Archive for June 9th, 2008
If it wasn’t just plain sick the way AARP treats it’s members, it might be laughable. AARP holds itself out as an advocate for just about everything for us seniors. In fact they are so excited about being able to be an advocate for you that they start working on you to join well before you reach your golden years (over 50).
Just when you think they are getting serious about offering valuable advice like their “No-guff guide to rude relatives” in their latest magazine issue, you open the magazine and run smack into a full page ad for their group life insurance. I’ve attached a copy so we can all be on the same page. Read the disclaimer right below their quotes and tell me about the warm fuzzy feeling it gives you.
aarp-rip-off
Let’s cut right to the chase. Unless you have some reason to want too little life insurance for too much money, some comparison shopping is in line. First, let’s come to grips with the fact that $10,000 or $20,000 worth of life insurance between ages 45 and 60 is simply unnecessary when we’re talking about term insurance. That is burial insurance amounts and people shouldn’t buy burial insurance with term unless they are planning to die fairly soon. So, while still not likely to be enough, we’ll do our comparison at $50,000.
AARP’s term insurance, underwritten by New York Life (they should be ashamed too) is a 5 year renewable term. That means that every 5 years the price is going to go up and while the first few times might not be too bad, when you get to 65 or 70, the prices will likely lead to you dropping the coverage. Even if you hang in there with the rapidly rising prices, the insurance ends at age 80. Of course we all know hardly anyone lives past 80, so that’s hardly even worth fussing about.
I will compare their products with the best standard rate (most will qualify for better than standard) guaranteed level 30 year term available. The prices I quote will also contain a conversion option that will allow coverage to go on to age 100 if you want. The conversion will be at a higher price, but remember that you don’t have that option with AARP and your premium will be level for 20 years, unlike AARP.
So, here are the $50,000 quotes (monthly rates) from their attached ad.
Age 45-49 female $28.67, male $41.08
Age 50-54 female $36.29, male $51.04
Age 55-59 female $55.92, male $74.58
Compared to the best standard rates on the market.
Age 49 female $17.94, male $23.76
Age 54 female $22.71, male $31.89
Age 59 female $34.91, male $52.02
So, what’s the difference? Well, to get the better rates you have to take an exam. That’s at no cost to you and can be done at your home or workplace. And remember, I quoted standard rates. Those quotes will generally be high for the age groups that AARP advertised. A person in good, not perfect but good, health could easily be looking at rates half of what I quoted.
Bottom line. If AARP really cared about their members they would be writing articles about how to get the best life insurance rates possible instead of telling you about rude relatives.
June 9th, 2008
You know, I really hate to point fingers and tell on folks, but when they are just blatantly charging more than they need to, someone needs to speak up.
While we all love to pay for insurance (right up there with vacation), hardly anyone I’ve talked to would pass up an opportunity to pay less for their life insurance as long as it comes from a reputable company and offers good guarantees. OK, so let’s leave Swamp Life of Vermont and AARP out of this discussion.
What I would like to talk about is America’s biggest property/casualty (industry name for auto and homeowners insurance) companies. For the sake of this discussion we’ll stick with the three of the most wholesomely named, State Farm, Farm Bureau and Farmer’s. I mean what is more down home and honest sounding than farms?
These guys have had it rough over the years with hurricanes, tornadoes and wildfires. But, they still have managed to be profitable. So, I suspect that over the years they haven’t underpriced their insurance. They all sell themselves as one stop, full family need, give us all of your insurance business kind of places. They’re really big at offering discounts. You know. “If you get your life insurance through us we can give you 10% off on your auto insurance”. It sounds like, well, an unbeatable kind of deal.
I kind of enjoyed math when I was in school and once I was able to start applying that math with some common sense (that came much later) to situations, some interesting trends starting becoming clear. For instance, in the situation above, if Farm Bureau can offer you 10% off on your car insurance if you buy life insurance, doesn’t it kind of make sense that either their car insurance or their life insurance is overpriced. Or maybe both.
I’m not saying this will work every time, but I will conservatively say that 90% of the time, if you buy your life insurance from a life insurance company (not property/casualty), the savings on your life insurance will be larger than the 10% discount you might receive from say State Farm. And I am willing to bump my estimate up to 100% if you recently had a speeding ticket or fender bender.
Bottom line. I just beat up a little on three great companies. They are great at their primary business which is property and auto insurance. But they aren’t even in the ballgame when it comes to life insurance pricing, knowledge or products. Shop it for yourself and do the math. I just cut a life insurance bill for the CEO of a company from $12,000 a year down to $6,000 by moving his business to a life insurance company.
June 9th, 2008
Any time I am working with a new client who has had serious health issues, there are specific pieces of information I need that are essential to my ability to provide an accurate quote. On rare occasions people will know the critical information, but most of the time it has been filed in their minds as doctor talk and left to the archives of their medical records.
With cancer it is imperative to know the specific type of cancer and the stage and grade of the cancer. With diabetes it is imperative to know the hbA1c, a long term measure of glucose levels. With the cancer the information is contained on the pathology report and in the case of diabetes, the most recent full blood profile.
Whenever there has been a heart attack or coronary artery disease (CAD) that leads to either bypass surgery or angioplasty, the critical information is contained on a stress test. Generally a stress test will be done 6-12 months after a cardiac event just to check on the amount of damage that was done and how well the heart is performing.
Usually either a stress echocardiogram or a nuclear or thallium stress test will be done. These stress tests are known as imaged stress tests because rather than just graphs that you would see on a stress ekg, the tests provide data and images which make it easier to pick up on subtle abnormalities.
Probably the key piece of information that comes from these tests is the left ventricular ejection fraction (LVEF). This is a measure of how efficiently blood is pumped out of the left ventricle and is considered a good measure of the overall strength of the heart, or put another way, how much damage the heart has suffered. In a normal healthy adult an ejection fraction would be between 65% and 70%. Anytime the LVEF is below 50% there is a very high likelihood that a life insurance application would be declined.
Bottom line. Successfully shopping for life insurance after serious health issues takes teamwork. You need a good, knowledgeable independent agent, but you also need to be willing to do your homework. Providing accurate information to life insurance underwriters during the informal trial or quoting phase will help to ensure no surprises with the final outcome.
June 9th, 2008
Ahh! The good old days when smokers were smokers except with one life insurance company, some smokers weren’t smokers.
This actually wasn’t all that long ago, maybe a year and a half, but there was a company called US Financial who truly looked at things in a different way. This was a company that pioneered what they called “clinical underwriting”, a term that simply meant that they looked at each case on its’ own merit. This differs from traditional underwriting where, literally, each applicant with a health issue or habit is thrown into the same bucket and they are all given the same rate class with very little consideration for differences in control or habits.
This proved to be huge for those people who fell into what US Financial considered a social smoker category. Qualification for social smoker status was pretty straight forward. If you were under age 50, smoked less than a pack a day and had smoked less than 20 pack years (defined as less than a pack a day for 20 years), you could qualify for preferred non smoking rates even though you were in fact smoking.
This differed greatly from traditional underwriting. All the other insurance companies would put you in a smoker category even if you were one of those people who smoked half a dozen cigarettes a month, truly a social smoker. Those companies, which are now all companies since US Financial was purchased and put out of business by AXA Equitable, would have you pay rates 2 to 4 times higher than a non smoker even though there is clearly no clinical or medical link between a very occasional cigarette and the health conditions that are attributable to regular smoking.
But, as happens with most good old days, they disappear. AXA Equitable bought and destroyed one of the best, most innovative companies in the history of life insurance.
Bottom line. Now cigarette smokers are in fact smokers. There is still one bastion of relief for those who use tobacco or nicotine products other than cigarettes. A good independent agent would guide you to Prudential for non smoker rates if you are a cigar smoker or pipe smoker, or happen to chew. Again, all other companies would put you in the same bucket as cigarette smokers for those habits.
June 9th, 2008
