Posts filed under 'Uncategorized'
Like cancer and car accidents, there are probably very few of us who haven’t been touched by the loss of a relative or someone we know by suicide.
I try to address this sensitive issue a couple of times a year just because I believe a lot of life insurance claims go unpaid when the death is due to suicide, not because the company doesn’t want to pay them, but because claims aren’t filed.
To say there is a stigma that goes with the whole subject of suicide would be soft peddling the impact it has on the family and friends of the deceased. It’s often unexpected and always traumatic and very often produces feelings of guilt in a family that feels like they should have been able to keep it from happening.
It is the stigma, shame if you will, and the myriad of other feelings that often lead surviving spouses to either forget or just not file a life insurance claim. Mixed in with that most people don’t believe that insurance companies have to pay in the event of suicide, so why file?
But they do pay! There is a two year exclusion for death due to suicide, the suicide clause, in most states, one year in the others, and by law after that exclusion period the company has to pay.
But here’s the kicker. The companies don’t watch the obituaries and contact families when there’s a death. A claim has to be filed. If no claim is filed, no benefit is paid.
Bottom line. I just don’t want to see cases where a widow doesn’t get the life insurance proceeds that are due to her because she somehow believes it is owed or deserved. If you have a friend whose spouse commits suicide, bring the subject up. Help them out. File the claim!
March 10th, 2010
Yesterday I offered a post about term insurance versus whole life. There was on piece of the puzzle I left out, a particularly disturbing one since, first and foremost a life insurance agent should be all about making sure there is enough death benefit to take care of the family.
I have a young couple as clients who came to me a few years ago concerned that they might not have enough life insurance. They had been sold whole life policies by a Northwestern Mutual agent who had started out suggesting $500,000, 6 times the husband’s annual income, but they insisted that whatever insurance they bought had to fit within their budget. (Dave Ramsey would have loved them for that) Being the dutiful Northwestern agent that he was, he didn’t let go of whole life. He came down to their budget and ended up selling this young couple $150,000 worth of whole life, not quite 2 times the husband’s annual income.
Based on their age and income and family situation this couple felt like they needed at least $1,000,000 on the husband and at least $500,000 on the wife. They admitted that they got all wrapped up in the agent’s pitch about the cash value aspect and all of the advantages it would have down the road and finally just signed on.
We were able to get this couple into 30 year term insurance for the amounts they felt they needed and stay within their budget. This is the point I get hung up on with agents that are wholly sold on whole life. To the detriment of the family’s needs, they will stick to their guns and under insure them rather than go to a term product and make sure that the family is taken care of completely if something happens. All the rap about cash value wouldn’t have done these folks any good if the husband had died. The family income would have been gone and the widow and three children would have had just a fraction of the money they needed to carry on.
So why did this agent beat them down in death benefit and stick to whole life when it made no sense for the clients? Whole life insurance is insanely profitable for life insurance companies so they spend more than just a little training time teaching agents how to keep turning clients back to whole life and how to make sense of too little insurance. They of course also remind them of the commission and renewal advantages of whole life just in case the agent has a conscience but is able to be swayed by money.
Bottom line. The most important components of a life insurance sale are the client’s needs and their budget. The needs should be met and the budget should remain intact.
March 9th, 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
Like smoking, another issue that gets a lot of interest in life insurance but very little follow through, is weight.
I’ve offered several posts concerning companies that will underwrite obesity at fair rates. I’ve also mentioned frequently that what is fair for someone 6′1, 394#’s is not going to be the same as what is fair for someone 200#’s lighter. These companies are underwriting known mortality risks when they choose to make offers on those who don’t even fit on most companies build charts at all.
For whatever reason, smoking and obesity are two areas where I see customers who want the insurance but decide nothing is better than something when they see the price on what they would like to have. By this I mean that, for instance, a person would like to have $1,000,000 worth of life insurance. When they find out that it doesn’t fit into their budget due to the premium charged for smoking or obesity, the opt to do nothing rather than look at $500,000 or $250,000. It’s kind of like the kid that takes his bat and ball and goes home because he can’t get what he wants. So he goes home and then he has a bat and ball and no one to play with. Somehow that doesn’t work out to be a good deal.
In life insurance, deciding that nothing is better than something may work for you, but how’s that going to work out for your family? Do you have some sense that your family is better off with nothing than $250,000? Do you really think that it would make sense to your wife that because you couldn’t afford $1,000,000, you should just go without any protection for her and the kids?
We can successfully get offers all day long for those who can’t get it somewhere else due to build, but we can’t change that all or nothing mentality.
Bottom line. Keep in mind that I have never had a widow call me and gripe that their husband left too little behind. The only time I hear complaints is when they find quotes or application paperwork that was never followed through with. Don’t break the bank. Get what you can afford and your family will be glad you did.
November 30th, 2009
When A doctor says you’re doing just fine or you don’t need to worry about this or that, they really mean it. I suspect that in the short term scheme of things they may even be right most of the time.
But let’s not mix up a short term prognosis with an adjustment in your mortality experience. After all, if you’re 50 and can expect to live to be about 80 if you’re healthy, what is a doctor going to gain by letting you know that your health condition, on average, is going to shorten your life span 6-7 years. That is definitely not in the doctor’s handbook on how to win patients and influence people.
But it’s a problem when you are applying for life insurance. When a doctor poo pahs your health problem because he will likely be retired before you die, he sets you up with the expectation that the rest of the world will see your situation from the same frame of reference and treat you as if “there is nothing to worry about”. And I’m not saying that you should worry. Doesn’t help anyway.
What I am saying is that when a life insurance agent tells you that your A1c of 6.9 isn’t pre diabetes for underwriting purposes, you need to understand that everyone who has a 6.9 a1c is looked at the same by life insurance underwriters. It’s diabetic. They really don’t care how your doctor presents it to you.
I know I rant about this quite a bit and I really don’t know what the answer is. Being people like we are, we are generally going to take the opinion we like most and base our expectations on that. If the doctor says you don’t have anything to worry about then it’s normal to expect that insurance companies will treat you like gold. If your doctor says you’ll never be able to get life insurance because you’ve had a heart attack, then it’s normal to put your stock in a life insurance agent who has experience that disproves that.
Bottom line. Know that doctors and life insurance underwriters aren’t evaluating the same part of your life. Doctors are in the present and underwriters are looking at the distant future. Doctors are evaluating you alone and underwriters are looking at how your condition plays out on average within a certain risk pool. The real bottom line is to keep an open mind when your insurance agent’s opinion doesn’t seem to match up with your doctor.
November 20th, 2009
Once upon a time life insurance underwriting wasn’t as cut and dried, and frankly brutal, as it is today. There was room for flexibility and negotiation and even compassion when working with underwriters.
That was way back then….about 4 years ago. Competition thrived in those days and one company would literally snatch a piece of business away from another company by offering a better approval. It was great for the customer. It ripped their case right out of the textbooks and put it on the block for the most aggressive underwriter to win.
I’ve talked about this shift before that came when there was a great consolidation of re-insurance companies, decreasing the number from about 20 to the present day 6. When there were 20 there was real competition between the “re’s” and if you didn’t like the answer you got from one, there was generally another that would fill the order for you. Sounds a little risky on the surface, like maybe insurance and re-insurance companies were offering rates lower than they should have been, but that really wasn’t the case.
Mortality risk and experience was still the driving force behind all approvals. Underwriters weren’t going out on fractured limbs and putting the risk pool in danger, but the competition was alive and healthy.
Now with the recession and the new economic belt tightening, insurance companies are a little less likely to go that extra rate class to win a case. They aren’t, because of the small number of re-insurance companies, likely to do much outside of the re-insurance manual guidelines unless they are within their own retention limit.
So, is all lost? Do we have to accept all decisions as final? The answer is no. It is tougher than it used to be but what I’ve seen is that underwriters, while not as likely to cut slack for anyone that asks, are still willing to discuss and negotiate with agents who have proven themselves to be worth their trust over the years. A case that kind of drives home what can still be done is one I am wrapping up now where a client with bipolar disorder went through another agent and got a table 2 approval. The client read one of my blog posts and called to see if I could do better since I had more experience with bipolar.
I shopped the case and got a standard trial offer through the same company that had approved him a table 2 through the other agent. I was able to negotiate, after reviewing all the records, a new approval at standard. They didn’t really go out on a huge limb. They just allowed a review and a reconsideration. Good company.
Bottom line. The tighter things get the more important it becomes that you choose an independent agent with the experience and knowledge to get the job done and get it done right the first time.
November 3rd, 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
I have often talked about what a wonderful place I live. Generally that has been in the context of comparing the laid back life style compared to the stress of driving through Denver, Colorado for instance. It certainly seems a fair assumption that the stress level and the chance of having an anxiety disorder should be less 2 hours away from the big cities.
I have written close to 1200 blog posts on life insurance and how almost every malady known to mankind can affect it. Today is my chance to take a break from beating up on AARP and talking about how to get life insurance if you’re bipolar. Today I want to sell my house.
No, I’m not going anywhere. My wife and I will move about 2 miles. We will miss our beautiful home of the past 13 years, but we have an opportunity that we really shouldn’t pass up.
But that leaves a great opportunity for someone to pick up where we left off. The property is unique with a 3 BR, 2 BA home, an 1100 sq ft office, a barn built in the 1800’s and a pasture with lots of trees and the Little Arkansas river running through it. It’s in town but with 8.2 acres has amazing privacy and quiet. Close to everything without having to look at anything but mountains and trees.
Bottom line. Call my realtor, Jeff Post, at 719-539-6682 if you want to know more, or call me. I love to talk about it.
October 20th, 2009
Previous Posts
