I've been working all day on refreshing my stock research. I find that spending hours on this, digging through numbers, gets me some fresh new ideas to share with clients. Stocks are a core element of our profession, and I think folks that don't do any equities are missing the boat at best, sissy men at worst.

We are also going to send out a mailer every 6 weeks or so, that has a muni idea, a preferred stock, taxable bond, and a cd on it. Any reasonable prospect, will be asked if they'd like to recieve it in the mail. We did something like this for several years at our old firm, and it was pretty good at getting business, or a warm prospect to turn into a client. So, we're working with compliance on getting its base format approved.  

I hate insurance

never wrote a ticket

aint no state farm agent

have advised people and sent them elsewhere

long term care.......

tons of people have asked for advice

never knew the right advice

seemed like such a waste if you dont need

Ive seen those expenses bury people

this new crap  (new to me)

where you get a life policy and wrap it with long term care

i like it.      

cover urself for the nursing home stuff and don't totally piss the cash away.

looks like you get a low CD type return if you dont start drooling 

i might do all the BS to pitch this stuff.  

any insurance doctors out there?    

im cynical as hell

am i missing any major snake oil angle here?

No, you aren't missing anything here.  They are pretty sweet when you get someone to do it.  I have done a few 1035 exch from regular life insurance to this and it is an easy sale if you find the right situation and the client is in ok health so they can get through underwriting. 

You need to look into several different variations on that theme.  There are two basic ones at Jones - Moneyguard and Hartford's Life Access rider.  What I've found out is that Moneyguard (what you're describing above) leans more towards the LTC side and not much bump to the DB on the LI side of the contract.  The Hartford product lets you take 2% of the DB per month as long as it lasts.  It's better at the LI side obviously. 

Still, if you set up a traditional LTC policy to basically do the same thing as Moneyguard, it's very competitive with the other products.  The additional bonus that you get with a traditional LTC policy is through the partnership regulations that have gone through a lot of states. 

I just had this conversation with a client last night.  It used to be a really simple discussion.  Now, they leave with their head spinning because they've got so many ways to cover LTC expenses. 

I don't think you're missing any snake oil.  It's pretty simple - you're buying life insurance in case you die instead of using the LTCI.  No smoke and mirrors.  Just simple leveraging of your already earmarked money. 

Good points. You figure, if you go with high quality coverage, you get what you pay for, so it comes down to the client's goals. No sense in pitching great products to flakely or  just poor people.

Assuming there is money, probably no sense in mixing product features. Better to go with an "average" scenario on the long term care (2-3 years total care) and keep the rest of the premium money "liquid".

Don't forget DI for the increasing number of self employed contractors, or even people who feel insecure in their jobs and won't enjoy portability of term coverage ( and separate term and perm).

You can point out that group DI likely does not cover the bonus, so now is the time to apply, when you have insurable income. Probably most everyone should have at least a "small" perm policy (for tax free liquidity, even if it is just to protect the investment portfolio from disruption for the survivor, you talk about real cash flow at death).

Peoples goals have a way of changing, too. Mom dies and dad wills many assets to the new spouse, just change the beneficiary on dad's perm policy to the kids. Ooops, I forgot, advisors and clients don't like to talk about this stuff.

If you want to understand life insurance, focus on the projected internal rate of return tables.  Even in UL (not VUL) - in some cases, if I put a lump sum in a policy, the internal rate of return is a couple hundred percent if the client dies early, and drops down to a few percent if the client lives to 100. Let's see, if I live to 100, I still get a few percent a year compounded, passed on tax free to the family... how bad is that? If I die in ten years, the internal rate of return is 17%.

Could be a few opportunities in insurance for 2011.

When dealing with a life or insurance wholesaler of any sort, remember that they tell you what you want to hear, not what you need to hear. Spend extra due dilligence reading the paperwork, offering materials, contract, prospectus, so you REALLY know the stuff. My former colleagues always took everything at face value, and when I'd bring up something technical, they were shocked at what I'd revealed. But, if you only care about making a sale, then forget it, just pound out the typical insurance cliches and off you go... Not like it will bite you in the butt for at least 5-10 yrs... 

Right.

If I look at retirement income for someone with, for example, 500k, no pension, a spouse and aggressive income goals, 2 SS pensions, etc, and I'm NOT showing:

Portfolio strategies

Annuity strategies

Annuitization

Life insurance strategies

Long term care...

and so on as alternatives from which to choose, can I call myself a financial planner?

Not meeting goals is really a bite in the butt. I'm in favor of keeping it simple, but I believe this industry has veered off course a bit toward "asset management", and I'm not talking about real HNW accounts, I mean the mass affluent clients.

In that sense, insurance is probably getting a bad rap. Ironically, the best mass affluent prospects for insurance are probably more analytical and will be looking at things like internal rate of return, contractual guarantees versus potential market returns, and real diversification (not just asset allocation or hedge funds).

Running out of money when you are old really sucks.

Within the next three years, the insurance industry will get a black eye to the degree that many will not admit having been great purveyors of it in the past...

There are defaults coming, and I predict that at least two household names will go into recievership, just in the USA. A couple Euro companies may go under as well.

Insurance companies are big investors in real estate, bonds, and also have a bunch of private equity crap, along with derivatives.

So, why hasn't this already happened huh? Well, that's because the puppet masters aren't yet ready to dump this onto the unsuspecting public. Same goes for FDIC charge offs. No, they'll just wait until the economy shows signs of recovery. Yup, that is when they'll start the dumping.

And, that is EXACTLY what they did in the aftermath of the junk bond/re crash of the late 80s, and the S/L crisis. 

Big, thanks for bringing us the happy news.

Should I be dumping my A.M. Best rated A+ (company's financial strength, ability to meet contractual obligations) VUL now?

I'll take an A+ contract, real estate, a portable generator, and backup water supply over most alternatives any day.

Bad purveyors going bust is never a reason to quit the truth.

Rated? Huh?

Pay me 100 bucks, and I'll rate anything you want AAAf ....

And, if you pay me another 100 bucks, I'll rate anything you want that is AAAf, a BB-

Let's make lots of money....

Check out what the ratings agencies are going to do to Europe, then our State obligations. Crime syndicate...

I don't see where the assets backing the investment portfolios of my insurance contracts are much different than my wrap accounts. In most cases, insurance companies are better hedged with calls, puts, and other options - unless you are running those. Maybe I'm missing something. I don't doubt that you could argue munis, or whatever, are a house of cards, but I don't see the comparative benefit of any value or quality that you could add versus the general account of any well rated insurance company. If you have any specifics, I'm all ears. Specific (top rated companies), specific leverage or risky bets?

You generalizing your fears about the insurance industry don't make it so. Can you point me to your research sources? This is starting to sound like a pitch for gold and guns.

Read the risk factors section of any annual report of an insurance company. My studies are extensive, including reading up on stuff at www.soa.org, an actuarial society website.

MBIA and Ambac are already broke. Why?

So, just take that "why" and apply into the retail line of insurance.

You have to charge appropriate levels of premiums for risk, and they didn't. You must have assets backing your potential liabilities, they don't. When managing risk, you must buy prudent assets and create hedges that actually work, and they didn't/couldn't. An insurance company has to limit the scope of their liabilities to a reasonable level, they did not.

Don't shoot the messenger...

PS, did you know that the insurance industry has had declining premiums for 3 straight years? That has not happened since the GD.  

I wouldn't want to shoot the messenger, but I don't find anything disturbing at the actuarial website. Perhaps you can provide a specific link to support your claims, which seem to be more of a general narrative case against insurance than anything specific.

I do know that advisors are selling a lot less insurance. Again as narrative, we know a lot of advisors have moved from b/d to RIA, have dropped their insurance licenses. Even established b/d reps seem to just want to collect a fee to manage the assets, which is my point. The contrarian opportunity to address insurance issues may be better for many clients, and it might even be lucrative for some advisors.

I guess we don't have many insurance people on this board. Whatever.

I listed some specific issues. Beyond that, I don't have the care/energy. I know what I know.

Wow, are you kidding?

Do I strike you as a "kidder"?

What I meant by that, was that I don't feel like writing a term paper on this website discussing the research I did. I spent quite a bit of time on that. Again, I'd just emphasize that both Ambac and MBIA are toast, and for the same reasons why I think some larger more retail ins co's are at risk. I also listed the specific problems both Ambac and MBIA encountered. 

You make it sound like I'm predicting rain on the sun.

Frankly, I'm just stating the obvious. But, it wasn't so obvious when I first encountered the issue, which was late 2007, as I became more and more suspicous that our entire financial system could only be described as one big bloated hedge fund of derivatives. I had no idea just how right I was.

Trust me, it never hurts my feelings when people disagree with me. When I state an opinion though, I'm careful to back it up with details. And I have. I'm just not going to start linking articles, and turn this into a big research project.

Insurance profits are impacted for one real reason this year ,,, no person with money is making any moves until they have some idea what's going to happen to estate taxes.

As for ideas to get motivated...  I'm going to focus on four main areas of business building in 2011 and hope that will get me excited:

1. Seminars / Events 2. Small Business Retirement Plans 3. Estate Planning 4. Referrals

My core business plan will center around these areas.  In addition, I'm going to rework my appointment presentation.  Good things ahead!!!