Are Insurance Companies Really Safe?

read our article about insurance companies

Recently, we have all witnessed a dramatic change in the attitudes people have about their money. Investors have begun seeking ways to properly eliminate risk and preserve long-term, guaranteed growth. When people seek safety and protection, they often consider utilizing the services and guarantees of America’s insurance industry. For many years, people have considered annuities to be a safe haven for their life savings. The following is a brief outline that reveals some of the reasons annuities and insurance companies are so safe.

Regulation

The US insurance industry is truly one of the tightest regulatory environments in the world.
Each state has a Department of Insurance (DOI) regulating insurance activity in their respective state. For example, if you live in Oklahoma, your DOI is keeping an eye on the operation and solvency of each insurance company that does business in Oklahoma. It is important to keep in mind that the same holds true if that same insurance company is approved to do business in another state. In other words, your DOI is not the only one watching over the insurer. Every state the insurer does business in has another DOI looking over their shoulder as well. This creates a truly remarkable level of oversight to catch potential problems well before they can get out of hand. The following is a short list of the key areas under
constant supervision.

Capital & Surplus Requirements

Insurers use capital and surplus as a buffer to finance growth and pay for emergencies and other business commitments. Each state specifies a minimum dollar amount for required capital and surplus that each insurer must maintain.

Risk Based Capital Ratio (RBC)

This sophisticated formula allows regulators to evaluate whether the insurer maintains sufficient capital in relation to the relative risk within the insurers operations. Each year, the RBC levels for each company are reported to the National Association of Insurance Commissioners (NAIC) and the state where the insurance company is domiciled. These ratios are then compared to the standards set by the NAIC for monitoring. The NAIC prescribes action based on 6 categories within the levels of performance for the RBC Ratio.

Solvency

Annual Statements are filed with every state where the insurance company is licensed to do business and a copy sent to the NAIC. This allows for a thorough annual review of overall solvency within the company.

Other Ratios and Formulas

The Insurance Regulatory Information System (IRIS) is a system that has been developed to monitor financial conditions and prevent insolvency within an insurer. There are a total of 12 financial tests performed within the IRIS. The Financial Analysis and Solvency Tracking (FAST) system was created for additional analysis of larger insurers. The FAST system is applied to review the insurance company’s financial status every three years. The FAST system reviews both current financial records along with a review of the company’s 5-year history.

Guaranty Associations

As an additional safety net, each state has established a life and health guaranty association, which operates under the supervision of the state insurance commissioner. Insurers are required to participate in a state’s guaranty association in order to do business in the state. The association is responsible for funding obligations to policyholders should an insurance company be unable to meet the financial obligation. The members of the association are assessed fees to pay for obligations to customers. Guaranty funds have specific limitations on the amount they cover. These amounts vary from state to state. State laws ordinarily prohibit an insurer from using the existence of the guaranty association for the purpose of the sale of insurance and annuities.

Other Insurance Companies

In order to keep a safe distance from financial challenges, insurance companies work together to create an additional level of safety for policyholders. Many insurers actively pursue reinsurance through other insurance carriers. This further spreads the risk against the potential for a catastrophic financial dilemma to have a substantial impact on any individual company.

Specialization

Today, many insurance companies specialize in a particular line of business. While this may skew their risk into specific types of areas, it can also provide another level of security. For instance, an insurer that focuses almost exclusively in the annuity business is not exposed by large natural disasters or unforeseen health circumstances. A well-managed annuity company can provide tremendous levels of safety and confidence by properly managing the funds in their care through a conservative portfolio of government issued and investment grade bonds.

Time

Insurance companies are built to last. In Europe for example, you can find insurers that are literally hundreds of years old. This tradition of conservative asset management and well tested formulas for performance put insurance companies in a class by themselves.

Size

Insurance companies today are measured in terms of the billions of dollars that they have under their care. This financial clout allows companies to weather the storms of time and keep the promises they have made to their policyholders.

Ratings Services

Insurance companies are among the most closely monitored business entities in the United States. Most active insurers are scrutinized by ratings services such as Weiss, Standard & Poors, Fitch, and the premier insurance rating company, A.M. Best. Companies like A.M. Best do more than simply make sure the company is meeting the minimum standards for regulatory clearance. Most ratings services are measuring the amount that the insurance company actually EXCEEDS the minimum requirements.
This additional monitoring level cannot be overstated. Nobody thinks twice when a consumer asks, “What is that insurance company rated?” In fact, most agents don’t wait for the question to be asked. They often offer the current company ratings to the client because it is assumed that they expect to receive this type of information. Why? Because the insurance industry is safe and measurable to a high degree. Now think carefully; when was the last time you asked, “What is my bank rated?” or how about, “I wonder what the credit rating of my local stock broker is?”

Taxation

The items discussed above are indicative of a truly safe environment for an individual’s long-term money. However, there is a risk that is often overlooked; the erosive nature of the personal income tax. Every American that earns interest in non-qualified CDs, checking accounts, money market accounts, bonds and other interest bearing vehicles must pay Uncle Sam a percentage of what was earned whether they used this money or not. Insurance products like annuities allow people to determine when, if ever in their lifetime, they are going to pay income taxes on their earned interest. This advantage can dramatically increase the amount of money people have available when they need it most.

Summary

Are insurance companies really safe? Absolutely! Insurance companies that follow the prescribed formulas, practices and traditions mentioned above can achieve a level of financial security for customers that other financial service entities can only dream of. Give us a call to evaluate if your current portfolio passes the safety test!

Help us Delay the DOL Fiduciary Rule

dfs marketing is a life and annuity marketing organization

NOW is the time for you to contact your Member of Congress and request they co-sponsor and vote in favor of the “Protecting American Families’ Retirement Advice” Act. This act will delay the implementation of the Department of LaborFiduciary Rule.

Last month, during our visit to Washington D.C., our team requested Congress help us delay the implementation of the Department of Labor (DOL) Rule. Congress has listened, and a new bill is circulating. When passed, the bill will delay the DOLFiduciary Rule for 24 months.

This is an important step in developing a workable solution regarding how, when, and where Americans receive investment advice on their retirement accounts. It also allows us to continue working through other avenues to develop a winning approach for independent agents to continue thriving as they provide safe solutions to many retirement challenges. Below are the resources you will need to contact your Member of Congress.

To see this short DOL delay bill CLICK HERE.

To find your Member of Congress CLICK HERE.

Sample Message to Congress Below:

DEAR _________,

I am requesting your support to co-sponsor and vote in favor of the “Protecting American Families’ Retirement Advice” Act. This act will delay the implementation of the Department of Labor’s controversial fiduciary rule and will allow our industry adequate time to comply and adapt to this far-reaching rule which affects trillions of dollars in retirement accounts and tens of thousands of jobs in the fixed insurance industry. I am in favor of giving best interest advice, but the rule was poorly written and actually eliminates entire distribution channels which have served consumers with safe retirement options for many decades. Please join me. I respectfully ask you to co-sponsor and vote for this bill so we can continue to work with Congress to develop a workable solution and better protect consumers with a law from our elected Representatives rather than an administrative order. You can view the bill at the following URL. Thank you for your time.

http://joewilson.house.gov/sites/joewilson.house.gov/files/Fiduciary%20Bill.pdf

Fixed Annuity

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A fixed annuity offering choices to balance your accumulation and liquidity needs

 

Does your financial time horizon rule out most annuities?

Is access to a portion of your money important to you?

Do you seek opportunities with future interest rate movements?

 

The choice is clear . . . for peace of mind and tax-deferred growth.

 

Choices

CHOICEFOUR from EquiTrust Life Insurance Company® is a tax-deferred annuity featuring competitive

one-year renewable interest rates, access to your money and protection of your principal. It is built on the understanding that competitive returns and minimal taxation are critical to reaching your retirement goals. You choose the time horizon that best fits your liquidity needs and a strategy that suits your interest rate outlook.

 

CHOICEFOUR is a single premium deferred annuity with a twist – you can make additional premium payments anytime during the first contract year. Plus, you have a variety of choices to customize your contract to suit your objectives.

CHOICEFOUR is really four products in one. You choose the product for you:

1.  BASE CONTRACT

The “Base Contract” features a one-year fixed rate that is reset annually. All premiums paid in the first contract year will receive the same interest rate as the initial premium. The interest rate in subsequent years may change on each contract anniversary – subject to the Minimum Guaranteed1 Interest Rate.

 

Upon partial withdrawal or surrender2, you are subject to a surrender charge on the accumulation value, in effect for nine years and declining annually: 12, 11, 10, 9, 8, 7, 6, 4 and 2 percent.3

 

If you need access to money from your contract, you may withdraw interest earned in the prior 12 months, and do so without surrender charges.

 

2.  MARKET VALUE ADJUSTMENT OPTION

If you’re confident that you will not need access to your money early, you may choose the Market Value Adjustment (MVA) Option. This option gives you an immediate 1.50 percent premium bonus, applied to all premiums received in the first contract year.

The Market Value Adjustment Option affects early surrenders of the contract in excess of the free withdrawal provision. The MVA may increase or decrease the accumulation value surrendered when interest rates move up or down relative to rates at the time of your annuity purchase. At the end of the surrender charge period, your cash surrender value will equal the full accumulation value. Ask your agent for more details on the MVA, or refer to your contract.

 

3.  LIQUIDITY OPTION

If you have a financial time horizon shorter than nine years, you may choose the shortened surrender charge schedule available with the Liquidity Option. This will reduce your surrender charge schedule to six years, declining annually: 12, 11, 10, 9, 8 and 7 percent.3 The cost of the Liquidity Option is reflected in an interest rate slightly lower than the rate available with the Base Contract.

 

In addition, the Liquidity Option allows you greater access to your money. You may withdraw up to 10 percent of the accumulation value annually without surrender charge, beginning in the second contract year. Although withdrawals of greater than 10 percent can be made, a surrender charge will be applied to amounts exceeding the 10 percent maximum.

 

Keep in mind that any withdrawals may be subject to federal income tax, and you may incur a 10 percent IRS penalty tax on withdrawals taken prior to age 591/2.

 

4.  COMBINATION OF BOTH OPTIONS

This option combines the benefits of both. If you prefer a shorter surrender charge schedule, yearly access to 10 percent of your accumulation value without surrender charge or MVA, as well as a 1.50 percent premium bonus in exchange for the Market Value Adjustment and a slightly lower interest rate, then both Options may be right for you.

 

Getting Started

CHOICEFOUR is available for issue ages 0-85. You pay no initial front-end sales charges or annual maintenance fees; 100 percent of your premium goes to work for you right away.

 

Other Features

ANNUITIZATION OPTIONS

Several annuitization payment options are available, including payment for life, payment of a designated amount or payment for a certain period of time. You determine the schedule that best fits your financial circumstances – a period as short as 5 years, or for as long as the annuitant is alive. Your agent can help you determine the most appropriate payment option, or discuss a specific payment schedule you may have in mind.

THE VALUE OF TAX DEFERRAL

Currently, all interest income earned on an annuity accumulates on a tax-deferred basis. No income taxes are payable until you receive a payment from your contract. If you are under age 59 1/2 at the time of withdrawal, an additional 10 percent IRS penalty may be imposed. Tax deferral is currently available only to individuals and joint owners, not to corporations or other non-individuals.4

 

MINIMUM GUARANTEE

You are guaranteed, upon surrender, to receive no less than 100 percent of your premiums, excluding any premium bonus if applicable, less any partial withdrawals, plus interest earned at a rate of no lower than 1% and no higher than 3%, less surrender charges.

 

NURSING HOME WAIVER RIDER

For additional peace of mind, your contract includes a Nursing Home Waiver Rider5 at no extra cost.

Available at issue up to age 80. If you are confined to a nursing home or hospital for 90 days or more, your contract accumulation value will be available without surrender charges or MVA beginning in the second contract year and during your confinement.

BENEFITS UPON DEATH OF OWNER

If the owner of the annuity dies, the full accumula- tion value is paid to the beneficiary, without surren- der charges or MVA. Upon death of an owner, the beneficiary may choose to have the death benefit paid immediately or applied to a payment option.

 

FREE-LOOK PERIOD

After your CHOICEFOUR contract is issued, you have a specified number of days to review it; see your contract for complete details. If you are not com- pletely satisfied with the terms, you may return the contract and receive 100 percent of your premiums paid, less any prior withdrawals.

 

Ask Your Agent

Ask about the variety of options that CHOICEFOUR offers for the stages of your life, or refer to your contract.

 

This is a summary only. CHOICEFOUR may not be available in all states. In those states where it is available, certain provisions may vary or may not be available. Prior to purchasing this contract, contact your agent or the company for complete contract provisions and details.

Benefits and Riders

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How do these riders work?

The Accelerated Benefit Riders (ABRs) are offered for no additional premium. However, the accelerated benefit payment will be less than the amount of death benefit requested because it is reduced by an amount calculated based on evaluation of the insured’s future expected mortality at the time the benefit is exercised as well as an administrative fee of up to $500 assessed when the benefits are elected. See acceleration amount limitations below.

 

Three separate riders may provide for the payment of an accelerated benefit which cover the following conditions:

  • Accelerated Benefit Rider for Terminal Illness (Policy Form Series: ABR14-TM): For use if an eligible insured has an illness or chronic condition that is expected to result in death within 12 to 24 months, depending on state
  • Accelerated Benefit Rider for Chronic Illness (Policy Form Series: ABR14-CH): For use if an eligible insured is unable to perform two out of six activities of daily living (bathing, continence, dressing, eating, toileting, or transferring) or is cognitively
  • Accelerated Benefit Rider for Critical Illness (Policy Form Series: ABR14-CT): For use if an eligible insured experiences a critical illness described in the rider after the issue date. Covered critical illnesses may be found in the Rider

California Residents:

  • A supplemental application is required to determine
  • The chronic and critical illness versions are not available for applicants age 65 and
  • Chronic illness is not available in conjunction with term coverage whether it is the base policy or a
  • The accelerated death benefit is an unrestricted cash

 

Minimum Policy Death Benefit to Obtain Riders:

  • Terminal Illness: $25,000
  • Chronic & Critical Illness: $50,000

 

Maximum Death Benefit Eligible for Acceleration

  • $2,000,000 (issue ages 0 through 65)
  • $1,000,000 (issue ages 66 or older)

Policies exceeding the maximum acceleration amount will still contain the Accelerated Benefit Riders; however, the owner will only be able to accelerate up to the maximum death benefit eligible for acceleration. For example, on a $4,000,000 policy (where eligible), the owner will only be able to accelerate $2,000,000 if issue age 65 or under at time of issue.

 

There is no minimum partial acceleration request; however, the partial acceleration will not be allowed if the policy’s face amount would be reduced below the minimum required for the product.

The accelerated benefit may be paid in a lump sum or applied to any settlement option under the contract that does not involve life contingent payments.

Not everyone that applies for acceleration will be eligible to receive accelerated benefits.

Eligible Accelerations:

If the primary Insured suffers a qualifying medical condition, the base policy and any additional riders on the primary Insured are eligible for acceleration. Likewise, if a spouse or other Insured party suffers a qualifying condition, their specific rider benefits will also be eligible for acceleration. The Children’s Term Rider is not eligible for acceleration.

Upon payment of the accelerated benefit to the owner, the policy or rider(s) providing the eligible death benefit will be treated as if the Insured has died if full acceleration is elected. In the event of a partial accelerated benefit, the policy or rider will be treated as if there has been a decrease to the face amount.

This Rider is automatically included in specified life insurance products in New York. There is no additional premium for the Accelerated Benefit Rider but an administrative fee not to exceed $300 will be deducted from the initial Accelerated Benefit.

In the unfortunate event, you are diagnosed with an illness that is expected to result in death within 12 months, you will be eligible to accelerate a portion of your death benefit in advance.

The maximum Initial Accelerated Benefit you may request is the lesser of 50% of the Eligible Death Benefit or $250,000. However, should you wish to initiate subsequent accelerations, the maximum eligibility of acceleration is limited to 80% of the Eligible Death Benefit or $400,000.

Upon death, any funds paid under the Accelerated Benefit Rider will be held as a lien against the death benefit in addition to any outstanding loan balances and interest charged to the policy.

How does this benefit work?

This Rider is automatically included on qualifying Signature Guaranteed Universal Life Insurance Policies. On each available option period, the rider allows you to surrender your policy in full and receive a return of your premiums paid subject to policy details.

 

The rider requires payment of the policy’s annual minimum premium to remain in-force. In any given year, if the policy’s annual premium payment is not satisfied you will be notified and have 60 days to make the payment. If the required payment is not paid, the rider will terminate and will not be eligible for reinstatement.

 

Rider Restrictions

  • The Cash-Out Benefit will be reduced by any loans or withdrawals.

 

Rider Details

  • You may only choose to Cash-Out during the 60 day period following each available option The Cash-Out Benefit will be reduced by any loans, withdrawals, or decreases.
  • Cannot be added after
  • The amount of the Cash-Out Benefit will depend on the option period the rider is exercised and the death benefit of the

At each option period, the Guaranteed Cash-Out Value will be the LESSER OF:

  1. A specified percentage of premiums paid OR
  2. The benefit maximum, which is a percentage of the death

 

The Rider Will Terminate When Any Of The Following Occur:

  • The policy’s minimum premium requirements are not met
  • The date the policy terminates or is surrendered in full
  • The 61st day after the last available option period

Note: Once the rider terminates, it cannot be reinstated.

 

 

 

 

Source: American National

LEAD GENERATION & MARKETING

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DFS Marketing consults with the most successful lead generation resources in the nation. Each month, we evaluate new opportunities that have proven to drive new prospects to your practice. Continuous marketing is the first step in building consistently increasing revenues and a hallmark of every top producer we serve. Avoid the common mistakes and take advantage of our detailed research. As we work together, our team will be able to help match your personality and practice to proven approaches that play to your strengths so that you may maximize your results. The most successful lead generation resources in the nation.

START WHERE OTHER SYSTEMS END!

The goal of every lead system is a face-to -face meeting with a new client. This system begins with a face-to-face meeting! This campaign is based on a unique mailer. For best results, mail 5,000 pieces.

HEAR IT ALL!

All response calls are archived on your personal web account so you can listen to each and every appointment. Appointments are set based on what you are looking for. You will choose the minimum investible assets for prequalifying the prospect.

LET NOTHING SLIP BY!

We have found that these clients are less likely to attend a seminar or workshop. They prefer the personal approach. This opens a new client base to you. You will even receive a list of every call-in including those who have less than the minimum investable assets to qualify for the face-to-face meeting. Use these opportunities to fill in the gaps in your schedule. Don’t let anything slip by.

MAKE THE SALE!

Expect between 10-15 appointments and average sales over $200,000. These folks will definitely have money because the purpose of the meeting is to see if you can help them position their finances for greater success in the future.

THE HIGH-QUALITY PROSPECT LIST

Intensely scrubbed and constantly updated lists bring better results. By cross referencing bi-weekly between the leading list sources in the nation, we connect you to the best. Our program targets higher quality prospects to attend your event which yields higher appointment ratios.

MESSAGES THAT RESONATE

Our proven messaging is current and relevant to today’s economy. Stop relying on stale messaging and move into high impact marketing that draws from the concerns people have right now. Then, watch your workshop fill up!

PROTECT YOUR MARKET

Through proper coordination, your event will be free from identical competition.

CONTENT

We have several highly successful and winning workshops (including handouts) you can choose from. Instant training is available whenever you are ready. Just ask!

401 (k) Magic

There are trillions of dollars in 401(k) accounts throughout the nation.

Get in front of an untapped market of people aged 40-55, with incomes of over 100k and own their own houses. These people have income and assets and want to create a legacy and financial stability for themselves and their children.

This may be the perfect supplement to your workshops and other marketing activities.

AN AMAZING MARKET!

Each day, nearly 10,000 people become eligible for Social Security benefits and what they don’t know will hurt them. Strategically pull responses from people between the age of 60 and 66. This is the perfect client base ready to learn about eliminating volatility, keeping more of their benefits and planning their future retirement income. Tap into this opportunity with minimal effort.

There are many more opportunities and exclusive niche marketing game changers we can connect you with. Contact our Business Development Team for more information.

ROTH IRA CONVERSION

Our exclusively created mailers drive people to the ROTH IRA opportunity to explore if it is advantageous to make the leap into a tax-free world. Clients responding to this piece have substantial assets in qualified money and typically earn high incomes. They are motivated to find a legal way to reduce their current and future tax exposure.

WORKSHOP READY

Combine this with our ROTH IRA workshop and one-of-a-kind conversion calculator and you are well on your way to lucrative large transactions.

GO ONE-ON-ONE

Advisors using these professionally written and designed advertising pieces have loaded their practice with new prospects who are ready to get out of the excessive tax environment and jump into a tax-free universe. Our newspaper and direct mail ads even include a designs for one-on-one appointments!

FINAL EXPENSE

Build a big data base! Innovative producers have made the move to this high response approach that allows you to rapidly build a data base. Think of this business as a lead generation program that pays for itself. This is great for covering a basic need everyone has, establish the relationship and then go deeper to find other problems you can solve. If you are trying to build your agency with a junior agent, use this to get the ball rolling.

SINGLE PREMIUM LIFE

  • Do you think tax payers are fed up?
  • Are investors tired of volatility?
  • Or are they worn out on low growth?
  • Are people concerned about covering the high costs of Long Term Care, Critical Illness, etc.?

This mailer may just be the ticket for you!
Call DFS Marketing to Learn more! 855-740-3140