Posts filed under 'private pilots'
There is a tendency for people to just hold on to life insurance once it is in force, even when opportunities to improve on the rate or the term length come up. Most often this happens when their isn’t a servicing agent around to find the better deals and encourage the change.
This week I’ve provided three posts that really shout “out with the old and in the with the new”. These are opportunities that weren’t there two or three years ago so if a person in any of these situations took out a policy more than two years ago, they can likely reapply at this point and either pay less for what they have, get more for the same price, or extend the term length without paying more.
The first opportunity was for private pilots with a VFR rating. Until this past week the best they could find would have been preferred rates or, as I mentioned, ING’s preferred plus and a $.48 flat extra, which in most cases comes out slightly higher than preferred rates. Now a major term insurance player will write up to $10 million of term insurance or universal life at their best rate class if the pilot has 100+ solo hours and flies right side up from 26-150 hours a year. It’s huge.
The second opportunity came in family history underwriting where another major insurance company, in the absence of any other risk factors, will overlook a parent’s cardiovascular related death if the parent at ages 58 or 59. This opportunity may seem rather narrow but I can assure you that it could impact the rates of tens of thousands in a positive way since almost anyone whose parent died of a heart attack or stroke at those ages is currently paying standard plus rates, the third best rate class. For them a jump to the best rate class would be outstanding savings.
The third opportunity is the addition of another major player, ING Reliastar, in aggressive underwriting of sleep apnea. For a lot of years the best case with sleep apnea was a standard rate class. Now with both ING and Prudential allowing best rate underwriting for mild to moderate sleep apnea, another door is open.
Bottom line. A very small percentage of life insurance applicants get the best deal possible right from the get/go. This fact makes it imperative that your agent review annually your situation always with an eye toward improvement of the price, term length or product. Insist on it.
February 5th, 2010
As noted last week a major A+ rated life insurance company has broken into uncharted waters by offering preferred plus (best rate class) rates for private pilots that are not instrument rated.
And that’s just the tip of the good news iceberg. It gets even better when you find out that the company is a heavy hitter in the term insurance wars, showing up in the top 10 rates at preferred plus at most ages and term lengths.
To put this in perspective, for a male age 50 who is a private pilot with a VFR rating, with 100+ total solo hours and flying 26-150 annual hours, before the best they could do on a $2,000,000, 20 year term policy would have been through North American at their preferred rate for just under $4600 a year. With this new underwriting available, given all the same criteria a person could end up spending nearly $1000 less per year.
As I said last week, there is obviously an assumption that aviation aside, all other factors would have to qualify for preferred plus as well. That usually isn’t a huge issue for pilots since, unlike the average population, they get regular physicals and health issues seldom get out of control.
So, where does this fit into your life insurance planning? It’s huge so I don’t throw this out fliply. If you are a VFR pilot in good health and meet the criteria above and you currently have life insurance in force, you need a comparative quote. If you can potentially lower your life insurance bill by 25%, it’s not a review you want to pass up. If you don’t have life insurance in force and have been avoiding it because you can’t stand the rates you’ve been quoted, it’s time to act.
Bottom line. It’s rare when a road block to the best rates is removed. We’ve seen it with a few companies that will allow their best rate with treated blood pressure. We’ve even seen it in the past year, albeit with a very limited window, for people with type 2 diabetes. But, absent a flat extra charge, this is a first for the average private pilot.
February 1st, 2010
So many life insurance companies have come so close, but none have ever stepped off the edge and done it. Preferred plus rates with no extra charge for private pilots who don’t have an instrument rating.
ING Reliastar came out with their preferred plus and a $.48 flat extra per thousand and got everyone’s attention for a while until it kind of blended in with the fact that several other companies were offering preferred rates. When you did the math the premiums were often lower at preferred than ING’s lure with preferred plus. But now……
An A+ rated carrier announced yesterday that they will now underwrite VFR pilots with 100+ solo hours and 26-150 hours annually at what are arguably the most competitive preferred plus rates on the table today. The underwriting applies to term insurance and universal life and can go up to $10,000,000.
Just to put that in perspective I have a client who has $4,000,000 of term insurance in force. He fits all of the criteria above and currently has his policy with North American at preferred paying about $4800 annually. We just discussed this and ran rates with this just announced underwriting and it would reduce his premium to $3700 annually.
This really can’t be overstated. VFR pilots simply haven’t been offered these kind of rates before. Obviously you would have to qualify for preferred plus rates in all other aspects, but generally speaking health issues are not a big factor with pilots, some of the most annually examined folks there are.
Bottom line. If you are a private pilot with life insurance you shouldn’t pass up this opportunity to shop your coverage and jump on the savings. If you don’t have insurance and have always been envious of those best rates you see advertised, here’s your chance.
January 28th, 2010
Airline pilots have been given a free pass by life insurance companies for a long time. The companies have assumed that if you are good enough to fly one of those big things for a real airline company, aviation won’t be an underwriting issue.
New question on those applications should go something like, “Have you ever played cards, read a magazine or used your personal computer while flying?” When those Northwest pilots overshot their destination by 150 miles while using their laptops to “check crew schedules” (Right!!), they put a whole new face on the folks on the other side of that door at the end of the aisle.
Life insurance companies may need to rethink this whole thing. While there is one other class of pilots that qualify for the best rate class, those that are instrument rated, have substantial life time hours and fly enough annually to remain proficient, other private pilots either get bumped a rate class or may have to pay a small flat extra for full aviation coverage.
Of course those guys won’t have to worry about whether their life insurance covers aviation anymore. No license. No flying. No exposure.
Ironic though. Life insurance companies have put so much stock in whether a pilot has the training, ratings and proficiency and then we find out that those who fly the highest and fastest are doing the grown up version of “Look Ma, no hands”, only worse. It’s “Look Ma, no hands, not even looking or caring where I’m going”.
Well, in spite of it, airline pilots will likely continue to get the best deal from just about any company they want to go with. Private pilots may not get to choose their company, but all of them from students, to VFR and IFR have enough companies that they should be able to put together an insurance portfolio at a reasonable rate.
Bottom line. This highlights the fallacy of life insurance companies assuming a certain class of people are above underwriting.
November 9th, 2009
Behind every good man is a good woman the saying goes. That’s certainly true in my life. Also, behind every successful impaired risk life insurance agent is a talented, well connected General Agent.
Impaired risk is an industry term that covers the full spectrum of those clients who, because of some physical or mental impairment, have a hard time getting life insurance at affordable rates and often have a hard time getting life insurance at all. It is this end of the business where I have hung my hat and where I found the perfect partner in Rich Fuller with CPS/Special Risk Services in Denver.
Rich has, when all of my bullets have been shot, gone to bat and to battle over cases where we know that the facts and logic are on our side (things that somehow escape underwriters who are lovers of their sacred underwriting manuals). Because of his connections and because of the connections he has helped me make, we are able to able to present trial quote requests to the right people with the right information, a key to success.
He has successfully ferreted out life insurance rates for private pilots that are second to no other agency in the country. He has helped me carve out niches where very few agents want, or even have a clue how, to go. We have been able to consistently beat some of the largest agencies in the country for clients with heart disease, aortic valve replacements, type 1 diabetes and type 2 diabetes, bipolar disorder and depression.
For both of us this is all about the clients we can help. We have gone above and beyond what an average agency would given the small amount of money to be made on some cases. There are a lot of agencies that will just blow off smaller cases, a rather self centered point of view. We have also hit major home runs on huge estate cases where we were able to save clients tens of thousands in premium per year.
Bottom line. I just needed to say these things for two reasons. First, there are a lot of agents who follow this blog and I wanted them to know where they can find the best help for their clients. Second, it’s important for those looking for life insurance to know that there is a professional team out there who will make their life insurance challenge a personal mission. We want to get the job done the way it should be.
June 23rd, 2009
The cost of being a private pilot can be staggering anyway you go about it. One area that you can keep the cost down in is your life insurance, if you do your homework and pick the right agent.
Student pilots face their first gut check when they find out, on average, that it will take $6000 to $8000 to complete the training for a private pilot’s license. That’s a serious cash commitment added to the time commitment it takes to complete the training. Another gut check can come from your spouse at this time when they ask to increase the amount of life insurance you have and to make sure that aviation is covered.
Good news on that front comes for those who are already adequately insured and had the insurance in force prior to making a decision to take up flying. It’s certainly prudent to check with your life insurance agent, but if the policy was purchased prior to aviation flying into your life, then in all likelihood it will be fully covered without making any changes. One of the great features of life insurance is that you don’t have to repurchase it any time something changes in your life. Again, a review by an agent will help you know the status on aviation. In you can’t find an agent, call your life insurance company directly and explain the situation to them and they will be able to guide you. If you do find that you need to purchase new coverage or additional coverage, the good news is that it can be done affordably through a few companies. Make sure you seek out an independent agent that knows where to take your business.
Once you have earned your ticket and are now a private pilot, well, this is when many find out if they were more fascinated than serious. This is when the cost of renting or owning a plane whacks you in the wallet and determines if that license will be a wall hanging or something that you seriously integrate into your life. This is also the next time that your spouse is going to broach the life insurance question.
Let me just interject some common sense at this point. If your spouse asks you to increase the amount of your insurance you really need to consider that question carefully. If you were adequately insured before, say with $500,000, you’re still adequately insured at $500,000. Just because you’re a pilot and have added that to the portfolio of possible ways to die, doesn’t mean that your death is somehow more monetarily challenging than it was before. But, as I said, consider the question carefully. It is possible that what your wife is saying is that she was willing for you to be under insured before, but with this new perceived danger in your life it’s time to bring your coverage up to where it should be.
This can actually be a useful tool for husbands. If you want to know if your wife is truly comfortable with the amount of life insurance you have in force, ask her if she would be comfortable with your current coverage if you took up flying. The good news is that as a VFR pilot with 100+ total hours in command and at least 26 in the last year, rates are going to be very good and competitive with those than you would pay even if you didn’t fly.
As you work your way up the next step is often an instrument rating and with 250+ total hours and again, at least 26+ hours annually to maintain proficiency, you are eligible for preferred plus rates with several companies. Again, a good independent agent is helpful here. Not all companies see eye to eye on this.
Bottom line. Private aviation is not a cheap hobby or avocation, but with some forethought and planning there isn’t any reason that your life insurance should make that any more of an issue.
June 5th, 2009
While the words CEO and flying may cause a little angst among some, the truth is that CEO’s are flying privately more often and whether that is on a corporately owned aircraft, a chartered jet, or their personally owned airplane, it is generally more efficient and cost effective to the company.
Life insurance underwriting for the pilot in all three of those scenarios is all over the board, but really that’s true of almost any underwriting topic other than the common cold. But private aviation and how different companies view it is about as diverse as you can get. While one company might give a private pilot preferred plus rates, another company will have them pay a flat extra fee for aviation coverage. Corporate pilots and charter pilots get the same wide variance in offers from best rate class to companies that really don’t want to cover them at all.
With the exception of airline pilots, underwriting of pilots really comes down to five primary questions.
1. Age of the pilot
2. Pilot rating – Commercial, private (IFR/VFR), or student
3. Total hours as pilot in command
4. Hours flown annually
5. Type of aircraft
Optimally the best rate class would go to someone over 26, IFR, 250+ total hours, 26-250 hours annually flying a proven, certified plane.
The truth is that private, student and commercial pilots can get very competitive rates and in most cases have the tough part of life insurance already whipped because they fall into that rare category of people who get regular physicals, so they actually know what their health is and it’s almost always good.
Bottom line. With good health being a given, even pilots that don’t meet the optimal criteria above can still get life insurance without paying a flat extra charge.
May 28th, 2009
What a difference from a year ago. Private pilots have been freed up from the $5+ per gallon fuel and are once again logging hours.
Life insurance underwriting for private pilots with most of the aviation friendly companies calls for a minimum number of hours annually for proficiency. Most companies use 25 or 26 hours and a few use 50, but all of them want to see enough hours that they can kind of feel assured that you remember what you’re doing when you go there.
Last year I talked to a lot of my pilot clients who, because of the price of fuel, had been flying anywhere from 25-150 hours annually but cut way back, many of them to below the company cut offs. While that didn’t impact their in force coverage, it did put a squash on additional insurance or being able to change to a new company if a better rate popped up. For some it meant not being able to take advantage of milestones like becoming instrument rated, a point where they would normally be able to find better life insurance values than they could with a VFR rating.
One of the other underwriting milestones is total hours as pilot in command. Again it varies from company to company, with the best being at 100 hours and the strictest being 250 hours. Several companies will approve at preferred rates and a few at preferred plus rates depending on how the criteria stacks up.
Bottom line. While the price of fuel went up and came back down, the good deals on life insurance remained constant for most private pilots.
May 7th, 2009
I did a series of posts last year on life insurance policies and have referred back to those posts on several occasions when explaining some specific clauses and options such as the suicide clause and incontestability clause and the conversion option.
Now I would like to start from the beginning and talk about the application. The application itself has been something of a sore point with some customers and for a few who are more concerned than the average person with identity theft, a cause for deciding against applying. I have actually had clients pull the plug completely on purchasing life insurance to protect their family because of questions about their social security number, their income and their net worth.
For the purposes of this subject I’ve chosen to use a West Coast Life insurance application mostly due to the simplicity of the document. west-coast-life-application Notice that they don’t beat around the bush with identity information. Coming out of the first line of the application they have your name, date of birth, social security and driver’s license numbers.
The social security number is right up there with the most frequent “Why do they need to know that?” questions I get. It’s not questioned that often, but probably 1 out of every 100 clients has some issue with it. There are really two reasons. The SSN is used to confirm identity on both the application and upon death. The other reason is that your death is an event that has to be reported to the IRS. Even though the death benefit is not income taxable to your beneficiary, the amount of the death benefit is added to the gross value of your estate for estate tax purposes unless it is owned by a life insurance trust. So, like it or not, if you want life insurance you’re going to have to share your social security number.
I get less grief over the driver’s license number, but the reason for the life insurance company having it is because most life insurance applications require a copy of your motor vehicle record. Most people never think about it, but the type of driver you are does have some impact on your mortality risk.
The application then moves into your occupation. While you do need to provide your employment information, I can honestly say that I haven’t heard that insurance companies necessarily verify your employment. But here is where two other questions come up that people aren’t that keen on sharing the answers to, income and net worth. “Why do they need to know that.” The need is less sinister than those who are concerned about might think. Income and/or net worth are determining factors in how much life insurance a company will underwrite on an individual. For non estate purposes, a multiple of income determines the max. For estate tax purposes, the amount of insurance is determined by the net worth minus the exemption times the tax rate. So, they don’t really care or necessarily check on how much you make, but the insurance companies do have some interest in not insuring someone who makes $20,000 a year for $2,000,000. That goes a bit beyond the whole replacement of income idea.
Next comes a synopsis of the type and amount of coverage being applied for followed by the beneficiary designations. It’s important to note that the application actually becomes part of the policy when approved and issued and the beneficiary designation in the application is actually the only place in the policy where the designation is noted.
This is followed by non medical history covering such things as foreign travel and whether or not you are a private pilot. After that is medical history. The application is kind of a synopsis in these areas. If there is more information needed in non medical history questionnaires are completed for things such as aviation, scuba diving or foreign travel. A more complete medical history is done during the exam.
And last on the list of information needed is a list of life insurance currently in force and whether you intend to replace it or not. This is another area where people get a little testy, thinking that it’s not the business of the company to know whether they are replacing anything or not. But keep in mind that it is the business of the company to know whether they are going to be a party to over insuring you. It is also the business of the company to be compliant with state laws and provide the appropriate forms for replacement.
Bottom line. There are a lot of personal questions on a life insurance application. It’s important to keep in mind that they have have valid, important reasons.
April 27th, 2009
All right guys, you can take a break. I already know how most of you feel about life insurance. If it’s free you’ll take some but if it gets into your beer or bass boat money, well, a guy has to have his priorities, right?
Ladies, in general men have two ways of handling life insurance. Not at all or insufficiently. Men really believe that it won’t happen to them even though the facts don’t back that up. The truth is that 1 in 6 of them that reach age 25 won’t make it to 64 and I suspect I’m not going to far out on a limb to say that there’s probably very few, if any, of you who can’t plug a friend or family member into that statistic.
I would just like to share a testimonial from the wife of a client who died a few years ago. He was a private pilot and, well, her words…..
“My husband John loved to fly. His entire childhood he dreamed of the day when he could learn to fly, and own his own plane. In December of 2005 he was closer to that dream, when he purchased a Bonanza Beechcraft single engine airplane. He was a year ahead of his scheduled deadline of flying before he reached 50! His dream was real, and it was like Christmas to him.
His excitement hit an all time high when he finally took ownership of the plane in February and planned his first “cross country flight†with his flight instructor. He had to reschedule that flight 6 times, due to rain and schedule conflicts, and finally was able to go on my son’s birthday, almost 4 months later.
It was his first and last cross country flight. Coming home from Reno, on takeoff the plane lost its engine and plunged tragically into a house in Reno and in a blaze of fire destroyed the house. The flight instructor and John were instantly killed.
Life Insurance? Thank God John had done that. He and Ed had established a policy to cover in the event he had an accident, even tho it was NEVER going to happen! I will forever be grateful for that.
Ed made the process move along and championed my cause from the first phone call after the accident. He was diligent, focused and made things happen – all at a time when I wasn’t any of those things.
No, the money doesn’t bring my husband back, but the boys and I have been able to be free from the tremendous financial pressures we would otherwise, no doubt have faced, and at a time we were least equipped to face those challenges.
John was only 49. I have had five friends lose their husbands before they reached 52. Strange things happen. To me, Life insurance is not optional, it is a real necessity.”
“John was only 49.” John was an exceptional man. He cared deeply about Karen and his boys and even though he figured he would outlive his term insurance, he just wanted to be sure. He bought it. He didn’t fuss about it. And he bought a very adequate amount.
Bottom line. Whether it is cancer, a heart attack, or an accident while pursuing a dream, unforeseen things happen. Life insurance is a very affordable way to make sure that those left behind don’t have to struggle with finances as well as grief.
April 16th, 2009
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