example: a 70-year-old male  purchasing a $100,000 DIA from an A++ carrier today could guarantee themselves a $30,698.76 annual income beginning at age 85 (life with cash refund)
  • Income can be deferred up to age 85, and as a result, taxes are too
  • A number of death benefit options are now eligible, including return of premium


While DIAs are available today, the first QLAC-friendly contract is expected to be released at the beginning of November, with more expected to follow. Now is a great time to reach out to your clients who don’t enjoy taking RMDs – schedule a meeting to discuss this new opportunity. Activity will lead to sales, even if it doesn’t involve utilizing this concept.

Our Ash Brokerage annuity team is stacked with industry experts who are very much up to speed with these new regulations. According to LIMRA, DIAs were the fastest growing annuity segment in 2013, and they are expected to capture significantly more market share in the years ahead. We’d love to hear from you to discuss this new opportunity and be the trusted partner who helps you incorporate QLACs into your practice. Call us today – your clients are depending on you, and you can depend on us. 

QLAC Annuities DIA Deferred Immediate Annuity

Lessons from the Boll Weevil


You may or may not be familiar with the story of the boll weevil, but I’ve been thinking about it the last few weeks during the recent market volatility. The story is a great reminder of why we need to consider alternative products outside of our normal assets-under-management mindset. Change is always feared, but many times, it results in greater success. 

The boll weevil is a beetle that migrated to the United States from Mexico in the late 19th century and devastated the cotton crops in the South. Farmers nearly went bankrupt due to the infestation, so many began to grow peanuts instead. Most cotton farmers resisted the change, however, saying peanuts wouldn’t grow and no one would buy them. As it turns out, peanuts were not only resistant to the boll weevil, but they were also extremely profitable. In fact, the peanut farmers made enough money in three months to equal an entire year’s work in cotton. 

Eventually, the boll weevil was nearly eradicated in the south and cotton farming resumed. However, those who seized the opportunity to grow peanuts became far more prosperous than those who never diversified. In fact, the citizens of Enterprise, Alabama, erected a boll weevil monument to show their appreciation for the insect and its profound influence on the area’s agriculture and economy. 

Take a hint from the peanut farmers. With the recent market volatility, we must look to alternatives to meet client needs. Our clients continue to fear running out of money during retirement, yet we continue to throw out the same solutions to old problems. Like many farmers in the south found, a forced change creates opportunity and profits. Annuities and life insurance provide an opportunity to leverage tools for safety, protection and tax-advantaged growth. Many advisors don’t like having a conversation about these products, but it’s time to change.

The Bottom Line: The boll weevil taught a southern town the value of change. Adversity forces us to look at alternatives that many times work in our favor. 


AUM Annuities Change

Don’t talk yourself out of annuity sales


I would challenge every advisor in this business to ask yourself the following question: Are YOU talking yourself out of fixed or fixed index annuity sales because YOU think they’re not a good value for your customers?

In my travels, I often come across new advisors who cannot believe that fixed and fixed indexed annuity sales are having a record year. They actually seem to feel sorry for me until I explain now is a great time to be in the business. 

Right now, clients are looking for ways to get better yields without risk. There has NEVER been a better time to sell these products since other low-risk alternatives are at all-time lows for returns. I always compare the value of an annuity against a five-year CD. Back in 2008, you could find a fixed annuity rate at 5 percent, with indexed annuity caps around 8 percent. Five-year CDs were also at about 5 percent. So the leverage between the CD and the fixed annuity was nothing, and the index cap came out a little ahead.

Today’s rates are a different story. Five-year CDs are at 1 percent, with a five-year fixed annuity at about 2 percent and index caps about 5 percent. The leverage for the fixed annuity is now two times the CD, and the index cap five times! So I would argue that now’s a much better time to sell these products than five years ago, not to mention we also now have very innovative income riders available.  

Don’t talk yourself out of annuity sales – the public is starving for them!


Don’t forget this solution for businesses


We all know annuities are a great solution for retirement. But have you ever considered annuities as a retirement solution for businesses? If you’re working with business owners and executive-level clients, ask if their company has a defined benefit pension plan. 

Why? Traditional pension plans have become a thing of past as 401(k) and other contributory plans have overtaken the retirement landscape. As a result, many businesses have decided to do two things: 

  • Freeze and eventually terminate an existing defined benefit pension plan
  • Shift all or a portion of their plan benefit obligations to a third party

Here’s how it works: Businesses with a defined benefit pension plan can remove plan liabilities from their books by transferring the risk to a group annuity issued by a top-rated insurance company. This transfer allows the company to eliminate premiums paid to the Pension Benefit Guaranty Corporation along with significant cost savings in the plan administration. These cost savings can be reinvested in their business. Most importantly, the transfer allows the company to make good on the benefit promises made to their employees.

Plan participants benefit from the transfer because it ensures payment of the plan benefits promised to them at retirement that may include guaranteed income, the ability to provide ongoing income for a joint annuitant, and options such as payment frequency or cost-of-living adjustments.

You don’t have to be an expert to help your business clients execute this unique solution – Ash Brokerage has a dedicated team who can do it for you. You should call us – (800) 589-3000 – to learn more or to start identifying opportunities today. 

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