Ed Hinerman On Life Insurance

Product Restructuring Brings Renewed Interest In 2nd To Die Life Insurance!

Since the inception of 2nd to die or survivorship life insurance policies to protect estates from being pillaged by estate taxes, most of the policies were written as traditional universal life or whole life insurance. Cash value policies.

When the cashless universal life with an external no lapse guarantee came along people were able to secure this valuable estate preservation tool for a fraction of the cost of the traditional policies. Without the burden of funding unneeded pools of cash value coverage was literally available for new pennies on the old dollars.

An example of this was a client four years ago who replace their $5,000,000 Mass Mutual 2nd to die whole life policy that had an annual premium of $89,000 and was only guaranteed to age 94, with a $5,000,000 Protective Life policy for $32,000 annually with a guarantee to age 121.

Now with the external guarantee products being revisited due to current reserve requirements and a lot of companies either raising the rates or discontinuing new sales of the products, attorneys are encouraging clients with existing survivorship policies to review them now. Not later. Now.

We still don’t know what will happen with the estate tax laws next year, but with the current news out of Washington leaning toward higher taxes for the wealthy, I think we can assume that the estate tax exemption won’t get bigger than the current $3.5 million and the estate tax rate will likely not go lower than the current 45%. The need for 2nd to die life insurance and irrevocable life insurance trusts isn’t likely to go away anytime soon.

Bottom line. If you have an estate preservation policy chances are very good that you are paying too much for it. There is a window of opportunity to fix that and with keeping the money in the family being the common goal, it’s time to have that policy reviewed and for very good reasons it is prudent to have it reviewed by someone other than the original agent you bought from.

Add comment July 16th, 2009

Type 1 Diabetes Life Insurance Quotes!

I wrote a few posts ago about the challenges of finding fair rates on life insurance for type 1 diabetes and mentioned that I was currently shopping a case that I would share the results on.

Because of it’s early onset and inherently higher mortality risk with type 1 versus type 2 diabetes, underwriting is a little more critical and cautious. While someone with type 1 and a history of good control and no collateral health issues can expect to get reasonable offers, they are generally rated policies and “reasonable” has to be measured against the standard for most companies which is to decline to make an offer at all.

The client I am shopping for is 42 and was diagnosed at age 15. He has never had any collateral health issues and his most recent A1c was 7.1, reasonable control. The best offer on $500,000 of 20 year term for him came in at $1670 annually, about $146 per month. This, while certainly high if you are a completely healthy 42 year old, stacked up quite favorably against the three declines he had already experienced through other companies.

That was the best result and should lead to an approval. The other offers went steadily down hill from there with several companies offering table rates that most agents and clients never hear about. Several companies, like the ones he had already tried, declined to offer.

Bottom line. There is life insurance available for a well controlled type 1 diabetic. Make sure you use an agent that has access to a large list of companies and keep your expectations realistic.

1 comment July 16th, 2009