Archive for April 1st, 2009
Just when you thought I was through yelling, Prudential just announced today that their least expensive term insurance product, simply the best deal going in the $1,000,000 and up amounts will have a rate increase effective May 1.
You know that stomach crunching feeling you get at the bottom of a steep drop on a roller coaster? That is the feeling people are going to have when they wait a couple of months to buy a term policy and find out that the prices hit bottom when they weren’t paying attention and headed back up.
Now, don’t get me wrong. Term insurance was a good deal 10 years ago before rates started falling and the increases we are seeing so far won’t set us back 10 years. But, take as an example a Prudential policy a client put in force today at $2310.00 annually. It is a 30 year term. Prudential’s stated price increase is 4% which would raise the cost of the policy by $92 a year, a little over $2700 over the 30 year life of the policy.
I don’t know about you but I hate it when I let good deals walk right by and out of my life. And I really hate it when I blow $2700 for no reason at all. That’s why I added to my term portfolio last month, taking the advice I’ve been screaming at the top of my lungs since the first of the year.
Bottom line. I’m not saying to go out and buy life insurance you don’t need, but I am saying that if you are considering a purchase, get off you rear and do it now. If you have insurance in force and want to replace it at the lowest rates in history, do it now.
April 1st, 2009
I just off off the phone with a man who got laid off and then got blown over when he found out the reality of what it would take to make his group life insurance portable.
Since I’ve been in the business, even back when I was big into setting up group plans, I always recommended that people carry some life insurance outside the workplace. Group life insurance is great stuff. Don’t get me wrong. As long as you are employed and your benefits don’t get changed group life is one of those rare gems that is a real blessing. Real live cheap life insurance. Sometimes even free!!!
And then the benefits get or the lay off comes and the reality comes. You are offered the opportunity to convert your group policy and you’re thinking “all is not lost”. Then you find out what the opposite of cheap group term insurance is. The only option they offer on the conversion in almost every case will be an expensive whole life or universal life policy, and I am talking gag reflex expensive.
So, you’re laid off and your income has just been slashed to the bone if there’s any left at all and the cost of your family protection has just been quadrupled or worse, much worse. The only good news in this scenario is if you happen to be in good health. You should be able to get an individual term life policy for a very reasonable price. If your health is not so good, something that is absorbed by group life insurance, you should be seeking out an independent agent to shop for the best possible price you can find and put in force what you can afford.
Bottom line. If you still have your job and you still have a group life insurance policy, count that as frosting and go out and purchase an individual policy. Get something that no board of directors, no employer and no recession can take away from you.
April 1st, 2009
So the question really comes down to this. Is a family going to realize a better benefit in their family trust through the purchase of a guaranteed life insurance policy, or through the purchase of land in Mississippi using the same amount of money.
I have been working with clients for over a year now trying to help them unravel the mess that a Hartford agent got them into with a single premium variable universal life insurance policy. 10 years ago their $200,000 premium bought a non guaranteed death benefit on a second to die policy of $1.6 million. Today the policy has about $130,000 cash left and with them in their 70’s, the policy is rapidly imploding due to poor investment performance and the natural rise in mortality charges.
With some health changes that have occurred, we shopped to see what kind of fully guaranteed policy we could get to replace the Hartford disappearing act. We had several offers that came back better than Hartford, the best of which would give them about $500,000 guaranteed for life with just the single premium.
They are considering that, but they just threw in the mix the possibility of using that $130,000 to buy land for inheritance purposes. They apparently have found what they believe is a good deal. Of course there are no guarantees on future land value and if the value does very well, there will be substantial capital gains due at some point.
Having discussed that with them I left them to compare that with a life insurance policy that will produce a 375% tax free return on investment. Life insurance has the added value of being a much simpler inheritance vehicle to dispose of and divide when the time comes. With several children the land idea could be a can of worms if they don’t all magically agree on what to do and when to do it. With life insurance there is no question. Simple division and disbursement, tax free.
Bottom line. There’s no doubt that whatever we do, whether our own retirement or planned inheritance, we want to make sure we get the most bang for our buck. Consider it all carefully before you commit.
April 1st, 2009
