Author: Sean Drummey

Turning 70

by

September 23, 2011

4:07 PM

Leave a comment on Turning 70

Age 69, Age 70, Burial insurance, Conversion, Estate Planning, Final expenses, guaranteed universal life, In your 70's, Seniors, Term Life Insurance, Whole Life

About to turn 70?  Just turned 70?  70 is a very good milestone to finalize life insurance planning.


Current policy owners

Term policy holders:  Health not what it used to be?  Many term policies allow conversion to permanent to age 70, and the definition of age 70 usually is nearest attained age, meaning up to age 70 1/2.   There is no health evaluation for conversion.  Any agent can help on conversion.   Please contact me for details.

Permanent policy holders:  is it really permanent?  Do not assume your coverage will last a lifetime.  Most permanent policies sold over the last 30 years are universal life (UL), not whole life.  UL’s are tricky depending on their structure and cash value.  A great many will lapse for insufficient cash value.  Conduct a policy review to evaluate how long your policy is projected to last.  Request an in force illustration from your carrier.  It may be a better deal to replace your current coverage by transferring the cash value into a new plan that has lifetime guarantees.   Regardless, keep in mind cash value can be used to offset your premium payments.   This may be an appropriate strategy depending on the amount of cash value, and is often the best way to wind down the policy for those in failing  health.

 

New coverage       Available at most health levels.  You’d be surprised.

The best is called guaranteed universal life.   Premiums and coverage are locked in for life, to age 121,  with a lapse protection guarantee.   Click here for age 70 quotes for $25,000 to $5,000,000 in coverage, or refer the right hand side of my website for quotes.


Final Expenses   (Burial Insurance)   $3,000  to  $25,000

Guaranteed universal life.    There are also small whole life plans.

 

Estate Planning   $25,000 to  $5,000,000

Guaranteed Universal Life.   Companies are very competitive and willing to write coverage for people in their 70’s.

 

Term life insurance is not a good choice.  Term is less expensive because you will probably outlive it.  If  you need term life insurance, to pay off a debt or other obligations, I strongly recommend Genworth’s Term UL, because it automatically converts over to Universal life insurance to age 105 at a fixed rate.

 

Image source:  Wikipedia Commons

Financial planners may be wrong on life insurance

by

September 22, 2011

12:15 PM

Leave a comment on Financial planners may be wrong on life insurance

Age 55, Age 70, guaranteed universal life, In your 50's, In your 60's, In your 70's, Policy Review, Universal Life

Do you have a life insurance policy purchased in the 1980’s or 90’s? It’s time for an independent review.  Do not necessarily expect the agent or financial planner that sold it to you to give you objective recommendations on its status. I reviewed a policy this week where a financial planner gave years of bad advice and continued to do so, even as the policy projected to go off the cliff. A financial planner may be unqualified, too busy or lack the financial incentive in revamping your life insurance coverage. Here’s what you should recognize if you bought a policy in that era:

  • Do not assume the policy is whole life.   Generally, they are universal life (UL).    There’s a big difference.

Continue reading “Financial planners may be wrong on life insurance” →

Prescription drug deaths exceed traffic fatalities: Fentanyl drug lollipops now in the mix

by

September 19, 2011

4:31 PM

Leave a comment on Prescription drug deaths exceed traffic fatalities: Fentanyl drug lollipops now in the mix

Early Grave, Indiana, Preventable Deaths

 

Prescription drugs are deadlier than cars.  (emphasis mine)

 Among the most commonly abused are OxyContin, Vicodin, Xanax and Soma. A relative newcomer to the scene is Fentanyl, a painkiller that comes in the form of patches and lollipops and is 100 times as powerful as morphine. Such drugs now cause more deaths than heroin and cocaine combined.

Later in the article:

The most commonly abused prescription drug, hydrocodone, also is the most widely prescribed drug in America, according to the U.S. Drug Enforcement Agency. Better known as Vicodin, the pain reliever is prescribed more often than the top cholesterol drug and the top antibiotic.

Cleaning the medicine cabinet

Are there any unused prescription drugs in your medicine cabinet that could be abused or stolen?   A new Indiana law allows Hoosiers to return unused drugs.  If a take back programs is not available, the FDA recommends:

  • Mix medicines (do NOT crush tablets or capsules) with an unpalatable substance such as kitty litter or used coffee grounds;
  • Place the mixture in a container such as a sealed plastic bag; and
  • Throw the container in your household trash

 

 

Images source: Wikipedia commons

The need for life insurance

by

September 9, 2011

1:07 PM

Leave a comment on The need for life insurance

Age 56, Age 61, Age 66, Age 71, Estate Planning, guaranteed universal life, Term Life Insurance

Since September is life insurance awareness month, here a few thoughts on the need for life insurance.

Real life testimonials of life insurance beneficiaries are compelling.  Neil Frankle of the WealthPilgrim.com has a memorable personal story of being orphaned at 17 and unexpectedly receiving $25,000 in life insurance that his father inadvertently signed up for as a loan condition.

Yes, but aren’t the odds of dying before one’s time fairly rare?  Modern life is certainly not as prone to unexpected death as it was 100 years ago with tuberculosis, cholera, typhoid scarlet fever and pneumonia.   There was the flu pandemic of 1918 and another could conceivably happen.  The West Coast could see an earthquake on the order of magnitude as the San Francisco earthquake of 1906.

But in America today, on a day to day basis, the main risk to one’s life is in a car.  It’s routine to travel at speeds above 50 mph, trusting your life to drivers passing by who may be drunk, distracted, unskilled or infirm. Fatalities run around 33,000 a year in the US.   It’s possible to be another one, and entirely not your fault.

If you are raising children, get some life insurance.   Term is cheap.  Don’t let your kids down.

For example, Genworth, preferred non tobacco, 10 year term rates for men, $100,000 in coverage:

age 31 – $8.11 a month
age 36 – $8.37 a month
age 46 – $13.64 a month
age 51 – $19.68 a month

Genworth has $50,000 10 year term that’s even cheaper.   Woman’s rates are even less than for men.

Continue reading “The need for life insurance” →

Estate planning checklist: include life insurance information

by

September 6, 2011

2:36 PM

Leave a comment on Estate planning checklist: include life insurance information

Estate Planning, Policy Review

Findlaw.com has a useful estate planning checklist which is from the American Bar Association.  This checklist asks for the basics of life insurance policies: company name, address, policy number, owner, beneficiaries, etc.   What’s missing from the checklist is method of payment.  It ought to be included.  Provide information as whether the policy is on bank draft or direct billing, and provide information on the billing cycle.  Many problems occur with life insurance policies on bank drafts being rejected for insufficient funds, or direct bills, mostly quarterly or annual, not being paid.   Life insurance policies have by law a 30 day grace period for past due payments.   If a permanent policy has cash value and an automatic loan provision, the policy can draw off its cash value and remain in force.

If you don’t know the policy number, most companies reference life policies by the insured’s social security number.  I found it rather curious omission that this checklist didn’t ask for social security numbers.  It’s can be very useful for tracking down a life policy.

postscript 9/12/2011:  (emphasis mine)

But 57 percent of the policy owners who have talked to the beneficiaries about the existence of the policy admitted that they have not told the beneficiaries where the policy is located.

Image source:  Wikipedia Commons

West Coast Life Insurance Company merges out of existence

by

August 30, 2011

1:35 PM

Leave a comment on West Coast Life Insurance Company merges out of existence

California, Conversion

West Coast Life Insurance Company merged with Protective Life in 1997, and Protective has announced to life insurance agents that they will stop accepting applications on West Coast Life paper on December 1, 2011.  It’ll be all Protective Life from that point forward.  Protective did a similar thing with Empire General Life Assurance Company back in the 1990’s.  West Coast Life was begun in 1906 in San Francisco right before the great earthquake.   The company’s founders rightly considered that the West Coast of the US needed it’s own life insurance company, and it quickly prospered. Given the death toll from the great earthquake in 1906 was above 3,000, and remains the greatest loss of life from a natural disaster in California history, that tragic event undoubtedly motivated survivors to protect themselves with life insurance coverage.

West Coast Life policy holders will likely see their policy’s name changed to Protective Life in 2012.  There will be no impact on policy provisions, but name changes are not good.  It’s adds a potentially obscuring layer to the paper trail  for the beneficiaries and contribute to unclaimed life insurance, which has made the news this year in the life insurance industry.

For West Coast Life term policy holders, I strongly recommend you consider other options, especially if you may want or need permanent life insurance after your term coverage ends.  West Coast Life term policies, sold years ago, were initially strong for conversion: up to age 75 with a wide range of product options, including guaranteed universal life.   However during this Great Recession, Protective Life has sharply reduced term conversion options, and West Coast is in my bottom tier of carriers for conversion: very limited and relatively expensive permanent products.

Image source: Wikimedia Commons

Can you trust the ratings of life insurance companies?

by

August 25, 2011

2:34 PM

Leave a comment on Can you trust the ratings of life insurance companies?

Estate Planning, Permanent Life Insurance, Policy Review, Term Life Insurance

The Business Insider, a breezy and irreverent online business website, last week came out with an article on a former Moody’s analyst who submitted a tell all to the SEC on how Moody’s, a major ratings agency, is in Business Insider’s words “corrupted to the core.”  How the ratings agencies escaped Department of Justice or congressional inquiry after the 2008 financial meltdown is still somewhat of a mystery to me.  You would think the large bulk of the investor class of whatever political persuasion would have demanded, howled for, an inquiry as to what happened, to hold those accountable, and to reform the rating agencies, so independent ratings agencies could serve their proper independent analyst function.

Well, prior to 2008, it was common for me as a life insurance agent and broker to the give ratings of life insurance carriers in a straightforward style.  For example, “American General Life, part of AIG,  is rated A++ by A.M. Best.”   As it turned out, A. M. Best downgraded AIG in October, 2008, one day and one step before the Fed gave them a bailout to prevented their collapse.

How do we stand today in 2011?   Most life insurance carriers are rated by A.M. Best, Standard & Poor’s, Moody’s and Fitch.   Some of the smaller carriers are only rated by one or two agencies.  For example SBLI is rated by A.M. Best and Weiss. But how does one give their ratings more than a fraction of credibility?  How much did the life insurance companies have to pay them to get their ratings?  Since there hasn’t been any ratings agency reform, how much the system is gamed for life insurance?   Moody’s and Fitch tend to rate the companies lower, so I tend to look at those ratings closer because they might be more realistic.   I track stock performance of the certain companies which is somewhat useful.   If you Google search a company and put “Downgrade” pulls up negative information ratings agencies have given on a company’s performance after 2008.   Put “Upgrade” or “Neutral”  will also provide information the ratings agencies have provided.   The overall trend since 2008 has been downgrades and then leveling off with some upgrades.

Fortunately, each individual state has an insurance commission which regulates life insurance companies.  They have to have certain financial reserves, and new products must be approved for sale.   The North Carolina Department of Insurnace, for example, has had a strong history of consumer protection.

Look at the ratings but don’t trust them as a window to the truth.

 

Image source:  Wikipedia Commons

Small permanent life insurance in your 60’s and 70’s

by

August 8, 2011

2:42 PM

Leave a comment on Small permanent life insurance in your 60’s and 70’s

Age 68, guaranteed universal life, In your 60's, In your 70's, Whole Life

Looking for a smaller life insurance policy for final expenses?   What’s best?   It depends on how much coverage you need.

American General Life recently sent agents and brokers a notice that they were lowering their prices on the whole life product, called American Elite Whole Life.   They had pretty good prices already, so I looked into it.  For example,  a $10,000 whole life policy with American General for a female 68 non tobacco is $48.20 a month.   That beats Liberty Bankers Life $51.97 a month.   Both are “non par” or non participating whole life: no dividends and so the face amount is level; it will always be a $10,000 benefit.  American General has paid up insurance.  That’s a plus if you decide to stop paying premiums.  You would have the option to surrender the policy for its cash value or keep a smaller paid up policy.   For example, after 10 years this 68 year old female would have the option of taking $2,330 in cash value or keeping $3,918 in paid up insurance. American General however requires full underwriting, meaning a blood test and possibly a review of medical records, for people over 55.  Liberty Bankers life is simplified issue, no blood test.

In contrast a $25,000 guaranteed universal life policy with North American is $47.68 a month at their best rate, $50.26 at preferred non tobacco and $64.03 at standard non tobacco.   This required full underwriting: blood test and usually medical records.

$25,000 of coverage for $50.26 a month or $10,000 for $48.20 a month?   Easy choice.  You pay about the same for a $25,000 guaranteed UL as a $10,000 whole life.  Both offer permanent life insurance coverage at a fixed rate.   American General’s whole life only real advantage is if you terminated the policy.  You have the choice of the guaranteed cash surrender value or reduced paid up coverage.  North American guaranteed UL builds little or no cash value, but if you pay on time the coverage is guaranteed to age 120.  Guaranteed Universal Life is a better deal.

What if all you need is something like $5,000 or $8,000 in coverage?   Let’s use female age 68 non smoker again as an example.   For $5,000 it’s $24.10 a month with American General and $28.22 with Liberty Bankers Life.  For $8,000 it’s $38.56 with American General and $42.57 a month with Liberty Bankers Life.   American General is less expensive.  It would depend on your individual health situation, because American General requires more underwriting.   Regardless, look to whole life for coverage amounts less than $10,000.

Face amounts as low as $5,000, $1,000 for term conversions.

8/8/2011, quotes , non tobacco, rates subject to change, quote accuracy or completeness not guaranteed

image source: Wikimedia commons

Family history of mom, dad, siblings and life insurance rates

by

August 5, 2011

11:28 AM

Leave a comment on Family history of mom, dad, siblings and life insurance rates

Early Grave, Underwriting

When applying for life insurance, the best kind which requires a blood test, you’re bound to get asked a version of this question:  Did your mother, father or a sibling have or die from heart disease or cancer prior to age 60?   If unfortunately that’s a yes, and you thought you might qualify for preferred rates, you have to shop a bit harder for the most favorable rates.  For a reference guide please check my carrier underwriting guidelines for family history.

Are rate ups due to family members fair?  Well,  evidence does support a family history of heart attack as hereditary, and certain cancers are associated with genetics.  It doesn’t seem fair when bad health habits were the problem.  Justified or not,  most carriers will stick to their underwriting guidelines, though pleading your case through an agent cover letter can’t hurt.

Fortunately, a few carriers like Lincoln National, John Hancock and ING a family history of cancer is not a factor.

For heart disease prior to age 60, many companies give it a pass.   For fatal coronary heart disease of a parent prior to age 60, it is much harder to avoid a rate up, though Principal Life and MassMutual use an overall credit approach where good health can offset a risk factor like family history.

 

 

Image source:  Wikimedia Commons

Life insurance rates for motorcyclists no different

by

August 2, 2011

10:02 AM

Leave a comment on Life insurance rates for motorcyclists no different

Motor Vehicle

Life insurance companies treat motorcyclists the same as any other motorist.  When applying for life insurance carriers check all motorist’s DMV records, and applications usually asks if you engage in a hazardous activity like motor vehicle racing.  So if you have a clean driving record and don’t race, riding a motorcycle is not a factor.  Even one moving violation in the last few years would qualify you for the best rates with most carriers.

source: Wikimedia Commons

Source: Center for Disease Control