Ed Hinerman On Life Insurance

Get a refund on unused life insurance!

It’s always a good feeling for me when I do a project around the house and end up not needing everything I’ve purchased. Well anyway, it beats the feeling of coming up short and having to make another trip to the lumber yard or hardware store. At least this way when I make the trip I get my money back for the unused merchandise.

Return of premium term insurance does the same thing. If you don’t use it you get a refund. And since you can’t use part of your term insurance policy, it’s not a partial refund……you get the whole thing back. It’s better than a home project!

Return of premium term insurance may not be the right fit for everyone, but it is an option your independent life insurance agent should always throw on the table. It answers the most common objection to term insurance, that being that you have somehow wasted all that money if you outlive your term. That need to somehow avoid wasting money drives a lot of people to buy much more expenisve universal life or whole life policies just to ensure that the policy will outlive them. The downside to that idea is that then you have purchased a policy that is substantially more expensive and will likely outlive your need for the insurance.

Remember, term insurance is bought when we can determine the point at which we will no longer need the coverage. So, if I buy a $500,000 policy to cover the years when my child is growing up, once that child is grown and no longer dependent on me, do I want to continue to pay premiums on a permanent policy, or would I feel better about getting a refund on the term insurance I had but didn’t use. Worth thinking about!

Now, no games here. Return of premium term does cost more than straight term insurance. So, weigh the pros and cons. Crunch the numbers. There isn’t anything inherently wrong for paying for protection you don’t use. It’s peace of mind. If you can’t quite feel that peace, look at return of premium life insurance.

Add comment March 14th, 2007

Good news for private pilots about their life insurance!

The news from life insurance companies just keeps getting better when it comes to private pilots. More and more companies are softening their stance on the actual mortality risk that this group represents.

Of course airline pilots have enjoyed the best insurance quotes available for some time. What got them there? It’s their experience and training and an overall low mortality risk. What the life insurance underwriters are seeing more clearly now is that there are plenty of private pilots out there who have the experience and training, and fly enough hours to stay proficient, that they too should qualify for great life insurance rates, whether they need term insurance, universal life or whole life.

If you’re a private pilot looking for fair and affordable life insurance, seek out an independent life insurance agent with experience working with pilots. If they don’t ask about your ratings, total hours, annual hours and type of plane you fly, call another one because they don’t know what the underwriters will need to know.

Bottom line is the news for private pilots just keeps getting better, and it’s about time.

Add comment March 14th, 2007

Diabetes misdiagnosed by life insurance website

Go figure how a website can make it to the top of Google under the search “Life insurance for diabetics” and be completely uninformative and actually misleading.

They start off with statements like this, “Once a person is diagnosed with diabetes, life insurance policies sold within the United States can become unaffordable or unavailable. This is because life insurance policies are allowed by state and federal law to charge a premium based upon an applicant’s health status. In addition, a plan can choose to not provide a policy based upon an applicant’s health status. If a person with diabetes wants to purchase a life insurance policy, the best option is to search for life insurance sold under the laws of another country. Most life insurance salespeople with large firms can help find international underwriters who will sell this type of policy in the United States.”

WHAT AN ABSOLUTE LOAD OF GARBAGE!!! Most people with either type 1 or type 2 diabetes need look no further than a reputable independent life insurance agent right here in the US for fair and affordable life insurance quotes. Just like any health situation, whether diabetes, cancer, coronary artery disease, etc, the only issue that life insurance underwriters look at in the United States at is how well controlled the medical situation is.

It is not uncommon for diabetics who show good compliance with doctor’s recommendations, monitor their glucose and A1C readings, and carefully watch other risk factors such as build and hypertension, to get better than standard rates with many companies.

This top seeded website then offers a place to click to get “diabetes life insurance quotes” which takes you to a search engine where there is no information on how to correctly quote yourself as a diabetic. Apparently in whatever country they are from, one quote fits all. In the US that is called bait and switch.

If you are diabetic and looking for life insurance, steer clear of any website with “Spectrum” in their url. If they start out with blatant lies, you can assume it won’t get much better the deeper you dig.

1 comment March 14th, 2007

Retirement options and life insurance!

Most companies and government agencies offer options when you retire if you are married. Generally it goes something like this.

Option 1. Maximum payout. You can take $4000 a month on your retirement. It will remain at $4000 as long as you are alive. If you die and your spouse is still living the amount is cut down to $2000 a month and remains at $2000 for the rest of her life.

Option 2. Maximum survivor payout. You take $2800 per month and that remains level as long as either you or your spouse are alive.

The life insurance option. As long as you are in reasonabily good health, take Option 1 and draw the maximum retirement. It puts $1200 a month more in your pocket. Buy a $500,000, 20 year term policy. In this example let’s assume that will cost about $3000 a year, or $250 per month. If you die your spouses income is cut back to $2000 from your retirement plan, but she has $500,000 income tax free with which she can buy an annuity that will pay a lifetime income roughly equivelant to the $2000 a month lost by choosing Option 1.

Remember, the older you both get the less it will take to purchase the life time income for your spouse. So, you might want to consider $400,000 or term and $100,000 of universal life.

Just a thought. I will visit this with more detail in the future.

Add comment March 13th, 2007

Why can’t I buy as much life insurance as I can afford?

Life insurance companies use criteria such as financial justification and insurable interest to determine how much life insurance they will sell to an individual.

Financial justification simply keeps the amount of insurance in proportion to the actual financial loss. The idea is that life insurance is a tool to replace a loss, not create wealth where there previously was none. My best stab at an analogy would be if you could insure your 2000 Toyota Camry, not for it’s replacement value, but let’s say for $100,000. If you wreck the Camry you then have the opportunity to upgrade to a very pricey Mercedes. I don’t see a lot of auto insurance companies jumping on that idea and I don’t hear many people asking why not. Creating wealth where there was none is not good business.

Insurable interest is another one that life insurance companies take pretty seriously. Insurable interest simply asks the question, “what financial loss would you suffer upon the death of the insured?” In the absence of insurable interest as a check and balance, we might be able to talk a relative, say our mother, into letting us purchase a large insurance policy on her as kind of an investment. If that policy was for $250,000, the query from the company would be show them that you would lose $250,000 upon the death of your mother who makes $9000 a year on social security.

We are frequently asked for life insurance quotes that don’t meet the criteria above. In the case of financial justification, as their independent life insurance agent we have to explain the criteria used and the maximum amount of coverage is that a life insurance company will approve.

With insurable interest we are often having to explain that, while a burial or final expense policy might be very appropriate, a large policy on mom as an investment is not going to fly.

Important questions to consider when considering life insurance.

Add comment March 11th, 2007

Why do universal life and whole life policies fail?

Universal Life, Whole life.  Sounds like it ought to last forever. Almost without fail the life insurance agent who told you about universal life or whole life led you to believe that it would last forever. An unfortunately large percentage of those agents didn’t tell you the truth. Yes, they lied!!!!!!! A conservative guess would be that between half and three quarters of all whole life and universal life policies will fail even if you religiously pay your premium every year.

Universal life and whole insurance qre the most misrepresented products to hit the market since, well, since life insurance has been for sale. Misrepresentation of  life insurance performance has been the source of more lawsuits and agent’s lost licenses than any reason.

So, is there something inherently wrong with the products……or is there something inherently wrong with the life insurance agents who just can’t bear to tell you the truth for fear they may not make the sale. Let me narrow it down for you. The products, sold correctly, are solid and dependable. It will do exactly what you want it to do. It is guaranteed to perform. The problem is not with the product!

So, all of this begs the question, “why would an agent sell you something that can fall apart without warning in the future”? 

Life insurance is a tough business. Most agents don’t make it through their first year and a very small percentage could actually be considered successful by anyone’s standards. For most agents the difference between making a sale and not making a sale can be the end of their career.

 The easiest way to make a universal life or whole life sale is to show the customer the non-guaranteed illustration at the lowest premium possible and hope you don’t ask about the other side of the page, the guaranteed side. Then if you buy, they hope you can’t remember their name, so that when the policy unravels, they won’t have to answer the question above.

Use a reputable independent life insurance agent and insist on guarantees. Get it in writing and insist that your agent review your policy with you annuallly.

2 comments March 10th, 2007

Does your build affect your life insurance quote?

Probably one of the most common surpises and points of contention in life insurance underwriting is when, even though your health is perfect, your life insurance quote changes after you apply because your height and weight (build) weren’t exactly what they thought they were. For that reason, rather than telling your independent insurance agent what you think your height and weight might be, step gently on those scales, get a grip on reality, and an accurate quote up front.

Here is a sample from a middle of the road company. These are their build guidelines for their best rate. Honestly most companies are within a few pounds of this. Some are stricter and some more lenient, but count on them to adhere to it especially if you want their best rate class.

Add comment March 10th, 2007

Life insurance and foreign travel!

It’s interesting to see the debate on this issue. Some states have adopted regulations that don’t allow insurance companies to use foreign travel as criteria for underwriting life insurance. I’m not convinced that is a prudent move. Whenever a health condition or an activity is disallowed weight in underwriting, it simply shifts the burden of that potential mortality risk to the entire risk pool.

In simpler terms, rather than charge someone extra for going to countries that don’t have a great safety record, the life insurance company will simply charge all of us a little more so that person won’t be penalized.

Did you know that smokers, on average, pay about 3 times as much for their life insurance as non smokers, if all else is equal? Did you know that Alaskan bush pilots (who don’t always land on runways), will pay about 2-3 times more for their term insurance than a private pilot who takes off and lands from established airstrips, all else being equal? Did you know that men pay more for their life insurance than women, all else being equal (except in Montana)? Why you ask. Because men, smokers and bush pilots don’t have the same mortality experience as their counterparts.

Ok, let’s just be real. There are some places in this world that aren’t necessarily safe to travel to. Life insurance companies should be allowed to consider that. They shouldn’t be allowed to be abusive about it, but they should be allowed at least the opportunity to assess any mortality risk associated with that activity. If they aren’t allowed to assess the risk where it belongs, they will assess the risk to all of us.

If states start dictating what can and can’t be used for underwriting, I can see the bush pilot risk being shared by all private pilots in the future.  Again, I don’t think life insurance should be able to abuse the knowledge of foreign travel, but it should be able to be considered. A good independent life insurance agent can steer you to the companies that don’t abuse the knowledge.

1 comment March 10th, 2007

An optimist’s look at life insurance and heart disease and heart attacks!

You have to love an optimist. I had a call a few years back from a man inquiring about life insurance. As we were going through health questions I asked about cardiac issues and he admitted that he had gone through a two vessel angioplasty after a minor heart attack. At this point I was the optimist, since, given some specific criteria having been met, he would be very insurable at competitive rates.

I then asked him when he had the angioplasty and his answer smashed my optimism and brought his to the forefront. He was still in the hospital and the heart procedure had been done the day before.

Well, there are criteria to meet if you want life insurance and life insurance quotes that are competitive. The day after the procedure doesn’t meet any of the criteria, but I went on the explain to him the threshholds he would need to meet in order to once again be in the life insurance market.

First, a little bit of time. For most companies that would be a year. For a few, as little as six months. During that time they will want to see compliance with any life style changes the cardiologist has recommended such as STOP SMOKING. All companies will insist on what most cardiologists regard as normal followup. Regular checkups with ekg’s and at least one stress test within the first year after the procedure.

So, if you have had an angioplasty, bypass surgery, with or without a heart attack and are thinkng that little wake up call might be a good time to consider life insurance, do the following. If you are a smoker, STOP!!!!!!!! Can’t qute emphasize that enough. Life insurance companies don’t have a lot of sympathy for smokers with cardiac issues. Get regular checkups and comply with everything the doc says to do. When you get your stress test, get a copy of the narrative report. This gives the independent life insurance agent you are going to use the information to know what company to go to.

Just like a diabetic needs to know what their A1C level is, if you have had heart problems you need to know what your LVEF is. That stands for left ventricular ejection fraction and is a measure of how efficiently your heart is pumping, or how much damage your heart has sustained. An ejection fraction below 50% is a tough sell to an insurance underwriter.

Bottom line, take the wake up call seriously. Good news is you are still around to read this. Even better, if you do all the things you should do, life insurance will be affordable going forward.

Add comment March 10th, 2007

Breast cancer - a new look from insurance companies!

Uninsurable and breast cancer used to be synonymous in life insurance, no matter the type, stage or grade. It wasn’t that long ago that cancer of any type was generally talked about in the context of how many weeks or months someone had left to live.

Thanks to more screenings and early detection, breast cancer survival has improved dramatically. Along with that has come a new look from insurance companies in the way they treat breast cancer and life insurance.

To find out what is available and the best rates, contact an independent life insurance agent for quotes. Use an independent agent so your situation can be shopped across a broad spectrum of companies and products.

When you find an agent be prepared to provide a pathology report showing the stage and grade of the cancer and details of the treatment and when it was completed. Just to put things in context, the likelihood of getting a life insurance offer during treatment is 0. Obviously a company wants to know the outcome of the treatment before deciding to insure.

So, take heart if you are a breast cancer survivor. Affordable insurance is a very real possibility.

Add comment March 9th, 2007