Archive for June, 2007
I really think they are probably faking the shock and amazement when they find out they don’t get those life insurance rates advertised everywhere, because those are non smoking rates and they smoke. Surely they’ve slipped up at least once and read the old warning on the pack that says smoking has NOT been linked to great health and longevity.
Even the most even handed companies will charge twice as much for a preferred smoking rate as they will for a preferred non smoker. Some are three times more and I’ve seen some companies with smoking rates four times higher. I’m thinking the underwriters at those last two sets of companies may have read somewhere that there are statistical links between smoking and cancer, smoking and heart disease, smoking and stroke and just to make the point clear, smoking and etc, etc, etc, etc………..
What I find amazing is that some life insurance companies will allow a person who has smoked for 20 or 30 years, quit for 12 months and get preferred non smoking rates. I know they say that damage from smoking starts to reverse itself shortly after you stop smoking, but all the way to preferred in one year. I’m all for people getting great rates, but it seems to me that the companies are shifting some of the risk burden to those who have taken good care of themselves all their life just so they can reward someone who finally figured out one of the basics.
Just my opinion of course, but my blog, my opinion. I suspect there are a few smokers and ex-smokers out there that will take exception. Bottom line, keep smoking and your life insurance rates will be appropriately high.
June 29th, 2007
Most sleep apnea is diagnosed first by the person sleeping next to the apneatic. While on a trip to Mississippi after Hurricane Katrina I got to experience firsthand the room shaking impact of sleep apnea. Having some knowledge of the problem and knowing that I could well experience this 50-100 times that night, I found another room in the church we were housed in to call my home.
According to the American Sleep Apnea Assocication, “Sleep apnea is very common, as common as adult diabetes, and affects more than twelve million Americans, according to the National Institutes of Health. Risk factors include being male, overweight, and over the age of forty, but sleep apnea can strike anyone at any age, even children.”
I knew that sleep apnea from a life insurance underwriting standpoint can be problematic, depending on the company it was underwritten through. Some companies will charge abusively high rates if the issue is even mentioned. Other more discerning companies at least allow some difference in underwriting depending on the type of apnea and the severity. In most cases, with either surgical correction of obstructive sleep apnea or control through use of a cpap, better than standard rates can be found. A good independent agent can help assemble the right information and ferret out the right company for each situation.
There was a time when I thought the real mortality risk of sleep apnea was the possibility of being murdered in your sleep by a fed up spouse. The ASAA shed some light on other possible concerns for underwriters.
“Untreated, sleep apnea can cause high blood pressure and other cardiovascular disease, memory problems, weight gain, impotency, and headaches. Moreover, untreated sleep apnea may be responsible for job impairment and motor vehicle crashes.”
It can be very tricky when you start combining issues such as sleep apnea with being a private pilot. Again, depending on the severity and treatment compliance, some companies will run screaming into the dark, while others will weigh carefully how seriously a pilot takes the sleep apnea issue and the actual risk if they are in fact compliant with their cpap use. Again, a good independent agent will make a huge difference.
Bottom line. An angry spouse is not the only mortality issue with sleep apnea.
June 27th, 2007
Another overly diligent life insurance shopper shot themselves in the foot today. Remember, three things can happen while you are looking for the best possible rate. One of them is good and I’ve seen people even turn that one against themselves.
1. The good one. Nothing happens. You just keep shopping and shopping and shopping and you finally settle on the one you want and you apply for it. You’re still in great health and you’re obviously not dead, so you’ve done your job. Well……sometimes. You see, most people who haven’t been around life insurance much think they are good to shop or good to wait until they buy until their birthday. Everyone knows that life insurance goes up with age, right? No! Most companies use the age nearest method to compute your insurance age. So, if you are 49 and 183/365th’s, you are really 50 with most insurance companies. I’ve seen plenty of diligent shoppers have to make their purchase at an age one year older than they needed to.
2. Your health changes. I just had a client who shopped it until he finally came to the conclusion that mine were in fact the best rates. He called up to apply and asked if it made any difference that they had found a melanoma on his back the week before. This guy had been trying to beat my rates for 2 1/2 months. He will now never see rates like he could have had and it will be some time before he can get an offer at all, depending on the pathology results of his cancer.
3. You literally shop until you drop. I’ve had far too many calls from widows or children who found quotes and a business card in the deceased’s important papers. The papers weren’t important enough to do anything about. Still thinking about it!! Waiting for one more set of quotes!! Trying to lose 10 pounds!! None of those things provide protection for your family.
Life insurance isn’t like a car or a house. If you buy one of those and make a bad choice, you are either going to lose money or you are just stuck with something you don’t want for a long time.
With term insurance you can get something in force and then shop around, lose some weight, think about it, whatever. If you find something better, you can apply for that and if it actually turns out to be a better deal, drop the first one and accept the better deal. No penalties. No loss.
I would suggest that if you are going to purchase with the idea of covering your family until you make sure you have the best deal, pay for it monthly or quarterly. If you pay annually, in some states the insurance companies are not required to refund unused premium.
So, do the right thing. Cover your family first. Enthrall yourself with your shopping prowess after that.
June 25th, 2007
I am often asked why I need to know someone’s driver’s license number when they are applying for life insurance. “What’s that got to do with it”?
Life insurance companies have found a glance at a motor vehicle report to be helpful in evaluating a person’s lifestyle. Multiple moving violations or perhaps an unadmitted DUI might just point toward a risk factor that might need a closer look.
Most insurance companies aren’t going to go bonkers if you have a couple of tickets that are just marginally over the speed limit, but if they run your MVR and find that, for instance, you have 3 or 4 speeding tickets in the last couple of years, that might raise some eyebrows and rates. The bad news for you folks that drive too fast on a consistent basis is that you will likely pay more for your life insurance for now. The good news is that, just like your auto insurance, the further you get from that last ticket, the better your chances of securing even the best rates available.
DUI is a little different and somewhat the same. You are hard pressed to find insurance companies that will want to make any offers if you are less than two years removed from your roadside attempt to walk a straight line. From 2Â to 5 years you will need a good independent agent to weed through all the companies that will make offers and find the best for you. Generally after five years you are back to best rates with a lot of companies………..unless you have a history of more than one DUI. Something about that multiple occurrence thing worries insurance companies, a lot.
Bottom line. Life insurance companies don’t just weigh health risks when evaluating a potential customer. They want to know if your habits are healthy as well.
June 19th, 2007
Somewhere in the education system for financial planners, the curriculum missed one little detail. People die unexpectedly! Estate planning attorney’s missed that class also.
For all the good that can come from the advice of either profession, none of the advice works if they take months, or years to finally come up with the perfect plan…..and their client is dead or has been rendered uninsurable due to cancer or heart disease. I’ve seen it happen more often than it ought to and I hope the family has the presence of mind and the resources to sue the pants off of the poorly advised advisor.
Whether an estate attorney or financial planner, the first thing they should advise if a person doesn’t have life insurance in force, is to get some. Buy term insurance. Keep it cheap and easy to walk away from, but don’t go into a planning process that always takes longer than it should, uninsured.
Not long ago I had a client who kept waiting, against my advice, for a retirement specialist’s opinion on how much life insurance he should have in order to maximize his retirement income. 9 months and a massive stroke later he didn’t have a choice anymore.
My advice, and if I’ve said this once, I’ve said it a whole bunch of times, is to fill the need for life insurance and then plan. You can always change. Just because you bought a 10 year term doesn’t mean you have to wait 10 years to make a change. Change when the planner makes their recommendation. Change when the estate tax attorney comes up with a plan. Also, don’t do an extensive 6 months shopping and research job on what product to buy and leave yourself uninsured during that time. Put something in force and then shop with all the confidence in the world that if you die while shopping, your family will be just fine.
You know, this kind of advice really rubs some people the wrong way. But ask your financial advisor or tax attorney if they are willing to take care of your family if you die before the end of the planning process, or if you become uninsurable. We all know the answer to that one.
Please don’t think I am against good financial planning or good estate legal advice, but I am against these people advising that you hold off on your purchase for even a week, let alone the months it usually takes for them to do their job.
June 15th, 2007
Most small businesses, which provide the majority of employment, kind of fly by the seat of their pants when it comes to the area of life insurance and a business continuation plan. Just some food for thought. In the US today, you are more likely than not to either own a small business or be employed by a small business.
Whichever category you fit in to, there is a critical question that needs to be addressed. It affects your family. What if the owner, or a partner (oneof the owners) in a small business dies? Obviously, in the absence of adequate life insurance, whoever passes away will leave behind a family with some very hard choices.
Does the family sell the business? Truth is most small businesses are worth what the company earns while the owner is alive. Does the family try to continue the business? The truth is that generally family members aren’t interested in or capable of running the business. What usually happens in the absence of adequate life insurance is the employees are laid off and the physical business is sold for whatever it can bring.
Business life insurance can take the burden off the family, off the employees and off the business.
If it’s a partnership, a buy/sell agreement whereby both partners have life insurance, guarantees a fair price to the family of the deceased partner. If it is a corporation or sole proprietorship, a life insurance policy can allow the family to pass the business on to an employee or employees.
If you own a business or work for a small business, have a discussion with an independent life insurance agent today about what would really happen if you didn’t come to work tomorrow due to your death. It is a sobering thought when you consider the impact on the lives of your family, and your employees and their families. The cost is minimal in reality and almost invisible in proportion to the potential damage.
June 14th, 2007
The discussion went smoothly. A wife looking for insurance to replace a term policy on her husband that was coming to the end of the guarantee. Good health. A little family history hiccup, but not a big deal. Then I asked about foreign travel and she said, well, yes he does travel. After a little beating around the bush it seems that her husband had become a little bored with retirement and had decided to do contract work….. kind of where ever he might be needed. He was currently in Iraq for 12 months. Wrong time to review his insurance portfolio!!
To all of you husbands/wives who have a husband or wife who is considering changing careers or taking up hobbies, review life insurance while it is still in the considering stage. Once plans are in place and commitments have been made, whatever is coming down the road will impact your life insurance.
A few examples might help clarify this. Let’s say I’ve always thought it would be kind of fun to take up skydiving, but I’ve always kept that in my someday file. If I buy life insurance and they ask me about skydiving, it’s not an issue. I have no set plans on when I might do it so it doesn’t impact my life insurance. If, on the other hand, I am scheduled to start skydiving lessons June 23, 2007, the answer is yes to the dangerous hobby question and it will impact my life insurance rates. Now, a good independent agent can minimize the impact, but it isn’t going to go away.
Like our example above, if I have always thought it would be fun, or exciting, or profitable to go for an extended stay to travel Africa, it doesn’t impact my life insurance if I have not actually started planning and scheduling or making commitments. If, on the other hand, I have started negotiating with a company to help sell water purification systems in Zimbabwe, I have to be honest about my future plans, and yes, it will likely impact my life insurance rates.
I discussed in another blog the fact that some states no longer allow life insurance companies to ask about foreign travel. Personally, I don’t see that stance lasting long. I really don’t see it growing past the 5 or so states that currently have that rule.
That’s not the point though. Review your life insurance with your agent annually. Share your “want to’s” with your agent so they can advise you at the right time. Whether it is foreign travel, skydiving, motorcycle racing or mountain climbing, after you have headed down that road is the wrong time to ask about the impact on your life insurance.
June 13th, 2007
When faced with the reality that life insurance rates are going to be higher than expected due to high blood pressure readings on an insurance exam, denial is the mode of the day. People don’t deny that their blood pressure was high. It just follows that there will be a string of excuses such as, 1. I had to fight traffic all the way home to make the appointment. 2. I had to watch the kids while the exam was being done and they were a bit crazy. 3. The examiner was annoying me with all the questions. 4. I didn’t sleep well the night before.
The truth is that all of those things can raise the blood pressure of someone who is susceptible to spikes in their blood pressure. So what’s the big deal? Why don’t life insurance underwriters just accept the excuse and ignore the readings?
High blood pressure is a contributing factor to stroke and heart attacks. If a person is prone to spikes in their blood pressure over things that normally occur in life, that means that their chance of hypertension doing damage is higher than the average person. Life insurance is all about assessing risk and clearly a susceptibility to spikes in blood pressure is a risk.
If you have a good indepedendent agent working for you, they will likely work with the underwriter to get a new set of readings in the absence of the stress. An underwriter will average these in with the original and hopefully you will gain some ground. That’s only about the rates you pay though.
While you might be able to dodge the bullet in your life insurance rates, in my opinion you should still recognize that their is a gun aimed at you. Don’t ignore the fact that your blood pressure shoots up in stressful, but real life, situations. To me this handwriting on the wall should be a heads up to a cork that could blow at any time, given the wrong circumstance. See your doctor if your blood pressure is high on an insurance exam. While it may be normal under some conditions for it to be higher than usual, being above the normal range should be checked out.
June 11th, 2007
There are many health things in life that just jump up and grab you. You never see it coming and you would have never dreamed of the impact it could have on your life. The question inevitably runs through your mind. What did I do to deserve this? What could I have done to avoid this?
The truth is there are a lot of health problems that you truly don’t have any control over. Type 1 diabetes for instance. Doctors know what it is and for the most part they know something about treating it, but the cause is illusive. While many times type 2 diabetes can be linked to lifestyle choices, lifestyle doesn’t seem to be a part of the picture with type 1.
Lifestyle choices, and specifically the way we eat, can have a direct impact on health problems such as obesity, colon cancer and heart disease. Making poor choices can lead to the problem. Making good choices can help you avoid them. Family history can also play a part in what happens to you, but more and more we are seeing that family history can be overcome by making prudent choices about how we live.
In a blog posted yesterday on www.thediabetesblog.com by Allie Beatty, Allie shares some very good recommendations for dietary changes that can not only help with control of diabetes, but could have a positive impact on anyone’s life. With life insurance underwriters looking at diabetes control as a major underwriting factor, anyone with diabetes who is anticipating purchasing life insurance should read the article.
Making healthy lifestyle choices can help secure the best possible life insurance rates. Making those choices will likely mean you add years to your life, and healthier years at that. Choosing a knowledgeable independent life insurance agent can help you make the most of your good choices.
June 7th, 2007
A Simon and Garfunkel song with the line, “my lack of education hasn’t hurt me none”. Well that may be just fine for most life insurance agents, but the fact that it hasn’t “hurt them none” isn’t really the point. How many clients are financially damaged every day by life insurance agents who refuse to learn about their own business?
You should see the test it takes to become a life insurance agent. It’s not even meant to weed out those that who were to lazy to study. Even the continuing education courses are for the most part a joke.
So it’s just sales right? What do you need to know other than “what will it take to get you to drive away in this life insurance policy today”? Well, allow me to express my opinion on this based on far more years in the business than the average agent will ever last.
If I were teaching the school, closing the sale would be left out. Knowledge of impairments, knowledge of insurance and estate law, and good customer service would be the curriculum.
How can an agent hope to do the best possible job for someone with heart disease or a history of cancer if you don’t know what the results of a stress test or a pathology report mean? How can an agent advise a client who is treated for depression if they don’t know the difference between situational or chronic depression? How can an agent hope to help someone who has been through drug or alcohol treatment if they don’t know how underwriters from different companies view the issue? How can an agent help a private pilot find the best life insurance pilot if they don’t know the difference between IFR and VFR? The answer to all of these is the agent can’t properly help those clients because they haven’t bothered to educate themselves.
How can an agent give proper advice about the use of life insurance in estate preservation if they don’t understand estate tax law? How can an agent advise a client on the need for a life insurance trust if they don’t understand the tax law that applies? How can an agent even represent the products unless they know the regulatory implications of their advice? Again, they can’t!!
A poorly educated life insurance agent is bad for the client and bad for the business. I honestly believe that states shouldn’t take the licensing of agents so lightly. A person should have to prove knowledge way beyond what is currently required before they are ever allowed to give advice to someone about matters that will impact that person’s family in critical ways.
And you ask why does this bother me so much? Because it allows someone with a gift for selling to give bad advice and damage clients and get paid for it. Just my opinion of course.
June 7th, 2007
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