Author: Sean Drummey

American General’s new Guaranteed UL has very good rates

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October 18, 2013

4:53 PM

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2013, 55 year old, 55 years old, 56 year old, Age 55, Age 56, American General Life Insurance Company, lapse protection guarantee, lapse protection rider, lifetime guaranteed death benefit, lifetime no-lapse guarantee, No-lapse guarantee, universal life policies with secondary guarantees

Guaranteed Universal Life, GUL, for life insurance coverage is a great low cost alternative to Whole Life with fixed rates and coverage available to age 120 and beyond.

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Looking over quotes for a client in his early 50’s, I found American General’s new Guaranteed UL, called “AG Secure Lifetime GUL II” has very competitive low rates.   Doing my latest revisions this week on permanent life sample quotes for 54 years old, 55 years old and 56 years old, American General has the lowest rates for female preferred best for $500k, $1m and $2m, and for male at preferred best $500k.  That is not a complete survey, it does not include for example the preferred rate classification, or age rates for those in their 60’s and 70’s, but it is an indicator that American General is now very competitive for certain face amounts and rate classifications and should be part of any comparison for permanent life insurance, no-lapse guaranteed Universal Life.  This product also builds guaranteed cash value and has a option surrender the policy after 20 years and with a guarantee to receive back 50% of the premiums paid.

Cash Value Life Insurance Choices

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September 25, 2013

10:40 AM

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Age 120 guarantee, Cash Value, cash value life insurance, cost of insurance, Increasing death benefit, IUL, lapse guarantee, No Lapse Guaranteed Universal Life, No-lapse guarantee, par whole life, Whole Life, whole live vs indexed universal life

Santiago Rusiñol. Calvario marlloquí

Whole Life: life insurance participating, or par

  • Dividends
  • Builds Cash Value
  • Guaranteed Cash Value Accumulation
  • Endow, worth face amount in cash, at age 100 or age 121
  • Increasing face amount
  • Cash dividends option, after a period of years
  • Paid Up Insurance
  • Cash value protects policy if payments are missed
  • Coverage guaranteed to age 100 or age 121

Pros: Since it builds on top of guaranteed cash value, par whole life has highest potential for cash value accumulation, flexible to changing circumstances; good to start for children, in 20’s, 30’s or upper income
Cons: much more expensive than Universal Life (UL) or Indexed Universal Life (IUL)

Indexed Universal Life:  IUL

  • Builds Cash value, higher upside potential with index crediting then current assumption UL
  • some guaranteed cash value accumulation, not all years
  • Flexible on payments
  • Option for increasing face amount, option B
  • Cash value protects policy if payments are missed
  • Policy lapses with zero cash value

Pros: less expensive than Whole Life, flexible to changing circumstances
Cons: if underfunded and or performs poorly can lapse without additional premium; higher cost of insurance charges than UL, periodic review is advisable, more complex, more choices to make than current assumption UL

Universal Life: UL, current assumption UL

  • Builds Cash value
  • Flexible on payments
  • Option for increasing face amount, option B
  • Cash value protects policy if payments are missed
  • Policy lapses with zero cash value

Pros: less expensive than Indexed UL, flexible to changing circumstances, lower cost of insurance charges than Indexed UL
Cons: if underfunded and or poor interest credited can lapse without additional premium

Whole Life: non-participating, non-par

  • guaranteed cash value accumulation

Pros:  fixed premium, guaranteed cash value accumulation, endow at age 100 or age 120; good for final expense
Cons: level death benefit; cash surrender value matter little compared to death benefit

Guaranteed Indexed Universal Life: GIUL

  • cash value accumulation, generally not in 80’s and older

Pros:  lifetime guarantee, or set guarantee year
Cons: lower casher value accumulation than Indexed UL

Guaranteed Universal Life:  Guaranteed UL, GUL,  no lapse guarantee UL

  • Little to no cash value accumulation

Pros: least expensive lifetime guarantee age 120+, also least expensive setting guarantee to age 90, 95, 100, 105, 110 or whatever length desired;  ability to structure longer guarantees, and at older ages than term life, for example 30 year guarantee at age 59
Cons: missed premium payments lapse policy, little to no cash value accumulation
Return of Premium Term:   ROP term

  • guaranteed cash value accumulation
  • reduced paid up insurance with some carriers

Pros:  At the end of the term you get all your premiums back; builds cash value, mostly in the last years of the term period
Cons:  death benefit same as term if you pass away, cash value not included; more expensive than term, especially after mid 40’s

Term life insurance and conversion

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September 11, 2013

3:18 PM

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20 year term, 30 year term life insurance, 68 years old, 71 year old, 71 years old, Age 68, Age 70, Age 71, Conversion, exchange, term

Carpe Diem

In follow ups with clients and talking to life insurance term policy holders shopping for coverage,  I am struck again and again how important conversion is to term life insurance.  The lowest term price is the easy part to figure out. Conversion is the quality feature.  If you have a health problem during the term period, conversion may be the only game in town for new coverage. For example:

Timely conversion:
John, 42 years old and in excellent health, starts a $500k 30 year term policy at the preferred best rate.  At 61 years old he has a heart attack. At 62 years old with the term coverage ending, he converts $250k of his term coverage into a universal life policy at the preferred best rate, no underwriting,  by just signing a couple of forms.

Past the conversion deadline:
Jill, 51 years old and in good heath, starts a 20 year term policy with the preferred non tobacco rate.  At 68 years old she develops stage I breast cancer.  At age 71 with the term policy ending, she discovers her conversion period ended at age 70.  Instead of converting her policy at preferred a year before, the most favorable offer she finds for new coverage available has a flat extra charge of $7 per thousand for 5 years at the standard rate.

Pay close attention to which carriers has the best conversion options when shopping for term. Policy holders note term conversion or exchange rules and the deadline for conversion as a vital record.

Health Credits for Better Life Insurance Rates: Table Shave Upgrade to Offset Health Problems

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August 22, 2013

12:07 PM

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Aviva Life and Annuity Company, Aviva Life Insurance, AXA Equitable, Banner Life, credits, excercise, impaired risk, life insurance cost, life insurance rates, Lincoln Life, Lincoln National Life Insurance Company, Mutual of Omaha, Nationwide, Principal Life Insurance Company, Principal National Life Insurance Company, rate classifications, standard, Symetra Life Insurance Company, Table C to Standard, table reduction program, table shave, table shave program, Transamerica Life Companies, Transamerica Life Insurance Company, United of Omaha, Up to 2 Tables, Up to 3 Tables

 Kinnaur

Certain life insurance carriers allow standard rates for those with below average health.  It’s called a table shave program.  Carriers also will upgrade rate classification with health and lifestyle credits.  For those who have experience health problems, these rate classification upgrades can save a good deal of money on premiums, especially if a rated case gets to standard.

Top carriers 

Table 3 to Standard  (permanent plans only)

Aviva
Lincoln
Principal

Notable for Carrier Credits 

AXA          Good Health Credit Program
Banner      InTOUCH Underwriting
MetLife
Mutual of Omaha      Fit Program    (United of Omaha)
Nationwide
Symetra
Transamerica

Credits may include:

Preferred or better build; regular preventative care; optimal blood pressure control treated or untreated; lifetime non smoker; history of non-tobacco use, no tobacco in the last 10 years; no family history or death from disease prior to age 70, both parents surviving to age 75, family history of longevity; cholesterol/HDL ratio less than or equal to 5.0, or less than or equal to 4.5; regular exercise; cancer screenings such as colon cancer, and other routine preventative age and gender screenings such as pap smear, mammography, prostate exams; negative cardiac testing; recent negative treadmill; lifestyle changes and improved health habits.

Please contact me for a free and confidential quote.

sean's profile picLicensed Agent:  Sean Drummey
phone:  (910) 328-0447
email:    spdrummey@gmail.com

Boomer Esiason: life insurance awareness from personal experience

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August 15, 2013

11:32 AM

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American General Life Insurance Company, Pruco Life Ins. Co., Prudential life insurance

Former NFL quarterback and long time NFL announcer Boomer Esiason is this year’s spokesperson for life insurance awareness month in September. Great choice. Boomer has an appealing unassuming demeanor on broadcasts.  He’s well known for his support in research to find a cure for cystic fibrosis with the Boomer Esiason Foundation.

Boomer’s mom died of cancer when he was 7 years old, and she did not have life insurance.

 

Life insurance is important for parents, especially those with young children, to cover the cost of child care.

Boomer Esiason’s mother was a stay at home mom.  A homemaker isn’t required to have earned income to qualify for life insurance.  Carrier guidelines vary on how much a non working spouse can qualify for, so it’s best to compare if shopping for a larger face amount. Non working spouses can qualify for the same amount of coverage as working spouses with Prudential. Other carriers like American General offer coverage with face amount limits depending on household income.

 

 

Cash value life insurance vs. term and invest the difference: is that the only choice?

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August 12, 2013

4:14 PM

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1 year point-to-point, 20 year term, cash benefit, Cash Value, cash value insurance policy, chronic care benefit, hybrid life insurance policies, hybrid long term care insurance and life insurance, In Your 20's or 30's, Indemnity Benefit, indexed life insurance, Indexed Universal Life, life insurance and long term care, life LTC hybrids, Lincoln Life, Lincoln National Life, Lincoln National Life Insurance Company, long term care life insurance hybrid with return of premium, preferred rate, reduced paid up life insurance, Return of Premium Term, Return of Premium Term, ROP term, S&P 500, SBLI, SBLI of Massachusetts, Universal Life

Last week Seeking Alpha posted an article where a 38 year old man, presumably an investment broker, passed on his life insurance agent’s advice for a permanent life insurance product with a $5,000 annual premium, and instead choose term coverage for $600 a year. He took cash value life insurance to task with the self-serving advice to buying term and investing the difference.

OK.  No real argument there. At age 38, or for that matter for any working age person, term offers more bang for the buck, and that’s the most affordable way to replace lost income and thus protect a spouse or dependents.  But did this gentleman get enough coverage?

Term: How much and how long
He’s to spend $600 a year in premium.  Let’s review the most competitive rates and see what $600 a year buys.  A male preferred non-tobacco with SBLI (Savings Bank Life Insurance of Massachusetts), $800,000 of 20 year term is $596 a year. 25 year term $525,000 face amount is $600.75 a year with SBLI.  The rule of thumb is had 7 to 10 time one’s annual salary in life insurance. If he has children, there’s a college fund to consider.  Whether this individual got sufficient coverage depends on how much he makes, but keep in mind the goal is to get an adequate amount, and if affordable extend coverage to retirement age or to a point the children would be expected to have finished their secondary or post secondary education: age 22 or age 26.

Term and Permanent:  Two Plans – Two Purposes
Term verses permanent life insurance is a fallacious argument, as if it’s either one or the other. You can set up two policies: one term to replace lost income during your working years and a permanent for estate planning and to build cash value.  For this 38 year old, instead of a $800k 20 year term, how about a $100,000 of permanent life insurance and $700,000 in term?  A $100,000 Indexed Universal Life “Lincoln LifeReserve Indexed UL Accumulator” with Lincoln National, increasing face amount, targeted to endow at age 100, is $1,511 annual for male, age 38, preferred. That quote assumes 5% interest on S & P 500 index, annual point-to-point. At 5% that projects $33,803 cash surrender value and a $133,803 death benefit after 20 years.  Add a $700,000 20 year term with SBLI for $529 annual, that comes to $2,040 annual total cost for the two plans, and the Indexed UL is a very flexible premium, up or down depending on index returns or personal finances. This way after 20 years this person, now in his late 50’s, doesn’t have to encounter much more expensive choices in establishing permanent coverage for estate planning and with the right plan a chronic care or LTC rider in case LTC is needed.

There is also return of premium (ROP) term.  $800,000 20 year ROP term is $3,072 annual with American General for a 38 year old male at preferred.  In 20 years that guarantees $61,440 cash back or $170,218 in paid up life insurance.  After 20 years that paid up life insurance might be an appealing choice.  You could do a mix of ROP term and regular level term to lower that cost.

Please contact me for a free and confidential quote.  Many more options available.

sean's profile picLicensed Agent:  Sean Drummey
phone:  (910) 328-0447
email:    spdrummey@gmail.com

James Gandolfini’s estate tax and the role of life insurance

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August 7, 2013

10:46 AM

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current assumption UL or CAUL, Estate Maximization, Estate Planning, guaranteed universal life, GUL, ILIT trust, irrevocable life insurance, irrevocable life insurance trust (ILIT), life insurance in a trust, New York, No Lapse Guaranteed Universal Life, no lapse universal life, No-lapse guarantee, term insurance, term life, Term Life Insurance, universal life insurance, Whole Life

James_Gandolfini

James Gandolfini, actor extraordinaire of The Sopranos, who died recently of a heart attack at age 51 apparently has left his heirs subject to a sizable estate tax.  Tax experts noted that they will likely end up owing a significant amount partly due to his residing in New York.  State estate taxes vary considerably depending on which state you reside in.

I was struck by this comment in one analysis as to the very practical role of life insurance in estate planning.

At a minimum, an irrevocable trust should have been set up for Mr. Gandolfini to use to pay insurance premiums toward a life insurance policy that would have covered expected estate taxes, Mr. Wolfe said.

Gandolfini did set up a $7 million life policy for his son in a irrevocable life insurance trust (ILIT).  To give the benefit of doubt, he may of set up others. Life insurance is not required to be in the public domain of probate. One lesson to come out of this is to add life insurance regularly especially when remarrying and having children.  Insurability, the ability to obtain coverage, can be an issue when adding life insurance later in life. Fully underwritten life insurance involves a blood test, and depending on age and coverage amount, an EKG and medical records. In Gandolfini’s case at his age in the absence of identifiable heart disease his rate classification probably would have depended almost entirely on his weight according to the carrier’s build chart.

Estate planning with minor children makes term life insurance an option.  There’s 10, 15, 20, 25 or 30 year term depending on the age of the child and how far it is prudent to carry the coverage out.  Term is inexpensive and conversion allows on to exchange the term into a permanent policy without proof of insurabilty during the term period.

For permanent life insurance the first and foremost estate planning tool is Guaranteed No-Lapse Universal Life locking in coverage to age 120 or beyond.   For other situations and goals the options include current assumption Universal Life, Indexed UL or on the upper cash value and benefit end a Whole Life plan.

Lost Life Insurance Policy in California: Search, Find and Recover A Valid Claim

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June 24, 2013

3:50 PM

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2013, California, life insurance policy, lost life insurance policies

Detail California seal

The California Department of Insurance advises here how to go about locating a life insurance policy.

California has reached a settlement with 18 life insurance carriers on unpaid life insurance benefits   In a June 2013 press release of the settlement with 11 carriers the agreement provisions include:

Like previous settlements, the agreements announced today require the companies to do the following:

  • Restore the full value of all impacted accounts dating back to 1995;
  • Fully comply with California’s unclaimed property laws and cooperate with the Controller’s efforts to reunite these death benefits, annuity contracts and retained asset accounts with their owners or, in many cases, the owners’ heirs;
  • Pay the policy beneficiaries 3% compounded interest on the value of the held amounts from 1995, or from the date of the owner’s death, whichever is later.