Archive for June 1st, 2009
As we have reported early, often, loud and accurately, term insurance rates as we’ve grown to know and love them, lower each year, are turning rapidly the other way. West Coast Life insurance announced today that they will increase their term insurance rates effective 6/15/09. It’s a fire-sale
This follows another move of the same genre from West Coast a few months ago, the removal of their ultra competitive no lapse guarantee universal life from their conversion options.
The word in the back alleys is pretty consistent. Insurance companies have enjoyed a long run of very high profitability and high financial ratings that have allowed them to drive the cost of term insurance down. With the bruising recession, financial ratings have dropped and many companies have been forced to carry higher reserves due to the downgrading.
Don’t expect this to be the last of it, but take some solace in this. 10 years ago the best rate available for a male age 46 on a $500,000 20 year term policy was $770 a year. Currently the same policy would cost $615, unless you buy from Zander Insurance in which case it would cost you $665. The modest rate increases we’re seeing now will, I’m thinking, never return us to the levels that were around 15 years ago. Quote me a few years from now for better or worse, but this string of increases do spell the end of the downward trend, but I don’t believe they foretell the beginning of an upward trend. More like the bounce when something hits the bottom.
Bottom line. Time to get real people. Don’t buy something you don’t need, but if you need a new term insurance policy to add to your existing portfolio or replace one with a term too short for your needs, or a low priced universal life with a no lapse guarantee to replace an overpriced traditional UL or whole life, it’s fire sale time. Don’t drag your feet.
June 1st, 2009
90% of life insurance agents cash those commission checks and forget anything they said about service. If this past year has taught us anything, we should have learned that a financial adviser that doesn’t stay on top of changes and doesn’t stay in touch can cost us tons of money, quickly.
Transamerica just posted a piece today talking about the new, even more important role that life insurance plays during these “uncomfortable” times. But along with the comforting features of life insurance such as tax free benefits, comes the bad news, a real ongoing black eye for the life insurance industry, the fact only 10% of agents do annual reviews with their clients.
Annual reviews are a two edged sword among the 10% of agents that actually participate in the practice. I know agents that will follow up with clients annually at least a few times with the express purpose of up selling or proposing stupid ideas such as life settlements. If they find the client isn’t going to be an ongoing cash cow, they never call again.
Annual reviews are a service that clients should expect. They have put their trust and faith in an agent that is handling what is being called the “new asset class”, their families future as held together by life insurance. Clients should come to trust that an annual letter and call from their agent won’t have hidden agenda, but will keep them current on their coverage and educate them on changes that have occurred that might have an impact on their overall financial plan. Clients should expect an agent to let them know when there are opportunities to save money either with new products or when laws change and the client’s need for life insurance becomes less.
Just a few questions concerning your current agent.
1. If you have an estate tax plan that uses life insurance has your agent let you know that over the last 6-7 years there have been huge opportunities to save amazing amounts of money on the permanent universal life or whole life policy that is funding that plan?
2. Has your agent let you know that right now there is the end of an era of prices that will likely never be seen again? Term insurance prices are no longer going down and there is still time to lock in rates that will soon be known as the lowest that ever were. But not much time. A call from your agent a year from now will be too late.
3. Has your agent that sold you that whole life or universal life policy ever told you about universal life policies with an external no lapse guarantee, a product that can replace traditional policies for pennies on the dollar with better guarantees? Has your agent told you that opportunity is taking the same turn as term insurance and will cost more or be unavailable with many companies very soon?
4. Has your agent that worked so diligently to sell you life insurance for your estate plan 5 or 10 years ago called to let you know that the estate tax exemption has gone from $600,000 to $3,500,000 since 2001?
5. Did your life insurance agent call to let you know that your term insurance policy was coming to the end of its’ guarantee period or did you just get a much larger bill from the insurance company?
6. Do you know if your life insurance agent is even still in business?
Bottom line. It’s called service folks and we, as life insurance agents, should be expected to provide it even if we never make another dime. We have asked you to allow us to manage part of your family asset portfolio and we should provide the service due from a financial professional.
June 1st, 2009
I’ve never been seen smoking and I suspect that Dave Ramsey isn’t real big on the habit either, but after spending the last year and a half immersed in Dave Ramsey through his Financial Peace University, I am convinced that Dave Ramsey wouldn’t want to monetarily punish smokers for their choice.
I think it’s safe to say the Dave is the best known and most listened to debt reduction advocate out there today, far surpassing those who seem to kind of flit around the periphery like Suze Orman. Dave’s messages stay consistent. They are no nonsense and meaningful to me, they are sound from a biblical point of reference.
Dave has recommended a nationwide agency, Zander Insurance, for some time. Quoting him on Zander’s home page, “Four generations and 80 years experience, unparalleled commitment to service, the best products on the market, and a principled commitment to debt free strategies, are just a few reasons I trust, use and strongly recommend Zander Insurance.”
Having learned and taught Dave’s debt free strategies I find it more than a little troubling that, using myself as an example, if I were a smoker and took Dave’s advice to use Zander life insurance, I would pay nearly $1200 more per year for a $500,000, 20 year term insurance policy than I would through most other nation wide agencies out there. Zander’s website quotes my best rate in this scenario as $6295 a year from Transamerica, while our website and many others I checked quote $5100 annually with Liberty Life. I believe that Dave might characterize that kind of unnecessary expense “a stupid tax”.
I emailed Dave on his radio show and also sent this email to his info@ address. ” I’m a life insurance agent and agree with your philosophy on term versus permanent insurance, actually have since well before I ever heard of you. Been through FPU and am facilitating FPU at my church right now. What a life changer. Not debt free yet, but well on our way.
My question is why Zander when they clearly don’t offer the best value in term insurance in many cases? If you bought from them and then found out you could get the same amount and term length for $1000+ a year less with a company they didn’t quote, would you be OK with that?” I really don’t expect a reply on his radio show, not because he wouldn’t want to talk about it but rather because there are who knows how many thousands of calls and emails to him daily. What are the chances?
I did receive a response from his customer care folks and was told “About your insurance questions, Dave has been working with Zander for many years now. They have been in business for several years as well. Four generations and 80 years of experience…they offer the best products on the market and have a commitment to debt free strategies (which is what Dave teaches). Dave strongly recommends them and personally gets his insurance through Jeff Zander. This is the only insurance company that we endorse and recommend not just because of their excellent commitment to service, but because they provide the most informative access that our customers and listeners need—when it comes to insurance. They are not only committed in providing excellent service to us (our team members) and families, but to our customers and listeners as well. This is who we recommend and endorse.”
I emailed back and thanked them for the response but suggested that my question really wasn’t answered. The question really went to whether Dave was aware of the fact that Zander had made an administrative decision to charge far more than necessary in some cases. The answer I received was to contact Zander if I had questions concerning their term insurance plans. Quoting Zander insurance from their website, “GREAT RATES AND GREAT SERVICE. A strong statement we know, but with Zander’s 80 years experience and our arsenal of term life insurance plans, we know we can deliver. We understand the importance that term life insurance provides to a family’s financial future. We also recognize that it is just one piece in your financial plan and needs to be the most cost effective option allowing you to focus on debt reduction and wealth accumulation strategies. It is the balance and commitment to these two principles that define our mission to help you succeed in your goal of financial peace and independence.”
Bottom line. I write all of this because there are so many agents and agencies that really do embrace Dave’s beliefs and really do more than lip service to “providing the most cost effective options”. I’m not suggesting that Dave endorse me or any one other than Zander, but I am suggesting that when a person has millions of followers they should stand ready to take those they endorse to task when they fly in the face of deeply held beliefs and philosophies.
June 1st, 2009
