Let’s talk first about the similarities. Underwriting of diabetes, no matter the type, still focuses on control and compliance. Are the glucose levels remaining in a controlled range based on the hbA1c? Optimal underwriting is between 6 and 7. 7.5 is still considered good control. Above that things start to slide from an underwriting view. Does the client monitor their glucose levels regularly and keep regular, usually quarterly appointments with the doctor for full blood and urinalysis workups?

With type 2 diabetes early onset, prior to age 50 or 40 depending on the company, is a key factor. With type 1 there is an assumption that most cases were diagnosed prior to age 20. Because both types of diabetes are hard on the body in a best case. Type 1 in almost all cases has longer to work on the body. Because of this, collateral issues such as eyesight, kidney, or cardiovascular problems really need to be absent completely for best case results.

I am currently shopping a case for a 42 year old type 1 diabetic. He was diagnosed at age 15. His a1c is 7.1 and he has no collateral health issues. I will share this coming week what kind of offers we get back.

Bottom line. With good compliance and control type 1 diabetes can be underwritten at fair rates. Overall there is about a 7 year difference in mortality between those who have type 1 and normal mortality, but remember that those kind of statistics take into account all of those who don’t take care of themselves as well as those who have exceptionally difficult diabetes to control. In the healthiest type 1 diabetes population the mortality risk is the same as the general population.

Post from: Ed Hinerman On Life Insurance

Life Insurance And Type 1 Diabetes!

I do this…….

1. Someone who has not been hospitalized for bipolar disorder other than for diagnosis?
2. Someone who has not attempted suicide or had bouts with suicidal ideations?
3. Someone who is compliant with their treatment, both medications and regular followups?
4. Someone who is leading a stable family life or social life?
5. Someone who is exhibiting a stable work life?
6. Someone who is not on disability for bipolar and does not have issues with drinking or drugs? If there’s a problem here, then the answers to 3, 4 and 5 are no.
7. Those who are not on anti psychotic meds will get the better rates.

…..so no one spins their wheels in reaching for the prize. We all want the same thing, a good price on life insurance. It gets us nowhere if you just kind of don’t talk about one of these things and hope it doesn’t pop up in your psych records.

Case in point, “issues with drinking or drugs”. I just had a client who completely ignored that question or didn’t answer it honestly, and when we got medical records it turned out there was a mention of a DUI and being a member of AA. When the company asked for an alcohol questionnaire he confessed on the questionnaire that he had, in fact, had a DUI. He did in fact go to AA. And he still drinks on a daily basis although he claimed he had cut back.

He was declined. If he had divulged this prior to applying I could have told him it was a likely decline. Life insurance companies really hate the idea that people are going to AA and still drinking.

Bottom line. We help a lot of folks with bipolar disorder, depression and other mood disorders, but we are only as good as the information we are given. Underwriters really do care about the answers to those questions and they really will look at your records.

Post from: Ed Hinerman On Life Insurance

Yes, The Underwriters Really Do Care About This Stuff!

That couldn’t be more true when it comes to this past year’s economy and those who didn’t use life insurance to manage or protect wealth. There is a point when self insurance makes sense, that point when protected wealth reaches a point where life insurance is redundant for personal purposes.

One of the challenges is that this somewhat blurred point in time also happens to coincide with the need for life insurance for estate preservation from estate taxes.

But, to be sure, a lot of people in all ranges of financial accomplishment have simply missed the obvious boat during this recession, and because recessions can happen, life in general. A financial plan needs a backup. Something needs to stand between your life savings and disaster and that something is life insurance.

When things started to unravel last fall and it became obvious that retirement funds were going to take a beating I recommended that, at the very least, people consider putting a substantial 10 year term insurance policy in force as a way to ride this financial dip out. A lot of people took that advice knowing that if things bounce back with a bang they can always drop the insurance, but if something unforeseen happens, the retirement you worked so hard for won’t be stripped away from the spouse you’ve left behind.

Bottom line. Assuming their won’t be ups and downs in the investment world is not a financial plan. Again, there has to be something that takes your exposure to risk to a lot lower level.

Post from: Ed Hinerman On Life Insurance

Who’s Swimming Naked?

By the way. When I talk about the second coming of the 1980’s, it is not a good thing. Back in the 80’s when the universal life product went bonkers, agents wouldn’t think twice about telling a customer that they were not only going to have life insurance forever, but were going to get filthy rich for having owned it. This was all based on the wildly high interest rates at the time and assumed that those interest rates would always remain high.

While North American and other companies aren’t claiming that their policies will build cash value at the 1980’s 18% rate, to claim in the year 2009 that you should expect a constant 8% or higher return is just wrong. I hate when any agent suggests that any client look at, let alone use, non guaranteed rates as a reason to buy. The higher the non guaranteed interest rate, the more unconscionable the act becomes.

Just like banks and mortgage companies and credit card companies need to clean up their act and change their ways of thinking, life insurance companies need to quit pretending it’s OK to hang a possibility out there to lure customers in knowing full well that historically the assumptions don’t hold up.

All of this is tapping into the greed that has brought our country to its’ knees already. We have great guaranteed products but at some level people want more from their life insurance than just life insurance. They just don’t want to pay for it. Are you getting the drift. These products get sold by greedy agents who don’t do the right thing for their customer that really wants wealth to accumulate where there is none. Something for nothing never has been a good plan.

Bottom line. If you have a need for permanent life insurance, but universal life with a no lapse guarantee and know that what you have isn’t going to come back and bite you in the butt. Steer clear of indexed universal life, variable universal life and whole life. If your needs aren’t permanent, buy term insurance.

Post from: Ed Hinerman On Life Insurance

Will Life Insurance Companies Ever Learn?

They kicked off their Twitter experience with a Tweet
asking the question, “Does Price Top Value in Deciding on a Life Insurance Policy?” A refreshingly fair question, so let’s explore it from both sides of the aisle.

They start off their article with a couple of questions, “Price shopping online for a life insurance quote? Are you aware of the risks?” Risks? That infers there may be more than one and I, for one, get a little worried when I am surrounded by multiple risks, so we should dig deeper.

Right off the bat we find that one of the risks is that you will end up with a life insurance policy on yourself that does not include “family protection insurance”. Now I’m not knocking family protection insurance, only because in the entire article it never tells you what it is, what it’s going to do for you, and of course with New York Life you will never know the price of that little gem without having direct contact with a NYL agent.

And of course that is another risk of shopping and buying through an agent on the internet. You won’t get the opportunity to meet and build a relationship with a NYL agent, an agent that is highly educated in all the ways to suck money out of your bank account and make you feel like it’s OK, even though there is this nagging feeling that you’re probably being taken to the cleaners.

Oh, and another risk is that you may miss the opportunity to be underwritten by a company that is not known for treating people with real health issues fairly.

Oh my gosh! Then they go on to talk about the real danger. “The real danger, however, is that you could get a great deal on a product that does not meet your needs. Life insurance is a product designed for the long–term, involving possibly hundreds of thousands of dollars in ultimate benefits, with consequences that may impact your spouse and children decades from now. The policy you buy is only as good as the company behind it, including its service and its reputation.” That really puts it in perspective for me. There’s certainly no danger in having a NYL agent sell you a lousy deal on a product that doesn’t meet your needs. The truth is that the average NYL customer has either over extended their budget or under insured their family because of the overpriced products NYL offers. Doesn’t seem prudent at this economic juncture, if ever at all.

And then they just seal the deal with this gem of a paragraph. “The smart way to buy life insurance: New York Life believes that price shopping is not the best way to meet your protection needs and that there are a number of other factors to consider besides price. This is why NYLIC recommends that, when you are considering purchasing a life insurance policy.” No, I really didn’t alter that to make it look like their proof reader took the year off.

Bottom line. Price doesn’t top value, but trying to make the case that starting with a great price isn’t a good start to a valuable financial tool is crazy. And furthermore, New York Life doesn’t epitomize value in the life insurance industry. They would rather you be under insured with a whole life policy than adequately insured with a term insurance policy. They would love for you or your parents to buy their bottom dwelling life insurance products through AARP when they know full well that their is better value all over the life insurance map.

Post from: Ed Hinerman On Life Insurance

New York Life Makes Their Case For Not Paying Less For Life Insurance!

I just had this delicate conversation with a 61 year old man who qualifies for preferred rates today and could potentially, with lower cholesterol and a few less pounds, qualified for preferred best rates next year. It will be a stretch as he needs to get his cholesterol from 267 down to 240 and his weight from 230 down to 216, but it might be doable.

His rate for $1,000,000 of 15 year term insurance today at the approved preferred rate is $5040 annually. If he can get it all done in one year and no other health issues pop up he could potentially get his rate down to $4410. If it takes him two years it will cost $5230. It’s a small window of opportunity and only one company we can do it without having to get his cholesterol down to 230 or 220.

My recommendation in this scenario is take the bird in the hand and put it in force. If he can reach his goals he’ll hit a home run next year and if he doesn’t reach those goals he’ll be better off than he would be if he tries again in two years.

At younger ages the system can be worked a lot easier because the cost of insurance isn’t going up as much every year. Once you get into your mid 50’s and older, unless you can fix the problem in a year you get gobbled up by your own age.

Bottom line. I never discourage someone from looking ahead toward an opportunity of lower rates. I always, always recommend that you do your looking ahead with insurance in force. While it’s possible to improve health and your rate class in your 50’s and 60’s, generally that isn’t the direction most of us go.

Post from: Ed Hinerman On Life Insurance

The Point Of Diminishing Return!

Probably the most common lifestyle issue that catches people by surprise when they apply for life insurance is their driving record. Underwriters regularly pull motor vehicle reports and with most companies if you’ve had 3 or more moving violations (speeding, etc) in the last 3 years, you will get whacked a bit. If you make something of a career out of talking to highway patrol officers you may even be declined for coverage.

Another lifestyle issue is smoking pot. Companies are all over the map on their treatment of pot smoking. Let’s set aside for a moment that in most places it is against the law. The underwriters feel the need to whack you to some degree, but it’s hard to figure out the logic. Given preferred plus health, finding preferred plus rates with admitted marijuana use is nearly impossible. Some companies will allow approvals at standard non smoking rates, showing their disapproval by bumping you a few rate classes. Other companies exact their social revenge by levying smoking rates so that you pay premiums comparable to those of a cigarette smoker.

Then there is the subject of legality and some companies flop down on the legally moral high ground (get it, high ground???) and decline to issue a policy at all.

Bottom line. It’s best to approach the issue of purchasing life insurance if you smoke pot with a clear head, and an independent agent who will have access to the companies that take the least offense to your relaxation method.

Post from: Ed Hinerman On Life Insurance

Life Insurance Treatment Of Marijuana!

Those pitches centered around two things. Agents sold the idea that universal life would build tremendous cash value and that it was a policy that would be there for life. What a package! What they didn’t tell potential clients was that there was no guarantee of cash value accrual and also no guarantee that if the policy started bleeding cash due to lower interest rates, that the policy would stay in force at all let alone for life. By the way the majority of estate preservation policies sold in the last 20 years used these types of universal life policies

Now keep in mind that sold correctly with enough premium dollars going in, a universal life policy could be guaranteed to remain in force forever and even be guaranteed to build cash value to some degree.
But also keep in mind that most life insurance is sold in competitive situations and that universal life policies have guaranteed and non guaranteed values. Logically the price is higher to guarantee values like cash and the longevity of the policy.

So, a dirtball agent who wanted to win the day for himself would show a client a non guaranteed policy illustration and talk a lot about how “the company has historically done well and there’s no reason to believe that will change”, and “things would really have to go down the tubes before the guaranteed values will come into play”. Some would simply not show the guaranteed values. It just muddied the waters.

Probably 90% of universal life policies sold in the 80’s were sold like this and the majority since then have gone the same route. It was more prevalent during the 80’s just because assumed interest rates were so high that agents were selling universal life as an early retirement vehicle. You could put in squat and be a millionaire in 20 years according to them.

So these “Bad UL’s looked great on the non guaranteed side and fell to pieces (death benefit went away)in short order on the guaranteed side. On the flip side a “Good UL stays together (death benefit remains intact) on the guaranteed side.

Bottom line. I’ve made a lot of this issue over the years and probably will until I die or retire. What people need to know is that 1. you can’t hang on to it long enough for it to get better and 2. you can replace it with an appropriate product and get back on solid ground right now. There are far too many people out there thinking they can keep dumping cash into a failing universal life policy and someday, somehow, things are just going to be OK. Unfortunately…..NOT!

Post from: Ed Hinerman On Life Insurance

When Your Universal Life Policy Falls Apart!

Having said that, there is a problem when people want to suck the marrow out of the shopping experience, making sure that every stone is turned and every possibility is researched.

I was talking with someone today who was taken for a ride on a universal life policy he bought 15 or so years ago. Promised that it would last forever and it is imploding before his eyes, price going up and guarantee non existent at this point. I offered several fully guaranteed options to him and he was having a hard time, even though he called the agent a crook, wrapping his mind around changing. Wanted to think about it a while longer. So I shared a story with him from last year. He is now considering the merits of making that change while he knows what his health is.

It never seems very far between stories gone bad because of shopping to long or dragging a person’s feet just a little too long. I worked with a man near retirement age last year, and the year before. He wanted an insurance policy that would allow him to maximize his retirement options. He kept putting it off because he wanted to make sure he purchased just the right amount. He was debating between $500,000 and $600,000. We worked this over for almost a year and a half. I kept explaining that he could put $500,000 in force and if, in the end, he wanted $600,000, we could add $100,000 or replace the first policy with a new one for the full amount. He didn’t have any life insurance in force and I made it clear that the suggestion above was a prudent approach.

He called one day and I had a hard time understanding him. His speech was slurred. He had a massive stroke and wanted to know if those rates I had quoted him were still good. Of course with the health change they weren’t and the options that he had kicked around for over a year went out the window.

Bottom line. I’m not against people shopping and spending their life in pursuit of the perfect policy at the perfect rate. But prudence dictates doing that from a position of power. Have insurance in force and then take your time researching the world. You can always replace a policy with a better one.

Post from: Ed Hinerman On Life Insurance

So, Let’s Think This Life Insurance Thing To Death!

The one that caught my “you’ve got to be kidding” attention today was a 68 year old man who has smoked most of his life, but has cut way back. Used to be two packs a day, now down to less than a half pack. He called to see if he could get better rates now than the policy he took out 10 years ago.

10 years ago, other than being a smoker he didn’t have any health issues. Since then he has battled glaucoma, losing one eye. He is now treated for high blood pressure and high cholesterol. 4 years ago he was diagnosed with emphysema and is on oxygen at night.

And he continues to smoke! And I wonder in these situations if the person has any idea what’s in store because of the choice to continue to smoke. It just truly baffles me.

And from a life insurance standpoint he’s up a creek. His current term insurance policy is at the end of the guarantee period and he can’t afford to do a conversion. To put it very bluntly, he can’t get a new insurance policy. He would be declined for traditional insurance because of the combination of his health problems and still smoking. If he can’t afford a conversion to a universal life policy he sure can’t afford something like AARP guaranteed issue whole life.

Bottom line. Really, the bottom line is two fold. Take care of your long term life insurance needs when you’re still healthy. I know there are things that can just jump up and bite you that don’t allow planning time, but if you’ve been smoking two packs a day for decades, you gotta know something is coming. And the second thing is, wake up! These are some amazing things we have, these bodies, but they won’t take abuse forever and just keep on ticking.

Post from: Ed Hinerman On Life Insurance

Hello! I Mean Really, Hello!