The Retirement Income Backstop Explained For Financial Advisors

00;00;00;13 - 00;00;32;02
Mark Lyons
All right. We'll just get started. Hello, everyone. My name is Mark Lyons. I'm the director of sales here at Sims Financial Solutions. And I'd like to welcome you, to April's life insurance webinar, that we host. It's, it's really good to have everybody here. And we have a very special program today. We're joined by Jason Miller and Martin Smith, John Hancock.

00;00;32;04 - 00;01;04;14
Mark Lyons
And so we'll be, we'll be doing the, the webinar. I think Martin will be leading the, the, the first part, the using, life insurance as a retirement backstop. That sounds like it's a very interesting topic. And then Jason is going to go into, John Hancock's longevity preparedness index. It's, it's a new, I guess you would call it feature, or asset, that, that John Hancock now makes available.

00;01;04;16 - 00;01;29;26
Mark Lyons
And they're one of the really the, the one of the leaders in the, the healthier living, market. And it's, and they're tying into life insurance in a very interesting way. So just, just before we get started. Welcome, guys. Martin, I'd like to, to introduce you, you know, you've been at Hancock here now for what?

00;01;29;26 - 00;01;59;20
Mark Lyons
About 17 years? I think that you told me. And you've been in a variety of roles, and most of those are, you know, revolving around case design illustrations. You're a member of the, the advanced, advanced planning team now. And so really helping those, those agents, and advisors, with their, with their customer plans that they're putting together, for their protection.

00;01;59;23 - 00;02;16;22
Mark Lyons
So welcome. And, Martin's, he has a beautiful backdrop behind him. He's, he's on the lake in Lake of the Ozarks in Missouri. And, Jason's up. And are you in, Minneapolis today? Jason?

00;02;16;24 - 00;02;18;05
Jason Mueller
Yeah, up in the Twin Cities?

00;02;18;05 - 00;02;18;13
Martin Smith
Yep.

00;02;18;16 - 00;02;33;23
Mark Lyons
Okay. All right, so Jason is newer to John Hancock. But he is our, our regional. And I think what, you're in a different career before, but then you saw the light, and that's why he decided to come over.

00;02;33;25 - 00;02;53;05
Jason Mueller
Yeah. I've been around a while, in the business about 28 years. Hancock. Just ten months. But it's really been a lot of fun, you know, kind of learning all the tools and resources Hancock has in the longevity space. It's, it's it's a fun story to tell and a great, fun way to sell life insurance and long term care insurance.

00;02;53;08 - 00;03;03;03
Mark Lyons
All right. That's fantastic. And, Martin, are we going to learn about, retirement, backstops using life insurance today?

00;03;03;05 - 00;03;06;06
Martin Smith
I hope so, I hope we do. I hope we learn a little something today.

00;03;06;08 - 00;03;32;03
Mark Lyons
I think I think we'll learn something. We'll we'll be taking away something from this. I did want to tell the, the audience that, you're free to ask questions. This is, this is a live webinar. But just use the Q&A box down at the bottom of your screen. We do not use the chat feature, for there are webinars.

00;03;32;06 - 00;03;48;14
Mark Lyons
So if you don't see the Q&A box, just click on the, the little icon that says more and it'll come up. All right. Let's get started in Martin, I hope you don't mind if I interject occasionally with a comment or question.

00;03;48;17 - 00;03;49;28
Martin Smith
Yeah, absolutely. That'd be great.

00;03;50;01 - 00;03;54;17
Mark Lyons
Okay. All right, all right, Martin, take it away.

00;03;54;19 - 00;04;22;05
Martin Smith
Perfect. Appreciate it. Yeah. Appreciate the opportunity to, to speak with you all today. So, again, my name is Martin Smith. I'm with the advanced markets team here at John Hancock. And we're gonna be talking about kind of one of my favorite kind of planning ideas today, which is the retirement income backstop. Essentially, it's, using cash value life insurance to protect a client's primary retirement assets from some of those risks that they're going to face, as they, near retirement and into retirement.

00;04;22;07 - 00;04;42;01
Martin Smith
So, you know, one of the first questions that we're always talking to, you know, with our clients about, you know, as they near retirement is, you know, are your clients adequately prepared for retirement? You know, have they have they saved enough? What are their have they thought about their current and projected future spending habits? Right. Are they going to are they going to plan to spend more money and and retirement?

00;04;42;01 - 00;04;56;29
Martin Smith
Are they going to go on more vacations or are they going to kind of settle down and are they going to be spending less? So, you know, having an idea of kind of what, the client's expected spending habits look like is, is is an important question to be asked as well. You know, what what are their investments look like?

00;04;56;29 - 00;05;16;03
Martin Smith
Is it mostly in qualified plans or is it mostly and, you know, non-qualified investments like stocks and bonds? And what goals do they have for their retirement legacy? Are they really focused on, you know, making sure that, you know, that their kids and grandkids have something, or, you know, are they more worried about, you know, their own retirement assets?

00;05;16;03 - 00;05;31;13
Martin Smith
Now, what what, what keeps them up at night? What are their worries? As they, as they near retirement? So having, you know, insufficient savings or, you know, outliving your retirement assets. Definitely a real and growing concerns for clients, nearing retirement age.

00;05;31;15 - 00;05;39;05
Mark Lyons
I can attest to that, actually. Yeah, I, I can attest to the fact that I'm starting to worry about it as I near retirement age.

00;05;39;07 - 00;05;58;15
Martin Smith
Absolutely. So what are the what are some of those risks that we're talking about? What are some of those risks that, you know clients are going to be facing. So, you know, kind of first we'll start off with, you know, kind of those health issues and needing long term care. And, you know, how can, you know, cash value life insurance policy potentially with a long term care, right, or help address some of those issues?

00;05;58;17 - 00;06;31;08
Martin Smith
We'll dive into each one of these risks, you know, a little bit deeper. But the other one, the next one is is longevity or outliving retirement assets. And as Jason and Mark both mentioned, John Hancock is heavily leaning into this longevity and wellness type program. So, you know, the three of us, we're all at, the longer, healthier, better symposium in Boston, a couple weeks ago where, John Hancock brought in a lot of, specialists and, and then both the medical field and health field and technology, you know, related to the medical field.

00;06;31;10 - 00;06;46;02
Martin Smith
So it was really a, you know, an interesting, seminar that we learned a lot about, you know, the technology and things that are happening these days where clients are, you know, potentially going to be living longer and longer lives. And I also.

00;06;46;04 - 00;07;07;03
Mark Lyons
And I would say it was a fantastic, conference. I mean, it was it was it was truly outstanding. So, you know, for those of you on the call that are going to be, you know, you know, big sellers of, of John Hancock, you know, that could be in your cards in the future.

00;07;07;06 - 00;07;27;15
Martin Smith
Absolutely. It it is a great conference and definitely I, I learned a lot. This was my first one going this year. And it was it was definitely a worthwhile endeavor for sure. In addition to that, you know, they, you know, as Mark mentioned, Jason's going to be talking about our, longevity preparedness index later. So Paul still has thunder there, but, but definitely another tool that that, we're putting out there.

00;07;27;17 - 00;07;50;13
Martin Smith
And the longevity space, another risk to clients are going to be facing and, and, retirement is withdrawal is, so withdrawal risk, you know, that's, you know, what is their anticipated spending look like? And what happens if they have unexpected expenses, and retirement, you know, are they, to put a new roof on or unexpectedly have to, you know, pay for a grandchild to go through college?

00;07;50;13 - 00;08;08;22
Martin Smith
Some of those types of risks that they're going to be facing. And we'll talk about how life insurance can help with that situation. Sequence of return risk. You know, this is obviously a hot topic. You know, I go to a lot of conferences and, there's not a conference that I go to where there's not a at least 1 or 2 presenters talking about sequence of return risk.

00;08;08;25 - 00;08;27;07
Martin Smith
So we'll dive into that a little bit, as well. And then lastly, we talk about taxes and inflation. So obviously extremely hot topics lately, and, you know, how can you know if, if taxes are higher than expected or inflation is higher than expected happen? How is that going to erode the client's purchasing power?

00;08;27;07 - 00;08;35;08
Martin Smith
And how can cash value life insurance, help to mitigate some of that or help to offset some of that loss of spending power?

00;08;35;10 - 00;08;55;11
Martin Smith
So what is, what is, retirement backstop and how can life insurance help? So we'll kind of dive into that as we go through the presentation. But essentially when we're talking about, you know, regardless what we're talking about, the other all of the other features that we'll talk about, a how we can protect against all those risks that I mentioned at the end of the day, this is still life insurance, right?

00;08;55;18 - 00;09;17;21
Martin Smith
So, it's still going to have an income tax free death benefit that's going to be able to, you know, provide, you know, provide for your, for the surviving spouse or kids, make sure that they have adequate retirement, you know, savings to continue on. Obviously, it's there to pay final expenses, you know, potentially provide, you know, legacy for, for children and grandchildren.

00;09;17;24 - 00;09;37;06
Martin Smith
You know, what I always say about life insurance is, is it provides liquidity when it's needed most. At the end of the day, the death benefit is, is is generally the most, you know, important feature. And it's going to provide that liquidity for the family members at the time that they need it the most. So to talk about the retirement backstop here at the bottom, like kind of the it's kind of a fun story.

00;09;37;06 - 00;10;00;25
Martin Smith
We kind of, you know, when we came up with this idea, a couple of years back, you know, we're kicking it around with a couple of my colleagues, and we're talking about what the the name of the, you know, this particular idea should be. And, you know, we kind of like, like lerp for older individuals or something like that and like, and but it's not it's more than just look for older individuals because, that this is really about what keeps your client up at night.

00;10;00;25 - 00;10;21;29
Martin Smith
Right? It's it's about, you know, protecting those primary retirement assets. Yes. There's a there's a big cash value component of it, but it's not like that traditional lerp sale where it's, you know, max fund a policy and minimum non max death benefit pay to 65. Start taking distributions immediately. To sell to you know, to supplement your to supplement your retirement.

00;10;21;29 - 00;10;43;24
Martin Smith
This is, you know, more of a, you know, let's build up cash value while we have these other features that we'll, that we'll get into. And we don't need to tap into that, the cash value of the life insurance immediately, like a lerp sale, because we assume that these clients have already done some, you know, retirement planning, and they have their primary retirement assets, in place that they're going to be using, using first.

00;10;43;24 - 00;11;14;05
Martin Smith
This is really about protecting those, those assets. So we came up with the, the idea of, that we called it the retirement backstop, similar to like, what we, you know, we talk about a baseball backstop. The idea is the, you know, of a backstop to kind of keep the ball and in the field of play. So similarly here we're talking about trying to keep the clients, you know, on track with their, with their, retirement planning and make sure nothing goes off the rails or goes out of the, the field of play.

00;11;14;08 - 00;11;34;19
Martin Smith
So now we can just dive into some of those retirement risks that we're talking about. So the first one is longevity. Like, you know, obviously like I mentioned and, and the others mentioned, this is something that John Hancock's leaning heavily into is something that, you know, we talk a lot about, when we talk about longevity, we need to make the distinction between life expectancy and lifespan.

00;11;34;22 - 00;11;54;28
Martin Smith
So oftentimes clients, you know, are looking at their life expectancy. And really what a life expectancy is, is when is that is the point at which 50% of people are going to live past. So 50% of people are going to live longer than their life expectancy, because life expectancy truly is just an average, of the, the length of time that someone's going to live.

00;11;55;00 - 00;12;22;18
Martin Smith
So are they our clients planning for life expectancy or are they planning for life span? And, you know, as we talk about, you know, all these advancements in medical technology and health and wellness, you know, our client's going to be living longer and longer, thus having a longer lifespan. Are they prepared, to to, to add, have retirement assets for their lifespan rather than just life expectancy?

00;12;22;21 - 00;12;43;27
Martin Smith
So when we talk about how life insurance can help here, obviously we talk, you know, we're talking about cash value. And the life insurance can help provide supplemental retirement income if they live too long. As I mentioned earlier, it's not about like starting taking distributions at age 66. This is more a you know, we don't need that to if we don't have to, we don't need to access that policy cash value immediately.

00;12;43;27 - 00;13;02;15
Martin Smith
Maybe we can wait until, you know, when our 80s or 85, if we live past life expectancy, are we going to have a source of funds that we can use to supplement our retirement, income if we live, if we live too long or live past life expectancy?

00;13;02;17 - 00;13;28;19
Martin Smith
Next issue we'll talk about is health issues and long term care. You know, this is another one of those things that we hear a lot about at all the conferences and a lot of talk, and not in just our industry, but in the media as well, about the cost of care these days. So I think this stats, even a little data, I think the 114,000 is higher than that now, but the national average cost for for for 24 hour home health care is more than $114,000 a year.

00;13;28;24 - 00;13;49;09
Martin Smith
So we can obviously see that, you know, how quickly of that that could erode a client's, you know, retirement savings. So one of the features that we have on our products and a lot of other carriers do, as well as a long term care rider that can be added to a permanent life insurance product. And essentially what this does is it accelerates the death benefit if a client has a long term care need.

00;13;49;12 - 00;14;12;17
Martin Smith
So that's going to be income tax free, funds available to them to pay for their long term care, need, long term care needs without having to, you know, dip into their primary retirement assets. They're going to be, you know, especially useful for, you know, married couples where, you know, if one person has the long term care need, they have access to these funds, you know, income tax free.

00;14;12;20 - 00;14;34;06
Martin Smith
They don't have to deplete their retirement assets for the, you know, planning for the other spouse. So the spouse will continue to have their primary retirement assets. So, long term care planning is an extremely important part of, of retirement planning. And we can combine that with, a life insurance policy, a permanent life insurance policy as well.

00;14;34;09 - 00;15;05;01
Martin Smith
Sequence of return rates. Again, very hot topic. You know, clients are going to experience, both below average and above average, market returns and sequence return rates. The thing that the kind of the scary part about it is the timing of these returns. If you have a, you know, negative, negative returns early on in the distribution phase of your retirement that can severely affect, the overall performance and longevity of your retirement accounts.

00;15;05;01 - 00;15;30;10
Martin Smith
So we can take a look at an example here. All right, so taking a look at these two individuals. So we have Mr. Smith on the left, Mr.. And Mrs. Jones on the right. They both have accumulated to $2 million worth of retirement assets, and they want to start taking $100,000 distributions for their, retirement income. You can see that they, you know, this is based on a client, retired 1969.

00;15;30;10 - 00;15;56;18
Martin Smith
Mrs.. Mr.. Smith and Mrs.. Jones retired in 1971. You look at the bottom, you'll see that the returns were we're about about the same over this 30 year stretch. But when you look at Mr. Smith, because he had a, negative loss and a negative return, and the first year when you go out to his age, 86, he's completely depleted his retirement, his retirement funds versus Mrs. Jones, who retired two years later.

00;15;56;21 - 00;16;20;22
Martin Smith
Not only that, she is still have a healthy balance at age 86. But it's continuing to grow. And you'll notice, too, that like Mrs.. Mr. Smith actually had the higher average 30 year market returns than Mrs. Jones, but because of the sequence of return, Mrs. Jones is going to fare a lot better in that situation. So when we talk about how can cash value life insurance help, imagine if Mr..

00;16;20;22 - 00;16;41;27
Martin Smith
Mr. Smith or even Mrs. Jones, didn't have to liquidate their assets in the down year. They would put their primary retirement assets in a down here. Instead, they had another source of funds that they could tap into, to provide the rest, provide the income that they needed without having to liquidate market, assets in a down here.

00;16;41;29 - 00;16;51;01
Martin Smith
This picture would look a lot different for Mr. Smith and Mrs. Jones. If they were able to, avoid liquidating assets in those down years.

00;16;51;04 - 00;17;01;13
Mark Lyons
That's actually a fascinating example. I mean, it's just it's incredible. You know, it's that different between two years.

00;17;01;16 - 00;17;24;01
Martin Smith
Yeah, absolutely. So that's why, you know, again, to a lot of people out there talking about sequence of return rates and we're we're talking about it here, obviously, and we're talking about, bringing a solution to market here where they're going to have, you know, funds available that they can, that they can access in those down here so they, they don't end up like Mr. Smith and helpfully ended up more like Mrs. Jones.

00;17;24;04 - 00;17;31;00
Mark Lyons
Yeah. Retiring in 1969 was a bad idea. Apparently.

00;17;31;02 - 00;17;34;21
Jason Mueller
All right.

00;17;34;23 - 00;17;50;12
Martin Smith
Yeah. So much as I was going to mention, you know, that in addition to, having access to that, those fund, those income tax free funds to help offset those, those negative years. There's also the singles return risk can also be minimized depending on.

00;17;50;14 - 00;17;50;29
Jason Mueller


00;17;51;22 - 00;18;18;01
Martin Smith
You know, product like an index universal life product is going to have, you know, down pat downside protection, but it's still in the market. So, a little bit help there with, with sequence of return risk as well. And then, of course, if the clients even more conservative, you know, we have, fixed account current assumption, universal like products as well that have a very stable yield tied to the, the interest the carriers generally, withdrawal rate risk is the next one.

00;18;18;01 - 00;18;37;13
Martin Smith
So this is, again, those unexpected expenses that a client's going to to have in retirement. So say they do have to, you know, have that critical home repair that they have to unexpectedly pay for. Where are they going to get those assets? Are they going to have to tap into their primary retirement, funds in order to do that?

00;18;37;15 - 00;18;57;02
Martin Smith
Or can they tap into their cash value life insurance? And again, this is doubly important to cut ties on to the back of the sequence of return risk as well. You know, what if they what if one of these emergencies come up, during a down year, are they going to have to make a large liquidation of, some of their primary retirement assets in order to pay for this unexpected, unexpected expense?

00;18;57;04 - 00;19;17;28
Martin Smith
And we saw how, sequence of return risk, you know, just on a level, level out, they can, you know, adversely affect the performance of the retirement account. What if it was a large, large, emergency expense or whatever the case may be? That they needed to, to liquidate and in a down here.

00;19;18;01 - 00;19;37;18
Martin Smith
Inflation again, obviously a hot topic, because it, you know, over the last several years, it's been something that that, you know, we're all keeping an eye on. I'm sure you're all keeping an eye on, obviously, the, you know, the, the, industry at large as well as, you know, all of the media as well is also also looking at this.

00;19;37;18 - 00;19;54;28
Martin Smith
But if inflation does end up being higher than the clients, you know, projected, you know, inflation because, you know, I one when we all are doing retirement planning, we all put some inflation factor in there and say, you know, this is what we want, to have when we get to retirement and we assume inflation, inflation is going to be X.

00;19;54;28 - 00;20;23;03
Martin Smith
And what if it actually turns out to be Y. And you know, the cost of living is more expensive in the future. So, you know, having a, another source of funds that someone can access, to help supplement that retirement income on an income tax free basis is, is going to be extremely valuable. So again, we have indexed universal life products, variable universal life products that that are tied to market performance.

00;20;23;03 - 00;20;35;00
Martin Smith
So those are going to, you know, help would help with, you know, inflationary cost to help keep pace with inflation and, you know, be able to provide that cash value needed, when the time comes.

00;20;35;02 - 00;20;53;26
Martin Smith
And then taxes will get into taxes. So, you know, I don't have a crystal ball. I have no idea what taxes are going to be in the future. I don't really want to, you know, project. It's really cute. It's hard to say. But, you know, I will say, if you look at the the chart here, the highest marginal income tax rate is relatively low compared to where it's been.

00;20;53;29 - 00;21;15;22
Martin Smith
And history. Additionally, our, you know, national debt is the highest it's ever been. I'm not saying that raising taxes is the only way that that here that problem. But, you know, is it something that, that, you know, clients should be aware of, you know, are their taxes potentially going to be higher, in retirement than than they currently are or that they, that they're planning that, they're planning to be.

00;21;15;22 - 00;21;43;09
Martin Smith
So, again, you know, having a, an income tax free, access to policy cash value either from, you know, from policy withdrawals or policy loans from a life insurance policy, again, to help, you know, not only with, providing that additional source of income, but also with tax diversification. And when we talk about tax diversification, you know, this is again, another very popular topic in the industry.

00;21;43;12 - 00;22;12;22
Martin Smith
But the the, you know, there's been a lot of studies out there who basically said that people who are well taxed, who are well diversified amongst, the different types of of taxable investments, do do better in the end and have, a lower, lower total income taxes overall. So when we talk about these types of, these types of investments, you know, we have our traditional, you know, pretax contributions that are, tax qualified, that tax deferred, you know, qualified plans.

00;22;12;22 - 00;22;34;05
Martin Smith
You for one case, you know, those are great accumulation vehicles, great for retirement. And, you know, hopefully, you know what we're talking about these these type of, you know, life cash value life insurance products. These are like these are going to be in addition to some of these, you know, primary retirement planning. Right. So it's not going to, you know, we're not trying to replace a qualified plan.

00;22;34;05 - 00;23;03;07
Martin Smith
So these are for those clients who, you know, kind of maxing out their contributions to their 41K, and those types of things. So, so those are great. You know, but withdrawals from those, from those, those are assets are going to be 100% taxable as ordinary income. And then the other, investable, the other investments options are the, after tax contributions, the taxable, account, the taxable investments such as, you know, stocks, bonds, annuities, real estate, etc..

00;23;03;07 - 00;23;19;01
Martin Smith
So, you know, those are going to be subject to capital gains tax, maybe even ordinary income tax, depending on how long it keeps, whether it's dividend paying an asset, etc.. So and then what we're talking about here is those after tax contributions that are tax advantaged. Right. So, you have your money in your arsenal.

00;23;19;01 - 00;23;35;11
Martin Smith
We're really focusing on the life insurance part of this today where, you know, distributions from those like those life insurance policies, again, sound like a broken record, but they can be accessed income tax free, versus policy loans and withdrawals.

00;23;35;14 - 00;23;55;10
Martin Smith
So we talk about the the retirement backstop solution, and how you can kind of plan to get some of those, you know, unforeseen risks. And the later years. But there's other, you know, benefits to, using cash value life insurance and permanent life insurance as well. We've talked about the, income tax free death benefit.

00;23;55;13 - 00;24;22;07
Martin Smith
You know, that there's kind of provide, you know, protection to, your heirs and provide, you know, financial protection for them as well. The tax free income. And then, mentioned the long term care rider again here. So again, if you put a long term care rider on your policy, you have a long term care and you can accelerate that death benefit up to 100% of that death benefit on an income tax free basis to help pay for those those long term care needs.

00;24;22;09 - 00;24;45;15
Martin Smith
So I'll take a quick look at a hypothetical example here. So the 50 year old looking to retire within the next ten years. You know what keeps him up at night is, you know, outliving his retirement assets. And then, the potential, you know, long term care event that would, further, further that problem. So he said, you know, I have, you know, my primary retirement assets.

00;24;45;15 - 00;25;07;29
Martin Smith
What can I do to, you know, protect those assets and enhance my retirement planning? And he said that he can contribute, up to $25,000 a year towards additional towards his, his retirement plan. So what what does that look like for retirement backstop type design? We can put the $25,000 he's going to pay for ten years, right up till the time he retires.

00;25;08;02 - 00;25;28;02
Martin Smith
He's going to buy a $750,000, universal or indexed universal life product. And that's going to with the long term care rider that's going to provide him with, you know, that that it's going to provide him with $15,000 a month and long term care benefit as long as a very as well as a very healthy cash cash value that he can access.

00;25;28;02 - 00;25;47;11
Martin Smith
In this case, we we, you know, we can show, you know, if he gets to his 80s and you and he needs to take some additional distribution, how much cash value is available to him in there. And we're saying that he could take $123,000 a year, for those six years in his early 80s, to help supplement some of his retirement income.

00;25;47;11 - 00;26;09;00
Martin Smith
So a lot of different protection features here. And you know what I will say? One of the beautiful things about the the backstop design is that it really is about what what keeps your client up at night, what's what's most important to them, especially with regards to like, you know, are they more concerned about long term care like this particular client was?

00;26;09;00 - 00;26;29;17
Martin Smith
Or maybe they're not as concerned about long term care. Maybe they bought a standalone long term care at some point in time in the past. Or, you know, are they more concerned about making sure that their, their kids have, you know, financial protection of their grandkids and they're more worried about the legacy. So maybe we can, you know, and buy a little bit more death benefit with a little bit more or less cash value.

00;26;29;19 - 00;26;46;26
Martin Smith
Or maybe they say, you know, I don't you know, my kids are going to be fine. I'm more worried about my supplemental income. So maybe I can design this with like a minimum non Mac death benefit. Maximize that to maximize the cash value potential. That's really all about what keeps them up at night and what what their concerns are.

00;26;46;29 - 00;27;05;21
Martin Smith
You know, it doesn't have to be a protection product. This can be, you know, an accumulation type product, but that's more where their focus. So that that's kind of one of the beauties of this is it's kind of understanding where your client is, what they're concerned about. And how can we put a plan together, to, to address their concerns.

00;27;05;24 - 00;27;35;24
Martin Smith
So looking at, the looking at it here numerically again, you know, that $25,000 a year for ten years. Well, based on our 50,000 death benefit with a, $750,000 LTC pool, which gives them $15,000 a month if they need, long term care. And then we look out 40 years from now. And we took those distributions, you know, and the in their 80s, you know, they, they were able to take six years of distributions totaling $740,000, cash value.

00;27;35;28 - 00;27;46;00
Martin Smith
And even after they've taken those distributions, they're still going to be, a residual death benefit. They're, available for the family as well.

00;27;46;03 - 00;28;05;04
Martin Smith
So again, we're talking about, you know, the different who are the prospects for this type of, planning. So we mentioned like the, that the, the accumulation phase, the traditional lerp type design, those are generally your clients in their 30s and 40s, you know, again, stuff as much cash in there as possible. Not really worried about the death benefit.

00;28;05;04 - 00;28;27;24
Martin Smith
And we're going to start taking distributions at age 66, to, you know, supplement, retirement income and, you know, alongside our retirement assets. So this the retirement backstop is really more of a solution that addresses those, plans for a little bit older and their 50s and 60s. And they, you know, want to, you know, build up cash value in there.

00;28;27;24 - 00;28;59;02
Martin Smith
But again, they're not going to start taking distributions. This is not like we're going to start taking our 66 to like this is hey, we're going to have we're going to build up this cash value in there. So if we have this unexpected expense at age 67, we can go in and take some of that cash value. If we, you know, get if inflation's higher than expected, you know, we can start taking, you know, income later, you know, later in our, you know, years to kind of help, you know, offset some of that or, if I don't need it, you know, if I don't have those unexpected expenses and I live too

00;28;59;02 - 00;29;21;01
Martin Smith
long, I'm still going to have this cash value, in, in that policy that I can, use later on in life to, help supplement my retirement, my retirement income. And generally, these clients are going to be in their highest income earning years, right? So generally, just prior to retirement, these are the folks who, you know, see retirement on the horizon.

00;29;21;08 - 00;29;47;02
Martin Smith
They're becoming more acutely aware of the risks that they're going to face in retirement. And those are the things that are starting to to worry them. And this those clients, you know, are going to potentially have that extra expendable income. Maybe the kids are out of college, maybe the mortgage is eliminated, all those things. So, you know, this is a great conversation we have with those clients because, hey, we can have, you know, you have this expendable income.

00;29;47;02 - 00;30;03;14
Martin Smith
Can we put it into a cash value life insurance policy that can help protect your primary, retirement assets? And, and, and, provide some additional protection in your, in your retirement years.

00;30;03;17 - 00;30;31;29
Martin Smith
So, the important part about this is informing your clients, having that those conversations, talking to them about all those risks that they're going to face in retirement, talking to them about which ones they're worried about, which ones are not, and then devising a plan. You can bring that, you know, to, to my team or any of your contacts from, from SMEs and, you know, really start putting that plan together and use, use cash value life insurance and this retirement backstop type design.

00;30;31;29 - 00;30;49;05
Martin Smith
So it's really a lot of fun. Is there a lot of fun? It is. It is fun. It is fun for me to talk about it. But, you know, there's a lot of flexibility with these, these types of plans. And, we've seen a lot of success with that. We've seen a lot of people talking about and changing the way that they're, that they're talking about life insurance.

00;30;49;05 - 00;31;04;02
Martin Smith
So hopefully that gives some sales ideas and some ideas there and have to be talking to your clients about, but something that, that we, that we rolled out really exciting is they longevity preparedness and next and I'll turn it over to, my partner in crime, Jason, to talk about that.

00;31;04;02 - 00;31;38;23
Mark Lyons
I, I'm just going to interject just for one moment. So, I mean, that was really great, Martin. I mean, I think John Hancock, you know, captured all this important information and put it into into one presentation. So, you know, our risk here for health issues, it's longevity risk or living too long. It's withdrawal risk. In case you need the home repairs or the vacation, or the unexpected emergency, you've got the, the sequence of returns risk.

00;31;38;26 - 00;32;06;03
Mark Lyons
And we saw that, you know, very clearly demonstrated by the person in retired 1969 versus 1971. You got to deal with taxes. You've got to deal with inflation. You also want to have these things that you're concerned about, a comfortable retirement for a surviving spouse, final expenses, the legacy for the children and grandchildren is always important to a lot of people.

00;32;06;05 - 00;32;36;00
Mark Lyons
And then using life insurance to solve all those problems. One thing I just wanted to be to point out to is the, I think in your example, that you had, you had the, the $250,000, being put into the life insurance policy. You were pulling out $123,000 for a six year period. So that's a that's a great return on that money to me.

00;32;36;00 - 00;32;52;14
Mark Lyons
And it's and it's tax free. And then you still had the $750,000 benefit for long term care because of the long term care right. Or on the policy regardless of of whether you're pulling out the withdrawals. Is that correct?

00;32;52;16 - 00;32;54;07
Martin Smith
That's a little trickier question.

00;32;54;07 - 00;32;56;24
Mark Lyons
So I'm I'm sure it was.

00;32;56;26 - 00;33;25;18
Martin Smith
So it depends on how the policy was designed. So, if it if it has an increasing death benefit or it hits corridor and pushes the, the death benefit above, the initial in that case, $750,000, even withdrawal down to, you know, take withdrawals or loans or whatever distributions from your policy basically down to the 750. And then that 750 would still be, that would still be the, the $700,000 benefit for long term care.

00;33;25;25 - 00;33;51;05
Martin Smith
If that death benefit doesn't get pushed up, if it's a level death benefit type design, then unfortunately that's not going to be the case. I shouldn't say unfortunately. I mean, it's it's it's for one or the other. Or it can be it can be a combination of the both. But you're not you wouldn't be able to if it only had a $700,000 level death benefit, you wouldn't be able to take 600, $700,000 worth of cash value out and still have, that, that LTC pool.

00;33;51;05 - 00;34;01;01
Martin Smith
So kind of depends again, on the design, a lot of flexibility. There and again, if that is something that that they wanted to kind of have best of both worlds, we can you can design it that way.

00;34;01;08 - 00;34;08;12
Mark Lyons
But but the team at John Hancock will help our agents and advisors and our team through that process.

00;34;08;12 - 00;34;25;22
Martin Smith
Absolutely, absolutely. And that's a great point. One thing I forgot to mention is we do have a customized client presentation that goes right on the front of the illustration. It's called the retirement income backstop. Goes on the client. It's client friendly and it's part of the illustration, and walks them through this, you know, all the risks that they're going to face.

00;34;25;24 - 00;34;37;13
Martin Smith
Both, you know, graphically, textually, numerically, it's going to break it all down for them in a client friendly manner. And it's a really it's kind of an awesome presentation that the tax. Right. On to the, the basic illustration.

00;34;37;15 - 00;35;06;17
Mark Lyons
So I mean that that kind of really leads into my, my next question for you, with all this information that you provided, and it's a, it's a great, planning process, I was going to ask you about the tools that are available to help agents and advisors through that process. And you've kind of I think you've you've really laid out one.

00;35;06;17 - 00;35;27;16
Mark Lyons
It's this, it's this, this beginning section on the illustration that shows how all these risks are addressed. Do you have a, like a, tool that you use, you know, before the illustration gets drafted, whether the advisors can use with their clients.

00;35;27;19 - 00;35;49;19
Martin Smith
Yeah, absolutely. So, you know, we have, you know, basic marketing materials, or presentation pieces. Right? So, we had client friendly materials on their retirement bags out there. You can provide a client, but, you know, before the before we even put in any, you know, pen the paper or, you know, put the numbers together. They can, you know, read through this, the client, the client guide, and it'll identify the risk to them.

00;35;49;21 - 00;36;09;15
Martin Smith
And, you know, maybe that's a good kind of starting point for them to say, you know, this is a this is a risk that I'm concerned about. Maybe not so much. This one, but maybe this one, you know, I'm concerned about as well. And then you bring me to bring that information, you know, to you, and then you can, you know, work with, your SMS team or my, you know, anybody over here at the Advanced Markets team to help, you know, customize, customize that presentation.

00;36;09;15 - 00;36;12;21
Martin Smith
We also have the agent agent materials on the concept as well.

00;36;12;24 - 00;36;38;04
Mark Lyons
So, I think what would be the the best course of action, for us with the the folks that are on the, on the call would be to provide some of those, those tools directly. And so they don't have to go searching for them and then we'll make sure that, we'll make sure that they have, the information on if they wanted to, to find those tools.

00;36;38;12 - 00;37;11;26
Mark Lyons
How do they get to the John Hancock website? You know, the you can access a lot of this stuff, through the, through the SMS, website. And I think that would be, that would be very helpful. And so I think probably now we want to move on to, to Jason's presentation. So, Jason, if you want to, you know, start, sharing your slides and then, run us through the, the longevity preparedness index.

00;37;11;28 - 00;37;20;22
Jason Mueller
Sounds great. Martin, I don't know if you're able to stop sharing.

00;37;20;24 - 00;37;22;02
Martin Smith
But there we go.

00;37;22;05 - 00;37;35;21
Jason Mueller
All right. Let's take me just a second.

00;37;35;24 - 00;37;38;09
Jason Mueller
Mark. How's that?

00;37;38;11 - 00;37;40;19
Mark Lyons
We're not seeing anything quite yet.

00;37;40;21 - 00;37;43;18
Jason Mueller
All right, I can fix that.

00;37;43;20 - 00;37;47;24
Mark Lyons
And now we're starting to see things.

00;37;47;27 - 00;37;52;25
Jason Mueller
All right, let me swap that. And there you go.

00;37;52;28 - 00;37;53;23
Mark Lyons
You got it.

00;37;53;26 - 00;38;23;00
Jason Mueller
Awesome, awesome. Well, hey, thank you so much, Martin. And Mark. But, I love that retirement income backstop presentation. You know, I did my, Well, you're all probably familiar with the American College of Financial Services. Clu, CHC designation. I did my resp. Retirement income certified professional designation about five years ago, and it was eye opening, but it was eye opening.

00;38;23;05 - 00;39;02;08
Jason Mueller
It hit on all of the same themes that Martin just talked about. And, I frankly just they talked about monetizing your mortality and using insurance, using insurance not as an expense, but using insurance to actually drive, more retirement income and greater likelihood of success. So I was ashamed to admit it that at the time I've been in this industry for over 20 years, and I just don't think I fully appreciated the impact that, whether it's life insurance or long term care insurance or both can have on someone's retirement income plan in both improving the results and improving the likelihood of their, their success.

00;39;02;08 - 00;39;04;20
Jason Mueller
So, big fan of retirement.

00;39;04;23 - 00;39;28;13
Mark Lyons
And I think you made a good point about, you know, not looking at as light at life insurance as an expense because we all of it all have a tendency to, to to do that. And, you know, there's a there's a lot of, agents and advisors out there that also look as look at life insurance as an expense.

00;39;28;16 - 00;39;35;14
Mark Lyons
And, you know, sometimes it's that you should look at it much differently, as you say.

00;39;35;17 - 00;39;53;06
Jason Mueller
Yeah, I had a much greater appreciation. And, I'm sorry it took me 20 years to, to get there, but, it was a great exercise to go through. And the great news is you don't have to do that. You just call this a mess. And they'll get Martin on the phone. So, Okay, I want to spend just a little bit of time.

00;39;53;14 - 00;40;14;10
Jason Mueller
We've had some big announcements in the last couple of weeks. I must get to it in just a minute. The longevity preparedness index is a tool. It's a, it is a, diagnostic tool that you can use both for yourself and for your clients. We're going to talk about that in just a minute. But we've had some big announcements in the last couple of weeks.

00;40;14;12 - 00;40;36;07
Jason Mueller
We mentioned the longer, healthier, better symposium that we were at a couple of weeks ago. And so there's quite a bit of news that came out of that. You guys hopefully know. John Hancock has been investing in vitality and healthspan, helping people live longer, healthier, better lives for for the last decade. And you know, we're not, you know, no bones about it.

00;40;36;07 - 00;40;59;18
Jason Mueller
If we can help people live a little healthier, live a little longer, avoid chronic disease. If we make money, we're in the business of making money to. And by doing that, we we, you know, pay that death claim. Five years later, it's five years more that they able to enjoy with their grandkids. And we give a lot of that back to consumers and reward them for taking those little steps.

00;40;59;21 - 00;41;22;04
Jason Mueller
So, hopefully you've seen some of these announcements of things that we do in the Vitality Program. One of the the big areas that we've focused on is, cancer. Cancer is the number one killer around the world. And so cancer has been really a pillar, helping people identify cancer early, has been a pillar in the vitality program.

00;41;22;04 - 00;41;38;00
Jason Mueller
And so we do things like offering the Gallery multi Cancer early detection test. We offer that to to policy owners and insureds every year. And so that's been a big one for the vitality program and how it's evolved over the last decade. Yeah.

00;41;38;00 - 00;42;01;25
Mark Lyons
So and and and a lot of folks on the on the call may not be familiar with the Grail test. If you, if you just back up one slide. You know, and you can see the, the they're offering this as a benefit of the, of the vitality program, having been somebody that's actually taking the taking the test twice.

00;42;01;28 - 00;42;32;16
Mark Lyons
It really gives you peace of mind when it comes back, as negative and, you know, just just so you know, it, I mean, it's it's testing whether or not you have cancer. And, you know, for example, they can detect, pancreatic cancer in stage one, and that's almost never the case. So the test is able to see the, the cancer cells like shedding in your bloodstream.

00;42;32;16 - 00;42;49;02
Mark Lyons
And so that's how it finds its and it can pinpoint the cancer and say, you know, it's here and it is so small that the doctors actually have a hard time finding it when it comes to treating it. So it's it's just fantastic.

00;42;49;05 - 00;43;16;21
Jason Mueller
Yeah. I've done it twice as well. And so we, we invest very substantially in this program that, that, that gallery can't multi cancer early detection test. It's about $965 a year. There is so much value for us as an insurance carrier and helping customers identify cancer early. We subsidize that test fully. On policies a half million and up and we pay for half on and policies below 500,000.

00;43;16;24 - 00;43;37;26
Jason Mueller
So we we invest considerably in it. So cancer has been really a pillar of the program, since the start. We really do believe as a life insurance, a long term care insurance company. We are in a great position to, to help people live longer, healthier, better lives. And so what you're going to start seeing from us are investments in, cardiac.

00;43;37;28 - 00;43;58;11
Jason Mueller
And so cardiac health is, is very is the number heart disease is the number one cause of death in the United, the United States. This is the next area of focus for the vitality program. So you're going to continue to see announcements coming out and how we're enhancing cardiac support in the in as part of the vitality program.

00;43;58;13 - 00;44;23;20
Jason Mueller
Some of the, initial steps that we're taking here, where we just started offering a discount on automated external defibrillators. So this is brand new. I'm not sure we even have a flier on this yet. But go rescue people can have these in their homes or in their office. And so we're subsidizing the purchase of these, whether it's new or pre-owned.

00;44;23;22 - 00;44;45;01
Jason Mueller
Additionally, we already have things like an Apple Watch for the program. People can get a new Apple Watch every couple of years. Other wearables that are available to help people detect irregular heart rhythms, heart heart rate patterns, things that they can catch early and go talk to their doctor about.

00;44;45;04 - 00;45;01;25
Jason Mueller
The other new one that we just added is a discount on Garmin blood pressure monitors. So these are our first steps, but you are going to continue to see cardiac evolve as a pillar of the vitality program. And these are our first steps in that program.

00;45;01;27 - 00;45;27;25
Jason Mueller
Skip ahead a little bit here. Okay. So with as much emphasis as we've had on Healthspan, the next step, one of the partnerships that we've had is with, the MIT age lab. You guys all know MIT. They've spent a lot of time studying, longevity and how aging societies can live together, work together, get around, and function as an aging society.

00;45;27;28 - 00;46;03;03
Jason Mueller
And so we've developed a longevity preparedness index to help clients with answering the right questions. And what you'll note here on this slide, living to age 80, 90, 100 is relatively new. Now this slide goes back to 1900. But if we took it back 10,000 years, if we took it back 10,000 years, the average life expectancy has been right around 25 years, 25 years old for the majority of that living to age 80, 90, 100 is just a blink of an eye in, in, in history.

00;46;03;05 - 00;46;36;13
Jason Mueller
And so everyone's grappling with how can they how can they live their best life, with new longevity expectations. So by 2050, population of adults over age 60 will double the fastest growing cohort. Today as adults over age 85. We do have this issue. And John Hancock is trying to address the difference between Healthspan and lifespan. No one wants to spend the last decade of their life wondering if it's nap time and if they took their medications yet.

00;46;36;15 - 00;47;03;13
Jason Mueller
And so that's what vitality is intended to do to help them avoid chronic disease and live longer, healthier, better. These are conversations that clients are having today already. Longevity right now is a $7 trillion industry. And in just a few years, by 2029, it's near about 9.8 trillion, nearly a $10 trillion industry. So consumers are talking about longevity.

00;47;03;13 - 00;47;30;10
Jason Mueller
They're talking about health span. They're spending money on it. And as an advisor, it's an opportunity for you as well to to be a valuable resource. So with lifespans changing, what else needs to change? Well, many advisors, nearly 60% are not having these conversations, are not having a longevity conversation at all, with their with their, with their customers.

00;47;30;13 - 00;47;51;29
Jason Mueller
And so there's an opportunity just to, have these conversations and make people aware. And so new conversations, new solutions from carriers like John Hancock that are invested in this space. And then it allows you to have broader, deeper relationships with your clients and a greater sense of purpose. Give them a greater sense of purpose in their longevity plan.

00;47;52;01 - 00;48;14;05
Jason Mueller
So, MIT a fantastic partner. We've worked with The Age Lab for years, but this is really, a new partnership. We have a five year commitment that we're investing in this relationship, with the academics and the researchers at the MIT lab to really study, you know, how can society live longer, healthier, better lives? And what does that mean?

00;48;14;06 - 00;48;43;13
Jason Mueller
What does that having a longevity plan even mean? And so, we they surveyed over 1300 U.S. adults. It was a fairly extensive survey, and they focused on eight different domains. And I'll just mention typically when I ask advisors, how do you talk about longevity with your customers? They usually are focused on health and wealth. What's your retirement number?

00;48;43;18 - 00;49;03;02
Jason Mueller
Is, a common answer that we hear. Or, you know, what's your life expectancy or how long do you expect to be able to do the things you want to do? Health and wealth are really the two bookends in this conversation, but there's six other domains that people don't spend a lot of time talking about because they don't know what questions to ask.

00;49;03;05 - 00;49;29;08
Jason Mueller
What should they be doing right now? So overall, the LP score, it's not a grade. You know, the overall score was a 60 out of 100. That is, that's not a d-minus. You know, don't don't look at it as a grade. This really is a diagnostic tool to identify, where are the opportunities for us to have some additional conversation and, address questions.

00;49;29;11 - 00;50;04;08
Jason Mueller
When you break them out, women generally scored the highest in things like social connection and community. But overall care plan really jumped out is the one that really, had the most room for improvement. You can. So if everyone grabs their phones or Johnstown, this website, the, it was two weeks ago at the longer, healthier, better symposium, we announced that this is now available for you to use, both for yourself, but then also to send to your clients.

00;50;04;11 - 00;50;31;09
Jason Mueller
So send your clients this tool in advance of any annual review. You have an annual review of the next week with a couple you've been working with for the long time. Send them this link. It takes them ten minutes. Ask them to go through it separately. The the husband and wife do it separately. See how they answer and see what see what their answers come back with and how different they are.

00;50;31;12 - 00;51;07;10
Jason Mueller
This will give them some idea of where they stack up relative to how others have responded. But then importantly, and I especially like this, this will give them for each of these domains. Here are the five things that you can do right now okay, so it's giving them specific action items that they can talk about between themselves or with their advisors to say, you know, well, what do we need to talk about, realize, understand that everyone, not everyone, is going to be focused on all eight domains.

00;51;07;13 - 00;51;32;04
Jason Mueller
If you ask a 45 year old what their care plan is, they're going to tune you out immediately. But if you ask them, you know, as an adult child who has parents in retirement, what's your parent's care plan? And so all all eight domains, it might be retirees, pre retirees or adult children. There you go. It gets the conversation going.

00;51;32;04 - 00;51;58;17
Jason Mueller
It gets them thinking. But it can also lead to sales ideas that you might not have thought of. So you'll have parents that maybe rather than gifting and just writing a check to their kids or grandkids, they think about buying an asset based long term care policy on their kids. Hey, I know you guys are fun. You're saving as much as you can for retirement planning rather than us just writing you a check.

00;51;58;19 - 00;52;19;18
Jason Mueller
John Hancock has a great, you know, life care product for asset based long term care. And we've had parents fund that on their children. It goes the other way too though, you know, ask an adult child what assets for your parent's assets. Which ones are you going to liquidate when you need to pay your parents for your parent's care plan?

00;52;19;21 - 00;52;40;11
Jason Mueller
And when they start thinking about who's going to pay the bill for their parent's care plan, it can lead to children buying long term care insurance on their parents. So it creates a lot of conversations, gets people thinking and leads to different sales ideas. So with Mark, with that, I'll wrap that up. I'll leave the slide up for just a second.

00;52;40;11 - 00;52;44;19
Jason Mueller
If people are looking for the website or want to grab the phones.

00;52;44;21 - 00;53;14;01
Mark Lyons
Oh no, that was great. Jason. I, you know, I, I really commend, John Hancock for for one, you know, leaning into this longevity, idea. And the and just creating the preparedness index, I, I think it's a, it's a, it's a fascinating tool. And, for advisors, I mean, it it really just kickstarted a lot of conversations, that they can have with their clients.

00;53;14;01 - 00;53;27;07
Mark Lyons
And, you know, just the fact that you get an individual score and, you know, it says here that here are five things that you can start doing now. It really does. You know.

00;53;27;09 - 00;53;56;13
Mark Lyons
It keeps them, the agents and advisors, from having the hesitation to bring it up because they have something at the end to say, these are the things that we recommend, you know, even if the things that, you know, Hancock recommends. So I think that's, that that's great. For everybody on the call. You know, if you want to know more, please reach out to your, sales director, at SMS, you can you can reach out to me.

00;53;56;15 - 00;54;19;03
Mark Lyons
We you can go to the website senior market sales.com and ask to get contracted. And then we'll, you know, help to put you in touch with, Jason or Martin. Jason, you've been very, very helpful on, you know, some of the difficult cases that we've had to, get through underwriting. And I and I appreciate that that greatly.

00;54;19;06 - 00;54;45;01
Mark Lyons
We'll be sending out some, follow up materials regarding, like, a sample illustration, some of the marketing tools. You'll be able to find a webinar and a link, on our, website. That's where we store all the, the life webinars that we're able to record. And this is one that we're recording and will be available for storage.

00;54;45;04 - 00;55;09;04
Mark Lyons
Just check to make sure there's no other questions here. I think I answered the one question. But thank you guys. Really appreciate it. Thank you for all you do. And thank you for, all John Hancock does. And this concludes the webinar. I hope, everybody on the call will join us in May, for another life insurance webinar from Smart Financial Solutions.

00;55;09;07 - 00;55;10;10
Mark Lyons
Thank you.

00;55;10;13 - 00;55;11;11
Jason Mueller
Thank you, thank you.