Posts filed under 'Independent agent'
If you talk to most life insurance applicants who fall into the obese or morbidly obese categories according the their BMI, they have usually been told that they aren’t insurable or that the prices are so high as to render uninsurable because they can’t afford it.
Let’s not dance around the subject. Life insurance underwriting is all about assessing mortality risk, your chance of dying compared to someone in average health. One of the things they consider are the risk factors that you have and the health issues you might, or in some cases are likely to acquire.
In the case of obesity, it is a known risk factor for high blood pressure, heart disease, stroke, cancer and diabetes. So honestly it is not just the weight that impacts the outcome of the life insurance application, but the compounded perceived risk. Given the risk factors, while you may not agree when you have to pay higher premiums, life insurance companies are actually pretty generous with their build charts.
As I was running quotes for a person 5′11 and 395 pounds today, I was impressed by the fact that, number one, he was insurable and number two, while he may not be able to afford all he wants, he can still afford to make sure that his family is taken care of. Back when I did a series of blogs on the TV show Fat March, it generated a lot of attention to see the contestants on that show go from uninsurable to insurable, to great rates as their weight came down. Probably the most important aspect of that show and that series of blogs was the great discussion it generated over not just life insurance rates, but how life style changes could have such a huge positive impact on health and longevity.
Bottom line. If your only issue impacting life insurance at this point is weight, bite the bullet and find an independent agent to shop for the best possible rate for you. The picture isn’t going to get any prettier if you drag your feet and other health issues pop up and compound the issue. While there is a point where weight alone can keep you from getting traditional life insurance, chances are you aren’t there even if you’ve had a decline letter or two.
October 7th, 2008
Talk about a topic that has changed with the wind over the years, diabetes underwriting would be that animal. There was a time not all that long ago, at least if you’re my age, that diabetes was treated by most companies with a swift decline and by the few that would entertain it, with extreme caution (read that higher rates).
In the last 6-7 years we finally found some sanity on the subject with US Financial Life. They were the first so called clinical underwriting company. In a nutshell that meant that they didn’t treat all people with diabetes the same. If you happened to have type 1 or type 2 diabetes and were doing all the right things to take care of yourself, they would often hand out approvals at their preferred rates. That was the good news. The bad news is that they caved into a buyout offer by giant AXA Equitable. When all was said and done, they dismantled the company and the progressive underwriting and left it as a fond memory.
Since then we have had beacons of hope in companies like Banner Life. Banner briefly stepped out there and said they would offer their best rate class given strict guidelines. They wanted to see age of onset past 50, no other health issues or risk factors, and an hbA1c in the borderline area, below 6.0.
They soon revised that from their best rate class to standard plus, still a breath of fresh air. In premium dollars their standard plus was actually competitive with the old US Financial preferred so it seemed that even given their swift back step from preferred plus possibilities, we still had a competitive direction to go. That was last year.
Fast forward to now. Banner Life is still the one to beat out there although they have tightened on their criteria a bit more. That has brought companies like American General (yes, they’re still a good company) and West Coast Life into the mix.
Bottom line. Type 1 diabetes has become a tougher hunt than it used to be, but still not impossible. The companies that do entertain underwriting the condition are very cautious about collateral health issues. Type 2 diabetes remains a very competitive market which means there are good rates available. Seek out a good independent agent to find out what all of this means for you or your loved one.
October 6th, 2008
Well, duh! Of course you do, but the good news is that you don’t have to be breathing all the time. After all, sleep apnea could be loosely described as periods of not breathing during sleep.
Sleep apnea is one of those health issues that life insurance underwriters, from company to company, vary wildly on. Some companies treat sleep apnea as if you’ll never start breathing again, instant decline. They act as if the risk is somewhere between stage 4 colon cancer and sky diving without a parachute.
On the other end of the spectrum, we have been very successful at getting best rate class approvals for people with mild to moderate sleep apnea if there aren’t any other risk factors involved. Even severe sleep apnea is getting placed at better than standard rates.
So, are underwriters really concerned that someone will stop breathing and not start again? Well, no! The truth that drives sleep apnea underwriting really revolves around the fact that during those periods of apnea, the blood oxygen level drops and sometimes blood pressure increases. These strains on the heart can lead to cardiovascular issues and possibly a heart attack.
There is also the very real risk that a spouse may strangle you because, to put it gently, there is snoring and than there is sleep apnea snoring. The difference is not subtle and with sleep apnea, especially severe sleep apnea, there is very little break from the onslaught.
Underwriting becomes more difficult when there are already risk factors involved such as obesity or high blood pressure. The more risk factors you pile on that all sort of lead in the same cardiac related direction, the tougher it is to get the best rates. In most cases though, with a good independent agent, life insurance can be found and approved.
Bottom line. As with all health issues, life insurance underwriting of sleep apnea is all about compliance with treatment, control of the problem and if you have confined the problem to just one issue.
September 30th, 2008
If anything, I hope I’ve driven home the point over the years that life insurance underwriters look at any health issue not just from a pure mortality standpoint, but from a compliance and control point of view. If you look at the overall bucket of potential insureds, some of the old school underwriters will still look at it from the angle that all people with hypertension should be treated the same.
But the key for those underwriters who truly analyze each case is compliance, does the client truly follow the doctor’s instructions and control, how well is it working? The truth is that while the dynamics of different health and mental issues may differ, the end result given an underwriter who isn’t trapped in the old school box of “everyone in the same bucket”, can vary dramatically in favor of those who take their issues seriously and strive for control.
A few examples of companies and underwriters who are acting outside the industry box with hypertension are Banner and Minnesota Life. While no other companies will allow their best rate class if a person is treated for blood pressure, these two leaders do just exactly that as long as control is demonstrated. Given good control most companies will only bump these clients to their second best rate class, but that is usually a full 20% higher than the best class. That can mean hundreds of dollars a year depending on age and policy size.
More and more companies are allowing that kind of treatment with cholesterol, but there are still plenty of old school companies and underwriters who believe that people should be penalized for treating their cholesterol, even when that treatment is preventative or if it’s for a borderline issue.
While certainly more complicated in what it takes to call bipolar disorder controlled, there are a few companies with underwriters that understand that the bucket approach is completely inappropriate. There are people with bipolar who are completely functional, stable and far from being a mortality risk.
Bottom line. Whatever your health challenge, if you believe it to be well controlled, if you believe that you are truly in charge of it and not it of you, seek out the independent agent who can capitalize on that for you. In many cases there is simply money that doesn’t need to be spent.
September 26th, 2008
I understand that most people go and stay where they are the most comfortable. That’s why so many people end up buying overpriced life insurance through their auto and homeowner’s agent, agents that are captive to companies like Farmers, State Farm, Farm Bureau and Allstate.
An independent agent can offer two things that will set them apart in the life insurance arena to such a distance that you will wonder where the auto and homeowners guys get off even claiming they sell life insurance.
First, and I have documented this in previous posts, the rates available through life insurance companies can be as little as half of the premium you would pay for comparable coverage through one of the Farm companies. The agents don’t have a choice. That is their product and I honestly believe that most of them don’t know any better and believe that their rates are just fine. After all, if they weren’t just fine, why would people be buying them. A case I mentioned just recently with Farm Bureau was on a young couple that was paying $51 a month for both of them for $100,000 of 10 year term on each.
This couple has two very young children and to start with, 10 year term insurance isn’t the right product. They needed at least a 20 year term to make sure things are covered until those kids grow up. We were able to get them $250,000 of 20 year term each and they are paying $33 a month total. So, numero uno, independent agents have the best prices available to them.
Second is underwriting. The folks underwriting life insurance at auto and homeowners companies are very likely told not to accept any risk, perceived or real. So even the smallest of issues is blown into an underwriting nightmare. I worked with a woman over the weekend that was told by her State Farm agent that at her age and her health, she should probably just forget about getting life insurance. She is 66 and the only health issue is borderline high blood pressure. She is well on the way to getting the coverage that she really needs at a very good price.
Bottom line. It is the independence that makes the difference. If your agent hasn’t got a choice of companies and and variation of underwriting guidelines, they are stuck hoping you don’t notice just how bad their products are. Shop around.
September 22nd, 2008
With the federal bail out and takeover of AIG a few days ago it is now pretty apparent that assets from the insurance giant will be up for sale soon. With the terms of the bailout loan only being two years in length and at an interest rate of 11.5%, while there won’t be a fire sale mentality, there will most certainly be very little foot dragging.
The good news for the government and AIG is that apart from their financial products unit, the branch that insured mortgages, there are some very healthy and profitable parts of the company. There will be some very healthy and wealthy companies that will be looking seriously at purchasing, for instance, American General Life Insurance.
For all of those policy holders with guaranteed products through American General, their term insurance products and their universal life products with external no lapse guarantees, the sale of the company will have virtually no impact other than who their premium checks are made out to. By law all of the guarantees that are part of the American General policy will remain intact with the new company.
Where the rubber, all I’ve said over the years about non guaranteed universal life and whole life policies, will meet the road will be in this sale. Because many of those products have no guarantees or short guarantees, they will be subject to rate increases when the guarantees run out and I think it is fair to say that those rate increases aren’t something that might happen. They will happen.
The good news will be for those who still have some guaranteed time left and even better for those that are still guaranteed and have cash value. If you work soon with an independent agent to look at alternatives, you may be able to replace your current policy with a fully guaranteed policy at potentially a better rate than you are currently paying. If you have cash value it can be rolled into the new policy tax free through a 1035 exchange.
Bottom line. In a few years this will be just another financial footnote. I can say unequivocally that none of my customers will be impacted by this as they all have guaranteed products. If I were king I would ban all non guaranteed products and force those who want to play with their money to do it outside of the scope of their family protection.
September 19th, 2008
I haven’t talked for a while about my mother’s progress in fighting the breast cancer she was diagnosed with about 3 months ago. Kind of a disclaimer concerning this is that while I am using my mother as an example of how the different aspects of breast cancer are considered in reference to life insurance, I’m not just talking about my mom and in her case she is well past the point of needing to buy life insurance.
What I have been attempting to do with her example is to put into perspective what someone younger facing a similar diagnosis and prognosis might encounter in their quest for life insurance.
From a pathological standpoint what she has been dealing with is a stage 2 lump in the breast that upon removal and biopsy of lymph nodes in the area, was found to have spread to a number of the lymph nodes near the breast. An MRI didn’t show any metastasis or spread to other areas of the body.
The treatment prescribed was radiation in the breast/lymph node area where cancer was found. That was a six week series of treatments and she has almost completed that. Because of her age chemotherapy was not used. Instead she is taking an oral drug that has much the same impact without the hard hitting side affects of chemo. In a younger woman the treatment would have likely been chemotherapy.
So, from a life insurance standpoint using the younger woman example, she would be considered a postpone for at least one year after treatment. At that time, given no recurrence, insurance would likely be offered with an extra charge until she was five years out from treatment. Higher stages and grades would be treated differently, either incurring a longer postponement of a higher extra charge. If the cancer is stage 0 or 1 insitu, standard rates would likely be available after one year.
Bottom line. Breast cancer, especially with so much of it being detected a early stages and grades, is a very survivable and insurable cancer. If life insurance is something you know you will be wanting to look at and you’ve had or are going through treatment for breast cancer, consult with an independent agent about what you need to do and what you can expect.
September 17th, 2008
I have brought up several times in the last two days the fact that those who have guaranteed policies don’t have anything to worry about in the whole AIG shake up. On the other hand, those with non guaranteed universal life policies, policies that rely on assumptions or external indexing, need to visit with an agent sooner rather than later.
Just so everyone is clear on the difference, I am pulling out my old friends, good UL and bad UL. I have used these two samples numerous times to illustrate what happens when a person focuses on all of the big numbers on the non guaranteed side of the illustration and takes their eye off the prize, the guarantee.
good-ul
bad-ul
It is the bad UL’s that are subject to “adjustment” in bad times. If a companies profits aren’t what they would like them to be, they have the right to make changes on the non guaranteed side of the policy. They can’t touch the guaranteed side, but they can blind side you on the non guaranteed side with a huge increase in premiums. The result is usually a lapsed policy.
Bottom line. If you’re still not sure, get a review of your policy from an independent agent.
September 16th, 2008
Wow, what a day. What a week! What a year! Being an independent life insurance agent, one of about 57,000 who have American General, AIG in their portfolio, I have had the opportunity to discuss the whole financial crisis of AIG several times today.
I have also see misinformation and even lies being spread around the internet about what would happen if AIG declares bankruptcy and while I have tried my best to intercept and shoot down some of the bad information, I simply don’t have that many missiles in my arsenal.
So, let’s talk about IT. IT seems to be coming together as a common question, “What happens to my life insurance if AIG goes bankrupt?” This is really a two part subject and answer with a few sub parts, but I will attempt to keep it simple and straightforward.
First, let’s address those who have fully guaranteed AIG policies. Those would be term insurance policies and universal life policies with a no lapse guarantee. If AIG declares bankruptcy in order to restructure, they will either keep or sell American General and it’s block of business. If they keep American General absolutely nothing will change. All of the values of your policy, the level premium, guaranteed term length and death benefit, are fully guaranteed and will not change. Other than reading about it you won’t even notice that AIG is in bankruptcy. If you die your beneficiaries will be paid in full in a timely fashion.
If AIG decides to sell off American General, which aside from AIG is a very prominent and respected life insurance company (note that AIG has been downgraded by ratings companies while American General has not), their block of business will be sold to another company who will obviously be on solid ground. If the do sell American General the only thing that will change for you is who you make your premium check out to. By law all of the guarantees of the policy have to stay intact.
I can tell you that if it does come to American General being sold, there will be plenty of interested buyers. American General has combined conservative underwriting with prudent but competitive pricing and some company will be able to pick up that block of business without the cost of underwriting. I suspect there is some lick lipping going on as we speak.
Now to the flip side of the coin. Policies that are not guaranteed. This would be universal life policies that are dependent on assumed values or are tied to indexes rather than guarantees. If AIG keeps American General you can bet your next premium check that your next premium will go up. Because you signed up for a policy with no guarantees, the company has the right to change anything it wants on the assumed side of the policy. The train wreck I have talked and talked and talked about is about to happen to that block of AIG policies.
If American General is sold, the purchasing company has the same right and you can bet they will exercise it just to recoup some of their investment cost and to force those policies into a more solid position or force them to lapse. Either way, rest assured they won’t be a liability to the new company.
Bottom line. Life insurance companies are bought and sold all the time. It just usually doesn’t happen in a hugely public way. Recent sales like Chase being bought by Protective and Traveler’s by Met Life didn’t make any headlines and the reason is that it all went down just as I explained above. I’m not saying that AIG’s problems aren’t big news, but the impact on policy holders will be minimal.
September 16th, 2008
I’ve fielded a number of questions in the past several days concerning AIG, American General Life. With AIG, American International Group, taking a beating in the last quarter, mainly due to the mortgage meltdown and its’ exposure to that, clients who have their life insurance with American General or who are considering American General for coverage have, well, been a bit nervous.
The truth is that while the hit to AIG sounded big, in the context of how profoundly huge the company is, the overall impact has and likely will be minimal. As for life insurance, and this will probably sound like my stump speech on how to purchase coverage, if you purchased guaranteed products you won’t have anything to worry about. As they look for ways to spread their loss over different areas of the total company, non guaranteed products may see some adjustment, but guaranteed term insurance and guaranteed universal life won’t be touched.
As part of American General’s attempt to calm the waters a bit, they sent out an email to agents. It had a colorful little piece that we could send out to you, our customers, and another attachment that was for us agents only, “not for dissemination to the public”. Well, here you go. If it good for me to know then it’s also good for you. aig-strength-questions
The one thing I found of value that makes the life insurance branch of AIG stand out from the rest of the company is the fact that all insurance companies, by state law, are required to maintain adequate reserves to meet their obligations. Obligations in this sense would be death benefits and any contractual guarantees. I already knew that, but hopefully that will put life insurance with AIG in a safer perspective for you.
Bottom line. There is no time like the present to know for a fact that your life insurance products are guaranteed. The world and the financial markets are far too volatile for anyone to comfortably sit and trust that you non guaranteed life insurance won’t suffer some distasteful adjustment. If you just aren’t sure if what you have is guaranteed or not, seek a review by an independent agent other than the agent that sold it to you. I know I keep coming back to that point post after post, but if an agent sold you a non guaranteed product, their trustworthiness is suspect to start with. That would be like getting a second opinion from the same doctor that gave you the first one.
September 15th, 2008
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