Filled With Gratitude

-by Marc Schwartz

As we close out the books on 2016 and begin a new year we wanted to express our gratitude for all the love and support we received during an emotionally challenging 2016.  In June we unexpectedly and rapidly lost Jerry Schwartz; dad, best friend and co-founder of Windsor. Hal Brooks beat back lung cancer with surgery and two rounds of chemo.  Lastly, in early December Jane Brooks, Hal’s wife of 60 years, succumbed to her decade-long battle with Alzheimer’s.

Family, friends and business associates provided tremendous support for us during these difficult times with messages of love and friendship as well as wonderful memories and stories that brought smiles to our faces.

I had the tremendous honor to ride shotgun next to my dad for decades and learn from a true visionary in our business.  For the past 16 years I have had the privilege to lead the fantastic group of people we call Windsor and contribute to NFP, which grew from Jerry’s three-page business plan to a multi-billion dollar success story.

In 2017 Windsor begins its fifth decade of continuous operation and we are filled with excitement and energy to continue to grow and support all of you.

Thank you for entrusting us with your life insurance cases.

Thank you for allowing us to be a partner in your success.

Thank you for your friendship.

Cheers to a happy, healthy and prosperous 2017!

An Interview with DuWayne Kilbo and Marc Schwartz: Why You Need to Review Your Clients’ Policies Now.

In our previous two blogs, Marc Schwartz talked about how pricing adjustments among a few life insurers had created an “out-of-control” environment for some of our clients.  In part two of “Putting Clients Back in Control,” Marc explored several product solutions that can help put your clients back in control – but for you, what’s most important is knowing first what your clients want out of their life insurance policies.  Here, Marc and DuWayne Kilbo discuss why you need to review your clients’ policies now.


The idea and process of Policy Review has been around forever. Why is it so important now?

Marc:  There has been a lot of negative press around life insurer pricing adjustments, and that has created an environment where your clients need the reassurance that you’re aware of the issues and you’re looking out for their best interests. With the recent reductions in dividend rates from the mutual companies, the various COI issues in 2016 and spread compression because of the overall interest rate environment, the need to reach out to your policy owners and your centers of influence is more important than ever.  This should basically be a business development activity for all life insurance professionals and advisors in 2017.

Related: New York Times: Why Some Life Insurance Premiums are Skyrocketing

You mentioned recent reductions in dividend rates. It seemed for a while that dividends were floating above the interest rate drops.  What’s changed?

DuWayne:  It took longer for the sustained low interest rates to significantly affect dividend rates, but recently we’ve seen a cascade of dividend rate reductions from most if not all of the major carriers.  One carrier has experienced a 33% drop in dividend rate over the past nine years, which corresponds to comparable seasoned triple-A bond rates over the same period.  Additionally, the policy expense component in participating policies is adjusted independently of the dividend rate, and many carriers are, or will be, increasing those rates as well.

Chart: Historical Life Dividends: 1988 to 2017

So what should be the next step for an agent or advisor?

DuWayne:  First and most importantly, to confirm with their clients that they’re in sync as to the purpose and goals of their insurance.  Clients often have older policies, or have acquired policies from other sources, and reviewing the entire life insurance and annuity portfolio, with the client’s goals in mind, is priority one.

Marc:  For participating plans where dividends play such a big part, agents should review the initial projections that were used in making the sale – chances are that the policy’s performance has fallen short in some ways, especially for policies issued 10-20 years ago.  Paying particular attention to the distribution side, if that was a high priority for your client, means looking closely not just at the numbers, but at the contractual loan provisions as well.

Article: “Under Control: Five experts discuss how annual reviews can realign clients’ insurance portfolios . . . and calm their nerves”

So policy reviews are critical in determining if policies are performing as needed – and will alert stakeholders if adjustments are required to get “back on track.” Are there other reasons to review a client’s life insurance portfolio?

DuWayne: Yes, absolutely! Besides underlying product performance, policy reviews provide an opportunity to audit “structural integrity” of the life insurance portfolio. In other words, think of this as a planning review in addition to policy review. Is the amount of coverage still relevant?  Are ownership and beneficiary designation properly set up? Have key documents (trusts, split-dollar, buy-sell agreements, etc.) been executed and are they still current? Has the client’s health improved and should the existing underwriting class be reviewed?

Marc:  Raising awareness and identifying areas of potential vulnerability will win trust and credibility with professional advisors and other centers of influence. Also, CPAs, attorneys and bankers are much more comfortable having this kind of service-oriented discussion with clients rather than one which might sound like a sales pitch. At the end of the day, it will all come back to whether the existing policy is doing the job or not.

And if a review indicates a need for a change, what options are available?

DuWayne:  In situations where premium cost and cash value performance have become more questionable, there are several options that can create face amount stability as well as upside cash value opportunity.  These include 1035 exchanges to newer products with baseline guarantees and potential market-indexed cash value growth, 1035 exchanges to policies that can accept sizeable outstanding policy loans and minimize adverse tax consequences, along with many other creative alternatives.

Where can agents and advisors get some help on this?

DuWayne:  That’s what we do.  Windsor is dedicated to help agents eliminate the hassle and uncertainty that can upset a client’s plans, and determine their best course of action going forward.  We have experienced and knowledgeable industry resources who can analyze the situation at hand and develop suitable alternatives.  We are expert in case design, carrier/product access and underwriting to drive the best case offer.

Marc:  And we have an outstanding service platform to help steer your applications through the roadblocks that sometimes get in the way of issuing a policy.  There’s no problem we haven’t seen and solved in Windsor’s 40 years serving life insurance agents and their clients – which means that agents can be confident that we’ll handle the back room, and they can focus on what they do best.  For starters, we’ve provided this link to a basic policy review fact finder that agents can complete and email or fax to our Policy Review team.  With all the changes swirling around the life insurance industry, now is the time to go back to your clients and reconfirm your commitment to their financial future.

What Can We Do to Put Clients Back in Control – Part Two

-by Marc Schwartz

In my previous blog I explained how many of our clients feel as though what they want and expect from their life insurance policy is no longer in their control.  Because some life companies have taken actions that create additional uncertainty and expense for their customers, it’s up to us, as experienced professionals, to find a way to put our clients back in control.  The key is to know what’s important to your clients and then find the products and features that deliver the predictability and value they expect.

Golden key and puzzle

No Lapse Guarantees (NLG)

No question that we’ve seen a dramatic retraction of the “perfect product” in the wealth transfer market. Many of the carriers that have remained have raised prices and/or capped face amounts, and that trend continues. But there are a handful of high quality carriers that are committed to the NLG space. One shining star that is a consistent leader in the benchmarks is wholly owned by a leading Japanese insurer. This same carrier is a relatively recent entrant to the high-end life insurance field and, with no significant historical block of NLG business, isn’t subject to the drag created by its in force legacy. NLG has not gone away…and major, well-rated players provide cost effective solutions which are guaranteed to meet client expectations.

No Lapse Guarantees – with Exit Strategies!

Ever have a client who acknowledges a current need for life insurance today but who balks at buying? Perhaps they’re not comfortable cutting big premium checks for a future obligation that may morph into something unrecognizable, increase costs, reduce benefits or even vanish completely? Or maybe they’re concerned that new and different problems could arise down the road — such as living too long or getting seriously sick along the way. Is the product you recommend nimble enough to address these kinds of concerns? What if clients could buy an option to “take the money and run” at certain points in the policy’s future? This is a compelling way to provide ironclad guarantees with optionality — helping clients overcome the perception of NLG as being inflexible. And by using a “split policy” approach (splitting the face amount into two policies), you can give the client three guaranteed options down the road:

  • Keep the coverage as is and continue paying premiums
  • Cancel both policies and receive all premiums paid back
  • Keep policy 1, cancel policy 2, and use a portion of the premium refund to fully pay up policy 1 while maintaining a guaranteed death benefit for life

Extended Guarantees – VUL and IUL

And, of course, you have clients that want the best of both worlds: a secure death benefit along with the potential to build cash value greater than what could be generated in a fixed NLG contract. There are multiple options for this hybrid solution including both Index UL and Variable UL flavors. Among these options, we have extended guarantees (typically to or around life expectancy) and true lifetime guarantees. One life insurer that we’ve had tremendous success with uses a VUL chassis with less restrictive AG37 reserving requirements, offering an inexpensive guaranteed death benefit with all the upside associated with true VUL. The same design is available as Survivorship VUL.  These products are exceptionally competitive in single and short pay scenarios and are the 1035 solution in the marketplace when NLG is a consideration. So, if you kept your FINRA registration…then you need to be thinking about Variable again!

Guaranteed Income Streams – For Life!

Over the last few years, many of us have pivoted to cash accumulation sales with IUL being the product of choice. Although these products allow upside participation and downside protection, they still are vulnerable to market influences and, to some extent, the ability of carriers to press buttons and pull levers. Even though some of these products offer extended guarantees, projecting future cash values and distributions is a bet heavily reliant on forces outside of your control.  As a way to address client concerns regarding future income, there are a handful of life insurers offering a Life Income Benefit Rider (LIBR). When the client is ready for income distribution, they can elect to exercise this rider and receive a level guaranteed income stream for life (calculated based on cash value at the time of election). In addition, a minimum death benefit is guaranteed for life regardless of total distributions made. And distributions are all loans, taking care of any tax issues. Think of it as a life policy morphing into a “life only annuity” but with no adverse tax consequences under current tax law. IUL is a product with many moving parts and LIBR allows client to “lock in” potentially tax-free income for life — which probably was their motivation to buy in the first place.

That’s just a sampling of how you can tailor the life insurance products and features available today to fit your client’s need for assurance, security and predictability.  As a trusted advisor and, in many cases, a friend of your client, one of the most valuable and lasting services you can provide is to have the tools, resources and knowledge to help put your client back in control.



What Can We Do to Put Clients Back in Control?

-by Marc Schwartz

You’ve probably noticed that life insurance has been making headlines recently – which is rarely a good thing.

When both the Wall Street Journal and the New York Times sound off on how life insurance companies today are facing lawsuits from some of their customers, it’s clearly cause for concern.  The legal actions have mostly been prompted by increased premium requirements on universal life and long term care contracts.  According to the companies, there are many reasons for the actions that result in the increases, including slow growth, a shrinking sales force, increased compliance requirements, greater reinsurance oversight, but most importantly a sustained historically low interest rate environment.  As the Times put it:

“It adds up to a vexing math problem: how to back a promise of 4 percent in a 2-percent-or-less world. For life insurers — where more than three-quarters of the industry’s $6.4 trillion in invested assets are parked in bonds — low rates like these can be calamitous.”

Solution and Strategy Path

And how are companies reacting?  In various ways – some with increased COIs, others with more limited product selection, price increases, restricted term conversions, layoffs and expense reductions, sales and service pullbacks, and non-traditional (read ‘cheaper’) product distribution.

What makes this scenario even more alarming, and confusing, for our clients is the scattershot nature of the actions that companies have taken to mitigate the threat to their viability in the business.  Public relations disasters abound and company actions appear arbitrary to the general public.  One company pays an extraordinary dividend to its overseas parent of $785 million, and soon after informs certain customers that the premiums required to continue their policies will be significantly higher.  Another company discovers that its universal life insureds over 70 with face amounts of $1 million or more are experiencing higher than expected mortality, and their COI rates will be adjusted to reflect the additional claims expense.

Both the Journal and the Times articles imply that companies like these have resorted to pressing buttons and pulling levers that in effect transfer an increasing proportion of policy risk to their customers. The companies respond that the changes they require have been reviewed and approved by the appropriate regulatory agencies, and are allowed by contract.  But the transfer of risk is real:  the risk of higher costs and policy failure due to higher fees and expenses, higher than expected mortality, or lower than expected earnings and growth on policy equity.

This does not bode well for an industry built on trust, predictability and meeting client expectations.  Right now, some of our clients feel as if the industry has not lived up to that trust, and by companies using contractual provisions that had rarely, if ever, been used before.  Some clients feel as if their life insurance, and by extension their sense of security and peace of mind, is out of their control.    Which leaves us with an important question:  Are there ways that we, experienced and expert in our profession, can put our clients back in control?

The answer is yes. There are products and riders that you can recommend today that give clients the control they want and need.  Products with contractual guarantees and exit options that reduce uncertainty in just the right places:  death benefit guarantees, cash value floors, contractual flexibility, or guaranteed maximum premiums.  The key is knowing what’s important to your clients, and matching them with the right companies and products.  We’ll explore those options and opportunities in our next Windsor blog.



-by Heather Krohn FALU FLMI

If you have taken out a mortgage or obtained new automobile insurance in the last few years you have probably used an electronic signature (e-signature) platform.  An e-signature provides both extraordinary convenience and the same legal standing as a handwritten signature, as long as it complies with regulations published by the National Institute of Standards and Technology (U.S. Department of Commerce).

green CPU background

The beauty of e-signatures versus traditional wet signatures is that they can be executed portably and with ease via computers and devices.  An insured can sign a document anywhere and anytime at the touch of a button.  Most platforms are single-click and do not even require a password.  The email address is used as a mobile identification source.  Agents no longer need to mail or fax documents from place to place to obtain multiple individuals’ signatures on a single document, because the software allows the user to assign a signing order.  The document comes back to the user electronically signed and dated by all parties, so even a document that requires the insured, owner and agent to sign comes back legibly signed and in good order.    The days of faxed documents with form numbers cut off and print that’s barely able to be made out are over with the use of electronic platforms.  Anyone who has access to email and some sort of device can sign a document electronically.  The platforms are also very user-friendly.  It is as easy as uploading a document and assigning virtual tags in the appropriate places.

So why doesn’t the life insurance industry use e-signatures more than it does today?  The answer is easy, though disappointing:  Just about every insurance company has a different set of rules regarding the acceptance of e-signatures, making it very difficult to keep track of what is allowed and what is not.  No agent, working with a valued client, wants to get forms signed only to find that the carrier does not allow e-signatures on the specific form being submitted, or does not accept the e-signature vendor.  Some companies allow almost all documents to be electronically signed as long as a certificate of authentication is provided with the document.  Other companies may have very rigid workflows with strict guidelines about when e-signatures are acceptable and when they are not.  Some companies do not allow co-mingling of traditional and e-signatures on a single case, whereas others allow forms signed both ways.  Some even require additional identification checks to validate e-signatures.  This lack of industry uniformity is confusing and often frustrating, but not surprising.  Until life insurance companies adopt a common standard for e-signatures, it’s important for agents to know, or to work with intermediaries who know and keep track of, the various e-signature standards and limitations required by each life company with which they do business.

There are many vendors that provide services related to e-signatures, but one of the most commonly used, especially in the insurance world, is DocuSign.  If you are interested in learning more about e-signatures as well as carrier specifications, Windsor has gathered an extensive amount of information that we would be glad to share with you.  Windsor can also provide guidance as to when the convenience and ease of an e-signature may be appropriate.  Lastly, Windsor can provide a demonstration that is specific to DocuSign if you are interested in learning more.


Minimum Wage Retirement Planning

-by Marc Schwartz

Selling is a creative and dynamic process, at times requiring fresh thinking and a different approach to engage customers.

In the case of business owners, substantial monies are spent to attract and retain talented employees who can get the job done. However, often overlooked by business owners may be one of their better employees–the minimum wage employee. This is the lowest paid employee in the company who, if given the opportunity, has the ability to contribute significantly to a business owner’s success and well-being.

The “minimum wage employee” conversation is a creative and fresh way for you to make more sales with business owners.  Let’s walk through an example of how to put this employee to work for you and your business owner clients.

Your friend, Dave, is a 44-year old small business owner.  You’ve known Dave since college – he’s a hard worker, independent, creative, with a young family.   He’s put his time and energies into building the business and helping his spouse provide a good life for their children.  But Dave has never made much of an effort to invest toward his retirement.   Over lunch, Dave shares an odd encounter that he had the other day with a prospective employee.

“So this guy walks in to interview for a sales position that I have open right now.  And here’s what he says:

‘I’m not really here for your sales position, but I think you’ll find I can help with an opportunity you have right now, but that you don’t recognize.

‘First, here’s what I ask of you.  You agree to pay me minimum wage for the next 21 years.  That’s all.  No vacation, no sick leave, no benefits, no 401(k) match, no salary increases.  Just today’s minimum wage for 21 years, until you reach age 65.  That’s $7.25 an hour, $290 a week, about $1,255 a month, a little over $15,000 a year.  With me so far?

‘And here’s what I’ll do in return.  If you die before age 65, which we both hope won’t happen, the business stops paying me and I’ll give your spouse and children at least $300,000, tax-free.  I’ll miss you, but our deal will be done.  But if you live to age 65, I can potentially provide you with over $50,000 a year of supplemental retirement income until you reach age 85.  That’s 20 years of $50,000, or about $1,000,000.  How does that sound to you?’

Dave continues, “Of course I didn’t believe any of it, but he seemed to be serious.  So I asked, ‘How in the world are you going to do this?’ And he said, ‘Here’s how.’”



[A tip of the Windsor hat to our friends at Lincoln Financial for their inspiration and these supporting materials:]

Minimum Wage Retirement Planner Presentation

Minimum Wage Retirement Flyer

Lincoln WealthAdvantage®Indexed UL Illustration

Contact Windsor for illustrations and more information about the potential advantages of Indexed UL.

When Two Plus Two Equals Zero: Simultaneous Applications and Competing Production Sources

– by DuWayne Kilbo

You’ve met with the clients and their advisors on a few occasions and the time has come to take an application and submit underwriting information to the carriers.  However, what you hear next stops you cold:  “Our son’s friend is also in the business and we want him to shop our application as well to be sure we are getting the best offer and premium available.”


You pause and think.  For several reasons you know that it’s never a good idea to pit production sources against one another with multiple carrier submissions. It can complicate matters and often results in an inferior offer and a higher premium rate class.  Also, in large case situations it may lock out the clients from getting the coverage they want and need.

You ask yourself, how do you dissuade your clients from this course of action? What are the issues with this approach?  Isn’t competition a good thing?

Absolutely, competition is good!  It makes us all work harder to provide unique value for our customers.  However, in the life insurance industry the competitive selection process to obtain the best results and value takes place prior to carrier submission of any applications. And it starts and ends with the producer selection process.

This isn’t necessarily intuitive to our clients or to most anyone outside the life industry.  Why shouldn’t applications be shopped to the same carriers via multiple production sources?

Carrier price and ultimate client value are a function of three things:  1) the stated carrier product pricing, which includes illustrated values and pricing for preferred, standard and other rate classes; 2) the carrier’s product strength and how it aligns with the client’s goals; and, 3) the final negotiated underwriting class.   Thousands of financial professionals work through Brokerage General Agencies (BGAs).  From a carrier’s point of view, the combination of producing agent and BGA is viewed as a single “production source.”  Many BGAs and agents are equal in terms of acquiring and illustrating carrier product pricing. That’s the easy part. However, where BGAs are not equal and where great value is created is in the strength and ability to negotiate the most favorable underwriting rate class.  Certain BGAs – especially those with underwriting expertise “on staff” who can capably interface and negotiate with carrier underwriters – maintain a distinct advantage to provide exceptional offers and ultimate client value.  If an underwriting rate class can be negotiated from an otherwise standard to a preferred, product value can be significantly enhanced.  At times one can achieve 20% or more client value in terms of lower premium payment and/or improved product performance.

You may ask, won’t a carrier simply match offers if an application is submitted to them from more than one source?  The answer is yes, and this is where a potential pitfall lies. If the agent chooses a BGA that has a proven track record of strong underwriting success and negotiation skills and if the client allows the agent to access the insurance market before information is submitted by any other agent, then all is fine–there’s a good chance that the best possible offer will be negotiated.  However, if the information is first submitted to and quoted on by a carrier without benefit of strong hands-on negotiation, then the opportunity for exceptional client value passes—sometimes forever.

Why does this occur?

While the ultimate customer for a life insurance carrier is the insured or policy owner once a policy is issued, during the application process a carrier’s customer is the agent.  In view  of this and for reasons relating to concerns such as channel conflict and avoiding the “appearance” of producer preference, all carriers are very careful about keeping all production sources on a level playing field—especially when it comes to providing underwriting offers on an applicant.  Once an offer is provided, a carrier will not change their underwriting decision unless additional “meaningful” medical information (and in financial situations additional financial detail) is provided that will sway their opinion.  In most cases this hurdle is nearly impossible to overcome.

Because the producer selection process takes place prior to an application being submitted, a critical selection criterion is to choose a production source that has the skill, ability and track record to negotiate the best underwriting offer.  Essentially, the clients and their advisors must employ the agent that has the greatest opportunity for success to take control and submit the application to the insurance marketplace—before anyone else. In large face amount situations, this critical decision-making step can save an applicant tens to hundreds of thousands of dollars during the life of a policy.

In addition to negotiating the best offer in very large case situations, the client must choose an agent who is capable of putting together large total lines of coverage.  This requires a special skill set because these “Jumbo” or extremely large total line cases typically involve several different carriers as well as reinsurance. Many sets of eyes review these situations because of their bottom line impact upon carrier mortality, and several parties weigh in on the ultimate decision to issue coverage and at what price.

Why does this matter?  Can’t one simply buy what they want and need?

Yes, to a degree depending upon case detail and circumstances. However, no matter what is applied for, it must be done right.

There is a limit to the amount of coverage available for any one individual in the U.S. life insurance industry.  Anecdotal evidence for the most favorable cases suggests this to be in $330 to $350 million range, which includes most direct carrier and reinsurance capacity.  This is a significant amount of coverage, but it is very closely monitored for what an applicant may financially qualify based upon carrier underwriting guidelines, and balanced with the amount of available industry capacity.

On the largest applications, beginning in the $30 million plus area, very few carriers have the ability to retain all the risk on their own books – nor do they want to.  All carriers, including both small and large retention companies, don’t like and can’t afford quarterly mortality hiccups caused by large claims. To help manage these situations, coverage is spread out to reinsurers.  This allows the carriers to diversify their large face amount risks and smooths any mortality spikes that may occur.

So putting together the large total line case requires keen insight into what the insurance market can deliver in terms of offers and capacity.  If done right, an applicant may achieve the greatest amount of coverage they may qualify for (capped by industry capacity) and at the best rates possible.

So what does a producer need to know to successfully deliver optimal value in the large case market?

There are two things to be familiar with. The first is case control.  In the large case market, application control is critical.  This involves choosing a BGA that has the skill and ability to control the entire application process for all carriers before any applications are submitted.  Because of the complexity involved, this is no small task.

Large total line case submission requires a clear understanding of what is being applied for and with which carriers. The carriers and their reinsurers get extremely uneasy about situations where there are competing agents and applications and where the potential for case control appears compromised.  Their nervousness stems from the fact that more coverage may be issued than anticipated, with the potential for financial underwriting guidelines to be breached and/or carrier and reinsurance retention and automatic limits exceeded.  Neither of these situations is good and may cause a carrier to refuse to underwrite an applicant altogether.  Some of these situations may be unwound to the point where the carriers may once again be willing to consider a risk, but they take an inordinate amount of time and effort and often the end result is not as favorable as it could have been if handled properly at the outset.  In order to combat this situation, there needs to be complete clarity and understanding of what’s being applied for, and control must rest in the hands of a single production source with the skill and ability to manage the entire process.

The second thing to know is how to maximize capacity at the best rates possible.  As mentioned earlier, this involves having the ability to negotiate the best possible rates.  However, this also requires choosing a BGA with the knowledge and insight into carrier products, and having experience and proficiency in the areas of carrier underwriting niches, retention, automatic reinsurance limits, super pools, Jumbo limits and reinsurance relationships.  Since most carriers have a Jumbo limit of $65 million, one of the keys to any case above this amount is to negotiate the best possible offers with all carriers and then understand how to stack and order coverage to be placed.  This may require engagement from the carriers on how much they may consider given the offer provided and any limitations they may have.  Again, this is an involved and iterative process that is best left for experts.

So what should we tell the clients and their advisor when they want to bring multiple producers into the application process?

  • Competition is good.  However, competition to achieve the best possible results should begin and end with the producer selection process—prior to any applications being submitted.
  • Simultaneously submitting applications through multiple sources often has a deleterious effect and results in inferior offers, greater premiums and ultimately lower client value.
  • In large total line case submissions, the ability to control the application process is critical.  One production source must be in charge to manage the entire application and underwriting process.  This is required to negotiate the most favorable offers, maximize available coverage, and prevent carrier uncertainty about total line to be placed.
  • The critical decision point is to pick a production source partner that has the skill, ability and proven track record to drive the best results for you.