Archive for February, 2011
Don’t you just hate the fact that hindsight is 20/20 and when you look back with clear vision you see that you waltzed right past some of the deals of the decade? Hasn’t happened to you?
YET! With very few exceptions people who look at conversion quotes on life insurance are shocked. They love the term insurance prices and can’t quite squeeze together the equation that makes permanent insurance several times more expensive per thousand. Well, here we go with Life Insurance 101. The longer the guaranteed level premium and death benefit, the higher the price.
Most permanent life insurance is guaranteed to age 120 these days. That means a company is contractually locked in to providing you a set amount of insurance at a guaranteed level premium for 40 years after the average mortality age. Talk about senior life insurance! If you keep making the payments they are going to have to pay the death benefit at some point, and logic would tell you that it will be closer to 80 than 120. And for all of those who cry foul when they see the price of conversion, let’s give two points to the insurance company. Number one. Even if it doesn’t feel like it, the permanent insurance is under priced. Only half of us will make it to 80 and only a handful will make it to 100. The insurance companies will be paying out the big bucks on conversions if the fountain of youth isn’t found soon.
To make matters worse for the company on conversions, they promised to convert to permanent insurance at the same rate class you were originally approved at. So, even if you have cancer and will be lucky to make it another couple of years, they have to convert at the preferred plus rates you were approved at so long ago.
Having defended them, let me now tell you I think the insurance companies are wrong and they have great products ripe for the picking, so here’s the deal. Life insurance companies know they have themselves in a bad position and they are changing rules and raising rates as fast as they can. They will, in the first half of this year, completely change the face of conversion and they will take away the awesome deals on permanent life insurance that are available now. It’s not if there will be a rate increase. It’s not even when. It’s happening now with the companies that haven’t already done it.
I’ve already beat these poor horses to death, but what the heck, let’s review. West Coast Life no longer allows conversion to a permanent policy. Banner and American General only allow conversion to more expensive policies after the 5th year. Phoenix Life only converts to a 5 year guaranteed product. New York Life charges extra for a full conversion option. Lincoln Financial has said they will be raising rates as much as 25% in the next few months. I’ve really only talked about conversions, but this will also be affecting newly purchased permanent life insurance products as well.
So, if you have term and you think you may want to convert some portion of it someday, see if it works into your budget today because it sure won’t next year. If you have been considering purchasing permanent insurance for final expense or estate planning, see if it works for you today and weigh that against the cost of a 25% increase and the fact that even if your health doesn’t change, your age does. I think 20/20 will show you that right now is clearly the time to act.
Bottom line. Putting it off to next year is definitely an option, just a bad one. Waiting until after tax season is also an option, but again just not a very good one. So, whether it is final expense senior life insurance or estate protection for high net worth families, get started now.
Professional Liability Consulting Group LLC Is Pleased To Announce The Expansion Of Its Doylestown Office And Professional Staff
PLCG, owned and operated by Thomas Schrandt, announces that it will no longer operate solely as the Philadelphia branch office for North American Professional Liability Insurance Agency (NAPLIA).
My son crashed his car and was looking for a replacement. A friend told him about a car for sale, the owner moved out of state, but his roommate handed
The National Autism Association responded firmly in regards to Bruesewitz v. Wyeth, in which the parents of Hannah Bruesewitz sued the Pfizer company, saying that its DTP vaccine caused her seizure disorder in 1992, and that the company knew it could produce a safer shot but chose not to. The Bruesewitzes took their claims to vaccine court first, but were denied, so they sued…
More than a quarter of a million Wisconsinites currently face the threat of catastrophic family health care expenses from serious, unexpected injuries or illnesses, such as accidents, sports injuries, cancer, diabetes, and other diseases. A new cap on out-of-pocket expenses, a key provision of the Affordable Care Act, will help those families protect both their health and their budgets…
More than a quarter of a million Minnesotans currently face the threat of catastrophic family health care expenses from serious, unexpected injuries or illnesses, such as accidents, sports injuries, cancer, diabetes, and other diseases. A new cap on out-of-pocket expenses, a key provision of the Affordable Care Act, will help those families protect both their health and their budgets…
I was playing with my granddaughter over the weekend. There’s probably nothing she likes better than being chased and I forget how clumsy I can be. Anyway, I tripped a bruised a rib and as we all know there isn’t anything you can do about that except try not to sneeze or cough.
I’m not whining about it, but it does kind of bother me that something that would have quit hurting in a week when I was 30 now takes a month or more at double the age. So I’m sitting here in my office and trying to think about the good things that come with “maturity”, so here you go, a little whine with your good news this morning.
Once you become a senior life insurance can become more challenging both from an age and health perspective, with some notable exceptions. Being diagnosed with type 2 diabetes over age 60 can be a real underwriting advantage. Well controlled diabetes that is diagnosed close to or after age 60 is the only time in the industry that a person has a chance, and a good chance at preferred plus rates. In the absence of other risk factors that would bump you out of the best rate class, ING Reliastar will approve a type 2 diabetes case if the applicant is over 60, has been diabetic less than 5 years and has an A1c under 7. Small window to be sure, but an absolute home run if you fit through it.
Another case where senior life insurance will catch more of an underwriting break than our younger counterparts is with successfully treated prostate cancer. The lower grade (Gleason 6 or under) and stage prostate cancer that can bring an approval at any age, can be cut even more slack in your 60′s and 70′s. What underwriters understand is that a low stage and grade prostate cancer, even untreated, is a slow moving cancer that especially in older patients is not likely to be the mortality factor that leads to their death. Before anyone misconstrues that sentence, understand that going without treatment, while medically it might be fine, won’t work for life insurance underwriting. You will not get approved without successful treatment.
Another place us well seasoned folks catch a break with a lot of companies is on their build chart. Several companies have build charts that allow significant slack after age 64 or 65. A weight that might only get you a preferred or worse approval, with companies like Genworth and Prudential could lead to a preferred plus approval. A good example is with Genworth, 5’10″ and 229# can still get their best rate at age 65.
Bottom line. All is not downhill when it comes to life insurance for seniors. While we may be losing the battle with our climbing rates with age, at least we can battle back with some underwriting advantages.