Archive for October, 2009
There is a common misconception, especially among those who have pretty extreme weight issues, that life insurance simply isn’t available. With most, but not all, companies they would be right.
Obesity carries with it a lot of mortality baggage that most insurance companies would really rather not deal with. They see the glass as half empty so to speak. When they see an application for someone, say 5′10″ and 370#, even in the absence of any other health issues they can’t seem to get past the fact that obesity is in fact a risk factor for a lot of problems such has high blood pressure, heart disease, cancer and stroke.
Some companies can’t get past that and see their way to an approval. That is not to say that the companies that will approve a policy on a severe weight issue are ignoring the potential consequences, but they are giving some leeway for the fact that those problems haven’t shown up yet. This gives some advantage to younger applicants as, just like diabetes, obesity tends to wear your body down over time. You are far less likely to have been impacted by obesity in your 30’s and 40’s than later in life.
The good news whether you are in your 30’s or in your 50’s or older is that if you have managed to maintain good health, other than your weight, reasonable rates are available. Some companies, like Prudential, even bump their build scale up after age 65 sort of acknowledging that not all of us can hold our stomach in forever.
Bottom line. There are times when you really won’t qualify for traditional insurance based on height and weight, but in most cases that isn’t true. A good independent agent can guide you to the right company for your build.
October 30th, 2009
So, you have this life insurance policy and you don’t know if it’s a good deal or not, but it’s in force. That’s a good thing and actually far better than most folks have done. But what if there is a better deal out there?
I am amazed at the loyalty that people have to life insurance policies. The thing that amazes me is that there is generally not an agent that is actively staying in touch and servicing your business and in so many cases the loyalty isn’t to the company for their stellar financial ratings. Clients have often expressed to me that they kind of don’t feel right about switching because, I guess, they feel like that makes them a bad customer.
Let me try to put some perspective on this. The agent who sold you the policy was paid a commission. While most agents don’t agree, in this office that means you get our service for the life of that policy. Some customers feel a certain loyalty to me because I do stay in touch and help them with their questions. Some don’t.
But the norm is that you will buy a policy, be thanked for your business and you will never hear from the agent again. They made their money and they are done with that sale. Nothing personal. They just really don’t see the value in being their for their customers.
You should have no second thoughts at all about replacing a policy through me, good service and all, if you find a better deal, and you should certainly have no loyalty to someone who doesn’t remember your name after the commission check is cashed.
As for the company, let’s really get a grip. It’s going to happen one of two ways. Let’s say you have a policy for $500,000 for which you are paying the company $1000 a year. Let’s say 8 years into the policy you find a better deal. The company has been paid $8000, more than enough to pay for underwriting and any cost associated with putting the policy in force, and then some. So they make, say, $6000 and you cancel your policy and go elsewhere.
Now true, they would have loved to continue to get $1000 a year, but what they won’t miss is the chance to pay your family a $500,000 death benefit. Don’t take that wrong. Insurance companies stand ready to pay and pay without a fuss, but from a profit and loss standpoint, keeping the half million on their side of the ledger is a good thing. The longer you are a customer the higher the risk that they will pay out the big one.
So, are you hurting their feelings or messing them up when you replace their policy? The answer would be nope.
Bottom line. Whether your cholesterol has gotten better or you’ve lost weight and your diabetes is better controlled, or if you just got your last policy through one of those over priced no exam companies, shop it and don’t be bashful about replacing it if you find a better deal.
One other thing to keep in mind. A better deal isn’t always just price. How long the price is guaranteed is a huge factor also.
October 29th, 2009
I got a call from a prospective client last week wanting to see if I could find anyone who would offer him life insurance.
His issue is prostate cancer with a Gleason 9. He had a radical prostatectomy, chemotherapy and is currently on hormone therapy Lupron. His PSA has been undetectable for a year and a half. While we certainly haven’t had much luck with a Gleason grade greater than 7, I told him I would shop it and see. One thing about this business is you really never know.
I got the first round of responses in yesterday and for the most part they were the typical “No way” answers that the reinsurance manuals would lead them to. No harm. No foul. There are companies that will not deviate from reinsurance guidelines even when the death benefit is within their retention limit. I think it’s kind of woosy, but I’m not their CEO so what can I do.
I did get two interesting responses though. Western Reserve Life said no for now but that they would consider coverage December 2010. I suspect at that time it would come, if they approved it, with a substantial flat extra, but that’s OK. We’ll keep that one bookmarked. The other was Lincoln Financial who said they would consider coverage once he was not on Lupron. That may or may not work because we don’t know if Lupron will go on for the rest of his life or not, but again it was not an absolute no.
Generally prostate cancer with a Gleason grade 6 or less is not a big issue as long as the treatment has brought the PSA down to essentially 0 with a radical prostatectomy and less than 0.5 if the treatment was seed implant. Approval at standard or standard plus is a target that can generally be hit. Even a Gleason 7, depending on the stage of the cancer is generally not insurmountable in the life insurance search. A Gleason 7 would probably be a rated policy, higher than standard rates.
But Gleason 8 and above is indicative of a fairly aggressive cancer. I have reached out to more companies on behalf of this client and will post all of the results by each company once they all respond.
Bottom line. Prostate cancer is the second most common cancer amongst men but with early detection and treatment, it is a very survivable cancer.
October 29th, 2009
My Dad died just over a year ago after a two year battle with bladder cancer. I say battle, but he was really in good health (other than the cancer) and good spirits right up to the last few weeks. He was 86 and led an amazingly full, blessed life.
When a parent dies sometimes it brings our own mortality a little closer in a way. We’re the next in line. You know the train of thought. But today is one of those days that makes the frailty of life all to clear. A 33 year old man, a construction worker, had a massive stroke today and was airlifted out to Denver. He’s married and has children and is the bread winner. We’re all praying that he survives and comes through OK.
But there are always these times. I’m sure I’m not just the odd duck that knows all the wrong people. My first wife died at age 33 of cancer. That stuff isn’t supposed to happen.
My present (and forever) wife’s first husband died in his 40’s from leukemia. He died when my now step daughters were in their early teens.
A doctor friend of ours was in his late 30’s when he went to a conference out in California. When his wife couldn’t get in touch with him they found him dead in his motel room from a heart attack.
My brother in law’s first wife died in her 50’s from cancer. There have been a lot of deaths in my church family of the past 13 years. Some, like my Dad, lived a good long life, but too many were young. Too many died way too soon.
How close it’s been through my adult life. I bought life insurance long before I ever considered being in the business. Too many people I knew were left with huge holes in their lives and I didn’t want my wife or children to have financial problems added to an inexplicable loss.
Bottom line. How close does it need to come before you get it?
October 27th, 2009
I’ve talked recently about the United of Omaha “Fit test” crediting program where a person’s health habits and lifestyle can help reduce the price of their life insurance. Well, they bowled a strike on a bipolar disorder term insurance case I was working on today, approving it at the rate they quoted on the trial offer and then lowering that price by about 25% using Fit test credits.
In this case my client was looking at $500,000 of 20 year term at $2360 annually. Once the credits were applied her new guaranteed rate for 20 years is $1762.00.
And these aren’t killer requirements to qualify for credits. It’s not like they want to know if you can run a 10k in under 30 minutes or spend more than 2 hours daily in aerobic exercise.
There are some serious savings to be had for people that have been rated by other insurance companies or have an impairment like type 2 diabetes or bipolar where we know up front that best case is going to be a moderately rated approval. United of Omaha’s crediting can reduce the premium 25% to 50%.
Bottom line. Not being rewarded for your life style is one of the primary complaints people have about life insurance underwriting. United of Omaha just might be the right Fit for you.
October 26th, 2009
Ah, but for the immortal! I’ve long picked on men for their “it won’t get me” attitude when the statistics show differently, but while women do live a bit longer on average, I still wouldn’t take those odds. 1 in 6 men and 1 in 9 women will die between the ages of 25 and 64.
I’m sure there must be a certain “beat the system smugness” if you don’t buy life insurance and your assets grow to the point of self insurance. Didn’t have to spend that money! But ladies and gentlemen, this isn’t a system where attempting to beat the system and making the wrong assumption is very forgiving. Life insurance is very affordable these days and the money you would save over the years where you have real responsibility pales in the face of the burden you impose on your surviving family if you die prematurely.
If you’re married and especially if you have children, you know that trust is at the core of a successful marriage and tops the list in the parenting column as well. Whether you’ve been brave enough to discuss it or not, your spouse and your children trust that you would never intentionally let them down. All of us who are married and have children know how it can rock the boat when we fail at something small. That is the result of inadvertently dropping a rock in the trust pond.
Never mind life insurance for a minute. If you die prematurely kids feel abandoned. You left them when you promised you would always be there for them. Your spouse will go through the same feelings, just more on an adult level. Now add in the fact that you broke that promise and also left them without a replacement for your income and a way to pay the mortgage, or a way to dream of college, or a way to have fun on a vacation.
Bottom line. Responsibility is a tough thing. We seem born to think about ourselves first and it is an adjustment to actually put the welfare of someone else first, but that’s life.
October 26th, 2009
I got an application in the mail yesterday from a Garden State Life It came with a (dang it) non-negotiable sample death benefit check and all of the emotional verbiage they could come up with in order to convince you to act now and don’t take time to check out the competition.
Their product is laughably called BudgetGard. They must be talking about the company budget because they get to save the cost of a life insurance exam and then turn around and provide you with a viciously overpriced and poorly guaranteed term insurance product.
Like our friends at AARP they seem to have embraced the logic of getting people into a term product with rate increases every 7 years that ends at age 80. While there is a conversion option that lasts to age 65, there isn’t any mention of what that product is or how huge the price is.
They mention in their compelling argument that “Some of those other term life plans you’ve seen elsewhere may require you to take and pass a rigid medical exam to qualify for coverage. Not so with BudgetGard. No medical exam is required!” So, what are you really gaining by not getting the free exam? A normal life insurance exam is done at no cost to you and consists of blood and urine specimens, a check of your height, weight and blood pressure and a review of your medical history.
Well, you have to answer all the medical questions for this company anyway, so that’s no big deal. If you check anything at all for health issues they have the right to obtain your medical records and everything in there is fair game for declining your coverage. Even if you say no to all the health questions they can still find information on you in the Medical Information Bureau (MIB). No exam is not code for guaranteed issue.
So, if you are moderately healthy you are far better off taking an exam that in most cases will get you better than standard rates. If you qualify for better than standard rates $100,000 of 10 year term at age 55 could cost you as little as $20 a month. If you were no better than standard it could cost you as much as $44 a month. This company’s price for $100,000 of 7 year term is $67 a month.
But here’s the real kicker. the company is underwriting you for one rate class, standard. If you are better than a standard risk you still get their standard rate. If you are worse than a standard risk they simply decline to offer coverage. If you take an exam you will get approved at the rate class you qualify for and if for some reason you don’t qualify for standard, traditional insurance offers higher rates so you can still get insurance. Here’s the other real kicker. Those higher than standard rates may very well be better than the company’s standard anyway.
Bottom line. There is no real advantage to “no exam life insurance”. It is an advertising ploy to make you feel like you’re getting away with something when the truth is that, best case, what you will get away with is a policy with terrible rates and terrible guarantees.
October 23rd, 2009
I just got an email a few minutes ago. A client died in a car accident two weeks ago and I helped his widow complete the claim forms and make sure she really didn’t have to deal with the process.
Today’s email from MONY Life simply said:
This is to inform you that we have received the requirements from the beneficiary.
We are happy to advise that the claim was approved for payment today and the check is being sent direct to the beneficiary.
Check amount: $250,239.41
Bottom line. This isn’t about me and it really isn’t even about the man who took out the life insurance. It’s about his widow and the fact that there is at least one thing she won’t have to worry about.
October 22nd, 2009
I certainly don’t want to be seen as jumping on the pro excessive pay band wagon for executives, CEO’s and Presidents of companies, but there are some company financial health issues that can and should be addressed in the life insurance arena.
It happens daily in America. Whether it is a small partnership or a large company with a multitude of shareholders, an untimely death can send a company into a tailspin and into a place where, with proper planning, they didn’t have to go.
If the President of a company or a major shareholder of stock passes away, a company needs to be poised to be able to buy back that stock. Buying the stock back ensures that the company will keep remain stable. Failure to buy the stock back can leave wide openings for power struggles, or if enough shares of stock are at risk, a company takeover.
With life insurance and a stock repurchase plan in place, there is no question as to any loss of control of the company. The company absorbs those outstanding shares and the family of the deceased is paid a fair market value for the stock.
This can be even more critical in a small partnership where most state’s laws would allow a surviving spouse or member of the family to actually move in and become part of the business if they weren’t bought out. If a proper buy/sell arrangement is in place, fully funded by life insurance, the surviving partner has the ability to buy out the deceased partner’s share of the business.
Life insurance is an attractive way to enhance a bonus package for members of a company board of directors. Generally this is an unpaid position where the person or their survivor might get some amount of stock for their years of service. In a best case scenario if the company were to carry life insurance on the board member they could use the proceeds from that to buy the shares of stock back from the surviving spouse.
Bottom line. The death of the wrong person at the wrong time in a company can create a real crisis. A funded life insurance plan can be the salvation of the company and the family of the person who passed away.
October 22nd, 2009
Forgive the title to this post, but thank God we have women in this country who will do what is needed to keep family’s finances intact. I read an article today that referred to the current recession as a “mancession” due to the fact that more men than women have lost their jobs.
It’s not a small disparity either. Apparently the jobless rate for men is 9.6% while for women it is 7%. What that means is that the balance has shifted and it is women who are carrying the burden of family income more now than ever in the past.
So, for all you men….and women, who have in the past thought it was the prudent and reasonable thing to protect that breadwinner’s income with life insurance forsaking the other spouse as inconsequential in the whole financial scheme, hold your horses! Have the roles changed?
First of all, that was the wrong attitude before the mancession and surely now the logic of both adults in the household having adequate life insurance should be starting to sink in. Certainly the financial impact of a lost breadwinner can put the fear into a family, but so to can the financial impact of a lost homemaker. Do you think for a minute that you can replace what a stay at home mom (or dad) does for free?
I guess where I’m headed with all of this is that if this recession gets us all to take a look at the value of life insurance as more than just cash income replacement, well, we can attach a little value to the whole experience.
Bottom line. Actually my hope is that the life insurance lesson is just one of many that we as Americans take to heart from this whole economic meltdown. Personally I think we are better, far better, than we have been acting for the last 30 years.
October 22nd, 2009
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