Blog - Life Insurance Recommendations

Lifetime Guaranteed Coverage

February 14, 2011

10:52 AM

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One key element to permanent life insurance is the age guarantee. If you’re over age 60, look for something called guaranteed universal life, or GUL for short. The best of these products guarantee coverage at a fixed rate to age 120 or beyond. Banner Life has a good product that guarantees cash value accumulation as well. All you have to do with a GUL is pay on time. The contract provides a lapse protection guarantee as long a you make timely payments.

Whole life insurance was traditionally guaranteed to age 100 with guaranteed cash value. Universal life, UL, came out in 1980’s promising higher returns but took out those guarantees. About the year 2000, carriers introduced universal life with lifetime guarantees. A guaranteed UL is much less expensive than whole life, so much of what you see out there today are guaranteed ULs.

Which company has the best guaranteed UL for you will depend on your age and health. As an independent broker I have access to multiple carrier comparison quote systems not available to consumers on the internet. You can compare term on the internet but not permanent. Let me know, and I show you the top 5 for your age and health.

If you bought cash value life insurance in the 1980’s or 1990’s let me review it for you. It may not be a permanent as you think.

Survivorship Life Insurance: Only One Needs Their Health

by Sean Drummey

February 10, 2011

3:16 PM

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Estate Planning, joint life insurance, Survivorship Life Insurance, Survivorship Universal Life

I read a blog entry today by an estate planning attorney on survivorship Life insurance, also called second-to-die life insurance. It’s a good way for husband and wife to settle their estate. A life insurance benefit is paid out when the last surviving spouse passes away. The last person standing, so to speak. Your estate may be help up in probate. Selling your house may take time. Life insurance can provide liquidity during this period.

Coverage for a couple is available even if one of you is uninsurable because of cancer, heart disease, COPD, or whatever. You get a lower price if you’re both insurable, but this is a key point: if at least one of you can get covered, both of you can obtain a life insurance policy.

They are not that expensive either, sort of two for the price of one.

Term to permanent: Conversion is Your Ace in the Hole

by Sean Drummey

January 31, 2011

12:24 PM

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Companies, In Your 20's or 30's, In your 40's, In your 50's, In your 60's, Term Life Insurance

Often something is better than nothing. If you need life insurance, and can’t decide what to get, or can’t afford a permanent policy as big as you need, get term life insurance. Then at least you can convert the term to permanent, even if you’ve developed a health problem. Term is generally all about lowest price, but conversion options is where quality comes in. Genworth has the best conversion with their new Term UL. It’s a fixed price from the get go, locking in the universal life premium rate to age 105.

I got a 10 year term policy after my first child was born. At that point, I needed the most bang for my buck, in case something happened to me. I’m still healthy so when the term ends I can shop for the best deal. But many people run into health problems, and that’s where conversion comes along. Many people in their 60’s end up converting their term policies.

Simplified Whole Life: Affordable Even in your 70’s

by Sean Drummey

January 28, 2011

2:08 PM

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In your 60's, In your 70's, no medical exam, Simplified issue whole life, whole life insurance

Cremation is inexpensive. Prices vary but scattering one’s ashes might run in the $1,000 range. Simplified issue whole life insurance is also inexpensive. A $3,000 in coverage for a female non tobacco is about $20 a month at 70 and $38 a month at 80. Here are sample quotes those in their 60’s and in their 70’s. Simplified means a only short questionnaire and no blood test.

If you haven’t had any really, really bad health problems, or they were over 2 years ago, you can qualify for simplified issue. It’s full and immediate benefit life insurance, unlike some life insurance pitches you see on TV or get in the mail. I recommend Liberty Bankers Life to my clients. Good idea to get one of these while you’re fairly healthy and before hitting 80.

Divorce and Life Insurance

by Sean Drummey

October 29, 2010

2:13 PM

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Uncategorized

I Google searched Divorce and Life Insurance on Google to see what was written. Third from the top was an article written in 2005 on the American Bar Association webset reviewing the legal ramifications and giving an overview of the types of life insurance. The authors gave a good name to plain old Universal Life, calling it Conventional Universal Life, as a separate category to either Guaranteed Premium Universal life or Variable Universal Life. The life insurance agent’s role isn’t discussed that much.

Here are some thoughts, short of a more formal analytical article, on life insurance going through the gauntlet of divorce from a life insurance agent’s perspective. The “Who’s on first?” question revolves around ownership of the policy. Everyone involved must understand that the owner can change the beneficiaries of the policy at any time. To avoid the wayward husband changing the beneficiary to his new fiancée, the ex-wife should be the owner or better yet devise a spell-it-all-out life insurance trust.

What type of new policy to set up will depend on the situation. Let’s say the father has two children ages 7 and 9. A 15 year term protects the youngest, one hopes, to college graduation day. It’s best to put in some padding for a 5 year+ college plan, so a 20 year term in this example would be more appropriate. But would the father’s financial obligations end in all contingencies? What if a child is subsequently disables by a health condition or accident? A guaranteed UL, fixed rate for life, would be the answer, though the husband probably will balk at the greater expense. Well, remember term life insurance has a conversion to permanent option, which offers a plan B, but for most companies the price and options are determined at the time of conversion, and a few carriers have taken a cold hard look at their conversion options and cut them back during this recession. So conventional term conversion leaves too much open to the realm of contingency. Who knows what’s going to happen in the next 15 to 20 years. 2010 brings an answer! Genworth and West Coast Life have come out with Term UL products that set a fixed price for UL coverage at the end of the term. A known quantity lends itself better to this situation, and eliminates at least one mystery in a future, divorced from the past, that is full of divergent mysteries.

One reason to get a rock solid, there when you need him, agent like myself, involved in a cooking up a divorce style policy, is that a good servicing agent will stay involved in making sure the policy is paid. Payment by the insured, who’s off in a new direction, for the owner, the ex, may require a bit of bridge tending. The owner should get a 30 day grace period notice, but also the agent and brokerage will be notified. A good servicing agent will act as the policy’s guardian angel.

A Guaranteed UL’s (G-UL) with lapse protection is probably the best product for those more affluent divorce cases, a conventional UL or VUL could go careening off, and a G-UL has a fixed premium, which lends itself more to a two party agreement. It may not be best in all situations because other UL options, the younger you are, may be better. Setting G-UL coverage to an age past what anyone can expect to live, say age 121, is advisable. Setting the coverage period to end at age 90,95 or 100, does not shut the door to a centenarian opening.

Incentive for Smokers to Choose MassMutual Whole Life or UL

by Sean Drummey

October 27, 2010

2:31 PM

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Universal Life, Whole Life

MassMutual is the only life insurance carrier I’m aware of that allows whole life or universal life tobacco policy holders to switch to non tobacco rates, if they have quit tobacco use for one year. So let’s say you smoke cigarettes and plan to quit, um, one day. With an eye to the future, you take out a MassMutual whole life or UL with a tobacco rate. You pay along on your policy, and lo, that steely willpower day comes: New Year’s Eve, a birthday, baby on the way, when you finally quit. Contact MassMutual after a year, fill out a few forms and do a urine sample. You don’t have to all the way through underwriting again; basically it’s a limited set of questions that have to do with smoking. If you’ve developed a nasty smoking related condition along the way: coronary artery disease, cancer, emphysema, to name a few, you won’t be permitted to switch.

Quit pounding coffin nails, before the lid is too tight, and you lower your premium to non smoker rates. Plus your UL or whole life policy cash values perform much better off the tobacco road. Granted, many people never quit, but this a viable avenue for a far better deal on your UL or whole life insurance, and another incentive for quitting to lay down on the path.

Research on a Life Insurance Company

by Sean Drummey

October 26, 2010

10:25 AM

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term conversion

Low priced term with quality life insurance carriers is something a truly independent agent like myself must keep track of to present to their prospects and clients, so I began researching a carrier yesterday that is posting some very low prices on a comparative term quote engine. (Since my research has been very preliminary, and not wanting to misrepresent them, I will not name the carrier.) I Google searched their name and went to their website. I called up their marketing department and first asked about conversion. Conversion is to age 70 and there is a guaranteed UL to convert to.

That sort of conversion is very likely part of any initial research an agent would do on a carrier. Lowest price is one thing, it’s something a consumer can readily understand, but with term life insurance the second most important factor to evaluate is the carrier’s conversion options. Conversion allows you to automatically switch your term into a permanent type product, whole life or UL, without proof of insurability. Get a 20 year term policy today at preferred non tobacco at 45, and then at 65 convert it, let’s say, to a guaranteed UL, despite having had cancer and a heart attack. Conversion might be your only game in town for plan B, if you want or need life insurance beyond the term period, and you’ve had health problems.

The carrier had conversion to age 70. That’s good, about par for what’s out there. The gold standard for conversion age is age 75. Minnesota Life Insurance Company has conversion to age 75 with their Advantage Elite Term product. Two other major carriers had conversion to age 75 up until this year, but have discontinued it. I would recommend avoiding carriers with an age 65 conversion limit, since age 70 or 75 is way better.

The carrier whole life and a guaranteed UL (G-UL) to convert to. That’s good news too. Guaranteed or no lapse universal life is what you would like to have for conversion, under a majority of circumstances, since it locks in coverage for life: pay on time and the coverage is guaranteed not to lapse. Certain carriers recently have withdrawn their G-ULs for conversion, another spill over from the recession. That’s very bad news for those policy holders.

The problem for an agent or consumer judging a carrier on conversion is that you have no idea what the carrier may offer 20 or 30 years from now and at what price. You can look at the carrier’s financial stability, and the products and premiums on what they currently offer for conversion for some insight, but knowing what will happen that far into the future defies most measures of prophecy. Only a sage life insurance analyst could have predicted what’s happened in the last 5 years to the industry.

That’s why usually my recommendation for best term is Genworth Life and Annuity’s Colony Term UL. This term automatically converts to a UL at a set price at the term’s end. You can see the UL’s premium’s price right on the illustration. Genworth’s prices are amongst the lowest as well.

I did some financial research on a carrier. There are ratings agencies: Fitch, A.M. Best, Standard & Poor’s and Moody’s. The ratings agencies’s overall trustworthiness was tarnished in this recession, to say the least, but it’s a start. To get any bad news first, I Google searched “Carrier X downgrades”. It is not uncommon to get results on an insurance carrier from this. The recession has certainly been a challenge. The key may be into how they are responding to the recession. The next search was “Carrier X outlook” gives information on the carrier’s prospects.

It turns out I won’t represent this carrier at this time. An independent agent can’t always meet a carrier’s commitment requirements.

Life insurance for families and the affluent

by Sean Drummey

October 25, 2010

8:12 PM

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Estate Planning

The Wall Street Journal had an article 10/3/10 on “Shift to Wealthier Clientele Puts Life Insurers In a Bind“. Since 1985 policies for families with children is down 45%, while million dollar policies account for well over 50% of the new policies sold.

It’s unfortunate parents don’t pick up at least a term policy to protect their kids. Term is inexpensive. A $250k 20 year term policy, preferred non smoker male, is $17.52 a month with Genworth Life and Annuity, 30 year is $25.98. I guess the counter argument is that it’s fairly unlikely for one to pass away in their 30’s, 40’s or 50’s. Granted it’s uncommon, but in The Boston Globe online today, on the main page, was an obituary for a woman 52. Your 50’s could be when the kids are still under your roof or in college.

The tax advantages of permanent life insurance are there for the wealthy. I ran some numbers on permanent, G-UL, today for age 65. A $1m policy for a female non smoker age 65, runs from about $15k to $19k a year, regular rates depending on your health, with Lincoln National. The math looks favorable to me.

The difference between Whole Life and Universal Life

by Sean Drummey

October 21, 2010

11:13 AM

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Product

When I bring up universal life (UL) people naturally ask, “What’s the difference between whole life and universal life? One thing is for certain: whole life builds guaranteed cash value. A $100,000 whole life policy taken out today is generally guaranteed to “endow” be worth $100,000 in cash value at age 120. Pay your premium on time and whole life is also guaranteed for life.

Universal Life (UL) is an apt name because, like the universe, it structure goes all over the place. If you purchased a UL from 1980 to 2000, I strongly recommend you let an agent review it, because no telling how well it’s orbiting. It could be headed for the sun, i.e. destruction, so pull out the latest annual statement, if you got one, and call an agent or the carrier.

Those of you who purchased anything between 1980 and 2000, that was not term, should heed this advice and have your policy reviewed. Most so-called permanent policies sold at that time were most likely a UL. They were less expensive and promised better returns. But if you ask a 1980’s or ’90’s policy holder, they think they have whole life, and it’s guaranteed for life. Not so! You need a close look at the policy, an annual statement or in force illustration to find out.

After about 2000, the life insurance industry came out with a rock solid product called guaranteed ULs (G-UL) or no-lapse UL’s: pay your premium on time and the policy lasts to whatever year set, like age 121. This G-UL lifetime guarantee is like a whole life’s lifetime guarantee. But a (G-UL) doesn’t build much cash value, so it’s low orbit, miss payments can cause it to come crashing down to earth, i.e. lapse. I highly recommend guaranteed ULs for someone in their 60’s or 70’s. Just pay your money on time and the benefit is guaranteed for a set period of time. You can easily set it to at least age 110.

For someone in their 40’s or 50’s, I generally recommend a regular UL. It’s interest sensitive, so it builds cash value. Pump sufficient premium into your UL ,and it should last a lifetime. You got to watch it though. The difference between a whole life and a regular UL is sort of like the difference between driving a car and being chauffeured by a limousine. Driving a car requires a bit more attention. A UL’s gas is premium. The carrier’s interest contributions is the oil. The gas tank is cash value. If the regular UL gas tank goes empty, has zero cash value, the car quits. (With a G-UL you don’t have to worry about zero cash value, if you pay your premium on time.) If you set it up correctly and you watch it over the years, with the help of your trustworthy agent, it should serve you well. (Those who purchased UL’s in the 80’s and 90’s often, ominously, haven’t checked the oil or know how the gas tank works.)

The difference between whole life and UL is mainly about price and guarantees. UL’s have a much better price. Once you’ve reached your 40’s, a whole life’s price, for a decent sized policy, generally becomes out of reach. You take a UL, understand how it basically runs, like one does a car, and you can manage it quite well for your journey towards the horizon.

Living Past 100

by Sean Drummey

October 19, 2010

9:14 AM