This month, Jay talks to Ramona Neal, CLU®, ChFC®, CLTC®, REBC®, President, Living Benefit Review, LLC. The pair talk about Ramona's unique path to the life insurance industry, her new entrepreneurial endeavor, Chronic Illness and Long-Term Care riders and, of course, restaurants.
Jay: We have so much to cover, Ramona, and I promise to fit it all in. First, you’re amazing. Living Benefit Review is a success both in terms of customer reach and revenue. Congratulations! You spotted a need in the life insurance industry for long-term care education and impartial, competitive analysis and acted on it. Before we dive in though, let’s first start with your telling us about your unique journey which led you to the insurance industry, which I find fascinating.
RAMONA: Thanks Jay. I’ve been reading your interviews each month and was happy when you called to ask if I would participate!
I ended up in insurance by chance and it was only supposed to be temporary. After graduating from OSU, I was hired as a Child Welfare Investigator for the county. Although I loved my work, I was never a welcome guest entering homes and there were dangers. One day, I received an allegation that a mom had held a gun to her teen daughter’s head for having left a spoon in the sink. I expected it was a false allegation. But, upon interviewing “Rhonda” at school, she said it was true. Her mom was a drug addict. The day stopped. With authority from my boss, Rhonda was immediately held. I then petitioned for temporary custody which was granted.
However, there was still a problem - two younger siblings remained in the home. Around 8:00 pm that evening, while 4 months pregnant, I waited in my car, in the projects, for the Columbus police to arrive. My doors were locked. When the policeman arrived, I got out of my car and prepared to enter. He told me, “No” and explained he couldn’t enter without back-up.
After the second policeman arrived, we were greeted by an infuriated mother. They held her at bay while I assessed the children. They were bruised, which may have been from abuse, so I removed them from the home. While I was doing so, she threatened to shoot me. Very early the following morning, as a precaution, I called the courthouse to give the security guards a description of her. It was in that moment, while on hold, I made the decision it was time for me to temporarily leave social work until my son was born. I called my friend, Janine Moore, who was a manager at Nationwide Insurance. I was hired 30 years ago and, today, I am still passionate about life insurance.
JAY: I’m doing my best not to jump to a list of questions about LTC or Chronic Illness Riders. We will get there. This is your second year of running Living Benefit Review, a company you started by first deciding to leave the relative comfort of your former life insurance employer of 28 years. I’m not sure many would take such a risk. You are in such a niche market which has resulted in leading insurers subscribing to your services, along with top producing firms and advisors. Tell us about your family, military background, and your path to becoming an entrepreneur?
RAMONA: Yes, the risks I’ve taken are paying off handsomely. Interestingly, I attribute the privilege of being able to take the risks directly to my upbringing. I was born in Germany in
1967 to a bi-racial couple. My African American father was born in 1922 and his
experience in America was gut wrenchingly inferior to mine. He grew up poor with few avenues to success except the military. He was both a WWII and Vietnam veteran. My mother is German and was born in 1940 during WW II. She grew up in a time of food shortages and suffered from tuberculosis. In my family, we learned to always save first and to do without.
Since I wanted to go to college, I joined the Ohio Air National Guard, where I was awarded Airman of the year and was one of two women to be awarded the Air Force Achievement
Medal from my unit. My parents instilled in us that fancy cars and name brand clothes were
exclusively for those that could afford it. One day after I returned home from work, my
mother had prepared dinner for my boys. She was practically force-feeding one as he cried. I said, “Mom, why do you always make them finish it all?” She scolded me and replied, “I have to fatten him up for the winter.” Historical context is everything!
As many times as I rolled my eyes at my parents, in the end, more of them rubbed off on me than I planned and I am grateful for it. The values they instilled in me, allowed me to save and invest in real estate so that I could afford to retire early. I went without many things, for many years, so that I could be here in this moment. In my second year as an entrepreneur, I’m able to match the same income that had taken me 28 years to earn in corporate America. Quite a remarkable blessing for a black girl - if you consider I launched my business in the middle of a pandemic, in a male-dominated industry.
JAY: When we spoke a few weeks ago, you asked me what I thought was the top trend or product innovation of the past 15 years in the life insurance industry. I would have guessed premium financing and/or Indexed Universal Life would be the answer. I wasn’t even close, was I? What is the correct answer and what are some of the statistics?
RAMONA: The #1 trend in the life insurance industry in the last 15 years has been the sale of combination products: LTC-Life insurance solutions - LTC riders, Hybrid-Linked Benefit products, and Chronic Illness Riders. These riders have transcended all product categories and can be found on whole life, IUL, VUL, GUL, UL and sometimes term. They have become an integral part of the sales process regardless of the sales application - accumulation, protection or guarantees.
Per LIMRA, for year ending 2019, 30% of total individual life premium had some sort of LTC solution. In 2020 though, during the pandemic, combination sales by premium were down 23%. To be fair though, most insurers restricted the sale to older ages which have traditionally been their target market, especially for Hybrid products.
In short, 15 years ago, there were only a handful of insurers that offered these solutions. Today, you would be hard-pressed to find a product that didn’t offer one of these riders. In fact, some insurers offer up to four solutions, sometimes with two or three riders available on one product. The challenge is understanding, as a salesperson, what you are selling and adequately representing the benefits.
JAY: In my view, there is a growing amount of confusion about what is being purchased when it comes to Chronic Illness riders, particularly on what the benefit will be. Explain the differences in Chronic Illness variations and what, in your opinion, can be done to help the consumer?
RAMONA: Today about 80% of the Chronic Illness riders sold have no charge until acceleration. They are appealing to advisors since they are automatically included with no underwriting. No charge until acceleration typically means that both the charge and benefit amount are determined at claim time. As a result, only a fraction of the death benefit may be eligible for acceleration.
How much exactly is eligible can be difficult to determine. In terms of consumer advocacy, insurers could implement best practices and standardizations in illustration uniformity and disclosure, along with fair and balanced examples in marketing literature. Not doing so makes comparing these riders like the Wild West, leaving advisors stuck, comparing apples to oranges. At Living Benefit Review, we help to educate how much death benefit can be accelerated. From an advisor perspective, it is your responsibility to know what you are selling. And, if you don’t know what you are selling, then how can your clients know what they are buying?
Advisors will be faced with the terminology of a charge at acceleration, or an up-front charge and it is critical the difference is understood.
Is the type of Chronic Illness Rider being sold with no charge until acceleration? The Discounted Method is most popular where the charge is determined at the time of claim. Logically, since the charge is unknown until the time of claim, it stands to reason that the actual chronic illness benefit amount is also unknown until the time of claim. For this variation, a fraction of the death benefit can be accelerated such as (a) $30k out of $300k, or (b) more, or (c) less. The amount eligible to be accelerated depends on various factors such as age, life expectancy, severity of condition, gender, future premiums, cash value, permanent or term product, and interest rate. Typically, these riders do not require underwriting and are often automatically issued with the policy up to a certain age/rating.
In a Chronic Illness rider with up-front charges, you will find ongoing charges deducted each month from the policy’s cash value or off of every premium for whole life. Here, the entire death benefit can be accelerated - such as $300k from the above example. These riders require separate underwriting based on morbidity just as LTC riders do.
JAY: I’m convinced that there is a role living benefit riders can play in estate planning. How would you incorporate these riders, especially when an irrevocable trust that owns the policy is involved?
RAMONA: You are correct. As an example, with proper planning, LTC riders can be used in estate planning with an ILIT. In general, you will hear carriers with Indemnity solutions promote their designs, since the benefit is paid directly to the trust and can be structured in a manner so that there is no incidence of ownership. Whereas, with Reimbursement designs, when the benefit is paid directly to the care provider for the benefit of the insured, there is a link to the insured risking the policy’s death benefit being includable in their estate and destroying the original intent of the trust.
Alternatively, you may hear carriers with Reimbursement designs promote that LTC benefits paid to the trust instead of the care provider should maintain the integrity of the trust, similar to an Indemnity rider, provided the insured understands that there is no direct access to the money for LTC purposes. They represent that LTC funds may be used to repay trust beneficiaries for expenses paid on behalf of the insured - assuming the trustee can make current distributions under the trust terms - or may be lent to the insured if the trust generally doesn’t prohibit such loans.
JAY: You and I first met 22 years ago when we both worked at Nationwide Financial in Columbus, OH. Since that time, when it comes to diversity and inclusion, I sometimes think our industry has made some advances and other times, I feel we are lagging behind. My experiences as a member of the LGBTQ+ community have been different from yours as both a woman and an African American. I’d love to hear your thoughts on where we stand as an industry and how we can do better. Plus, I know you’ve had your fair share of awkward situations throughout your career.
RAMONA: I think the insurance industry has made great progress for women and for African Americans. Anecdotally, it feels to me like more progress has been made in the last three years than the previous 30. But now that we are here, let’s celebrate! Consider how many female CEO’s we now have: John Hancock, Alliance, Prudential Financial, Jackson National, Ohio National, Penn Mutual, Thrivent, Symetra and Lincoln Financial!
The BLM movement also forced insurers to take a long, hard, look in the mirror - their org charts! Suddenly, we saw insurers highlighting their African American leaders, announcing new promotions, and putting out more diverse advertisements. I think as companies are pressured to make detailed disclosures on their racial, ethnic, and gender makeup, we will continue to see more advancements.
In terms of awkward moments, every woman has her story to tell – regardless of color. Before I tell you mine, let me first share this… Years ago, I was due in court on a custody matter and wanted to enter pictures into evidence that were crucial to my case. I was told if I arrived early, I could make color copies. Between hearings, the clerk walked me to the back toward the judge’s chambers. I opened the door to a large bustling office with people hurrying about. I was intimidated. I scanned the room looking for the least important person. The men were all wearing suits and there was one woman seated in jeans.
I approached her respectfully, and said, “Ma’am, can you please direct me to someone who can help me make copies?” She said, “I can,” and took the photos out of my hand as I followed her to the copy machine. She looked at each photo as she copied it and then returned them. I humbly thanked her. As we waited to be called, I pondered how my case had not been going well. My ex-husband’s attorney was from a prominent law firm with one brother as a politician and the other a judge.
As the doors to the court room swung open, I looked up. The judge was the unimportant woman in jeans who had made my copies. After my attorney made the motion to introduce the pictures into evidence, opposing counsel objected. Curiously, the judge called all four of us up to the bench. My ex-husband’s attorney cited prejudicial and inadmissible. The judge gave her ruling - the pictures could not be entered into evidence, and we lost the motion. But I won the court case.
Even though every woman has her own unique story, we can all testify to certain shared experiences. While I was working as an Advanced Sales Consultant, one of the attorneys had a conflict and couldn’t make a broker meeting in California to present on estate planning and I was asked to fill in. I arrived early to set up. An older white male approached me acknowledging my Nationwide badge. He asked if I could help distribute the handouts and I gladly obliged. He then returned with a second stack.
Meanwhile, as men entered, he shook their hands, engaged in small talk, laughter, and back pats. Then I noticed, even as young men entered who were with my company and more junior to me, it was the same. Their male privilege afforded them the chance to network. He then returned to me for the 3rd time with one last handout. I smiled and kindly rejected them, saying that I needed to get situated because I was the keynote speaker. He profusely apologized and asked, “Why didn’t you say so?”
Of course, the question should have been, why didn’t he include me in the set of possibilities of being the speaker? It’s called diversity and inclusion for a reason. The lesson is, stop pre-judging and open our minds to the possibility that women or African Americans could be in key roles. Can you imagine if I had been rude to the unimportant woman in jeans? What about you, are you unintentionally offending people who could be helping you and your business?
In summarizing my experience in the life insurance industry, my one consistent theme has been to never give up. If the front door of opportunity was locked to me, I simply went to the back door. If the back door was locked, I would climb in the window. If the window was locked too, and there was literally no opportunity for advancement, then I would move to another house, or department, where there were ample opportunities.
There has been a movement in terms of diversity in our industry. I am optimistic that this will continue, and we will see opportunities based on merit. But my story is, no matter your gender or your color, if you find yourself standing up against a Goliath of seemingly impossible odds, never give up. And, even in times when a “judge” has ruled against you, and it appears that you are losing, you can still win. You just need to adjust your path for victory.
JAY: As an entrepreneur in a startup business, I expect you are busy. How do you spend your free time?
RAMONA: We’ve all heard, “A mother can take care of 10 children. But 10 children can’t take care of one mother”. I happily enjoy spending time with my mother who is still healthy and thriving. I also adore working with the Children’s Ministry at a small inner-city church where I serve as the Finance Secretary. We all work hard every day but when a child says, “thank you”, it truly is the most meaningful reward.
JAY: Because Living Benefits Review is a subscription service which brings tremendous value, how can our readers contact you to learn more?
RAMONA: They can visit our website or email me at livingbenefitreview@gmail.com. We provide unbiased, impartial, insights and comparisons on LTC-life insurance solutions. Hybrid-Linked Benefit products, LTC Riders, Chronic Illness and Critical Illness riders.
Also, for those that have a CLTC designation, or subscribe to Bobby Samuelson’s services, you are eligible for a 20% discount so let me know this when reaching out.
JAY: When I lived in Columbus, my favorite restaurant was Cameron Mitchell’s Fish Market. However, when I returned in 2016, I discovered it was now a part of Landry’s Restaurant Group and the quality of the food and service had declined. What a waste! Fortunately, I have you to tell me, without naming a steakhouse or a steak dish, where I should eat during my next visit.
RAMONA: I’ve prepared for this question, Jay, with a lot of practice! My two favorite spots in Columbus are:
Zapatas Mexican Kitchen where I always order either the Revolutionary Nachos or a Shrimp Taco Salad; and,
Buca di Beppo Italian Restaurant where the Lasagna is amazing.
Since its inception, Life Insurance Strategies Group has solely focused on the individual high net worth life insurance market. We do not sell products. This allows us to offer unbiased, pragmatic advice. Visit us at www.lifeinsurancestrategiesgroup.com.