Part II of Our Dental Survey:–You Know the Drill
by Leila Morris •  Welcome to Part II of our annual dental survey. We’ve asked the top dental providers in California to answer 28 questions to help you, the agent, understand the benefits, features, and services.
Helping Employers Manage Their Healthcare Costs
by Kevin Ryan •  Self-insured plans are becoming more attractive as health insurance premiums continue to rise for fully insured plans. Growing numbers of employers in California are taking a harder look at benefits that come with being responsible for paying medical claims.
It’s No See-cret: Family Vision Care a Marketing Opportunity for Brokers
by Peter H. Kehoe, O.D., F.A.A.O • Your benefit recommendations need to take children’s health into account since a third of the workforce is made up of parents with kids under 19.
Vision Plans Aid in Early Detection and Support Disease Management Programs
by John Lahr, D.O. FAAO • Vision plans are important to eye health because a plan’s participating providers can detect the onset of eye diseases, such as cataracts, macular degeneration, and glaucoma.
Catching the HSA Wave
by Leila Morris • More and more employers are taking advantage of high deductible health plans (HDHPs) to address rising healthcare costs. In fact, just in the past year, enrollment grew 14% for high-deductible health insurance plans tied to health savings accounts (HSAs).
View from the Top
Top Life Executives Have Seen Individual Sales Increase and Anticipate Growth for Employee-Paid Life Insurance Benefits

by Leila Morris •  Unlike the rest of the economy, the life insurance industry did well last year. In this year’s view from the top survey, executives tell us that life insurance has become even more relevant with today’s uncertain economy and aging population.
Helping Your Clients Choose the Right Individual Plan
by Michael Ginsberg • With the passage of the Patient Protection Affordable Care Act (PPACA), many of your clients may be confused as to what kind of individual health plan offers the best prevention and wellness coverage.
Demonstrating Your Value as a Retirement Income Expert
by Brian Grigg • Don’t shoot the messenger,” may be an apt motto for our industry today, as producers have to be the bearers of bad news to Baby Boomers.
Boomers Bearing Down on Life Settlement Industry
by Stephen Terrell •  For agents, life insurance settlements offer a new opportunity to connect with Boomer clients and a new reason for policyholders to keep policies in force.
Life Settlements 2.0 – The Next Generation
by Eric Lund • You would not be alone if you believed that the life settlement market was kaput. You would, however, be wrong.

Our Annual Dental Survey Part II–You Know the Drill!

Welcome to Part II of California Broker’s 2011 Dental Survey. We’ve asked the top dental providers in California to answer 28 crucial questions to better help you, the agent, understand their benefits, features, and services. Read the responses and sell accordingly. If you’d like to see the survey in it’s entirety, please click here.

How do you ensure that your dentists are aware of the benefits of your plan(s)? Do you have a way of knowing if the dentists are soliciting or recommending services that are not compensated for by your plan?

Aetna: Participating dental offices 
receive our helpful Dental Office Guide, which provides clear information about plan designs, policies, and procedures. We also offer a Website specifically designed for dentists. The site includes real-time eligibility and benefits information, a 24/7 speech recognition system called “Aetna Voice Advantage.” Also, our dental solutions team is trained to know what is important for provider service. Unusual treatment patterns may be discovered during our review of utilization reports. This usually results in an office audit that includes a review of patient files and general office practices. We talk with the dentist about the findings and develop recommendations for improvement where needed.

We have materials that may be provided to dentists with information on how to file claims and access online materials. A dedicated section on provides dentists with claim forms and instructions, as well as online access to verify policy benefit amounts. If the dentist has any additional questions, he or she may call our Customer Service Center.

Providers can access individual plan 
information using the toll-free voice response system, the fax-back system, or our online benefit Website. We hope this educates both the provider and insured of covered benefits. If not, periodic surveys and automated utilization review mechanisms help provide a way to monitor issues regarding plan coverage misunderstandings.

The members are given material specific to the dentist to ensure that benefits are understood. We also offer extended customer service hours with a department dedicated to assisting dentists with benefits information. We have regular outside auditors who review claims for this information in addition to scrub during time of payment.

BEST Life:
Dentists may contact BEST Life for information about member benefits by calling 800-433-0088. We also have a fax back line dentists can use to obtain benefit information through their fax line.

Blue Shield:
Each provider receives a Provider Manual upon acceptance into the plan, which outlines requirements of participation and details on plan administration. Providers may receive in-person training with their staff, if requested.

A large staff of dental network managers, based in specific 
field locations and in operational offices, meets continuously with dental care professionals on our administrative and quality policies. Our network teams counsel any offices found to not be in compliance and remediation plans are put into place to ensure compliance.
DHMO – The CIGNA Dental Care Reference Guide and Patient Charge Schedules at a Glance, and Specialty Referral Guidelines are provided to each network dental office on the plan. These comprehensive documents describe the policies and procedures to administer the plan and help members, the patient charges for each plan, and the benefits of participating in the CIGNA Dental Care network. “Network Update” is a bulletin we produce to communicate information about nationwide and state-specific policies, procedures, and regulations that affect dentists. This bulletin is mailed with monthly payment packages to all dental offices to which the information is applicable.

DEPO/DPPO – The CIGNA Dental Office Reference Guide and fee schedules are provided to each network dental office on the plan. These comprehensive documents describe the policies and procedures to administer the plan and help patients; the contracted fee schedule for the office; and the benefits of participating in the CIGNA Dental PPO network.

Dearborn National:
Upon contracting with our network, providers will be informed of the established fee schedule that will be their basis of reimbursement. The fee schedule highlights reimbursement rates for specific benefits offered through our network. Statistically based utilization review helps ensure that dental services are medically necessary, dentally appropriate and of acceptable quality and within the scope of a group contract. A dentist’s practice pattern is evaluated through post payment utilization of paid claims based on statistical analyses and comparisons to the dentist’s peer groups. Throughout the utilization review process, dental consultants are available to provide professional advice or answer questions requiring clinical knowledge. Our dental consultants are thoroughly trained on contractual plan provisions and in the review of claims for appropriateness of care.

Delta Dental:
Detailed program information for all enrollees is available through a secure area of our website and through a toll-free telephone number including maximums, deductible and benefit levels. Additionally, Delta Dental issues a bimonthly newsletter to network dental offices, which covers Delta Dental policy, industry news, seminars, new Delta Dental clients, tips on submitting claims and other useful information. Delta Dental also issues a quarterly quality-related newsletter to participating dentists that provides useful information to help improve the quality and efficiency of the care they provide. Delta Dental also holds regular seminars to keep dentists up to date. Regular enrollee surveys seek information on various quality issues, such as services rendered that are not covered by the program; services delivered as claimed; office cleanliness and appearance; and customer service.

Dental Health Services:
We regularly provide on-site training, audit
ing, and service visits for our participating prepaid dentists. Additionally, each office gets a comprehensive manual and we monitor all services and treatments received by our members through monthly utilization reports.

Dentists can access plan benefits using our on-line web tool, or by phone. All PPO dentists receive information about Guardian’s plans through local network recruiters as well as mailings of pertinent information. Our claim system tracks and monitors each dentist’s practice patterns for bundling, over-utilization, etc. We consult with dentists who are not meeting our expectations, and if they are unable to do so, we may discontinue their network participation. We recommend that members obtain a voluntary pre-determination of benefits before proceeding with any treatment that will cost $300 or more, but we do not reduce or deny benefits if the member does not submit the treatment plan for predetermination. The member will be advised if the treatment plan includes services that are not covered under his or her plan. All offices that join our DHMO network receive an orientation that fully explains the plan. Additionally, our DHMO Regional Network Managers periodically visit the offices to review the plan. Dental Offices submit encounter data of services provided to DHMO members which is reviewed quarterly by our Quality Assurance Committee.

Health Net Dental:
We educate our providers about our administra
tive policies, including guidelines on appropriate care. Providers are encouraged to submit pre-treatment plans for review in order to learn what procedures would be covered under the member’s benefit plan and the level of reimbursement. In the process of reviewing pre-treatment estimates and in completed claims, we track and monitor each provider’s practice patterns. Providers with aberrant patterns get a focused review, including statistical analysis and record audits, which may result in appropriate corrective action plans. Our Professional Network Relations reps meet with providers to counsel them and to answer any questions about planning care for members. Our Internet portals provide real-time information to providers and members on their benefits.

MetLife: For our Dental PPO, MetLife has developed a multi-
channel technology platform for employers, participants and dental offices, providing access to information via Internet, fax, or phone. At the time of service, dental offices can access eligibility, plan, and other information through dedicated real-time* channels. Once selected to participate in MetLife’s Dental PPO network, dentist’s treatment patterns are monitored to help ensure maintenance of appropriate practice patterns — not plan design as they may not address the unique needs of individuals. If a dentist’s treatment patterns become unacceptable, the dentist is educated and monitored via MetLife claim review processes, and, if warranted, removed from the network.

If a participant should have a complaint regarding charges for services, covered or not covered by a MetLife plan, our trained customer service representatives will review the issue with the participant and generate a response and follow-up investigation, if necessary. For the Dental HMO, each dental office gets a facility reference guide with a section on the plans. A provider relations representative conducts a thorough orientation with the dental office staff to help them fully understand the plans. Quality Management reviews member concerns and conducts regular chart audits.
Transactions are processed in real-time except when the systems are undergoing scheduled or unscheduled maintenance or interruption.

Principal Financial Group: We provide on-line, telephone and fax service options for providers to verify benefits and eligibility. We encourage pre-determination to be performed for inlays, onlays, single crowns, prosthetics, periodontics and oral surgery.

Securian Dental: Dentists can verify benefits by calling our toll-free customer service phone number or via our Website.

United Concordia Dental: Dental offices can confirm benefit coverage information on our website via “My Patients’ Benefits,” through our telephone interactive voice response (IVR) system, or by speaking to a customer service representative. In some instances, we also inform dentists of important benefit changes through our quarterly newsletter, a stuffer included with dentist checks, and/or with an automated telephone call. Dentists can also reference benefit information using our Dentist Reference Guide, available on our website. Professional relations representatives are also available to provide assistance when necessary. We identify abnormal practice patterns through a comprehensive quality assurance process. United Concordia Dental reviews thousands of claims each year to ensure the acceptability of treatment and quality of services. Advisors and consultants also review dentists’ fees and practice patterns. Dentists who fall outside of the norm are targeted for education and additional monitoring.

Western Dental: Each provider is trained and given training materi
als to ensure that they are knowledgeable about Western Dental programs. Western Dental Services also monitors customer service inquiries and grievances in addition to reviewing utilization data supplied by each provider.

How many provider offices have you lost over the past 12 months? If asked, will you provide the names and phone numbers of at least three of these offices?

Aetna: In 2010, we lost 2.5% or providers in our DMO network and 
1% in our PPO network. This is the voluntary termination rate. We are not at liberty to provide specific dentist information, such as names and phone

Aflac: N/A

Ameritas PPO: 2,591 provider access points were lost (Ameritas = 1,578, FDH =1,013). Yes, we would provide names, if requested.

For all plans combined, the turnover is less than 2%. 
Many offices have been terminated due to lack of meeting credentialing standards, retirement or death of the provider. BEN-E-LECT does maintain the information for these offices, however it is not common practice to release the information.

BEST Life:
Less than 3% of providers have left our PPO networks 
over the past 12 months. Reasons for leaving include retirement, relocation of practice, changes within group practices, and voluntary terminations. For the sake of privacy, our network does not share such information for the purpose of a general interview. Our networks also focus on growth. Our national network has 14% nationally just in the first quarter of 2011, and has added 321 provider locations to the California network alone.

Blue Shield:
Dental PPO: For 2010, the voluntary turnover rate (ex
cluding deaths, retirements and practice relocations) was less than 1%. Dental HMO: For 2010, the voluntary turnover rate (excluding deaths, retirements and practive relocations) was 2%.

CIGNA’s dental network turnover rates have been lower than 
published industry average data. Dentist and dental office information can be shared with clients and brokers if required.

Dearborn National: In 2010, there were 1,758 terminations.

Delta Dental: Our Delta Dental PPO network increased by 2.6% in 
2010, our DHMO network increased by 5.78%. Our Delta Dental Premier network decreased 0.2%. Delta Dental does not release specific information on its contracted dentists. California turnover: Premier, 0.28%; PPO, 2.18%; and DeltaCare USA, 1.46%.

Dental Health Services: Although roughly 5% of participating dentists have been lost over the past 12 months, our overall network size has made up for this and has increased by 5% over the previous year through a focus on seeking out only the most qualified dentists while improving accessibility and availability. The names and phone numbers of all offices are available on request.

Guardian: Over the past 12 months, turnover in both our DHMO and PPO nationwide networks has been approximately 6%, and includes dentists who voluntarily discontinue their participation (retirement, moving from area, closing the practice) and those whose participation is ended by Guardian. We can provide names and phone numbers of terminated offices, subject to permission from the offices.

Health Net Dental: In 2011, our DHMO turnover rate for voluntary terms is 1% and our PPO turnover rate is 1%. We do not release specific information on our contracted dentists.

HumanaDental: 87 California dentists were termed during the past 
12 months, including seven that were termed by HumanaDental due to not meeting our credentialing standards. We will not identify terminated providers.

MetLife: For Dental PPO, our turnover rate was 1.40 % for 2010. 
For Dental HMO, 2.04% of contracted dentists in California left the network in 2010.

Principal Financial Group: For our PPO network, we’ve lost 3,300 provider locations. For our EPO network, we’ve lost 950 provider locations.

Securian Dental: Very few providers choose to leave the DenteMax network. Less than 3% of our network dentists discontinue participation with DenteMax every year. The majority of these terminations are due to a provider’s retirement or death or the moving or closing of a practice. We would be willing to provide names and phone numbers of terminated offices upon request.

United Concordia Dental: In California, we retained 98% of the dentists in our PPO network and more than 92% of the dentists in our DHMO network in the last 12 months. Yes, if requested, we can provide the names and phone numbers of dental offices that no longer participate in our network.

Western Dental: Turnover is about 3% for the past year. Yes, we 
will provide the names and phone numbers for 3 of these offices, if requested.

What percentage of your network is closed to new enrollment? How many offices does this represent?

Aetna: For California, approximately 4% of our DMO participating pro
viders are closed to new patients. All of our PPO providers are open to new patients so 0% are closed.

Aflac: N/A

Ameritas PPO: Only 34 Ameritas Offices and 6 FDH Offices are closed to new enrollment. This represents approximately 0.1%.

BEN-E-LECT: All of our dental PPO providers are accepting new patients. For our DHMO product, less than 3% of the offices are closed to new enrollment representing approximately 60 offices.

BEST Life: All participating PPO dentists are accepting new patients.

Blue Shield: In 2010, less than 2% of dental HMO plan network providers maintained closed practices; this represents approximately 30 offices.

CIGNA: DPPO network offices don’t close to new enrollment. For DHMO in California, the total number of general dentist network locations is 1,475. Of those, 1,327 are open to new enrollment.

Dearborn National: All participating provider offices in our PPO 
network are open to new enrollment. Contractually, participating providers are required to maintain an open practice. For our DHMO network, less than 1% is closed to new members.

Delta Dental: 0%. Under the PPO/Premier plans, enrollees are 
free to see any licensed dentist. Contracted dentists can close their practices to new patients but cannot close their practice exclusively to new Delta Dental patients; 6.7% DHMO dental facilities are closed to new enrollment.

Dental Health Services: About 8% of network general practice den
tists are closed to new enrollment (63 offices). No specialty offices are closed to new members.

Guardian: In California, only .01% of our PPO network and 5.1% of our DHMO network is closed to new patients.

Health Net Dental: As of June 2011, for DHMO, currently 2% (33 
out of 1,996) of our offices are closed to new enrollment. For PPO, currently 0.06% (17 out of 30,566) of our dentists’ offices are closed to new enrollment.

HumanaDental: Under HumanaDental’s provider contract, participating dentists must schedule and treat members without discrimination, including benefit or payer differentials. Because this is a fee-for-service reimbursement program, closed practices are not common.

MetLife: Nationally, less than 1% of our participating Dental PPO 
dentists have requested that their names be removed from our provider listing for purposes of not accepting new MetLife-eligible patients. For Dental HMO, 4.6% of general dentist offices are closed to new enrollment in California.

Principal Financial Group: Less than 1% of the offices participating 
in our network are closed to new enrollment

Securian Dental: All of our network dentists are open to new enrollment.

United Concordia Dental: In California, more than 99% of our PPO 
dentist network is open to new enrollment, as well as more than 96% of our DHMO dentist network.

Western Dental: Less than 3% of our network providers are closed to new enrollments – about 60 offices.

Do all of your contracted offices accept every benefit level sold by your company or do they have the option to pick and choose only the programs with co-payments they want to accept?

Aetna: All DMO offices accept all of our DMO coinsurance and fixed co-payment plan designs. Our PPO offices accept all of our PPO plan designs.

Aflac: N/A

Ameritas: All providers accept patients from all plans sold through 
Ameritas Group Dental.

BEN-E-LECT: All benefit levels are accepted and to date no offices 
have limited or requested to limit the programs they will accept.

BEST Life: All contracted offices accept every benefit level sold by 
BEST Life. Furthermore, by contract, all providers will honor the PPO discounts on all procedures, including non-covered services.

Blue Shield: Offices are not allowed to pick and choose which plan designs they accept.

CIGNA: All contracted DPPO offices accept all of the insured benefit DPPO plan designs that we offer. All contracted DHMO offices accept all of the DHMO plan designs that we offer. For our discount dental programs, not all DPPO contracted providers are required to participate. They may opt out of participation in these discount dental programs if they desire.

Dearborn National: The contracted offices of our PPO providers are 
required to accept the established fee schedules that include the benefit levels sold by Dearborn National. Providers are not allowed to pick and choose programs with co-payments they want to accept, but instead accepted previously established fees.
For our DHMO network, we do not require the dental office to accept all plan variations. Dentists are free to select only the plan products that work for them and their office.

Delta Dental: Delta Dental holds contracts with individual dentists 
for participation with each network (Premier, PPO and DeltaCare USA [DHMO]). Dentists can choose to participate only in those programs with copayments they wish to accept.

Dental Health Services: All new dentists are contracted for all plans 
offered by Dental Health Services.

Guardian: All contracted PPO and CA DHMO offices accept all of the plan designs that we offer.

Health Net Dental: All participating PPO dentists accept all of our 
plan designs. Contracted DHMO providers accept all Health Net Dental DHMO plans.

HumanaDental: The PPO contract is for all network-based programs, excluding DHMO, which requires a separate agreement.

MetLife: For Dental PPO, all participating dentists accept all of our 
plan designs. They cannot pick and choose which MetLife plans to accept. For Dental HMO, when contracting with a dental-care provider, it is understood that the dentist will accept all Dental HMO plans. A few contracted dentists do not participate in some of the older custom DHMO plans.

Principal Financial Group: Providers can choose to participate in 
our PPO and/or EPO networks. Within each option, providers need to accept all benefit levels sold by our company.
Securian Dental: Yes, they accept every benefit level sold by our company.

United Concordia Dental: All contracted PPO dentists accept all 
United Concordia Dental PPO plans. All contracted DHMO dentists accept all United Concordia Dental DHMO plans.

Western Dental: The entire network accepts all of the new Series 7 plans.

Do you have a way to monitor the length of time patients have to wait in the doctor’s office?

Aetna: A semi-annual written survey is collected from all Calif. DMO 
general dentists

Aflac: N/A

Ameritas: We monitor patient wait time through random customer 
and patient surveys. Providers are contacted, if necessary, to discuss specific feedback.

BEN-E-LECT: This information is tracked closely with our Freedom 
Pre-Paid Dental Plans. The information is tracked via surveys and questionnaires for our PPO products.

BEST Life: Network accessibility and wait times are included as part 
of the credentialing and ongoing monitoring processes.

Blue Shield: Yes. We monitor and track wait times several ways. We 
document member complaints on this issue in our customer service workbench and track them electronically until they are resolved. We also conduct an annual member satisfaction survey, which contains specific questions about wait times with our network offices.

CIGNA: The dental network management team monitors wait times in our DHMO general dentist facilities via monthly telephone calls. Additionally, we are able to identify lengthy wait times through our patient satisfaction surveys.

Dearborn National: In-network dentists are expected to deliver care 
at the same professional standards as defined by the American Dental Association and found in their publication, “Principles of Ethics and Code of Professional Conduct.” Average waiting time for scheduling appointments is not tracked for our dental programs.

Delta Dental: Delta Dental conducts random enrollee surveys 
semi-annually for the fee-for-service enrollees and annually for DHMO enrollees. Surveys include questions about dentist access (for example, number of dentists from which to choose and appointment availability with their dentist) as well as other customer satisfaction issues. For the DHMO, the appointment availability is also monitored via regular office visits from a Delta Dental representative.

Dental Health Services: Yes, we monitor our members’ experiences 
through frequent member surveys, regular on-site dental office visits and quarterly access surveys.

Guardian: We do not monitor appointment scheduling or wait times for the PPO plan, although every month we send member satisfaction surveys, which include questions concerning wait times, to randomly chosen PPO members who have been to a network dentist within the previous 90 days. The DHMO has established access standards and monitors this quarterly by mailing access monitoring forms, member satisfaction surveys, transfers, and grievance data. Telephone calls are utilized on an as needed basis.

Health Net Dental: We monitor individual wait times in the dentist’s waiting room through our member satisfaction surveys and provider access surveys. Results of these surveys are a critical tool in assessing a member’s experience with network dentists and their specific offices. In addition, we get feedback on office wait times from members calling our toll-free Health Net Dental Member Services number.

HumanaDental: We rely on member calls to keep us apprised of scheduling issues. Sometimes, the member is limiting their options (i.e., after 5 p.m.), which is discovered through discussion with our customer-relations representatives. If the issue becomes chronic, the information is forwarded to our National Dental Network department because additional providers may be needed in the area.

MetLife: For Dental PPO, we monitor patient impressions of wait 
time through monthly satisfaction surveys that specifically ask this question. For Dental HMO, SafeGuard, a MetLife company, monitors the length of time that patients wait in the reception area and the operatory through the quarterly accessibility survey and service visit reports by provider relations representatives. In addition, we track wait times through a monthly report and member satisfaction survey.

Principal Financial Group: We do not monitor this.

Securian Dental: We do not monitor this.

United Concordia Dental: Yes, it is monitored through member surveys, a customer service grievance process, and periodic phone audits of the offices.

Western Dental: Western Dental monitors patient’s length of time 
by onsite reviews, surveys, and questionnaires. In addition, our staff model offices use the Quality Assurance Management System. The state-of-the-art, proprietary software tool tracks measurable items, such as wait times, which ensures that our members have timely access to quality dental care.

Are there plenty of providers who stay open late and are open on Saturdays?

Aetna: Office hours are set by each individual dental office. We docu
ment dentists’ office hours as part of the credentialing process. We use the information to balance networks by contracting with dentists who offer weekend and evening hours.

Aflac: We do not have a network of providers. Policyholders may visit 
any dentist they choose, which includes those with extended hours.

Ameritas PPO: Yes, each office sets its own hours. Those hours are available to all our members on our on-line provider listings. Our goal is to balance care availability throughout the area to ensure needed care.

BEN-E-LECT: Yes, many of our offices offer extended evening and 
early morning hours in addition to weekend hours for ease of access.

BEST Life: Yes, many providers have extended and flexible hours.

Blue Shield: This varies by provider, but many do stay open late and or are open on Saturdays.

CIGNA: DHMO: There are 2,804 network offices (24.8% percent of 
the total DHMO network) offering Saturday office hours, and 3,778 network offices (33.5% percent of the total DHMO network) with evening hours (6:00 p.m. or later).

DPPO: Since members are able to visit any licensed dentist for care, we do not measure evening or weekend hours for network dentists. Additionally, our dentist contracts require dentists to provide or arrange for emergency care 24 hours a day, 7 days a week and to provide emergency appointments within 24 hours.

Delta Dental: Our online dentist directory contains information on 
hours and access, including maps, directions and languages spoken. In addition to posting hours and access, DHMO network dentists are required to provide 24-hour emergency service to enrollees seven days a week.

Dearborn National: Yes, there are in-network providers that schedule evening appointments and that also maintain business hours on Saturdays for the convenience of plan members.

Guardian: Many PPO and DHMO provider locations have extended or weekend hours.

Health Net Dental: The office hours of each dentist location is listed 
in our online provider directory. This information is also available to all members through Health Net Dental Member Services. As part of our dentist agreement, all locations are required to have an emergency contact available for members whenever the dental office is closed.

HumanaDental: Members can see the provider of their choice and they are encouraged to contact their dentist for appointment availability. Based on today’s busy lifestyles, many providers are extending their hours to meet the needs of their patients.

MetLife: For Dental PPO, as part of MetLife’s credentialing criteria, 
all participating dentists must provide acceptable hours of service and have established emergency care and/or off-hour protocols. For Dental HMO, SafeGuard, a MetLife company, contracts with individual dental practitioners, many who have evening and Saturday hours.

Principal Financial Group: Members can see any provider of their choice which can include those who have extended hours.

Securian Dental: Yes.

United Concordia Dental: Yes.

Western Dental: Yes, many of our IPA providers have evening and 
Saturday hours. The Western Dental Staff Model Offices are open from 9:00 AM to 8:00 PM, Monday through Friday and 8:00 AM to 4:00 PM on Saturdays.

With respect to your mid-range benefit level, what is the specific amount of capitation paid to the general dentist? Do you offer validation for these amounts?

Aetna: We establish varying compensation rates under each customer’s benefits plan for subscribers, spouses, and children. Monthly compensation rates are based on community averages and plan design. Actual capitation amounts are proprietary.

Aflac: N/A

Ameritas PPO and the FDH Networks: Neither of these networks is 
used for dental HMO purposes, so no capitation is paid.

BEN-E-LECT: This is not applicable for our PPO plans. All dentist 
capitation has been added to the dentist premium amounts collected for our DHMO products.

BEST Life: We do not compensate our providers through capitation. Our Indemnity and PPO plans allow patients to utilize providers of their choice. Network providers are contracted to accept payment in full at a discounted fixed fee schedule.

Blue Shield: This information is considered proprietary.

CIGNA: Dentist capitation amounts are considered proprietary 

Dearborn National: We do not offer capitation to our PPO network providers. For our DHMO providers, this information is not public.

Delta Dental: Capitation rates are developed based on the plan 
design, annual utilization data, enrollee/dependent mix and employer contribution. Compensation is designed to reimburse approximately 60% to 65% of usual fees.

Dental Health Services: Our compensation system involves many 
more components than capitation and is designed to keep the participating dentists whole while providing incentives for appropriate treatment and care.

Guardian: DHMO capitation amounts paid to the general dentist vary based on plan design, adult or child, and region.

Health Net Dental: Capitation information is proprietary.

HumanaDental: Managed dental care capitation varies by plan schedule and geographic location.

MetLife: For Dental HMO, capitation is actuarially set by plan design 
and that information is proprietary. Capitation is augmented by supplemental payments for certain procedures. In addition, the plan pays fees for each member visit.

Principal Financial Group: N/A

Securian Dental: We do not offer capitation plans. We offer PPO and Indemnity plans.

United Concordia Dental: Specific capitation amounts are consid
ered proprietary information.

Western Dental: Series 7 plans reimburse providers with capitation 
and supplemental payments. Total compensation, as with fee for service designs, depends on how much treatment is provided.

Are there incentives for the provider to be thorough?

Aetna: Quality management programs are designed to help protect members and providers.

Aflac: It is expected that the dentists selected by our policyholders 
treat their patients with the utmost respect and provide the highest standards of quality care without requiring incentives to do so. If our policyholders are unhappy with the service received, they may change dentists at any time.

Ameritas PPO: Provider thoroughness is an expectation; we do 
not offer an incentive for this. We do, however, monitor patient care through quarterly utilization review. If standards are not met, it could result in the provider?s termination from the network.

BEN-E-LECT: Yes. Providers which exceed quality of services and accessibility standards may be offered a bonus.

BEST Life: Our networks administer comprehensive Utilization Reviews for dental necessity and appropriateness of care.

Blue Shield: Appropriate care provided by dentists in our networks 
is measured continuously through numerous oversight mechanisms. While routine treatment plans are carried out by dentists without prospective review, more complicated treatments are evaluated by our dental consultants. These professionals assess the proposed treatment(s) for appropriateness and benefit determination. All dentists involved in our review process are fully licensed. Our clinicians are also actively involved in the annual review of dentist records. These quality-of-care audits involve the use of comprehensive guidelines established by the American Academy of Dental Group Practice, the California Dental Association, and the American Dental Association (through the University of North Carolina School of Dentistry). A random sample of each dentist’s records is selected for scrutiny by our dental consultants. Necessary recommendations are made to any dentists who do not meet our quality standards and follow-up audits are conducted to verify corrective action has been taken.

CIGNA: Our Integrated Quality Management Program drives overall 
quality across all of our dental networks. While we do not provide incentives, the expectation is that the dentists in our networks meet professionally recognized standards of care.

Dearborn National: There are no incentives to PPO providers to 
control costs or provide quality of care. As indicated in the provider agreement, along with our Quality Improvement Guidelines, network dentists are required to follow standards of care as defined by the American Dental Association.
For DHMO providers, we subject them to quality assurance standards and routine audits, therefore there is nothing for them to gain by not being thorough.

Delta Dental: Delta Dental does not pay any special incentives. We expect all credentialed network dentists to provide high-quality care within professionally accepted standards and to maintain the dental health of enrollees, with the intention to reduce the need for more invasive care later. Dentists who provide quality care and service retain their assigned enrollees, and as a result, gain enrollment and greater overall compensation.

Dental Health Services: Our supplemental payments and rigorous 
Quality Assurance Program are designed as incentives to provide appropriate and thorough care. Only caring, experienced, qualified doctors are accepted into our exclusive prepaid network. All of our dentists undergo a careful and highly selective screening process. To ensure ongoing quality, a panel of quality assurance professionals conducts regular monitoring, reviews, and audits while an extensive checklist helps to make sure that plan members get the best and safest care possible.

Guardian: Our PPO fee schedules and plan provisions are adequate to encourage proper care. We do not offer incentives. Guardian requires participating dentists to treat PPO members the same as any other patients and we investigate all quality of care complaints from members. Our DHMO reimbursement schedules, capitation payments, office visit fees, supplemental payments, and chair-hour guarantees are adequate to encourage appropriate care. Participating dentists treat DHMO members the same as any other patient, and we have a grievance process in place to follow up on all quality of care complaints from members.

Health Net Dental: We do not offer financial incentives to our dentists. Our expectation is that our dentists perform in accordance with high professional standards without incentives. Our extensive credentialing process ensures that our contracting dentists are of the highest caliber.

HumanaDental: Fee-for-service reimbursement encourages 
thorough treatment. Member complaints are reviewed by our Quality Assurance Department and through our standard grievance process.

MetLife: Providers are expected to perform in accordance with high 
standards of competence, care, and concern for the welfare and needs of participants.

Principal Financial Group: Being thorough is an expectation and we 
do not provide incentives to meet expectations. All providers in our networks or those we might recommend must meet strict credentialing requirements. This means they have all been independently reviewed and found to have proper professional credentials and a verified history of responsible billings. However, a member is free to choose any provider.

Securian Dental: All DenteMax dentists undergo a rigorous credentialing process to ensure the highest quality dentists are treating our members.

United Concordia Dental:
Our expectation is that all services performed by participating dentists will meet the high standards of the dental industry. In addition, participating DHMO primary dentists get supplemental reimbursement on the most highly utilized procedures in addition to monthly capitation and member co-payments, which encourage dentists to provide the services necessary to ensure the oral health of members.

Western Dental: Western Dental Services Inc. may pay the dentist 
a bonus based on exceeding standards specified by Western Dental with regard to accessibility of services and quality of care.

Do you provide coverage for all types of specialist referrals?

Aetna: Yes

Aflac: We do not require referrals.

Ameritas PPO and the FDH Networks: Yes, specialty coverage can be a part of any Ameritas plan designs. Our networks are comprised of a full-spectrum of specialists to cover the needs of our customers.

BEN-E-LECT: Specialist referrals are not necessary. Coverage is 
available for all types of specialty procedures including, but not limited to, endodontic, periodontic, cosmetic, orthodontics, oral surgery and pedodontics.

BEST Life: Yes, specialists are covered at full contract benefits as 
described in our Indemnity and PPO plan Certificates of Insurance. Our orthodontic plan is available for all of our PPO and Indemnity plans at a deductible or lifetime maximum. An in-network discount for Orthodontia is also available for members who access our PPO Network.

Blue Shield: Dental PPO plan members may self-refer to any spe
cialist. For the dental HMO plan member there is no coverage for prosthodontic specialists.

CIGNA: DHMO: Network general dentists initiate patient referrals for 
endodontic, oral surgery, and periodontal treatment. Referrals are valid for 90 days from the approval date. Specialty referrals are not required for orthodontic treatment, if covered on their plan design or for pediatric care for children up to age seven as long as individuals visit network specialists. The network specialist may submit a request for pre-authorization to CIGNA Dental for oral surgery and periodontal services. Individuals are responsible for the applicable patient charges listed on the Patient Charge Schedule for all covered procedures. After specialty treatment is complete, the individual should return to the network general dentist for care.
If it is determined that a network specialist is not available, the general dentist will refer the patient to a non-network specialist and the patient will only be responsible for charges listed on the Patient Charge Schedule.

Dearborn National: Yes, our DHMO program will provide coverage for all types of specialist referrals. Our PPO program does not require specialist referrals.

Delta Dental: Fee-for-service enrollees can self-refer; referral by the 
general dentist isn’t required. For DHMO enrollees, the primary care dentist is responsible for submitting the predetermination request and directing the enrollee to the appropriate specialist once authorization is received.

Dental Health Services: Our plans provide specialty coverage for 
endodontics, periodontics, oral surgery, pedodontics and orthodontics.
Guardian: We provide coverage for all types of dental specialists.

Health Net Dental: For DHMO plans that require pre-authorization, 
the contracting primary care dentist completes a specialty referral form and submits to Health Net Dental. Approvals are returned to the primary care dentist, member and specialist. Upon receiving the approval, the member contacts the specialty office to schedule an appointment for completion of treatment. For plans that have direct referral, the primary care dentist may directly refer the member to a participating specialist by visiting our website or by contacting our customer service.

HumanaDental: Fee-for-service reimbursement encourages thorough 
treatment. Member complaints are reviewed by our Quality Assurance Department and through our standard grievance process.

MetLife: For Dental PPO, claims for services by licensed dental 
practitioners will be considered for reimbursement based on the participant’s plan design. For Dental HMO, the SafeGuard SGX and MET series of Dental benefit plans have co-payments for endodontics, periodontics, oral surgery, pedodontics, and orthodontics services provided by a participating specialist.

Principal Financial Group: Generally yes.

Securian Dental: Our plans do not require referrals. We provide 
coverage based on plan benefits.

United Concordia Dental: Our PPO plans do not require specialist referrals. Our DHMO plans require referrals for specialty coverage for endodontics, periodontics, pedodontics, oral surgery, and orthodontics. The services provided by specialists that are considered for benefit reimbursement are limited to the specifics of the dental contract for each covered member.

Western Dental: Specialty coverage is available in all of our group 
plans. Oral surgery, periodontics, endodontics, pedodontics, and orthodontics are covered specialties.

If covered, explain the process that allows the general dentist to refer to the specialist.

Aetna: For DMO plans, general practitioners can refer to a participating specialist directly based on published guidelines. DMO members have direct access to participating orthodontists and do not need a specialty referral. Indemnity and PPO plans have direct access for specialty services.

Aflac: We do not require referrals.

Ameritas PPO and the FDH Networks: Specialist referrals are allowed at any time from our general dentists. There is no gate keeper involved in this process.

BEN-E-LECT: Referral is not necessary for any of our plans. The member may select a specialist and schedule an appointment upon making a phone call or personal visit.

BEST Life: No referral is necessary. Insureds can visit a specialist at any time.

Blue Shield: The general dentist completes a specialty care refer
ral form and provides a copy to the dental HMO plan member, who brings this to the participating specialist at the time of the appointment. Dental PPO plan members may self-refer to a specialist.

CIGNA: DPPO plans don’t require referrals and general dentists aren’t required to act as gatekeepers. For DHMO plans, general dentists act as coordinators for all specialty services except pediatrics up to age seven (on most plans) and orthodontic network dentists. Referrals are not needed for orthodontia or for children under age seven to visit a network pediatric dentist. General dentists refer individuals to network specialists as deemed necessary. CIGNA works directly with the specialists for preauthorization and direct payment when appropriate.

Dearborn National: For our DHMO program, General Dentists can either refer members to an in-network dentist by calling our customer service, or the member can call our customer service department directly for a list of specialists in the network.

Delta Dental: Fee-for-service enrollees can self-refer; referral by the 
general dentist isn’t required. For DHMO enrollees, the primary care dentist is responsible for submitting the predetermination request and directing the enrollee to the appropriate specialist once authorization is received.

Dental Health Services: The general dental office sends Dental 
Health Services a specialist referral authorization. Upon approval, the authorization is sent back to the general dentist who informs the patient that they are now eligible to get appropriate care from a specialist.

Guardian: For the DHMO plan, any complex treatment requiring 
the skills of a dental specialist may be referred to a Participating Specialist Dentist. Our DHMO plans offer Direct Referral in which the member may be referred directly by their primary care dentist to a participating specialist without pre-authorization.

Health Net Dental: For DHMO plans that require pre-authorization, 
the contracting primary care dentist completes a specialty referral form and submits to Health Net Dental. Approvals are returned to the primary care dentist, member and specialist. Upon receiving the approval, the member contacts the specialty office to schedule an appointment for completion of treatment. Our PPO dental plans allow self-referrals to participating or non-participating specialists as needed.

HumanaDental: General dentists are encouraged to refer members 
to participating specialists to provide the highest level of benefit to the member. The general dentist can refer out-of-network if there are no specialists within a reasonable distance.

MetLife: Our Dental PPO product does not require referrals for specialist care. For Dental HMO, the SafeGuard SGX and MET series of Dental benefit plans allow participating general dentists the flexibility to refer members to participating specialists without prior approval from SafeGuard — except for orthodontic and pedodontic specialty services in CA where the member’s selected general dentists will contact SafeGuard for pre-approval.

Principal Financial Group: Patients can choose any provider in the network; referrals are not required.

Securian Dental: No referral is required.

United Concordia Dental: Although DHMO plan members must coordinate all care through their primary dental office, including referrals to specialists, no preauthorization or referral review is required, allowing the referral process for all specialty services to be completed immediately.

Western Dental: Once the general dentist determines that the necessary procedure is out of his or her scope of practice, the office will submit a written referral request to our plan. Western Dental’s dental director then determines whether the referral is medically necessary and whether the procedure is covered under the benefit plan.

Are any of your specialists board eligible/certified?

Aetna: Yes

Aflac: For benefits to be payable, the specialist must be licensed by his or her state to perform the required treatment.

Ameritas PPO: Yes, all are board eligible or certified and are monitored during the PPO credentialing process.

BEN-E-LECT: Yes. All of our specialists are board certified as a requirement.

BEST Life: Yes. All of our specialists are certified and must meet a rigorous credentialing process to be included in our network. Before a specialist can join our network, we require a license to practice, DEA/CDS certificates, Education/Training including Board Certification, work history, malpractice insurance, malpractice claims history, hospital privileges, sanctions against their license, Medicare/Medicaid sanctions, and perform ongoing monitoring of sanctions or regulatory actions. All providers must go through the credentialing process every three years.

Blue Shield: Yes, this varies by specialist.

CIGNA: Yes, all network dentists contracted to provide specialty care have successfully completed post-graduate dental specialty programs in their fields. CIGNA’s dental networks include specialists in periodontics, orthodontics, endodontics, pediatric dentistry and oral surgery.
It is important to note that in dentistry, board certification is not the norm. As a result, we do not require this item for credentialing. We accept dentists who are recognized specialists, including those who are board certified or board eligible.

Dearborn National: All specialists in our network must be board 
eligible to be accepted into our network, however specialists are not required to be board certified.

Delta Dental: Delta Dental requires board certification where it is required by state law. Under the fee-for-service plans, Delta Dental credentials all of its participating specialists in the same manner, whether they are board eligible or board-certified. Under the DHMO plans, Delta Dental requires all DeltaCare USA network specialists to be board qualified.
Dental Health Services: The majority of our dental specialists are 
board certified.

Guardian: Many of our PPO specialists are board certified or eligible and all of the DHMO specialists are board eligible.

Health Net Dental: Yes.

HumanaDental: All participating specialists must provide copies of 
their specialty licenses or residency certificates.

MetLife: In order to participate with the Dental PPO or HMO, special
ists must submit and keep current any certifications and/or other factors necessary to maintain their specialty.

Principal Financial Group: Yes. All specialists are required to be 
board eligible, board certified or be a designated specialist by the ADA.

Securian Dental: 100% of the specialists in our network are board 
certified or board eligible.

United Concordia Dental: Yes, as part of our credentialing process, 
we verify each dentist’s education, license and certifications.

Western Dental: All contracted specialists are board eligible/certified.

Self-Insured Plans

Helping Employers Manage Their Healthcare Costs

by Kevin Ryan

Self-insured plans are becoming more attractive to employers as health insurance premiums continue to rise for fully insured plans. Growing numbers of employers in California are taking a harder look at benefits that come with being responsible for paying medical claims, according to a California Health Plan Analysis from HealthLeaders-InterStudy.

Self insured plans offer the freedom of designing an affordable health plan that meets employees’ needs while having the ability to pay claims directly for services instead of paying premiums to insurers in fully insured plans. As healthcare costs for employers rise even faster than wages, employers have more incentive to take matters into their own hands when managing employees’ medical costs.

It’s no surprise that employers cannot sustain healthcare coverage that comes with unpredictable, variable costs. Too often, employers end up paying too much for necessary procedures or paying for services that are not medically necessary. As more employers take control of their healthcare costs and risks, it makes sense for them to look at how unnecessary services and inflated procedure costs are affecting their bottom line.

Brokers can help clients look beyond simply purchasing stop-loss insurance to manage and mitigate the risks associated with the fluctuations in healthcare expenditures. It is important for brokers who want to help employers structure their employee medical plans to understand how a specialty benefit manager can help them anticipate and plan for these costs. One way to help manage the cost of care while improving quality is to consider adding a specialty benefit manager as a TPA; specialty benefit managers work with the employer and/or the health plan administrator to implement programs to reduce costs.

Managing the Cost of Care

It’s been impossible to identify one single factor that is driving the increase in healthcare expenditures associated with unnecessary procedures. In addition, the treatment of chronic illnesses undoubtedly strains the system. Specialty benefit management companies can help reduce spending per employee by managing specific areas of care. CareCore National recently analyzed 24 million case reviews and medical claims. The research reveals that companies can save up to $156 a year per insured by making sure patients get the most appropriate medical treatments and diagnostic services in seven different areas of care: radiology, radiation therapy, cardiology, medical oncology, musculoskeletal care management, sleep management, and lab services. The savings can be even more significant for groups with one million insured commercial lives. Specialty benefit management can save organizations of that size more than $156 million each year with even greater savings for Medicare Advantage members.

Employers also lose money when employees receive services at facilities that are reimbursed at levels well above the market price and the quality of the care isn’t necessarily better. It makes sense to consider programs that allow the employee to conveniently get the same quality of care for less. For most exams, the same professional services rendered by physicians at two separate locations on the same or similar equipment can have a 500% cost differential, according to CareCore National’s data. This wide variance can make it difficult for employers to project healthcare spending in a given year. Specialty benefit managers can also provide services, such as scheduling for high-tech imaging so that employees can choose a convenient, high quality, and low cost facility. This ensures some predictability in the cost of services. When implementing this type of member scheduling program, employers in certain markets have seen cost reductions per member per month along with a 90% or more employee satisfaction rate. Scheduling cost reductions and managing specific areas of care can help significantly reduce the cost variables that often take employers by surprise.

Patient Quality Improved & Protected

The best way to reduce the cost of healthcare may be to improve the quality of services. Using patient-centric, evidence-based medical practices ensures that diagnostics and therapies are medically appropriate and provided efficiently. Employers that are considering self-insured plans can be active in managing their employees’ healthcare with the help of a specialty benefit manager.

Since rising costs and uncertainty about the effects of healthcare reform present challenges to employers, brokers should consider specialty benefit management programs to reign in unnecessary or excessive spending.


Kevin Ryan, executive vice president, Specialty Products for CareCore National, the nation’s largest specialty benefit management company. For more information, call 800-420-3471 or visit


No See-cret:
Family Vision Care a Marketing Opportunity for Brokers

by Peter H. Kehoe, O.D., F.A.A.O

What wouldn’t parents do to keep their kids healthy these days? Your benefit recommendations need to take children’s health into account since a third of the workforce is made up of parents with kids under 19. So when you’re talking about vision benefits with HR clients, it only makes sense to emphasize the importance of regular eye care and corrective eyewear for the whole family.

You may already be aware that you can increase productivity at work by offering vision benefits. For instance, we know that productivity loss on specific tasks can be reduced by up to 20% by ensuring the employees wear the right eyewear with an up-to-date prescription and glare protection to reduce eyestrain and fatigue, according to a report by the University of Alabama School of Optometry.

It’s a no-brainer that seeing well is critical to job performance, but kids’ eyes also need special attention and protection to ensure that they remain healthy and perform well in school – making the topic of kids a great segue when talking about vision benefits.

We already know that parents want a vision benefit. A recent survey from Transitions Optical revealed that nearly 80% of parents are enrolled in one, with seven out of 10 citing “providing eye care for their family” as a reason.

Let’s consider some key insights and strategies that you can use to educate your clients and encourage employees with children to enroll in and utilize a vision benefit.

Encourage Eye Exams

It sounds simple: get a comprehensive eye exam. But a recent survey from Transitions Optical revealed that, while nearly 70% of parents say they use their vision benefit for an eye exam, less than half of parents had taken their child for an exam in the past 12 months. Even more alarming, a study from Prevent Blindness America and VSP revealed that nearly two-thirds of children under six have never had an eye exam by an eye doctor. As an optometrist, that just makes me cringe, but it’s also a good opportunity for brokers to step in and offer their clients additional value.

Many schools or pediatrician’s offices provide free vision screenings for kids, or have them read off of the Snellen Eye Chart (the chart with the big “E”) to test their distance vision. Unfortunately, these types of vision screenings will identify just 5% of vision problems in children – leaving other serious problems undetected. A true comprehensive exam, by an optometrist or ophthalmologist, will include multiple techniques to evaluate the health of the eyes and maximize the visual performance of your child.

It’s also important to recognize that many children who aren’t seeing well may not realize it or know how to communicate it. In fact, approximately 10 million children in the U.S. suffer from undetected vision problems. More than 80% of children diagnosed with learning disabilities have undiagnosed vision problems.

When left untreated, vision problems can cause difficulty reading or seeing the chalkboard, decreased performance in school or daily activities, frustration or low self-esteem, and even tearing of the eyes and headaches. Trouble seeing may also just spell trouble – literally. Many studies show that vision problems can be a contributing factor to juvenile delinquency. Vision problems can also have many negative effects on a child’s social abilities. Although easily detectable through a comprehensive eye exam, vision problems and eye conditions affect more than one in four school-aged children, and may include the:

• Myopia – or trouble seeing far away
• Hyperopia – or trouble seeing up close
• Astigmatism – or a condition that causes blurred vision or difficulty seeing fine detail, at distance or up close, due to the irregular shape of the cornea, the clear front cover of the eye, or the curvature of the lens inside the eye
• Strabismus – or crossed eyes
• Amblyopia – or lazy eye.

Both strabismus and amblyopia can lead to permanent vision loss unless detected and treated early enough.

Spotlight on Diabetes Management in Children

As some of you may already know, the eye can also serve as a window to detecting several serious systemic diseases. Because of this, the eye doctor is often the first to detect certain overall health issues – in both adults and children.

In children, some very serious overall health conditions can be seen through the eye including neurological disorders, brain tumors, and certain types of cancer. An eye exam can also provide early detection of diabetes in both children and adults.

Diabetes is one of the most common, chronic diseases in school-aged children. Experts from Centers for Disease Control are predicting that children born in the year 2000 have a one in three chance of developing diabetes due to the rise in childhood obesity. Children of Hispanic origin have even greater chances – with one out of every two expected to be diagnosed with the disease.

The disease can also lead to increased sensitivity to sunlight, making UV- and glare-blocking eyewear an important consideration for kids with diabetes. Equally alarming, research shows that complications from diabetic retinopathy may be especially more rapid and severe in children who develop diabetes at an early age. Children of Hispanic, African or Asian descent have an even higher risk of developing diabetes and related vision complications. Unfortunately, just 35% of parents are aware that their ethnicity could put them and their children at greater risk for vision-related problems, according to a Wakefield study sponsored by Transitions Optical. For this reason, regular eye exams are critical to detect diabetes – and they prevent future vision problems for kids who are already diagnosed.

Explain the Eyewear Difference

It’s not surprising that vision care and vision wear go hand-in-hand. But beyond the prescription, there are many important options to consider – from impact-resistant lens materials, to ultraviolet (UV) and glare protection, to photochromic or adaptive lens options. Consider that 78% of parents say vision coverage is important when choosing eyewear, versus 67% of non-parents, according to the Wakefield survey. So, make sure your clients and their employees understand what’s included and what’s not.

It’s not surprising that children are more active than adults, so they tend to have more eye injuries. Unfortunately, few children use eye protection for sports, when they should be wearing impact-resistant or protective glasses or goggles. For kids who already wear glasses, they should be made using impact-resistant materials, such as polycarbonate or Trivex material. Many vision plans offer discounts on or full coverage of impact-resistant materials for kids, which can be used to pique interest among employers and their employees during the enrollment period.

Kids are also in greater need for protection from UV radiation. It makes sense – given that they spend more time outside than adults and get three times the sun exposure. Plus, a child’s eye is developing and is more vulnerable to UV damage, which is cumulative and can’t be reversed. Over time, UV exposure may lead to serious diseases, such as cataract, macular degeneration, and pterygia. Short term, UV exposure can also lead to sunburn of the eyes and eyelids. For these reasons, children’s glasses should block 100% of UVA and UVB rays. And those who do not require corrective eyewear should be wearing sun lenses when outdoors.

Glare protection is very important for children as well. Glare – or bright light – can be distracting and dangerous and can lead to symptoms, such as eyestrain and fatigue. Because children spend more time in glaring conditions outdoors, they need glare protection even more than adults. Even glare from TV or computer screens can cause difficulty seeing, eyestrain, fatigue and headaches.

Lens features, such as darkening in the sun or having an anti-reflective coating offer protection from glare and can improve a child’s overall quality of vision. It can also help them see more comfortably by eliminating squinting and eye fatigue.

Unfortunately, a 2010 study supported by Transitions Optical revealed that while nearly three out of four parents said they wear sunglasses to protect their eyes from UV and glare when outside, just a little over half said they put sunglasses on their children – an education point that can be truly eye-opening for parents.

Recognizing the benefits of UV and glare protection for kids, there are many vision plans fully covering or offering options like photochromics for kids, such as Transitions lenses. These lenses offer a great package for kids because they block damaging UV while minimizing glare and they are available with an anti-reflective coating. HR professionals are also becoming more aware of these benefits and are looking for plans that cover them, so don’t overlook them!

Educate on Vision in 5 Simple Steps

Chances are, you’re going to have just a short amount of time to talk about vision. The key is to educate your clients using a few key points – then go back and fill in the gaps if they’re interested.

1.  Sell the Exam. Explain how a vision benefit covers regular, comprehensive eye exams for the entire family and how they are instrumental in detecting vision problems, such as trouble seeing, eye diseases and overall health issues, such as diabetes. Mention that vision screenings offered at schools and in the pediatrician’s office don’t cut it.

2. Talk up Eyewear. Explain how eyewear can do more than just correct vision and that certain options – like UV, glare and impact-protection – are especially important for kids.

3. Point to Covered Options. Play up all the features offered in different tiers of the vision package. Kids are in greater need for UV, glare and impact protection.  If your vision plan offers discounts on special lens options that do the job – play them up and give clients a handout or information about the benefits.

4. Show Them the Money. We know your clients appreciate clarity about costs and savings – so reinforce the costs to treat medical conditions – including those affecting children, like Type 1 diabetes – and explain how offering a vision benefit as part of an overall health benefits package can help lower future costs.

5. Leave a Cheat Sheet. Always leave behind tools and resources so employers can learn more about the value of vision benefits and what the plan covers; then share the information with employees. Remember that kids health is a growing focus with national campaigns like “Let’s Move.” If your vision plan offers special coverage for kids, make sure to let your clients know about it.

There are a number of free tools you can use to educate employers and employees about the importance of eye care available through a vision benefit during annual enrollment and throughout the year from the American Optometric Association and specific vision plan providers to educational programs like Websites, videos, vision loss simulators and employee newsletters all make great tools.

You hear a lot about the importance of vision for employee productivity and wellness – and hopefully that’s starting to rub off on your clients, but they might not realize that focusing on the value of vision care and vision wear for the whole family could be a great way to get through to their employees. It’s no “see-cret,” but making kids eye health part of your benefit discussion may help your clients better achieve the true potential behind their vision plan – and help you stand out from the competition.


Dr. Kehoe has been practicing optometry since 1984. He is a partner in multiple practices in Galesburg, Illinois. Dr. Kehoe has a special interest in children’s vision, contact lenses, glaucoma and allergy/dry eyes. He served as president of the American Optometric Association from 2008-2009 and was instrumental in the development of the InfantSEE program. He is an active member of the American Optometric Association, the Illinois Optometric Association, and the West Central Illinois Optometric Society. In 2001 he was named Optometrist of The Year by the Illinois Optometric Association. Dr. Kehoe works closely with Transitions Optical’s professional development team to help strengthen the company’s programs to support the industry and the eye care community. He’s a graduate of the Illinois College of Optometry and Indiana University, and is a fellow of the American Academy of Optometry. 

Vision Plans Aid in Early Detection and Support Disease Management Programs

by John Lahr, D.O. FAAO 

Vision plans are important to eye health because a plan’s participating providers can detect the onset of eye diseases, such as cataracts, macular degeneration, and glaucoma. Participating providers can also play a valuable role in overall health, productivity, and early detection of chronic high-risk conditions, such as hypertension, hypercholesterolemia, and diabetes.

By dilating a patient’s pupils during an eye exam, eye care professionals can view the back of the eye and identify changes in the blood vessels, which can show clinical indications of cardiovascular disease and diabetes. By discovering these changes early, eye care professionals can alert patients to the risks and refer them to their primary care physician for a follow-up exam.

Eye care professionals can also help patients who have already been diagnosed with these conditions by performing a dilated eye exam and sharing the findings with the patient’s physician. By communicating with the patient’s physician (regardless if the condition is newly detected or already diagnosed), eye care professionals can help ensure that the professionals managing these diseases become aware of the status of the vascular complications in the eye.

Technology also plays a role in monitoring eye health beyond the dilated eye exam. Eye care professionals are using retinal imaging technology, a covered benefit in some managed vision care plans that provides detailed photographs of the retina, the inner nerve layer that lines the back of the eye. The patient’s eye doctor can compare digital retinal images to later views of the retina to look for changes that could indicate early onset of a serious eye condition or disease. The earlier any disease is discovered, the greater chance of improved clinical outcomes from a treatment program.

Early detection and treatment of high-risk ocular conditions may help preserve vision and decrease the likelihood of developing sight-threatening eye complications.

Capturing Employee Health Trends

Employers and health plans are interested in the overall health of employees and members as well as the cost of care. A comprehensive eye examination can provide important information for health plans and disease management consultants who are working on behalf of employers.

When providers capture and report medical diagnosis (ICD-9) codes, employers have a better opportunity to learn about ocular conditions and observe workforce health trends. But, this is only possible if eye care professionals consistently report the appropriate ICD-9 codes and facilitate communication with members’ physicians and the employer’s disease management partners on a consistent basis.

Disease management is particularly important in monitoring diabetes, one of the leading causes of blindness. Some managed vision care plans allow patients with type 1 or type 2 diabetes to receive additional services from their eye care provider. Under this benefit, patients can receive office service visits every six months to monitor for signs of diabetic complications. In addition, diagnostic testing may be covered every six months including photo documentation of diabetic retinal findings or laser scanning to detect the earliest stages of swelling of the retina.

Monitoring Compliance

Some vision plans monitor and audit eye care professionals to make sure that they capture and report high-risk clinical data. But the responsibility isn’t only on the eye care professionals. Vision plans should promote the benefits of annual eye exams and provide eye care professionals with easy-to-use tools to report the information and communicate with other healthcare professionals.

Many health plans and disease management vendors understand that vision data can provide added resources for early detection. But, they might lack the knowledge of the severity levels of the ICD-9 codes provided. Some vision plans are dedicated to supplying the risk profile information that’s needed to allow full integration of the codes submitted. When vision plans, eye care professionals, and health plan/disease management or-gan-izations work together, they may be able to increase the number of members who get regular eye exams, which can result in early disease detection and referrals for needed treatment.

It is important to find a vision plan that understands the significance of eye care in the early detection and reporting of serious health issues. It is also important to find a plan that is committed to empowering eye care professionals to help members maintain good eye health and get the care they need to enjoy a life of wonderful sight.


John Lahr, OD is divisional vice president and medical director for EyeMed Vision Care. For more information, visit or call 888-362-7463.

Catching the HSA Wave

More and more employers are taking advantage of high deductible health plans (HDHPs) to address rising healthcare costs. In fact, just in the past year, enrollment grew 14% for high-deductible health insurance plans tied to health savings accounts (HSAs).

Enrollment has nearly doubled over the past three years with 11.4 million Americans covered by high-deductible plans, according to a study by America’s Health Insurance Plans (AHIP).  And California is among top six states with the highest enrollment.

HSAs, which were authorized by the Medicare Prescription Drug Improvement and Modernization Act of 2003, must be coupled with a high-deductible health plan, sometimes referred to as “catastrophic coverage.” Paul Fronstin of the Employee Benefit Research Institute explained, “Although a person can have a high-deductible plan and not have an HSA, that’s pretty rare. They go hand in hand.” Fronstin is not surprised that more people are enrolling in high deductible plans. With employer healthcare costs continuing to grow, employers are expected to look for plans that require them to contribute less money.

Large Groups Lead the Market

AHIP reports the large-group market accounts for much of the growth. HSA/HDHP plans accounted for 10% of all new health insurance purchases in January 2011. The large-group market represented approximately 55% all HSA/HDHP enrollment in January 2011, up from 50% of HSA/HDHP enrollment in January 2010.

However, Martin Trussell senior vice president, Business Development for First Horizon Msaver said, “We continue to see employers of all sizes moving their employees towards HSA-qualified health plans. There also seems to be a trend toward more employers contributing at least some money to their employees’ health savings accounts.”

In the individual and large-group markets, about 95% of enrollees in HSA/HDHP plans were in PPO products. About 80% of enrollees in small-group HSA/HDHP plans were in PPO plans.

PPO plans offer lower co-payment or coinsurance requirements for in-network services. HSA/HDHP enrollees generally have access to negotiated discount arrangements with healthcare providers through their PPOs or other plans. More than 85% of the employers surveyed offer members online access to HSA account information, health education information, physician- information, and personal health records, according to AHIP.

 The Typical HSA Consumer

A survey by HSA Bank reveals that people with an HSA-compatible health plan have similar characteristics – including age, health, and income; Sixty percent are 45 or older; 96% say their health is average or better; and 42% have an annual household income of $50,000 to $100,000. HSAs are also growing in the individual market. As of January 2011, 2.4 million people were covered by HSA/HDHPs in the individual market.  Forty-nine percent are 40 or older; 51% are younger than 40, 26% are younger than 20, 25% are 20 to 39; 19% are 40 to 49; and 30% are 50 or older. (These figures include dependents.)

Barriers to Adoption

HDHP may be getting more popular, but not all employers are convinced. Forty-two percent of employers offer HDHPs, according to a poll by the Society for Human Resource Management. The poll, sponsored by Aetna, reveals that 58% of HR professionals surveyed don’t feel that they know enough about HDHPs. In addition, forty-nine percent say their employer does not offer a HDHP simply because most employees are satisfied with the health plan they already have.

Despite the cost savings that the plans offer, many financial executives are wary of them, according to a survey by Corporate Synergies Group. Andrew Bloom, of the Corporate Synergies explained, “Many financial executives believe their employees would not accept HSAs. Many companies that have offered the plans have seen fairly low enrollment rates. But this apprehension is keeping employers from reaping the myriad advantages of HSAs.” Bloom added that thoughtful communication and appropriate benefit structure are keys to adopting these programs.

Thirty-two percent of companies that do not offer HSA plans say they need more education about the benefits of HSAs and 30% say that their employees need more education. Many financial executives that do not offer HSA plans say that their employees think negatively about them. “To fully embrace HSAs and high deductible plans, employees need to know more about how the programs work and what costs they can expect. Also, the benefits need to be priced and configured attractively for employees’ adoption,” he said.

Mark Schmit of SHRM explains that this type of health plan can be more complicated than a traditional plan. But, he says that it is well worth it for employers to make the extra effort to get familiar with these plans. Christine Riedl, head of Enterprise Medical Products for Aetna said, “Our research has shown that employees with these plans became more engaged and informed healthcare consumers, using preventive care services more frequently and visiting the emergency room for non-urgent care less than members in other plans. We also see lower healthcare costs for employers, especially when the employers have invested time in educational programs with employees.”

Seventy-seven percent of the HR professionals whose companies offer a HDHP say it has helped engage employees in their health and wellness. Financial executives see a number of advantages in offering HSAs, such as offering of tax deductible contributions (76%), giving employees the flexibility in how they spent their medical dollars (62%), giving employees more control over healthcare decisions (60%), and offsetting high deductibles (58%), according to the Corporate Synergies study.

What’s Next?

Contribution limits for HSAs in 2011 are staying at the same as in 2010. For tax year 2011, HSA annual contribution limits are $3,050 for an individual and $6,150 for a family. HSA catch-up contributions to age 55+ are $1,000.  Although the healthcare reform law has extended family coverage up to age 26 for certain dependents, it doesn’t affect HSA distributions. Tax-free HSA distributions can only be made for qualified medical expenses incurred by a covered spouse or other dependent.

As a result of the Patient Protection and Affordable Care Act, only prescribed medicines or drugs are considered qualified medical expenses. Over-the-counter drugs, without a doctor’s prescription, are no longer eligible for tax-free reimbursement from the member HSA, including pain relievers, sleep aids, and cough medicine. However, certain non-prescription purchases are still eligible, such as insulin, bandages, and medical devices. The tax penalty for non-qualified distributions has increased from the member HSA from 10% to 20% (if you are under age 65 and not disabled).

AHIP is calling for legislation to eliminate the provision that prohibits members from using HSAs to pay for over-the-counter medicine without a prescription. AHIP also takes issue with new medical loss ratios that govern how much an insurer can spend on administrative costs calling them unfair to HSA-eligible plans. While these plans typically have lower benefit costs, they are not necessarily less costly to administer on a per-enrollee basis, AHIP said.

Sen. Orrin Hatch (R-UT) and Rep. Erik Paulsen (R-MN) have sponsored legislation that they hope will simplify and enhance HSAs and health flexible spending Accounts (FSAs). The Family and Retirement Health Investment Act of 2011 and its House companion, H.R. 2010, would do the following:

• Allow a married couple to make catch-up contributions to the same HSA.
• Remove restrictions for over-the-counter drugs.
• Allow individuals to roll over up to $500 from their FSA accounts.
• Clarify the use of prescription drugs as preventive care that will not be subject to an HSA-eligible plan deductible.
• Reauthorize the use of Medicaid health opportunity accounts.
• Expand the definition of “qualified medical expenses” to encourage more exercise and better diet.
• Allowing seniors enrolled in Medicare Part A to continue to their HSAs.
• Allow for the purchase of low-premium health insurance and long-term care insurance with HSA dollars.

The National Assn. of Health Underwriters is working closely with Senator Hatch’s office to gain momentum and cosponsors. The Direct Primary Care Coalition praised a provision in the bill that would allow monthly fees for direct primary care services to be treated as “qualified medical expenses” under Section 213(d) of the Internal Revenue Code.

The legislation supports a healthcare model in which patients and/or employers pay one low flat monthly fee in lieu of insurance directly to a primary care provider for all primary and preventive care, chronic disease management, and care coordination throughout the healthcare system. Under the bill, patients and employers could use health reimbursement arrangements (HRAs), HSAs, and flexible spending accounts (FSAs) to pay for these services.

Direct primary care medical homes (DPCMHs) already exist in more than one-third of U.S. states, offering affordable health care alternatives to nearly 100,000 Americans, according to the Direct Primary Care Coalition.

Neil Trautwein, Vice President and Employee Benefits Policy Counsel of the National Retail Federation said “Allowing direct primary care fees to be paid for with money from health savings accounts…would enable businesses to provide significant new high-quality healthcare options to their employees without breaking the bank…The bill marks another example of growing federal recognition of the importance of the flat-fee direct primary care model, which was also included in the Patient Protection and Affordable Care Act last year.”

It’s clear that HSAs have survived health reform to become a growing force in the market. Employers are sorely in need of brokers who can help them sort out this increasingly popular healthcare option.


Leila Morris is editor of California Broker Magazine and the weekly Insurance Insider News, which she produces. She has been a business and technology editor, reporter, and writer for more than 16 years. Before coming to California Broker, she produced custom newsletters for life insurance agents and provided insurance industry Website content. She has a B.A. in Political Science from St. Mary’s College of Md. For more information, e-mail


View from the Top

Top Life Executives Have Seen Individual Sales Increase and Anticipate Growth for Employee-Paid Life Insurance Benefits

by Leila Morris

Unlike the rest of the economy, segments of the life insurance indus-try did well last year with individual life sales increasing nearly 10%, according to a LIMRA survey. In this year’s view from the top survey, executives tell us that life insurance has become even more relevant with to-day’s uncertain economy and aging population. In fact, life insurance could emerge as a separate asset class.

It’s apparent that life insurance companies are finally paying attention to the middle market. Carriers are finding just how much employers and employees value having convenient access to life products at the workplace. Executives expect a higher than normal growth for employee-paid life insurance benefits. However, some feel that employer-paid coverage will see lower than normal growth rates as employers grapple with health reform and the economy.

As expected, guaranteed products continue to be popular while variable life is struggling to rebound after a very rough couple of years. Also, today’s consumers are looking for products that can do more, such as hybrid style permanent life products that combine long-term care and critical illness.

 How is the life insurance market faring in today’s economy?

Michael Ferik, Senior Vice President, Individual Life, The Guardian Life Insurance Company of America (

There are a lot of headwinds – pervasive unemployment and sluggish growth in the broader economy – and uncertainty abounds. That said, consumer uncertainty has actually helped some as clients continue to seek safe havens for their money: Whole life insurance, in particular, remains one of the last few vehicles that allows clients to protect their families and businesses, obtain a competitive tax-deferred rate of return and obtain guaranteed cash-value growth. Guardian’s life sales were up 10% for the first quarter versus 8% industry wide, so going forward, we remain cautiously optimistic about the prospects for growth in life insurance sales: specifically, permanent life insurance sales.

Shawn Smith, territory vice president, Transamerica Worksite Marketing (949-216-9725): The convenient access to life products at the workplace appears to be a strong value proposition for many employers and employees. Competitive rates, creative life products and stronger underwriting offers have impacted the higher participation levels too. As a life company nationally, both our voluntary term and permanent life insurance are up over 20% from this same time frame in 2010.

Robert J. Ehren, senior vice president, Life Product Manufacturing, Securian Financial Group, Inc. ( The life insurance market has returned to a slow growth mode after taking a step back during the Great Recession. The industry is targeting high single digit growth in 2011 and for the next few years.

Brian D. Murphy, executive vice president of The Hartford’s Individual Life business and Chairman of Woodbury Financial Services: After years of life insurance being subordinated to investments, the current strain on people’s ability to accumulate for retirement and the expected pullback of social security has resulted in an opportunity for life insurance to emerge as a separate asset class and a product that can provide income for life’s outcomes.

Peter Golato, CLU, ChFC Senior vice president, Nationwide Financial Services: The life insurance industry did well last year overall. According to LIMRA, 2010 individual life sales increased nearly 10 percent. This is a big jump from the typical annual increase of between three and four percent. We had a very good year at Nationwide; our 2010 sales increased nearly 40% – mainly due to increased consumer demand for guaranteed products.

Paul LaPiana, CFP, Senior Vice President, US Distribution, Protection Product Wholesaling, MetLife ( MetLife’s core fundamentals remain strong and the company continues to benefit from a diverse mix of business.  MetLife offers a comprehensive portfolio featuring a range of term and permanent solutions. We are not overly dependent on one product or line of business, this allows us to remain strong through many economic environments.

Warren May, National Vice President of Individual Life Sales, the Principal Financial Group: The recent financial crisis certainly had an impact on our industry, but things are starting to rebound with stronger than expected first quarter sales results with the current forecast for 2011 looking to be a better year. When we were in the trenches of the recession, our brokerage partners and advisors told us they were working twice as hard to stay in the same place and now we are starting to see that turn around.

In our work with small-to-medium-sized businesses, we are witnessing the effects of the recession and the current desire to protect and retain key employees.  Beyond protection, owners want to plan for succession and provide asset accumulation.


Has there been a significant change in product mix over the past 12 months in terms of guarantees, variable, or term? Do you see that changing again?

Shawn Smith, Transamerica: The hybrid style permanent life products that combine long-term care and critical illness into one product have increased in popularity and improved employee participation based on the combined cost to value benefit proposition. The expense and underwriting for hybrid life products are more attractive to the employee than purchasing three separate policies for similar benefits. I do not see a future change in life products, but we do see lower employer contributions for the basic term life programs shifting more life benefit cost to the employee. Also, we are experiencing a strong increase in small group voluntary life sales. Many employers have downsized but want to remain as an employer of choice and retain their good employees.

Peter Golato, Nationwide Financial: Consumers continue to demand guarantees, as evidenced by the increase in sales of whole life (over 24% increase from 2009) and the attractiveness of UL (nearly 14% increase in 2010). We’re also seeing an increase in sales of indexed universal life contracts, potentially due to a desire for some cash value growth

Robert J. Ehren, Securian Financial Group: The consumer’s interest in guarantees has risen in the last few years. Policies with long duration guarantees and whole life products made significant sales gains. Term insurance is reported as being down in sales, but some of that is due to some term UL products that actually count as UL sales even though they are direct substitutes for term. Variable life is struggling to rebound after a very rough couple of years. Consumers are turning to index products instead.

Michael Ferik, The Guardian: Consumer preference for products with guarantees remains strong and we continue to see growth in our core whole life product line. In particular, we’ve seen an increase in short-pay plans and whole life dump-ins as clients seek safe havens for their assets. As long as the market remains volatile, we expect this trend to continue. Clients are looking for steady returns, safety and financial security – and all three are the backbone of Guardian’s whole life portfolio.

Brian D. Murphy, The Hartford: The most dominant product continues to be lifetime guaranteed UL. However, over the past few years, the addition of our “LifeAccess” rider for chronic illnesses has been the biggest single change in our mix. This patented rider is issued on more than 30% of our policies.

Paul LaPiana, MetLife: We continue to see a shift from term insurance to our permanent products.  Specifically, our no lapse guarantee universal life and our Promise Whole Life continue to gain traction.  As the economy slowly improves and the Tax Reform Act of 2010 has provided some short term certainty, we have seen consumers re-engaging into tax and legacy planning.

At MetLife, we have continued to focus on cash value life insurance to highlight the guarantees and protection offered by such products, which have become more popular during turbulent economic times. Clients and financial advisors looking for ways to restore retirement portfolios and legacy plans are now turning to this coverage as a way to address recent market volatility.

Since these products address two important client needs, MetLife expects to see continued interest in them. First, whole life can provide financial protection through tax-free proceeds to the client’s beneficiaries upon death (if properly structured).  Secondly, it also may provide access to the cash value accumulated in the policy.  Finally, some clients have been shifting to Whole Life to take advantage of this product’s benefits as Universal Life prices have increased.

Even though we have seen some improvement in the economy, there is still uncertainty among consumers.  That said, we see that some consumers who may need life insurance to protect themselves and their families are either not acting or are selecting term life insurance as a less expensive option for protection. Individuals who do choose to purchase term life insurance will at least lock in their insurability. MetLife remains committed to providing a full suite of life insurance products to meet the financial needs of a diverse marketplace.

Warren May, Principal Financial Group: In terms of products, guaranteed sales remain strong and we have seen an increase in accumulation business. I anticipate term sales overall will remain flat as the economy normalizes to higher unemployment rates, however we are seeing increased use of term insurance to fund business concepts.


Do you see growth in particular niche markets? For example, does the fact that fixed annuity sales are taking off in this economy affect your product mix or strategy?

Peter Golato, Nationwide Financial: Fixed annuity sales at Nationwide have been strong and The Nationwide Lifetime Income Rider, which offers a guaranteed lifetime withdrawal benefit, has been extremely popular. However, fixed annuity sales results are not influencing our strategy or product mix on the life insurance side. Nationwide’s growth is driven by understanding the challenges facing consumers and advisors and offering products and services built around their needs.

Brian D. Murphy, The Hartford: I see life insurance having a renaissance and being purchased by many more people than in the past because it does what no other product can do. This is a result of a new wave of innovation triggered by companies like The Hartford. With our new patent-pending LongevityAccess Rider added to the LifeAccess Rider, policyholders can now be protected against dying sooner than they should, living longer than they thought possible, and/or getting sick along the way. Niche concepts will still exist but it will be the general use of life insurance that will drive sales growth.

Shawn Smith, Transamerica: In the group space, we are experiencing a rise in municipality, union, and association life business. Union and association voluntary product offerings are becoming more attractive to their members for a few good reasons: Many employers are not allowing the voluntary benefit payroll deductions, mainly due to a reduction of HR payroll staff, which generally leads to billing issues; these group style products are not available on an individual basis; and members can continue their group products regardless of what employer they work for.

Robert J. Ehren, Securian Financial Group: It’s hard to know what to call a niche anymore. Companies must be prepared for many economic and demographic scenarios, rather than trying to predict them.

Paul LaPiana, MetLife: We continue to focus our strategy on our core products and managing them for the long-term. We consider the breadth of our portfolio to be one of our strengths.

Because of the variety of products we offer, specific products can be used in niche markets.  For clients who are interested in protecting against risk in their financial plan, whole life can play a role.  We are seeing more traction in the accumulation space with whole life.  Consumers who have a need for death benefit protection are also taking advantage of the guaranteed cash value and upside potential of dividends.  They are looking at the cash value as an attractive, tax efficient way to accumulate additional retirement income dollars which is non correlated to the equity and bond markets.

Warren May, Principal Financial Group: We’ve focused on the business market for a reason, because we see continued growth in this area.  In late 2010 we surveyed businesses owners regarding their business priorities through a survey with Harris Interactive.  We heard loud and clear that “business protection” is now their number one priority, eclipsing “health insurance” as the top priority in previous years.

We’ll maintain our focus on this market and will continue to develop new tools and services that help address the challenges owners are facing. To help meet their needs, we offer a full range of products (individual and survivor universal life, variable universal life and term protection) plus expertise and pre-sale support and post-sale administrative services.

In addition to our business focus, we’ll continue to provide traditional life insurance products designed to address the personal needs of mass affluent, affluent, and high net worth individuals.  Solutions include income protection and estate planning.

What is happening with your distribution systems?

Shawn Smith, Transamerica: Our core distribution channels will continue to be the broker and general agencies. Our product delivery in the marketplace will continue to evolve. We are now providing all products on a spreadsheet enrollment basis with no employee signature required, but only when Guarantee Issue is the underwriting offer. Employers want new technology and simplicity of enrollment for all products; why should the ancillary products be any different? We are primarily growing our general agency distribution, which generally leads to hiring more Regional VP’s in certain markets. We have no direct client marketing distribution.

Brian D. Murphy, The Hartford: The Hartford is dramatically increasing distribution. We have four large channels: our traditional assisted sales within financial institutions where we have the dominant market share; expansion to the independent space directly to agents through the new Monarch program; property & casualty agents; and direct to producer groups and select other intermediaries. We are expanding our assisted sales force, adding wholesalers, and growing our own with our Life Sales Academy.

Michael Ferik, The Guardian: Our distribution platform continues to span a number of channels and our career system, the cornerstone of our distribution model, is experiencing very strong growth. 2010 was one of our strongest recruiting years in recent history, as candidates explore new career opportunities in this difficult employment economy. Our attrition has historically run well below industry averages, a trend we expect to continue.

We will continue to focus on growing our career system in 2011 and into the foreseeable future. Of course, financial representatives at Guardian have access to our proprietary whole life product and our leading-edge technology, The Living Balance Sheet, but they also have access to a long list of products outside the Guardian portfolio – allowing them to help meet their clients’ needs while having the strength and stability of a Fortune 300 company like Guardian behind them.

Robert J. Ehren, Securian Financial Group: Our core career force is at a fairly stable number. During the height of the great recession, many new advisors struggled to create sustainable practices and left our business. That is abating right now.

Peter Golato, Nationwide Financial: Our distribution systems have remained stable and we continue to see increased life insurance sales from our property and casualty agents. More than 2,800 Nationwide agents sold at least one life insurance policy in 2010 and we are increasing the number of property & casualty agents hired and trained in financial services. Brokerage general agencies (BGAs) are another critical part of our distribution strategy and we will continue to enhance our support for this important group as well.

Paul LaPiana, MetLife: In addition to benefiting from a diverse mix of business, MetLife also benefits from our various distribution channels. I oversee a team of life insurance and disability insurance wholesalers who support MetLife affiliated representatives and those within well-known independent firms. MetLife’s brokerage channel consists of independent marketing organizations and successful brokerage general agents. This channel represents the majority of our independent sales. Our National Accounts Channel consists of sales through third-party banks and wirehouses.

With regard to our affiliated distribution channel, my colleague Mike Vietri, executive vice president, leads Individual Distribution representing MetLife, New England Financial, and MetLife Resources. He remains committed to investing in the distribution channel and recognizes the importance of the salesforce as an asset. He’s executing on a multi-year strategy focused on salespower growth, agent productivity, and overall profitability. At the core of the strategy is a focus on attracting and retaining the very best, and MetLife has invested in a value proposition aimed at top producers. Additionally, efforts continue around multicultural and women recruitment, as Mike believes strongly that our salesforce should reflect the changing face of America.

Warren May, Principal Financial Group:
Our distribution is concentrated in two major areas: the brokerage general agency (BGA) channel and our own career distribution system, which consists of nearly 1,000 agents affiliated with 29 business centers nationwide. As we look ahead, we are committed to grow distribution in both channels by attracting producers with an interest in business insurance.

In the brokerage market, sound brokerage general agency (BGA) relationships are critical to success.  We will continue to work to earn BGAs’ business through a consistent balance of relationship, competitive product, compensation, service, underwriting, technology, and communication.  The Principal is committed to leveraging our strong reputation and business insurance platform to successfully activate new national distribution relationships and maintain franchise value for our BGA partners.

Given the current regulatory landscape and the recession, advisors will not be able to do business the same way they have in the past. This opens up a whole new group of potential life insurance producers. Benefits brokers who traditionally sold health insurance have access to business customers, but may no longer have a product to sell.  Similarly, owners of P&C agencies, particularly if they focus on commercial lines, are looking to add life insurance to their product mix.  Distributors are looking to be affiliated with not only a financially sound company, but with a company that offers expertise and resources.

What kind of growth do you see in life insurance sales as an employee-paid or employer-paid benefit?

Michael Ferik, The Guardian: We continue to see a substantial opportunity to position life insurance as an ancillary benefit, especially as small businesses look for ways to retain talent while at the same time shift some benefit costs to their employees. Guardian is already well positioned in the small business market with its small business focus and group benefits products. The key is providing a business and employees with a holistic suite of benefits from which they can select based on their specific needs: something many carriers attempt to do but which – we believe – few do extremely well.

Brian D. Murphy, The Hartford: It depends on what happens with corporate and individual tax changes. There is a strong possibility of growth in the executive carve-out market. Worksite also presents an attractive way to access many Americans needing life insurance.

Robert J. Ehren, Securian Financial Group: Employers are still managing their businesses fairly tightly; so employer-paid benefits are not experiencing much growth today. However, with improvements in technology and underwriting knowledge and capability, there continues to be a growing opportunity for employees to purchase life insurance in the workplace.

Shawn Smith, Transamerica: What we are experiencing is employee-paid life insurance will experience a higher than normal growth for the next few years as brokers prepare for healthcare reform. Group employer paid coverage will experience a lower than normal growth due to the increases in medical cost and overall expense of doing business in a down economy.

Paul LaPiana, MetLife: With employer-paid basic life providing only a foundational layer of protection, it often falls short of employees’ full life insurance protection needs. Employee-paid supplemental life insurance continues to play an important role in life insurance sales as employers look to obtain adequate life insurance for their employees. According to MetLife’s 9th Annual Study of Employee Benefits Trends (EBTS), close to two out of three companies (61%) recognize that shifting benefits cost to employees is now necessary to continue to providing the benefits employees want and need. To obtain the financial protection they need, employees are willing to pay; in fact, 54% of employees surveyed in EBTS indicated that life insurance through the workplace is important even if they have to pay for it on their own. Therefore, growth opportunities for group life continue to be in supplemental life insurance, which has become increasingly important as more responsibility in building a financial safety net shifts to employees.  Brokers and consultants have a unique opportunity to help employers promote the need for adequate life insurance coverage through a mix of both employer and employee-paid benefits, educate employees on the protection this coverage provides, and design a comprehensive offering, which, in turn, can help employees obtain the right amount of coverage to protect themselves and their families.

Are you more or less active with alternative distribution systems (banks, stockbrokers, direct?)?

Shawn Smith, Transamerica: Our core distribution will continue to be direct with brokers and general agents, who offer our products to employers, approved unions and associations. I do see a heavy increase in benefit administration systems such as BenefitsConnect and BRMS working directly with us to load products on their systems. Commonly referred to as Ben-Admin systems, they provide brokers a one stop shop core and voluntary benefits delivery to their clients.

Peter Golato, Nationwide Financial: Alternative distribution systems continue to be a special area of focus for us at Nationwide. For example, the bank channel has been a key driver of sales of our single premium universal life product.

Robert J. Ehren, Securian Financial Group: We are more active. As we continue to build our life insurance capabilities and products, we are looking for the right independent distribution partners to match our combination of resources and financial strength.

Michael Ferik, The Guardian: We are doing direct business now in alternative distribution in our non-core product areas. We have a bank owned life insurance (BOLI) product that continues to do well in the BOLI specialist market. We also have a strong offering in the non-qualified (NQ) deferred compensation platform in which we sell NQ plans – corporate owned life insurance (COLI) and mutual funds – through COLI brokers. Our product offering is bundled with best-in-class administration. We also offer a Multi-life disability income platform with strong product and outstanding online enrollment capabilities that is doing well with group brokers, pension brokers and P&C firms. Both the BOLI and COLI products are sold very effectively through our career agents as well.

Brian D. Murphy, The Hartford: I am a strong believer in the multi-channel model. The Hartford will be expanding our distribution for the next several years resulting in broad access to our products for producers, registered reps, and direct to consumer.

Paul LaPiana, MetLife: MetLife is very active with alternative distribution systems. Through our National Accounts Channel, we offer point of sale support to a select few national broker dealers and banks. We also provide support to securities-based professionals, like stockbrokers, including assistance in identifying opportunities in their books of business, engaging clients in meaningful discussions about protection products and implementing solutions. For this channel, it is important to have credentialed professionals who can offer expertise in case design in addition to support through the sales process. Finally, having a robust Advanced Markets organization in place to offer expertise in case design work allows these professionals to focus on acquiring new clients and servicing them.

Warren May, Principal Financial Group: The opening up of financial markets has certainly had its problems, but a positive has been that we can access customers in many more ways.  Utilizing our brokerage general agency network we gained increased access to banks and wirehouses. It’s clear that the advisors are more open to looking at selling our products, which means in support of our BGA’s, we’re able to be more active in this area.

Our Alliance Management Group (AMG) establishes and grows distribution relationships with firms that have a higher level of engagement than just a selling agreement.  These relationships, referred to as “alliance relationships,” include joint written business development plans, annual marketing plans with focused initiatives to drive sales results, and mutually-agreed to goals.


How have recent events affected the way you do business, if at all?

Brian D. Murphy, The Hartford: There are always lessons to be learned and applied from any major economic event. One for the general marketplace is to be wary of bubbles or over-exuberance of any one thing. Balance is key. For insurance companies, it is constant risk management, not only of what you might be insuring but also of all of the investment and capital structures supporting that promise.

Peter Golato, Nationwide Financial: Throughout the market turmoil, Nationwide has remained a strong, financially stable company with Midwestern values that producers and customers can rely on.

Robert J. Ehren, Securian Financial Group: It has not affected the way Securian does business. We have always sought to make our decisions based on the best interests of our customers over the long term. Having a longer horizon for making decisions helps us sustain our strength even through the roughest times.

Shawn Smith, Transamerica: We have increased voluntary benefit sales by 60% since 2007 and through May 2011 our sales have increased 33% over the same time last year. I don’t believe the market downturn or scandals have negatively impacted our voluntary benefit sales. I believe the increase in sales have been attributed to our solution-based product portfolio and electronic delivery, focusing on employer and employee needs.

Paul LaPiana, MetLife: MetLife continues to stand apart as a strong, stable leader in the financial services industry and is well capitalized, with a strong balance sheet. MetLife’s core fundamentals remain strong as we continue to benefit from a well balanced mix of businesses.  MetLife is not overly dependent on the success of one product or line of business.

Our investment portfolio is well balanced and defensively positioned; our excess capital position and financial strength ratings are among the highest in the industry; and I believe we have benefited from a “flight to quality” by both financial professionals and their clients. We preserve market share and differentiate ourselves from other companies through our disciplined approach to risk management and strong capital position.

Warren May, Principal Financial Group: The economic downturn was certainly the big event, but scandals in the financial service industry added fuel to the fire.  With our more affluent clients I would also point to the success the IRS has had in shutting down questionable tax shelters.  All this leads to the idea that “boring is the new exciting”.  Quality is king.  We have emphasized our solid ratings, our expertise, and our resources … and people are listening.


What, if any, state or federal legislative issues are you concerned about?

Peter Golato, Nationwide Financial: Federal and state deficits have placed government entities under increasing budgetary pressure, which will continue to drive greater interest in tax reform. As government officials search for new sources of revenue this could pose a threat to the tax favored treatment of financial services products such as life insurance. I’m confident that our industry is poised to act and can work together to educate key decision makers about the negative consequences that these changes could have on our customers’ ability to financially prepare for the future. It remains to be seen how implementation of the Dodd-Frank Wall Street Reform Act will impact our industry, but we can likely expect new rules and regulations at both the federal and state level. It’s critical that industry leaders work with government officials to ensure that they understand the full impact that new regulations could have on customers and the financial services industry as a whole.

Michael Ferik, The Guardian: Any time the Congress discusses basic tax reform, we are concerned about protecting the savings initiative that is offered by the deferred tax treatment of the inside buildup of cash value life insurance and annuities. We think we have a good story to tell, especially when Social Security is under tremendous pressure and private savings becomes so important. On the state level, we are concerned about getting improvements in speed to market, annuity disclosure requirements, preserving our dental business from unintended damage from health care reform, and potential changes in corporate governance and accounting standards. All of these issues ultimately affect our ability to deliver quality products at reasonable costs through our producers to our policyholders, who are Guardian’s owners under the mutual company structure.

Brian D. Murphy, The Hartford: In general, over-regulation can be a negative reaction to the issues we have faced in the past decade. While there clearly needs to be revisions, some of the proposals could significantly increase cost and complexity for the consumer with questionable benefits. As for age groups, with so many Americans turning age 65 over the next 18 years, this presents a huge challenge and opportunity for the entire industry.

Robert J. Ehren, Securian Financial Group: We are watching carefully all the legislative issues that can affect our customers. In this arena, Securian does not try and predict what will happen. Instead, we prepare for many possible contingencies. We are concerned about the economic conditions of our governments (state and federal) and the impact they may have on the broader economy.

Shawn Smith, Transamerica: We are mostly concerned about healthcare reform and how it will impact our broker and general agent partners. Also, any increase in taxes will directly impact employee’s disposable income to buy voluntary life products. The life insurance need will not change, but the amount of coverage they buy will change.

Paul LaPiana, MetLife: There are a few we are watching very closely.  Through MetLife’s own Government and Industry Relations Department (GAIRD) and through our participation in industry trade organizations, we continue to focus on federal and state issues, partnering with industry counterparts to provide lawmakers and regulators with industry insight to assist in reasonable outcomes.

For example, the deficit and revenue picture at the federal level has caused the industry to remain alert to make certain that the tax treatment of protection and retirement savings products are not adversely impacted.  Whether changes could come as “pay-fors” to offset the cost of spending or tax cuts, or as part of a broader tax reform (which is less likely), MetLife is actively engaged at all levels of the business.

Also of intense interest to the industry and MetLife is financial services regulatory reform.  We are currently reviewing the comprehensive financial services reform legislation to fully evaluate its implications for MetLife.  As it calls for several studies to be completed and regulations to be written, it is not yet certain what impact final rules could have on MetLife, the industry or policyholders.  We remain committed to staying actively involved in discussions with legislators and regulators to help avoid any unintended, adverse impact on the life insurance industry and the many policyholders it protects.

Regarding niches or age groups, although many financial professionals continue to focus on the baby boomer market, the emerging middle market, ages 25 – 40, presents an excellent opportunity for growing new business in an under-served market.

Warren May, National Vice President of Individual Life Sales, the Principal Financial Group: There have always been threats to our industry, but never before have I seen such a convergence of regulatory oversight, pending legislation and on top of it all a slowly recovering economy.  We’re watching the landscape closely and creating new tools and resources to help our brokerage partners and advisors navigate the uncertainty.  If ever there was a time for insurers and their distributors to be involved in advocacy, now is the time.

Speaking of life insurance customers, are their certain niches or age groups that brokers should more of a focus on?

Yes, we have a strategic focus on business owners and their executives in both personal and business needs.  Mid-year, approximately 70% of our life insurance premium is related to this market segment.


Speaking of life insurance customers, are there certain niches or age groups that brokers should put more of a focus on?

Shawn Smith, Transamerica: Due to the large Baby-Boomer population and the average worker’s age approaching the late 40s, many brokers are focusing on post retirement life sales. Providing permanent life protection is important to many individuals post retirement life insurance needs such as final expenses and estate planning regardless of estate size.

Peter Golato, Nationwide Financial: Baby Boomers are beginning to retire and brokers should focus some of their attention on this key demographic. Producers who can assist Baby Boomers with protecting their family, ensuring they have enough funds saved for retirement and creating a plan for systematically drawing down those funds will be the most successful. Middle-market households are another important niche that brokers should focus on. According to LIMRA, about one in four middle market households admit they don’t know how to obtain or reach their financial goals and 18% want to speak with a financial professional about their life insurance needs.

What are some of the common characteristics of your most successful brokers?

Robert J. Ehren, Securian Financial Group: “Focus” is an excellent description of the suggestions we give advisors. We do not have a global target market. Rather, we recommend advisors focus on the markets they are passionate about and can learn about. We also recommend they focus on the kind of people they enjoy working with. That way, they can do the best job serving the clients. Everyone wins in that scenario.

Michael Ferik, The Guardian: Our most successful brokers are doing the same basic things that have made them successful in up or down markets: good, sound planning advice and simple sales approaches. We have seen strong growth in whole life sales through our brokers in the last year or so, as brokers and clients look for a high-quality whole life portfolio from a carrier with outstanding financial strength.

Peter Golato, Nationwide Financial: The most successful brokers are the ones who are in consistent contact with their customers and take the time to listen to them. Recent studies have also shown that women are increasingly becoming the decision makers when it comes to household finances. Producers who understand their power and how to include them in the discussion will be the most effective.

Brian D. Murphy, The Hartford: Our most successful brokers believe in financial planning, lifetime advice and service, and use life insurance to provide guardrails for income planning for their clients. They have the highest stake in compliance since many of them are community and civic leaders. The want to do business with companies that have stood the test of time and ethics because they know that their work for their clients is dependent on a sound backer of the promise.

Shawn Smith, Transamerica: Brokers who are students of our business and creative thinkers who provide their clients with the latest technology for core and voluntary benefit delivery solutions. In addition, creative brokers and general agents who provide first dollar benefit solutions to help meet their clients employee’s financial obligations due to an accident or illness. A high deductible health plan can save families thousands of premium dollars every year until a serious accident or illness happens.

Paul LaPiana, MetLife: The qualities I see in all the successful brokers that I have had the pleasure to work with are professionalism, persistency and patience.  They also have expertise in multiple products and can work well on a team that can address the holistic planning needs of clients today.

The most successful brokers have integrity and focus on the long term financial success of their clients. Successful brokers are usually credentialed professionals who always work towards upgrading their skill set to become better at what they do.  Many are involved in the industry through associations and are actively involved in their communities as well.

An increasingly important trait is patience and the ability to help educate clients and their advisors about financial products and the companies behind the products. Successful financial professionals are also able to educate clients and their advisers about the economics of life insurance and how to position it as an asset rather than an expense.  Whether it is being used to accumulate supplemental retirement income or take care of beneficiaries for multiple generations, the internal rates of return on cash surrender values and/or death benefits can be very attractive.  In addition, as brokers assist clients and their advisors with product selection, they need to reinforce the tax advantages of life insurance and the carrier’s guarantees within life insurance that are provided to individuals, their families and businesses.

Brokers who have all of these traits are well positioned for success.

Warren May, National Vice President of Individual Life Sales, the Principal Financial Group: 

• Adaptability:  our way of doing business is under attack. The successful broker is the nimble, adaptable person who can compete to win

• Thirst for knowledge:  The business insurance market has long been a tough nut to crack.  We’re seeing that many of the brokers who are succeeding in this market are the ones willing to learn about the needs and solutions for business owners and their executives.

• Passion:  The recession taught us about the nobility of the life insurance profession.  Those who succeed are those who believe:  believe in a product that is logical, predictable, and self-completing.

Leila Morris is editor of California Broker Magazine.

Individual Health

Helping Your Clients Choose the Right Individual Plan

by Michael Ginsberg

With the passage of the Patient Protection Affordable Care Act (PPACA) and its regulations regarding prevention coverage, many of your clients may be confused as to what kind of individual health plan offers the best prevention and wellness coverage.

Using preventive services is important for the health of individuals and families since early identification of health concerns can help stave off medical problems. Not only will preventive services save money, but more importantly, they will also help your clients stay healthy so they can enjoy their lives more. As brokers, you are key to helping your clients choose the right plan to help them meet their health and financial goals. Here are some suggestions to help individual and families choose the right plan:

• Plan design matters: It may be a better financial value for some clients to pay a little more each month for a plan that offers coverage for ongoing medical expenses or specialized medical needs given the health condition of the individual or family. Conversely, a high-deductible health plan that’s tied to a health savings account (HSA) may be a good option to help younger healthy individuals save for future healthcare expenses on a tax-advantaged basis.

• Grandfathered versus non-grandfathered: At first, many plans seem the same in terms of coverage for prevention and wellness. But, with the passage of PPACA, plans may vary in what is actually offered based on grandfathering status. Grandfathered plans may offer more robust and flexible health benefits for some individuals and families.

• Value-added benefits are important:  People often overlook the “hidden benefits” found in many health benefit plans. For example, many insurers offer discounts for programs, such as smoking cessation, weight loss, fitness club memberships, and other services. Many plans also include a 24-hour health information line staffed by nurses to help families determine appropriate care and potentially save them unnecessary emergency room visits and costs.

• Online tools make a difference:  Many health plans offer an array of online support and tools to help individuals save time, money, and possibly avoid costly medical care in the future. Varied online features range from information about claims, the quality of a doctor or hospital, coverage benefits, co-pays, and deductibles.

Prescription drugs often make up a large portion of a medical budget. So tools that compare drug prices at local pharmacies as well as generic and name brand options, can help save up to $500 a year, depending on the plan design and the use of generics. It is important to maintain compliance with drug protocols for a particular health condition. Saving money on prescription drugs can be an important value-add and point of difference for many clients.

• Quality matters: When individuals are looking for health plans, they want to know how the plans have worked for others. Help your clients feel confident about choosing the right individual plan by encouraging them to check out the plan’s report card on the National Committee for Quality Assurance’s Web site, available at

• Explain access points: Make sure that your client knows all the access points for support and care and understand their needs. Ask if they would call a 24-hour nurse line while on vacation or if they might need 24/7 customer service support.


Michael Ginsberg is the vice president of sales for CIGNA’s individual and family plans and is located in California. He can be reached at For more than 125 years, CIGNA has been helping people lead healthier, more secure lives and additional information about CIGNA’s individual and family plans can be found at 


Demonstrating Your Value as a Retirement Income Expert

by Brian Grigg

Don’t shoot the messenger,” may be an apt motto for our industry today, as producers have to be the bearers of bad news to Baby Boomers. In addition to having low savings rates, many Baby Boomers overestimate the retirement income that their nest eggs can generate from bonds and CDs. They also underestimate the long-term impact of inflation and taxes on their purchasing power. Fortunately, this is a major opportunity for producers to become the bearers of welcome news by providing income solutions that offer peace of mind.

In this article, we will discuss how to shift the conversation with Baby Boomer clients from an accumulation to an income perspective and how the latest generation of fixed indexed annuities can allow producers to customize solutions to a client’s financial preferences.

Retirement income is cause for concern for many Boomers. More than half are concerned about outliving their retirement savings, according to Benefit Research Institute’s 2011 Retirement Confidence Survey. Eighty-nine percent of the 77 million people from 1946 to 1964 are not strongly convinced that they will be able to live in comfort in their later years, according to a recent Associated Press poll. About 44% of Boomers express little or no faith they will have saved enough money by retirement while one in four do not expect to retire, ever.

Helping Baby Boomers come to terms with their income prospects is not an easy role for many producers to assume. Many producers have spent virtually all their insurance career helping clients focus on accumulation; they are less comfortable discussing long-term income requirements.

Producers are aware that many Baby Boomers may be disheartened, at first, when their financial situation is examined in detail. It is never pleasant telling near-retirees that their income in retirement is likely to fall short of their expectations.

Many producers lack the training and experience to help clients select an advantageous income solution. It is crucial for producers to overcome these hurdles. Advisors who fail to add retirement income to their knowledge base risk losing clients to competitors who are well prepared to engage in income discussions. Conversely, producers who are adept at helping clients transition from their accumulation to distribution phase have a major opportunity to add business and provide advice on the entirety of their clients’ lifetime assets.

Changing the Conversation

The good news for producers is that modifying the conversation with clients from an accumulation to an income perspective is not as drastic as it may appear. In our experience, producers can often initiate this conversation using the following three questions:

1. What are your retirement goals and how do you envision yourself in retirement? Prompting people to discuss how they want to spend their time in retirement and what apprehensions they have about this new phase enables advisors to reinforce their personal bond with clients.

2. Do you have an income plan that will allow you to live the way you want for the entire span of your retirement? This question flows naturally from the preceding conversation. The answer from clients is almost always “No,” or “I’m not sure.” This gives producers an opportunity to present themselves as experts who can help the client succeed.

3. May I schedule time with you [and your spouse or partner] to review your retirement income and discuss the various options you might have? This question is a logical counterpoint to the previous question. The producer can explain that this second discussion will focus on the five essential elements of an effective retirement plan:
1. Protecting against outliving assets.
2. Protecting purchasing power against inflation.
3. Protecting against market risk.
4. Providing the retiree with the ability to finance a quality lifestyle.
5. Ensuring that a retiree does not lose control of her money.

When the producer and client meet again, the first step is a thorough fact-finding session to gather information about your client’s financial position and retirement goals. This includes listing all actual and potential sources of income, such as Social Security, a pension, IRAs, an expected rollover IRA from a defined contribution plan, stock and bond portfolios, cash accounts, royalties, legal settlements and rental income. It can also be important to consider whether a client’s primary residence or other real estate can unlock income. Once these sources are identified, they should be categorized as guaranteed or non-guaranteed and taxable or tax-deferred.

Since many people have misconceptions about Social Security, a producer can add value by helping clients understand how this benefit can fit into their total financial picture. In general, Social Security replaces only about a third of the average earner’s income. Pressure placed on our nation’s retirement system by the Baby Boom demographic suggests that Social Security may decrease in the future.

According to Social Security Administration figures, 72% of all people begin Social Security at the early-retirement age of 62. Producers can provide a real service to clients by alerting them that electing early benefits may result in a significant reduction in income received over time. The client may understand this on a superficial level, but not truly appreciate the loss this will entail. Similarly, producers can review with clients the advantages of delaying Social Security and substantially increasing the lifetime benefit.

You can provide this information within the context of creating the client’s retirement income strategy. Once you have clarified Social Security issues, the next step is to estimate how much income other sources can be expected to contribute. This should be a simple discussion if a client’s savings and projected spending are well aligned. However, in many cases (if not most) producers find a mismatch between a client’s income sources and spending expectations, especially when potential inflation, taxes and longevity are factored in. This conversation can be especially difficult if there is a possibility of clients outliving their income or depleting it to such an extent that it threatens their quality of life. In this circumstance, producers and their clients may be prudent to consider insurance-based income benefits.

Creating A Viable Income Benefit

Regardless of how much a household has saved, a viable income plan should produce a solution that guarantees income for life and the ability to maximize payment during the accumulation phase. It should also enable clients to start and stop withdrawals at their discretion and restart withdrawals at least once. For many retirees, these features are essential to their financial well-being and not simply nice-to-have indulgences.

The original generation of income annuities possessed some, but not all of these attributes. Clients appreciated the lifetime income, but they had some resistance to the perceived lack of flexibility regarding withdrawals and opportunities to grow savings. These vehicles also were faulted for their inability to provide investors with greater control, especially the inability to reverse decisions.

Virtually all of these concerns are addressed by the latest generation of fixed indexed annuities. These products have made sizeable advances in enabling producers to customize solutions to a client’s financial preferences. In addition to accumulation elements, a growing number of FIAs offer better upside potential for interest crediting as well as access to the same guaranteed lifetime withdrawal riders that were once available only to variable annuity investors. Indeed, income riders in fixed products are prone to be more competitive than their VA counterparts because FIAs do not have to insure the downside risk.

FIAs are clearly not for all retirees, but they appear poised to capture a larger share of insurance income products. When available for purchase, the rate of election for guaranteed lifetime withdrawal benefit riders was 57.5%, according to the 1Q 2011’s Indexed Sales & Market Report. Advantage Compendium notes that FIAs have performed competitively in high and low interest rate environments as well as both rising and falling stock markets.

The Boomer generation’s need for lifetime income is a massive opportunity for producers and the new generation of insurance income products provides more flexible tools to achieve this than ever. Now is the time for advisors to present themselves as retirement income experts to their clients.


Brian Grigg is vice President-Annuity Distribution, Fidelity & Guaranty Life.

Life Settlements

Boomers Bearing Down on Life Settlement Industry

by Stephen Terrell

For years, demographers and business luminaries have instructed financial advisors about the approaching opportunities presented by the Baby Boomer generation – the 76 million Americans born between 1946 and 1964. This huge segment of our population has begun to retire. It has long been believed that Boomer savings and investments would greatly bolster the collective businesses of anyone in the world of financial services.

The life insurance industry is no exception; it began seeing a boost when Boomers started having children and building wealth decades ago. In fact, Baby Boomers are the best insured generation of all time. This will drive the life insurance settlement issue for many years to come.

Many Boomers purchased life insurance primarily to protect their spouses and children while others purchased it for estate tax reasons. A recent estimate by Conning reveals that the potential market for life settlements is more than $177 billion. Of critical importance is the fact that Boomers need all the help they can get to help fund retirement. More than 10,000 Boomers a day reach age 65, but many have no retirement savings. A recent Harris Poll confirmed that 25% of Boomers have saved nothing.

Here are some other troubling statistics regarding Baby Boomers:

•44% of Boomers are not confident that they’ll have enough money to live comfortably in retirement.
•57% say they lost money during the recent economic downturn.
•42% say that’s why they’re delaying their retirement.
•55% say they have at least some confidence that they will have the financial resources to live comfortably during retirement.
• 11% are deeply confident that they are financially prepared.

However, the dire retirement picture for Boomers is counter-balanced by this generation’s unprecedented investment in insurance. Life insurance can come to the rescue. While some may think life insurance settlements are meant for the super rich or for individuals with large estates, the truth is that most seniors who have life insurance are likely to be eligible for a life settlement.

Most seniors learn about life settlements from their insurance agent or from life settlement provider companies that use direct mail and traditional advertising. Also, a tremendous amount of information about life settlements is available online. The industry has become very mainstream in its marketing efforts: Our company even uses the country’s most famous octogenarian Betty White as a spokesperson.

With a life insurance settlement, the purchasing company agrees to pay the life insurance premiums for the remainder of the policyholder’s life. In return, the purchaser is paid the death benefit when the policyholder dies. Traditionally, these transactions make the most sense when life insurance policies become too expensive or are no longer needed. For example, a policy that was purchased on a husband’s life to offer financial protection to his wife and children may become unwanted or unneeded once the children are grown or if the marital status changes.

Issues regarding the estate tax regulations have also arisen recently. Many Baby Boomers purchased policies specifically for estate planning purposes; life insurance was very typically sold as a means to fund anticipated estate tax burdens on families. However, recent changes in the estate tax law have made some life insurance purchased for that purpose unnecessary. Prior to life insurance settlements, the unneeded or unwanted insurance was allowed to lapse and most of the value of the policies was lost. Life settlement companies are currently looking for individuals with policies that match these traditional circumstances.

Individuals over 50 often reach a crossroads with their life insurance. If they purchased term insurance when they were younger, the period of the term may be close to ending and seniors often debate whether or not to keep the coverage. Their original plan may have been to keep the insurance only until children were grown — a milestone, which may have been reached.

Other seniors may be holding permanent insurance in forms called “whole life” or “universal life.” This type of policy was likely sold as an investment because it builds cash value over time. Regardless of the type of insurance that a senior might have, the crossroads is usually affected by increasing costs. Term insurance, which was often purchased when seniors were much younger and cheaper to insure, may now cost10 times as much per year. Whole life insurance costs also escalate. In addition, if insurance was purchased for the purpose of paying estate taxes, it may no longer be needed for that purpose.

Many factors at this crossroads will point a senior toward the options of not renewing policies, cashing them in for the value that whole life insurance has built-up over time, or simply letting the insurance lapse.

We recommend that seniors do everything in their power to keep their insurance in force for as long as possible. Many term insurance policies are sold with options that enable the policy to be converted to a whole life policy. Many Boomers have this type of insurance and don’t even know it. Converting an old term policy to whole life may be significantly cheaper than buying a new policy because the underwriting is based on medical records from years earlier.

For seniors, a life insurance policy that costs a few hundred dollars per year to keep in force may be worth hundreds of thousands of dollars once they reach age 70 when a life insurance settlement becomes a viable option. Policies with a face value of $250,000 or more can be sold at that time and provide an immediate financial lifeboat. Payouts vary depending on the type of policy and the policyholder’s medical history. It is not uncommon, for example, for a senior with a million dollar policy to receive a six-figure life settlement. This is a significant figure, particularly when you consider that many seniors let these policies lapse and receive nothing. Keeping a policy in force for a few more years can make a major difference.

For agents, life insurance settlements offer a new opportunity to connect with Boomer clients and a new reason for policyholders to keep policies in force. Helping your clients keep their insurance in force until they reach their 70s could be the financial difference between retiring happily and struggling along.


Stephen E. Terrell is senior vice president of Sales, Marketing, and Public Relations of The Lifeline Program, a life settlement provider based in Atlanta, Ga. Terrell oversees all aspects of marketing including the P3 Program (Production – Performance – Profit) which enables agencies and agents to build a new market with life settlements, broadening revenue and increasing commissions. For more information, call 770-724-7300 or visit Or follow him on Twitter @LifelineProgram.

Life Settlements 2.0 –The Next Generation

by Eric Lund
You would not be alone if you believed that the life settlement market was kaput. You would, however, be wrong in what is, perhaps, a testament to the soundness of the concept. Life settlements essentially represent the difference between a life insurance policy’s closed market/cash surrender value and its open market/net present value. Life settlements continue to be viable despite an almost perfect storm of issues that washed over the industry at the end of the past decade.

The life settlement industry was humming along from the late 1990s through 2008. Its growth rate accelerated rapidly with its primary issues being inefficient processing, inadequate transaction transparency, and confusion over how to properly conduct business as states rapidly and often inconsistently implemented regulation.

Additionally, the industry began to struggle with the more serious issue of policies purchased with the express intent to sell into the secondary market — a violation of insurable interest law. Worse, these policies were often written through programs, allowing premiums to be financed which only heightened their appeal to participants both sophisticated and not.

But the hammer really dropped in late 2008/2009. The industry was rocked by dramatic adjustments in the calculation of life expectancies in the senior age groups (arguably the most important and least predictable component of the formula for determining present value). For investors, this adjustment meant the virtual certainty of impaired returns on existing portfolios (if not outright loses). When the credit markets collapsed in early 2009, “risk off” became the default investment theme and the life settlement market was essentially paralyzed.

Are there still opportunities for you and your clients? Is there a next generation for the life settlement market? I would argue yes. For starters, buyers, who are now more comfortable with their mortality risk are back. Prices today are clearly lower than pre-2009, but transaction volume is still measured in the billions of dollars of death benefit. So there may still be meaningful value for an owner who wishes to dispose of a policy in the secondary market.

Stranger owned life insurance has largely been stamped out. Reduced volumes and improved internal processes have allowed for a much cleaner and faster closing process. For those who have lived through a life settlement transaction, this is no small reward! Lastly, the transparency of a transaction is much improved with reputable brokers providing detailed transaction breakdowns.

While it is certainly difficult to build a business solely around life settlements, the opportunity for unlocking hidden policy value is still viable according to Dan Bockhorn managing partner with Trinity Financial Services an Orlando Fla. based life settlement broker. Bockhorn believes that it is prudent to develop a relationship with a reputable life settlement broker who can quickly guide you through the screening process and then, should you proceed, ensure that your client receives the best offer the market will provide. As a reminder, California law now regulates life settlements; you must have an active California life license to even discuss life settlements. q


Eric Lund is a California-based financial services professional and a licensed life and health agent. Lund has over 25 years experience in sales and business development in the banking, brokerage, and insurance industries, and is a former senior executive with life settlement provider, Maple Life Financial. He can be reached at