Archive for February, 2008
There are a couple of reasons this upcoming election could have an impact in the life insurance realm. For most of us poor folks you would think that estate taxes wouldn’t be a big issue. I think it’s significant no matter who you are.
Just to recap the journey that estate tax law has been on, back in 2000 estate taxes had to be paid on any estate over $600,000. The $600,000 is called an exemption meaning that much of your estate is exempt from taxes and can be passed to your heirs tax free. What was happening was that people were working all of their lives to build up businesses like ranches and farms, and the more successful they were, the more the federal government got when they died.
Because there is also a rule that says the taxes have to be paid within nine months, this often creates a fire sale situation where full value is not realized. It was not unusual to see businesses worth $2-$3 million be sold for pennies on the dollar to meet the tax obligation, leaving the family with nothing.
So, the exemption has been increasing since then and is now at $2,000,000. Next year it will go to $3,500,000. Theoretically in 2010 it will disappear altogether and there won’t be any estate tax and at the end of 2010 it will reappear with a $1,000,000 exemption. Confused yet?
The idea of raising the exemption to next year’s $3.5 million is a home run for hard working families and family owned businesses. Congress has a choice about everything that happens in 2010, and depending on who is in charge I, and many of my colleagues think it will shake out one of two ways. Either the Democrats will be in charge and they will choose to freeze the exemption at $3.5 million, or the Republicans will be in charge and they will let it go away.
Without getting political, if it is frozen at $3.5 million, a home run has been hit over the past 10 years for those who have been successful. If the exemption goes completely away the government will have done away with an historic funding source that has finally been made fair. That funding source will then be distributed over a broader number of people and the poor folks will get to help carry that burden.
The other thing has to do with health care and health insurance. In an article I read today it cited a study that showed that people without health insurance were more likely to have cancer diagnosed later, often too late. Because they can’t afford what some people can afford, they don’t get to live as long and their families can be destroyed over inordinately high medical costs.
Bottom line. Plenty of life insurance reasons to think about the upcoming election.
February 18th, 2008
I admit that I am something of a whiner when it comes to cold and snow. I am often asked, if that’s true, why I live in Colorado? The answer lies mostly outside the winter months.
Snow has been building up, or at least not going away since late November. A few weeks ago we finally got some relief from the cold and the snow and ice in my parking lot began to melt. Two days ago it had reached a point where the ice was virtually gone. I actually went outside and just stood in the sun. For the first time in months I wasn’t holding my breath or gritting my teeth against the cold.
Then it started snowing again. My parking lot is once again covered. I was up at 5 this morning shoveling and pushing snow. People who have had heart attacks pay big bucks to have a cardiologist make them work like that. A stress test for sure, on more than one level.
I’ve read somewhere that shoveling snow is a major cause of heart attacks in the winter. Winter is also a big culprit in the onset of depression.
So, do life insurance underwriters view those of us that have to shovel snow in the winter with extra caution? Fortunately the answer is no, unless we suffer from depression or have a heart attack.
Bottom line. It’s supposed to warm up again this week so with any luck I will be able to stow away my whine for a while.
February 15th, 2008
We’ve often discussed in this forum that one of the most prevalent risk factors associated with obesity is the increased risk of cancer. Scientists are narrowing down some of the worst culprits of obesity and their role in that increased risk.
Processed meats win the prize for the worst thing you can do for yourself if you are trying to control your weight and have decided that, given a choice, you would prefer not to have cancer in your life. In a report that is drawing fire from the food industry, excessive intake of red meat, and to a greater degree, processed meats, are shown to contribute to a significant increase in the risk of cancer of the colon, kidney, pancreas, esophagus and uterus as well as post menopausal breast cancer.
While the report was especially rough on bacon, sausage and pepperoni, it recommended guidelines limiting intake of red meat to just over a pound a week. I gave some thought to my own habits, and while I certainly don’t keep track of that kind of data, I suspect that I run at or below that amount. I remember staying with some cousins of mine who were ranchers several years back and being shocked at the amount of meat they filled their days with. They probably met that weekly recommendation on a daily basis.
Life insurance applications and underwriters don’t ask about your eating habits, although the evidence is generally shown in things like weight, lab results, health issues, etc.
I had a client recently that expressed dismay that the quote I provided didn’t hold up when he weighed 20 more pounds on the exam than what he had stated to me and had indicated on the application. He said that I should make people aware of anything that could possibly effect their rate prior to them applying. I don’t know why that struck me as odd, but it did. Life insurance rates are all about assessing risk. But, for the sake of any future customers, my disclaimer: “Anything that puts you more at risk of disease puts you more at risk of premature death and puts you into a higher rate category.”
Bottom line. It’s all about taking care of yourself and making prudent choices in your life. We can’t expect to waltz through life eating recklessly and piling on the pounds and not have our bodies revolt at some point. If that is the direction you choose, my recommendation would be to get your life insurance before the next toll booth comes into sight. Weight alone can affect your rates, but cancer, in some cases, can keep you from being offered insurance at any rate.
February 14th, 2008
Small businesses, the backbone of American employment, often run by the slimmest of margins. I’m not talking about profit margins. I’m referring to the owner or one of the owners being just a heart attack away from leaving their family with the business or a partner trying to figure out how to buy the deceased partner’s family out of the business.
In either case, business insurance in the form of key man or buy/sell life insurance can save the company and your family the strain of trying to figure out what to do with their inherited new career.
There are so many unprotected partnerships out there that it boggles the mind. How would you like to have your partner replaced by one of his family members tomorrow? If you can’t afford to buy out the partner’s portion of the business, the family has a right to do what they need to do to replace the lost income. You could end up with someone “helping” you run the business that doesn’t have the slightest clue what to do.
If you are a sole proprietor, carrying life insurance to replace the lost income and carry the business until it is closed down, sold or turned over is critical. In the absence of that protection, your family will not only lose the income, but likely lose the business along with it. Rare is the small business that can be successfully taken over by your wife or another family member.
Bottom line. Ensuring the succession of your business with life insurance makes great sense and in most cases the cost is very low. Compared to the alternative it is always low.
February 14th, 2008
OK! Most of us only feel like the fattest person in the world occasionally. And we whine when diet and exercise aren’t producing the results we really want, but are we trying hard enough?
There is no arguing that obesity is a problem, but this guy takes the cake and ate it too. Manuel Uribe from Mexico was recently noted as the officially largest man in the world, topping the scales at a whopping 1257 pounds 2 years ago. Even though bed ridden for the past five years, he has been steadily losing weight over the past two years under a doctor monitored diet and exercise program.
Without radical procedures like gastric bypass he has managed to shed 570 pounds and has set a goal of getting down to 265, one fifth of his peak weight. That kind of puts things in perspective when you are a mere 100 pounds overweight.
Admittedly this was no regular diet and exercise program. He had doctors from three countries working with him and I suspect funding from somewhere. Obviously he isn’t out making a living and I kind of doubt anyone is going to make a movie about him.
How would a life insurance underwriter look at this? Remember that large weight loss underwriting is a gradual process. There is always an assumption that rapid weight loss is temporary until proven otherwise. In Mr Uribe’s case, he still has about 400 pounds to go before he would be insurable based on normal guidelines. Most underwriters would want to see a couple of years of stability in a normal case. I suspect longer in his case just because of how dramatic the change is.
Bottom line. Just wanted to pass along a diet and exercise success story. The good news is that great rates are available for just the average overweight person.
February 13th, 2008
There are so many options to shop for your life insurance needs, each making the claim that they will save you money. Save 70% on your term insurance! Hundreds of companies to choose from! Give us 10 minutes and you could save hundreds of dollars on term life insurance! Shopping for insurance is quick and easy!
Well, if you happen to be young and healthy and happen to have done an impulsively ignorant thing like buy your current whole life insurance through Northwestern Mutual, these claims are not out of line. You can save big bucks because you are spending far too much now. It can be quick and easy because if you’re young and healthy there isn’t much for an underwriter to think about.
But let’s step away from that market for a moment. Let’s talk about you and me. Let’s talk about people in their 50’s, 60’s and 70’s, whose health ranges from less than perfect to down right problematic. Let’s talk about those of you who have diabetes or heart disease. Let’s talk about the reality of finding affordable life insurance if you suffer from depression or bipolar disorder. Let’s get real about the challenge of finding life insurance when you have survived breast cancer or prostate cancer.
The mammoth agencies that make those claims at the top really don’t want to deal with impaired risk (industry term for health problems) business. They make their money by churning out mass amounts of quick and easy, young and healthy, 10 minute business. They don’t want to get bogged down in asking all the questions it takes for them to fully understand your situation. They don’t want to wait for you to produce stress tests and pathology reports that are critical in obtaining good offers. They don’t want to take the time to petition underwriting opinions from dozens of companies. And they really don’t want to spend the time it will take in underwriting knowing there is always the chance that the business might be declined or rated to the point that they will not make a sale. Quick and easy. 10 minutes.
There are a group of agents out there, independent agents, that honestly are experts at impaired risk business. They understand the work it takes and they understand how much it means when they succeed for their clients. As independent agents we embrace the education required to succeed for you. We build relationships with those companies and underwriters that we know will come through for you. We made a choice to leave quick and easy behind a long time ago because anyone can do that.
How do you know you’ve found the best deal? How do you know you’ve found the right agent? If you come away from a first contact with an agent and feel like they understood your health issue and knew what questions to ask, that’s a good thing. If they asked questions that possibly you didn’t know the answers to, believe it or not, that’s a good thing. If you are diabetic and don’t know what you hbA1c is, you should know. The agent that asks for it understands what it is, how important it is to your health, and that you can’t get accurate quotes without it.
Very often a first contact on impaired risk business will leave you with homework to do. I’ve had people back out of the request because they aren’t willing to call or go to their doctor and find out the information it takes to properly present a request for quotes to underwriters. They lose because a request for quotes with a history of cancer that doesn’t include the stage and grade of the cancer won’t get any responses. A request for quotes on someone with bipolar disorder that doesn’t spell out whether it is bipolar 1 or 2 won’t get any quotes.
Bottom line. You will know when your interests have been properly served and you will know when you have the best value, because it will be obvious that the job was done, done right and done completely. If you take health issues to “quick and easy”, you will get exactly what they have advertised, but the chances of your best interests being served are slim to none.
February 13th, 2008
So, you’ve been told you have hypertension, high blood pressure in layman’s terms. Your doctor said that you need to take medication and change a few lifestyle items, primarily eating right and getting more exercise.
If you are like the majority of high blood pressureans, you’ll probably take the medication when you feel like you need it which is not what your doctor ordered. And there is clear evidence that most folks with hypertension kind of pass over that whole thing about changing their diet.
It seems to me that one of the reasons that health care costs are so high here is that so many people spend money to get a doctor to diagnose and recommend treatment. Then they turn around and ignore the treatment, which leads to further deteriored health. In the case of high blood pressure, not being compliant with treatment and recommended lifestyle changes can lead to a stroke or heart attack.
From a life insurance standpoint compliance and control are the bedrock of underwriting. When an underwriter is reviewing records and sees ongoing reminders from the doctor to take the medication daily and not when a patient feels like it, the big red flag goes up. When a person isn’t following recommendations and their blood pressure should be controlled, but isn’t, they should expect to pay a high premium or even be declined for life insurance.
Bottom line. Life insurance underwriters aren’t there to tell you how to live your life. They are there to tell you about the risk you pose by not taking medical advice seriously. They do it with rates. Great life insurance rates and high blood pressure don’t have to be oxymorons.
February 12th, 2008
From time to time we will have a life insurance application postponed until the client completes a planned medical procedure. Sometimes it is a colonoscopy. Could be a tonsilectomy. The issue here is that if you are going to be medically assailed for just about any reason, the insurance company would prefer to wait until you’re out of the hospital.
My own experience would indicate they should probably have even tighter postponements. I was re-hospitalized 5 months after surgery due to a staph infection that was apparently introduced during that initial surgery to piece together a broken leg.
The truth is that life insurance companies have good reason to be cautious about planned medical procedures. The numbers of people who die due to medical mistakes each year are comparable to the number that die in car accidents.
Bottom line. From a life insurance standpoint it is just a matter of practical caution. If you know that a potential client will be at risk by being exposed to a medical procedure, postponement is prudent.
February 12th, 2008
When I’ve talked to people about universal life insurance products that have guarantees to 120 and longer, I’m often met with a bit of skepticism. People can’t seem to comprehend the idea of living past 100 even though it appears to be a popular past time.
My own parents are a good study in this issue. Inspite of some health issues, they are both in their mid eighties and going strong, at least most days. Forever it has been assumed that if you live past the mid 70’s, well, you’ve beat the odds and are living on borrowed time. More recently, and the reason life insurance companies are offering longer guarantees at affordable prices, studies are showing that if you reach your mid sixties in good health, the average life expectancy shoots out to between eight five and ninety. If that’s the average, then the century mark is just a few steps away.
So, while universal life is still not my recommendation at younger ages, when you reach that point in your life where you know what your permanent needs are, a product that is guaranteed beyond 100 is the appropriate step. And great news. It’s an affordable step thanks to products that are putting the old expensive whole products to rest. Universal life with a no lapse guarantee is a permanent term insurance policy and you can’t outlive it.
Bottom line. Quit poo-pawing the idea that you might live past 100. It’s real. It’s happening more frequently all the time and it doesn’t appear to be a trend that will be reversing itself.
February 12th, 2008
Report after report talk about rampant, out of control obesity. MacDonald’s is to blame. Television and video games are to blame. I’m sure there are reports out there that directly blame my mother’s chocolate chip cookies. Somehow I ate them and didn’t get fat, but the rest of the country did and it’s my mom’s fault.
Now comes the real truth. It is the government and their infliction of daylight savings time on us that has really caused the problem. Check it out. Daylight savings time and the onslaught of obesity problems started about the same time and we all know how much the time change messes with our internal clocks. And now we find out that metabolism and weight gain can be effected by our internal clock.
And now that the new earlier in the year and later in the year changes have taken effect, we can count on yet another round of health issues caused by the government.
In all seriousness though, keeping a regular schedule has been proven to be effective in helping to regulate an array of problems from bipolar disorder to obesity. From a life insurance standpoint, regulation, or control is a key issue in whether a condition is insurable and how good the rates can be.
Bottom line. Whether it is bipolar, high blood pressure, obesity or cholesterol, having control so that other health issues or other parts of your life are not impacted is the key to reasonable and affordable life insurance rates. Is the government really to blame for obesity? Maybe. Is the government intentionally jacking with us twice a year and causing untold problems linked to stress? Absolutely!
February 11th, 2008
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