Ed Hinerman On Life Insurance

Life expectancy! Mortality Experience! Can Someone Just Tell Me How Long I Can Expect To Live?

As a life insurance agent I’ve become used to the term mortality experience, how long a person can expect to live given a set of health issues. It was kind of creepy the one and only time I spoke with someone in the life settlement business. I gave him a scenario based on age and health issues and he said that the client’s mortality experience should be 6 years and 4 months. I asked what day the client could expect to die and the life settlement guy didn’t think that was all that amusing.

But the reason I bring this up is that there are very real, very stark differences in how long you can expect to live depending on your health and lifestyle.

In an article put out by a Dr Rutledge in Nevada, he had this to offer.

” First, How Long will you live?

Life Expectancy calculators are tools that use your personal information to predict how long someone can expect to live. Factors that have been shown to determine life expectancy include the your age, weight, smoking, drinking, your blood pressure and your family’s medical history. These factors are analyzed and compared against recent Mortality Tables.

Try the “The Life Expectancy Calculator”

You can also try “The Longevity Game” to get an estimate of your life expectancy and the effects of weight loss and resolution of high blood pressure and other obesity associated illnesses.

Using the MetLife Life Expectancy Calculator:

Obesity Kills

Research shows that obesity contributes to a slew of medical conditions, including diabetes, heart disease and various cancers. So powerful are certain lifestyle choices that recommended diets along with maintenance of physical activity and appropriate body mass can, over time, reduce the incidence of cancer by 30 percent to 40 percent, according to the American Institute for Cancer Research.

Caloric Restriction Leads to Weight Loss and a Much Longer Life”

Now Dr Rutledge is pushing something called the “mini gastric bypass” surgery, a laproscopic gastric bypass that he touts as safer than a traditional gastric bypass or a lap band. I don’t know much about the procedure or his credibiity, but the life expectancy calculator actually sent me on a search for a better one.

MSN Money has a life expectancy calculator that is supposed to help you come to grips with how long your retirement may be. Good questions. Try it and see what you think.

Bottom line. Family history, health and lifestyle write the script. The good news is that you can change the ending by changing the script.

Add comment August 16th, 2007

You Just Can’t Fix Stupid!

I love that saying! I have it hanging in my office. I don’t, however, have much fondness for those that it applies to. It would not be hard, or take long to write a book about stupid, harmful life insurance recommendations made by, and I use this reference loosely, my colleagues. The life insurance business is full of agents that will not put their customer’s best interests above their 0wn desire to make money.

Just yesterday I spoke with a woman who was in the process of trying to get life insurance on her and her husband. Both in their mid forties. She is a full time mom with five kids ranging in age from 16 to 5. She said they had life insurance in the past, but her husband let it lapse. He just wasn’t OK with paying on term insurance just for the protection. He wanted some return on his insurance premium.

They also wanted small policies on all of the children.

In steps a local agent. A young guy with American Family. He suggests that they get a $150,000 variable universal life policy for each of them and carry the children on a dependent child rider for $10,000 each. The VUL solves the husbands issues with not getting anything back he told them. The children were no problem since they were just riders. He didn’t even ask health questions about them.

So my take on this recommendation? Any agent that thinks $150,000 is going to keep the boat afloat with that large a family, if either the mother or father dies, is either still living at home, is intentionally giving bad advice to make higher commissions, or is stupid. The other thing is don’t ever quote anyone, let alone 5 anyone’s without asking about their health. As it turns out, 1 of the children has a serious health condition and would not be insurable under a dependent child rider.

My other issue was that the VUL appeared to be underfunded. Since a VUL does not have any guarantees, there is no way to tell if it will even be in force when the youngest child is in high school.

We talked more and the woman admitted that they did in fact want more insurance, but with the American Family VUL, this was all they could afford.

I ran some numbers and it appears that this couple, for the same money, could get as much as $500,000 of return of premium term insurance each, dependent child riders on the 4 healthier children and a stand alone whole life policy on the child with the health problems.

So why didn’t the American Family agent quote that instead of a VUL? He probably doesn’t have access to the product. If he does have access to the product, then he quoted the VUL because it had better commission. I can’t say for sure. American Family doesn’t publish their products and rates like most of the top carriers.

Bottom line. The right thing for this agent to do is present the best product he has and then suggest that his clients see an independent agent to find out if there is something better available. That’s a tough one to swallow. Life insurance agents make money when they sell. That’s the shortside. If an agent is looking at the big picture they will understand by referring a client to a place where they can be better served, referrals will come back to them. They’ve done the right thing.

Add comment August 16th, 2007

The Dirty Little Secret Of Life Insurance Really Isn’t!

I mean really. What one of you hasn’t wondered at some point how a company can offer $500,000 worth of life insurance for for $14 per month. You die after 10 months (made the math easy on myself) and they’ve taken in $140 and paid out $500,000, a net loss of $499,860. Doesn’t sound like very good business to me.

Quick and simple! The majority of life insurance policies never pay a death benefit. I’m not talking about the majority, as in 51%. I would be surprised if 5% of policies actually pay a benefit. I can hear everyone screaming now about the dirt ball insurance companies not paying claims, but the truth is that nearly every claim filed is paid. There is an occasional fraudulent claim that doesn’t get paid, but those are rare.

So, why only 5%. I think the reasons probably go in this order.

1. A person gets tired of paying premiums and not seeing the benefit. Personally, I’m not all that anxious to use my insurance, but some people really do look at it that way.

2. A person buys a term policy and outlives the term insurance, and the need for the insurance, so they drop it. In this case the insurance did it’s job and is no longer needed.

3. Improperly sold universal life policies and whole life policies lapse because they run out of cash value to support them. I covered this sore point in a post yesterday.

Each time a policy lapses, the insurance company has collected money and not paid anything out. That pile grows and the company then has reserves sufficient to offer what seem to be inordinately low rates.

Bottom line. It’s really not a dirty little secret. Imagine what life insurance would cost if all policies paid a death claim. The good news is that the companies really will pay out a $500,000 benefit when you only paid $14 a month.

Add comment August 16th, 2007

Is Your Universal Life Policy Really Going To Be Around? Probably Not!

This is a point that probably can never be driven home enough to get everyone’s attention, but listen…..No matter what your life insurance agent told you about your universal life policy staying in force as long as you pay the premiums…..No matter what kind of promises the agent made, get your insurance company to send you a current in force illustration showing what is guaranteed, not projected or assumed, but GUARANTEED!!

I spoke with a man today and we reviewed his two universal life policies. He said he was pretty sure he was in good shape, because the agent told him the policies would stay in force until his age 95. He is 61 now and has been paying on these policies for about 15 years. He happened to have an in force illustration, but admitted that he had filed it, not really understanding what it meant. He really wasn’t worried about what it said, because his agent told him it was good to age 95.

He pulled out the illustrations. They showed that best case, both policies will collapse in 2020, 13 years from now, his age 74. More than likely well before he will need the insurance, it will be gone, a victim of it’s own cash eating self.

And that was the best case. On the guaranteed side of the policy it will only last another 3 years. Either way he is going to lose his insurance and all the money that he put into it.

I hate to be like this about people in my own industry, but folks there are some scum sucking bottom feeders out there that really don’t care what happens to you, your family or your money as long as they make the sale. I’ve said this before, and I’ve never had anyone step forward and refute it. I believe that the majority of universal life policies in force today are underfunded and doomed to fail.

Bottom line. Don’t ever buy a life insurance policy from anyone without being shown the guarantees. Demand it. Don’t write a check without it. If you’re not sure you’re really seeing guarantees, get a second opinion. If you’re still not sure, ask your state insurance commissioner’s office to give you an opinion.

Add comment August 16th, 2007

Breast Cancer And A Familiar Face!

I suspect there isn’t any of us who don’t have a family member or friend who has had breast cancer. The good news from a life insurance standpoint is that breast cancer screening and treatment has improved dramtically, meaning early detection and intervention and a better prognosis.

Just a few days ago Robin Roberts, a news anchor for ABC’s Good Morning America talked about her breast cancer and her attempts to keep life as normal as possible while undergoing treatment. For her, returning to work as soon as possible was a key to the normalcy she needed.

While she was able to get the surgery and treatment that will likely give her life back completely, in another article she talked about the plight of the uninsured or underinsured and the fact that they often don’t have access to mammographies and other early detection methods, let alone the type and quality of treatment that is needed.

I talked not too long ago about a life insurance company, Genworth Life and Annuity, who was helping to defray the cost of ultrasound screening of the carotid artery. Early detection of carotid blockage can prevent a stroke. Maybe if more life insurance companies and health insurance companies would step forward with that type of preventive attitude, more women would have access to the screening that makes the treatment less expensive also.

Bottom line. Early detection means a better prognosis. If you are a breast cancer survivor looking for life insurance, avoid your local agent who sells everything from home to boat insurance and find an independent agent with a background in finding good rates for breast cancer.

Add comment August 16th, 2007