It’s probably been close to a year since I first mentioned the United of Omaha (Mutual of Omaha) lifestyle crediting program for life insurance underwriting called the Fit test.
The Fit test provides the underwriter plenty of ammunition to approve a policy at better rates than the underwriting guidelines might otherwise lead to. This has been done plenty in the past with permanent life insurance. Sales incentive “table shaving” programs have been around for a long time on universal life products where the premiums are high and it’s easier to knock off a few rate classes and still have plenty of money coming in to cover the risk. Where United really stepped out was offering this on term insurance and being bold enough to spell out the criteria that earn the credit.
Today we got an approval on a client with bipolar disorder. This wasn’t an easy case. The best tentative offer we got when we shopped it was United of Omaha at table 4. For those that don’t understand what table ratings mean, rates classes go preferred plus, preferred, standard plus, standard. After standard a policy is table rated. Each table with most companies is equal to 25% of the standard rate. So, if a policy at standard has a cost of $1000 a year, a table 4 would be $2000 a year.
United of Omaha’s Fit test allows for a credit of up to 2 tables, 3 in a few instances. In the case I described above, approved at table 4 it received a 2 table credit. To put that in perspective as far as what that can mean for the customers, they now have the option of paying 25% less for the 20 year term they wanted or the possibility of now going to a 30 year term for not much more than they originally budgeted for 20. It’s good stuff.
Bottom line. When United of Omaha first announced this program we all viewed it through slightly jaded eyes. It looked like a great opportunity but table shave programs in the past had often turned into bait and switch games by the company. But a year later I am ready to say that United of Omaha is the real deal. They have great underwriting and the Fit credits really do provide an underwriting emphasis on a healthy lifestyle.
February 23rd, 2010
Using a LIMRA study of a few years ago, at that point there were tens of millions of Americans that would fit into a category of “needing” life insurance, but didn’t have any. I know I’ve been down this road before, but is there really a case to be made by those millions of people, a good case, for not having life insurance protection for their families?
Just a few facts from that 2008 study kind of paint the picture.
Many U.S. families are not prepared for an untimely death
* Fifteen percent of husbands and 28 percent of wives have no life insurance.
* 6 million households (ten percent of families with children under 18) have no life insurance.
* The percentage of families with dependent children that admit they’ll have immediate trouble with everyday living expenses is 22 percent. Another 26 percent say that if a primary wage earner dies they’ll only be able to cover expenses for a few months.
So, 48% of families are either uninsured or grossly under insured if they are going to be in immediate or imminent financial trouble if the primary wage earner died. That’s half of the families with dependent children! That is just crazy. Oops. Kind of tipped my hand on where I stand on this question.
While the LIMRA study didn’t break it out by the age of those that were uninsured or under insured, I would venture a guess that most are in their 20′s or 30′s, those years of immortality when the idea of budgeting $20-$30 a month, every single month, for life insurance is like, well, it’s like acting just a little too grown up. What if they need that money to go out to dinner, or buy beer for the super bowl?
Maybe that’s a bit harsh. Truth is that in too many cases money is just tight for young families with children. But if that’s the case and that’s really the only reason you’re not doing the right thing, ask your parents for help. My children have life insurance because I pay for it. As a parent and grandparent, if you really think it through, there is a lot to be said for carrying a term insurance policy during that period when your children have dependent children.
There has been plenty made about how medical bills can bankrupt a family. How about when those medical bills end in the death of a family bread winner? With life insurance bankruptcy is taken out of the picture, as is the stress of the financial meltdown that can occur upon that death.
Bottom line. For me it comes down to this. If you’re old enough to have kids or old enough to be married; if you are old enough to have responsibilities that would impact someone else upon your death, you should have life insurance. No excuses. If you can’t afford it, get your parents or grandparents to help you. If you’re just blowing it off, get a friend to slap you in the face and wake you up. It’s time. Not later. Now!
February 23rd, 2010
