Posts filed under 'insurance quotes'
I am a graduate of Dave Ramsey’s Financial Peace University and a firm believer in his financial guidance and yes, his thoughts on life insurance. I believe that both his passionate belief that people should have life insurance and that for almost everyone it should be term insurance are right on track. But, after careful study I don’t understand his endorsement of Zander Life Insurance as the only agency in the country that a person ought to go to.
This past week I was talking to client about his insurance quotes and he mentioned that he was going to compare our quotes with Zander. That’ s fair. If I can’t earn the business, I don’t deserve it. So we pulled up Zander on the computer and ran quotes for him. While based on his personal health information there will be some adjustment, for comparison sake he wanted to run the quotes at preferred plus. His birthday is 1/23/49 and he wanted a quote for $500,000 of 10 year term.
Zander has an easy to use quote engine and we soon had a spreadsheet of quotes, zander-instant-quotes_files.We discussed these quotes and I explained why it was important to have access to a wide variety of companies due to the underwriting foibles of each company.
We than ran quotes on the Hinerman Group website and found a bit of a disturbing difference, hinerman-group-get-a-quote.
Please note Dave’s comments at the top of Zander’s quotes. And please note that while our websites agree on the best company at that rate class, Savings Bank Life, Zander has skipped over 5 companies in between Savings Bank and their second best quote, Transamerica. Did they skip them because they are not “top notch” as Dave suggests? I don’t think so. The missing 5 are all comparably rated to SBLI and Transamerica.
Is it because those 5 offer inferior underwriting? Again, I’m not seeing that. In fact, if you are 5′10 and weigh 202 pounds, you will not get that rate from Savings Bank Life, but you will from Prudential Financial (Pruco). Dave talks about pre-existing conditions. Weight is the most common rate changer in the life insurance business.
Bottom line. Agencies delete certain companies from their quote engines generally to drive their customers in the direction they want. I don’t understand Zander’s logic but I know from having a quote engine that you don’t accidentally leave companies out. There appears to me to be some reason that Zander wants to have a larger gap between the first and second best quotes than actually exists. What’s up with that kind action Dave?
August 18th, 2008
Life insurance proceeds are about the only source of money that is income tax free. This gives added value to the benefit that you leave your beneficiaries.
There is one area that you need to be careful with beneficiary designations. The IRS has a three year look back rule whenever there has been a change of beneficiary, not for income tax, but for taxable estate value. What they are trying to prevent is someone changing beneficiaries when they know they don’t have long to live, to avoid estate taxes.
Life insurance, if owned by an individual, while not income taxable, is added to the value of the estate upon death. With proper estate planning, an irrevocable life insurance trust would be in place at the time the life insurance is purchased. The trust would own and be the beneficiary of the life insurance. Since the individual doesn’t own the policy, the IRS says it is not added to the value of the estate.
The problem comes when an individual owns a policy, his or her estate grows to the point of being taxable, and they decide to change ownership of the policy to remove it from the estate value. This triggers the 3 year look back. If the individual dies within 3 years of this change of ownership, the IRS will deem the original ownership takes precedence leaving it in the estate and added to the taxable estate value.
I have had clients on several occasions discover that they aren’t following their estate attorney’s orders after the policy is already applied for. Changing the beneficiary after the insurance is applied for falls within the same 3 year rule. When investigating ownership for estate tax purposes they will actually look back to the original application to see what changes were made by application amendment. The original intent stands.
Life insurance is set up incorrectly every day, usually due to the ignorance of the agent. We’ll look at a couple of viable options to deal with a poorly thought out purchase in a subsequent post.
Bottom line. Care needs to be taken. Advice from estate planners and estate tax attorneys should be sought. Whenever you are buying substantial amounts of life insurance, quiz your life insurance agent on estate tax consequences and how to structure ownership.
October 7th, 2007
It’s been one of those weeks that will drive me to repeating myself. I know I just smacked doctors over the head a few days ago about how they don’t quite explain all the relevant details to their patients. That really puts the patient in a awkward position when it comes to purchasing life insurance.
Let me explain in a little more detail how that works. Say a person wants to buy life insurance and they have had a 3 vessel bypass surgery in their past. No heart attack. Just had chest pains. The bypass got things back in order and the doctor let the person know that it was no big deal and as long as he watches everything going ahead, well, no problem……on followup stress tests the doctor reiterates, no problem.
So, 6 years after this little run in with heart disease the person applies for insurance and tells his agent about the bypass and passes on his interpretation of what the doctor told him. It was minor blockage (no big deal) in 3 vessels. No heart attack. No problems on subsequent stress tests. When asked if he can get a copy of the most recent stress test, he complies and the agent sends the narrative summation of the cardiac incident off to the underwriters along with the most recent stress test. When asked for a medical report of the original incident, well, the client really doesn’t want to go to that much trouble.
This is a common way to shop a case. Underwriters review what you send and give their opinion of what rate class to quote with the caveat, “subject to full exam and medical underwriting”. The quotes go out to the client with the same caveat. Subject to medical underwriting is another way of saying, as long as what you said matches up with your medical records.
So the application and exam are completed and medical records are ordered. When the records get to the underwriter he notes that the records indicate that the blockage wasn’t minor. 85% in one vessel and 95%+ in the other two. Severe coronary artery disease. While he didn’t have a heart attack, there are some other issues with the heart that are significant enough to be in the records, but either not significant enough to discuss with the patient, or forgotten by the patient. The rate goes up. The picture has changed.
When that news is delivered to the life insurance client they generally explode. They feel like they divulged everything just as it happened, and in most cases they probably do divulge everything just as it was told to them or just as well as they can remember. But that doesn’t make the two stories match any better.
It is at this point that the agent or the company are declared inept and the messenger is shot. I always offer to review their records for the discrepancy, but very few people take us up on that. The assumption is that if we couldn’t get it right the first time, then we must not know what we’re doing.
Bottom line. When an agent asks for more information before he quotes, supply it. It may be more work up front for you, but it will yield results in a more accurate life insurance quote and approval.
August 23rd, 2007
It’s time I quit beating around the bush about this subject. I get numerous requests for people who are looking for $20,000 of life insurance or less. Generally I am talking about retired folks who only need final expense or burial insurance. Some times health is an issue. I have tried to find a better product in that size policy, but the truth is that nothing I have found beats Colonial Penn . It is not a company that uses agents. that is to say it is a direct company on line, so I can’t offer their products, but I can recommend them.
From $25,000 on up, which I consider legitmate amounts for final expense policies, there are a number of better options available. A good independent agent can guide you to the best product and the best rate in that area.
Bottom line. Whatever the size of your life insurance need happens to be, you should know where to go for the best possible price.
August 21st, 2007
My goal for following the ABC show Fat March has been to bring attention to the fact that people can get life insurance at affordable rates even if they are overweight in most instances. I also wanted people to see, as the participants drop weight, what a difference it can make in the cost of their life insurance.
From my first post last week you may remember that I laid out the basis of the quotes as being what one could expect due to weight alone, with no health issues. All quotes are based on $250,000 of 20 year term insurance. In all cases I am using the best possible underwriting in the industry to make sure the prices are as good as it can get. I would also like to correct the starting weights that I used for the participants. I took those weights from www.zap2it.com and they were close, but not accurate.
There are, at this point, just 10 participants remaining with Shane and Kim not making it past the first week. I was sorry to see Shane get voted off. I truly hope he will pick up another avenue of weight loss that is a little less brutal. Of the 10 remaining participants, the following is their starting weight and their current weight after having walked 150 miles, followed by their original life insurance quote and their current quote. It’s important to understand when looking at rates, that rates don’t go down pound by pound. A rate class can often span a 20-25# range, so even though significant loss has occurred, it’s possible to remain at the same rate until more weight is lost. That was not the case this week as everyone made headway.
1. Michael started at 319 and is now 286. Start $735, Now $605.
2. Chantal started at 250 and is now 236. Start $535, Now, $471
3. Will started at 472 and is now 441. Start uninsurable, Now $619
4. Wendy started at 242 and is now 223. Start $575, Now $477
5. Anthony started at 433 and is now 396. Start $560, Now $500
6. Sam started at 382 and is now 351. Start $613, Now $553
7. Jami Lynn started at 236 and is now 218. Start $430, Now $356
8. Loralie started at 241 and is now 222. Start $381, Now $331
9. Shea started at 289 and is now 272. Start $355, Now$310
10. Matt started at 389 and is now 355. Start $613, Now $525
Will had this comment after the first round of quotes that he posted on myspace.com, “So this one guy has a blog about life insurance. For some reason, he thought it would be interesting to tabulate the life insurance rates for the Fat March contestants. Very expensive for everyone, but according to him, me and Shane are the only two that are UNINSURABLE!!!! I thought that was funny as ****.
Wonder if I’m insurable now, lol
Well, the answer is yes. I know that for younger people especially, it is hard to consider something like life insurance seriously, but someday the reality of being uninsurable could have a real impact on a person and their family. I think it is awesome what all of them have accomplished, and the adversity they have overcome.
Bottom line. It appears that weight issues can be overcome in what appears to be a fairly brutal manner. The good news is that with each loss of weight comes a healthier life and lower life insurance rates.
August 14th, 2007
The old saying that “a bird in the hand is worth two in the bush” is really what I try to drive home about life insurance. Something is always better than nothing when it comes to your beneficiaries.
Let me give you a common example. A person applies for $250,000 worth of term life insurance to cover a mortgage. After underwriting they find out that because their cholesterol is absurdly high, something neither of us knew going in, the cost for that $250,000 is going to be almost twice what we had originally thought.
My advice, if they really need insurance, is to put a shorter term in force or put less insurance in force. Both of those can drive the cost back down to where the client wants it. Once they fix the cholesterol issue, we can reapply for more insurance or a longer term, whatever the original goal was. In the meantime they have coverage.
An amazing number of customers will opt to not accept the policy at all. They will forego the insurance because they didn’t get what they wanted. What they are saying, and let’s be blunt about this, is that if they can’t have it the way they want it, they would prefer their beneficiary get’s nothing, $0, rather than something.
“But if I lower the coverage it won’t cover the mortgage!” If your spouse has absolutely nothing to work with if you died, they will lose the house. If your spouse has, say, $100,000 (instead of $250,000), they have options. They can use the the smaller death benefit to continue to make mortgage payments until they have another plan in place. They can use it to pay down and refinance to a smaller mortgage. They have options. $0 of life insurance leaves 0 options.
“But I want a 20 year term, not a 10 year term!” If you put a 10 year term in force you may have just done the best thing you can possibly do for the moment. If your health changes and you qualify in a year or two for better rates, you can always reapply and extend the term. If your health goes bad, you have a 10 year term that is convertible at conversion rates that are substantially better than if you had just put it off because you didn’t get approved the way you wanted.
Again guys. Life insurance is not about you!! It is about those you leave behind and for them something will always be better than nothing.
July 24th, 2007
If you have type 1 diabetes or type 2 diabetes and have shopped for life insurance, you more than likely ran into a few stumbling blocks, a few roadblocks and some outright dead ends. The real problem is that you probably ran into an agent who didn’t understand what to ask and where to go with that information.
Life insurance underwriters look for 3 primary things when evaluating life insurance in relation to diabetes. The more accurate the information you can provide, the more likely that you will get the quotes and approval that you want.
1. Know the status of your diabetes! Know the labwork numbers. Everyone can remember their last glucose reading from their own test. If you want to seriously shop for good rates on your life insurance you need to know your most recent hbA1c. Underwriters aren’t impressed if your last glucose reading was 105. They are impressed if your hbA1c is 5.8. Why? The A1c averages your glucose levels over a 3 months period. It knows when you’ve been good and when you haven’t. A 5.8 would indicate that you are in fact keeping your glucose in a normal range. Each time you get labs done, get a copy. If you’re serious about your disease, you need to know what’ s on your labs.
2. Know your medications and be compliant with your doctor’s recommendation for your treatment! If the doctor says you need to take a 500 mg tablet twice a day, do exactly that. Don’t take the one in the morning and skip the one in the evening because you feel pretty good. Underwriters want to see compliance and control and you don’t get one without the other.
3. Know, monitor and remember the status of other risk factors. If you’ve studied diabetes you know that one of the concerns for underwriters is the potential complications such as heart disease, neuropathy and retinopathy. Because of this, it is critical that you not only keep your glucose in check, but also your blood pressure and your weight. Obesity and hypertension are not your friends in your quest for good health and they are not going to win points with underwriters.
In summary, control, compliance and risk factors. Do the right things to stay healthy and you’re doing what it takes to get competitive life insurance rates.
July 16th, 2007
I just learned today that due to pressure from reinsurance companies, many life insurance companies will be charging higher rates for women who have had gestational diabetes. Again, why do you want an independent life insurance agent?? While many life insurance companies will now charge a higher rate for up to 10 years after a woman has gestational diabetes, not all of them will. Just like type 1 diabetes and type 2 diabetes, it pays to have an agent who knows which companies have their head screwed on right.
This is a huge change as gestational diabetes was, in the past, considered a non issue from an underwriting standpoint as long as it resolved itself after the pregnancy. This caught a lot of agents off guard like the change in the stance on multiple basal cell carcinoma did a few years ago.
I will be researching the gestational diabetes issue to see if I can determine the logic and will share that with you when I get an answer. Can’t promise it will make sense or bear any semblance of reality, but I will get an answer.
Just a heads up from something I ran into today. Many life insurance quote websites only ask about health issues for the past 10 years. READ MY LIPS!!!!! That doesn’t mean that health events more than 10 years ago won’t impact your rates. Again, another reason to have a good agent who asks, “Have you EVER been diagnosed with or treated for”. I talked to a client today who answered no honestly to the 10 year question, but had two run ins with cancer prior to that. That is relevant!!
May 16th, 2007
When completing a health interview before receiving a life insurance quote from your independent life insurance agent, you will be asked a family history question. Most companies want to know if any member of your immediate family (defined as mother, father and full siblings) has had an occurrence of heart disease or cancer prior to their age 60. Some companies go a little further and include type 1 diabetes or type 2 diabetes and ask about disease prior to age 70.
If the answer is yes to any of those, your agent will ask about that family member and whether they survived whatever illness occurred prior to that age. If you were keeping score, in general an occurrence of disease before 60 would be one strike and a death prior to 60 would be 2 strikes. With each of those you would normally take a one rate class bump up in your life insurance quotes.
Often argued is the relevance if the person being interviewed is healthy, a non smoker and non drinker, and we are discussing a parent who died of a heart attack at, say, age 55 of a heart attack when they were obese, and drank and smoked like there was no tomorrow. While those risk factors certainly contribute to coronary artery disease, there are certain hereditary factors that can also make a person with a great life style susceptible to the same problem. Bottom line from an underwriting standpoint, while that parent didn’t do themselves any favors with the bad habits, is there any proof that they would not have had the heart attack anyway?
A good independent agent can help you navigate toward the company that will be best for you based on family history. There are companies that don’t look at family history of cancer. There are companies that don’t care about occurrences, only deaths. There are companies that, even though a family member died prior to 60, will throw that out if you are past age 60. There are a few companies that will only bump you one rate class if there has only been one immediate family death prior to 60. Why an independent agent? Folks, you aren’t going to get those options with your local State Farm or Farm Bureau agent. If your agent doesn’t have options you will never know they exist.
In summary, family history will remain a part of life insurance underwriting, so seek an agent who knows how to get you the absolute best rate anyway.
May 15th, 2007
Hi, My name is Ed Hinerman. I haven’t been selling life insurance forever, but I have been around long enough to see radical changes in products available. I just want to share with you today what I consider to be one of the most troublesome leftovers from the last century. This problem will end up with owners of life insurance policies spending huge sums of money, only to have their policy fail inspite of having been assured at the time of sale that they were buying permanent coverage. BIG PROBLEM!!!!!
In a nutshell, permanent life insurance has cash value and by law has to be illustrated to show what is guaranteed and what is not. The problem is that 90+ percent of agents are so desperate to make a sale that they will emphasize what is not guaranteed (because it’s less expensive) and may or may not mention what the real guarantees of the policy entail.
The problem is that historically the non guaranteed illustration, also called the current illustration (because it reflects what is true at the moment the illustration is cumputed), fails to hold up. The policy collapses and all of the money paid in is lost. Unless you can arrange to pass away prior to this meltdown, you heirs will receive nothing from your life insurance policy.
There are products available today that can provide guaranteed policies at much lower costs than in the past. There is no good reason to buy a policy that is not guaranteed to be there when it is needed.
April 27th, 2007
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