Alright, good morning everybody this is Mike Courtney.
Mass Mutual Eastern Pennsylvania.
I'm joined by Steve Parisi
president and CEO of IBC Global.
We're here midweek
coming to the end of October 2020.
How's it going, Steve? How are you today?
[STEVE PARISI] Great Mike.
It's the final countdown, the last quarter baby.
It's going non-stop.
Yeah, it's fun.
[MIKE COURTNEY] We gotta we got a big pipeline
We got a lot of cases to push through.
I know you do as well.
As we head into the end of the year here,
I've recently been talking
to more and more brokers that I work with,
who are struggling to find
permanent life insurance solutions.
A lot of carriers have pulled back on product,
have restricted underwriting.
Mass Mutual in particular
has rolled out some different Riders throughout the year.
Then frankly I'm still getting my arms around
as far as the plan to ALIR [Additional Life Insurance Rider]
You've been a master at this over the last few years
with regards to blending our LISR Rider [Life insurance supplement rider]
Which is the 1-year term.
Blending our ALIR
Which is a paid-up addition Rider.
How do you model these policies?
Where you're minimizing risk, increasing flexibility,
and increasing cash value.
Without going through the mechanics of
how the software works.
In your mind, when you're putting together a plan,
how do those different Riders come into play?
And what's the benefit for the client?
[STEVE] Yeah, definitely.
So when you look at all those different Riders
especially that 1-year term Rider
with a lot of whole life insurance products.
I like that Rider for 2 reasons.
1) It allows a policyholder
to really minimize their insurance expenses.
Specifically the base premium
and plow funds into paid-up editions.
Which does buy them more death benefit
but they accelerate the immediate cash value
and long-term cash value as well.
So I like it for that reason
but the main reason I like it
is take Mass Mutual for example,
you mentioned the LISR Rider.
Mass Mutual typically or I should say traditionally
is not a very flexible company.
So if I come to you and say
"Hey, Mike I want the ability to pay in a $100,000 per year
into a cash value life insurance policy
and the death benefit's important
but cash accumulation is a huge goal of mine,
that's my interest.
So I want to be able to pay in $100,000 per year
but I don't want to get a bill for $100,000 a year.
That's not my thing."
So with Mass Mutual
if someone wants to pay in $ 100,000 year 1
then $30,000 year 2
then $70,000, bounce up and down,
it's very very difficult to do that with them.
Their planned ALIR opened up a little bit of flexibility
but it's still restricted...
[MIKE] A little bit.
[STEVE] A little bit. It's not there yet
but they are improving it
as I see them continue to make updates.
I'm sure they will.
But the LISR component
if that is attached to a policy
you can take a company like Mass Mutual
that a lot of people are attracted to.
When we design policies for corporations
they always 100% of the time are in the discussion.
They're an attractive company for good reason.
So that LISR component
which is a 1-year Term Rider,
which is available with a lot of insurance carriers.
Allows you to adjust payments
with Mass Mutual every year
and not have to go through medical underwriting.
That's the key. So...
[MIKE] Meaning,
if I have a stated LISR premium on an annual basis
I can overfund that on the fly at my discretion?
[STEVE] So when the window of opportunity...
{good question}
exists to throw money into that LISR
that 1-year term and PUAs,
is really on your anniversary date.
When the premium is due
so it's not that exact day.
[MIKE] Whatever any given year.
[STEVE Correct.
MIKE] I could overfund that LISR payment
satisfy the LISR premium
and then see the rest of those Dollars go into paid-up editions?
[STEVE[ Correct, correct.
And we've had a lot of people do that where for example,
if someone is anticipating a real estate sale.
Or they know: "Hey I'm gonna be receiving a lump sum
within the next 4 to 5 years
it's with certainty, it's coming in."
And a lot of Mass Mutual agents
aren't aware you can do this kind of stuff.
With the creative planning, we can have a policy
where maybe I pay in $30,000 for the first 4 years
and then I make a huge catch-up payment
and it's $150,000 in year 5.
Assuming I designed it right,
I don't trigger a MEC [Modified Endowment Contract] or anything.
You can make that type of payment
and not have to go through any medical underwriting.
Whereas with most designs with a basic Mass product
you'd have to do that kind of stuff.
And we're talking about Mass in this specific scenario
but a lot of companies have very similar rules
when you look at that flexibility.
But that 1-year Term Rider
whether it's the term LISR
or the 1,000,000 other terms out there.
[MIKE] Yeah
[STEVE] What a Mass used to call it?
"Sipper" or something like that?
[MIKE] That was on the survivorship.
[STEVE] Yeah, I remember that.
[MIKE] So yeah there's always got to be an acronym.
[STEVE] Yeah and then some companies call it option Q
or level Q term, alright it's all the same thing.
But it does open up a lot of flexibility.
So that was technical
what we just talked about there.
The main thing is kind of for a consumer
or an agent looking at creative planning to say:
"Okay, I think whole life, I think fixed premium.
I just keep paying the same amount."
Where you can shift it into
an extremely high cash value policy from day one
and very very flexible.
Where again, going back to the example,
I want to be able to pay in $100,000 per year
but I don't want a bill for that.
I can set my premium at, call it, $10,000
and then add up to $100,000 each year
depending on my cash flow, my situation.
Very, very flexible.
So now if life happens,
you can really reduce your liability with the base premium.
But if things go very, very well
you can plow funds into PUAs
which accelerate your cash value growth
and accelerate your death benefit
especially on a long-term perspective.
[MIKE] I know you've got a real detailed
and popular video that comes up on Youtube
and comes up on your website
that goes into much, much, more detail
and much greater depth about this.
So if anybody's interested in
what we're talking about right now.
I would encourage them to go over there.
Because I've been at this
with specifically with Mass Mutual
for quite sometime now
and never understood this before.
Theoretically that 1-year Term Rider
all I knew was a cheaper premium
for permanent death benefit
but very sensitive to dividend fluctuation.
So it always felt to me not so much like flexibility
but like cheaper premium.
But I potentially could have a problem down the road.
if the dividend reduces
and my LISR premium goes up.
I didn't even realize that there was so much flexibility
with regards to
how much premium I was paying into that Rider
and what the subsequent effect on the policy was.
I think it's really an underused concept
and I'm glad that we're talking about this.
[STEVE] Yeah you know that video
I think we have it titled
"OYT, One year Term Rider Full Transparency"
or something like that.
But to your point,
you know that it's called a blended PUA Rider
because it blends PUAs and decreasing Term Rider.
Is the cost of that term does increase over time
but at the same time the face amount,
the death benefit of the term decreases.
Typically your net cost doesn't go up much.
But the thing is
like to your point where you mentioned:
"Hey it's very sensitive based off of
the company's present dividend rate.
And if that goes down
the policyholder may have to dish more out of pocket
to satisfy the term cost.
Absolutely true if you stop there
but at the same time
as the agent, you have so much control where,
(A) if you are making a large PUA payment
you can just put more money in that
and that satisfies everything.
(B) the client can't pay
you can partially or fully reduce that term.
I have to make sure it doesn't MEC
but you plan ahead to make sure that it doesn't happen.
The point being, I mean it requires some due diligence
you got to be thorough understand
how that Rider and the product works.
But once you know how to drive the car
you can do a lot of good with it.
[MIKE] Well,
you have to be thorough past year 1 too as a servicing agent
And that's something that
we've touted this with your group a lot in the past.
And it's something that I feel like
has really fallen off in recent years.
You know I work out of a Mass Mutual agency
that's a pretty healthy blend of older seasoned agents
and younger entrepreneurial type agents
and the servicing agent has really gone away.
I see a lot of the younger folks
and by younger, I'm talking my age as well.
Who are out there
and don't always understand what they sold.
And don't necessarily want to service it down the road,
as questions come up.
And I watch you and your group
work with these clients on an ongoing basis,
to make sure not only
did you put a good flexible plan in place
but how to really execute on that plan.
And make sure that as things change you're staying nimble.
So that's you know big kudos to you guys.
I think that's important for anybody
who is looking to associate with your group as well
that you got an ongoing service model in place.
[STEVE] Yeah, no thanks for mentioning that.
I mean that that is a lot of work that
that's typically always behind the scenes
and it's just customer service.
When you look at companies that crush it
their customer service is top tier.
I always think of Apple
I mean anytime I've had an issue
they're on the ball calling me.
Which I like a lot so we try and emulate that.
And how I look at it
because when you have a high amount of volume
as far as business coming in, that's great.
Like that's my dream, okay this is great.
We got the volume, we can keep hiring people.
Agents love it because they don't have the prospect
let's just put the pedal down.
But then, the 2nd problem that occurs from that
is you've got all this activity now
you have to service it.
This is not just a sales shop
where you and I say:
'Okay let's just sell a policy and say see you later."
Because you know when people purchase this product
they want the flexibility that goes into the...
(the thing we were just talking about
the 1-year Term Rider you can provide that for someone)
but if life happens and I can't pay in as much,
well it's important for the agent
to have those review calls, review meetings,
review programs everything we have.
That are always there
making themselves available
to that prospect, that client.
Because they're not going to remember.
Just like, if you and I go to a doctor
and they diagnose us with whatever,
like I'm not going to remember the term
or the things I have to do.
Which those regular checkups
they're going to remind me of that:
"Okay here's the checkup.
Here continue to do the right thing."
So that's very important.
We've invested a ton there on the technology space.
And then just manpower
as we hire more individuals
for our client relations department.
[MIKE] Yeah, a huge step in place.
Well listen, anybody who's out there listening,
any brokers or independent financial advisors,
check out Steve IBC Global.
Steve Parisi, he's president and CEO.
Steve's a great guy, he's got a great team.
I'm coming to you from Mass Mutual Eastern Pennsylvania.
If you're a broker and you're interested in life insurance,
disability, long-term care,
fixed annuities, dutch base, let's talk.
We still got time before the end of the year.
Big push right Steve?
[STEVE] Right on, right on.
We've got your contact info below Mike.
I definitely encourage anyone to reach out to you.
You're a huge help.
[MIKE] Nice. Alright, thanks Steve.
Have a great day everybody.
Have fun, be safe and talk to you soon.
[STEVE] Likewise, thanks Mike.