Posts by cgentry0854
Is the Question “If” I Die or “When” I die?
You know, we are not immortal. Many of us may think we are, but in the end, we are not. That is why, if we are smart, or for us that are in the life insurance business, we are smart enough to help our clients with their planning by explaining to them the difference between “If I Die” and “When I Die”, because there is a difference. By the way, this is not my idea, I heard Joe Ross, ChFC, CLU, CRC, VP Sales Productivity & Business Development with AIG speak at a recent meeting. It just really got me thinking because so many of us think about “If” we die and not “When” we die. It should all be about when we die. Some of us will die earlier in life and some of us later. That being said, the “When” is often turned into an “If”. If I die too soon will my family be taken care of? If I die too soon, how will the mortgage get paid? If I die too soon, will my kids be able to afford college? These are all legitimate questions no doubt, and it is smart to be prepared for the “ifs” particularly in the pre-retirement years. But now let’s talk about “when” you die. When we die. It is a tough subject but so important to think and talk about. I hear it a lot, “My kids are grown, the mortgage is paid off, why do I still need life insurance?”. There are still risks of financial loss and some great reasons to have life insurance in place in the post retirement years. We all plan to go into retirement with our spouse, do some traveling, enjoy the grandkids and have a peaceful, comfortable retirement for perhaps 20 years. Here are some reasons why that may not be the case: When one spouse dies earlier in retirement and the other lives to a ripe old age of 95 or 100, which is happening more and more often, will there be enough income to sustain the one that is left living longer than expected? Health care costs can eat into retirement income like crazy! The lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68% for people age 65 and older. [ AARP. Beyond 50.2003: A Report to the Nation on Independent Living and Disability, 2003, (11 Jan 2005).] Most Americans do not have long term care insurance to help pay for this, so retirement income will be eaten away in health care costs. Even if you do have a nice nest egg put away, what about the financial risks? Interest rates, inflation, cost of living could all leave financial hardship. Then there is my story. Being blessed with parents who have both lived into their 90’s but they are outliving their retirement savings and I have been supplementing their income for several years. I am happy to do it but, that is money I could and should be saving for my own retirement. All of these issues could be resolved by having life insurance in place for ‘’When” you die. Which means not renting term insurance but owning permanent insurance that will be with you the rest of your life and take care of your loved ones “when” you die! Consider making permanent life insurance part of the plan going forward for you and your clients. There are many types available to make permanent planning affordable. Give me a call if you want to...
Read MoreWhat is the big deal about “Lack of Candor”
On occasion, individuals like to play “Truth or Dare” with life insurance companies. Sometimes it is deliberate and sometimes it’s not. Those doing it deliberately are basically not providing honest information to the carrier. Can’t they just go back to the carrier and say “Oops, sorry, I forgot!”? Lack of candor or being dishonest to a life insurance company is a big deal. It involves both the omission and/or misrepresentation of information. The first issue is being dishonest in the application process. If your client would happen to get away with it and a policy goes inforce, they would be putting their loved ones at risk of not receiving benefits when an investigation is done at death. Secondarily, the fundamental hurdle with lack of candor is the question of what else they might be hiding. The carrier needs to trust the information that their mortality decision is based upon. Some carriers take a hard and fast line on lack of candor. You lie to the insurance carrier, you are declined. Others take a broader view of the significance of the information – how relevant is the information that is missing? Trying to hide things like heart issues, stroke, cancer, mental disorders, substance abuse, multiple DUIs and adverse financial history are a big deal in the underwriting process and will result in an immediate decline. In speaking with one of our carriers I found they are also having problems in this area with the language barrier and some clients that do not speak English as a first language. The carriers are concerned that the proposed insured may not have an understanding of the questions asked, the contract language and/or what they are attesting to with their signature. So can your client still get coverage if they omitted information on an application? The answer is maybe. They can apply to a different carrier being fully truthful and disclosing all medical or financial information requested and depending upon if they are insurable, they can get coverage. Unfortunately your client has now wasted their time, your time and the carrier’s time trying to get away with not admitting all of the relevant information when they first applied for life insurance. Bottom line, tell your client to be honest on their life insurance application so it won’t come back to bite them later! Let them know, with all of the big data out there today, the carriers will find...
Read MoreWhy Does That Attending Physician’s Statement Take So Darn Long!?!
You would think that in this age of technology and the fact that laptops are used in MOST doctors’ offices today, the retrieval of an Attending Physicians Statement (APS) would be lickety-split. The truth is, this process is still antiquated and if we (the Brokerage General Agency (BGA)) do not know the medical history from the inception of the application process, the ordering of an APS can be delayed as well. Case in point; today we have both express apps and drop ticket applications. Neither requires the agent to get any medical information in advance. The application and medical information is done via phone interview. Once that is completed, the carrier may take 3 to 5 working days to review and then make a request for an APS. The APS is ordered by the BGA, through that carrier’s approved service provider, typically that same day. This is where the fun starts! 4/19 – Request for an APS is made 4/19 – Service provider faxes request to the doctor’s office 4/20 – Call made to see if the request was received; had to leave message requesting callback to confirm receipt. Refaxed request to ensure receipt 4/25 – Medical Records clerk for the doctor’s office verified that the request was not yet received and that they had a preferred fax number. Refaxed request 4/26 – Called medical records area of doctor’s office to verify receipt of faxed request. Voicemail states to allow 2-3 days to verify request was received. Left message and requested callback to confirm receipt 4/28 – Receipt of request confirmed!!! Doctor’s medical records clerk advised that the turnaround time for an APS is 15 days to be copied. Once copied they will fax an invoice for payment, once paid they will release the records 5/2 – Follow up on invoice. Not released yet 5/4 – Follow up on invoice. No invoice generated yet 5/5 – Follow up on invoice. No invoice yet 5/8 – No invoice as of today. Called doctor’s office medical records area and was advised that they process APS copies in order of receipt and have not gotten to this APS yet 5/10 – Follow up on invoice. No invoice yet I could go on but I think you see my point. Making matters even worse, many medical facilities including hospitals and doctors’ offices now utilize copy services for getting medical records sent out. These copy services are merely processors and have not a care about getting the records out in a timely manner. They simply put the request in a queue. There is no sense of urgency no matter how hard we push! HIPPA is also making the process harder. Some facilities do not accept the HIPPA forms provided by the insurance companies as part of their application packets, causing delays, and/or do not accept electronic signatures, causing delays. There are actually state laws under HIPAA directing how long a medical facility or doctor’s office has in release of medical records. In the state of Texas a hospital must make a patient’s recorded health care information available to the patient no later than 15 business days after receiving a written authorization. This may sound good; however, there is no recourse if they go beyond the 15 days leaving a state law that is violated. Even with this, as in our example above, the copy service gives themselves 3 days just to verify the authorization was received!! This is still an antiquated process. As a BGA we have tried several methods of speeding this process along including: Picking up the APS if the facility is in our vicinity Asking the client to push their doctor in getting the records sent out Asking the client to retrieve their records Sending a letter to the doctor’s office letting them know they will be liable if they delay the process of our mutual client getting life insurance and the client passes away As a producer you can help too. If your client is a woman, make sure you have her correct name and madden name, records may be...
Read MoreWhy can’t I just buy any amount of life insurance I want?
You would think that if you have the money to pay for life insurance that you could buy any amount you might want. In fact, this was the case with a recent client I went to see with one of our local agents. He had received a call from an attorney client; they needed to buy coverage to fund a buy sell agreement they were putting in place for a business which housed a building the two of them owned together. They were 50/50 partners in the business and wanted to make sure the cash was on hand to buy out the heirs. Here is where the kicker is; they also wanted to just provide a bit of extra cash for their family members. After exchanging pleasantries, they stated they each wanted $1,000,000 of coverage for the building. I asked them what the value of the building was and how they came up with $1,000,000 each. The response was that the building was worth about $500,000 and they just thought $1,000,000 each would be a good amount to buy out the partner and give a bit extra to the heirs. I explained that the insurance company would only insure for the value of the building and any outstanding loan on the building, which was about $160,000. So the maximum insurance on each today to fund the Buy-Sell would be about $350,000 each. That is when I got the question, “You mean I can’t just buy any amount of life insurance I want?” With the Buy-Sell agreement, as with any life insurance, there does have to be specific financial justification for the amount of insurance that is purchased. In the case of a Buy-Sell agreement, the carrier would want to see a formal business valuation done by an accredited appraiser or the value of the business found in the business’ financial statements. With Keyperson insurance, the carrier will typically cover up to 10 times the Keyperson’s total compensation. In all cases a cover letter giving the underwriter important and relevant details that are not addressed in the application is very important in answering the potential underwriting questions. At a minimum the cover letter should include: Tell the business story – who they are, what they do, where they do it, how well they are received, any growth plans that they might have A clear business purpose that the life insurance will be used for Policy owner’s relationship to the insured, making sure there is a clear insurable interest How the requested insurance amount was determined Any insurance that is currently inforce and the purpose of that insurance In the case of Keyperson coverage, include a biography of that key employee Any additional supporting data you might have. You may even want to look online for details. Here are some great cover letter templates you can use from Legal & General America (scroll down to Financial Underwriting Cover Letters). Perhaps it would be great if the insurance companies just let us have whatever amount of life insurance we are wanting, but for now, life insurance carriers are focused on protecting your client’s wealth, not creating it! Would you like to discuss a case or learn more about business life insurance? Feel free to give us a...
Read MoreWhat is Your Client’s “Premium Comfort Zone?”
Did you ever think our approach to selling life insurance might be all wrong? We go through a needs calculation to determine how much life insurance our clients need and present them with a proposal letting them know how much it will cost. Sometimes we hear a little gasp, sometimes we don’t, yet they give the go ahead to apply for the coverage. Once the underwriting process is done, the client has pondered the price even more and decides they are not comfortable with the cost. They may not express it to you that way, but that is the issue. You know you did a great job in explaining the benefits of the product and how their family will be taken care of, but they still don’t take the coverage. Perhaps finding the client’s “Premium Comfort Zone” and working with that may be your answer to making sure the coverage is placed. Here is an example: Sarah is a 45 year old single mom with two small children. She fully understands the need to have life insurance for the benefit of her children just in case something should happen to her. She makes a decent income yet is on a tight budget. You propose $500,000 of 20 year level term to keep the price down which is $60.23 monthly if she qualifies at preferred non-tobacco. You ask Sarah if that premium is ok and she hesitatingly says yes. She applies for coverage and receives the preferred non-tobacco rate classification, but then does not respond to you when you let her know the policy has been issued and is ready to deliver. You are a bit confused as to why this is happening. She seemed ready to buy. Well, it may be that the amount was not fully in Sarah’s “Premium Comfort Zone”, particularly after she reexamined her budget while going through the underwriting process. Instead of giving up, why not offer Sarah some options? First, if you can find out what her premium comfort zone is, that would help. Come to find out Sarah’s was actually $40.00 monthly. Here are some options that might work: 15 year level premium term for a $450,000 benefit costing $42.14 monthly 20 year level premium term for a $300,000 benefit costing $39.75 monthly Now you have made Sarah’s life insurance more affordable to her and more comfortable for her to pay for. And with regular reviews you can add to her coverage as her income increases. You can work in a similar way if your client comes back with a rating. Don’t let them simply drop the coverage! Give them reasons to place the rated case and alternatives that make the coverage affordable for them. Keep them in their “Premium Comfort Zone” and get them the coverage they need! Give us a call to give you a hand. We are happy to help!...
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