Archive for September 7th, 2007
In a post a few days ago I talked about the fact that women in business have several reasons to consider life insurance. On a site called Women’s Initiative , they presented a list from an article in the Birmingham Business Journal, of statistics about women in business.
As I read through that list it struck me that women may have already taken over the world and that their need for business life insurance is certainly as large as I had insinuated, and really more far reaching.
Left out of my thought process were women majority owners of stock companies. Life insurance has long been a key tool in keeping control of a stock company in the event of the death of a major stockholder, through the use of a policy for stock re-purchase.
Women as key persons in a business should be insured to offer stability to the business if there was an untimely death. Creative use of a return of premium refund policy can set that up to protect the company and reward the employee if they outlive the need for it.
Bottom line. Women are a powerful force in large and small business and they should seek counsel as to the best ways to put in place a business succession plan.
September 7th, 2007
I mentioned in a post the other day that one of my shortcomings is I have a very generalized philosophy that if a little bit of something is good for me, a lot of it should be great for me. If, whatever it is, can be used in monstrous quantities, who’s to say I may not be Superman?
Of course one of the things I was referring to was the often cited glass of wine per day being good for your heart. Then there is the aspirin a day recommendation. Why not knock down a handful of aspirin and a bottle of wine. If you could still walk you ought to be able to run a marathon.
My partner rained all over my parade today by forwarding a couple of articles, one designed to snatch that bottle of wine out of my hands, the other the bottle of aspirin . The day isn’t over yet. He will probably forward me an article about staying out of the sun to avoid skin cancer, thus ruining my weekend.
From a life insurance underwriting point of view he is probably right though. If, in my quest to avoid heart disease, I end up in alcohol treatment with bleeding intestines, my chances of impressing an underwriter with my intelligent thought process is probably pretty slim.
Bottom line. Moderation. If a little bit of something is good for you, use a little bit and let it be good for you.
September 7th, 2007
We’ve all heard some version of the story. A life insurance policy with an exclusion for anyone that dies if they are hit by a bus while wearing a green shirt on a Wednesday during August. Actually if the price was good, I would take that one. Don’t have a green shirt and no buses where I live, so……..
In all seriousness though, exclusions are a common question and a very real concern. Some time ago there were small policies that had odd exclusions and the concern has spilled over into a more sane and fair time in the life insurance industry.
Today’s life insurance is underwritten such that there are no needs fior exclusion as the pricing takes into account any “pre-existing condition”. It is not uncommon for someone with an impairment such as cancer or epilepsy to ask how long it will be before they are covered if they happen to die due to something that has to do with that condition. The answer is that there is no waiting period. The policy was underwritten to accept that risk so it is covered from day one.
There are generally only three exclusions that you will find in a life insurance policy. The first two are general and apply to all policies. They are the suicide and contestability clauses. Suicide is obvious and it states that if, during the first two years of the policy (one year in a few states), you take your own life, the company is not bound to pay the death benefit, just return the premium paid.
The contestability clause states that if you die from something that was materially misrepresented during the first two years of the policy, the company again is not bound to pay the death benefit. So, if you had actually been having chest pains, and had discussed it with your doctor but never really had it looked into, and you didn’t divulge that on the application, that would be material misrepresentation.
If you flat out lie about something on the application, that is fraud. There is no two year limitation on fraud and a company could refuse to pay if you died from something you lied about. Do people lie on their applications? Well, yes they do! Generally it is uncovered in the application process when their medical records are reviewed, but sometimes it can slip through. That is not a position you want to put your family in.
The last is an exclusion that private pilots occasionally take. A pilot who has aviation practices that are considered a higher risk such as crop dusting, aerobatics or bush piloting are often assessed a higher rate. They can choose to exclude aviation from their policy. Most private pilots get very good rates and don’t need to exclude aviation. This is really the only thing that most companies will allow an elected exclusion for.
One notable exception to what I’ve said is guaranteed issue life insurance. Anyone can get guaranteed issue. It is exactly what it says it is. They have a two or three year waiting period with no death benefit, only return of premium. That is their way of protecting themselves as anyone, with any health problem can get a policy, no questions asked.
Bottom line. Life insurance policies are very straight forward. When your policy goes in force you are covered with only the exclusions mentioned above. As we explain to clients, don’t lie on the application and don’t kill yourself and you’re covered fully from the day the policy goes in force.
September 7th, 2007
Cholesterol, as I’ve mentioned before, is one of the two leading causes of surprise insurance quote changes. The other is not really knowing what your weight is. A good guess only lasts until the examiner pulls out the scale. But, are insurance companies treating cholesterol, and especially the cholesterol ratio (total cholesterol divided by good cholesterol, HDL) fairly?
Well guys, I wouldn’t have brought this up if I thought the answer was yes. Let’s look at average guidelines for cholesterol and cholesterol ratios. For this example I’ll use American General as a kind of conservative company with a mildly innovative way of looking at the issue.
For their best rate class you need a total cholesterol of 205 if you have a ratio of 5. They will allow as high as 240 total if your ratio is 4.5.
For their second best rate you need a total of 235 and a ratio of no more than 6, or you can be as high as 260 with a ration of 5.5.
For their standard rate classes you need to have a total of 250 and ratio of no more than 7, or up to 280 with a ration of no more than6.5.
Their take on the good effects of HDL is somewhat in line with the American Heart Association but to my way of thinking, only holds out a part of a carrot. I believe there should be more reward for a low cholesterol ratio.
Looking at the best rate class, they hold out the tiny carrot of your cholesterol ratio being 4.5. The American Heart Association says that a ratio of 2 or 3 dramatically lessens your chances of getting stung by heart disease. So, why don’t insurance companies look at the actual picture and not cap it at convenient round numbers? If my total cholesterol is 275 and my ratio is 2.5, I should present a better risk to American General than someone with a total of 260 and a ratio of 5.5. Truth is I should, medically speaking, be better off or at least on equal footing with the best rate 240 total with a ratio of 4.5.
Bottom line. We have successfully argued better rates in a few cases, but life insurance companies really don’t want to bend. They have this insane fear that the whole system will break down if logic is applied. If your cholesterol is above 200 and you have a great ratio, seek out an independent agent who can find those few hold out underwriters who will still occasionally peek outside the box.
September 7th, 2007
