With all the ongoing financial drama, television networks are falling all over themselves to interview experts on this and that and what the heck we should do to protect our retirement. Just by the sheer luck of the draw I ran into three Suze Orman interviews within the past week.
Personally I think the advice she gives on the economy and investments is either stolen from someone else or worse yet, made up on the spur of the moment from her own, very original, lack of expertise. But, let’s just accept for the minute that she is clueless on financial matters and move on to something where she is on a level playing field with all of the other advice givers today. None of them understand why people buy life insurance.
They all have an opinion on term insurance versus whole life, universal life versus variable universal life, etc, but I honestly don’t think they understand that the reason people buy life insurance is because……some of them don’t live as long as we think they will. As they provide advice on this tactic or that tactic of how to salvage as much of your 401k as possible and flip out advice about “as long as you have 15 or 20 years”, they are all avoiding the subject of life insurance and how it can keep this economic car wreck from turning into one family’s personal train wreck.
This is precisely the time when they should be inserting into every interview the need, the urgent need, for people to have adequate term life insurance in force not only to replace lost income if someone dies prematurely, but also to replace the investments that may never have a chance to come back with the breadwinner out of the picture. They should talk about the need for stay at home parents to have adequate insurance because if things get worse, going forward the surviving parent may not have the luxury of just working one job and may need the life insurance proceeds to pay for child care and school.
Bottom line. The world is full of good advice and it’s also full of people that BS for a living and personally I think Suze deserves a plaque in that particular hall of fame. If you don’t know what life insurance is for, don’t give advice on how to buy it.
November 22nd, 2008
In the past I’ve gone off on the whole idea that people over age 65 or 70 should have to complete a cognitive skill test as part of a life insurance exam. It is insulting and as many times as I’ve looked at the questions, I still fail to see the relevance.
So, if you’re “elderly” and applying for life insurance and the examiner tells you that you need to complete a cognitive skills test, get in the first punch. Tell the examiner that you have an examiner cognitive skill test that is required before you allow even your family doctor to check you out. Since your exam was scheduled, you can have your computer on and tell the nurse that it should only take them two minutes. As soon as they finish you’ll be happy to do their test.
Bottom line. You may still have to put up with the test, which by the way is rapidly losing popularity for obvious reasons, but if you do you’ll get to have a little fun first.
November 22nd, 2008
We’ve been hitting them out of the park on type 2 diabetes underwriting for quite some time, but that pot at the end of the rainbow, fair underwriting for type 1 diabetes, that we never have been able to get to is finally coming within reach.
Given certain guidelines, we now have a company that is willing to be more aggressive than anyone in the past on early onset type 2 diabetes and juvenile onset type 1 diabetes. Three months ago we couldn’t find anyone that would jump on board that wagon, but as the world spins…….
So, some guidelines. I know it’s not going to be the answer to everyone’s wishes, but it’s a start in the right direction.
First let’s talk about type 1 diabetes. Type 1 is aka insulin dependent diabetes, aka juvenile onset diabetes. Type 1 by definition is your inability to produce insulin at all. This has historically been a tough underwriting challenge just because in the absence of the willingness and ability to closely monitor and control the issue, complications are plentiful and damaging.
What this company is saying is that they are willing to approve business on people whose diabetes is diagnosed as early as age 10 with a track record of reasonable control and no complications for as much as 20 years. I’m hearing people scream foul because that makes the person 30 before they can get life insurance, but tell me the last time you heard of a 30 year old type 1 diabetic paying less than $1000 a year for $250,000 of 30 year term insurance or $600 for a 20 year term. It may not be all that everyone wants, but it’s a home run for those that fit. I am still fighting the fight
on those younger type 1 diabetics and will keep you posted on that.
The company is saying that as the age of onset increases, the number of years of control and no complications will decrease and the rate class will improve. Underwriting treatment for type 1 diabetes diagnosed after age 20 will be very similar to that of type 2 diabetes. So let’s talk control and complications.
Control will be measured by an hbA1c under 7. We were told that it could be above 7 (as in under 7.5) but that all other risk factors had to be good. No complications!! Type 1 diabetes complications run the gamut from heart disease and kidney disease to neuropathy and eyesight problems.
I would leave everyone wondering if I tried to outline all of the different possibilities, but suffice it to say that there are possibilities today for type 1 diabetes life insurance coverage that didn’t exist even a few weeks back. And then there are the changes in the underwriting for type 2.
That same 30 year old with type 2 diabetes, no other risk factors or complications could get $250,000 of 30 year term insurance for as little as $630 a year and a 20 year term for under $400 a year. I have often referenced the underwriting being much harsher than that on type 2 diabetes onset before age 50 and definitely before age 40. Home run!
Bottom line. If you have diabetes it’s time to do some shopping. Yes, it’s an A+ rated company and yes the rates are guaranteed level. Good control, no other risk factors and no collateral health issues and you can be knocking it out of the park too.
November 20th, 2008
Being in the life insurance business and having been on the business end of passing on checks for death benefits, I have a real sense of just how much life insurance is needed by the families that receive it and a real passion for helping others understand that buying life insurance isn’t about expense, it’s about peace of mind.
In the years that I have been posting this blog, the world according to Ed, I’ve been a bit rough on men. Maybe not rough enough though. Men have this real thing about life insurance. They seem to think it’s all about them and the money that they will have to spend to ensure that, even if they don’t, their spouse will make it to retirement financially OK. They think it’s betting against themselves. They think they would be better off just putting that money in investments so that they can enjoy it, never considering that there are significant odds against them seeing retirement.
When I say significant, let’s put that into betting context. I know people who buy multiple lottery tickets every month with a 1 in a bazillion chance of winning, or those who buy scratch tickets every payday with a 1 in 250,000 chance of winning anything other than the money you’ve blown through the years on all the losing ticket. So, what are the chances that life insurance will be needed between young adulthood and your mid sixties, what we used to fondly think of as retirement time.
Well guys, if you knew that those fairly small life insurance premiums were covering a 1 in 6 chance would it become something worth thinking about? 1 in 6 men who make it to 25 in our country don’t make it to 64. For women it is 1 in 9. That isn’t betting against yourself but rather doing the prudent thing to cover a very real risk for those who are dependent on you.
And the cost! I know everyone is rethinking how they spend money these days. Is there any chance that we have an inordinate amount of our income going to play and toys? Is it possible that with just a little creative thinking we could divert a bit of that play money to peace of mind money?
Bottom line. All of us know someone who has died far too young in a car accident. You are in a serious minority if you don’t have a family member who has died prematurely from cancer or a heart attack. And consider all those around you for who obesity is an ingrained part of life and that with that lifestyle comes the risk of diabetes and so much more. What part of life insurance doesn’t make sense?
November 19th, 2008
Impaired risk, an industry term that refers to life insurance on people with significant health issues, cancer, diabetes, heart disease and such, is an area that we have focused on for some time. While the masses and the giant internet agencies flock to the healthiest clients they can find in a feeding frenzy on the easily insured, some of us have found a niche that most agents would prefer to steer away from.
Because of the path we’ve chosen I often get solicitations from different large agencies to help handle our impaired risk shopping and administration. While I have used Special Risk Services out of Denver for as long as I can remember because they really are the best, like any other business we still get offers.
Most blow right through my desk and on to the trash can. One today caught my eye and because it was so bizarre I thought I would share it. This came from a series of six ideas about how to handle impaired risk cases, a lot of industry mumbo jumbo for the most part until you come to idea number six.
Number six has to do with what we should suggest if we find a client who truly is not insurable. It suggests, seriously, that you find a surrogate insurable person to take out insurance in your client’s place. So, you’re too sick to get insurance and therefore your beneficiary won’t get anything when you die, but you talk someone else into taking out insurance with, for instance, your wife as beneficiary, and when they die your wife finally gets the insurance you weren’t able to provide her.
So, I’m explaining this to my wife. “It’s like this Pam. I’m too sick to get the $1,000,000 of insurance we need to replace the income you will lose if I die, so we turn to my nephew who is healthy and get him to take out $1,000,000 with you as beneficiary. There is a downside though. He is younger and very healthy and will likely outlive me by 20 or 30 years. So, in order to make this work, my last act as a devoted husband will need to be to shoot my nephew so you can collect the money you need to get on with life.”
Bottom line. Good chuckle. The good news is that with proper preparation and shopping, very few cases are uninsurable. Call an independent agent to work on quotes for you today, but steer away from idea number six.
November 19th, 2008
Following quickly on the heels of the obesity epidemic has been the type 2 diabetes epidemic that is sweeping the country. With $billions being thrown around like dimes these days I was surprised that a headline with $billions even caught my attention. The estimated annual cost of type 2 diabetes in our country is $218 billion.
I would like to throw out a little different view of that staggering figure. Type 2 diabetes and all of it’s associated collateral health issues such as heart disease produce a substantial mortality experience in our country. I think someone would have to bury their head in the sand pretty seriously to not understand that diabetes and its’ complications are responsible for an astounding number of deaths each year.
When you consider that in the context of the number of people who are uninsured or under-insured, when those deaths occur families are going to be left with health care debt that will bankrupt many of them. Life insurance may be the only thing that will prevent that financial disaster from occurring.
The good news is that for many with type 2 diabetes life insurance is very affordable. The key of course is to get insurance while the diabetes is well controlled or in the early stages and hasn’t yet caused any other health issues. Here is just a quick review of the points that an underwriter looks at when reviewing a diabetes file for insurance.
Age of onset is part of the equation. After age 50 is optimal. Before age 50 will cost more, but the higher rate class is often offset by the lower cost for age. Control of the diabetes as measured by a blood test of glycated hemoglobin, the hbA1c, is critical. Well controlled diabetes tends to be less detrimental to the body. An A1c of less than 7 is good, less than 6.5 is optimal. Finally, whether their are related health issues, a measure of how far the diabetes has progressed is taken into account.
Bottom line. With $200 billion plus being racked up each year in costs associated with diabetes, the financial fallout for the families can be a terrible cost. You know me and my belief that if you have a family you should have had life insurance in force all along, but if you don’t and you have diabetes, apply for life insurance now.
November 18th, 2008
There isn’t any question that given the clear choice between suffering a potentially fatal heart attack and having the artery opening procedure called angioplasty, the prudent thing to do is to stack the deck in your favor and open those arteries.
But there is a serious question about the use of angioplasty as a preventive measure. In other words, if you are not in imminent danger of a heart attack and arteries that have begun to clog are treatable with medicine, is the risk of an invasive procedure still prudent and reasonable. Recent studies have shown that there appears to be enough inappropriate recommendations for the procedure that the American Heart Association and others will be releasing new guidelines within a few months regarding when an angioplasty should be set aside for treatment through cholesterol lowering and clot busting drugs combined with exercise.
Medically this is a huge issue. From a life insurance standpoint it can make the difference after the diagnosis of how soon a person can get life insurance and how much they will pay. If a person is found to have blockage that is successfully treated medically and those results can be substantiated on a subsequent stress test they could be looking at standard rates, possibly better, within six months. If they have an angioplasty, whether it was needed or not, it will be at least a year and a good stress test and then the rates will generally be higher than standard rates.
The good news is that, given a good stress test, either way you would be insurable. The bad news is that an over zealous doctor might do more damage than just handing you a large cardiologist’s bill.
Bottom line. Second opinion, second opinion, second opinion……unless you are having a heart attack.
November 17th, 2008
Still fresh in my mind is the story a client related to me about her experience of being declined for life insurance due to bipolar disorder. This was news to her since she didn’t have bipolar disorder.
In talking through the situation with her she did bring up the fact that she was treated for ongoing depression with the drug Lamictal. Lamictal has several uses, but because of the magic of television advertising, probably the best known is its’ use for bipolar disorder. It isn’t mentioned in the ads, but it is also commonly used for seizure disorders and, lo and behold, depression.
The decline from this company came without ever requesting medical records. There was a leap of assumption on the part of the underwriter that this client had put down depression, but the problem was really bipolar disorder and this leap of assumption was based solely on the medication. We shopped this case for her and detailed everything up front including what the other company had done and we were able to get her an approved policy at standard rates, a fair rate given her history of depression.
The knee jerk reaction from the majority of life insurance companies when it comes to depression, anxiety disorders and bipolar disorder is unfortunate. A large percentage of these folks are wearing the sign and taking the medication and leading normal lives. They hold down jobs, have healthy family and community lives, don’t sit around thinking about suicide, aren’t in and out of hospitals, comply with their treatment programs and in general are no more of a mortality risk than the average person that doesn’t have one of these issues or at least hasn’t been diagnosed with it yet.
A little friendly advice if you happen to be part of one of these groups and need life insurance. First, don’t go to your State Farm agent (or whoever handles your auto and homeowners). Those companies are licensed to sell life insurance but it is definitely not what they’re good at and the agent is licensed to sell the product, but they have no training in how to find you fair underwriting for your issue.
Second, don’t go to the big online insurance agencies. They are volume shops and writing a policy for someone with say, bipolar disorder, takes some time and doesn’t fit into their style of doing business. You are going to clog up their well oiled machine and while they might find you an approval, it’s not likely to be the best one out there for you.
Third, do find an independent agent who has a background and track record in dealing with your particular issue. You’ll know when you talk to them because we ask questions that will tip you off to the fact that we’ve been there before. We won’t just take down minimal information and run quotes for you. We’ll take a lot of information and then take the time to shop it for you.
Bottom line. Take heart! While the majority of life insurance companies are very conservative and would prefer to skirt around the whole issue of mood disorders, there are 15-20 companies out there that really have their head screwed on right and know how to fairly underwrite your case.
November 17th, 2008
I receive although I never subscribed to an industry magazine called National Underwriter. It occasionally has a relevant article on such things as estate taxes, marketing ethics and so on, but mostly the articles lean in directions that are against my professional grain.
An article this last week caught my attention because it pushed one of my buttons. The article, “For The Cash-Strapped Business, Cash Values Can Be A Life-Saver” by Warren S Hersch. The premise of the article is that whole life and universal life policies with cash value are good things because when things go bad you can borrow from that cash value. On the face a good thing. Or not!
While the virtue of whole life is being extolled by the author as something of a God send in times of tight credit markets, what this author fails to mention is that if the cash value in your whole life or universal life insurance policy is significant enough to save your business, you had to have paid way more than significant premiums for quite some time to accumulate that cash.
Now, I’m not saying that it isn’t an alternative at this time. If you already bought the farm, I mean the whole life policy, then that cash may in fact be a valuable tool for you to use*****. I believe that statement requires five asteriks because if you choose to tap that cash you run the risk of trashing the very thing you initially purchased, a life insurance policy. If you are not prepared to pay back that cash in a prudent, timely manner, your life insurance contract, especially in tough times like this, may gobble itself up and disappear.
The last paragraph of this article was provided by a charter financial consultant named Mark Weber. He states, “If a business doesn’t know what cash flow will be or what impact a downturn will have on their ability to meet business obligations, then I wold recommend purchasing convertible term insurance….you don’t want the premium to be one of the causes that drags the business down”. And everyone said Amen except for the whole life insurance sales people.
The whole idea of buying whole life, universal life or variable universal life policies because of their potential savings and loan value is just, well, stupid. The article makes it sound so easy. No loan application. No loan committee. Just call the company and ask for the money!! Well, if they had protected themselves with term insurance and socked the difference away, guess what? The money would have likely accrued more interest and therefore have been a larger sum. You could access it without an application or a committee and all you would have to do is call the institution where it was stashed in order to access it. And the frosting on the cake is that if you never pay it back you still have your life insurance.
Bottom line. The term versus whole life debate will rage on forever. For me it comes back to the old adage about “if it sounds too good to be true”. Run the numbers every which way before you ever commit to a cash value policy. Get a second opinion from someone who doesn’t seem to believe cash value it the best thing since sliced bread.
November 16th, 2008
Over the years we have offered discussion on how to get the best possible life insurance rates even though your health is less than perfect. The truth is that with perfect health and family history you can probably find good rates at any number of sources and how to go about it is not a big issue.
But let’s be real. The truth is that those who have at least some health issue are more numerous than those who don’t. Those with more serious health issues such as diabetes, heart disease and obesity or mood disorders such as anxiety, depression or even bipolar disorder are not the majority of those seeking life insurance, but they are the group in the greatest need of hands on experienced help in finding the right company and the right rate.
There is probably nothing I have harped more on over the years than compliance and control. These are the first things that a life insurance underwriter will look for, and lack of either might very well be the last thing they look at when reviewing your application.
Are you compliant, truly steadfastly compliant with your prescribed treatment? Do you take your medication as prescribed or, for instance, do you just take medication when you feel like your blood pressure is high? Have you taken seriously the lifestyle changes that your doctor has recommended? Do you keep regular appointments and do you complete any suggested testing?
With compliance comes control, but I’ve found the biggest challenge in this area is your own education about your condition. If you have diabetes, do you know what your hbA1c is? If you’ve had a post cardiac issue stress test do you know what your ejection fraction is? If your cholesterol is an issue do you know what ranges are considered normal and high and do you know what your HDL and LDL are and what they mean? If your blood pressure is being treated do you monitor it on a regular basis and do you actually know the difference between diastolic and systolic? Do you know what it means when one of them is higher than it should be?
I guess what I am getting at is the difference between being told by a doctor that you’re doing OK and knowing for yourself based on test results just exactly how you are doing. A good example would be if you have diabetes and on your blood test your hbA1c is 7.5 and your doctor says you’re doing OK. Let’s just keep monitoring it. If you knew from your own studies that a reading of 6.5 was better than OK, in fact excellent, you might ask your doctor what it would take to get to better control.
I’m not saying that it’s not good to know you’re doing OK, but I know from experience that doctors aren’t big on education and OK really is good enough for most of them. But is good enough for them really your goal?
Bottom line. Compliance and control are the most important keys to the best possible rates when your health isn’t all that you wish it was. In an age where online health education is just a click away, there really isn’t a reason not to know not only how to manage your health, but how to measure it.
November 15th, 2008
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