Archive for December, 2007
I suppose it has something to do with age, but each year the journey toward winter solstice seems a little more daunting. As the days get shorter and my workday starts in the dark and ends in the dark, and I have to bundle up to survive the 45 second commute from my home to my office, I really start to wonder if I’ll survive another one. Winter that is.
I didn’t used to be such a woose, but now I really rejoice in the fact that we’ve reached the bottom of the pit, winter solstice, and the days are getting longer (albeit only by a few minutes a day). If I was a life insurance underwriter determining my own mortality, a week before winter solstice I would probably decline myself. I’m not suicidal or anything. It just, as I mentioned, seems that actual survival is a legitimate question.
A week after solstice (today), I would be a little more aggressive in my underwriting. I suspect that at this point there could be as high as a 30% chance of survival. Could have been higher, but the low last night was -10. At the end of January the whining has generally softened and the survival rate could be as high as 90-95%, unless there’s one of those arctic express things happening. By March I am finally confident of survival.
Then they change the time which kind of jacks with my attitude for a while. Whoever thought up that daylight savings thing should be forced to sit on one of our Colorado peaks naked all winter……just because.
Bottom line. While I am blessed to be very good at some things like life insurance, I am a woose extraordinaire when it comes to short days and cold weather.
December 29th, 2007
When I sold my first final expense (burial) life insurance policy nearly 30 years ago, it had a face amount or death benefit of $7000. It was certainly, at that time, adequate to properly bury someone and even have a little left over to host a wake.
I still get 10-20 requests every week from people that “don’t want much, just a final expense policy”. When I ask how much they are considering it is always somewhere between $3000 and $10,000. I understand that the reason for asking for a small amount of insurance is always cost. The hope is that the smaller the policy, the smaller the cost. Unfortunately the logic doesn’t hold true.
For a little help with illustrating this I went to Colonial Penn. I believe, after a lot of study, that Colonial Penn is the best company in the business of writing small policies between $5000 and $25,000. This is a truly unbiased opinion. They don’t use agents. Everything is written directly through the company. I can’t sell it and can’t make anything from recommending it. Their products and pricing as so much better than the AARP policies written through New York Life, that AARP should really take a month off and just write letters of apology to all of us members.
OK. Now that I have put AARP in their place again, let’s look at a few examples of what Colonial Penn offers and what the alternatives are. For this example let’s assume a 65 year old man in pretty good health looking for $10,000 in life insurance. A little high blood pressure, a few new knees, but nothing serious. Colonial Penn offers a whole life policy, so we go to their website and get the quotes. All you have to do is type in the state, age and sex and hit submit. These are not guaranteed issue prices, so if our guy is hiding a few health problems they will likely show up on his medical information bureau report which could lead to a decline. But for now let’s assume good health.
Ok, let’s assume a 62 year wife, in comparable health, wants coverage as well. After all, properly burying you and not her is, well, just not proper. Use the same procedure to run quotes for her.
So, for $10,000 of coverage this couple would pay a total of $166 per month. If they wanted $25,000 it would run them $245 per month…..if they stuck with Colonial Penn. If they found an independent agent and asked them to find the best value for them, the results would be substantially different.
First I would have to explain that we are going to ask health questions and they will have an exam, at not cost to them, done in their home at their convenience. I would also have to explain that we don’t offer policies under $25,000, but if price is the issue, there’s good news. To write $25,000 on each of them, approved at preferred rates (not superman rates), their total monthly cost would be $93.39.
Keep in mind that whether through Colonial Penn or Genworth Life and Annuity (the company I quoted), these rates are guaranteed level and payable for life. So, if the reason for only wanting $10,000 is cost, wouldn’t it make more sense for you and your spouse, to have $25,000 in coverage for $70 less per month. More coverage? Less money? There’s no trick to this. Two things drive this out of balance scenario. Colonial Penn offers simplified issue which means no exam. So they are accepting the risk of not having lab results. That coupled with the fact that they are pushing cash value policies where they are simply not needed increases the cost. You’re buying life insurance, right? Take that extra $70 a month and throw it into an annuity if you need the cash, or gift it to your grandchildren if you don’t need it.
Bottom line. What appears to be the easy route, and yes, even appears to be the logical route can lead to higher prices for less insurance. Use your good health to your advantage. Take the physical and get the most bang for your buck. Don’t need that extra $15,000 in life insurance? Leave it to your grandchildren, or your church.
December 29th, 2007
That could be true of any part of your life. The truth is that compliance with motor vehicle laws and controlling your urge to speed can help you avoid violations that can, in fact, impact your life insurance rates.
But generally speaking, from a life insurance standpoint, compliance and control are referring to your management of a health issue. Whether it is high blood pressure, type 1 diabetes, type 2 diabetes, or bipolar disorder, compliance with treatment (taking medication just as prescribed and not just when you feel like it), and having the health issue controlled so that you are managing it and not the reverse, are the two primary ingredients needed for affordable life insurance.
In relation to type 1 diabetes, there are times when even the best effort can’t bring the two ingredients together. Take for instance the issue of brittle diabetes. With most diabetes compliance brings control. In other words, if you take the medication as prescribed, avoid eating the wrong things at the wrong times, and take monitoring seriously, you can expect that your glucose levels will remain in acceptable ranges and the diabetes, while still a piece of work, will not lead to other complications.
With brittle diabetes the rules don’t seem to apply. You can do all the right things all of the time and glucose levels can still swing wildly, basically out of any real control. From a life insurance standpoint this presents a real problem since lack of control will ultimately lead to collateral health complications and the assumption of shorter mortality by insurance underwriters is not just a wild guess.
Bottom line. There are instances when the prudent decision by a life insurance underwriter is to decline coverage. There are instances when even the best independent agent can’t get offers for clients. Fortunately those instances are rare.
December 29th, 2007
Technology has taken the life insurance business, and everything else, by the throat over the past several years, but for all the savvy geeks have when it comes to how the internet works, is there really any carry over from that intelligence to the basic knowledge it takes to, say, buy life insurance?
If today’s self proclaimed geeks and nerds have such a great handle on the adopted mother of all knowledge, the internet, why is it they fall into the same pits as any old guy surfing for good life insurance rates? Why is it they walk right into bait and switch just like their parents did? Why is it they can get their mind wrapped around Microsoft’s Silverlight, and can’t figure out if they should buy term insurance or universal life?
The game show, Are You Smarter Than A Fifth Grader, is quick to point out the knowledge gaps that can be left when someone leaps up the ladder of life and doesn’t bother to learn or retain important information. There is still a place in this world, even outside the blogosphere, for personal information sharing and good old professional advice.
Bottom line. As a life insurance agent, I consult professionals for advice on my websites and internet niche marketing. My time is better spent providing the service I know. I’m thinking at some point, even though they would love to prove me wrong and beat the system, even a geek has to be some value on his or her time.
December 28th, 2007
Oh, if it was just that easy! Bipolar can be one of the toughest of mood disorders to get a handle on. Some are lucky enough to find the break in one medication. For some it can take several medications.
One of the biggest challenges with bipolar disorder is finding the right combination of medication and lifestyle that will bring stability to life. Now there seems to be evidence that an attainable stability in sleep patterns can actually bring about positive changes in the disorder.
Nighttime sleeplessness and daytime exhaustion can cause more frequent and severe mood swings. Bipolar disorder is highly sensitive to the human circadian system (our internal clock) and if a person can create consistency in sleep and exercise patterns, it can protect against the extremes of mania and depression.
Life insurance companies vary widely on their opinion as to how bipolar should be viewed. There is especially a wide variance between bipolar 1 and 2. The good news is that there are several companies that, if the disorder is well controlled and life is stable (work, family, etc), will offer standard and even as good as preferred plus rates.
Bottom line. The key from a life insurance standpoint is compliance and stability. To get the best possible rates a person needs to show that they are compliant with their treatment and they have a track record of stability.
December 28th, 2007
Private aviation, especially with the rising cost of fuel, has been hit hard in one of the areas that life insurance underwriters look at closely, proficiency. In this case proficiency really comes down to flying enough hours that each new flight isn’t liking waking up in a new world. So, what’s the big deal with proficiency?
Most companies are pretty consistent with what they want to see as far as annual hours. In their minds they want enough to stay in practice and not so much that they feel the sheer volume of hours is tilting the risk factor. The general rule of thumb is that 26+ hours annually is the minimum they want to see for proficiency and 150-200 hours is the most they want to see for exposure.
There are exceptions made on a case by case basis, and determining what needs an exception and where to go to find it are the job of an independent agent. There are less than 20 life insurance companies that step outside of the box for private pilots and an agent that purports to be doing the best job for you should have access to all of them.
The rest of the companies don’t mince words with their treatment of pilots. Unless you are an airline pilot you will be asked to pay a flat extra fee for coverage of aviation. The average flat extra is $3.50 per thousand per year. On a $1,000,000 policy using that basis, you would have the normal policy cost plus $3500 per year in flat extra charges.
$3.50 is just for standard private aviation. It can quickly climb if you are, for instance, bush flying in Alaska. Something about landing on sandbars in rivers makes underwriters nervous even if they’re not on the plane. Flying homebuilt and some experimental aircraft can raise their eyebrows as well.
A few commercial pilots that take heavy hits are tour group pilots, EMS pilots and pilots that ferry crews and equipment to and from off shore oil platforms.
Bottom line. If you fly and are looking for life insurance, do not throw your request out to the general life insurance agent pool. Seek out agents that have the experience and the connections to get the job done and still leave enough money to fuel up for your next flight.
December 28th, 2007
Investment or rental property is a great way to supplement your income and help solidify and diversify your retirement portfolio. The way you find the best investments is to find a professional real estate agent who puts your goals above everything else.
Absent that commitment, you are dealing with someone who is probably thinking about their bottom line first and your best interests second. On several occasions I have pointed out that the big on line brokerages aren’t real keen about quoting and selling Prudential. Prudential is always competitive and they have some of the most aggressive underwriting in the market today, so it all comes down to the bottom line. If the brokerage is going to make 20% more by selling you the second best deal, that’s where their interest will fall.
I am a big advocate of the idea that what goes around comes around. If you give the second best advice to try to make more money, clients will eventually catch on to the fact that you are a second rate agent or agency. You may be dumped for a more honest agent and you sure won’t be referred to any new business.
So, just like you would choose the best possible real estate professional, you should seek out the best possible life insurance professional. If you are looking at insurance coverage for investment or rental property, you will want an independent agent that is licensed in all states since you never know where you might find the right property. They should be licensed with multiple companies so that they can always nail down the best rate for you.
I’ve been particularly impressed just recently as my wife and I have been looking at property in our area. One real estate agent has really stood out as one that does her homework and has notably put our needs ahead of her own bottom line. If she was in life insurance, she would be someone I would recommend. I would highly recommend her for real estate needs.
Bottom line. Whether purchasing real estate or life insurance, the true professional you choose to represent you will stand out simply by putting you first.
December 27th, 2007
Guys, guys, guys, guys, guys! If we don’t pull it together soon, or cull out the stupid ones, women are going to start showing us what life insurance is really for.
I swear not a week goes by that I don’t have a conversation with a husband in which they honestly don’t get the fact that life insurance on themselves is not for them. No kidding! They will say, “So, let me make sure I’ve got this right. If I die before the end of the 20 year term I’ll get the full $500,000?” OKKKK! Not quite.
There are so many men out there that just can’t get their mind wrapped around the idea that they are doing this for their wife or their children. And I don’t think the sentence above is a matter of misunderstood semantics. Even though they know that there are beneficiaries, deep down they really still think it is all about them so surely they must be the ones that end up with the money.
So, a little flow chart for the guys.
1. Without life insurance you live…….you die…….your wife and children are left without your income or any way to replace it.
2. With life insurance you live……you die……your wife and children are left without your income, but with sufficient tax free life insurance proceeds to carry on.
Bottom line. I hate to pick on guys, but face it, as a subspecies of the human race, brilliance is the exception. With life comes responsibility, and if you have people in your life that are depending on you to be responsible, get your ducks in a row and do it.
December 27th, 2007
The last time I played tennis I remember it being a significant workout. That was especially true because I was on the losing end of the game, meaning I ran twice as far and hard as the person who knew how to play.
Bad news for those attempting to replace your daily recommended exercise with the new interactive video games. It seems that in spite of having the appearance of participating in sports and exercise, they don’t even come close to meeting the minimum recommended exercise regimens. So, that game of tennis in front of your TV may be fun, but isn’t going to keep you, or get you fit.
So, back to the good advice. Which ever regimen you buy into, 30 minutes a day 5 times a week, 60 minutes a day 3 times a week, 10 minutes 3 times a day every day……….which ever one you choose, the truth is that if you honestly exercise, get your heart rate up, sweat a little, theoretically you’ll be healthier and live longer.
Exercise helps control weight, and avoiding obesity can help you avoid diabetes, high blood pressure and heart disease. That’s all good stuff. Is it a pain in the rear to exercise regularly? I guess it can be, but there are so many things you can do, including just going for a walk like my 85 year old dad, that most anyone can find something that works and doesn’t drive them crazy.
Bottom line. Exercise pays off in so many ways. I know I feel better, more energized, after I go for a run. And if it beats back obesity and all of those related problems, it’s bound to be good news for your life insurance rates. Sorry to be the one to pass on the news about the video games. NOT!
December 27th, 2007
I just did a quick gut check on my blogging efforts over the past year. Who really cares about what I believe and what I know about life insurance? Who reads this and really believes that I can do what I claim?
I have had more than just a little interest in weblogs I’ve posted concerning some of the more difficult illnesses and situations to successfully get affordable life insurance with. I’ve had plenty of people take me up on my assertion that if they’ve been declined, it was probably more the fault of the agent and the company, than their own impairment. Here is a quick list of declines from 2007 that came to me looking for help and now have in force life insurance policies.
- Bipolar disorder
- Type 1 diabetes
- Type 2 diabetes
- Epilepsy
- Breast cancer
- Prostate cancer
- Early onset heart disease
- Heart attacks
- ADHD and
- Gastric bypass
This is exciting for me. I’m not in this business to write life insurance for the young and healthy. While I’m glad to help them out, they don’t need me.
My passion lies with those folks that have successfully beaten or at least controlled a disease, only to be slapped in the face by the insurance industry. My passion is to prove the ignorant life insurance agents representing the ignorant life insurance companies wrong. My passion is to turn declines into in force life insurance.
Bottom line. Thank you, all of you, who dig a little deeper and don’t take no for an answer. I am there waiting for you.
December 26th, 2007
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