Obsolete password policies frustrate users. User friendly password policies actually increase security.

The National Institute of Standards and Technology (NIST) published new Digital Identity Guidelines this past June. The new guidelines address my pet peeves about the password policies you’ll find in most enterprises, on websites, and commercial software products.

Number one on my list is infuriating password complexity rules. You know the ones I’m talking about; “passwords must be at least 8 characters long and contain at least one special character (but not ^, #, -, or space), an upper case character and one number evenly divisible by 3”. And I have special love for password entry forms that let me enter a password and only then tell me their restrictions.

The new guidelines1 endorse pass phrases2. Here’s an example, “I’ve been juggling budgets since 1981!” That’s a thirty-eight character password that a user can actually remember and is more secure than a shorter password like Pa$$w0rd1. It also meets most complexity requirements, if you allow spaces!

The next irritant addressed is password expiration. That probably surprises you, right? Password expiration polices are so ingrained that their use is accepted without question. Technology and threats change. Password expiration policies are based on an obsolete threat model, incur support and productivity costs, and do little to mitigate risk. Here’s a short, authoritative article that gives more details; Time for Password Expiration to Die.

Finally, password entry fields should allow users to paste passwords in the field instead of forcing them to type the password in manually. NIST is implicitly endorsing the use of password managers. A trustworthy password manager is the only sensible way for users to use secure, separate passwords for all the services that are a part of their lives.

PCMag.com has a good review of the top password managers. I use 1Password, mainly because it has excellent support for the Apple ecosystem. I recommend LastPass to Windows users. By using a password manager, I only need to remember three pass phrases. The primary one is my domain password, the second is the master password for my password manager, the other is for the cloud service that contains my password vault in case I need to setup a new environment from scratch.

Each of my three pass phrases is over 50 characters long, but they are memorable phrases that I have no trouble recalling. And, since they don’t expire, my muscle memory allows me to type them in rapidly. The password manager will generate and remember long complex passwords for all the other sites and services and I can devote my shrinking hippocampus to better things.

It’s not often you can make life easier for your users and your systems more secure at the same time.

  1. The password section starts on page 13 of this document; https://doi.org/10.6028/NIST.SP.800-63b
  2. A passphrase is a memorized secret consisting of a sequence of words or other text that a claimant uses to authenticate their identity. A passphrase is similar to a password in usage, but is generally longer for added security.

Posted October 18, 2017 filed under Articles.

The life insurance industry is usually lagging and playing catch-up with technology. There are many reasons for the lag such as costs, compliance and adoption. The Life Brokerage Technology Committee (LBTC) has made it a priority to research and educate BGAs on emerging technologies. In the last two years, there have been some growing tech trends like accelerated underwriting, ePolicy Delivery, mobile apps for life insurance sales and marketing just to name a few. Today we will introduce you to two significant new technologies that are game changers!

You will first learn about Chatbots, which offer agents the ability to quote, field underwrite, get marketing information, and apply for insurance using plain conversation on a messaging app or voice assistant. We will then update you on Blockchain. In the last few years, you probably have come across a news story about Blockchain as it relates to Bitcoin, however Blockchain will affect the life insurance industry resulting in a monumental shift in the way sales, licensing, new business, underwriting, agent commissions and claims are processed. Blockchain is an industry disrupter; however, it will positively impact BGAs and agents.


What is a Chatbot?

A chatbot is an automated, artificial intelligence system/program that responds to speech or text input. It can be used to help you find answers, help you with tasks or organization, and it can even be used for entertainment. A simple example of this interaction is when you ask your phone’s AI about the weather. Rather than looking for the information online or through an app yourself, it will find the details and provide them to you immediately through speech and text. Chatbots are used on messaging apps and voice assistants. Text messaging, Facebook messenger, and Skype are some of the more popular messaging apps. Google Assistant and Microsoft Cortana are examples of voice assistants. Other popular ways people use chatbots are for news, creating a grocery list, personal finances, scheduling, and even friendship. Chatbots are used widely for customer support. Amazon Echo (Alexa) for example, is a voice assistant with a chatbot that does tasks you request and answers questions. The artificial intelligence in the chatbot learns how you ask for information and gets smarter the more you use it. Chatbots have personalities, designed so that the conversation experience drives more engagement. The learning curve is easy because there are over 1 billion users of Facebook messenger alone for example covering all age groups. Millennials are only interested in using chat to communicate and for getting their information. This means that more than likely agents are already engaging in chat with a messenger app for personal and business purposes.


How Will Agents Use a Chatbot to Sell Life Insurance?

When an agent runs a term insurance quote for example, they may use a mobile app or run it from a BGA’s website. If the agent needed to look up underwriting guidelines like height and weight, blood pressure, cholesterol, and tobacco use, or a malady like diabetes, then the agent would look for the information in the carrier’s underwriting guidelines in a PDF or use a field underwriting software program. The same thing applies for looking up information on a life product such as issue ages or conversion options. A chatbot is an agent’s one stop resource to have all the information he/she needs right at their fingertips.

Scenario: Agent opens-up a chatbot using a voice assistant on his/her smartphone. The agent says, “I need a quote for a 45 year old male nonsmoker for $500,000 preferred.” Instantly the annual and monthly premiums for 10, 15 and 20 year term pops up on the screen. The client tells the agent he has high blood pressure. The agent then says to the chatbot, “blood pressure is 120/90.” The voice assistant shows on the screen and verbally says, “For blood pressure 120/90 the risk class is standard plus.” The agent then says to the chatbot, “Change the risk class to standard plus.” A revised quote appears instantly on the screen.  The agent can then apply for the insurance submitting the business through a term ticket like ApplicInt’s ExpressComplete right from the same chatbot.

Impact Technologies Group, Inc., has a series of chatbots for insurance called InsureBotsTM . They are used for life insurance quoting, field underwriting, annuities, long term care, marketing and agent recruiting. There are reinsurers creating underwriting chatbots. Carriers are starting to develop internally their own chatbots for marketing. The P&C insurance world is exploding with chatbots using them as a claims advisor for example. Agents who sell insurance utilizing their website will see affordable solutions for a Web-bot that will quickly and easily educate the client answering common questions, providing media like YouTube videos, and then moving the client to a quote and a pathway to apply for insurance. The consumer experience will be much smoother and engaging using a chatbot, helping the agent generate more business.


What is Blockchain?

Blockchain is an algorithm and distributed data structure for managing electronic cash without a central administrator among people who know nothing about one another. Originally designed for the crypto-currency Bitcoin, the blockchain architecture was driven by a radical idea of a currency exchange system without any middleman, bank, country, or any other macro environmental factors.

In order to understand blockchain technology, it makes sense to first consider the “Internet.” It enabled a free, fast, and global exchange of information and ideas. The blockchain adds another dimension by making it possible to transfer and exchange value (and assets) without the involvement of intermediaries. Blockchain technology can also be used to store personal and other information in an accessible, but secure, environment.


How Does Blockchain Work?

Blockchain, also known as a Distributed Ledger Technology (DLT), was invented to support the Bitcoin cryptocurrency (Internet money). Bitcoin was motivated by an extreme rejection of government-guaranteed money and bank-controlled payments. The developer of Bitcoin, Satoshi Nakamoto, envisioned people spending money without friction, intermediaries, regulation or the need to know or trust other parties.


How Can Blockchain Impact the Life Insurance Industry?

Imagine a world in the insurance industry where life insurance agents don’t have segregated sales and marketing, product, underwriting, new business submissions, policy servicing, claims management, and commissions systems and departments to deal with on a consistent basis. They can access, track, and transact every facet of a life of a policy (case) from inception to service within block(s) of a chain securely.

The basic principle that blockchain provides is decentralized storage of the data. Currently, at an insurer, this data is stored on a centralized network. In many cases, there are multiple databases/departments that are managing these transactions between the agent/brokers, BGAs, and the carriers. At times, the information is either disjointed or incomplete regarding customers and their transactions. Blockchain solves this problem for the life insurance industry by aggregating all the transactional, static and changed information, as well as all the data. It is processed and stored decentralized, un-editable, unidentifiable and securely.

One of the more disruptive applications of blockchain is the development of “Smart Contracts” models. Smart contracts contain self-executing protocols that work with a blockchain to enforce the performance of a contract across all counterparties. This can help with automating the verification of coverage and streamline claim settlements to improve operational efficiency and hence minimize cost.

Here are some other great benefits of blockchain that will impact agents directly:

  • Fraud Reduction: With blockchain technology, tampered documents or false billings are almost impossible to process since the data is immutable and decentralized. This will also reduce the amount of erroneous claim payments.
  • Policy Purchase and Underwriting Process: Policy issue process can be designed via a blockchain to create a combination of data providers, health exchanges, and insurers. Underwriting process can be expedited by obtaining the required information from health exchanges and data providers to expedite the underwriting and new business process with minimal customer effort.
  • Management of Agent Contracts: Blockchain can be used to instantly verify agent licensing, contracts and setup a notification system to alert agents and issue commission checks when the policy is signed.

The impending future of the life insurance industry could strengthen through an intelligent adoption of blockchain. Large insurers have the predicted possibility to greatly benefit from the many applications in digital currencies, fraud solutions and smart contracts. But the process of implementing blockchain will come with necessary tweaks to the underwriting processes and structures of policies, as well as risk underwriting.  Essentially, Blockchain reduces premiums collected by large insurance companies by allowing for cheaper and more consumer oriented products to be developed. Ideally, cooperation between blockchain startups, carriers, brokers, reinsurers and other segments of the insurance industry would lead to optimal efficiency, but those segments will be subject to disruption and may not follow suit. LIMRA’s recent announcement that is has established an advisory council to explore opportunities in the life insurance and retirement sectors to use blockchain distributed ledger technology is a good sign. It is indicative of our industry seeking the practical and collaborative solutions to use the blockchain technology in the right manner.


References for Blockchain:

  1. Financial Times article; Technology: Banks seek the key to blockchain: https://www.ft.com/content/eb1f8256-7b4b-11e5-a1fe-567b37f80b64 – retrieved on August 24th, 2017.
  2. Cognizant; White Paper;  Blockchain: A Potential Game-Changer for Life Insurance: https://www.cognizant.com/whitepapers/blockchain-a-potential-game-changer-for-life-insurance-codex2484.pdf – retrieved on August 26th, 2017.
  3. Team Brella; White Paper: https://teambrella.com/WhitePaper.pdf – retrieved on Aug 20th, 2017.
  4. Online article: https://medium.com/startup-grind/3-reasons-why-the-blockchain-revolution-is-finally-becoming-a-reality-63bdd90c89e2 – retrieved on August 27th, 2017.

Author’s Bio

Ken Leibow
Senior vice president, Impact Technologies Group, Inc., has enjoyed a career spanning more than 29 years, with an extensive background in distribution technology and back office systems. He previously worked for Genworth Financial, Mutual of Omaha and as vice president of operations at Diversified Underwriters Services, Inc. As COO of Integrated Insurance Technologies, Leibow built the largest life insurance data exchange hub in the industry processing over 1,000,000 policies per year and 30 billion dollars of annuities. Innovation in quoting and illustration tools, CRMs, agency management systems, eApp platforms, and ePolicy delivery are some key initiatives implemented by Ken during his career. Leibow can be reached at Impact Technologies Group, Inc., 619 S. Cedar Street, Suite J, Charlotte, NC 28202. Telephone: 704-927-3234. Email: Ken.Leibow@impact-tech.com.

Adnan Raja
is director, Underwriting R&D at John Hancock Life Insurance Company. He has more than 18 years of experience in technology and project management combined with a Masters Degree and project management title designations PMP and SDRM. As vice president of Field Technology Solutions at National Financial Partners (NFP), Raja lead the creation and administration of key business technology systems for a national network of financial advisors. In late 2015, he joined John Hancock as a director of Underwriting Research and Innovation. Raja can be reached via telephone at: 617-572-5183. Email: araja@johnhancock.com. 

Posted October 17, 2017 filed under Articles, In The News.

by Gretchen K. Smith, CLU, ChFC

Less than 20% of retirees today have the traditional 3-legged stool, requiring some new strategies.

Good retirement income planning looks at all the resources a person has available for retirement, intending to utilize the available income efficiently and provide for the retirement lifestyle desired.

Traditionally, retirement planning revolved around the 3-legged stool concept with Social Security, a company pension and personal savings providing retirement income. Times have changed – less than 20% of future retirees can count on a pension.1

In this changing environment both Social Security retirement benefits and personal savings become even more important. Social Security maximization is the latest buzzword in financial planning, with nearly 10,000 baby boomers turning 65 each day.

Googling “Social Security maximization” returns thousands of hits from many sources, showing that it’s important to many: planners, financial institutions and future retirees. Changes in the ability to utilize maximization strategies in the recent Bipartisan Budget Act of 2015 has increased the need for planning.

When do retirees tend to start benefits? Studies show the two most popular ages are age 62 and Full Retirement Age (or FRA). In 2013, 36% of men and nearly 40% of women turning 62 claimed benefits.2 An additional one-third tend to claim between 65 and FRA. Only 4% of women and 2% of men in 2013 were age 70. According to this study, close to 90% claim at or before FRA. The trend to file early seems to be on the decline since 2005, but is still a significant proportion of retirees. Reasons vary, but the need to educate retirees on claiming ages and strategies remains.

A Typical Example

Let’s look at a typical married couple in their mid-50s. Bill is 55 and Maria is 54. Both work and have Social Security benefits at full retirement age of $2371 and $2000, per month. According to the life expectancy tables used by Social Security, Bill should live to 80 on average and Marie to age 83.

Using Social Security maximization software3, we enter their information. To get the maximum total benefits we find that Maria should file for benefits at age 66 and Bill should wait until age 70.4

But what if they live longer? Bill’s parents are both over 80 and healthy, and most of his relatives live into their mid-80s. Maria has several grandparents who lived to be 90. We can adjust their ages to 85 and 90. In that case, the software suggests that both wait until age 70 to maximize their potential benefits.

The difference between both starting Social Security at the earliest age (62) and waiting until age 70 is substantial, nearly one-half million in total benefits received over their lifetimes. Social Security planning is important to a retiree’s success in retirement.

Social Security is only one part of planning. Retirees also must consider their investments, the effect of taxes, and how to use all their resources together as a whole. A retirement cash flow plan must use resources effectively, not only Social Security but also assets, pensions and other incomes to provide a desired retirement lifestyle.

Let’s look at our retirees’ lifestyle requirements for income (Figure 15). Maria and Bill estimate $8000 a month for expenses in today’s dollars and inflation at 2.5%. They have an estimated $690,000 in various accounts with a 5% average rate of return before taxes. Bill and Maria each earn $95,000 a year and plan to retire at age 65. Putting this all together, we find they are reasonably well off, but will run out of money in their 80s with a shortfall in today’s dollars of close to $50,000 (present value calculated at 5%.)

Figure 1

We can optimize further (Figure 2). A good cash flow analysis considers cash flow, taxation and the order in which assets are utilized. We find that Bill and Maria can start benefits earlier, at Bill’s age 69 and Maria at 68. The calculation results suggest the optimal order to use assets, which in turn cuts the shortfall to just under $39,000, most of it occurring after Bill’s assumed death at 85.5

Figure 2

What if Maria lives longer, say to 95 or 100? We can measure the amounts needed at Bill’s death and find it is somewhere between $300,000 to over $1,000,000 depending on when Bill dies and how long the survivorship period lasts between deaths. Solving the survivorship needs is one way to solve the shortfall throughout their retirement.

Life insurance can provide the funds for the survivor’s cash needs. Total Social Security benefits will decrease after Bill dies, as well as pensions may cease or be reduced. The life insurance death benefit provides a source of funds for the surviving spouse, and may also provide additional income during the policy holder’s lifetime.

Since Bill is more likely to die first, we have selected a 10-pay whole life policy on Bill’s life, with surrenders and loans providing a tax-free6 annual income starting at age 65 of $32,000 a year. Ten annual premiums of $56,430 will be paid using some of the existing assets and salaries.7

Look at the results (Figure 35): assuming death at ages 85 and 90, the life insurance erases the shortfall and leaves over $300,000 to heirs at Maria’s death. If she lives longer, the deficit is smaller than without the life insurance. If Bill dies earlier, Maria’s survivorship needs are met.

Figure 3

If Maria dies before Bill, the policy has a substantial cash surrender value that Bill could use as needed to supplement his other income sources. Plus, they have turned some of their assets into a $32,000 a year supplemental income source and at the same time reduced overall lifestyle needs.Retirement income planning is a complicated and fluid process. Just maximizing Social Security is a start, but many other factors can affect cash flow. The type of asset used can produce different taxation, including what percent of Social Security benefits are subject to tax.

Originally published in Life Health Advisor:

  1. “From 1980 through 2008, the proportion of private wage and salary workers participating in DB pension plans fell from 38 percent to 20 percent (Bureau of Labor Statistics 2008; Department of Labor 2002).” Source: The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Incomes of Baby Boomers, United States Social Security Administration 2009
  2. Trends in Social Security Claiming, May 2013 by Alice H. Munnell and Anqi Chen, Center for Retirement Research at Boston College.
  3. Social Security Pro (SSPro) is a maximization software program offered by Impact Technologies Group, Inc. www.impact-tech.com
  4. Assumes an annual 2.5% Cost of Living adjustment, close to the historical average of 2.8% annually for benefits.
  5. The values in this case study were obtained by using Cash Flow Decisions, a retirement income software program offered by Impact Technologies Group, Inc. www.impact-tech.com
  6. Under current federal tax law, surrenders up to basis, then loan proceeds are not subject to income tax.
  7. Male age 55, non-smoker, sample whole life policy with dividends reinvested annually.

Posted February 3, 2016 filed under Articles.

New Intensity Grid Showing Social Security Cumulative BenefitsSocial Security Pro has a new Total Benefits Intensity Grid for clients too young to use ‘File Restricted’ and ‘File and Suspend’ strategies. The Bipartisan Budget Act eliminated the File and Suspend strategy for married individuals born after May 1, 1954 and eliminated ‘File and Suspend’ for any one born after May 1, 1950 and filing for benefits between now and May 1, 2016. For those individuals, Social Security Pro will continue to display its patented Social Security grid that indicates the best strategy for each age combination. However, for those not eligible for those strategies, Social Security Pro displays the new Total Benefits Intensity Grid.

The new Grid, similar to the previous one, calculates all the benefits for each age combination. The cell for each age combination indicates its relative value by showing darker green for the higher values and a lighter green for the lower values. Instantly, you and your clients will see the age combinations that will provide the greater incomes, and the ones that will not. The very highest age combination is shown with a star. Change any variable, and all values re-calculate and the resulting values are displayed.

The new graphic makes it easy to determine if a slight adjustment in filing ages will make a significant difference, or just a little. You and your clients will quickly see that it is not just a matter of the longer you wait the more you get. The differences may be tens or even hundreds of thousands dollars. This is a perfect beginning to the retirement planning process.

The new graph is just one part of the Impact’s entire update of Social Security related products. All changes for the new law that was signed into law November 2, were in place the morning of November 6. The products updated in addition to Social Security Pro, were Social Security Explorer, Social Security Lead Gen, Cash Flow Decisions, and Retirement Road Map.

Cash Flow Decisions, which contains a version of Social Security Pro within it, becomes even more valuable for incorporating Social Security claiming strategies into the total retirement plans of the clients. It optimizes Social Security, while considering taxation of the Social Security benefits and the other retirement income—including required minimum distributions from IRAs and 401(k) Plans, and it determines the best order of asset distributions considering all of these items. It also shows how the retirement income floor can be increased with annuity income, and that permanent life insurance is the best tool for protecting against longevity risks.

Using Take a free trial, start retirement planning by determining how and when to take Social Security benefits. Then using Cash Flow Decisions, coordinate all retirement income into the best retirement plan.

Posted November 19, 2015 filed under Articles.

The Bipartisan Budget Act of 2015 makes significant changes to Social Security planning. There are many articles that go into the details of the changes (this article from Michael Kitces for example), but the legislation most affects ‘restricted application’ and ‘file and suspend’ filing.

There are millions of Americans over the age of 62 who have not yet filed for Social Security benefits who can still take advantage of restricted applications. Those who will be age 66 by April 30th can still use file-and-suspend. And, anyone thinking of filing for benefits must consider when to file.

The changes for restricted applications apply to those who attain age 62 in any calendar year after 2015. Your clients who are at least 62 years of age by the end of 2015, will still be able to utilize a restricted application.

‘File and suspend’ however, is another story. The new legislation eliminates the most common application of the ‘file and suspend’ strategy unless your clients can take advantage of it within the next 180 days (the exact date for the expiration of the ‘file and suspend’ strategy is not yet available, but will be after April 30th 2016).

From a Congress that has been stalemated for years, this legislation came out of the blue and passed with unbelievable speed. We know the urgency you have to get proposals in your client’s hands that reflect these changes. Impact plans to have its software modified and deployed on Wednesday November 4th.

Posted November 3, 2015 filed under Announcement, Articles.

The loopholes Congress has targeted are the ‘file and suspend’ and ‘restricted application’ filing strategies. The changes for restricted applications will apply to those who attain age 62 in any calendar year after 2015. Thus, it appears that today’s retirees who are at least 62 years of age by the end of 2015, will still be able to utilize a restricted application. ‘File and suspend’ however is another story. The new legislation will eliminate the most common application of the ‘file and suspend’ strategy.

Impact has always been one of the first, usually the first, to revise its products to reflect changes to regulations and legislation. Not only do we quickly implement the changes needed, we also look for hidden opportunities to help you assist your clients.

Impact is immediately working on software changes that will reflect the legislation as it currently stands and we’ll be constantly monitoring any additional changes required as it moves through Congress. We’ll have further details when the final legislation becomes law.

Posted October 28, 2015 filed under Articles.

A Social Security claiming strategy is not complete unless Social Security benefits are considered within the context of the client’s other retirement cash flow. Cash Flow Decisions provides an easy, effective way to provide that context. Now, with the upcoming release of Cash Flow Decisions, advisors will have an effective tool to demonstrate life insurance as a valuable solution to survivorship needs in retirement as well as the role annuities play in providing security.

“I am always amazed by the brilliance of computer software designers. They can take the most complicated financial planning decisions and reduce them to a one-click — or one-swipe — tool. Social Security claiming decisions have benefitted greatly from such programs.”

— Mary Beth Franklin

That’s a quote from Mary Beth Franklin’s article, “Software evolving beyond Social Security maximization” in InvestmentNews. When the financial engineers at Impact first created their tools for Social Security maximization they immediately realized there was more work to be done. “We invented the best tools available for helping advisors analyze and present Social Security maximization strategies to their clients. Now we’re creating the best technologies to put Social Security in context,” says Heather Vaartjes, Impact’s COO. After over a year of research, design, and engineering, version one of Cash Flow Decisions was released in early August. Now, just two short months later Impact is preparing to release version two.

Often the biggest gap in a client’s retirement income will occur after a spouse dies. The gap is usually bigger the  longer the surviving spouse lives. That’s exactly what life insurance is designed for—to provide for survivors.  Yet, most advisors ignore the value of life insurance in retirement planning. Cash Flow Decisions not only shows the life insurance need to cover survivorship, it will also demonstrate how repositioning assets to acquire life insurance can provide income and survivorship protection.

Current subscribers to Subscribe to Cash Flow Decisions will receive the new release automatically.

Posted October 20, 2015 filed under Articles.