Ed Hinerman On Life Insurance

How Much Are Women Worth?

I was recently contacted by a stay at home mom who was, putting it politely, a little annoyed because she was told by an insurance agent that she could only be approved for 1/2 as much life insurance as her husband was carrying.

I explained to her that, in fact, that was the stance with the majority of companies and any exception to that would have to be well thought out and presented if she expected approval. I did let her know that it was not mission impossible, but just not one of those things you can throw against the wall and assume it will stick.

A couple of points that are important to consider. This rule has been around since before mothers really had a choice of having a significant career out side the home. So it is definitely old school thinking. But just for a minute let’s revisit the old school.

I remember questioning an underwriter about this very issue in 1978. Whether or not he could back up his statement I’ll never know, but what he said was that the industry had mortality statistics that showed a higher mortality rate for stay at home moms if they had life insurance equal to or greater than their husband. He also went on to explain that the reason they limited the amount of life insurance on children was, at that time, they had statistics that showed a higher mortality rate in children with life insurance in force on their lives that was significantly higher than what was needed for final expenses.

Again, I have no idea if that was true, or if that’s just what old underwriters told young agents to get us to drop the subject. But, fast forward to today when, in most instances, being a stay at home mom is a choice and the other choice is being a second breadwinner.

So, one half of the husband’s income was based on nothing more than, I suspect, a little paranoia with some skewed statistics. Today I would propose that the amount of insurance available to a stay at home mother should be based either on the amount of income she could be making, or the replacement cost of her stay at home services.

If we were talking salary replacement for the age group that most stay at home moms would fall into, they would be eligible for enough insurance to replace about 20 times their annual income, or if you use my supposition above, 20 times their annual replacement cost. Using the $116,000 from the article that means that an acceptable amount of insurance would be over $2,000,000.

I’m not hearing a lot of women clamoring for that much insurance, but hello!!!, this is 2008 and for a woman to carry as much as a husband is really just prudent family planning. Another plus to this whole idea is that most life insurance now has an accelerated benefit rider that allows a terminally ill insured person to take up to one half of the benefit while still alive. How good would that be if the money was available for the husband to take off and take care of his dying spouse and take the burden of the children off of her. With this type of rider the balance of the death benefit is paid out at the time of death. Time for companies to rethink that rule.

Bottom line. Life insurance is all about lifting the financial burden of a loss of the back of the surviving family members. I suspect that any underwriter who still believes that the old rule applies has never talked to a widowed father with children.

Add comment May 21st, 2008

Did I Forget To Talk About Number One?

In my passion to ensure that the world understands the risks of cancer, obesity and diabetes, I have often referred to heart disease, coronary artery disease, as a collateral health issue. What I have neglected to do is give the number one killer of men and women the singular emphasis it deserves.

Although women consistently note that their biggest health concern is breast cancer, it is heart disease that claims the most lives of any health issue that women face. According to a recent article in Pink Magazine by Michele Cohen Marill, “1 in 10 women ages 45-64 lives with heart disease”.

Probably because men have dominated the heart attack scenes in movies, very little coverage or concern has been given to the fact that women now outnumber men in the heart disease/heart attack statistics. The culprit in this switching of roles seems to be stress, and plenty of it.

We’ve talk many times about the impacts of stress on the body and the article really drives home that point by noting that “a Swedish study found that women are six times more likely to have a heart attack if they have a high pressure deadline at work”.

Oh, that we would all learn that life is just too short for that kind of stress. I understand why we do it. As a business owner I put more than my fair share of stress on myself. I hope I offset that stress with some balance in the form of daily exercise. My daily run is intentionally planned in the middle of my work day. It puts things back in perspective and the health benefits are a bonus. Vacations are critical. My wife and I have promised each other that play will be a part of our busy life.

I guess where I am going with this, is that a busy life, even stress, are OK as long as you find a counterbalance and don’t let it build up.

Bottom line. From a life insurance standpoint, heart disease, and especially early onset heart disease present an underwriting challenge. Bypasses and angioplasties aside, if the root cause isn’t changed, if your health condition isn’t addressed with the same passion that your career has been, you are headed down a road that will continue to worsen and life insurance underwriters will drive home that point in the rates they offer, or the declines they dish out.

As with all health issues, underwriters wants to see that you have made the changes, that you are committed to the treatment and that you have in mind not to add to the wrong side of the heart disease statistics. A heart attack can be just the wake up call a person needs. Even better, avoiding that heart attack by learning what changes you need to make in your life, and proactively taking the road less traveled.

Add comment January 21st, 2008