Archive for December 18th, 2007
There are times when diet and exercise just never seem to accomplish what’s needed. There are times when morbid obesity becomes life threatening and a radical approach to control the situation is needed.
Bariatric surgery, mostly commonly gastric bypass or lap band surgery, is that radical last choice. When things have gotten so out of control that the obesity is causing other health issues, radical becomes necessary. The good news is that bariatric surgery appears to have a direct positive impact on mortality experience.
I think most would agree that gaining control of weight through diet and exercise is preferable, but when dealing with extreme obesity, the ability to exercise is substantially crippled by the weight and dieting is often a slow arduous undertaking that fails when frustration sets in. With bariatric surgery the diet scenario is removed and the weight loss is dramatic enough that getting down to a weight where exercise is more plausible, happens very quickly.
At that point, keeping control of the vastly improved situation with a regular exercise program becomes far more likely.
Bottom line. Bariatric surgery is never recommended unless obesity is simply out of control. If the surgery can help avoid or control diabetes or heart disease, it can ensure the return of a quality of life that had been lost. When health improves and weight is controlled, life insurance becomes far more affordable. Do keep in mind that for most companies a 1-2 year period of weight stability after surgery is needed before they will accept the weight loss as permanent and give full underwriting favor to the new you.
December 18th, 2007
My recent post about Suze Orman’s lack of life insurance knowledge struck a chord with another life insurance professional, Jack Bobo. While I disagree with the premise of his article “The Tired Tirade Continues” in National Underwriter Magazine, it was refreshing to hear someone other than me with a long history in the business, taking Ms Orman to task for her attempts to dole out oversimplified advise.
Mr Bobo makes his case for whole life insurance by citing a number of instances where the cash value from whole life policies has saved the day. From people who had never been able to save money that suddenly discovered that they had been, by building cash value to Walt Disney using cash value from his life insurance to finish building Disneyland.
There is no doubt in my mind, because I’ve seen it over and over, that if someone buys whole life insurance, there will come a day when they discover that is has cash value and they will use it.
I guess what I wonder rather outloudly is, if a person wasn’t paying those high premiums for whole life insurance, wouldn’t they have money to put into savings? If Walt hadn’t been putting all of his available cash into whole life insurance, is it possible that he would have had even more funds available than what had accumulated in his policies?
Mr Bobo kind of makes the case that if you aren’t buying whole life insurance, you won’t put money aside for a rainy day. That may be true with some people. But if those same people are shown a different way to reach the same objective by an agent who isn’t stuck in a whole life rut, they might just find they have far more cash in their lives than whole life insurance could have ever provided.
Bottom line. If, as Mr Bobo asserts, whole life is a kind of force savings plan, two things come to mind. If a person hasn’t got the ability to budget for a savings plan, what are the chances that their budget for an overpriced whole life policy will work over the long haul? The second thing is, is whole life really the answer for temporary life insurance needs, and if the needs are permanent, shouldn’t they really be addressed with a more cost efficient universal life policy with a no lapse guarantee?
PS. I am not taking Suze Orman’s side. I still think she should go back to insurance kindergarten and start over.
December 18th, 2007
In a post not long ago I mentioned that New York was poised to approve the sale of indexed universal life, a form of universal life that uses market indexes to determine actual cash value above the guarantee.
Well, they’re off to the races. I ran a spreadsheet for both indexed universal life and second to die indexed universal life today and New York is on the map and Bankers Life of New York, part of the Aviva Group, is leading the way.
I’ve got to tell you that what I like most about the indexed universal life products, unlike variable universal life, is that they have a pretty nice potential upside in cash value, and the guarantees are great and there really is no downside as long as you pay the guaranteed level planned premium. Since all of my sales are based solidly on guarantees, my clients get the best of both worlds with this type of product.
I will, as I have all along, sell the guarantees and leave the assumptions alone. Maybe someone will make money there, but I want my customers to be happy about having the lowest cost guaranteed products. This is after all, a life insurance policy and the focus should be on providing a life insurance death benefit. If, 30 years down the road, there is cash value there, that’s ok with me. That cash value doesn’t add anything to the policy that is necessary to maintain the death benefit.
Bottom line. Hurray for New York and for Bankers Life leading the way.
December 18th, 2007
