Agent’s Sales Journal and Agent Media, products of Summit Business Media’s Life and Health Insurance Network, announced the results of the 2011 Life Insurance Market Study in the July issue of Agent’s Sales Journal. This year’s study is a result of a collaborative effort between Agent’s Sales Journal, Agent Media, and the LIFE Foundation.

The annual Life Insurance Market Study asks agents nationwide about their experiences in the life insurance market. Producers were randomly selected from Agent Media’s database of 1.8 million life, health and annuity agents, and were asked about their challenges in the market, their most valuable lead resource for new prospects, the type of life insurance they sell the most, and more.

“As the results show, agents are looking forward to a significant rebound in the life insurance market in 2011, and say they’re feeling good about the year ahead, especially when it comes to sales of term life,” explained Andy Stonehouse, editor of Agent’s Sales Journal. “The survey also demonstrates the importance of educating clients on their potential life insurance needs, and to prompt them to act earlier, rather than later.”

Highlights of the 2011 Life Insurance Market Study include:

• 53% of agents say Term Life is their top selling product, making it the bestseller
• Despite studies showing that active life insurance policies had reached new lows, 2010 was a strong sales year, with 38% of agents saying their sales increased last year.
• 76% of agents expect sales to increase in the coming year

The top challenges facing the industry involve consumer awareness. These challenges include:

• 56% say their clients procrastinate
• 36% agree that clients don’t recognize the need for life insurance
• 38% say their biggest challenge is prospecting/finding new clients.

Results were featured in the July issue of Agent’s Sales Journal, and complete survey results are available online at ASJOnline.com.

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Information is delivered via print weeklies and monthlies; via electronic newsletters and blogs updated daily, and websites updated with news as it happens; via live events, including trade shows, conferences, classroom-type seminars and web seminars; via reference materials, disseminated in both book and electronic formats; and financial and marketing databases. The markets we provide information to covers a wide and interlocking array of professional services, including the needs of the insurance, financial, investment and corporate management markets.

ABOUT AGENT’S SALES JOURNAL
Agent’s Sales Journal provides sales-oriented how-to information to help independent insurance advisors expand their life, health, and annuity practices. The magazine’s ongoing market research program allows the editors to quickly identify and respond to readers’ needs and challenges in a rapidly changing marketplace. Comprehensive selling guides, unbiased insight from industry experts, timely feature stories, and a dynamic online presence give readers the information and ideas they need to grow their practices.

ABOUT AGENT MEDIA
Twenty years ago, Agent Media set out to build a reliable database and marketing solutions company to serve the life, health, and annuity segments of the insurance industry. Today, the database has grown to over 1.8 million producers, representing nearly every licensed agent and registered representative in the U.S. Agent Media is now the industry leader — a one-stop marketing resource for a wide range of direct marketing needs.

ABOUT SUMMIT BUSINESS MEDIA
Summit Business Media is the leading B2B media and information company serving the insurance, financial services, legal and investment advisory markets. Summit strives to be “The Next Generation of Business Information” for executives and practitioners by providing breaking news and analysis, in-depth practice management strategies, business-building techniques and actionable data. Summit services the information needs of its customers through numerous channels, including digital, print, and live events. For more information, please visit SBMedia.com.

Think that the rising stake of e-commerce in retail sales isn’t a threat to insurance agents and investment professionals?

Think again. Although the old maxim that “life insurance is sold, not bought” still holds, an increasing number of customers are doing the research and making purchasing decisions without the assistance of a professional. For those customers, carrier marketing materials are a dominant source of information instead of an in person agent.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of insurance and advisory business in Advisor’s Journal, see Can Typecasting Your Clients Grow Your Advisory Business? (CC 11-64) & Are Portfolios-To-Go Threatening Your Business? (CC 11-77).

Last month, we talked about how cash value is influenced by the different cash value investment options, the historical performance of such cash value investment options, and cost-effectiveness of the various cash value allocation options.

This month we talk about using the most advantageous and consistent rate of return. There are different ways that companies publish rates of return depending on the type of life insurance.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of cash valuation in Advisor’s Journal, see Historical Performance of Underlying Cash Value of Life Insurance (CC 11-82).

Looking to recapture its prior competitiveness in the domestic captive insurance business, Nevada passed Assembly Bill 74 (AB 74), which amends the state’s captive insurance law. Nevada Governor Brian Sandoval recently praised the amendment, saying it that “will make Nevada a more attractive place to do business for captive insurers.”

A captive insurance company is usually formed as a subsidiary of a company to cover the risks of the parent company and its other subsidiaries. A captive insurance company typically doesn’t insure risks of unrelated third parties—although some will insure their customers’ risks. Other captive insurers insure the risks of members of a trade association or group.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the application of the Health Care law to captive provided health insurance, see Tax Facts, see 252. What nondiscrimination requirements apply to employer provided health benefits?.

Questions about Captives? Contact our Panel of Experts. Benjamin Terner is our “Captive Expert” and can answer your questions relating to domestic and offshore arrangements.

A stranger-owned life insurance promoter won a big victory when the California Court of Appeals ruled 2-1 that California’s 2009 anti-STOLI law does not apply to policies issued before the statue was enacted.

The ruling was issued by the 4^th Appellate District in an appeal on the case: The Lincoln Life and Annuity Company of New York vs. Jonathan S. Berck, as Trustee, etc, Case No. D056373 (17 May 2011).

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of STOLI cases in Advisor’s Journal, see STOLI Scheme Lands Insurance Agent in Jail (CC 11-92).

The Obama Administration’s 2012 federal budget proposal has revived two budget proposals that will touch the life insurance business – one affecting Corporate-Owned Life Insurance (“COLI”) and the other affecting carriers’ Dividends-Received Deduction (“DRD”).

In response to alarm that the proposals tamper with the tax preferred status of life insurance, the Treasury recently issued a letter clarifying that these proposals center around tax arbitrage issues, not the tax treatment of death benefits.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of corporate life insurance in Advisor’s Journal, see Obama Budget Would Undercut Utility of Life Insurance in Small Business Planning (CC 11-41).

For in-depth analysis of taxation affecting corporations, see Advisor’s Main Library: A – The Corporate Income Tax.

Why is this Topic Important to Wealth Managers? Discusses group term life insurance policies in general.  Provides a useful tool for client business planning when evaluating group term policy options. Also provides links to additional resources and materials to answer all your group term life insurance questions.

Generally, an employer may provide employees with up to $50,000 of group term life insurance protection each year without cost to employees.[1] However, the exclusion is not available unless the insurance provided under the plan satisfies the definition of “group term life insurance”.

When life insurance provided by an employer meets the following requirements it may qualify as group term life insurance providing special tax exclusion by employees.[2]The life insurance must meet four conditions to meet the definition of group life insurance under the code:

(1) It must provide a general death benefit, excludable from gross income under IRC Section 101(a). Under the regulations, travel insurance and accident and health insurance (including amounts payable under a double indemnity clause rider) do not provide a general death benefit.[3] Employer contributions for such benefits are contributions to a health plan under IRC Section 106 instead of section 79.

(2) It must be provided to a group of employees as compensation for personal services performed as an employee. A group of employees is all employees of an employer, or fewer than all if membership in the group is determined solely on the basis of age, marital status, or factors related to employment such as membership in a union, duties performed, compensation received and length of service.

As a general rule, life insurance provided to a group cannot qualify as group term life insurance for income tax purposes unless, at some time during the calendar year, it is provided to at least 10 full-time employees who are members of the group of employees of the employer.

However, insurance for fewer than 10 employees may also qualify as group term life insurance if: (1) it is provided for all full-time employees; and (2) the amount of protection is computed either as a uniform percentage of compensation or on the basis of coverage brackets established by the insurer under which no bracket exceeds 2½ times the next lower bracket and the lowest bracket is at least 10% of the highest bracket; eligibility and amount of coverage may be based on evidence of insurability but determined solely on the basis of a medical questionnaire completed by the employee and not requiring a physical examination.[4]

(3) The insurance must be provided under a policy carried directly or indirectly by the employer. A policy meets this requirement generally if the employer pays any part of the cost (directly or through another person). The policy can be a master policy or a group of individual policies.

(4) The amount of insurance provided each employee must be computed under a formula that precludes individual selection of such amounts. The formula must be based on factors such as age, years of service, compensation or position. This requirement may be satisfied even if the amount of insurance provided is determined under alternative schedules based on the amount each employee elects to contribute. However, the amount of insurance under each schedule must be computed under a formula that precludes individual selection.

For more information on this topic see AdvisorFYI: Group-Term Life Policy Tax Consequences.

For a detailed discussion on group term life insurance see TaxFacts: Group Term Insurance.

Tomorrow’s blogticle will continue to discuss issues related to the practice of wealth management.

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

[2] Treas. Reg. §1.79-1(a).

[3] Treas. Reg. §1.79-1(f)(3).

[4] Treas. Reg. §1.79-1(c).

Does a last in time divorce decree or a beneficiary designation made at the time of the application years ago prevail when it comes time to make a claim?  A wife had her estranged husband, sign a separation and property-settlement agreement to release him from any claims to her estate or property.  When the wife passed away, her former husband sought the life insurance proceeds, as did her mother and son.  The answer is set forth in a cautionary tale of beneficiary designations told in a recent 4^th circuit case.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber)

For previous coverage of beneficiary designations in Advisor’s Journal, see The Effect of Divorce on Life Insurance Beneficiary Designations (CC 10-39) & Don’t Overlook Beneficiary Designations and Settlement Options (CC 09-28).

For in-depth analysis of beneficiaries and settlement options, see Advisor’s Main Library: D – Problems In Beneficiary Designations.

Although the gender gap is closing, there’s still a discrepancy between the amount of life insurance coverage owned by men and women. A recently released study by the Life Insurance and Market Research Association (LIMRA) revealed that, although men and women own life insurance in nearly equal numbers, and women are working now more than ever, the amount of coverage owned by women still trails that of men.

Historically, men have been the main source of household incomes; but recent research has revealed that about 30 percent of women earn more money than their husbands. Despite this change, LIMRA’s studies found that women’s life insurance ownership has not increased proportionately. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For in-depth analysis of life insurance in qualified plans, see Advisor’s Main Library: A – Life Insurance in Qualified Plans & 412(i) Plans.

The Obama administration’s 2012 budget includes an attack on corporate owned life insurance that could further erode its tax advantages and put a ding in carriers’ balance sheets.  Washington’s repeated assaults on corporate-owned life insurance seem to be motivated by its view of corporate owned life insurance as simply a tax arbitrage opportunity for big corporations, ignoring its importance for smaller businesses that rely on a few key people to keep them afloat.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For in-depth analysis of corporate-owned life insurance, see Advisor’s Main Library: D—Deductibility Of Business Insurance Premiums, E—Premiums As Taxable Income To The Insured & F—Taxability Of Corporate Owned Life Insurance Proceeds At Death.