Ed Hinerman On Life Insurance

The Point Of Diminishing Return!

There is a point that us old guys reach where no matter how healthy we improve our mortality risk in the next year we just aren’t going to be able to get life insurance cheaper than we can today.

I just had this delicate conversation with a 61 year old man who qualifies for preferred rates today and could potentially, with lower cholesterol and a few less pounds, qualified for preferred best rates next year. It will be a stretch as he needs to get his cholesterol from 267 down to 240 and his weight from 230 down to 216, but it might be doable.

His rate for $1,000,000 of 15 year term insurance today at the approved preferred rate is $5040 annually. If he can get it all done in one year and no other health issues pop up he could potentially get his rate down to $4410. If it takes him two years it will cost $5230. It’s a small window of opportunity and only one company we can do it without having to get his cholesterol down to 230 or 220.

My recommendation in this scenario is take the bird in the hand and put it in force. If he can reach his goals he’ll hit a home run next year and if he doesn’t reach those goals he’ll be better off than he would be if he tries again in two years.

At younger ages the system can be worked a lot easier because the cost of insurance isn’t going up as much every year. Once you get into your mid 50’s and older, unless you can fix the problem in a year you get gobbled up by your own age.

Bottom line. I never discourage someone from looking ahead toward an opportunity of lower rates. I always, always recommend that you do your looking ahead with insurance in force. While it’s possible to improve health and your rate class in your 50’s and 60’s, generally that isn’t the direction most of us go.

Add comment July 6th, 2009

Life Insurance Treatment Of Marijuana!

Life insurance has this whole little underwriting niche that comes under the heading of lifestyle. It’s not about health or family history and it’s not about your lab results, it’s about, well, your personal life.

Probably the most common lifestyle issue that catches people by surprise when they apply for life insurance is their driving record. Underwriters regularly pull motor vehicle reports and with most companies if you’ve had 3 or more moving violations (speeding, etc) in the last 3 years, you will get whacked a bit. If you make something of a career out of talking to highway patrol officers you may even be declined for coverage.

Another lifestyle issue is smoking pot. Companies are all over the map on their treatment of pot smoking. Let’s set aside for a moment that in most places it is against the law. The underwriters feel the need to whack you to some degree, but it’s hard to figure out the logic. Given preferred plus health, finding preferred plus rates with admitted marijuana use is nearly impossible. Some companies will allow approvals at standard non smoking rates, showing their disapproval by bumping you a few rate classes. Other companies exact their social revenge by levying smoking rates so that you pay premiums comparable to those of a cigarette smoker.

Then there is the subject of legality and some companies flop down on the legally moral high ground (get it, high ground???) and decline to issue a policy at all.

Bottom line. It’s best to approach the issue of purchasing life insurance if you smoke pot with a clear head, and an independent agent who will have access to the companies that take the least offense to your relaxation method.

Add comment July 6th, 2009