Archive for December, 2008
When AXA Equitable made it official last week that they were going to discontinue their no lapse guarantee universal life products, I suggested that what we were gazing at was the tip of the iceberg.
There is some indication now that Phoenix Life will be announcing changes to its’ external guarantee UL products in the near future. I guess there isn’t any risk of my seeming redundant since I clearly am exactly that, so here I go again, redundiferous to the bitter end.
ANYONE WHO HAS PERMANENT PRODUCTS SUCH AS WHOLE LIFE OR TRADITIONAL UNIVERSAL LIFE, OR IS CONSIDERING THE ADDITION OF PERMANENT LIFE INSURANCE TO THEIR PORTFOLIO, NEEDS TO GET OFF THEIR REAR, or get used to the idea that you let one of the best deals in life insurance walk right past you and disappear.
I’m not absolutely sure that every company will discontinue these reserve heavy products, but I am sure that if they don’t dump it, they will raise the price. They are going to figure out some way to get the monkey off of their back to provide the large reserves these policies require and the only other back around is those who purchase life insurance.
This will be, not too far down the road, the life insurance equivalent of wishing you had bought Lincoln National stock at $5. Saving big money is just liking making big money.
Bottom line. Again, if you currently have permanent insurance and haven’t compared against the best of the universal life no lapse guarantee products, you are foolish not to before the opportunity is gone. If you have been considering adding permanent life insurance to the term insurance you have, consider it now before it has a much higher cost.
December 31st, 2008
What is normally a very straight forward process, the filing of a life insurance claim by the beneficiary, can become a nightmare if the beneficiary is someone other than a family member. While this is only an issue during the two year inconestability period, it is never the less an issue that needs to be considered.
I am working on a claim for a client of mine right now that illustrates what the problem can be. She and her fiancee took out life insurance for each other a few years ago and he died about 6 months ago, within the period of contestability.
During that period the company has the right and almost always exercises the right to obtain medical records and research the claim to see if anything was misrepresented on the application. When the beneficiary is a family member, as part of the claim packet, they sign an authorization to release medical records. In the case of a fiancee, or significant other, or life partner, unless they have exercised a medical power of attorney, they aren’t a valid signer for that authorization.
In the case of my client she asked her fiance’s mother to sign the authorization and was refused. The mother it seems, goaded on by a sister, decided they didn’t like the idea that her son had intended to leave his fiancee life insurance proceeds, and not her. She did say that she would sign the authorization for half of the proceeds.
This has led to a now pending court date to have a judge give my client a limited power of attorney in order to allow the company to process the claim. OMG!
Bottom line. If you are insured and your beneficiary is not a family member, or if you are a beneficiary and the insured is not a family member, get a limited medical power of attorney just for this purpose, at the very least. A claim that should have been resolved in 4-8 weeks is now in the sixth month and will likely be at eight months before it is finally paid.
December 31st, 2008
As life insurance agents we are provided with a set of underwriting guidelines for each company we represent. It tells us, rate class by rate class, what cholesterol, build, blood pressure, family history and so on are acceptable.
In the good old days which ended a few years ago, the guidelines were truly guidelines, not hard and fast rules. If for instance someone has a total cholesterol of 203 and and cholesterol/hdl ratio of 5.1, well, logic would lead the underwriter to see that while 5.0 is their guideline, 5.1 is very close and since 220 is also their guideline, 203 is better and trumps the 5.1.
Not so these days in far too many cases. They still call them guidelines but many life insurance underwriters are treating them has hard and fast rules, not to be breeched for any reason.
And then there are companies, like ING Reliastar, who like to give you a range of guidelines to hang yourself with. What follows is an example that I am currently jousting with them about.
Their guidelines for cholesterol for the preferred rate class read as follows, “Age 0-70: Chol max 240 + ratio not > 5.5 OR Chol max 260 + ratio not > 5.0′. I have a client whose lab results showed a total cholesterol of 253 and a ratio of 5.12. They, using the two examples, say that my client doesn’t fit into preferred. Being a logical kind of guy I created the following graph.
graph
Being techno challenged, my graph needs to be spun to the left. That done, the line is a logical line between the guidelines stated by ING and the lone dot is my client. Being to the left of the line and below the top it seems to be safely resting within their guidelines. In this case it seems that even if ING wanted to make their guidelines into rules, my client should still get preferred.
With all the changes in the way reinsurance companies treat insurance company underwriting, wiggle room is hard to find these days. It no longer matters in many cases whether the decision makes sense from a mortality standpoint. Decisions come down every day that defy logic and therein lies the value of a good independent agent. We can debate the case up the line and if we don’t overcome the forces with that company, we can shop it until we find someone who agrees.
Bottom line. If the war is to get affordable life insurance for all who want it and need it, above is a snapshot of the kind of battles we fight.
December 30th, 2008
In reviewing my last post concerning some of the changes in underwriting of life insurance that occurred in 2008, I found some parallels between that and some of the most significant medical breakthroughs of the year. Could it be that underwriters are doing their homework?
From the discovery that BMI is not always a true indicator of the percentage of body fat and therefore not a good measure of diabetes risk, to the discovery that eating foods that contain “resistant starch” as a way to help fight obesity and bolster weight loss, medical researchers are, year by year, getting a better handle on how we can get a better handle on our health.
A clearer picture of treatment for type 2 diabetes came from one of the largest studies done so far. Critical in the findings is early detection through risk factor education. Discovered early and treated aggressively, type 2 diabetes doesn’t have to have to be the 800 pound gorilla in the room. Studies showed that combining treatment for diabetes with treatment for cholesterol, triglycerides and blood pressure gave better results than treating diabetes alone.
Breakthroughs in the detection and treatment of colon and breast cancer will likely prove to be a boost to 5 year survival rates. While not a guarantee of any immediate impact on life insurance underwriting, these are the types of things that help pick apart the “one size fits all” underwriting of the past. Simply put, it is becoming harder and harder to justify the same mortality assumption for someone who has done all the right things relating to early detection and proper treatment of cancer with someone who hasn’t.
Bottom line. Life insurance underwriting is constantly evolving and while the best rates out there will never be available for everyone, with the right independent agent using the right companies, a fair shake is a more likely outcome than ever.
December 29th, 2008
Considering the turmoil of the economic meltdown that was 2008, it’s always good to find and hold onto bright spots. Here is just a quick review of a few of those bright spots coming from a most unlikely source, life insurance underwriters.
For years there has only been one company that would allow their best rate class for well controlled, treated high blood pressure. For those of us who deal with this issue and watch companies inflict a 30 percent hit on those who are often treating borderline blood pressure issues, to now have two companies that will allow treatment coupled with good control is a home run.
Another health concern that took a turn back toward sanity this year was the issue of basal cell carcinoma and specifically the underwriting treatment of someone who has had multiple cases. A few years back there was a study that showed there might be a link between those with multiple basal cell cases and the potential for melanoma, the deadly skin cancer cousin. At the time most companies changed their underwriting of multiple basal cell cases to best case standard rates, about 100% higher than their former stance that basal cell was not a rateable issue. This year many companies reversed course on that decision and have once again decided that basal cell, whether a single incidence or multiple, shouldn’t impact a person’s rate.
Diabetes made some headway this year. Without going into all the detail it needs, suffice it to say that there has been some loosening of the standard guidelines for earlier onset type 2 diabetes and some significant changes to the guidelines for type 1 diabetes. All of these changes have one thing in common and that is the assumption of good control.
Anyone who has followed my rantings about life insurance know that this has been a year of significant gains in underwriting of bipolar disorder. Hinerman Group has successfully placed more cases this year than any previous year and all indications are that the trend will continue. Again, there shouldn’t be any assumption that life insurance is a guaranteed thing with bipolar, but given good compliance, good control, and a level or work and social stability, good rates are achieveable.
Bottom line. The headway made in 2008 is a trend that we expect to see continue. Some of it is attributable to changes in insurance company change in philosophy. Much of it is attributable to the growth and change we’ve achieved on our end. We are doing a better job of understanding what will move an underwriting decision and also in forging new underwriting relationships and solidifying those who we have counted on for years.
December 26th, 2008
To all of you have shared in this blog and have helped in our quest to make life insurance less of a mystery and more attainable, Merry Christmas.
Whether you have sought our assistance in applying for life insurance that had proved challenging or you just sought us out for answers to questions, we appreciate your interest and willingness to trust that the first answer you receive may not always be the best one.
Bottom line. Each day that I can make a difference and help someone with diabetes or heart disease or depression or bipolar disorder or a history of cancer obtain life insurance, is a day that I have followed my Lord in serving others. And isn’t that what Christmas is really all about?
December 24th, 2008
There is probably no better feeling for me (and my clients) than turning their previous experience of being declined for life insurance into an approval for the insurance that they want for their family. For those who have been declined, it’s the same feeling as asking someone out on a date and being turned down.
When the next chance comes along, rejection is fresh in your memory and it’s a little hard to take the plunge again. But when that approval does come through, well, home run, fireworks, Acceptance with a capital A.
We were just able to help a man who has bipolar disorder and anxiety disorder get approved at an affordable rate after Erie Life had declined him just a few months ago. As we’ve discussed so often, there are companies that seem to have their own emotional disorders when it comes to underwriting emotional disorders. The word bipolar sends them screaming into the dark without even a cursory investigation to see if the person might be one of the large percentage of very functional and stable bipolar candidates for life insurance.
Because we are very clear up front about what it takes to get approved and because we ask and answer all the questions that surround an application for someone with depression, bipolar disorder or anxiety, our batting average is pretty good. That is not to say that we get life insurance for everyone who wants it, but we are able to right the ship for many who have previously applied with the wrong company or through the wrong agent.
Bottom line. There is no magic to getting life insurance if you are young, healthy and have never had a health or mental issue. But, if you are in the majority you should seek the help of a knowledgeable independent agent and save yourself from the unpleasant experience of rejection.
December 23rd, 2008
I try very hard to get out relevant life insurance information in a timely manner and would hope never to jump the gun and potentially mislead. In this case it appears that while I was a few days ahead of the event, the wolf was in fact on his way.
In a post last Wednesday I reported a rumor that AXA Equitable was re-evaluating its’ universal life products with an eye toward getting rid of their external no lapse guarantee. On Friday they released a bulletin to agents, axa-distributor, saying that they are discontinuing their no lapse rider (NLR).
This is not to say that all companies will follow suit, but for those who have permanent products or are anticipating the need for permanent products in their life insurance portfolio, I would highly recommend an err on the side of assuming that, at best, these products will be higher priced in the near future. Given the position of universal life with a no lapse guarantee as the best priced fully guaranteed permanent product available as of today, a move toward replacing whole life or traditional universal life with this extremely valuable product is worth a look.
Bottom line. Given the volatility of the current business financial market there is no mystery surrounding this move. No lapse riders mean the company has to carry high reserves. This isn’t a time when companies, given a choice, are going to tie up liquidity any more than they have too. Again, if you have permanent life insurance or think you will be needing, contact an independent agent today and make sure you lock in what may be the deal of the century.
December 22nd, 2008
One of the biggest life insurance rate hits is for those who smoke. There is some logic to that given the link between cigarette smoking and cancer and heart disease, but are the underwriters throwing apples and oranges in the same basket and assuming they all taste the same?
More companies than not bulk all forms of tobacco use in the same category as cigarette smoking, so for those who are cigar smokers or chew tobacco, even though the mortality risk is much different than for cigarette smoking, they pay the same rates. While most companies don’t really care if that is fair, some distinguish between the different forms of tobacco use and offer non smoking rates to.
To put this more in perspective, the cost difference between smoking and non smoking is about the same as that between someone in perfect health and someone with type 2 diabetes. Given the huge mortality risk hit appointed to smokers, the logic for that same risk for cigar smokers isn’t just thin, it’s absent.
There are companies out there who graciously allow an “occasional” cigar without taking someone to the cleaners. American General will even allow one cigar a week and still offer their best rate. The caveat and, in my mind, the bait and switch of that offer is that they also say you have to have a negative nicotine test on your labs. Given the length of time it takes for nicotine to leave the system, one cigar a week and a negative result on nicotine don’t logically match up. Most companies that allow occasional cigar use define it as one per month or four to six per year and negative nicotine.
There are a few companies out there who simply stand out on the issue. The goal of anyone who uses tobacco or nicotine other than cigarettes should be an approval at non smoker rates, rates that reflect the difference in mortality. Prudential Financial for instance will allow non smoking rates for tobacco use other than cigarettes even with a positive nicotine lab result. They don’t cap the amount of use in an attempt to paint you into an occasional corner.
Bottom line. If you smoke cigars or chew, and are being offered smoking rates or having a policy in force with smoking rates, seek out an independent agent who can guide you to the lower rates that are available, the rates that you deserve.
December 19th, 2008
Term insurance policies have a golden egg buried in them call the conversion option. This option allows you to convert all or part of your term insurance policy into a permanent policy without evidence of insurability.
This is huge in several ways. Let’s use me as an example. I have a $500,000 term insurance policy I took out 10 years ago when I was, from an underwriting standpoint, more in my prime than I am now. I was approved at preferred plus rates, the best rate class available. I’m still in very good health, but with a 10 years and a few more health wrinkles I am at best a standard plus risk.
I am considering adding $250,000 of permanent insurance to my portfolio. If I go out and buy that at my age and current underwriting classification, the best annual premium I could expect would be about $3600 annually. But, if I pull out that golden egg from my old policy I can convert $250,000 at my original preferred plus rate class and the annual premium would be $3000 annually. While $600 a year isn’t huge, when you consider paying it for 20 or 30 or more years, well….. If I had cancer and wasn’t insurable at all, I could still convert that policy at their best rate class.
And that’s if I do it today. I won’t be older for insurance purposes tomorrow, but the word is on the streets that the products I just quoted may be going the way of overpaid CEO’s. In this example I used a universal life no lapse guarantee product, simply the best, most affordable fully guaranteed product on the market.
What sets it apart from other permanent products such as whole life and traditional universal life is that it doesn’t have any cash value and uses, like term insurance, an external company guarantee. Policies with cash value, which not so magically comes from the person paying the premium, means that the price is substantially higher than policies with an external guarantee.
So, if you have any thoughts of conversion, or perhaps purchasing a new permanent policy or replacing an overpriced cash value policy, go directly to your independent agent and tell them you want it and you want it now.
Bottom line. There are three points that should be considered by those for whom permanent life insurance is part of their overall insurance plan or who are considering conversion. First, if you already have a universal life policy with an externally guaranteed no lapse provision, it will not change. Second, because product and rate changes usually do not happen instantly, there will be a period of opportunity for those who need permanent life insurance to still purchase it. Those prices that can be locked in now will likely be looked back upon as a brilliant purchase, savings tens of thousands or more of premium dollars over the life of the policy. And third, assume insurance companies will not announce to the world that they will be discontinuing an under priced product because they would probably would prefer to have it quietly disappear.
December 18th, 2008
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