July 2016 Volume 16, Issue 7

A Special Publ i cat ion for CENCO Related Agents

CENCO STREET JOURNAL

Inside this issue:

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to:

• Quotes

• Forms

• Introduc�on Kits for

Our Core Carriers

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current issues of the

Cenco Street Journal

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Cenco eNews

Check Out The Cenco Website: www.cencoinsurance.com

Key Man Insurance

2

ABR’s - When Should A Client Accelerate A Rider?

3

AIG Partners New IUL - QoL Max Accumulator+ QoL Max Accumulator+ is an attractive new, accumulation-focused index universal life insurance product designed to deliver both potential growth and the tax-advantaged income your clients need, when they need it. Plus, it incorporates a unique combination of cash value enhancement features and riders not currently available on any other single policy. Growth Strategy - Potential for long-term cash accumulation. Lean policy design can build cash value through potential interest crediting from index interest accounts. Stability Strategy - Help reduce impact of market volatility. Volatility control strategy is tied to a hybrid index currently exclusive to American General Life which seeks more stable returns. Access to Cash - Multiple options to optimize income distribution. Numerous cash access options for supplementing retirement, covering healthcare expenses, starting a business and more. Protection - Helps provide security for beneficiaries. The tax-free death benefit can help assure that your client’s family or business lives on with a lump-sum benefit payment. Option to select a guaranteed income stream for beneficiaries that will grow at a fixed interest rate. Check out QoL Life to the Max - an interactive & consumer-approved sales tool developed for you to use with your clients: http://retirestronger.com/QolLifetotheMax

Sales Idea of the Month Smart Money Sales Concept Smart Money is money your clients want to control and be able to access during times of need. While there are several places to store Smart Money, one option to consider is life insurance. Here are three sales tips: • Understand the concept: Permanent life insurance offers death benefit

protection, cash value growth potential, and access to funds. • Identify the client profile: Ages 50-80 needs death benefit protection and has

funds not meeting current needs. • Know how it works: Typically, the life insurance policy is funded with a lump

sum transfer product or a life insurance product with the potential to generate cash value growth.

Start now and help your clients meet their financial protection goals!

Page 2 A Special Publication for CENCO Related Agents

Key Man Insurance is a great way for a business to insure against the loss of a key employee. Typically, when a business owner is just starting out, they are thinking of immediate survival and not yet working on protecting the business in the event of the premature death of a key owner or employee. Key Man Insurance is life insurance on a key person in the business. In a small business, the key person is usually the owner, however a key person can also be a sales person who brings in the majority of the business, a machine operator, or an artisan who is needed to turn out work that will make the business prosper. Anyone whose absence would place the business in jeopardy or whose loss would damage the revenue stream of the business is a key person. How it Works When a company identifies a key person to their operation, the company can purchase a life insurance policy on the key person, pay the premiums, and be the beneficiary of the policy. Oftentimes the death of the key person in the company can mean the death of the company. The Key Person Insurance helps the company survive the loss of the key person. It provides cash flow while the business is either sold or provides money until the key person can be replaced and the business can then continue to grow or make up for the loss of the key person. The company can use the proceeds to pay expenses until the key person can be replaced. If the key person cannot be replaced, the company can use the funds to pay-off creditors, pay severance to employees, distribute money to investors, and, if necessary, close the business down in an orderly manner. How Much Insurance Is Enough? Have your business client create a spreadsheet of what would happen if the key employee would no longer be available.

• What sales would be lost?

• What processes could no longer be completed in an timely manner?

• What loans would default?

• Would suppliers cut the company off?

• Would the company continue to be viable?

• What would the resulting financial impact be on the company?

• If the owner is the key person, what will be the impact on his family that has depended upon the company for living expenses?

• What is the value of the company that would be lost? Use the spreadsheet to determine how much money the business would need to survive until it could replace the key person, regain lost momentum and make the business viable again. The reason we call it Key Man Insurance is that it can take years to regain momentum and make the business profitable again. Key Person Insurance or Key Man Insurance, as it is often referred to, compensates a business like a personal life insurance policy compensates a family for the loss of a loved one or bread winner. Many businesses have key intellectual property that needs protection. This insurance can also do double duty for debt protection, revenue protection or even Buy-Sell protection.

Key Man Insurance

Page 3 Volume 16, Issue 7

ABR’s - When Should A Client Accelerate a Rider?

Life insurance with Accelerated Benefit Riders. The key is to understand when the time is right to consider accelerating a rider. Accelerated Benefit Riders were and are designed to be available for assistance when the time is right. So when is that time? Well that is a good question and the answer will depend on the individual and their situation. If a policy holder files a claim and the qualifying condition has not affected the insured’s life expectancy, a smaller and in some cases zero payment could be available. If the insured’s life expectancy is shortened due to the qualifying condition, a much larger payment could be available. Simply having a qualifying condition does not always mean an insured should accelerate the policy. Here are some examples: Example 1: A 53 year old male with a $100,000, 10 year term policy that has been in effect for one year has what is considered a very mild heart attack. As an avid Crossfit athlete, he was found to have a 90% occlusion in one of his arteries. His condition was resolved with a coronary stint and improved with proper diet management and continuation of his exercise regimen. Negligible damage to his heart was done and his cardiologist indicated he has at minimum 30 years to live. A heart attack is a qualifying condition. Is this a good time to accelerate? No, since the cardiologist indicated that there was negligible damage to his heart and that the event had little to no effect on his life expectancy, this would not be an appropriate time to accelerate. Remember, the present value of the future premiums (approximately 30 years) are deducted from the present value of the death benefit. Take into account the present value of nine years of the 10 year level term premiums and 21 years of Annual Renewable Term premiums deducted from the present value of $100,000; this would result in an unpayable claim. Example 2: A 45 year old female with $500,000 IUL policy was diagnosed with ALS (Lou Gehrig’s disease) and given a life expectancy of 2 years. Even though she had very minor symptoms at time of diagnosis, was it time to accelerate? You bet. She decided it would be a good idea to do a partial acceleration shortly after diagnosis. She used that partial to enjoy spending time with her family and making memories while she was still functional. She had comfort in knowing she could further accelerate at a later date if needed if other future expenses were to arise. She actually beat the odds and lived 3.5 years. In this case, acceleration was appropriate and put to good use when it was really needed. Accelerated Benefit Riders are a wonderful tool to provide peace of mind for future events should they occur. The important part is understanding how they are calculated and when is the best time to utilize them. As you have seen, simply having an event does not always mean immediate acceleration is appropriate. However, sometimes it is and that is the backbone of what these riders are for - protection when it is really needed.

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Quality of Life...Insurance portfolio offers solutions for a variety of clients and needs. Learn more about their insurance products and sales resources by visiting:

www.qualityoflifeinsurance.com

Life Insurance You Don’t Have To Die To Use!

Did You Know?..... • 7 in 10 people who are age 65 will need chronic illness care

later in life. • The number of Americans who need long-term care will

more than double by 2050. • 9 in 10 people who go on long-term care claims do not

recover. Only 10% of the market will have a non-permanent condition.

The Definitive

Marketing

Publication

For Life &

Disability

Insurance

Four Generations = Four Different Sales

Approaches! Look Inside For

Details!

who relayed, when describing the ideal shopping experience, that “there is [some-thing] about the product and its cost, but there’s also a big part about being treated like a valued customer.”

Here’s a tip that may culminate in matching millennial needs to solu-tions: Foster your professional online presence (be sure to check for compliance with your agency’s or broker/dealer’s pol-icies), but also suggest offline time with clients and prospects. Invite millennials to meet you with some of their BFFs for a brief, no-strings-attached “lunch and learn” session geared at helping them be-come more savvy about personal finance matters.

Generation X (born: 1965-1979)Gen Xers make up a hardworking, well-educated part of the workforce, according to a Center for Work-Life Pol-icy report. According to Forbes, only 25 percent of adults in the U.S. are members of Gen X, but they have disproportionate spending power, with 31 percent of total U.S. income and 29 percent of total net

turns approximately 114,000 results. Consider the following strategies for

gaining mindshare and forward motion with millennials:

» Be succinct. As a blog post by Gavin Finn on CustomerThink.com relayed, mil-lennials have been perceived falsely as hav-ing “the attention span of a gnat,” but the reality is they have been trained to digest a high frequency of information. For that reason, he said, the volume of information shared with them must be condensed.

» Be transparent. A Mashable post by communications professional Joel Kaplan explained, “Millennials love give-and-take. …This generation craves transpar-ency and dialogue with the products they love.” It may be difficult for millennials to embrace a product or even continue a di-alogue about it if they’re unsure they’ve received the needed details.

» Be customer-centric. Acknowledge each millennial’s personality and preferences. An Accenture report earlier this year includ-ed the viewpoint of a millennial consumer

Don’t treat the youngest ones like juniors, but don’t call the oldest ones seniors.

By Mark Peterson

The gap between generations is the stuff of songs and movies. In the insurance and financial services industry, a failure to

respond to key distinctions between gen-erational attitudes and behaviors can keep agents and advisors from engaging with consumers, building a strong rapport with them, and closing the gap between their needs and appropriate solutions.

However, financial professionals whose approaches transcend generations may be able to develop and grow bonds more easily with consumers of any age. The defi-nitions of generational boundaries vary by source, and each prospect or client deserves a custom-tailored approach, as individuals don’t always fit labels. Keeping that in mind, here are some insights into nuances among generations and tips for interacting with members of each of the four key adult age cohorts.

Millennials (born: 1980-2000)America is home to 83.1 million mil-lennials, according to a June 2015 U.S. Census Bureau estimate. Additionally, millennial spending power is projected to reach $200 billion annually by 2017 and ultimately exceed $10 trillion, ac-cording to a Forbes report earlier this year. Given this generation’s vast size and strength, it likely will continue to influence development and distribu-tion of financial products and services for many decades. Yet millennials often are referred to as misunderstood; a Google search of the Web for the word “misunderstood” with “millennials” re-

Four Generations = Four Different Sales Approaches

AGLC109757

surancenewsnetM A G A Z I N ELife Annuities Health/Benefits Financial April 2016

FOUR GENERATIONS = FOUR DIFFERENT SALES APPROACHES BUSINESS

worth. However, at ages 37-51 this year, many in the Gen X group face preparing for their own future as well as for their children’s education and for the care of aging parents.

Following are some potential ways to foster a meaningful relationship with the Gen X consumer:

» Offer an annual needs assessment. Convey that you realize a plethora of pri-orities may be competing for their atten-tion. These priorities can include college funding, planning for sufficient income in retirement, covering potential long-term care costs, helping to pay the mortgage in the event of untimely death, and more.

» Show empathy. Explain how you’ve managed your own similar priorities (as applicable) or helped other clients with needs akin to the Gen Xer’s challenges.

» Explain value propositions. People are not always aware of appropriately priced solutions for financial needs. According to LIMRA research, Gen Xers overestimate the cost of life insurance by 119 percent.

Try this tip for closing the gap with with Gen X clients and prospects: Educate them about the role of products designed with utility in mind. Consider reviewing policies with available or in-tegrated riders that may be leveraged to help counter financial fallout from a chronic illness, costly accident or dis-ability.

Baby Boomers (born: 1946-1964)Baby boomers are “entering their retire-ment years and reinventing what it means to be retired,” according to an Urban Institute data project. This reinvention includes staying on the job longer. How-ever, there is some evidence that the baby boomers’ trend toward good health could be reversing. Moreover, boomers are increasingly entering their retirement

years with debt. Still, boomers are pro-jected to transfer $30 trillion in wealth to younger generations.

Try the following strategies for relating well with this populous, wealthy genera-tion:

» Exhibit positivity. The American Man-agement Association has characterized boomers as “more optimistic and open to change” than those in the generation that preceded them.

» Provide face time plus online re-sources. Ninety-six percent of boomers who participated in a recent Harris Poll reported spending five or more hours on the Internet per week, and 54 percent reported spending 20 or more hours on-line per week. Boomers may like being able to delve into details on your agen-cy’s website.

» Choose verbiage carefully. Boomers may respond well to a clearly expressed goal that hones in on their unique needs and helps with personalized solutions.

Consider this approach to help bring interactions with boomers to fruition: Take an assertive, straightforward tack. Simply ask whether you’ve earned their trust and their business. Boomers have been exposed to traditional marketing tactics for most of their lives.

The Matures (born: before 1946)America’s matures, from age 71 upward, actually include members of two dif-ferent generations. As the Society for Human Resource Management (SHRM) has explained, one group reached adult-hood during World War II and was known for its patriotism; the other was known for its pre-war stoicism and its ability to take adversity in stride.

Here are some tips for fostering positive interaction with matures:

» Don’t call them “senior citizens.” Ad-vances in medical science have enabled matures to live longer, but that doesn’t mean they like the term “seniors.” Instead, refer to them as “seasoned” people in the prime of their lives.

» Review solutions from familiar brands. Important spending attributes of the matures include brand loyalty and the desire for security.

» Discuss products that offer flexibil-ity. Matures who live on fixed incomes may appreciate a solution such as guar-anteed universal life insurance with a re-turn-of-premium (ROP) rider. This type of product, which can sometimes be is-sued up to age 80, offers the opportunity (when the terms of the contract are met) to recoup a portion of paid premiums if priorities change and the death benefit no longer is needed.

Consider this strategy to facilitate trust with matures: Demonstrate that you remain available as a resource while matures are considering which solu-tions are right for them. Matures take their time making decisions. Give them some space, but reach out from time to time to let them know you’re ready to supply more information or answers to their questions.

Being aware of varying generational preferences and knowing how to address them may help you get a physical or “vir-tual” foot in the door. Embracing a will-ingness to assist clients across the gener-ational spectrum just may set you apart from the crowd.

Mark Peterson is senior vice president, brokerage distri-bution, of AIG’s life insur-ance business. Mark may be contacted at mark.peterson @innfeedback.com.

For more information, visit www.RetireStronger.com.

Your Financial Future: How Will You Pay For Long-Term Illness Care?Life insurance chronic illness riders can help reduce the unexpected financial strain due to a chronic illness by providing access to cash while LIVING.

WILL IT HAPPEN TO YOU?

WHERE WILL CARE COME FROM?

who are age 65 will need chronic illness

care later in life.1

8 out of 10 people who need long-term care

By 2050 the number of available family and friend caregivers will be half what it was in 2010.This coincides with the time in which baby boomers will be in the high risk years of life5

Female, 49 years old

Spends almost 20 hours/week providing unpaid care to mother

Works outside the home

Has been a caregiver for nearly 5 years7

who go on long-term care claims do not recover.

Only10% of the market will have a non-permanent condition.2

The number of Americans who need long-term care

Nearly two thirds of family

caregivers are female (65%)6

9 in10 people

will more than double3 by 2050

7 in10 people

The “average” caregiver:

65%

2010 2050vs.

live in private homes where about 80% of the care is provided by family and friends.4

YEARS

HOURS

1 Centers for Medicare & Medicaid Services 11/14/2014 (longtermcare.gov/the-basics/who-needs-care/)

2 Society of Actuaries: “Long-Term Care Risk Management: Re-Pricing In-Force Policies”, 2014

3 S. Kaye, C. Harrington, and M. Lapiante (2010). Analysis of 2005 SIPP, 2007 NHIS, 2007 NHHS, and the 2005-2006 Medical Expenditure Survey

4 Congressional Budget Office “Rising Demand for Long- Term Services and Supports for Elderly People” June 2013

5 The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers; AARP Public Policy Institute August 2013

6 Donald Redfoot, Lynn Feinberg, and Ari Houser, AARP Public Policy Institute. The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers. Insight on the Issues 85, August 2013

WILL YOU BE ABLE TO AFFORD LONGTERM CARE?

Beyond 100

days Medicare pays

$0for long-term care services8

2015 annual median cost of long-term care:9

Policies issued by American General Life Insurance Company (AGL), Rider Form Numbers: ICC15-15602, 15602, ICC15-15603, 15603, ICC15-15604, 15604, ICC15-15600, 15600, ICC15-15990 and 15990. Issuing company AGL is responsible for financial obligations of insurance products and is a member of American International Group, Inc. (AIG). Guarantees are backed by the claims-paying ability of the issuing insurance company. AGL does not solicit business in the state of New York. Products may not be available in all states and product features may vary by state. Variable universal life insurance policies issued by AGL are distributed by AIG Capital Services, Inc., member FINRA. © 2016 AIG. All rights reserved.

AGLC109775 (0416)

$80,300 $45,760$91,250

Nursing Home(private room)

Nursing Home(semi-private room)

Home Health Aide

Homemaker Services

Assisted Living Facility

Adult Day Health Center

$44,616 $43,200 $17,904

7 Feinberg L. Testimony before the Commission On Long- Term Care. “Populations in need of LTSS and service delivery issues.” AARP Public Policy Institute July 17, 2013.

8 Centers for Medicare & Medicaid Services, “Medicare coverage of Skilled Nursing Facility Care” medicare.gov/Pubs/pdf/10153.pdf, January, 2015

9 Genworth 2015 Cost of Care Survey, Home Care Providers, Adult Day Health Care Facilities, Assisted Living Facilities and Nursing Homes; 03/20/15

We offer life insurance solutions that provide cash access to help with unexpected financial strain due to a chronic illness. Our Accelerated Access Solution® chronic illness rider can provide additional access to funds while LIVING.