BBA Blog Posts
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 talk.
What 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 out.
Why 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 in both.
- If you know there may be an APS required on your client due to their medical history, ask your client to wet sign a HIPPA Authorization even if you are dropping a ticket.
- Prepare your client for the medical history interview. They will need to know their own history such as doctor or facility names, addresses and the time frames regarding visits.
There is a silver lining. If you have been to the doctor’s office lately, most have laptops right in the examination room and are updating your records electronically. Electronic health records are coming of age and will make the retrieval of medical records almost instantaneous. Several records vendors are in the trial stage, and we may see them going live by the end of this year. Electronic APS services will eliminate copy services and immensely reduce the life application cycle time.
In the meantime, know your BGA is doing all they can to get the medical records to the carrier for a speedy decision on your client’s life insurance benefits. Although we can’t move mountains, we do try.
Why 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 call.
What 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!
Why Are You Still Filling Out 40 Page Applications For Your Term Life Sales?
To me it seems simple! Why take the time to fill out a 40 page life insurance application with your client, face to face, when you can complete a “Drop Ticket” or “Quick App” in 5 minutes over the phone?
If you have not already heard about the “Drop Ticket” or “Quick App” life insurance application process, you soon will because every insurance company is considering this type of process. It, along with the new “Accelerated Underwriting”, is an excellent alterative to the current application and underwriting processes. The carriers that are currently taking part are extremely happy with their results. One carrier Underwriting Specialist stated “As a lifelong underwriter, it is refreshing to see something that is such a great alternative for a quicker, faster, yet fully underwritten process. The process focuses on efficiencies”.
So how does it work, you might ask?
Step 1. Initially it is the same process you use today. You determine the need your client has for life insurance and offer a competitive premium from one of the carriers that have adopted the “Drop Ticket” process. This can all be done over the phone, by the way.
Step 2. When they say “Yes, what is the next step?” you say “Great! It will take me about 5 minutes to take some preliminary information. Can we do that now?” Using the online “Drop Ticket” tool you click the button to apply and run through the basic questions.
Step 3. Once completed you let your client know “What Happens Next”. This is a very important step because your client will receive a call from the carrier’s call center to take the full application over the phone. That process will take about 25 minutes and the call can be taken at their convenience. They will need to have available all of the information that they would for a full application. While your client is on the phone with the carrier call center, the paramedical exam will be arranged if one is needed.
Now you sit back and wait. The typical cycle time of the “Drop Ticket” is reduced, on average, by 7 days. We have even had cases, with the “Accelerated underwriting” go from phone interview to approval in 48 hours!!
If you want to use this great alternative to the 40 page life insurance application, simply click here for your copy of our “Drop Ticket” and “Accelerated Underwriting” guide.
7 Reasons to Consider the Past for Your Future
Have you ever asked yourself “Where are my next prospects coming from?” Why not consider the past and take a good look at all of your existing clients? There is a fortune in your files!!
Time flies by quickly and we often forget about the clients we already have in our present portfolio. A great way to keep those clients with you is to pay just a little bit more attention to them. Reaching out on a regular basis makes you the number one go-to person for their life and other insurance needs.
Here are ways to find that fortune in your files:
- The needs of your client may have changed and you should be the one to adjust their life insurance benefit plan to meet their needs.
- Life insurance products now offer benefits that will provide your clients with Long Term Care benefits and income during their later years when they retire. More than likely your clients don’t know this and you should be the one to share it with them.
- People like to do business with people they know and trust. That’s you!!
- Many of your clients may now have grown children that need your help! Ask your existing clients if their children have done any planning, then reach out to them as well.
- There is still a huge number of underperforming universal life products out there and you may have some in your files. These policies desperately need to be reviewed, and if you don’t, someone else just might.
- All of the 10 and 15 year level premium term policies were sold in late 1999 because of the onslaught of Guideline XXX, and are now out of their level premium period. It is a great possibility that you have clients paying increasing premiums on their term plans.
- It may be time for your clients to convert their term life insurance. You can help them and make a commission even if you were not the original writing agent.
All of the above give you the opportunity to reach out to your current clients and help them review their policies to meet their current needs. The best part of this is you didn’t even have to prospect for new leads! There is a fortune in your files!!
Policy reviews are one of our differentiators; we make it easy on you to do a policy review. Let us tell you how! Click here for your “Policy Reviews Made Easy” sales guide.
What is Your Application Cycle Time and What is it Costing You?
Have you ever contemplated the cost of how long a life insurance application takes to go through the underwriting process? Let’s consider the average life insurance sale.
You have talked to your client Jim about life insurance for several years. He has finally decided it is time to take a look at life insurance and the cost to protect his growing family. Jim is 47 years old and in good shape. You and Jim determine that $500,000 of coverage is about right for him and talk about the options available. You prepare illustrations and show Jim a 20 year level premium term with good conversion options at a premium of $179.61 monthly. Jim and his wife Jan agree that the premium is affordable and the coverage is important and they would like to proceed. You make an appointment and take the application. So far you have spent about two hours working with Jim.
The application is submitted to the company and the underwriting process begins!
During the underwriting process you have to get involved several times to gather missing information, verify answers, let Jim know how the process is going, and pushing the carrier to get the process done faster! All in all you spend another hour working directly on Jim’s case.
After 30 days you get word that Jim is approved as applied for and you wait about 5 more days to get the actual policy. You make an appointment to meet with Jim to deliver the policy and collect the final delivery requirements which takes you another hour. You submit the delivery requirements to the carrier and get paid on the case the following week!
You just spent 4 hours of actual work on the case and it took about 6 weeks for you to get paid! It’s easy to figure what you earned for the 4 hours with a premium of $179.61. At a 90% commission you are making $161.65 a month or $1,939.79 annually. Divide that by 4 and you got paid $484.94 per hour. But is that really a true accounting? You had to wait 6 weeks to get paid!
What if you had shown Jim a 20 year level term that did not require a medical exam and you let the carrier take the application for you? For $180.60 monthly, you could have offered a 20 year level premium term to Jim that did not require a medical exam. The process would have gone like this:
- You have your initial discussion with Jim and his wife, prepare the illustration which you present, and they agree to apply for the coverage. You spend about 2 hours (side note – this actually could have all been done over the phone as well, less driving time).
- You take the initial “Drop Ticket” application and explain to Jim that the carrier will be calling him to conduct the interview and take the full application over the phone. You let him know about how long the call will take and what information to have prepared in order to answer all of the questions. This takes you about 15 minutes.
- The carrier contacts Jim and takes the application within about 48 hours or a time specified by Jim.
- The application is processed by the carrier. They review Jim’s history electronically via his Medical Information Bureau report, pharmaceutical screening, driving record, and credit history.
- His application is approved 4 days after the phone interview, preferred as applied for.
- The policy is sent electronically directly to Jim with the delivery instructions.
- You are paid the following week.
Jim is thrilled that the process was so quick and easy and they decide to take out a policy on Jan as well!!
Now what did you make on Jim’s case? You spent 2 hours and 15 minutes with Jim. His monthly premium was $180.60 (he is willing to pay the extra 99 cents a month to avoid having to do a medical exam). Annually that is $2,167.20; at a 90% commission (most carriers do not discount commission on these processes). Your first year commission is $1,950.48 or $866.88 hourly. Not to mention that the entire process only took 10 days so you got paid faster!!
Learn more about how you can accelerate your underwriting process by emailing moremoney@bbalife.com
This blog post is for insurance advisors only and not for public use. The above is a hypothetical example and does not take into consideration policy fees although the rates are accurate.
8 Good Reasons to Have Your Client Buy a Little Bit of Permanent Life Insurance
Too often we are offering just term insurance to our clients because of price. Sure they like the low cost now but they won’t like what happens at the end of the level premium period when they still need life insurance! Have you ever thought about that?
Being in the business over 30 years and talking to a lot of orphaned clients, I can tell you many are not happy at the end of a term level premium period. They are now 15 to 20 years older and the cost for the same amount of insurance increased by 50 to 70 percent if they are still healthy and even more than that if they are not. Many are now on a fixed income as well, and although they still feel they need life insurance, it is now unaffordable for them.
Purchasing even just a bit of permanent life insurance at a younger age can guarantee a lesser cost for their lifetime. Why not give them the opportunity to lock in the price for some permanent insurance now? I know for a fact they will appreciate you when they are at the end of their level premium term, still need coverage, and now have health issues that would cause new coverage to be unaffordable.
Benefits of Permanent Life Insurance
“Permanent insurance” is really a catchall phrase for a wide variety of life insurance products that contain the cash-value feature. Within this class of life insurance, there are a multitude of different products. Whether it is Guaranteed Benefit Universal Life, Index Universal Life, Accumulation Universal Life or Whole Life, there are many advantages to permanent life insurance. Here are just a few.
- Death Benefit Protection – protection for pennies on the dollar paid to the named beneficiary income tax free!
- A savings plan through cash accumulation – policies that have cash accumulation allow the policy owner to access that cash at their discretion.
- Protection against market loss – benefits can be guaranteed!
- Tax deferred cash value growth – you can’t say that about too many non-qualified products.
- Tax free access to cash through policy loans.
- Cash values are protected from creditors, judgments, and lawsuits.
- Creates a forced savings plan – not enough Americans are saving for retirement like they should!
- Premium can be guaranteed – get pure protection for a lifetime.
Help your clients make a smart decision about buying some permanent life insurance today, before it is too late!
5 New Things to Try in 2017
Do you make New Year’s resolutions you often don’t keep? I know, when the New Year hits we may feel a bit melancholy because another year has gone by, but we can also feel energized, excited at the opportunity that a new year might bring. I do like to put a list of goals together each year. It gives me something to shoot for and reminds me of the things I should be trying to accomplish.
I am optimistic about 2017. It will be a year of new scenarios; a year for all of us to try new things, and perhaps go in new directions. Here are some ideas and possible ways for you to try something new in 2017:
- Offer life insurance that does not require a medical exam even if it is a little more costly. So often when we look at term life insurance we only look at cost. There are other aspects that you should consider as well. More and more carriers now offer term life insurance that does not require the cumbersome medical exam. Your client may appreciate that you offer these products, even if they are a few dollars more than the cheapest product.
- Think about what happens at the end of the level premium term period and consider laddering term and permanent insurance. All too often we are offering just term insurance to our client because of price, when all too often they want coverage that will last their lifetime. Purchasing permanent life insurance at a younger age can guarantee a lesser cost for their lifetime. Why not give them the opportunity to lock in the cost for some permanent insurance now? I know for a fact they will appreciate you when they are at the end of their level premium term, still need coverage, and now have health issues that cause that coverage to be unaffordable.
- Make an appointment to review your client’s life insurance policy. Whether your clients have term or permanent life insurance, doing a policy review a minimum of every 5 years should be on your mandatory to do list. There are so many reasons to do policy reviews:
- They will appreciate you for staying in contact with them
- You can ask for referrals
- Their needs may have changed and they may need more coverage
- It is an opportunity to talk about converting all or part of their current coverage
- If you don’t talk to them, someone else might and you could lose a client.
- Try the “Drop Ticket” process when selling term life insurance. Using the “Drop Ticket” or short form life application process can save you a lot of time by not having to fill out the long, cumbersome life insurance application. Plus, you can do it over the phone! No signatures required. Let’s face it, it is important for our clients to have life insurance, and that may be just a small term life insurance policy, but the time it takes for the full process may not be cost effective. With a “Drop Ticket” you are taking far less time to accomplish the same goal, which can be well worth it.
- Just ask. You have many small business clients that come to you for P&C or Health insurance. Start asking them about their business life insurance needs as well. Having a key person policy on the business owner that is owned by the company can be a smart move should something happen to that business owner. It doesn’t have to be anything complex. Term insurance will provide the coverage they need to protect both the business and their loved ones.
Like I said, I am optimistic about 2017. Your clients need what you provide to them, a safety net to protect the ones they love. Remember to include life insurance in that protection. It is important. We are here to help. We are simply an email or phone call away – 800.747.4445.
