Inside the Life Insurance Industry

What you need to know about the life insurance marketplace and products. Includes commentary on political, legal, and economic trends that affect the industry.

How Business Owners Use Life Insurance to Protect Against the Loss of a Key Person

As any business owner knows, when it comes to running a company, everyone counts. You can’t bring in money without a salesforce. You can’t count the money without an accounting department. You can’t run the computers without an IT specialist.

You can’t secure the building without security personnel. And you can’t keep the floors clean without the maintenance staff. The same goes for every clerk, administrator, secretary, supervisor, manager, and executive. Your business runs on the shoulders of many people in a variety of positions. Have you made sure that the loss of a key player won’t harm your business?

Why Do You Need This Coverage?

While everyone is integral, some people play principal roles. For example, revenue may suffer if you lose a top salesperson, and investors and shareholders might get anxious if you lose a chief executive. Clients and vendors might get nervous if a key manager leaves, and future production may be jeopardized if you lose a key technician, inventor, scientist, or idea person.

These situations show why businesses insure leading personnel. They take out life insurance to protect themselves against the loss of men and women whose death could impair the operation. The insurance benefit protects you by giving you the time needed to recruit the right replacement. In the meantime, client service continues, bills get paid, and employees have reassurance that the show will go on. Business can take place as normal.

Here are three quick tips for business owners to make the right decisions when insuring key personnel.

Determine the Policy’s Face Amount

How do you value the services of primary employees? Your answer to that question will vary according to the role they play. The service of a key chief executive would be assessed differently than the service of a key technician. Your firm’s accountant or chief financial officer should consult with an insurance company advisor to calculate the appropriate insurance benefit for your situation.

Decide on a Time Period

Key person coverage came about at a time when the main employees tended to make long-term commitments to their employers. Today, many key men and women tend to switch jobs more frequently. If you think that is the case in your business, then term insurance might be more applicable than permanent insurance.

Establish Your Options

What should you do with the policy on a vital person if he or she does leave? You have a number of options to choose from. You could simply terminate the policy, or, if it is a cash value policy, you might be able to surrender it for value. In some cases, the former employer keeps the policy in force and collects the benefit when the former employee passes away. The policy may also be sold for cash in a life settlement depending on the age, medical condition of the insured, and other factors related to the policy.

Your business is built on the shoulders of all those who work for you. How protected are you if one of your principal players passes away? I’d love to hear from you and answer any questions you may have. Ask anything by connecting here.

About Steve

Steven Kobrin is a life insurance expert with 25 years experience. He serves high net-worth individuals and business owners as well as high risk and uninsurable “impaired cases.” Steven offers concierge life insurance process to ensure the policy is approved as it’s quoted. To learn more, visit his website, read his blog, connect with him on LinkedIn.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

What the NY Times DIDN’T Tell You About Universal Life Insurance

NewYorkTImes

A recent article in the business section of the New York Times levels some pretty severe criticism of insurance companies. In particular, it reports on alarming increases in the premiums of some universal life products. It not only details how these high costs are placing many families in financial jeopardy but also highlights the lawsuits that are currently being launched in protest against certain companies. From my point of view, the reporting is, unfortunately, accurate, and the criticism merited.

But it is only half the story. And the other half makes all the difference. First, a little background.

A Product With Two Ledgers

Universal life insurance is a permanent product. It can last as long as you do. Most importantly to know, it is designed with two sets of values: guaranteed and non-guaranteed. Guaranteed values are exactly that: a death benefit, premium, and cash accumulation that are contractually guaranteed. Regardless of the investment performance, cost of doing business, and amount of claims paid, the policy will provide these numbers as long as the insured sticks to the payment schedule.

Non-guaranteed values are also exactly as their name implies: a death benefit, premium, and cash accumulation that are projections based on certain assumptions. Variations in investment performance, cost of doing business, and the amount of claims paid can affect the numbers provided by the policy, even if the insured sticks to the payment schedule.

A Sales Process With Full Disclosure

For decades, life insurance company have taken great pains to make sure that consumers understand the difference between these two ledgers. They are painfully aware of how people can get confused, or simply forget what they bought. They also know that life insurance sales representatives are not always the best at explaining the intricacies of these complicated products. So, they have implemented a number of full-disclosure requirements to ensure that clients know what they are buying. Chief among these is an illustration that portrays the premium-payment schedule to which the client has committed and the values that can be expected to accrue going forward, both guaranteed and non-guaranteed. The client signs off on this illustration when they accept the policy.

What Happens When Company Expectations Are Not Met

Insurance companies, like all businesses, make assumptions about costs and profits going forward. And, like all businesses, they have to adjust to changing circumstances. When a life insurance company experiences unexpected losses or increases in costs, they are compelled to make up the difference somehow. One area they typically target is the non-guaranteed ledger in universal life policies. They can legally, and legitimately, raise the price to restore profitability.

This is exactly what is being reported in the New York Times article. And so we have the shock and dismay of policyholders who forgot this could happen, who never realized it could happen, or who knew it was coming but still don’t like it. But what the paper doesn’t tell you is that those policyholders who have employed a payment strategy based on guarantees are completely unaffected by poor business performance. Companies are required to meet the contractual guarantees, so they do.

Now let’s look at some of the points raised by the article, but also include the other side of the story.

Guaranteed Premiums Remain Unchanged

People who bought universal life policies in the 1980s and 1990s, some of which guaranteed annual returns of 4 percent or more, are seeing their premiums soar.

This is true, but only non-guaranteed premiums are increasing. Guaranteed premiums are staying the same. Due to the increased cost, the policy might not last as long on a guaranteed basis, but, this would only be true if the consumer did not buy a policy with a lifetime guarantee. If the lifetime guarantee is there, then the policy will last a lifetime at the guaranteed premium, regardless of the company’s annual return.

Existing Policyholders are Secure

In the United States, in the hopes of staving off a reckoning, some insurers have stopped selling particular products and have raised the price policyholders must pay for some existing policies.

True. Some companies have stopped selling universal life with guarantees. But those consumers with current policies can keep them, and the contractually-guaranteed premiums are not being raised.

Guaranteed Cash Values are Reliable

Universal policies typically cost more, but the coverage never expires, and the buyer gets both a fixed death benefit and a “cash value” account, designed to earn tax-exempt interest. Money in the account can be used to help pay the policy’s premiums. But there is a risk. If the account gets used up paying those costs, the policy can lapse, and coverage ends.

Universal policies typically cost more than what, term insurance? Sure they do. If you want the company to guarantee the premium for a longer period of time, they’re going to charge you more. But we are not comparing permanent life insurance to term insurance here. The fact of the matter is that universal life typically costs less than whole life insurance, which is one reason why people buy it.

Despite the lower premium, some people will still depend on cash accumulation to offset the cost of coverage. If their non-guaranteed interest assumptions fall short, then they may run out of cash and lapse the policy. However, if they were banking on guaranteed cash accumulation, they will not have the risk of the contract under-performing. Their coverage will not lapse.

What You Can Do

Here is the bottom line: if you bought a universal life policy based on guarantees, you have absolutely nothing to worry about. All the alarms being raised by this New York Times article do not apply to you. If you have a policy designed with interest assumptions that are falling short, then you may have a problem. But you know what? You very well may be eligible for a product from another company that could give you the guarantees you need at a reasonable price. Thankfully, it’s a big marketplace out there, and good values are still available for a great many people. I’d love to hear from you and answer any questions you may have. Ask anything by emailing me at skobrin@stevenkobrin.com.

About Steve

Steven Kobrin is a life insurance expert with 25 years experience. He serves high net-worth individuals and business owners as well as high risk and uninsurable “impaired cases.” Steven offers concierge life insurance process to ensure the policy is approved as it’s quoted. To learn more, visit his website, read his blog, connect with him on LinkedIn, or request a policy audit today by calling his office at (866) 633-1818 or by email at skobrin@stevenkobrin.com.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

How Business Owners Use Life Insurance to Fund Partnership Agreements

PartnershipAgreementsIt’s a common practice for business owners to take on partners. While there are many reasons behind why you may want to take this step, there are also some crucial things to consider when entering into a business partnership. What legal bases do you need to cover? How can life insurance protect you, your business, and your family?

What a Partnership Looks Like

Some business owners enter a partnership because they need someone to complement their personal strengths. For example, one person could be an expert in operations, the other in sales and marketing. Sometimes professionals with the same area of specialization will join together to serve more clients. In other arrangements, one partner could be passive and responsible primarily for funding, while the other is the active manager of the enterprise.

The partnership could and should be a very structured relationship. A legal agreement should be formulated and should cover all the financial technicalities such as the percentage of ownership, tenure of the partnership, how and when the business is to be valued, etc. It should also plan for events that may dissolve the partnership, such as the death, disability, long-term sickness, or early retirement of a partner.

How Life Insurance Can Help

Life insurance plays a key role in the funding of a partnership agreement. When a partner dies, that person’s spouse or estate will probably end up with his shares of the business. The surviving partners want those shares, but they need money to buy them. Life insurance can provide the exact amount of money to do that at the exact time it is needed. It is typically a much more economical way taking care of things compared to other options such as taking cash out of the business, selling assets, or borrowing from a bank.

What are some integral pieces to consider when using life insurance to fund your partnership agreement?

Finalize Your Agreement

Before you do anything else, get the arrangement finalized before you get approved for your policy. There is nothing worse than getting approved at a great rate, only to delay paying for the policy because the legal work has not been completed. Until it is, you won’t have coverage, and something disastrous could happen that could either raise the price significantly or disqualify you altogether.

Costs Will Vary

Remember that not everybody qualifies for the same price. Each person represents a different risk profile to a life insurance underwriter. Age, gender, smoking status, health history, and a multitude of other factors affect the rate. Don’t expect life insurance to cost the same for each partner.

Explore Your Options

Research your options for policy ownership. In some instances, your business should be the owner and the beneficiary of the policies. In other cases, partners should own policies on one another. Talk this through with your business advisor to make sure your policies are issued correctly and fit your needs.

Life insurance is critical for business owners. It covers you, your business, your partner, and your families, and can be a game changer if the unexpected occurs. Don’t get caught without it. I’d love to hear from you and answer any questions you may have. Ask anything by emailing me at skobrin@stevenkobrin.com.

About Steve

Steven Kobrin is a life insurance expert with 25 years experience. He serves high net-worth individuals and business owners as well as high risk and uninsurable “impaired cases.” Steven offers concierge life insurance process to ensure the policy is approved as it’s quoted. To learn more, visit his website, read his blog, connect with him on LinkedIn, or request a policy audit today by calling his office at (866) 633-1818 or by email at skobrin@stevenkobrin.com.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Why You MUST Change Your Life Insurance Beneficiary When Getting Divorced

29894340172_1f9c654e89_nCertified Divorce Financial Analyst™, Michelle Ash has a must-read article about financial issues after divorce in womensdivorce.com. Here’s an overview:

The divorce is finally over, the decisions have been made, and now life proceeds anew for the client. But it’s never really that easy, is it? For the newly-divorced client, the legal work may be done, but there’s often a long list of financial clean-up that lies ahead.

Expert advice

As a life insurance broker, I pay special attention when experts offer advice on how to avoid troubles with your policy. Michelle points to a big one regarding the need to change the beneficiary designation when the divorce is finalized:

According to estate planning attorney C. Randolph Coleman of The Coleman Law Firm, “There usually are a half dozen cases during a typical year where someone will call and ask whether there is anything they can do to avoid the ex-spouse of their recently deceased spouse, parent, child or sibling, from taking the life insurance or retirement plan that the ex-spouse was still the beneficiary designated on the decedent’s plans/policies. The short answer, there is nothing you can do. The beneficiary designation will trump the will or intestacy every time.”

Again from estate planning attorney, C. Randolph Coleman, “I probably see about 6 or 8 people a year who typically come in for estate planning 4 to 5 years after a divorce to ‘finally get around’ to updating their estate planning. Usually, during the course of our discussions I will suggest to them that they go back to their employer and check on the beneficiary designations for their life insurance and retirement plans. Invariably, about half of them will call back and tell me how much they appreciate the counsel to check because their ex-spouse remained their beneficiary.”

A big takeaway

One take away from the story is this: if you wait for a life event to prompt an update of your policy, you may end up doing too little too late. This problem can be avoided if you get into the practice of conducting regular audits of your policy. Policy audits can frequently head off trouble at the pass. To learn more, read here.

What about your policy?

What about your life insurance policy? Is the beneficiary designation is current?
Please feel free to comment, or to contact me directly with a specific question.

If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

How Business Owners Use Life Insurance to Protect Their Families

BusinessOwners

Owning your own business has many perks and can bring plenty of freedom and success. You may have started a business because you like your independence or you wanted to get rich. You may like a challenge or simply want to build a better mousetrap or mop. Maybe you believe you can make the best pie, or computer, or automobile, and want to share your passion with the world. But will your business alone be enough to take care of your family in the future?

Taking Care of What’s Important

For many of us, owning a business is simply a way of living the good life, following a dream, and providing the best for our families. We desire to become independently wealthy and do what we want with our time. Since we are devoted to our spouse and children, we want to make sure our surviving family members can maintain the same standard of living even if we meet our tragic demise prematurely. As business owners, we often make provisions so our business can at least partially subsidize this ideal life in our absence.

However, the business usually cannot fully care for your family in the manner in which they have become accustomed. The full range of family financial needs, such as income replacement, mortgage protection, and retirement supplementation, cannot be met through the business alone. There is usually not enough to cover college funding or elder care for senior parents who become dependent, along with regular life expenses. As a result, life insurance is typically used to pick up the slack.

So how can you, as a business owner, ensure that your family is covered? Here are three quick tips for business owners for using life insurance to take care of their families.

Use Separate Policies

In many cases, the owner and beneficiary of a personal policy are different than for a business policy. A trust may be utilized, and a separate policy is therefore needed.
A personal life insurance policy will provide for your family and their future, while a business policy can provide for a buyout if your business has multiple partners. Make sure all your policies are separate and up-to-date so that there is no confusion or legal hold-ups if a tragedy occurs.

Use Multiple Policies

Most personal financial needs have different timelines. You may need 20 years to plan for college, but 40 years to plan for retirement. Separate policies with various face amounts and different guarantee periods can be employed to provide the exact sum of money for specific needs and further ensure that every aspect of your family’s life is taken care of. Take the time to look at all your family’s needs and determine what is necessary to provide for each one.

Beware of Tax Traps

Business owners like to have the business pay for everything. This practice can be very convenient and beneficial, but you need to know what you’re doing when it comes to taxes. You don’t want to get into a tax mess by using the wrong account for your life insurance payments. Get good tax advice from the right professional and cover your bases.

As a business owner, are you making sure that your family is taken care of? Do you know what type of life insurance you need and how to go about planning for your family’s care? I’d love to hear from you and answer any questions you may have.

Ask anything by connecting here.

About Steve

Steven Kobrin is a life insurance expert with 25 years experience. He serves high net-worth individuals and business owners as well as high risk and uninsurable “impaired cases.” Steven offers concierge life insurance process to ensure the policy is approved as it’s quoted. To learn more, visit his website, read his blog, or connect with him on LinkedIn.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Financial Independence vs. Independent Wealth

This was my view of Macy's 4th of July Fireworks. It was an awesome show. I'm really happy that I got this shoot from this position. Nikon D3000, shot in RAW, edited in Adobe Lightroom 5.

Today we celebrate the independence of the United States of America. Happy birthday, USA! Let’s talk about what independence means from a financial point of view. There are two common ideas related to independence and money: financial independence, and independent wealth. What is the difference between them?

Two ways of taking advantage

Here’s a quick way to answer the question: do you want to be rich? Of course you do. If you were rich, you wouldn’t have to answer to anybody. You could tell anybody you wanted to go jump in the lake. That could be your boss. It could be your biggest client who drives you crazy. It could be the banker or other lender who puts the squeeze on you because he knows you don’t qualify for better terms. Or anybody else taking advantage of you.

On the other hand, it could be the parent who very kindly bails you out time and time again. It could be the government agency who throws money at you simply because you qualify for big government benefits due to a technicality. Or any other entity of which you were taking advantage, albeit legitimately.

The focus is on freedom

Financial independence means you are finally on your own. But here’s the catch: once you are on your own, do you want to have to work 60 hours a week to stay on your own? To put up with all the stress and aggravation and problems of retaining your independence? No, you really don’t. You would like to have a life free of the rat race, even if it is your own rat you are chasing. You want enough money to work because you want to, not because you have to. To do the things you want, on your own time. To not have to worry about paying your bills, or working for the Man – even if you are the Man, your own boss. To do this, you have to be more than financially independent – you have to be independently wealthy. There is the difference between the two.

So, when we plan for our careers and our businesses, let’s strive for Independent Wealth. When we purchase life insurance and plan for the welfare of our survivors, let’s help them remain independently wealthy. And when we chart a course for the future of our country, let’s reclaim our independence and get ourselves wealthy enough to keep it. God bless America. Land of the free, home of the brave, and a country that should be the most prosperous on earth.

Here are a few more resources for you on this topic:

Finally, A Definition Of ‘Independently Wealthy’ We Can Really Get Behind

What Does Independently Wealthy Mean?

Financially Independent vs. Independently Wealthy

Does the distinction between financial independence and independent wealth make sense to you?

Please feel free to comment, or to contact me directly with a specific question. If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Follow Your Practice, Not Your Passion

FollowYourPractice

Is passion the key to success? If you attended one of the many college graduations taking place these days, you’d think so. Every year around this time, impressionable graduates are encouraged by the commencement speaker to follow their passions. Don’t pursue a career for practicality or financial stability. As long as you follow your dreams and love what you do, you’ll never work a day in your life.

And we don’t just hear this at graduation ceremonies. When actors win Academy Awards or musicians win a Grammy, more often than not they preach to their fans (who are often aspiring stars) to never give up on their dreams. It’s a charming notion, but is it also naive? Will following our passion, regardless of what it takes, put us on the road to happiness, fulfillment, and everything we want out of life?

Passion vs. Ability

TV personality, Mike Rowe, emphatically answers, “No!” The author of “Dirty Jobs” and “Somebody’s Gotta Do It,” Rowe divulges the real deal about the role of passion in a short and sweet webinar he hosted through Prager University. If you don’t want to watch the webinar yourself, I’ll summarize it in a nutshell: passion and ability have nothing to do with one another, and ability is what really counts when you want to achieve anything in life.

I agree with Rowe’s opinion, and I think it rings true for everyone, whether they’re new grads entering the job marketplace, professionals rebuilding their careers, or successful entrepreneurs and empire builders. Passion is great to have, and it can help you stick it out during the rough times. But without ability, passion can’t take you all the way. Your ability can improve with practice and hard work, but ability is necessary, nonetheless.

When I started out in the life insurance business, I had to develop a sales practice from scratch. I cold-called prospects I picked out of a phonebook. I went door-to-door to hundreds of businesses around the county. Was I passionate about calling complete strangers or knocking on the doors of businesses day after day? Of course not. But this was the first step of starting a life insurance practice. I had to get into the practice of picking up the phone and knocking on doors. Pick up the phone, knock on the door. Pick up the phone, knock on the door. Eventually, I got better at it, started seeing results, adjusted my strategies based on what worked, and I eventually learned to like it. Today, I love my career and am proud of the success I’ve achieved over the years.

The Path to Success

I’m not the exception to the rule. Take a look at how any successful person reached their status. When I was in high school, my idol was Jim Ryun, the youngest guy to ever run a four-minute mile. I was a runner myself, and I read his autobiography to learn how he trained. He shared how he had to drag himself out into the heat, rain, cold, and snow for his morning workout, and then repeat the exact same schedule after school. Day after day after day. Eventually, he got better at it, started seeing results, adjusted his strategies based on what worked, and learned to like it.

What about the the time artists have to put in to become masters? Whether it’s martial arts, performing arts, or visual arts, artists have to practice their craft hundreds of thousands and millions of times, step-by-step, note by note, stroke by stroke. In the book, “Outliers,” author Malcolm Gladwell claims that the key to achieving expertise in any skill, is a matter of practicing the correct way, for around 10,000 hours total. That’s a lot of hours. But eventually, you get better at it, start seeing results, adjust your strategies based on what worked, and learn to like it.

Mike Rowe has it right: never follow your passion, but always bring it with you. Find an opportunity and prosper. Stick with it, and with enough practice and perseverance, things will fall into place for you and you’ll learn to love it.

Where do you fall in the passion versus ability discussion? What do you think matters most for achieving success? Hard work? Inherent skill? Luck? A little bit of everything? Drop me a line and let me know your thoughts. I’d love to discuss with you!

About Steve

Steven Kobrin is a life insurance expert with 25 years experience. He serves high net-worth individuals and business owners as well as high risk and uninsurable “impaired cases.” Steven offers concierge life insurance process to ensure the policy is approved as it’s quoted. To learn more, visit his website, read his blog, connect with him on LinkedIn, or request a policy audit today by calling his office at (866) 633-1818 or by email at skobrin@stevenkobrin.com.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Listen to My Radio Show Interview!

Radio (1)

Listen to my recent interview on the WGSN-DB Business Showcase Show! The show’s host, Cece Shatz and I discuss life insurance, review unusual scenarios, and answer your most pressing questions about all things insurance. Listen to the recording now here!

Screen Shot 2016-06-11 at 9.26.01 AM

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

5 Reasons Why You Should Disclose Your Prior Drug Use on Your Life Insurance Application

28108832021_13765ce10c_nLife insurance is probably the most comprehensively underwritten financial product in the marketplace. Everything from current health, to family medical history, to criminal record, is covered – with various lifestyle and health factors in between.

Many people are not comfortable disclosing personal information in these areas. Maybe they had a tough time battling depression. Perhaps they feel ashamed about a criminal conviction back in the day. Some are reluctant to talk about income, or prior financial issues.

Recreational drug use is a common sensitive topic. This is true for a variety of reasons, including concerns about illegality and social stigma. While I understand the hesitation to talk about it, I am here to report that you have everything to gain and nothing to lose by giving thorough and accurate answers to this and every other question on your application.

Here are five reasons why I believe this to be true, based on my 25 years selling the product:

1. If you don’t admit to usage, you are committing insurance fraud.

Your application contains verbiage very similar to this:

Any person who knowingly with intent to defraud any insurance company or other person, files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which may be a crime and may subject such person to criminal and civil penalties according to state law.

So if you did smoke pot or do coke back in the day, but deny doing so on the app, that is a materially false answer. So what can happen? The claim can be contested.

Your policy will contain verbiage very similar to this:

This policy shall be incontestable after it has been in force during the lifetime of the life insured for two years from the issue date, except for… fraud in the procurement of this policy, when permitted by applicable law in the state where this policy was delivered or issued for delivery…

I have always understood this to mean that if the company finds you lied about drug use, for example, then they could contest the claim even if the cause of death was not related to drugs. Why risk depriving your beneficiary of their money?

2. It probably won’t affect the rate anyway.

Your recreational activity 10, 15, or 20 years ago or more, does not necessarily affect your mortality now. Today, you are older and wiser, and engaging in activities that are better for your health. Underwriters understand that. Unless they have reason to believe you are at risk for going back to your old ways, odds are they will not hold your past against you pricewise.

Even if your drug use was more recent, it could affect your eligibility for a policy only temporarily. In the worst case, maybe an offer would be postponed. Perhaps additional premium would be assessed on a short-term basis. In both of these cases, your eligibility for coverage could be reassessed year after year until a carrier is found who would make a decent offer. Good deals that are not available now could be available later.

In some cases, current drug use would not preclude an offer now. For example, people who use marijuana can qualify for low rates, including non-smoker pricing in certain situations.

3. Going through full disclosure builds the confidence of underwriters.

Life insurance as a business. Like every good business deal, it has to be a win-win for all parties concerned. The consumer needs a policy that gets the job done. The company needs a paying customer. The broker needs to earn a commission once the sale is finalized.

Nobody wins when applications are declined for incomplete or contradictory data. If information emerges in underwriting that conflicts with other disclosures, then the deal can be off, and all parties involved will have wasted precious time and money.

Full disclosure in the prequalification stage of the purchase is essential for avoiding this problem. Once an underwriter sees that you have provided thorough and accurate answers on the “minor” stuff, like drug use long stopped, they are confident underwriting won’t uncover major inconsistencies that could kill the deal. They are much more likely to put their best rate on the table from day one and stick to it. You have established credibility with them.

4. It is a private matter.

Privacy protection regulations keep your application information within the strict confines of the insurance company and its affiliates. These laws are taken very seriously. You can see this with all the authorizations you have to sign for even those parties involved to have access to your application and underwriting file.

This means that nobody else gets to see your answers to the personal questions. Not your spouse, not your children. Not your business partner or employees. Not the bank who needs the life insurance to cover your business loan, or the investor who needs you covered as a key person.

It also means that the life insurance company is not going to report you to law enforcement agencies for having done something illegal back in the day. Go ahead and ask a criminal attorney if he’s worried about that happening. I don’t think so.

5. There is no stigma.

I understand that in the greater social environment, recreational drug use is considered “bad.” I recall being in “health” class in junior high school in the 60s. I think the instructor took great relish in forecasting doom if you smoked pot. First it would be marijuana, then you would move on to heroin, and finally you would end up in jail – or dead. Today, guys like that are still waging the “war on drugs” and trying to pack the prisons full of drug users.

Putting the politics aside, the fact of the matter is that many extremely successful and wealthy people have used recreational drugs. For some, it was a phase; with others, it became an addiction that needed treatment. Some still use them.

Since drug use can in some way impair health and functioning, it is valid for a life insurance company to determine how it may be impacting your mortality. With the proper direction from your broker, this assessment could and should be done fairly, and with the upmost respect and sensitivity. Find a broker you can trust, and you will be in good hands.

Please feel free to comment, or to contact me directly with a specific question. If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

“Compare term life insurance rates at no cost from top rated companies in seconds.”
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Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Three Must-Knows About Corporate Life Insurance

Many large employers sponsor term life insurance as an employee benefit. Corporate sponsorship has its perks: the price is typically pretty low. It’s fairly easy to qualify for the benefit. And, the employer typically foots all or a large portion of the bill. Nonetheless, as with everything els28589664184_0f1a1e0e58_me, you get what you pay for. Here is what I see as the downside of the product.

The price goes up

Usually, the rate increases when you enter a new five-year age bracket, i.e. 30 to 34, 35 to 39, 50 to 54, 55 to 59, etc. As you get older, the percentage increase gets higher. You may get hit with a smaller increase when you’re younger, and a larger increase when you’re older. Depending on how much you are paying, and the rates for which you might qualify on the outside, a policy obtained on the open market could give you better long-term price stability than the corporate product.

It’s almost never enough coverage

The typical scenario is for a certain amount of corporate coverage to be issued on a guaranteed underwriting basis. Then, you have to be eligible for any additional amount. But these increases are underwritten on a simplified basis. It’s most often a take-you-or-leave-you decision. People who have a higher- risk factor, such as a medical condition or adventurous hobby, often do not qualify. Even if they do, there is usually a cap on how much you could buy. For most of us with multiple responsibilities and obligations, that amount is just not enough coverage.

You can’t take it with you

The corporate policy offers bargain prices (at least initially) because a large pool of people participate. It needs that pool to remain large to keep the price down. So, certain disincentives are in place to make people think twice about leaving their employer. One major disincentive is a lack of portability. If you do switch jobs, or go off on your own to start your own business, you probably can not take your coverage with you. So you are left fending for yourself in the marketplace, paying a higher price simply because you’re older. And, if you do have a higher-risk factor, that could affect the new price as well. Then again, the corporate product could be portable – if you medically qualify. Or, you may be able to take the coverage with you only if you convert it to a permanent product – which of course would cost more than the term.

Putting this all together, I find that this general rule should apply to your life insurance planning: treat the corporate policy as icing on the cake. Make a policy that you own and that you control the foundation of your coverage. Even though the corporate policy can provide short-term convenience, it could pose for you long-term trouble that is simply not worth it.

Please feel free to comment, or to contact me directly with a specific question. If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

“Compare term life insurance rates at no cost from top rated companies in seconds.”
https://www.insurenowdirect.com/stevenkobrin/Default.aspx

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

How the Collateral Assignment Helps Business Owners Control Their Life Insurance Benefit

Growing your business is the name of the game, and bank loans often fuel that growth. When a bank loans you money, it wants to be sure it will get paid back – even if you predecease the loan. So it typically requires life insurance to close the deal.

Using life insurance is good for everybody

This makes sense. Your loan officer doesn’t want to have to chase down your spouse, and force him/her to squeeze money out of your estate to pay the balance due. You certainly don’t want to have to put your grieving partner through that. Life insurance is the way to go to secure that debt, because each dollar of benefit literally cost pennies. It is a much more economically sound strategy than paying off the debt dollar for dollar out of cash, or liquidating LifeInsurance2assets at a potential loss.

Ownership of the policy is key

But who should own the policy? This is where many business owners are tempted to make a serious planning mistake. It may sound simple to make the bank the owner and beneficiary of the policy. This way, the insurance company could just send them a check and settle things once and for all. But here’s the thing: what if you take out a $2 million loan, and owe only $1 million at the time of death? If the bank is the beneficiary, they will get the full $2 million benefit – even though they are due only half that much! Why overpay them? You can still keep things pretty simple, and retain control over the amount paid, by using a collateral assignment.

A collateral assignment keeps you in control

A collateral assignment is simply an amendment to the policy. You get to designate the owner. It could be yourself, your estate, a trust, your business – whatever makes sense, according to your financial plan. You will also get to designate the beneficiary. The assignment is filed to inform the insurance carrier that you have agreed to pay your lender first out of the benefit. When a claim is filed, the carrier will check with the lender and ask them to prove any amount due. They do so and are paid accordingly. Your beneficiary will then get the balance of the benefit. This way all interested parties get what they deserve, and not any more or less. And, if you happen to pay off the loan before any claim is filed, you simply get a letter from your bank to this effect, and instruct the carrier to remove the assignment.

A post-policy issue requirement

A collateral assignment is really the last requirement to be met when you get your coverage. You go through full underwriting, get approved, and pay for the policy. In the meantime, you work with your bank to get the assignment form completed. It could be a form the carrier mandates, or, if they have no preference, the bank should have a template. The completed form should be submitted to the carrier along with all your policy delivery requirements – payment, health forms, amendments, etc. Then, when the policy is put into force, the assignment can be executed. This usually happens on the same day.

Your broker should provide reassurance to your banker

Sometimes, the purchase of life insurance can take a while. This is especially true if the insured has a higher-risk factor, such as a medical condition or adventurous hobby. Your broker has to first prequalify you in order to quote both a competitive and a reliable rate. He then has to advocate on your behalf throughout the underwriting process, to obtain an approval at the rate quoted. In the meantime, both you and your lender can get a little antsy because you want to close the loan, get the money, and supercharge your business. Encourage your broker to reach out to your banker peridocially provide reassurance that progress is being made. This is usually all that is needed for the banker to remain optimistic and interested in doing business with you. Before you know it, the deal will be sealed and you can march on.

Please feel free to comment, or to contact me directly with a specific question. If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Why Rich People Like Donald Trump Need Life Insurance

13291209014_dd2fa0a2a2_nDonald Trump has come to represent the rich, successful person. I am not saying he is my personal role model. I also want my next president to be a constitutional conservative. Having said that, let’s talk about rich people needing life insurance.

It’s all about leverage

What makes people like Trump rich? A lot of it has to do with leverage. They can really stretch a dollar. They can allocate time, money, and other resources, and get the biggest bang for the buck. They get a lot of mileage out of publicity. They create huge organizations to do work for them, while they operate at their highest level. They invest their money so it makes money.

Paying off a business loan

Let’s suppose a rich person like Trump takes out a $10mil loan to capitalize a business venture. What happens if he predeceases the loan payoff? Should his business have to close down? No. They should buy life insurance. The benefit would pay the bank, so the business could keep growing.

Funding a buy sell agreement

Suppose a rich person like Trump takes on business partners. They form a buy sell agreement to properly pass on the shares of a deceased partner. If one were to pass away, should the company have to strip its cash reserves to pay off the surviving family member? No. They should buy life insurance. The benefit would pay off their surviving family member, so the business could preserve its cash.

Paying estate taxes

Now let’s suppose a rich person like Trump amasses a huge fortune. According to current estate tax law, both Uncle Sam and the state are going to want a huge portion of that money when it is passed on to the next generation. Should the family have to sell off properties, heirlooms, businesses, and other assets just pay these taxes? No. They should buy life insurance. The benefit would pay off the taxman, so the family could keep the estate intact.

Helping rich people stay rich

Every dollar of life insurance benefit literally cost pennies. This is a great example of leverage. Life insurance can help rich people stay rich.

Please feel free to comment, or to contact me directly with a specific question. If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

How You Can Be Guaranteed $10 Million

3118141751_0cef0d9be1The saying is that death and taxes are the only guarantees in life. But you really can add life insurance to that list. Here’s why:

It’s the only insurance claim you will definitely file

You can buy many different types of insurance. But in every case – except one – you have no guarantee of filing a claim. You can buy medical insurance, but you may never get sick. You can buy disability insurance, but you may never be unable to work. You can buy professional liability insurance, but you may never get sued. You can buy auto insurance, but you may never have a car accident. You can buy homeowners insurance, but you may never have a fire.

You can buy life insurance. And you know what? You know you will die, so you know a claim will be filed – as long as you keep the policy in force.

Life insurance companies are reliable

Most certainly, you must pick your carriers wisely. There have been companies that have had problems. Yet in many cases, the industry took care of its own, and other companies picked up their obligations. Today, the market is full of strong companies with good financials, a good record of paying claims, and no bad press. And, there are a number of early warning systems in place to detect potential issues. These include rating agencies and other financial analysis firms.

If you financially qualify, big benefits can be yours

The amount of money a life insurance company will pay your beneficiaries is determined primarily through financial underwriting. Your need for the coverage, your ability to pay, and your overall value to the beneficiary are all assessed. If you qualify, you can leave your family, your business, and your favorite charity a huge amount of money. $10 million? For sure. I’ve seen much higher. If you qualify for a smaller amount, they will make that happen as well.

A sure way to guarantee a legacy – with discounted dollars

Do you want to guarantee your heirs a financial future? Do you want to be sure a certain amount of money will definitely be paid to them when it is needed? That is what life insurance does. And it does so for only pennies on the dollar. Every dollar of premium costs just a few cents.

A small price to pay for a guarantee.

Please feel free to comment, or to contact me directly with a specific question. If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

“Compare term life insurance rates at no cost from top rated companies in seconds.”
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Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Why We Should Think About Life Insurance on St. Patrick’s Day

29875104903_fc6681b164St. Patrick’s Day is a celebration of Irish religious and national heritage:

St. Patrick’s Day, or the Feast of Saint Patrick (Irish: Lá Fhéile Pádraig, “the Day of the Festival of Patrick”), is a cultural and religious celebration held on 17 March, the traditional death date of Saint Patrick (c. AD 385–461), the foremost patron saint of Ireland. St. Patrick’s Day was made an official Christian feast day in the early 17th century and is observed by the Catholic Church, the Anglican Communion (especially the Church of Ireland), the Eastern Orthodox Church, and the Lutheran Church. The day commemorates Saint Patrick and the arrival of Christianity in Ireland, and celebrates the heritage and culture of the Irish in general. Celebrations generally involve public parades and festivals, céilithe, and the wearing of green attire or shamrocks. Christians also attend church services and the Lenten restrictions on eating and drinking alcohol are lifted for the day, which has encouraged and propagated the holiday’s tradition of alcohol consumption.

There are many such days in the Jewish calendar, as well as in the calendars of other religions. We need observances like this to keep our identity strong.

Religions have both a ritual and a financial component

The financial end of religion complements the ritual end. It takes money to keep religious institutions going. Houses of worship, community centers, soup kitchens, homeless shelters, and many other places of service need a constant influx of funds. And people give generously, generation after generation.

In case you were unaware, many charitable gifts come in the form of life insurance. Donors take out a policy to benefit the charity of their choice. When they pass on, the charity receives a significant benefit. You can imagine how much money a charity could receive if donors of various ages took out policies. Year after year, decade after decade, money would come flowing in.

How life-insurance can take care of the financial component

Life insurance makes all this possible because of its tremendous leverage. Each dollar of benefit cost pennies. Even small donors can give big gifts by spending their donation money on life insurance premiums. Big donors can make really big gifts. This is something to keep in mind as we move throughout our various religious calendars and take pride in who we are and what we stand for. Money helps make Good Work possible. Life insurance can provide a lot of that money.

Please feel free to comment, or to contact me directly with a specific question. If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Three Reasons to Have Life Insurance on Your Children

30717926215_754aaee5b0Nobody likes to think about insuring kids, but you know what? There are really good reasons to do so. Here are three:

Huge cost savings

We all know that the price of a new policy goes up with age. If a 20-year old and a 40-year old were each to buy a new policy, the 40-year old would of course pay more. (For sure, once their policy was purchased, the premium would remain guaranteed for whatever period they chose.)

You can see how low the premium would be on a one-year-old, or a five-year-old! Can you imagine how much money could have been saved if $1 million had been placed on your life when you were five years old, instead of having to buy it when you were 25 or 35? Even if you factor in paying the premiums all throughout your childhood, odds are great that your total net outlay would still be lower than if you buy a policy at a higher rate as an adult.

Significant cash accumulation

Some life insurance policies are designed to accumulate a lot of cash. They need time to do this. (And you need to leave the cash alone – no picking at it for odd cash needs.) Once you factor in the favorable tax treatment, over the span of decades a huge amount of cash can grow.

Policies on children are ideal for this scenario. The whole strategy calls for keeping the policy in force, and leaving it alone, for a period well into adulthood. With the right product from the right company, enough cash can grow to make good things happen: buy a house, start a business, supplement retirement.

Insuring insurability

God willing, every one of our children grows up healthy and strong, and lives a good long life. But things happen. Some families predispose their kids to certain genetic conditions, such as diabetes or breast cancer. Sometimes children get sick as adults, such as with adult onset diabetes, and any number of other ailments. Sometimes they adopt higher-risk lifestyles: maybe they take on scuba diving or rock climbing as a hobby, or get a corporate job that requires travel to remote places across the globe.

In all these situations, the cost of insuring them could be higher than usual. It might even be so high that they would have to settle for insufficient coverage purely for budgetary reasons. Or they may not even qualify at all, unfortunately. But had their parents the foresight to put a life insurance policy on them when they were young, then they would enter adulthood already with coverage in force. They’d be way ahead of the game.

Please feel free to comment, or to contact me directly with a specific question. If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

The Seven Don’ts of Buying Life Insurance

LifeInsurance

Believe it or not, buying life insurance can be a satisfying experience. Like anything else, you just need to know what you’re doing. A lot of it comes down to avoiding the pitfalls that give many people frustration and aggravation.

Over the course of my 25 years of experience, I have discovered seven don’ts of buying life insurance. By steering clear of these, I believe you can experience more satisfaction with your purchase.

1. Don’t kid yourself about the risks involved.

Yes, you may be healthy today and take the utmost caution in life. But the fact of the matter is, no one knows when his final day on earth will come. There are a multitude of threats beyond our control, such as undetected medical conditions, freak accidents, household fires, car crashes, and even terrorism.

While we can all improve our health to our best efforts, which can keep the cost of our life insurance down, don’t assume that a lower premium and higher level of health guarantees life longevity. If you are committed to securing the financial future of your loved ones, be it family or charity, then you have to admit that their future without you could very well start tomorrow. All the more reason to buy the life insurance today.

2. Don’t treat insurance like an investment – or a form of gambling.

People tend to lump all financial products together. Insurance, annuities, and investments may seem similar — especially when life insurance products build cash value and provide a benefit while the insured is still alive — but they aren’t.

Life insurance is not an investment. Investments are for you when you are alive. The longer you live, the more value that investment can attain. Life insurance is for your financial dependents when you die. The sooner you die, the more bang for your premium buck these beneficiaries receive.

It doesn’t make sense to say, “Well, I can take the same premium amount and invest it. With good returns I should be able to self-insure at some point in the near future.” That may benefit you, but it won’t help your beneficiaries should you die sooner than you hoped. Furthermore, what would happen if you fell ill, lost your job, or the market crashed? Your plan to self-insure may fall short and your dependents may end up without any security. This is called gambling with their financial future, not insuring it.

3. Don’t compare your insurance quotes to someone else’s.

Life insurance is likely the most comprehensively underwritten product in the financial marketplace. Many diverse factors are assessed for their impact on your mortality: age, gender, current health, medical history, family medical history, lifestyle, hobbies, job, drug use (current and past), financial history, criminal and driving record, foreign travel…you name it.

Insurance actuaries have compiled a nearly endless number of mortality statistics to help them set reasonable rates. Trends emerge that prove to be consistently true: women typically live longer than men, so they pay less. Smokers typically die sooner than non-smokers, so they pay more. You can have two people of the same gender, same exact date of birth, and same everything else, but if one has high blood pressure and the other one doesn’t, then their rates for life insurance may be different. It goes without saying that if the face amounts and guarantee periods of their policies are different, the rates will be different as well.

Additionally, you may not be aware of every factor that contributed to someone else’s premium. People disclose personal information when they apply for a policy. Many times, their spouse, children, and business partner don’t know the whole story. Friends and family are typically not in a position to really know how somebody else qualified for the rates they were given.

And finally, let’s suppose that you have been assessed an extra premium because of a higher risk, be it a medical condition or an adventurous hobby. Is it worthwhile knowing what the rate would be for somebody who didn’t have that extra risk? Could be – but only if that gives you something to shoot for by improving your health or dropping the hobby. For now, you have to bite the bullet and pay extra until you qualify for something lower.

4. Don’t let your doctor play insurance man.

Doctors are supposed to be in the business of healing, diagnosing, and treating medical conditions. A good doctor upholds the ethic of “do no harm,” and tries his best to abide by that. If a mistake is unfortunately made, or things just turn for the worse, he does his best to help the patient recover.

Either way, the doctor gets paid. That is the stark truth. Hopefully, the patient live a long, healthy life; but if tragically they do not, the doctor still bills the family and expects payment. The life insurance underwriter, on the other hand, often makes a much more critical assessment of your mortality and possible life longevity. The reason is very simple: he has to put his money where his mouth is. He has one shot – the time of your application – to determine what risk you represent to his company. Based on his assessment, his company could be liable for millions of dollars to your beneficiary, and that amount would have to be paid even after just one monthly premium was submitted.

Frankly, I have found many times that the mortality assessment of an underwriter has more credibility than the doctor’s prognosis. It is simply the business of the underwriter to be an expert in this matter. They don’t pretend to be doctors and they don’t give medical advice. Physicians should show the same professional courtesy. They shouldn’t pretend to be underwriters, and so they shouldn’t venture their opinion on whether or not their patients could qualify for coverage.

5. Don’t second-guess your advisor.

You hire professionals to do the things you don’t know how to do. They are experts in their field. That is why you hire accountants to do your taxes; lawyers to defend you in court; and doctors to treat your illnesses. Life insurance brokers are hired to get you the best value for your premium dollar. Our job is to get you the lowest cost, the biggest benefit, or the longest guarantee. You don’t pay us out of your pocket, but your premium includes our compensation.

Let us do our job. We make an upfront investment in you as our client. We don’t get paid until you are satisfied. We have a huge incentive to make sure you are happy now, and stay happy throughout the duration of your coverage. We don’t want to provoke restless nights, worrying that you have the wrong policy. If you have selected the right professional – an independent, life insurance specialist who prequalifies you before you submit a formal application – then you are in good hands.

6. Don’t expect the perfect product.

A life insurance policy is comprised of three main factors: face amount, premium, and guarantee period. In an ideal world, we would buy all the coverage we would ever need for as long as we would ever need it at a guaranteed rate. It would make sense to keep it in force for our entire life so we can be sure a claim will be filed and the benefit paid.

Many times, though, we cannot do that. There are often budgetary constraints and we don’t always know how much insurance we will need in the long-term. So what do we do? As with any case like this, we must set priorities.

There is no doubt that the number one priority is face amount. Make sure you have enough coverage in force today. This is simply because, as we said above, you simply do not know when a claim will have to be paid. Too often, people try to get a “good deal,” and skimp on the face amount in favor of a long-term guarantee. But if your family or business tragically loses you sooner than expected, your beneficiary will be short-changed. They would rather have the extra benefit than the longer guarantee. That’s why I tell clients that if your budget is forcing you to choose between $2 million of 10-year term insurance, and $1 million of 20-year term, for example, take the product with a higher face amount and the shorter guarantee period.

It is smart business sense to have a budget for any purchase. With such a constraint, it is often hard to get maximum coverage with the longest guarantee period. If you find yourself with this dilemma, then first look to alternative premium funding sources. You might be able to leverage, liquidate, reallocate, refinance, or use any of a number of other techniques to free up funds. If this is not possible, then shorten the guarantee period. Revise your financial planning to secure funds in the near future for additional coverage. There is nothing wrong with buying life insurance in stages – as long as you make sure you remain eligible for coverage.

7. Don’t put the investment cart before the insurance horse.

How do people get rich? Work hard, earn, borrow, invest, leverage, and provide greater value to bigger payers. How do they stay rich? Insurance.

Insurance prevents catastrophes from wiping out your riches. You could have a huge amount of savings and investments, but any number of manmade or natural disasters could clean them out. Even if you can afford to sustain the loss, why pay dollar for dollar to do so? Every dollar of life insurance benefit costs pennies. It’s smarter to let an insurance company take on the risk.

It makes sense to have a strong insurance portfolio in place to serve as the foundation of your financial portfolio, but which type of insurance policy is most important? It’s simple: the most important type of insurance is the one that protects you against the most likely risk: life insurance. You can buy medical insurance, but you may never get hurt or sick. You can buy disability insurance, but you may never lose your ability to work. You can buy auto insurance, but you may never have an accident. But you know with 100% certainty that you will die one day and that a claim will be filed on your life insurance policy. For this main reason, life insurance should be a top priority.

If you have questions about life insurance or would like a second opinion on a quote you have received, please call me (866) 633-1818 or send me an email at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide, which you can see in the above tab.

“Compare term life insurance rates at no cost from top rated companies in seconds.”
https://www.insurenowdirect.com/stevenkobrin/Default.aspx

About Steve

Steven Kobrin is a life insurance expert with 25 years experience. He serves high-net-worth individuals and business owners as well as high risk and uninsurable “impaired cases.” Steven offers concierge life insurance process to ensure the policy is approved as it’s quoted. To learn more, visit his website, read his blog, connect with him on LinkedIn, or request a policy audit today by calling his office at (866) 633-1818 or by email at skobrin@stevenkobrin.com.

 

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

What To Do When Your Term Insurance Renewal Rate Spikes

TermInsurance

There’s a good chance that when you first purchased a term insurance policy, you were focused on finding a low-cost insurance policy. You were just starting a family, buying a house, and stretching your money thin due to other financial demands. So, you purchased a low-cost 15-year term policy. Now, it’s 15 years later, you still need life insurance, and you still have financial demands, but now your policy’s renewal premium is significantly higher than when you first purchased.

Unfortunately, this isn’t an uncommon situation. There are a number of reasons why your policy’s premium amount increases. The biggest reason is age. On average, a premium amount increases between 8% and 10% for every year of age. Every life insurance carrier has underwriting requirements that usually include health tests, and the older you are the more tests that are required.

Beyond age, the policy carrier may also be concerned about its reserves or the availability of credit. One insurance company was facing insolvency, and to avoid declaring bankruptcy, they realized they needed to reduce future liabilities. This meant they needed to eliminate a number of their policies. The best way to do this was to increase policy premiums in order to encourage some policyholders to cancel. Although the court ultimately ruled against the insurance company, this still remains the thought process for some companies.

If your term insurance premium has significantly increased when it comes time to renew, you do have options. Start by getting pre-qualified for life insurance to see your other options and what other policies for which you are eligible. This typically involves a complete medical exam and, depending on your age, the type of policy, and the amount of coverage, a carrier could request additional tests, such as treadmill test or EKG. You may discover that based on your age, health, and other factors that your premium renewal rate is on par with other quotes, or you may find you can obtain a different policy for much less.

As you shop around for different policies, consider a permanent life policy to avoid having to go through this ordeal again. Many term insurance policies can be converted or exchanged for a permanent life policy, including Whole Life and Universal Life, with no additional underwriting required. Whatever you choose to do, make sure you obtain another policy before cancelling your current one.

As I stated earlier, the unfortunate truth about term insurance is that the premium can significantly increase when it comes time to renew. If you are currently considering term insurance, consider your needs beyond the policy limits, whether it’s 10 or 30 years. You may discover permanent life is a better option for your needs. If you already have a term policy that is approaching its renewal date, start looking into alternative policies now so you can be prepared and know your options.

If you have questions about term insurance or would like a second opinion on a life insurance quote you have received, please call me (866) 633-1818 or send me an email at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide, which you can see in the above tab.

“Compare term life insurance rates at no cost from top rated companies in seconds.”
https://www.insurenowdirect.com/stevenkobrin/Default.aspx

About Steve

Steven Kobrin is a life insurance expert with 25 years experience. He serves high-net-worth individuals and business owners as well as high risk and uninsurable “impaired cases.” Steven offers concierge life insurance process to ensure the policy is approved as it’s quoted. To learn more, visit his website, read his blog, connect with him on LinkedIn, or request a policy audit today by calling his office at (866) 633-1818 or by email at skobrin@stevenkobrin.com.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

Life Insurance for the Walking Wounded: People With PTSD

ptsd-e1383860925532People with Post Traumatic Stress Disorder (PTSD) are among the walking wounded. They have been through a lot. They are survivors. In my work helping them to purchase life insurance, I have developed an affection and admiration for many.

When you find out what these folks have been through, it makes you cringe. Some have experienced horrible abuse, sexual and otherwise – at home. At school. In a place of worship. In prison.

Some have survived horrible accidents – plane crashes. Car crashes.

Some have been traumatized simply through trying to help others survive terrible events. I have met a number of first responders to the Twin Towers on 911 who were greatly affected by the ordeal.

And then you have the many returning warriors. Veterans who served their country in battle and came home battered and bruised, both inside and out.

I know life insurance underwriters who want to help these people. They want to make offers. What will give them a comfort level taking on the risk, and at a reasonable price? Here are a few of their primary concerns:

Diagnosis and treatment

People with PTSD can have all kinds of symptoms. Their emotions can be so out of wack. They can experience great rage, but also severe depression. Trouble sleeping.

They can have numerous psychological and neurological problems. Nightmares. Flashbacks. They can jump at the drop of a hat. It’s as if you can take the man or woman out of the battle, but you can’t take the battle out of the man or woman.

Medically, there can be many conditions. There can be complications with many organs. Bad stomachs. Headaches. The stress level they have experienced can overburden their system.

In all these cases, an underwriter wants to be sure the potential applicant has reached out for help. Has received the proper medical attention. Has identified the problem and been prescribed a course of treatment. And is compliant with that prescription.

Support system

I have found that people with PTSD can attempt to treat themselves before seeking professional help. They can try to self-medicate with drugs and alcohol. In a way, I guess they are trying to escape, and to numb the pain. Who can blame them?

But the drugs and alcohol just create additional problems. We all know that. An underwriter will pay special attention to any drug or alcohol history, to make sure it is indeed history. A major factor in the potential applicant’s favor will be participation in a support group. Strong family backing and communal involvement also help.

Functionality

Sadly, people with PTSD can have a really tough time managing their relationships, both personal and professional. Marriages get severely strained. As do relationships with kids. And parents.

Jobs can be hard to keep. Careers can be difficult to restart. If the potential applicant has managed to find stability at home and also at work, these are big plusses from an underwriting point of view. They also mean that odds are against the potential applicant taking drastic action, like contemplating suicide.

Let’s help these folks!

I like to help anybody and everybody buy life insurance. Every man and woman deserves a shot at the coverage they need at the price they can afford. And as a professional salesperson, I have to be respectful and sensitive to the unique circumstances of each and every client. Sometimes, though, the plight of a particular people strikes you really deep. Folks with PTSD affect me that way. They have really been through a lot, and I really try hard to help them.

Along these lines, I want to direct you to a fantastic story about a Ukrainian teenager who helps the veterans of her country deal with their PTSD. Her remarkable efforts have been reported by Nolan Petersen of the Daily Signal. Reading it will make your day.

Please feel free to comment, or to contact me directly with a specific question.

If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com.

I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely ed

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

The Genworth Scare: What to do When Your Life Insurance Company Suspends Sales

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The insurance world was shocked when Genworth Financial, one of the top long-term care insurance companies, announced it would suspend all new sales of traditional life insurance and fixed annuities products in an effort to reverse financial losses, save the company $50 million in annual expenses, and focus solely on selling long-term care insurance.

While this move may make financial sense for the company, how does such an extreme decision affect you? It’s jarring to see a company entirely close its doors to the life insurance business. While I don’t claim to be a corporate finance expert, here is what I have ascertained from the decision and what this means:

Brokers Won’t Abandon Ship

Brokers should feel confident they’ll get paid any and all commissions due to them. If the sales force of a company felt they wouldn’t get paid, they would abandon ship and the ship would sink very quickly. In the early 1990s, many brokers and agents abandoned Mutual Benefit when it started having trouble and, as a result, its demise was greatly accelerated.

It’s Business As Usual

I am confident that both brokers and policyholders will receive customer service as usual. Premium payments processing, beneficiary changes, policy status, and in-force reporting should all run smoothly, guaranteed benefits shouldn’t be affected, and cash values will still be guaranteed. When Mutual Benefit went under, other companies stepped in to pick up their obligations. The Genworth situation does not appear to be nearly as drastic, so there is no reason for people with policies that guarantee the death benefit and cash value to be concerned at this point.

Concerns Regarding Non-Guaranteed Values

Concerns could potentially be raised about the non-guaranteed values in the life insurance contracts. Will the dividends in whole life insurance be reduced? Will the scheduled interest rates in universal life be lowered? How high will the premiums increase when the guarantee periods of term policies expire? I think it is perfectly reasonable for people who may be facing problems in these areas to shop out their coverage now. It’s better to head off any complications at the pass.

Finding Comfort with Your Carrier

A major change like this will no doubt cause concern regarding guarantees and policies. Nonetheless, don’t immediately switch out of fear and end up paying more or receiving a lower benefit for your dollar. However, it’s worth researching your options and considering switching to a carrier that can offer a similar policy at a similar price.

While many companies before Genworth have needed to re-establish their position in the life insurance market, Genworth seems to be taking a different route. Rather than try to strengthen their position, they are backing out of the life insurance business altogether.

As time goes on, I hope to learn more about the impact of this sales suspension and how to anticipate potential problems. However, as there is no crystal ball in the world of finance and insurance, we’ll need to use our brains and follow our gut.

If you have questions about the Genworth change or would like a second opinion on a quote you have received, please call me (866) 633-1818 or send me an email at skobrin@stevenkobrin.com. I also encourage you to download my free Life Insurance Guide, which you can see in the above tab.

 

About Steve

Steven Kobrin is a life insurance expert with 25 years experience. He serves high-net-worth individuals and business owners as well as high risk and uninsurable “impaired cases.” Steven offers concierge life insurance process to ensure the policy is approved as it’s quoted. To learn more, visit his website, read his blog, connect with him on LinkedIn, or request a policy audit today by calling his office at (866) 633-1818 or by email at skobrin@stevenkobrin.com.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.

The Genworth Scare: What to do When Your Life Insurance Company Suspends Sales

Genworth just announced that as of March 7, it will suspend the sale of its traditional life and fixed annuity products. Here is the reason why, as explained in its PR notice:

Genworth has decided to direct its efforts exclusively on the market opportunity that provides the most potential for profitable growth and takes the greatest advantage of our expertise, long term care insurance experience, and competitive strength: providing solutions that address the financial challenges of aging.

Basically, it wants to concentrate on the sale of long-term care insurance. Of course, there is always more to the story. Here is background material from ALIRT Insurance Research:

Genworth Financial Inc. (GNW) released its fourth quarter 2015 GAAP financial results on Thursday, February 4, 2016. The key items from the news release are as follows:  GNW incurred a GAAP net after-tax loss of $292 million, and a net after-tax operating loss of $82 million, in the fourth quarter 2015.  The principal drivers of the 4th quarter GAAP loss were higher universal life insurance reserves (which led to individual life operating losses), as well as losses related to the sale of the group’s lifestyle protection insurance business and the pending sale of its European mortgage insurance business.  These losses were partially offset by earnings from mortgage insurance (U.S., Canadian, and Australian), fixed annuities, and long-term care insurance.

Okay. So they were losing money in the life insurance marketplace, and had some losses in other areas as well. Fair enough. Every business needs to regroup and focus on its strengths to remain profitable.

But what does this all mean for you and me? Even though a reorganization may be business as usual in the corporate world, it’s disconcerting to have a company close its doors. We would all much rather see it bounce back and turn things around. Turning a product line from a money-loser into a money- maker would be heroic. And a sign of a commitment to the life insurance business.

Now, I am no expert in corporate finance. As best as I can, I tried to see how the moving and shaking that take place on the macro-level affect the bottom line for myself, my clients, and my future clients. Here is what I have so far:

No need to abandon ship.

As a broker, I am still confident I’ll get paid any and all commissions due me. That is an important consideration. If the sales force of a company felt they wouldn’t get paid, they would abandon ship. The ship would then sink very quickly. (I recall that in the early 1990s, many brokers and agents abandoned Mutual Benefit when it started having trouble. It’s demise was greatly accelerated.)

Business as usual.

I am also confident that both brokers and policyholders will receive customer service as usual. Premium payments processing, beneficiary changes, policy status, and in-force reporting should all run smoothly. Guaranteed benefits should be OK. Even in the worst of times, the widows and orphans still get paid. Cash values still get guaranteed. When Mutual Benefit went under, other companies stepped in to pick up their obligations. This Genworth situation does not appear to be nearly as drastic. So there is no reason for people with policies that guarantee the death benefit and cash value to be concerned, at this point.

A question about non-guaranteed values.

However, I think concerns could legitimately be raised about the non-guaranteed values in the life insurance contracts. Will the dividends in whole life insurance be reduced? Will the scheduled interest rates in universal life be lowered? How high will the premiums be increased when the guarantee periods of term policies expire? I think it is perfectly reasonable for people who may be facing problems in these areas to shop out their coverage now. Better to head off any complications at the pass.

Feeling comfortable with your carrier.

To tell you the truth, I couldn’t blame somebody who was concerned only about guarantees for shopping out their policy as well. Even though there is no reason to believe anything will change, it is still okay to feel a little insecure. I certainly wouldn’t advise someone to switch to another company that charged them more, or gave them less benefit for their dollar – that would be too extreme. But a lateral change just to feel more comfortable with the carrier would be appropriate, in my opinion.

I was with Equitable a 1991 when they came across very hard times, and had to demutualize. But that move was to reestablish their position in the life insurance marketplace. They needed it to get stronger. That does not seem to be the case here with Genworth.

As time goes on, I intend to learn more about the impact of major carriers suspending sales, and how to anticipate trouble coming. But until I get that crystal ball, we will use our brains and follow our guts.

Please feel free to comment, or to contact me directly with a specific question.

If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at skobrin@stevenkobrin.com.

I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.