$522 Billion


A 2014 study by the RAND Corporation estimated the cost of informal caregiving in the US at $522 billion:  “Across America, people spend an estimated 30 billion hours every year providing care to elderly relatives and friends. The cost is measured by valuing the times caregivers have given up in order to be able to provide care.”  Those numbers continue to grow in 2017, as the baby boomer generation ages and creates greater demand for long-term care services.

Numbers like this get everyone’s attention, and long-term care (LTC) is a concern that is at once personal, cultural and political.  Those of us in the insurance business know there is a solution – one that’s been around for several decades:  Long-term Care insurance (LTCI).  But what’s happening to sales of LTCI amid these growing concerns and exponentially increasing numbers?

Six leading LTCI companies recorded increased policy sales in 2015 compared to their sales during the prior year according to the American Association for Long-Term Care Insurance. “This is a positive sign as is the fact that one new insurer began selling policies in 2016,” declares Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).  However, according to Slome, overall sales of traditional LTCI continued to decline compared to the prior year.  “The number of new policies (lives) sold in 2015 was down around 20 percent.”

The problem, according to Slome, is that, “Consumers we speak with perceive that LTCI protection is expensive, that insurers seek continual rate increases, and they express concern after reading online reports about denied claims.”  Though that perception may be mistaken in some ways (the industry paid over $8 billion in claims in 2015, a 4% increase over 2014), the reality is that sales of stand-alone LTC policies have been steadily declining for 15 years.  But ignoring the problem doesn’t make it go away.


“Here’s a stunner,” writes Richard Eisenberg for Forbes, “the average American underestimates the cost of in-home long term care by almost 50%,” according to findings in a 2016 Genworth Cost of Care study.  Still, in the midst of this growing disconnect between perception and reality there is a bright spot:  sales of combination and hybrid products with LTC benefits are on the upswing.

In May 2016 The National Association of Insurance Commissioners (NAIC) teamed with The Center for Insurance Policy and Research to create an exhaustive report:  The State of Long-Term Care Insurance: The Market, Challenges and Future Innovations.  In their section on LTCI products, they explain the appeal of hybrids in today’s marketplace:

“The hybrid product market has experienced substantial growth at the same time that standalone LTCI sales have collapsed and stagnated. . . . Hybrid products are appealing to customers, with particularly good alignment with consumer attitudes of the baby-boom generation, which now entirely comprises the target market for LTCI products. The products are fairly simple and can be easily explained to consumers. Generally, the customer has already made a decision to purchase life insurance or an annuity contract, and the step of making it a hybrid product is as simple as a choice to add a rider with LTC features. The customer is simply being advised of an optional feature which allows the ability to access his/her death benefit or account value in the event LTC is needed.”



Hybrids continue to evolve into new and better options for consumers, offering an array of innovative features and benefits, including

  • Residual Death Benefits
  • Inflation Protection
  • Return of premium features
  • Coverage for permanent and/or temporary conditions
  • International Benefits
  • Life policy lapse protection while on claim
  • Non-forfeiture options which preserve some benefits even if premiums are unpaid
  • Skilled nursing home care; adult day care; assisted care; home health care; intermediate care; hospice care
  • Family care (see “$522 billion,” above)
  • Guaranteed Issue contracts (call us for details on this)
  • Payment of benefits in full, through long-term care benefits and/or life insurance death proceeds

Additionally, insureds maintain control of the amount of the payment and enjoy a high degree of flexibility:

  • Insureds choose how much of the monthly benefit is received, up to the benefit maximum
  • As long as the insured is receiving care from a licensed care facility or service, excess benefit payments that are not needed to pay for care can be used for any other purpose
  • Insureds may choose to receive less of the LTC benefit than they are eligible for to preserve their policy benefits, effectively “stretching” the LTC coverage period



With all this flexibility comes a perplexing amount of information and choices.  Which means offering your client sound, informed advice about suitable products becomes vitally important.

At Windsor, we work with these products every day.  We understand the complexities and provisions of hybrid products including Hybrid Life/LTC (Lincoln’s MoneyGuard), life insurance with true 7702(b) Long Term Care (Nationwide, John Hancock, AXA), pre-underwritten/paid chronic illness riders (Prudential, American General), and embedded (free) discounted chronic/critical illness riders (American National, North American, Symetra).


We’ve found the money.  The market is worth $522 billion. We can help.



The State of Estate Planning – 2017

You probably feel as if the field of Estate Planning is in turmoil right now – uncertainty about income taxes, estate taxes and wealth transfer solutions seems so disruptive that Larry Brody, a widely respected estate planning practitioner, has titled an upcoming  presentation:  “What the Hell Do We Do Now?”confusion1

Is it really that bad?  Well, here are links to two excellent and recent AALU publications that may help answer that question.

The takeaways, first from the Survey: “Even in the face of major tax reform, clients and their advisors should remain optimistic and steadfast in their approach to implementing life insurance and legacy planning. Flexible, multi-faceted planning that can address both practical and tax issues is at a premium. Life insurance remains an ideal solution because of: (1) its unique attributes (instant, mortality-based liquidity and cash accumulation and death benefit payments on a tax sensitive basis) and (2) its ability to serve many critical objectives (tax, retirement, and liquidity planning, investment management and diversification, and family security).”

And from the Heckerling Institute: “Overall, Heckerling presenters were optimistic regarding the current planning environment, particularly as this is not the first time that the estate and life insurance industry has dealt with the prospect or passage of major tax changes (e.g., 2010 and 2012). Many planning approaches, like trusts, estate freezes, and life insurance, are inherently flexible and multi-faceted, and tax changes can actually enhance different structuring options and benefits. Accordingly, this environment should trigger thorough audits of client plans and open the door for a dialogue between allied professionals and clients, with interest in life insurance products continuing as both a solution to practical needs and as a complement to other planning approaches.”

We encourage you to read through both the Survey and the Heckerling Institute summary to help clear up some of the hyperbole and confusion that often arises when there’s talk of major tax policy changes.

Golden key and puzzle

If you’re like us, you’ll realize that 2017 will continue to offer plenty of new opportunities for planning and insurance professionals, no matter which way the wind blows.





The no good, ugly, scary future of life underwriting

-by DuWayne Kilbo

The tension is palpable.

Underwriting is being turned on its head, driven by big data, automation, alternative risk assessment tools, and more predictive underwriting models and processes augmented by analytics.

Go to any underwriting industry meeting and there will be considerable time and energy devoted to one or more of these topics, along with a fair amount of angst among the underwriting folks present.

Traditional and new industry players speak about the latest risk assessment models and tools, back-tested through hundreds of thousands of client records and data points, producing mortality results similar to existing methods at a fraction of the cost and in light speed when compared to most existing underwriting processes.  In addition, these new tools require less, and sometimes no, human underwriting intervention.


A new world of life underwriting is being ushered in. And it’s scary for the underwriting profession.

Driven by the under-served and uninsured markets, aging and shrinking producer distribution models, increases in carrier retention (with a focus on mortality as a profit center), a need to find new sources of revenue, direct to consumer distribution models, and technology players promoting lower cost and faster underwriting methods, the table has been set for change.

For the underwriting profession change was needed, and some would suggest long overdue.  Underwriting has been pretty much “business as usual” for the past 25 years. Today, long waits of up to several weeks typically occur for a policy to be approved and issued—even for simple, modest face amount cases.  No business or industry can expect to be successful or even survive long-term using this type of model.

On top of this, consumers, especially younger buyers, are demanding a better insurance acquisition experience, and don’t care about the disruption that creates for the life industry and its various players.  Though it may be an overstatement to say that traditional life underwriting is facing an existential threat, it could go down that road if the industry doesn’t adapt to customer needs and wants. The industry needs to keep things affordable, and make processes faster and easier for the insurance buying consumer.

So what does this mean for the life underwriting industry?  Is this no good, ugly, and scary for the underwriting profession?

In some respects, yes.

But in more important aspects where underwriting talents and skill sets are essential, no.

First, with new data sources and underwriting tools, predictive models, automation, and perhaps even artificial intelligence, the demand for underwriters—on a pure numbers basis—will be less.  This will be viewed as a negative by some, and certainly doesn’t feel good for the people impacted.

It’s absolutely necessary to automate and streamline as much as possible in ways that make sense and provide value to the customer.  No business survives or even thrives without addressing what customers need and how they want services or products delivered, with much of the delivery achieved through automation. This may require fewer underwriting resources, and it is inevitable.

However, while automation, predictive analytics, and other newer tools lend themselves to clean cases with reasonable face amounts, they don’t necessarily provide the same level of comfort for large face amount and medically impaired risks.

These latter cases require high level human intervention, where complex thought and interaction are required.  This is what underwriters provide to the risk appraisal process. Also, these things are difficult, if not impossible, to program into algorithms. While new tools and data sources may add to or support decision-making and perhaps streamline processes, mispriced mortality is unforgiving. Replacing the human element in these situations is risky and very unwise.

Second, besides technical skills, underwriters possess “soft” human interaction talents to create loyal customers and repeat business. Through their knowledge, understanding and engagement, underwriters have unique perspectives to interact with carriers, and among sales organizations, producers, customers and others.  These skills are extremely valuable and cannot be algorithmically programmed.  Just try to create any type of dialogue with “Siri” or “Alexa” and you’ll see what I mean.

Lastly, underwriters provide leadership to help guide their organizations and industry through challenges and to the next level, especially concerning mortality-related issues.  Some underwriters are very good at doing this within their organizations and industry, while others are not.  For those who are not it is imperative that they get better.  And some companies are very good at inclusive decision- making, while others are not. In either case, underwriting must find or create a place at the table to have an impact on the direction of their companies and the future of the life insurance industry.

The future for underwriting in this writer’s opinion is exciting—not “no good, ugly, or scary.”

With any change comes opportunity.

There is so much to be done and accomplished.  By learning new skills and uncovering new talents to propel the profession and industry forward, underwriters can provide additional value to their organizations and to others. This may include learning things beyond what they do today, such as statistical analysis, data applications, products, illustrations, sales concepts and more, providing fresh perspectives and new solutions for their organizations, customers and production sources.


For over 40 years, Windsor has responded to change in ways that created new advantages and opportunities for everyone we work with.  It’s what we do.

Now is the time for revitalization.

The future doesn’t need to be scary.







A split dollar power play made Jim Harbaugh college football’s highest paid coach — what was that about?

– by Marc Schwartz

Last summer ESPN.com ran the headline: Michigan, Jim Harbaugh agree to increased compensation in form of life insurance loan.  We suspect that most sports fans just shrugged and moved on to see how the Cubs were doing, but those of us in the life insurance business sat up and took notice.  After all, we seldom get any press on the business page, let alone the sports page.  And this was indeed big news about a big compensation boost, using a relatively little-known but powerful combination:  Split Dollar and cash value life insurance.

Lightning dollar sign

(Related:  American Institute of CPA’s:  Split Dollar Insurance Plans)

ESPN’s article, though, did not use the words “split dollar” at all, and that was fine.  Sometimes we get  caught up in our own jargon and forget that people outside our industry – clients, CPAs, sports writers, for instance – only care about what the arrangement accomplishes.  Not only did this new agreement make Harbaugh the highest-paid head coach in college football, it left some other notable coaches in the dust.  (USA Today:  NCAA Football Coaches’ Salaries)  In this blog we’ll explain why both Michigan and coach Harbaugh found this unusual approach to be in their mutual best interest, regardless of what the plan is called.

At its simplest the arrangement looks like this:  the university loans $2 million a year to the coach for seven years in the form of premiums paid for a life insurance policy on the coach’s life.  The coach will pay no interest to the university, and will instead be required to pay tax on that unpaid interest as imputed income from the university.  The rate used to calculate that imputed income is determined in the Internal Revenue Code and published monthly by the Treasury Department as the Applicable Federal Rate (AFR).  In return, policy values secure the loan – both the cash values and the life insurance death benefit can be used to repay the loan, should the university and coach part ways, though there are additional strategies to exit the arrangement that might prove less painful.  For the coach, you can see the advantage to this right away:  life insurance payable to his spouse and children, cash value growing inside the policy tax-deferred, with the potential  to use that cash value in the future (preferably after several national championships).  All in return for the tax bill on the imputed income from foregone interest, based on what are currently very low interest rates (the February 2017 AFR for this kind of loan is a little over 1%).

So what’s in it for the university?  First, the arrangement ties the coach to the school for several years in order for all of the numbers to work to the coach’s full advantage.  The life insurance benefit is there from day one, but there is much more of a reward, in the form of potential equity available for tax-free policy loans when the coach retires, along with substantial long-term life insurance death benefits for the coach’s family.  Take a look at the sample presentation we have put together for a similar plan using an Index UL product to get an idea of how attractive this can be over the coach’s lifetime, and how much of an incentive it can be to keep the coach close to home.  Second, the university’s loans are secured.  The values in the policy provide the university with some assurance that its investment may be recovered if things don’t work out as planned.

While it may be a surprise to find this kind of insurance-based solution headlining the sports page, such plans have broad application in executive compensation arrangements for all kinds of businesses.  In fact, the more attractive it becomes to spend money at the corporate/business level (because of lower corporate tax brackets), the more effective such plans can be.  So, the next time you are looking for a life insurance solution that can strengthen the executive-employer relationship and provide an incentive for a valued employee to stay on until retirement, remember the University of Michigan, coach Harbaugh – and Windsor.








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.